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The Alchemist
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CEYLON INVESTMENT PLC (CINV.N0000) - Page 2 Empty Re: CEYLON INVESTMENT PLC (CINV.N0000)

on Thu Oct 01, 2020 10:36 pm
Sorry buddy but nice try ! no free lunches Very Happy

About helping everyone and conclusions etc, best is for everyone to forget it. forget about AGMS and LOAN / PE deals etc. Then no conclusions noh ?

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The Alchemist
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CEYLON INVESTMENT PLC (CINV.N0000) - Page 2 Empty Re: CEYLON INVESTMENT PLC (CINV.N0000)

on Thu Oct 01, 2020 11:13 pm
VALUE / SLSTOCK or anyone else. i have one more question.
Since VALUE so correctly pointed out the accounting for RIT's Buki stake, and the EPS Calculation considering OCI, is this a fair method, i ask ?

On one hand, RIT does not get to book the profit on the price movement of its Buki shares as EPS. On the other hand, it also does not get to account for 20 % of BUKI's profit as an associate holding 20% equity should. (because the Boards of RIT and BUKI are different and their is no control). Is this fair ?

if you think its unfair and does not give a fair and accurate picture of RIT, CINV & GUAR Earnings, you are correct. Please also google, refer Warren Buffets concept of "Look Through Earnings". and let me know what you think.
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The Alchemist
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CEYLON INVESTMENT PLC (CINV.N0000) - Page 2 Empty Re: CEYLON INVESTMENT PLC (CINV.N0000)

on Thu Oct 01, 2020 11:15 pm
VALUE / SLSTOCK or anyone else. i have one more question.
Since VALUE so correctly pointed out the accounting for RIT's Buki stake, and the EPS Calculation considering OCI, is this a fair method, i ask ?

On one hand, RIT does not get to book the profit on the price movement of its Buki shares as EPS. On the other hand, it also does not get to account for 20 % of BUKI's profit as an associate holding 20% equity should. (because the Boards of RIT and BUKI are different and their is no control). Is this fair ?

if you think its unfair and does not give a fair and accurate picture of RIT, CINV & GUAR Earnings, you are correct. Please also google, refer Warren Buffets concept of "Look Through Earnings". and let me know what you think.
First Guy
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CEYLON INVESTMENT PLC (CINV.N0000) - Page 2 Empty Re: CEYLON INVESTMENT PLC (CINV.N0000)

on Fri Oct 02, 2020 8:03 am
Personally, I will not bother too much about such gains recorded. Ultimately, unless there is a chance of something to flow through to the shareholder, it is not going to make a difference. If some cash proceeds will be received/improvement in business that will result in distributions, it does not change anything to me. But if the price is at extremely deep discount it will adjust somewhat - probably has? Unless a divesture is in sight, I will value it based on recurrent earnings.

I do not hold any shares in this group, due to personal preference.

කිත්සිරි ද සිල්වා likes this post

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The Alchemist
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CEYLON INVESTMENT PLC (CINV.N0000) - Page 2 Empty Re: CEYLON INVESTMENT PLC (CINV.N0000)

on Fri Oct 02, 2020 1:46 pm
Hi FG, Good to hear from you ! Appreciate your views. I understand your thinking  and agree with your views.  
But just as we do not bother about these things, the point i am making / asking is, if we are to consider RIT, CINV, GUAR nature of business of these Investment Trusts, they buy and sell shares. As at the end of a period, those shares are measured / valued and flow through to Income Statement and Balance Sheet. Now, IF all shares of RIT are measured one way (i.e. Realized or unrealized gains on Income Statement) and Only BUKI is measured another way, simply based on MANAGEMENT classification of Asset Class (available for Sale through Profit or Loss or Fair value Gain in Comprehensive Income not accounted for in EPS), and the classification can be changed any time / day by Management, my question is, does this give a fair and accurate picture of their business model or not ?  The second point is why does RIT not Equity Account for its BUKI over 20 % stake ?

So Basically, RIT's over 20 % stake in BUKI, the price movement from time to time is not captured in Earnings (but Comprehensive Income) and neither is  RIT'S share of BUKI 'S Earnings reflected in RIT'S Accounts.

Given their nature of business of dealing in Equities, i think either one should be reflected, ideally EPS should include Comprehensive Income. Otherwise the earnings potential of the stake is "hidden" and does not give a fair and accurate picture of the Assets / Earnings of RIT and its shareholers (CINV & GUAR).

