Confused with new accounting methods...

Rapaport · 1 Confused with new accounting methods... Fri Feb 14, 2014 1:01 pm

Rapaport

Assistant Vice President - Equity Analytics

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Guys i have noted a huge portion of profit in RCL statement sucked up as non controlling interest.
And this does not reflect into the basic EPS which is 3.01 for this quater (Only includes profits for equity holders for parent) and only 3.30/- for 9 months

As an investor should one consider combined profits of 576 million (3rd QTR) in their EPS calculation??

I know new accounting standards have been adopted but i am a bit confused..

Doesn't it make sense and less complicated if the combined profits of parent and subsidary companies were calculated into EPS??

Hope someone with good accounting knowledge can iron this out...

http://www.cse.lk/cmt/upload_report_file/683_1392293968977.pdf

Cheers!

Jiggysaurus · 2 Re: Confused with new accounting methods... Fri Feb 14, 2014 1:07 pm

Jiggysaurus

Assistant Vice President - Equity Analytics

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Join date : 2012-06-14

This is nothing new.

What is new is that RCL is now a group so now the group combined profits of 576m is split amongst shareholders in the RCL company (equity holders of parent) and minority shareholders in the subsidiaries.

An RCL investor will need to consider the 333m as the profit accruing to him so the EPS is 3.01

If you are confused look at JKH and CARS.

Rapaport · 3 Re: Confused with new accounting methods... Fri Feb 14, 2014 2:01 pm

Rapaport

Assistant Vice President - Equity Analytics

Posts : 681
Equity Stars : 4614
Reputation : 55
Join date : 2011-02-01

Thanks Jiggy

Makes a bit more sense, sort of figured it out

Cheers!

The Alchemist · 4 Re: Confused with new accounting methods... Fri Feb 14, 2014 2:58 pm

The Alchemist

Senior Manager - Equity Analytics

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@ Rapaport - We have to be careful on the division of the total profit between Equity holders of the Parent & Minority Interest. Some times in the interim accounts, they get it wrong like CARS, BUKI & especially CFLB Group.

Classic example this time is for CARS.

In the recent 9 months interim accounts, hey have reported Rs 2 Billion Profit (should be really Rs 6.6 Billion as they are showing a Rs 4.6 Bill notional non cash Foreign Exchange Loss).
They have allocated only 40 % to equity holders & balance 60 % to minority interest. However, they own (equity holders) approx 60-65% minimum of all the sub-sectors/ business i.e. Goodhope Asia, Breweries, Real Estate, Investments etc.

So how can this be ? it is a mistake like last time I pointed out for Buki and they acknowledged their mistake in a footnote in subsequent accounts.

i will bring up that old post and show you.

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Confused with new accounting methods...

1 Confused with new accounting methods... Fri Feb 14, 2014 1:01 pm

Rapaport

2 Re: Confused with new accounting methods... Fri Feb 14, 2014 1:07 pm

Jiggysaurus

3 Re: Confused with new accounting methods... Fri Feb 14, 2014 2:01 pm

Rapaport

4 Re: Confused with new accounting methods... Fri Feb 14, 2014 2:58 pm

The Alchemist

5 Re: Confused with new accounting methods...

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