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

Sun Aug 21, 2011 7:31 am by seyon · Sun Aug 21, 2011 7:31 am by seyon

Touchwood moves to total organic practices

Touchwood Investments PLC plans to move to total organic practices by 2012. At present the company uses two percent of chemicals in their agro forestry plantations.

Winner of the National Quality Award 2010 (Organised by the Ministry of Productivity Promotion and the Productivity Secretariat) in the manufacturing and services sector, Touchwood Investments PLC is the first and only Agro forestry company to win the award, said Sales and Marketing Manager, Jeffry Ebert.

The agro forestry practices the company adhered to in the past 12 years helped it to win the award.

The company has achieved many other firsts-including obtaining ISO 9001:14001 under the agro forestry sector, the first company in South Asia to obtain ISO certification, the first company to be awarded the certificate of compliance and the first agro forestry company to be fully insured.

Touchwood is the first company to prove its business acumen by paying dividends from 2007. "We began paying dividends with our vanilla plantations", said Ebert.

We started our plantations with Mahogany and moved on to grow sandalwood, vanilla, coconut and other cash crops.

The company has patented 'shoot bora eradication' which affects the growth of Mahogany. Worldwide, shoot bora penetration is 40-50 percent. "At the inception we also experienced this problem, but now we have reduced it to 0.5 percent.

This enhances the confidence of the stakeholders as it increases productivity."

The company maintains a 100 percent buffer stock as a contingency plan said Ebert.The company was set up arted in 1999 by Founder Chairman Rosco Maloney who is now the group chairman.

The Company is spread across eight countries with plantations in four countries - Sri Lanka, Thailand, Australia and Vietnam. It is the first agro forestry company to be listed on the Colombo Stock Exchange.

In Sri Lanka, the company owns 3,500 acres of land spread across 42 plantations in six districts, said Ebert.Corporate social responsibility is intrinsic in its business model and the company has contributed to the livelihoods of the rural community with jobs, water, roads and electricity.The company initiated the Sandun Arana Program to preserve sandalwood plants. Under this program the company plants sandalwood trees at religious locations covering 500 locations up to date.

The company also supported the initiative of President Mahinda Rajapaksa to grow 1.1 millon trees by planting 200,000 plants within 11 minutes in Girandurukotte.

The company has set-up a tissue culture laboratory at the University of Sri Jayewardenepura as a joint venture. A sandalwood oil extraction plant and a vanilla extraction plant are in the pipeline.

Sun Aug 21, 2011 5:05 pm by Tiger · Sun Aug 21, 2011 5:05 pm by Tiger

All this is good, They still has to justify that their immature forestry and Nurseries worth 5Billion.

Mon Aug 22, 2011 8:26 am by seyon · Mon Aug 22, 2011 8:26 am by seyon

Tiger wrote:All this is good, They still has to justify that their immature forestry and Nurseries worth 5Billion.

Nobody can challenge the fair value based valuation, these valuation are based on the assumption and info, which are line with prevailed mkt conditions. However the assumptions should be reasonable to give the assurance about the valuation.

In Sri Lanka, this valuation model are not improved, and there is no expert on this to give the assurance report on the fair valuation.

One reason, We do not have standard ( still in the draft stage) to comply with. this would be overcome by next year.

2nd there is no player in the industry for the comparison.

This may be the reason this particular court case has been dragging for long-time. I guess TWOD is expected to harvest is 1st batch of its plantation by SEP, this would give a idea about actual yield of the plantation, which would be used to compare with its fair valuation. If the valuation is reasonable compare with actual outcome, TWOD will be cleared from the issues on valuation model.

Mon Aug 22, 2011 8:50 am by **sajeethk** · Mon Aug 22, 2011 8:50 am by **sajeethk**

that biological gain can get in company account cos they already sold that land to investors. actually that gain is own by who buy that land. still i am not sure how TWOD make profit out of biological gain in immature plantation.

