Touchwood Case Review

seyon

seyon

Assistant Vice President - Equity Analytics

Posts : 783
Join date : 2011-02-01

Unofficial information that the expected Touchwood case against Sri Lanka Accounting and Auditing Standards Monitoring Board(SLAASMB) next hearing will be on 26th May 2011. Yes everyone looking the favorable outcome. Today, there are rumors that outcome will be favorable to the company and some brokers recommend to buy at current price. I could see some collection (about 820,000 shares) was made @ 23.60 levels.

I just did some research on the Touchwood Case. It looks like decision will be favorable to company. (This is not a promotion, just merely to getting your views. To be honest I do not have TWOD shares at the moment.)

We all know about the case related to the valuation of biological assets. I extracted some facts from SLAASMB website of case information to start from beginning.

The Sri Lanka Accounting and Auditing Standards Monitoring Board has determined that the estimates of fair value of biological assets used by Touchwood Investments Limited in its financial statements for the years ended 31 March 2005 and 31 March 2006 are clearly unreliable. The Company has also not been able to provide the Board with any other estimates which are reliable. Further, the method of valuation used for the year ended 31 March 2005 was not in accordance with International Accounting Standard, IAS 41 Agriculture, which the company has purportedly adopted.

As the company has purportedly adopted International Accounting Standard, IAS 41 Agriculture, the Board has concluded that the biological assets should have been valued at a value which approximates cost in accordance with paragraph 24 (b) of IAS 41 or at cost less accumulated impairment in accordance with paragraph 30 of IAS 41. Based on such valuation the company would not show a net profit for the relevant financial periods.

As the impact on the financial statements is substantial the Board has decided to refer the non-compliance to the Attorney General. The Board has also decided to investigate the compliance with auditing standards by the auditors in relation to the audit of the financial statements of the Company.

Based on the above information I can see in the absence of Sri Lanka Accounting Standards, company uses International Accounting Standards 41, Agriculture for the valuation of biological assets. But SLAASMB argument is that estimates of fair value of the biological assets in not accordance with IAS 41 and the financial statements are unreliable.

Further I have received BASL News Letter (Bar Association) of December 2010, there talked about some legal judgment (I attached the newsletter in our research forum http://research.srilankaequity.com/t96-touchwood-case-basl-bar-association-news-letter-judgement-views , refer page 4 for the Touchwood case). There they briefed about the case and given their views. Based on that, Board had not statutory power to challenge the valuation of the Petitioner on non compliance with IAS 41.

Further company received the Certificate of Compliance by the Institute of Chartered Accountants of Sri Lanka for the Annual Report Awards 2010. This certificates covers the CSR, Financial, Presentation and Compliance. Therefore, this reveals that the company practice in valuing biological assets in accordance with IAS 41 as the certificated awarded by ICASL which is the statutory for setting the Accounting Standards

Followings extract from Touchwood website

Certificate Of Compliance

January 24th 2011

We are proud to announce that our Sri Lankan office, Touchwood Investments PLC has been awarded the “CERTIFICATE OF COMPLIANCE” by the Institute of Chartered Accountants of Sri Lanka for the Annual Report Awards 2010 - at the ceremony held on 7th December 2010.

This award is granted by the Inst. of Chartered Accountants of Sri Lanka every year. They evaluate and grant awards in key areas such as - CSR, Financials, presentation, compliance, etc.

This certificate emphasizes that all requirements are being met in order for us to achieve our goals and serve our investors with industry leading standards.

For the year to come Touchwood Investments PLC has its goals set on the CSR awards to be handed out in the 2011 ceremony.

Thank you to all our accounting and administration staff who made the award possible.

http://www.touchwood.com/news/certificate-compliance

So Guys, Based on the above information and facts, to me the decision would be favorable to company. How do you all look into that..

