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FINANCIAL CHRONICLE™ » FINANCIAL CHRONICLE™ » Disclosure EXPO

Disclosure EXPO

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1Disclosure EXPO Empty Disclosure EXPO Wed Nov 06, 2013 4:02 pm

K.Haputantri

K.Haputantri
Co-Admin
http://www.cse.lk/cmt/upload_cse_announcements/9851383731499_.pdf

2Disclosure EXPO Empty Re: Disclosure EXPO Wed Nov 06, 2013 8:18 pm

ccsentha


Vice President - Equity Analytics
Vice President - Equity Analytics
How nicely they have transferred two of the companies from expo holdings to their own Aberdeen holdings.

Expo is a listed company and it has public investors as well, but Aberdeen holdings is privately owned by the directors of expo.

So basically public fund/money has been transferred to their own account. (Unless the valuation of 550M for both companies are genuine which is highly unlikely).

It is worth while to note that Aberdeen holdings is not a subsidiary of the expo holdings, it is a separate entity owned by the same people.

3Disclosure EXPO Empty Re: Disclosure EXPO Wed Nov 06, 2013 8:42 pm

kas

kas
Manager - Equity Analytics
Manager - Equity Analytics
I'm confused, does EXPO get cash inflow as per this transaction or is this only an accounting entry?

4Disclosure EXPO Empty Re: Disclosure EXPO Wed Nov 06, 2013 8:47 pm

The Alchemist


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
@ccsentha wrote:How nicely they have transferred two of the companies from expo holdings to their  own Aberdeen holdings.

Expo is a listed company and it has public investors as well, but  Aberdeen holdings is privately owned by the directors of expo.

So basically public fund/money has been transferred to their own account. (Unless the valuation of 550M for both companies are genuine which is highly unlikely).

It is worth while to note that Aberdeen holdings is not a subsidiary of the expo holdings, it is a separate entity owned by the same people.
I know for a fact that this process was very transparent (but i cannot tell you how i know). 
In fact, they called for bids for company's transferred and transferred them at a HIGHER value than the best bid received. In other words, it was not worth that much to quoted Company Expo, had debts and did not form part of their forward looking strategy for the listed group.     
In fact, that food company (which included Paan Paan the bread shop), they transferred had a negative net worth !. 
They have been more than fair. Good god fearing people, these Expo Lanka chaps. 
Read the disclosure properly. they went through a transparent process supervised by a reputed Chartered Accountancy Firm & their Independent Non Executive Directors.

@kas - EXPO gets the Cash Inflow. It sold some non core businesses of EXPO at more than their instrinsic value to a privately held family company which has common directors /  shareholders same as EXPO.

5Disclosure EXPO Empty Re: Disclosure EXPO Wed Nov 06, 2013 9:02 pm

kas

kas
Manager - Equity Analytics
Manager - Equity Analytics
@The Alchemist wrote:
@ccsentha wrote:How nicely they have transferred two of the companies from expo holdings to their  own Aberdeen holdings.

Expo is a listed company and it has public investors as well, but  Aberdeen holdings is privately owned by the directors of expo.

So basically public fund/money has been transferred to their own account. (Unless the valuation of 550M for both companies are genuine which is highly unlikely).

It is worth while to note that Aberdeen holdings is not a subsidiary of the expo holdings, it is a separate entity owned by the same people.
I know for a fact that this process was very transparent (but i cannot tell you how i know). 
In fact, they called for bids for company's transferred and transferred them at a HIGHER value than the best bid received. In other words, it was not worth that much to quoted Company Expo, had debts and did not form part of their forward looking strategy for the listed group.     
In fact, that food company (which included Paan Paan the bread shop), they transferred had a negative net worth !. 
They have been more than fair. Good god fearing people, these Expo Lanka chaps. 
Read the disclosure properly. they went through a transparent process supervised by a reputed Chartered Accountancy Firm & their Independent Non Executive Directors.