Mon Aug 22, 2011 9:52 am by **Chinwi** · Mon Aug 22, 2011 9:52 am by **Chinwi**

sajeethk wrote:that biological gain can get in company account cos they already sold that land to investors. actually that gain is own by who buy that land. still i am not sure how TWOD make profit out of biological gain in immature plantation.

Actually the total gain is not own by who invested in land lots. There is an agreement for minimum buying price with investors and they manage a fair margin with the possible selling price.
This is what I heard. They said ownership of the land is also temporary, after cutting, the company take back the land.... I have no documents to refer.

Somehow, they have started getting income from their plantations in Thailand, even if owned no investor from here will go to sell them.

Thu Aug 25, 2011 12:57 pm by dr kiru005 · Thu Aug 25, 2011 12:57 pm by dr kiru005

so whats happening to the case? are they going for a harvest next month and are they liable to give dividends before court decision

Thu Aug 25, 2011 5:58 pm by seyon · Thu Aug 25, 2011 5:58 pm by seyon

dr kiru005 wrote:so whats happening to the case? are they going for a harvest next month and are they liable to give dividends before court decision

I don't think, in past TWOD gave us dividend, what i heard through the rumors, TWOD is going to harvest its 1st batch in September, this will enable to compare the actual value of the biological assets with its estimated value.

If the comparison shows positive TWOD can stand on their previous valuation model, SLASMB can not challenge its valuation model.

Tue Aug 30, 2011 9:54 pm by rijayasooriya · Tue Aug 30, 2011 9:54 pm by rijayasooriya

Next hearing on 2nd December 2011 according to annual report.

Tue Sep 13, 2011 1:09 pm by PGNN · Tue Sep 13, 2011 1:09 pm by PGNN

seyon wrote:

dr kiru005 wrote:so whats happening to the case? are they going for a harvest next month and are they liable to give dividends before court decision

I don't think, in past TWOD gave us dividend, what i heard through the rumors, TWOD is going to harvest its 1st batch in September, this will enable to compare the actual value of the biological assets with its estimated value.

If the comparison shows positive TWOD can stand on their previous valuation model, SLASMB can not challenge its valuation model.

What's the latest

Tue Sep 13, 2011 2:03 pm by rijayasooriya · Tue Sep 13, 2011 2:03 pm by rijayasooriya

seyon wrote:

dr kiru005 wrote:so whats happening to the case? are they going for a harvest next month and are they liable to give dividends before court decision

I don't think, in past TWOD gave us dividend, what i heard through the rumors, TWOD is going to harvest its 1st batch in September, this will enable to compare the actual value of the biological assets with its estimated value.

If the comparison shows positive TWOD can stand on their previous valuation model, SLASMB can not challenge its valuation model.

Did any one find anything about this harvesting rumour on annual report? I did not find anything.

Tue Sep 13, 2011 11:17 pm by Rocky · Tue Sep 13, 2011 11:17 pm by Rocky

Until a full evaluation of the valuation method of Biological Assets of the Company are carried out we will perpetually wait for the price of this share to go up just like all other Blue Chip Shares.

There are insect like investors who attack dormant shares like Touchwood, and when they do dry rot will set in. For what ever its worth, paying 23.60 for a share with NAV at 41.00 is not a bad investment.

I hope to see this gradually moving up in the coming days until 12th of Never.
Anyway, we have our very own ambassadors of Cricket who vouch for this company and with their high level of repute we have nothing to worry.Leaving sentimentality aside, I should invest more in this share.

Wed Sep 21, 2011 7:25 am by seyon · Wed Sep 21, 2011 7:25 am by seyon

As another step of Sandun Arana National Programme, which is operated with the guidance of Ministry of Environment and Natural Resources and Touchwood PLC, sandalwood plants to be planted at Namal Uyana were handed over under the patronage of Ven. Wanawasi Rahula and First Lady Shiranthi Rajapaksha, at the Namal Uyana World Heritage Site recently.

