Avarga (formerly: UPP Holdings)

[donmihaihai]

Unfortunately, I have to say that the person who asked the below question, doesn't understand accounting principles for subsidiary. Actually, the amt of dividends paid out by Taiga (without checking out Taiga's announcements) can be calculated by referencing the "Dividend paid by a subsidiary corporation to noncontrolling interest" under cashflow statement and then normalized to Avarga's ownership.

But this question also reveals a 15% tax when Taiga pays upwards. So inclusive of a ~15% conglomerate discount, the base scenario would be a minimum 30% discount for Avarga's trading value wrt to its ownership portion of Taiga. This is assuming the remaining assets are zero for simplicity sake.

ANNUAL GENERAL MEETING TO BE HELD ON 18 APRIL 2024 RESPONSES TO SUBSTANTIAL AND RELEVANT QUESTIONS RECEIVED FROM SIAS AND SHAREHOLDERS

Q16. The dividend received from Taiga, why it is not reflected in the cash flow statement? Is the dividend received from Taiga taxable? If yes, what is the tax rate?

Avarga: The intercompany dividend was eliminated at the group cash flow statement. Yes, dividends from Taiga are taxable in that if it flows up to Avarga, which is a Singapore domiciled company, there is a 15% Canadian withholding tax

AGM Q&A
https://links.sgx.com/FileOpen/Responses...eID=796416

By your reasoning, one need to also apply a focus discount on Delfi and Micro Mechanics. Each paid withholding tax on dividend received from their wholly owned overseas subsidiary or subsidiaries. 

Withholding tax does not identify whether a company is part of an overseas conglomerate or part of an overseas a focus group.

Cashflow statement is most useful when a listed holding company has a listed subsidiary. But when the holding company has many subsidiaries with NCI, then it is not so easy, especially for unlisted subsidiaries. What more some group lump dividend paid to shareholder and NCI together in cashflow statement. So, a better place to look might be the group change of equity statement.  

As for withholding tax, tax note is the best place to read, and one can apply whatever discount one think is appropriate from the number glean from this note.

But well, I like to think about it as if 2 listed companies of the same businesses, same return and the so called market valued one with NCI say 30% lower valuation than the other one without NCI due to the discount applied for showing dividends to NCI, then I would certainly invest in the one with discount when both are within the valuation that I like.