@kas - EXPO gets the Cash Inflow. It sold some non core businesses of EXPO at more than their instrinsic value to a privately held family company which has common directors /  shareholders same as EXPO.
Thanks for the info friend, Hope this will have a positive impact on share price. This share has been stuck in Rs.6 to Rs. 7 range for some time

6Disclosure EXPO Empty Re: Disclosure EXPO Wed Nov 06, 2013 9:52 pm

ccsentha


Vice President - Equity Analytics
Vice President - Equity Analytics
@The Alchemist wrote:
@ccsentha wrote:How nicely they have transferred two of the companies from expo holdings to their  own Aberdeen holdings.

Expo is a listed company and it has public investors as well, but  Aberdeen holdings is privately owned by the directors of expo.

So basically public fund/money has been transferred to their own account. (Unless the valuation of 550M for both companies are genuine which is highly unlikely).

It is worth while to note that Aberdeen holdings is not a subsidiary of the expo holdings, it is a separate entity owned by the same people.
I know for a fact that this process was very transparent (but i cannot tell you how i know). 
In fact, they called for bids for company's transferred and transferred them at a HIGHER value than the best bid received. In other words, it was not worth that much to quoted Company Expo, had debts and did not form part of their forward looking strategy for the listed group.     
In fact, that food company (which included Paan Paan the bread shop), they transferred had a negative net worth !. 
They have been more than fair. Good god fearing people, these Expo Lanka chaps. 
Read the disclosure properly. they went through a transparent process supervised by a reputed Chartered Accountancy Firm & their Independent Non Executive Directors.

@kas - EXPO gets the Cash Inflow. It sold some non core businesses of EXPO at more than their instrinsic value to a privately held family company which has common directors /  shareholders same as EXPO.
It says transparent all right, but every companies says so, was is really transparent? that is the question. Is the valuation a genuine one? Look it says supervised by a reputed Chartered Accountancy Firm & their Independent Non Executive Directors why didn't they mention the name of the company?
bcoz it too could it be one of their related firms.


Why didn't they just sell it to some one else?
why should their privately held company buy it if it was a loss making one? was it loss making for last year of for a long time? it can be manipulated to be a loss making firm for a year so that the firm can be transferred for a lower value.
why wasn't the matter passed on the share holders before?


it just doesn't sound right for me.

7Disclosure EXPO Empty Re: Disclosure EXPO Wed Nov 06, 2013 10:07 pm

The Alchemist


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
@ccsentha wrote:
@The Alchemist wrote:
@ccsentha wrote:How nicely they have transferred two of the companies from expo holdings to their  own Aberdeen holdings.

Expo is a listed company and it has public investors as well, but  Aberdeen holdings is privately owned by the directors of expo.

So basically public fund/money has been transferred to their own account. (Unless the valuation of 550M for both companies are genuine which is highly unlikely).

It is worth while to note that Aberdeen holdings is not a subsidiary of the expo holdings, it is a separate entity owned by the same people.
I know for a fact that this process was very transparent (but i cannot tell you how i know). 
In fact, they called for bids for company's transferred and transferred them at a HIGHER value than the best bid received. In other words, it was not worth that much to quoted Company Expo, had debts and did not form part of their forward looking strategy for the listed group.     
In fact, that food company (which included Paan Paan the bread shop), they transferred had a negative net worth !. 
They have been more than fair. Good god fearing people, these Expo Lanka chaps. 
Read the disclosure properly. they went through a transparent process supervised by a reputed Chartered Accountancy Firm & their Independent Non Executive Directors.

@kas - EXPO gets the Cash Inflow. It sold some non core businesses of EXPO at more than their instrinsic value to a privately held family company which has common directors /  shareholders same as EXPO.
It says transparent all right, but every companies says so, was is really transparent? that is the question. Is the valuation a genuine one? Look it says supervised by a reputed Chartered Accountancy Firm & their Independent Non Executive Directors why didn't they mention the name of the company?
bcoz it too could it be one of their related firms.