Pls Share ur thoughts and views

Mon Dec 10, 2012 3:04 pm by smallville · Mon Dec 10, 2012 3:04 pm by smallville

dinga wrote:

I am an investor in both agarwood and bamboo - with a modest US$560 currently owing on the March 2012 bamboo harvest. Like others, the failure to pay out the bamboo harvest (from memory there were quite limited numbers of bamboo culms promoted) in the most worrying aspect.

MODS - happy to provide whatever docs/emails you need to have this discussion parolled!

If u get any official letter from TWOD, we'd like to see it... So send Admins a screen-shot in mail or pm with the link.

We may not consider posting it in the forum, however it will be valuable proof in this regards..Thanks.

Mon Dec 10, 2012 5:40 pm by Kithsiri · Mon Dec 10, 2012 5:40 pm by Kithsiri

dinga wrote:
PS Can those not offering useful comment please desist or do something helpful (the "i told you so" type comments get mighty boring, apart from being a waste of everyones' time....)

Let me apologize, if my previous comment caused some discomfort to any.
I was not blaming any but was thinking loud only.
I know some were looking for a life line here.
The Thinking Loud has another purpose as some who are here not only looking for a life line but to get themselves educated.
In my life span I have seen such (Sugar coated) scams (Teak, Coconut & even Time share schemes) have come and gone with the same end result.
One of the reasons for people falling prey is because of their unawareness of such well planned scams.
That was the real purpose of my Thinking Loud and not anything else.

Mon Dec 10, 2012 6:25 pm by dinga · Mon Dec 10, 2012 6:25 pm by dinga

Kithsiri wrote:

dinga wrote:

Let me apologize, if my previous comment caused some discomfort to any.
I was not blaming any but was thinking loud only.

No discomfort caused, to this poster at least. If this is indeed proves to be one of "such (Sugar coated) scams" - and my wallet begs that it not be so - seems to me one glaring difference is that the promoter is a Company Listed on the SL Stock Exchange.

MODS - I will for sure provide copies of any advice received from Touchwood, but my experience to date matches the silence reported by other posters (I also find this remarkable for a Listed Company).

Mon Dec 10, 2012 7:03 pm by chas · Mon Dec 10, 2012 7:03 pm by chas

venkat1711 wrote:Dear friends, Sometimes back on 7th September the news item regarding transferring their marketing arm to Aequus Management was published on Touchwood website . However, very quickly within a few days this news item was retracted from their website & you don't find it any longer.

Any idea if this has fallen through?? Kindly share any news reg. Touchwood status. Really concerned with the health of this company from Harvest Return point of view.

NEWS ITEM :
Touchwood’s New Collaboration with AEQUUS Asset Management
September 7th 2012

Aequus Asset Management have agreed to become the marketing arm for Touchwood Limited from Monday 10th September 2012.

We have had close link with Aequus for many years and this step forward will allow us to handle what we do best: forestry. Going forward you will notice that Aequus will be handling the marketing of Touchwood Limited while we continue with forestry management and operations.

What does this mean for clients of Touchwood?

The only difference is that our future marketing and product sales will be carried out by AEQUUS. Forestry/Plantation management and establishment will remain our primary focus.

I think you will find that two directors of Aequus joined the TW board and then resigned a very short time later. I have been reliably informed that TW were employed as forestry managers for Aequus but they are now using a different company due to TW not honouriing their obligations with Aequus and TW clients. Suggest that someone asks Aequus to verify their view.. the appoinitments & resignations are recorded on the CSE. Its a little surprising that the CSE don't appear to have been interested in asking why TW has had so many directors resign in the last 12 months.

Thu Dec 13, 2012 6:20 pm by CML · Thu Dec 13, 2012 6:20 pm by CML

Hi, I'm a TW agarwood investor as well and my harvest return is 10 months overdue. Their replies are just rubbish.

Dear XXX,

Thanks for your email. Please note that the board of directors of Touchwood Limited still have not updated us as to when payment of the harvest return shall be made on your certificate XXXX.

As to your second question please note that we are not sure why payment hasn’t been approved by them. We shall continue to follow this matter up with them in order to get clarification as soon as possible.