According to the Red Data of IUCN, sandalwood is one of the plants faced with the threat of extinction. Sandun Arana National Programme has taken necessary steps to plant the valuable sandalwood plant in sacred places, government institutions and jungle gardens in order to protect it. Nearly three hundred thousand plants have been planted under several projects all over the country.

http://print.dailymirror.lk/business/127-local/56682.html

Wed Sep 21, 2011 1:39 pm by Tiger · Wed Sep 21, 2011 1:39 pm by Tiger

If you really see the history of ponzi schemes around the world, all has a common stage in life cycle where they get involved with high profile figures such as celebrities, sportsmen, community leaders etc... this ensures the continuous liquidity flow to the business to keep it moving, when the underlying business is filled with money spinning mechanism to cover up the value creation flaws.

To my observation TWOD is just waiting for court case to finish, to release next round of right issue to keep it moving. Don't forget that public owns 80% of this highly valued company and not by so called creators or guardians.

Tue Sep 27, 2011 9:29 am by ssuni · Tue Sep 27, 2011 9:29 am by ssuni

dividened-> 0.10 OCT 2011
will this be a signal for buy??

Fri Oct 14, 2011 3:15 pm by **Hawk Eye** · Fri Oct 14, 2011 3:15 pm by **Hawk Eye**

Are the trying to give a signal with the Dividend that they are improving on the cashflow.

Will there be a TWOD hype this time also with the court case

Tue Oct 18, 2011 11:34 pm by suranga · Tue Oct 18, 2011 11:34 pm by suranga

Pls tell when is the next hearing of the case.

Mon Nov 14, 2011 6:00 pm by **sureshot** · Mon Nov 14, 2011 6:00 pm by **sureshot**

TWOD...........

THINK NOW........ACT AFTER THE CASE.......

ALL THE BEST

Sat Nov 26, 2011 8:25 pm by **sureshot** · Sat Nov 26, 2011 8:25 pm by **sureshot**

T O U C H W O O D............COUNTDOWN STARTS ENJOY IT

ALL THE BEST....
ME AND THE JUDGE NO IT TOO.....

Sat Jun 23, 2012 3:05 pm by ccsentha · Sat Jun 23, 2012 3:05 pm by ccsentha

Guys what is the current situation with TWOD, can some one explain me please??

Sun Jun 24, 2012 4:23 am by market bull · Sun Jun 24, 2012 4:23 am by market bull

Case No. 100/2011 (SPL LA 42/10) ,Touchwood IPLC Vs. Sri Lanka Accounting and Auditing Standards Monitoring Board which is pending as an appeal matter was heard before the Supreme Court on the 21st May 2012 and postponed until 6th
November 2012 for arguments.

http://www.cse.lk/cmt/upload_report_file/631_1338461934550.pdf

suranga wrote:Pls tell when is the next hearing of the case.

Sun Nov 18, 2012 6:49 am by dinga · Sun Nov 18, 2012 6:49 am by dinga

G'day

I am an investor, via Touchwood Asia, in bamboo and agarwood trees in Thailand.

Seems the company has closed its office in Bangkok without any notification to investors. I should by now have been paid a modest amount for the 2012 bamboo harvest but am still waiting.

Emails and telephone enquiries to the Colombo HQ remain unanswered. I am told the separate company that maintains the plantations is still operating but frankly my pessimistic side wonders if this will continue given the very bad signals and silence from Touchwood Asia.

Am very concerned about my investments. Appreciate any insights about what is, or may be, happening with Touchwood?

Sun Nov 18, 2012 7:08 am by Fresher · Sun Nov 18, 2012 7:08 am by Fresher

There was someone like you who joined just to complain about the company which hasn't paid. Not wrong considering it's listed and we discuss about listed companies.

But in that case the company responded quickly and promised payment. I don't think you should panic too much and if you are in doubt, you should make it a point to somehow contact them. Calls are unanswered is a bit hard-to-believe. Anyway since it is an important thing, you should probably visit them personally to get a response, instead of posting on public forums.