Why didn't they just sell it to some one else?

why should they sold it to one of their own privately held firm?


why wasn't the matter passed on the share holders before?
q1 bcoz it too could it be one of their related firms.

no it was not a related firm. btw, do you know of any reputed chartered accountancy firms related to Expo-Lanka ?

q2 Why didn't they just sell it to some one else?

because they must have wanted to keep it in the family as some family members were running them ? 

q3  why should they sold it to one of their own privately held firm? 

same answer as in q2 applies. 

q4 why wasn't the matter passed on the share holders before?

bcos i guess it not need shareholder approval as it may have not constituted a major transaction.

8Disclosure EXPO Empty Re: Disclosure EXPO Wed Nov 06, 2013 10:10 pm

ccsentha


Vice President - Equity Analytics
Vice President - Equity Analytics
@The Alchemist wrote:
@ccsentha wrote:
@The Alchemist wrote:
@ccsentha wrote:How nicely they have transferred two of the companies from expo holdings to their  own Aberdeen holdings.

Expo is a listed company and it has public investors as well, but  Aberdeen holdings is privately owned by the directors of expo.

So basically public fund/money has been transferred to their own account. (Unless the valuation of 550M for both companies are genuine which is highly unlikely).

It is worth while to note that Aberdeen holdings is not a subsidiary of the expo holdings, it is a separate entity owned by the same people.
I know for a fact that this process was very transparent (but i cannot tell you how i know). 
In fact, they called for bids for company's transferred and transferred them at a HIGHER value than the best bid received. In other words, it was not worth that much to quoted Company Expo, had debts and did not form part of their forward looking strategy for the listed group.     
In fact, that food company (which included Paan Paan the bread shop), they transferred had a negative net worth !. 
They have been more than fair. Good god fearing people, these Expo Lanka chaps. 
Read the disclosure properly. they went through a transparent process supervised by a reputed Chartered Accountancy Firm & their Independent Non Executive Directors.

@kas - EXPO gets the Cash Inflow. It sold some non core businesses of EXPO at more than their instrinsic value to a privately held family company which has common directors /  shareholders same as EXPO.
It says transparent all right, but every companies says so, was is really transparent? that is the question. Is the valuation a genuine one? Look it says supervised by a reputed Chartered Accountancy Firm & their Independent Non Executive Directors why didn't they mention the name of the company?
bcoz it too could it be one of their related firms.


Why didn't they just sell it to some one else?

why should they sold it to one of their own privately held firm?


why wasn't the matter passed on the share holders before?
q1 bcoz it too could it be one of their related firms.

no it was not a related firm. btw, do you know of any reputed chartered accountancy firms related to Expo-Lanka ?

q2 Why didn't they just sell it to some one else?

because they must have wanted to keep it in the family as some family members were running them ? 

q3  why should they sold it to one of their own privately held firm? 

same answer as in q2 applies. 

q4 why wasn't the matter passed on the share holders before?

bcos i guess it not need shareholder approval as it may have not constituted a major transaction.
Fine mate, u seems to be a faithful fan of EPO. I as only putting up my doubts!!!!!!

9Disclosure EXPO Empty Re: Disclosure EXPO Wed Nov 06, 2013 10:18 pm

The Alchemist


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
@ccsentha wrote:
@The Alchemist wrote:
@ccsentha wrote:
@The Alchemist wrote:
@ccsentha wrote:How nicely they have transferred two of the companies from expo holdings to their  own Aberdeen holdings.

Expo is a listed company and it has public investors as well, but  Aberdeen holdings is privately owned by the directors of expo.

So basically public fund/money has been transferred to their own account. (Unless the valuation of 550M for both companies are genuine which is highly unlikely).

