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Friday, February 5, 2010

SRI LANKA - CEYLON LEATHER PRODUCTS WOULD HAVE TO INCREASE ITS LOSSES

By Devan Daniel

A company listed on the Colombo Stock Exchange, Ceylon Leather Products PLC, has understated losses and overstated assets in its financials for the year ended March 2009, the Sri Lanka Accounting and Auditing Standards Monitoring Board (SLAASMB) said.

SLAASMB, authorised to regulate and monitor how public quoted companies prepare and present financial accounts to shareholders, said in a statement that Ceylon Leather Products PLC had understated losses by Rs. 96 million while assets were overstated by the same amount in its consolidated accounts as at March 2009.

Ceylon Leather Products had not fully accounted for advances paid to subsidiaries while deferred taxes had been understated.

SLAASMB said the financial reports of Ceylon Leather Products were in violation of Sri Lanka Accounting Standards namely SLAS 3 dealing with the presentation of financial statements, SLAS 14 dealing with income taxes and SLAS 22 which deals with accounting for investments.

It said the company’s auditors Ernst and Young had qualified the financials in this respect.

Ceylon Leather Products are required to adjust its separate financial statements of the company and the consolidated statement.

Accordingly, the separate financial statement of the company would have to increase its losses by Rs. 117 million from Rs. 23 million as stated in its original statement to Rs. 140 million while net assets must be reduced from Rs. 974 million to 857 million.

The consolidated account would have to be revised by increasing the loss by Rs. 96 million accounted for as Rs. 24 million to Rs. 120 million while assets would have to be reduced to Rs. 833 million from Rs. 929 million.

A share of Ceylon Leather Products at the Colombo Stock Exchange closed at Rs. 93.50 last Wednesday. The company manufactures leather footwear and leather goods.

Latest available financial data are for the September quarter of 2009 filed with the Colombo Stock Exchange but the readjustments to its March 2009 year end results prescribed by SLAASMB are not captured here.

Group net profits soared 977 percent during the quarter to Rs. 5.6 million year-on-year while the for the six months leading up to end September increased 212 percent to Rs. 9 million year-on-year from a loss of Rs. 8 million.

Its revenue for the six months ended September 2009 increased by 51 percent to Rs. 220 million.

source - www.island.lk