Weather we bother about it or not or whether it makes a difference or not, is immaterial. The point is - Is it Fair ?
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The Alchemist
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CEYLON INVESTMENT PLC (CINV.N0000) - Page 2 Empty Re: CEYLON INVESTMENT PLC (CINV.N0000)

on Fri Oct 02, 2020 1:46 pm
Hi FG, Good to hear from you ! Appreciate your views. I understand your thinking  and agree with your views.  
But just as we do not bother about these things, the point i am making / asking is, if we are to consider RIT, CINV, GUAR nature of business of these Investment Trusts, they buy and sell shares. As at the end of a period, those shares are measured / valued and flow through to Income Statement and Balance Sheet. Now, IF all shares of RIT are measured one way (i.e. Realized or unrealized gains on Income Statement) and Only BUKI is measured another way, simply based on MANAGEMENT classification of Asset Class (available for Sale through Profit or Loss or Fair value Gain in Comprehensive Income not accounted for in EPS), and the classification can be changed any time / day by Management, my question is, does this give a fair and accurate picture of their business model or not ?  The second point is why does RIT not Equity Account for its BUKI over 20 % stake ?

So Basically, RIT's over 20 % stake in BUKI, the price movement from time to time is not captured in Earnings (but Comprehensive Income) and neither is  RIT'S share of BUKI 'S Earnings reflected in RIT'S Accounts.

Given their nature of business of dealing in Equities, i think either one should be reflected, ideally EPS should include Comprehensive Income. Otherwise the earnings potential of the stake is "hidden" and does not give a fair and accurate picture of the Assets / Earnings of RIT and its shareholers (CINV & GUAR).

Weather we bother about it or not or whether it makes a difference or not, is immaterial. The point is - Is it Fair ?

කිත්සිරි ද සිල්වා likes this post

slstock
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CEYLON INVESTMENT PLC (CINV.N0000) - Page 2 Empty Re: CEYLON INVESTMENT PLC (CINV.N0000)

on Fri Oct 02, 2020 3:40 pm
Alchemist,

I really do not want to spend time at the forum. ( I  have my life issues too deal with).But I am specially writing a reply as a mark of courtesy to you as you are
requesting feedback on the "fairness" matter.


Here is what I have seen  :

1) If I recall right, other Investment Funds like NAMAL or CANDOR , do report  Realized as well as Unrealized gains on Financial Asserts held at Fair value as Profit/Loss. Yes.

But they actually do not report Earnings per share( unit). 
What they do is they report the earnings as Increase/Decrease in NET ASSETS to Unit Holders. So essentially those unrealized gains/losses on marked to market shares are contributing to NAV ( not epu). 

One can argue  CINV is not a Unit trust, but the concept is the same.
Isn't the BUKI movement reported proportionately into  NAV 
consistent in that regard too?



2) What is different in RIT with BUKI holding is ( vs Shorter term Share trading funds) 


a) as I mentioned  BUKI is an Associate  of RIT ( which you realized later)

b) It is a longer term investment at Associate status.  So they need to follow additional accounting requirements. 



3)   In all fairness,  one can ask the question, 
      is anything  considered as profit or loss  unless one Sells it ?



a) Ex : We can own land. It goes up in market value over the years.
But until we sell it, can we consider it as profit or loss ( for accounting?)

b)   If RIT does not plan to sell BUKI as it is a long term investment  
( an Associate too), can a temporary share price movement be
considered as a real earning? This is what I tried to raise at the very beginning. 



By reporting the BUKI price movement in their NAV. ( which will go up  
when BUKI moves upwards and vice versa) , it shows any Investor  the 
value of the share at the present time any case does it not?


Ps : Do Check your forum  inbox too.

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First Guy
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CEYLON INVESTMENT PLC (CINV.N0000) - Page 2 Empty Re: CEYLON INVESTMENT PLC (CINV.N0000)

on Fri Oct 02, 2020 9:24 pm
I agree with sls

Business of NAVF, COF is making gains through investing in (mainly) equity securities so unrealised gain is captured in EPS/EPU.

Same with CINV although not much buying and selling happens. Business of BUKI is not that, therefore an investor will not expect to sell an investment in associate as a routine business. If one expects a sale for some reason, they will benefit for sure. That is where one can pick opportunities.

Similarly I want to touch on VONE (which I held till recently). I will look for an appropriate thread for that.
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