IFRS based new accounting changes?

Slstock · 1 IFRS based new accounting changes? Mon Mar 11, 2013 5:19 am

Slstock

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Hi,
Cam someone in accounting let us know the major changes that will happen to companies/bank with the new IFRS accounting starting March?

Should investments carried at cost be shown as marketr values ?

If so companies like RENU, CABO, DFCC , CIT/CFI might get a big boost in NAV?

Last edited by slstock on Mon Mar 11, 2013 7:28 am; edited 1 time in total

VISA · 2 Re: IFRS based new accounting changes? Mon Mar 11, 2013 7:06 am

VISA

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I believe this is very important. But what i heard from broker research is this will not happen as compulsory. So company's have choice to do what it feel.
Market ratio change dramatically with this. account's Standards will bring it to some level field with other countries.

I always believe we must do what is best for sri lanka at that moment. with this some company's book value will double.

Antonym · 3 Re: IFRS based new accounting changes? Mon Mar 11, 2013 7:38 am

Antonym

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Capital Alliance says that DFCC's NAV per share will increase from Rs 101 to Rs 138, as a consequence of revaluing its investment portfolio. This is due to IFRS implementation. Other banks would also benefit, but by smaller amounts.
(See Page 18 of Banking Sector Update in Research section)

I think this would also apply to the other companies that you have mentioned, but I am not certain.

Gaja · 4 Re: IFRS based new accounting changes? Mon Mar 11, 2013 8:53 am

Gaja

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Antonym wrote:Capital Alliance says that DFCC's NAV per share will increase from Rs 101 to Rs 138, as a consequence of revaluing its investment portfolio. This is due to IFRS implementation. Other banks would also benefit, but by smaller amounts.
(See Page 18 of Banking Sector Update in Research section)

I think this would also apply to the other companies that you have mentioned, but I am not certain.

It will give the notional profits to the companies, but there will be no cash flow moments,

am watching how CFLB is going to account for it, they also have a little PF

rainmaker · 5 Re: IFRS based new accounting changes? Mon Mar 11, 2013 9:00 am

rainmaker

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A lot of the changes are overrated.

Most companies would have started adapting the IFRS changes.

What it would do is that fair value changes in assets and liabilities (yes Pension liabilities of COMB) would be classified as Other Comprehensive Income. It would then be added to Accumulated Other Comprehensive Income (AOCI). --> In the balance sheet this is Unrealised gains/loss in the equity side.

There is no impact on P&L unless the gain/loss is realised. If it is (like DFCC selling COMB), the gain flows through P&L for a massive profit which is booked into "Retained Earnings" in the equity side

What you should compare is not the NAV per share to share price, but the "retained earnings" to "market capitalisation". It provides a better understanding of what you are buying.