It is worth while to note that Aberdeen holdings is not a subsidiary of the expo holdings, it is a separate entity owned by the same people.
I know for a fact that this process was very transparent (but i cannot tell you how i know). 
In fact, they called for bids for company's transferred and transferred them at a HIGHER value than the best bid received. In other words, it was not worth that much to quoted Company Expo, had debts and did not form part of their forward looking strategy for the listed group.     
In fact, that food company (which included Paan Paan the bread shop), they transferred had a negative net worth !. 
They have been more than fair. Good god fearing people, these Expo Lanka chaps. 
Read the disclosure properly. they went through a transparent process supervised by a reputed Chartered Accountancy Firm & their Independent Non Executive Directors.

@kas - EXPO gets the Cash Inflow. It sold some non core businesses of EXPO at more than their instrinsic value to a privately held family company which has common directors /  shareholders same as EXPO.
It says transparent all right, but every companies says so, was is really transparent? that is the question. Is the valuation a genuine one? Look it says supervised by a reputed Chartered Accountancy Firm & their Independent Non Executive Directors why didn't they mention the name of the company?
bcoz it too could it be one of their related firms.


Why didn't they just sell it to some one else?

why should they sold it to one of their own privately held firm?


why wasn't the matter passed on the share holders before?
q1 bcoz it too could it be one of their related firms.

no it was not a related firm. btw, do you know of any reputed chartered accountancy firms related to Expo-Lanka ?

q2 Why didn't they just sell it to some one else?

because they must have wanted to keep it in the family as some family members were running them ? 

q3  why should they sold it to one of their own privately held firm? 

same answer as in q2 applies. 

q4 why wasn't the matter passed on the share holders before?

bcos i guess it not need shareholder approval as it may have not constituted a major transaction.
Fine mate, u seems to be a faithful fan of EPO. I as only putting up my doubts!!!!!!

I am not a faithful fan of EXPO. In fact, I do not own a single share.
i am not saying it is a good or bad share. 
just trying to set the record straight with your concerns and telling you what i know.

10Disclosure EXPO Empty Re: Disclosure EXPO Wed Nov 06, 2013 10:33 pm

Jake Sully

Jake Sully
Manager - Equity Analytics
Manager - Equity Analytics
Off the subject but there are chartered accountants and firms who will sign any shit for a fee.

11Disclosure EXPO Empty Re: Disclosure EXPO Thu Nov 07, 2013 1:24 am

ccsentha


Vice President - Equity Analytics
Vice President - Equity Analytics
@Jake Sully wrote:Off the subject but there are chartered accountants and firms who will sign any shit for a fee.
Indeed!!!!! and they have not even mention the name of that chartered accountant firm, which is a bit shaky!!!!!

12Disclosure EXPO Empty Re: Disclosure EXPO Thu Nov 07, 2013 7:16 am

smallville

smallville
Associate Director - Equity Analytics
Associate Director - Equity Analytics
Anyways, good discussion ccsentha & Alchemist...

13Disclosure EXPO Empty Re: Disclosure EXPO Thu Nov 07, 2013 8:17 am

Rocky

Rocky
Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
Do you know what PCH, BFL and EXPO, GREG, CIFL, TWOD have in common?

14Disclosure EXPO Empty Re: Disclosure EXPO Thu Nov 07, 2013 8:59 am

yellow knife


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
I was collecting expo slowly. Each statement they offer to the market has something arguable. Once they was changing their brand name and spend too much of money for that. Now another report. they once aquired Paan Paan and made nice write ups in business magazines.

Anyway still I am watching this company positively. Yet the discussions here are really worthy for a investor like me. Thanks guys

15Disclosure EXPO Empty Re: Disclosure EXPO Thu Nov 07, 2013 10:03 am

K.Haputantri

K.Haputantri
Co-Admin
Still I have some reasonable doubts about their action even after reading the  lengthy discussion above (Thanks all who contributed) for two reasons-

(1) If the tender procedure is really transparant (as Alchemist insists) no one has any controle over the selling price and to whome it is to be sold (refer to answers of Al to questions 2 & 3). Then how could EXPO decided to sell it to a family company as Alchemist says.
(2) I remember that, there was a serious error (intentional?) in their prospectus at the IPO (corrected later- too late because by that time many had applied) favouring pre-IPO share owners of some private placement of shares at bargain prices. This eroded their integrity over managing public funds.

