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FINANCIAL CHRONICLE™ » EXPERT CHRONICLE™ » REEF and VFIN- Accountants who can't calculate

REEF and VFIN- Accountants who can't calculate

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innam

innam
Manager - Equity Analytics
Manager - Equity Analytics

REEF results are out and i'm sure we'll get multiple posts about the magical EPS figure of 7 for the March quarter that they have reported.

http://www.cse.lk/cmt/upload_report_file/568_1306907002379.pdf

But it seems that some of the accountants working for CSE listed companies don't seem to know how to use a calculator.

REEF profit after tax for the March quarter 2011 is 14 million and with 47 million shares outstanding my excel gives a figure of 30 cents but REEF is showing an EPS figure of 7.27
Profit after tax March quarter 2010 is 9 million and with 47 million shares outstanding my excel gives a figure of 20 cents but REEF is showing an EPS figure of 4.93
i have left out the dilution from the warrants to keep it simple for the moment

The same thing happened with VFIN yesterday and with two DONKEY LEVEL mistakes in two days, the troubling question to ask is, is this a deliberate attempt to mislead retailers by manufacturing incorrect EPS numbers or aren't they bothered about accuracy?
http://forum.srilankaequity.com/t4305-vfin-good-results-will-it-shoot-up-soon#29045

Don't the CEOs/CFOs/Finance Managers of these companies take look at what they file?

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econ

Post Wed Jun 01, 2011 4:55 pm by econ

thanks innam. very good observation as always you do.
I think this is not calculation problem. they may want to fool around investors.

smallville

Post Wed Jun 01, 2011 5:02 pm by smallville

Man.. Innam is dead correct..

REEF and VFIN- Accountants who can't calculate Reef10

Lets take Group figures;
Equity Holders of the Parent (12 months ended 31-03-11) - Rs.14834000/-
Equity Holders of the Parent (03 months ended 31-03-11) - Rs.15721000/-

Total No of Shares after rights issue - 47,191,953 (as illustrated on the reports)

Therefore; Annual Group EPS = 14834000/47191953 = Rs. 0.314/-
Qurater Group EPS = 15721000/47191953 = Rs.0.333/-

Lets take company figures;
Compnay figure (03 months ended 31-03-11) = Rs.14286000/-
Therefore Company EPS = 14286000/47191953 = Rs.0.30/-

Now from where this magical number 7.27 came from??



Last edited by smallville on Wed Jun 01, 2011 5:19 pm; edited 1 time in total

avatar

Post Wed Jun 01, 2011 5:14 pm by Gaja

interestingly, admin or moderators or any of the members of you have the contact with the company, why don't you informed to the company and ask them to correct it

Slstock

Post Wed Jun 01, 2011 5:17 pm by Slstock

innam wrote:REEF results are out and i'm sure we'll get multiple posts about the magical EPS figure of 7 for the March quarter that they have reported.

http://www.cse.lk/cmt/upload_report_file/568_1306907002379.pdf

But it seems that some of the accountants working for CSE listed companies don't seem to know how to use a calculator.

REEF profit after tax for the March quarter 2011 is 14 million and with 47 million shares outstanding my excel gives a figure of 30 cents but REEF is showing an EPS figure of 7.27
Profit after tax March quarter 2010 is 9 million and with 47 million shares outstanding my excel gives a figure of 20 cents but REEF is showing an EPS figure of 4.93
i have left out the dilution from the warrants to keep it simple for the moment

The same thing happened with VFIN yesterday and with two DONKEY LEVEL mistakes in two days, the troubling question to ask is, is this a deliberate attempt to mislead retailers by manufacturing incorrect EPS numbers or aren't they bothered about accuracy?
http://forum.srilankaequity.com/t4305-vfin-good-results-will-it-shoot-up-soon#29045

Don't the CEOs/CFOs/Finance Managers of these companies take look at what they file?

