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BRWN Community

Postby SHARK » Sat May 16, 2015 12:45 am

Hmmm this is the chart for brownies :D
BRWN.png


90 Rs was an accumulation zone, now trading 110 going towards 125 being the upper RES line.
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Re: BRWN Community

Postby SHARK » Tue May 26, 2015 11:52 pm

Hello Members
Anyone with this one ..... look like a good longterm entry around 110
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Re: BRWN Community

Postby SHARK » Wed May 27, 2015 12:02 am

Here is the CHART Guys .... Share your thoughts freely

Extremely based on Tech .....

Target towards Rs 130/- Min.
Please check financials for more information and prospect of any price appreciation.
Need to have extreme patience :D
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Re: BRWN Community

Postby fire » Wed May 27, 2015 10:11 am

thanks shark recently i add BRWN into my pf @114 i expect this will starts the run soon may bewith the quarterly report or dividend announcement :D :D

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Re: BRWN Community

Postby SHARK » Sun May 31, 2015 3:40 am

Yes Technically the is Good :D
All the best Fire :D
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Re: BRWN Community

Postby fire » Sun May 31, 2015 8:38 am

Thanks shark MR.BRWN have the strong fundamentals as well and traded below the net asset value :D

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Re: BRWN Community

Postby RPPA » Sun May 31, 2015 9:43 am

BRWN is worth at about 110/- as a long term investment. The issue with this company is they newer show consistent results.Though if there is a appreciation in price it had never been able to maintain that price. Current NAV 219 & 12M EPS of 18.69.

But again 4th Qtr results down just by looking at the outer crust. Just look, there was an other one off income of 1.6Bn in the 2014 Q4. So it should be taken out for comparison superpose.And also please note there is a accounting entry on Gain on Bargain Purchase (Negative Goodwill) for a value of 0.6Bn for the 4th QTR of 2015.

Any way by taking all the factors in to consideration we can conduce that effective profit of around Rs.0.4Bn for 2014/2015. But in actual terms for the last year no net profit from operations if other income has taken out.

http://www.cse.lk/cmt/upload_report_fil ... 258881.pdf

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Re: BRWN Community

Postby fire » Sun May 31, 2015 10:40 am

yes RPPA :-o i just fooled by the outer surface by looking at the valuation guide there income statement looks terrible possible chances for inflated profit as well is there any accounting standard permit to show negative goodwill as gain on income statement :-\ .any way thanks for the timely information :) hope to close the position with a profit as soon as possible :D

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Re: BRWN Community

Postby SHARK » Sun May 31, 2015 11:11 am

fire wrote:yes RPPA :-o i just fooled by the outer surface by looking at the valuation guide there income statement looks terrible possible chances for inflated profit as well is there any accounting standard permit to show negative goodwill as gain on income statement :-\ .any way thanks for the timely information :) hope to close the position with a profit as soon as possible :D

FRS 10 deals with accounting requirements of goodwill and intangible assets. The standard itself recognises that goodwill obtained during an acquisition is not an asset, like other assets, nor is it an immediate loss in value, explains Steve Collings.

Instead, the standard recognises that goodwill is essentially the difference between the cost of an investment shown in the acquirer’s financial statements and the values that have been attributed to the various assets and liabilities subjected to the acquisition in the consolidated financial statements and is referred to in the standard as ‘purchased goodwill’. Purchased goodwill can be positive, whereby the acquisition cost exceeds the aggregate fair values of the identifiable assets and liabilities; whilst negative goodwill arises when the purchase consideration is less than the fair values of the identifiable assets and liabilities.

The objective of FRS 10 is to ensure that goodwill and intangible assets capitalised in an entity’s balance sheet are charged to the profit and loss account over their useful economic lives. The standard then goes on to say that its objective is also to ensure that users can determine the impact that goodwill and intangible assets has on the financial position and performance of the reporting entity.