?Can any one enlighten me on this.

16Disclosure EXPO Empty Re: Disclosure EXPO Thu Nov 07, 2013 12:11 pm

The Alchemist


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
@K.Haputantri wrote:Still I have some reasonable doubts about their action even after reading the  lengthy discussion above (Thanks all who contributed) for two reasons-

(1) If the tender procedure is really transparant (as Alchemist insists) no one has any controle over the selling price and to whome it is to be sold (refer to answers of Al to questions 2 & 3). Then how could EXPO decided to sell it to a family company as Alchemist says.

(2) I remember that, there was a serious error (intentional?) in their prospectus at the IPO (corrected later- too late because by that time many had applied) favouring pre-IPO share owners of some private placement of shares at bargain prices. This eroded their integrity over managing public funds.

?Can any one enlighten me on this.
@ Haputantri - 

Without knowing the full spectrum of facts, it is very difficult for me to explain with details. 

EXPO is essentially a transport / logistics / Freight Company. perhaps they made some strategic blunders and diversified into unrelated business, which they later wanted to rectify. 

Some non core business units in the food sector of EXPO were running at losses and with debts and were a drag to core company's profits. however, these units were run / managed by shareholders & related parties of EXPO majority owners. Thus, a decision was made to transfer to one of their private family owned companies. since some of these companies had a negative net worth, the transfer price was an issue. thus this process which was supervised by the independent directors and conducted by a chartered accountancy firm entailed for tenders / bids as if these companies were to be sold to an outside third party in an "arms length" transaction. 

Perhaps this exercise was to establish an instrinsic value on the businesses, as some of them had a negative net worth. 

i presume EXPO then agreed to transfer to a related party at a price determined at an "arms length" distance which was better that the best bids received. 

i know they transferred these businesses at a higher price (to the bids received) to their own private company, rather than divested it to outside unrelated third party at a lower price, and that from EXPO point of view they have done well.

Re the IPO / Pre IPO price matter - i am not aware of the details. can someone clarrify this please ?

17Disclosure EXPO Empty Re: Disclosure EXPO Thu Nov 07, 2013 12:42 pm

K.Haputantri

K.Haputantri
Co-Admin
Thanks Alchemist for your lenthy explanations on behalf of EXPO.

My question now is, ?are they repeating the same blunders in their private companies too by buying loss making companies they could not run in a listed company profitably paying the highest price.

Or ?were they spending public funds recklessly but are very smart in handling their priate companies.

?Can we call them God fearing people, at least they should have been shareholder fearing people in a public company. This is very strange.

As for the pre-IPO blunder, it was discussed in the following link.
http://forum.srilankaequity.com/t4546-softlogic-the-angel-expo-the-devil-story-of-private-placements?highlight=EXPO+IPO

Almost all retail investors lost substantially because pre-IPO share holders dumped their shares below IPO price making a huge profit. SEC regulation on lock up of private placement shares were in effective because they had other shares which were not locked up and could be sold.

Such IPOs are partly responsible for the current down trend of the CSE.

18Disclosure EXPO Empty Re: Disclosure EXPO Thu Nov 07, 2013 1:23 pm

The Alchemist


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
@K.Haputantri wrote:Thanks Alchemist for your lenthy explanations on behalf of EXPO.

My question now is, ?are they repeating the same blunders in their private companies too by buying loss making companies they could not run in a listed company profitably paying the highest price.

Or ?were they spending public funds recklessly but are very smart in handling their priate companies.

?Can we call them God fearing people, at least they should have been shareholder fearing people in a public company. This is very strange.

