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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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