Yes, Innam when I saw VFIN report first time I thought two things.
a) They know the greatest of magic
b) maybe as the accountant is indisposed his 4 year old child did the math

On a serious note, as you mentioned the issue is how can it evade 3 qualified peoples eyes it is was a mistake. Accountant , Diretor, CEO ? Twisted Evil

avatar

Post Wed Jun 01, 2011 5:34 pm by sapumal

My personal idea is EPS = 7 is correct for REEF

Total equities 1,438,306,000
Total shares 47,191,953
NAV = Rs 30.59

last quarter NAV = Rs 22.39
They haven't include the profit to the PL statement but they have included to the balance sheet.
There are lot of comments about the fairness of the way ( selling lands to subsidiaries at higher prices) they earned Rs 7 EPS during the last quarter. But anyhow now they have NAV over 30.


http://forum.srilankaequity.com/t1561-cse-announcement-about-reef-reef-350mn-capital-gain

innam

Post Wed Jun 01, 2011 6:34 pm by innam

sapumal wrote:My personal idea is EPS = 7 is correct for REEF

Total equities 1,438,306,000
Total shares 47,191,953
NAV = Rs 30.59

last quarter NAV = Rs 22.39
They haven't include the profit to the PL statement but they have included to the balance sheet.
There are lot of comments about the fairness of the way ( selling lands to subsidiaries at higher prices) they earned Rs 7 EPS during the last quarter. But anyhow now they have NAV over 30.


http://forum.srilankaequity.com/t1561-cse-announcement-about-reef-reef-350mn-capital-gain

so this is the target audience for the magic EPS of 7.

i may be wasting my time convincing the target audience but just so newcomers are not mislead- magical land revaluations that take place on the balance sheet (the so called change in NAV) and not on the income statement (eg-mark to market adjustment) CANNOT be taken to calculate EPS. The only thing that can be used for EPS calculation is the earnings shown in the face of the income statement.

avatar

Post Wed Jun 01, 2011 6:43 pm by sapumal

I don't have any disagree with your point innam. They can't show a EPS using this statement. It is a magic figure
My point is they had a EPS of Rs 7 during last quarter due to the land revaluation and it is in the balance sheet.

innam

Post Wed Jun 01, 2011 6:46 pm by innam

bottom line if these management teams can't even do a simple calculation ( dividing 14 million profits by 47 million shares ), and the error isn't spotted by senior management- what other errors and mistakes are hidden within the detailed accounts?

avatar

Post Wed Jun 01, 2011 7:10 pm by Fresher

at least cant the one who prepares spot the large discrepancy between the quarter EPS and the yearly one. purely taking retailers for a ride.
next time they'll type EPS 30 and say they forgot to place the decimal

smallville

Post Wed Jun 01, 2011 7:14 pm by smallville

Gaja wrote:interestingly, admin or moderators or any of the members of you have the contact with the company, why don't you informed to the company and ask them to correct it

I already sent them a note requesting an explanation..

TuskerLK

Post Wed Jun 01, 2011 8:05 pm by TuskerLK

Donno how many more companies have reported like this.

monash

Post Wed Jun 01, 2011 8:38 pm by monash

innam wrote:bottom line if these management teams can't even do a simple calculation ( dividing 14 million profits by 47 million shares ), and the error isn't spotted by senior management- what other errors and mistakes are hidden within the detailed accounts?

Thank you Innam for your effort. I appreciate it.

I don't see these as mistakes. These may be done purposely to mislead investors. Fortunately this is Sri Lanka otherwise the company and auditors in trouble as investors can sue the company. Because this is CSE they are just playing games and toying investors. We have to think again about the credibility of financial statements at CSE.
Evil or Very Mad



Last edited by monash on Wed Jun 01, 2011 8:54 pm; edited 2 times in total

TuskerLK

Post Wed Jun 01, 2011 8:44 pm by TuskerLK

However these are not audited accounts,so audit firm has nothing to do with the quartally reports

xhora

Post Wed Jun 01, 2011 8:52 pm by xhora

Can we really believe auditors?
E.g ENRON & Arthur Andersen

TuskerLK

Post Wed Jun 01, 2011 9:08 pm by TuskerLK

For me auditors are not ethical at all. Most of the young guys and girls who works days and nights to meets the deadline are getting paid a allowance (not salary) less than what a estate worker get paid.