Regards

Harvest Return Team
Touchwood Asia Co.,Ltd.

Thu Dec 13, 2012 6:25 pm by CML · Thu Dec 13, 2012 6:25 pm by CML

I think we have to prepare for the worst and consider taking action together. The problem is I'm from Hong Kong and don't know what can be done.

Fri Dec 14, 2012 11:11 am by chas · Fri Dec 14, 2012 11:11 am by chas

my bamboo harvest was due in earlier this year, hasn't been paid and they haven't answered any communications.
They have now launched ANOTHER 'investment product' and on the marketing flyer it says "Paying harvest returns since 2007 (proven business model)....but as we now know they aren't.
I will be sending them a letter from my lawyer as this provides a record. suggest that everyone owed should do the same and join the group that is contemplating taking joint action.

Mon Dec 17, 2012 6:47 pm by CML · Mon Dec 17, 2012 6:47 pm by CML

Is your lawyer a local one? Can you message me his contact?

Mon Dec 17, 2012 7:36 pm by traderathome · Mon Dec 17, 2012 7:36 pm by traderathome

Whatever you guys tend to do....ACT FAST........there is no point delaying further.......that will give more frustation for the investors and more time for directors to escape. Cool

Tue Dec 18, 2012 3:46 am by Slstock · Tue Dec 18, 2012 3:46 am by Slstock

Yes, delaying this matter further seems very illogical at this stage if you have all these concerns.

I think it is high time SEC/CSE also forms a impartial body to mediate any issue arising from listed stocks.

traderathome wrote:Whatever you guys tend to do....ACT FAST........there is no point delaying further.......that will give more frustation for the investors and more time for directors to escape.

Wed Dec 19, 2012 2:34 am by Bachus · Wed Dec 19, 2012 2:34 am by Bachus

I recently learned about this discussion.
I invested in TW agarwood in the United Arab Emirates in 2006, I visited "my" plantation in Thailand in 2008, and received the final harvest documentation sometime in July 2012. I signed those documents off and sent them back to TW Bangkok office and received the confirmation of the receipt in October 30, 2012. And this was the last message I've got from TW in spite of numerous e-mails and calls.
All the above I can proof by publishing the scanned copies of the documents; please let me know where and how (I'm new in this forum).
I would like to join a coordinated action along with other let-down investors to recover due money from TW. Please keep me posted on this subject.

Wed Dec 19, 2012 12:43 pm by venkat1711 · Wed Dec 19, 2012 12:43 pm by venkat1711

Hi Bachus. So I have another company from UAE. Surely there must be several others here but not sure how to get in touch with them Crying or Very sad

I am surprised that atleast until July Touchwood had some intention of paying Agarwood returns and that's why I suppose they sent you the harvest documents Very Happy

. My Bamboo returns was due in June but no intimation/documents were sent to me Embarassed

I am not able to PM you... Not sure how to get in touch with you to share ideas. Administrator/Moderator kindly let me know if I can leave my contact No here.???

Wed Dec 19, 2012 12:52 pm by Slstock · Wed Dec 19, 2012 12:52 pm by Slstock

Venkat,

participate in the forum and get your post count to 10. Then you can PM.

venkat1711 wrote:Hi Bachus. So I have another company from UAE. Surely there must be several others here but not sure how to get in touch with them I am surprised that atleast until July Touchwood had some intention of paying Agarwood returns and that's why I suppose they sent you the harvest documents . My Bamboo returns was due in June but no intimation/documents were sent to me
I am not able to PM you... Not sure how to get in touch with you to share ideas. Administrator/Moderator kindly let me know if I can leave my contact No here.???