Sun Nov 18, 2012 9:34 am by traderathome · Sun Nov 18, 2012 9:34 am by traderathome

we are seeing some strange emails lately...guys where were you......all this time...just joining to post ....show us the proof .........its not right just to complain w/o valid proof that you have invested and your calls were unanswered.

to keep it short and simple....please show...

firstly any documents indicating you are a genuine investor of the company...
secondly prove to the forum members that your payment is now due...
thirdly your reminders such as emails sent to the concerned company....
finally snapshot of the that company office that is closed.....

i am not a spokesperson for the company...but to be fair you need to back up with some concrete proof to see for all of us.....to know your concerns are real......

no offense.......

Sun Nov 18, 2012 10:07 pm by **hariesha** · Sun Nov 18, 2012 10:07 pm by **hariesha**

It's very funny. A seem to be Thai national has created an account in Sri Lanka Equity forum to publish his grievances.

I also have some concerns about TWOD and regarding recent unexplained resignations of the majority of the directors, which I publish in this forum in certain threads.

But this topic has published clearly with some malice intentions.

It's really sad administrators are allowing this post to continue in this public forum!

Sun Nov 18, 2012 10:55 pm by **Chinwi** · Sun Nov 18, 2012 10:55 pm by **Chinwi**

dinga wrote:G'day

I am an investor, via Touchwood Asia, in bamboo and agarwood trees in Thailand.

Seems the company has closed its office in Bangkok without any notification to investors. I should by now have been paid a modest amount for the 2012 bamboo harvest but am still waiting.

Emails and telephone enquiries to the Colombo HQ remain unanswered. I am told the separate company that maintains the plantations is still operating but frankly my pessimistic side wonders if this will continue given the very bad signals and silence from Touchwood Asia.

Am very concerned about my investments. Appreciate any insights about what is, or may be, happening with Touchwood?

Saa wadi craap. dinga naai.

Khoon kheu krai?

Khoon bpen mai khohn see lan ga chai mai ?

Baawk khwam jing.

Khop khoon kraap.

- Chinwi

Mon Nov 19, 2012 1:07 am by stumpy · Mon Nov 19, 2012 1:07 am by stumpy

Reminds me the great words of a wise man called Innam Very Happy

Hat's off brother! cheers

Mon Nov 19, 2012 9:08 am by smallville · Mon Nov 19, 2012 9:08 am by smallville

hariesha wrote:It's very funny. A seem to be Thai national has created an account in Sri Lanka Equity forum to publish his grievances.

I also have some concerns about TWOD and regarding recent unexplained resignations of the majority of the directors, which I publish in this forum in certain threads.

But this topic has published clearly with some malice intentions.

It's really sad administrators are allowing this post to continue in this public forum!

There have been some requests to remove posts due to TW has promised to pay the individuals. So we're moving this thread to prison till the valid sources are presented.

Mon Nov 19, 2012 10:30 am by Lord Toad · Mon Nov 19, 2012 10:30 am by Lord Toad

I am also a Touchwood investor.

The closure on the BKKK office in haste is a fact.

There are other rumours innuendos et al floating about.

Smoke and fire spring to mind - I will post more when I have real facts.
I was paid last year but only after real fight to get my money

Mon Nov 19, 2012 1:22 pm by Kay2 · Mon Nov 19, 2012 1:22 pm by Kay2

Hi,

I think all of you should visit the following blog for details on Touchwood Agarwood investment, this helped me understand whats going on. I know of many people who have got their returns and some who had delays but still received payments at the end of it. Lets not get stuck with the negatives only there are positives to things you know.

The blog is : touchwoodinvestmentsplc.wordpress.com

Mon Nov 19, 2012 3:05 pm by zenobia · Mon Nov 19, 2012 3:05 pm by zenobia

a rumour is not a proof
a statement is not a fact

within the past couple of days i have seen two threads involving complaints about toucwood without a single piece of information to back the accusations made. the threads have started by forum members who have registered just before posting the thread.
to admins and moderators, kindly evaluate these postings and remove them if they were published to mislead those who read them.
thanks