Classes of intangible assets

The standard suggests six examples of intangible assets:

Licences
Quotas
Patents
Copyrights
Franchises
Trademarks
The standard recognises that these may be treated as separate types of intangible assets, but also states that further subdivision of these may be appropriate in individual circumstances (for example where different types of licence have different functions within the business).

Recognition and measurement

Purchased goodwill

Paragraph 7 to FRS 10 requires positive, purchased goodwill to be recognised as an asset on the balance sheet.

Negative goodwill

Where the initial calculations suggest negative goodwill has arisen during the acquisition, paragraph 48 requires the fair values of the acquired assets to be tested for impairment and also that the fair values of acquired liabilities have also been checked to ensure completeness (i.e. that none have been missed or understated). If negative goodwill still arises, then this should be recognised and disclosed separately on the face of the balance sheet, directly underneath the goodwill heading and followed by a subtotal arriving at the net amount of positive and negative goodwill.

Furthermore, negative goodwill up to the fair values of the non-monetary assets acquired (e.g. fixed assets) should be recognised in the profit and loss account in the periods in which the assets are recovered. The standard recognises at paragraph 49 that such non-monetary assets can be recovered by way of depreciation or through sale.

Internally-generated goodwill

The standard prohibits internally-generated goodwill being recognised in the financial statements (FRS 10.8). Many practitioners have been criticised by their professional body over recent years for inappropriately recognising internally-generated goodwill on a balance sheet, particularly when a client incorporates.

Intangible assets

When a company purchases an intangible asset separately from a business, paragraph 9 to FRS 10 requires such an asset to be capitalised at cost. However, if the entity purchases an intangible asset as part of the acquisition of a business, the intangible asset(s) should be capitalised separately from goodwill if the value of the intangible asset can be measured reliably on initial acquisition (FRS 10.10). In instances where the value of an intangible asset(s) cannot be measured reliably, paragraph 13 to FRS 10 requires the asset to be subsumed within the amount of the purchase price attributed to goodwill.

Useful lives and amortisation

Goodwill and intangible assets that are regarded as having limited useful economic lives are required to be amortised over their useful economic lives. The standard suggests a rebuttable presumption that the useful economic lives of purchased goodwill and intangible assets are limited to periods of 20 years or less. However, care must be taken before rebutting this presumption. Paragraph 19 to FRS 10 says that the presumption can only be rebutted and a useful economic life regarded as longer than 20 years, or indefinite, if:

the durability of the acquired business or intangible asset can be demonstrated and justifies estimating the useful economic life to exceed 20 years
the goodwill or intangible asset is capable of continued measurement (so that annual impairment reviews will be feasible). (FRS 10.19(a) and (b))
In terms of the first bullet point, FRS 10 offers some factors to determine durability:
the nature of the business
the stability of the industry in which the acquired business operates
typical lifespans of the products to which the goodwill attaches
the extent to which the acquisition overcomes market entry barriers that will continue to exist
the expected future impact of competition on the business
There is an inherent uncertainty factor when it comes to determining the useful economic lives of goodwill and intangible assets which needs careful handling which can be illustrated as follows:

Illustration
Company A Ltd has acquired an intangible asset, separately from a business acquisition. The directors are uncertain as to how long the intangible asset’s useful economic life actually is and in view of this uncertainty have decided to treat the useful economic life as indefinite.

Paragraph 21 to FRS 10 says that any uncertainty surrounding the useful economic life of an intangible asset does not form grounds for treating such useful economic lives as being indefinite (or even for defaulting to the 20-year amortisation period). Where it is expected that such a useful economic life is expected to be less than 20 years, then the standard requires an estimate of the useful economic life to be made.