Wed Dec 19, 2012 1:35 pm by Bachus · Wed Dec 19, 2012 1:35 pm by Bachus

What is PM please?
Venkat and All,
I met the local TW's representative in Dubai in April 2012 (at the time of plantation maturity). She presented three options of harvesting:
Option a: extend the term for another three years and double the return
Option b: buy back for the guaranteed sum of money (triple the investment)
Option c: harvest yourself
She strongly recommended for the Option a, however after some hesitation I decided for Option b. I confirm, that around July she absconded and the only correspondence was with the TW Bangkok's office - untill October.
Now I moved to my home in Poland for good and trying to investigate the TW whereabouts. Is TW still present in the stock exchange?
I informed the Thai Trade Center in Dubai and in Poland about the case, but no results so far.
Regards,

Wed Dec 19, 2012 1:52 pm by venkat1711 · Wed Dec 19, 2012 1:52 pm by venkat1711

Dear Bachus, Obviously they knew the status and no surprise in the representative asking to choose option a. For your information I was in touch with the Dubai representative by e-mail until even Nov... Now & then she used to come on skype and for name sake say hello and vanish after giving assurance that she is just on the job to get my return... She left Dubai sometimes in June end and never returned Crying or Very sad

obviously fearing investors here will hold her responsible.. I was in touch with one Mr Asanka ( I understand he is now responsible for international operations - Agarwood), and recently passed on the buck to another person (Luknam) saying he is the person in-charge for Bamboo... A relay race is going on in passing the buck but no concrete action... Mad

. This Mr Luknam sounded out that they are rescheduling the payments and said he will get back in another weeks time and inform regarding this... I am waiting for that man's feedback... I will keep all updated..

Wed Dec 19, 2012 2:18 pm by Kithsiri · Wed Dec 19, 2012 2:18 pm by Kithsiri

If the guys are in U.A.E., then why don't you individually and collectively report the incident to the Fraud Prevention Unit there and let them initiate their own investigations.

Wed Dec 19, 2012 3:53 pm by trendfollower · Wed Dec 19, 2012 3:53 pm by trendfollower

Hi, chas,

Please PM me how to join together for legal action. Thanks.

Wed Dec 19, 2012 11:07 pm by Bachus · Wed Dec 19, 2012 11:07 pm by Bachus

May somebody please explain what does "PM" mean? Thanks.

Just before I left the UAE at the end of November I reported the case to the Ministry of Economy (no response so far)- is the Fraud Prevention Unit within the same organization?

Wed Dec 19, 2012 11:18 pm by venkat1711 · Wed Dec 19, 2012 11:18 pm by venkat1711

Dear Bachus. PM is Private message.. If you see there is an icon "send private message" next to your name which is enabled only if member has posted atleast 10 posts ( as per this forum guidelines). Regarding reporting to the "Fraud prevention Unit" let me explore where they are located and how to go about in case they do accept our case against Touchwood which I think is only a representative office here.. I live in Abu Dhabi so there will be some difficulty in this regard. Still let me first find the details.

Thu Dec 20, 2012 9:23 pm by fatima172 · Thu Dec 20, 2012 9:23 pm by fatima172

Thu Dec 20, 2012 9:47 pm by Kithsiri · Thu Dec 20, 2012 9:47 pm by Kithsiri

fatima172 wrote:test

Welcome to the Forum : Very Happy

Fri Dec 21, 2012 9:08 pm by Bachus · Fri Dec 21, 2012 9:08 pm by Bachus

I made further investigation on the Touchwood companies:
Touchwood Forestry Co.,Ltd (Bangkok), Touchwood Asia Co., Ltd (Bangkok), Touchwood Investments Ltd.(Colombo) and Touchwood Limited (Hong Kong) are all different companies, however they run the same business. In my case The Touchwood Forestry Co.,Ltd with whom I had a land lease agreement was responsible for plantation maintenance. The Tree Sale Order was signed off in behalf of Touchwood Limited, and the same company issued the Final Harvest Documents, so I assume my dispute is with Touchwood Limited.
How it is in other cases?
Which Touchwood company is listed on the Colombo Stock Exchange?