So how come we can expect a reliable work from them?

mark

Post Wed Jun 01, 2011 11:24 pm by mark

guys,same thing i experienced in CSF results,ddn't got correct values......don't know,i may be wrongly calculated,but there was many questions.. Suspect Suspect

avatar

Post Wed Jun 01, 2011 11:27 pm by Gaja

smallville wrote:
Gaja wrote:interestingly, admin or moderators or any of the members of you have the contact with the company, why don't you informed to the company and ask them to correct it

I already sent them a note requesting an explanation..

Good let us know, if you got the reply

avatar

Post Thu Jun 02, 2011 7:55 am by Hiru

tinyman wrote:For me auditors are not ethical at all. Most of the young guys and girls who works days and nights to meets the deadline are getting paid a allowance (not salary) less than what a estate worker get paid.

So how come we can expect a reliable work from them?

That is true trainees are doing all the field work for Audits, but there are several stages which pay attention to accounts before they reach to Assigned Partner for his signature, specially in big for Audit Firms. So, have these managers at the audit firm failed to comply with procedures?
However, it seems these statements are not Audited.

Above all, I believe, there must be check for accuracy at CSE before publishing accounts on the CSE Website as all investors are not of the same quality.

is it good or bad to buy?
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avatar

Post Thu Jun 02, 2011 5:55 pm by Hiru

GJ wrote:is it good or bad to buy?
--
===
====
=====

VFIN is good at below Rs 50.

REEF is good to watch and buy as there would be huge capital gains. For me REEF.W0017 is comparably good. My view is based on the current trend and the information currently available, but not on fundamentals.

Please search for information available and evaluate by your self as money is yours.

smallville

Post Sat Jun 04, 2011 8:23 pm by smallville

Gaja wrote:
smallville wrote:
Gaja wrote:interestingly, admin or moderators or any of the members of you have the contact with the company, why don't you informed to the company and ask them to correct it

I already sent them a note requesting an explanation..

Good let us know, if you got the reply

I'm afraideven after 2 days I've recieved NO reply.. U know wat this means right??? Twisted Evil
Poor souls.. Can we send this to SEC as well? indicating the malpractice by company??

monash

Post Sat Jun 04, 2011 8:32 pm by monash

Smallville i also waited for your post to know the response of company.

Yes of course we can inform this to SEC. i think there is possibility to sue the company also if you have money and time, Consult a lawyer.. Wink
Reef is a pure scam.. the latest victim of them is CLND.

smallville

Post Sat Jun 04, 2011 9:19 pm by smallville

monash wrote:Smallville i also waited for your post to know the response of company.

Yes of course we can inform this to SEC. i think there is possibility to sue the company also if you have money and time, Consult a lawyer.. Wink
Reef is a pure scam.. the latest victim of them is CLND.

Well to be honest with, I dont have a single share even warrants.. but just for the community service I tried informing the company toget some response.. They didnt have the courtesy to accept it a mistake or whatever further assures this is a pure scam Wink Twisted Evil
Well I have other fish to fry.. so if some can post this to SEC, would be glad.. Wink

avatar

Post Sun Jun 05, 2011 3:45 pm by intelstk

tinyman wrote:For me auditors are not ethical at all. Most of the young guys and girls who works days and nights to meets the deadline are getting paid a allowance (not salary) less than what a estate worker get paid.

So how come we can expect a reliable work from them?

this is nothing to do with auditors. These interim figures are un audited. They responsible for annual audited figures only. Even that case prepartion and presentation of FS in a responsible of Directors.

Eventhough they are paid less than state workers, they are doing great job for the entire market definitly. So, don scold auditors in this case plssssssssssss

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