For the purposes of tangible fixed assets, the depreciable value is usually calculated using the formula: cost of asset less expected residual value. For the purposes of intangible assets, the standard does allow a residual value to be assigned, provided that such residual values can be measured reliably (paragraph 28). The standard acknowledges two circumstances where an intangible asset can be measured reliably:

when there is a legal or contractual right to receive a certain sum at the end of the period of use of the intangible asset
there is a readily ascertainable market value for the residual asset. (FRS 10.29 (a) and (b))
Illustration
Company B Ltd has acquired £30,000 worth of goodwill by acquiring 100% of the net assets of Company C Ltd and which has been duly capitalised. The directors of Company B Ltd have estimated that the residual value of this goodwill after the end of its useful life will be in the region of £8,000 and have taken this into consideration when calculating the amount to amortise the goodwill over its estimated useful economic life of 10 years.

Paragraph 28 to FRS 10 specifically prohibits any residual value being assigned to goodwill. Company B Ltd must therefore amortise the full £30,000 of goodwill over a 10-year period.

Methods of amortisation can vary between clients and paragraph 30 requires a method of amortisation to be chosen that reflects the expected pattern of depletion of the goodwill or the intangible asset. The standard requires amortisation to be calculated using the straight-line method, unless another method can be demonstrated to be more appropriate in the company’s individual circumstances. Where goodwill is concerned, the standard does recognise that it is unlikely that there will be circumstances when it can be justified (or evidence made available to suggest) a less conservative amortisation method than straight-line.

Impairment issues

Where goodwill and intangible assets are being amortised over a period of less than 20 years, impairment issues cannot simply be ignored. Paragraph 34 requires an impairment review for such goodwill and intangible assets to be reviewed for impairment:

at the end of the first full financial year following the acquisition (‘the first year review’)
in other periods if events or changes in circumstances indicate that the carrying values may not be recoverable
In relation to the first bullet point, paragraph 40 says that the first year impairment review can be performed in two stages:
initially identifying any possible impairment by comparing post-acquisition performance in the first year with pre-acquisition forecasts used to support the purchase price
performing a full impairment review in accordance with the requirements of FRS 11 Impairment of Fixed Assets and Goodwill only if the initial review indicates that the post-acquisition performance has failed to meet pre-acquisition expectations or if any other previously unforeseen events or changes in circumstances indicate that the carrying values may not be recoverable
Illustration
On 31 March 2011, a company carried an intangible asset in its balance sheet at £10,000. On 31 March 2012, an impairment review was carried out on this intangible asset which resulted in a loss being recognised of £5,000.

Paragraph 41 requires that if an impairment loss is recognised and the revised carrying value is being amortised, then it should be amortised over the current estimate of the remaining useful economic life.

The standard also requires that where goodwill and intangible assets are being amortised over a period in excess of 20 years (or where no amortisation is being charged at all), the reporting entity must undertake an impairment review at the end of each reporting period in accordance with FRS 11 Impairment of Fixed Assets and Goodwill.

Conclusion

This article has provided a summary of the main issues which may affect practitioners dealing with goodwill and intangible assets. It is not a comprehensive overview of FRS 10 and readers are encouraged to consult the mainstream standard if they encounter difficulties concerning goodwill and intangible assets.
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Re: BRWN Community

Postby SHARK » Sun May 31, 2015 11:13 am

@Fire
Neg Goodwill must be charged to Income & Expense Statement.

Every year the company must undertake to do this test ..... :D
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Re: BRWN Community

Postby SHARK » Sun May 31, 2015 11:13 am

@Fire
Neg Goodwill must be charged to Income & Expense Statement.

Every year the company must undertake to do this test ..... :D
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Re: BRWN Community

Postby SHARK » Sun May 31, 2015 11:19 am

Negative goodwill, also called a bargain-purchase amount, occurs when a company buys an asset for less than its fair market value. Negative goodwill is the opposite of goodwill.

How it works/Example:

For example, let's assume Company XYZ purchases the assets of Company ABC for $20,000,000. The assets are actually worth $35,000,000, but Company XYZ gets a deal because Company ABC needs cash immediately and Company XYZ was the only buyer willing to pay cash. The difference between the purchase price and the fair market value is $15,000,000.