Sat Dec 22, 2012 9:15 am by venkat1711 · Sat Dec 22, 2012 9:15 am by venkat1711

Hi Bachus, Same is the case for me also. Touchwood PLC is the company listed in Colombo and I suppose all others are subsidiaries/group companies. As informed earlier I am in touch with one Ms Luknam (who seems to be the Finance Head) regarding my Bamboo returns and she has been giving me some positive response. She said there is some management meeting regarding rescheduling/refixing price for both Bamboo / Agarwood and that she would update me with the outcome. While talking she mentioned about lower yield/ Yearly maintenance & harvest charges being much higher than thought earlier /Thai Baht-US $ fluctuation not favourable etc... She also indicated that she is working on Chairman communicating to all Investors regarding this issue. I will keep you all posted regarding this as and when info is available.

Sat Dec 22, 2012 10:01 am by Kithsiri · Sat Dec 22, 2012 10:01 am by Kithsiri

As a small time investor in the CSE, where a off-shoot of this (Fake) company is listed, I wonder what actions the authorities have taken to avoid the local investors being taken for a ride by this (fake) company.

Sat Dec 22, 2012 10:40 am by Slstock · Sat Dec 22, 2012 10:40 am by Slstock

I would like/encourage a rep from Touchwood to come and reply here. These complaint are not good for a company's future. One thing to note is that Touchwood has survived for a long time and is listed at CSE. So I presume they did not have fake intentions to be fair by them. But from the concerns were hear latetly they ( TWD) need to get their act together.

Sat Dec 22, 2012 11:37 am by venkat1711 · Sat Dec 22, 2012 11:37 am by venkat1711

While I still believe Touchwood has been into a good business, there management has been totally un-professional without any proper financial planning & monitoring.. I am sure the Parent co. listed in Colombo has been giving returns without much issues as otherwise there would have been lots of hue & cry. I presume most of their regular yearly returns are only in Vanilla which is short term... It needs to be seen if they are honoring returns Mahogany/Teak etc which are long term and doubt if they have made their first return on these long term trees. Some local investor can confirm this. Plantation in Agarwood/Bamboo are not coming under this parent co.

I suppose the Auditors KPMG might not be aware / knowing whether Touchwood is honoring any returns due on their international investors...Also I have got hold of their 2011-12 Annual Report and note that while there is mention about Tocuhwood Asia in the report as an affiliate but no mention of Touchwood Ltd Hongkong or Touchwood Forestry, Bangkok. Most of the international investor certificates have been issue from Hongkong. If there is a possibility I could attach this Annual Report. Admin kindly advise. Some of the forum members who are financial experts can atleast give us some feedback reg. their financial position. Of course as such it looks like Touchwood Hongkong has nothing to do with this listed company and so the parent financials may not have any bearing on international investors getting their money back Crying or Very sad

I doubt if any Touchwood personnel would have the guts to register in this forum and give any kind of reply. As it is, their management has been trying to cover up everything under the carpet and I don't expect open statements.

Sat Dec 22, 2012 12:58 pm by Slstock · Sat Dec 22, 2012 12:58 pm by Slstock

Touchwood Annual report is already available at CSE.lk

Sat Dec 22, 2012 2:51 pm by CML · Sat Dec 22, 2012 2:51 pm by CML

Hi all,

I would like to join the legal action as well. As most of us are not in SriLanka and I believe we may need someone local to take the action, the overseas offices are just sales units and may not be the counterparty we sign the contract with.

Trying to get 10 post to be able to PM, then we could discuss among us on what action to be taken.

Regards

Sat Dec 22, 2012 4:50 pm by dinga · Sat Dec 22, 2012 4:50 pm by dinga

Sage advice of Forum Members requested:

If I have a Agreement that specifies "Touchwood Investments Limited (Sri Lanka)" - does that mean Touchwood Investments Plc Sorry if this is a dumb question....(but I wonder about the accuracy of the reference, and whether there is any wiggle-room...)

Sat Dec 22, 2012 5:18 pm by Bachus · Sat Dec 22, 2012 5:18 pm by Bachus

To Admin:
I made a comment some 2 hours ago and hit the "send" button, but I do not see this in the panel?
Can you please advise what could have happen with it?
Thanks