As for the pre-IPO blunder, it was discussed in the following link.
http://forum.srilankaequity.com/t4546-softlogic-the-angel-expo-the-devil-story-of-private-placements?highlight=EXPO+IPO

Almost all retail investors lost substantially because pre-IPO share holders dumped their shares below IPO price making a huge profit. SEC regulation on lock up of private placement shares were in effective because they had other shares which were not locked up and could be sold.

Such IPOs are partly responsible for the current down trend of the CSE.
Thanks Hapu for some valid points. 

I feel that what we can discuss about this disclosure thread here, is how they did what they did.
we cannot discuss why they did what they did unless an EXPO Rep (like Melstacorp) comes on the forum or we question on another forum like AGM / EGM etc. 
with my limited info, i can only answer the "how they did" part and weather it is fair and not "why they did " part and weather that was unfair. none of us except EXPO themselves can answer that, which the first part of your question queries. 

On the IPO / PP issue, i read the attached linked thread. I still do not see any point of contention in this. Subscribers subscribed to the IPO knowing fully well that a Price Placement had occurred 6-8 months ago at a substantial discount. they did so at the height of a Bull Market driven by greed ? No one forced them to subscribe ? If subscribers felt there was marked disparity between the issue price (ipo) and PP price, they should not have subscribed. then when bear market comes later, and the price halves, is it fair to blame them ? if the Bull market continued and EXPO went up 50 % from IPO price, would the same sentiments be expressed ? If the SEC messed up with the Lock In period issue, can we blame EXPO ?

Just some points to ponder, as sometimes, things look different in hindsight.

19Disclosure EXPO Empty Re: Disclosure EXPO Thu Nov 07, 2013 1:37 pm

K.Haputantri

K.Haputantri
Co-Admin
The following link also usefull.

http://forum.srilankaequity.com/t3352-expo-error-in-prospectus-admitted?highlight=EXPO+IPO

They profited through a loop-hole in SEC regulations but submitting a prospectus without price sensitive info is a crime. If I were the SEC Chairman, I suspend the IPO for three months untill proper prospectus is issued. They should not be allowed to play with public funds like this.

I heard a recent amendment to this trying to plug the hole.

20Disclosure EXPO Empty Re: Disclosure EXPO Thu Nov 07, 2013 3:46 pm

The Alchemist


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
@K.Haputantri wrote:The following link also usefull.

http://forum.srilankaequity.com/t3352-expo-error-in-prospectus-admitted?highlight=EXPO+IPO

They profited through a loop-hole in SEC regulations but submitting a prospectus without price sensitive info is a crime. If I were the SEC Chairman, I suspend the IPO for three months untill proper prospectus is issued. They should not be allowed to play with public funds like this.

I heard a recent amendment to this trying to plug the hole.
Thanks for the link. 

The question is, is it fair to blame EXPO for perhaps profiting from a SEC Loophole ? should'nt fair blame be apportioned to SEC & JK lead Managers for IPO mispricing, lock in period etc ?

Yes, the Prospectus issue at first glance seems like a shocker ! i missed all this action, it seems, as i was overseas between feb - june 2011 :-) however, i just had a look at prospectus / errata notice etc, and on closer examination, i discovered the following -

1. IPO opened on 12th May 2011. Errata notice was dated 5th May 2011. one week before IPO date not sufficient disclosure time ?

2. On page 100 note 6.1 of IPO prospectus, it is shown the holdings in Expo Aviation & Denshun were 0 % as at 31st December 2010 down from 100 % - 90 % as at 31st March 2010. The valuation amount is as per the errata notice. therefore, it is obvious it is not intentional isnt it ? it has to be an error. only if you have not read page 100 note 6.1 properly will you feel that the errata disclosure is intentionally omitted form prospectus.  

3. Expo been allowed to play with public funds issue does not arise. There was an Offer, there was Acceptance (Over subscription) and the Consideration price was the IPO price of Rs 14. A solid Contract. end of story.  

whether we lost or gained, whether SEC & JK Managers dropped the ball on the EXPO ipo, i feel not fair to blame Expo.

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