Company XYZ records this as negative goodwill on its income statement, however it does not record the whole $15,000,000 at once. XYZ records the negative goodwill over the remaining weighted-average estimated useful life of the acquired assets. The remainder stays on the balance sheet as a contra asset that eventually dwindles down to zero as the assets age.

After the acquisition is complete, Company XYZ must test the fair value of the assets for impairment. In cases where a company is acquiring future losses and expenses, the negative goodwill is deferred and recognized on the income statement as those future losses or expenses occur.

Why it Matters:

When a company pays more than fair market value for an asset, it records the overage as an intangible asset (aka, goodwill) on its balance sheet. Negative goodwill is the opposite of this concept,
so the difference is recorded as an extraordinary gain on the buyer's income statement
. Negative goodwill is often a sign that an asset was purchased from a distressed buyer.
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Re: BRWN Community

Postby fire » Sun May 31, 2015 12:26 pm

yeah Negative goodwill needs to charged on income statement now i recall my memory =p~ thanks shark for ur valuable explanations :ymapplause: on that way no harm in holding this share but income from operation needs to improve :D :D

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Re: BRWN Community

Postby DXB » Sat Aug 08, 2015 5:58 pm

Hello Shark last Friday this was crossed the 125 level ...... the same run we can expect for coming days....???
:)

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Re: BRWN Community

Postby SHARK » Sat Aug 08, 2015 10:45 pm

Thanks for bringing this Up :)
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Re: BRWN Community

Postby DXB » Wed Sep 02, 2015 3:23 pm

now its good time to enter....??
:)

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Re: BRWN Community

Postby DXB » Mon Feb 15, 2016 4:59 pm

:)

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Re: BRWN Community

Postby SHARK » Tue Oct 25, 2016 9:20 am

Rs 85/- would be a Good Buy if you are able to HOLD this LT perspective.
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Re: BRWN Community

Postby SHARK » Tue Oct 25, 2016 9:21 am

Debt to Equity and DY are 2 Medium Term concerns, however could be an opportunity @CMP to 85 Levels.
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Re: BRWN Community

Postby Hawk Eye » Tue Oct 25, 2016 10:58 am

BRWNS main contributor to its Revenue is the trading segment. and under this segment agriculture is the main contributor, and under agriculture agricultural machinery mainly TAFE and Massey Ferguson tractors are the magic contributor. Its the cash cow segment offsetting all the other segment losses of which are in introductory stage or growth stage.

But agricultural segment needs certain factors positive as it was in 2011 & 2014 for this exceptional performance. Until that its a hard time for BRWN

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Re: BRWN Community

Postby sashimaal » Tue Oct 25, 2016 11:37 am

Thanks HE for the precise explanation

hawk eye wrote:BRWNS main contributor to its Revenue is the trading segment. and under this segment agriculture is the main contributor, and under agriculture agricultural machinery mainly TAFE and Massey Ferguson tractors are the magic contributor. Its the cash cow segment offsetting all the other segment losses of which are in introductory stage or growth stage.

But agricultural segment needs certain factors positive as it was in 2011 & 2014 for this exceptional performance. Until that its a hard time for BRWN
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Re: BRWN Community

Postby SHARK » Wed May 10, 2017 8:32 am

Hit Low of 68 recently and now trading around 85.

With Neg EPS and Low DY

When can we see a turnaround .... in its earnings
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Re: BRWN Community

Postby Blue Whale » Wed May 10, 2017 9:32 am

SHARK wrote:Hit Low of 68 recently and now trading around 85.

With Neg EPS and Low DY

When can we see a turnaround .... in its earnings


This has many issues. The biggest issue coming from poor performance in BIL.
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Re: BRWN Community

Postby SHARK » Mon Jun 19, 2017 7:52 am

what chances this has now..... with improved.....results
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Re: BRWN Community

Postby Blue Whale » Mon Jun 19, 2017 8:39 am

Let's wait for Q1 2017/18 results.
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