Wheelock Properties

[freedom]

I have limited accounting knowledge, so correct me if I am wrong.


2. The turnover of more than 100% is not really right. At the end of FY2014, the amount held as investment was 591M, subsequently in 2Q2015, the fair value increased 36M and in 3Q 2015, there was gain on disposal of 22M. Together, 591 + 36 + 22 = 647, not too far from 653


"When the ending balance is less than purchases during the year without the right amount of losses recorded in OCI, I say trade."
I don't agree with this treatment. As Wheelock chooses fair value for its investment, for every interest it receives, the investment value could drop without any amount of losses recorded in OCI. It simply just amortizes the premium it paid when it bought the investment, e.g. it bought above the face value, and discount rate is lower than the interest rate.

Feel free to disagree on whether is trading or not but lets get some facts right and this is my last post on this.

FY2015 will reflect what happened in 2Q and 3Q. Can't add that up.
In FY2015, there was a gain of 22M.
Go to Other comprehensive income(OCI) - there is a negative 22M and it says, transfer to profit and loss on disposal for available for sales(AFS) financial assets.
Basically what it mean is that gain on mark to market for AFS recognized in prior year under OCI and went other reserves is recognized in P&L upon disposal(current year). What you see in other income of 22M is pull out of other reserves upon disposal.
Double check Consolidated statement of changes in equity. Yeah it is there.
What does note to accounts 3.3 financial assets - AFS says.
Available-for-sale financial assets are non-derivative financial assets that are designated as available-for-sale or are not classified in any other categories of financial assets. Available-for-sale financial assets are recognised initially at fair value plus any directly attributable transactions costs. Subsequent to initial recognition, they are measured at fair value and changes therein, other than impairment losses and foreign currency differences on available-for-sale debt instruments and foreign currency differences on available-for-sale equity instruments designated as hedged item in hedge accounting, are recognised in other comprehensive income and presented in the fair value reserve in equity. When an investment is derecognised, the gain or loss accumulated in equity is reclassified to profit or loss.



Sound strange. This is how it is being accounted.

Some math.

Purchase - 330M
loss in fair value - 46M
Yr end financial assets - 252M
Note there was forex gain in the FY and those does not belong to AFS.
330 - 46 = 286M
286 - 252 = 34M
34M is missing. It can be explain by Wheelock subsequent sold some of the purchases during the year or cooking the book.

As Wheelock chooses fair value for its investment, for every interest it receives, the investment value could drop without any amount of losses recorded in OCI. It simply just amortizes the premium it paid when it bought the investment, e.g. it bought above the face value, and discount rate is lower than the interest rate.

This is not correct for equity or debt financial assets.

This shows how a bond premium is amortized and how to record book value.

http://www.wikihow.com/Amortize-a-Bond-Premium

equity security certainly does not work this way. only held-to-maturity debt security works this way. held-for-sale debt security works differently, too.

[noon]

May I suggest a knowledgeable buddy pose the questions to Wheelock CFO?

[donmihaihai]

I have limited accounting knowledge, so correct me if I am wrong.


2. The turnover of more than 100% is not really right. At the end of FY2014, the amount held as investment was 591M, subsequently in 2Q2015, the fair value increased 36M and in 3Q 2015, there was gain on disposal of 22M. Together, 591 + 36 + 22 = 647, not too far from 653


"When the ending balance is less than purchases during the year without the right amount of losses recorded in OCI, I say trade."
I don't agree with this treatment. As Wheelock chooses fair value for its investment, for every interest it receives, the investment value could drop without any amount of losses recorded in OCI. It simply just amortizes the premium it paid when it bought the investment, e.g. it bought above the face value, and discount rate is lower than the interest rate.

Feel free to disagree on whether is trading or not but lets get some facts right and this is my last post on this.

FY2015 will reflect what happened in 2Q and 3Q. Can't add that up.
In FY2015, there was a gain of 22M.
Go to Other comprehensive income(OCI) - there is a negative 22M and it says, transfer to profit and loss on disposal for available for sales(AFS) financial assets.
Basically what it mean is that gain on mark to market for AFS recognized in prior year under OCI and went other reserves is recognized in P&L upon disposal(current year). What you see in other income of 22M is pull out of other reserves upon disposal.
Double check Consolidated statement of changes in equity. Yeah it is there.
What does note to accounts 3.3 financial assets - AFS says.
Available-for-sale financial assets are non-derivative financial assets that are designated as available-for-sale or are not classified in any other categories of financial assets. Available-for-sale financial assets are recognised initially at fair value plus any directly attributable transactions costs. Subsequent to initial recognition, they are measured at fair value and changes therein, other than impairment losses and foreign currency differences on available-for-sale debt instruments and foreign currency differences on available-for-sale equity instruments designated as hedged item in hedge accounting, are recognised in other comprehensive income and presented in the fair value reserve in equity. When an investment is derecognised, the gain or loss accumulated in equity is reclassified to profit or loss.



Sound strange. This is how it is being accounted.

Some math.

Purchase - 330M
loss in fair value - 46M
Yr end financial assets - 252M
Note there was forex gain in the FY and those does not belong to AFS.
330 - 46 = 286M
286 - 252 = 34M
34M is missing. It can be explain by Wheelock subsequent sold some of the purchases during the year or cooking the book.

As Wheelock chooses fair value for its investment, for every interest it receives, the investment value could drop without any amount of losses recorded in OCI. It simply just amortizes the premium it paid when it bought the investment, e.g. it bought above the face value, and discount rate is lower than the interest rate.

This is not correct for equity or debt financial assets.

This shows how a bond premium is amortized and how to record book value.

http://www.wikihow.com/Amortize-a-Bond-Premium

equity security certainly does not work this way. only held-to-maturity debt security works this way. held-for-sale debt security works differently, too.

Final post. Hopefully.

I was wrong to say that this is not correct for debt financial assets. Well the quoted statement is not correct.

But 1st. any amortization has to record a charge to "somewhere" whether is OCI or income statement. This is always true.
2nd. I prefer to use FRS than IRS. Why? Wheelock uses FRS and stated in annual report. And read FRS109 4.1.1 to 4.1.2 for this. I am out of touch.
3rd. It is not about what we think the method the company should use but what the company accounting policies is. Let me reproduce note to accounts 3.3 financial assets for AFS again and note to accounts 9. investments.



The Group classifies non-derivative assets into the following categories: loans and receivables and availablefor-sale financial assets.

Loans and receivables
Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method, less any impairment losses.

Loans and receivables comprise cash and cash equivalents, trade and other receivables, amounts due from subsidiaries and related corporations.

Cash and cash equivalents

Cash and cash equivalents comprise cash balances and bank deposits that are subject to an insignificant risk of changes in their fair values.


Available-for-sale financial assets
Available-for-sale financial assets are non-derivative financial assets that are designated as available-for-sale or are not classified in any other categories of financial assets. Available-for-sale financial assets are recognised initially at fair value plus any directly attributable transactions costs. Subsequent to initial recognition, they are measured at fair value and changes therein, other than impairment losses and foreign currency differences on available-for-sale debt instruments and foreign currency differences on available-for-sale equity instruments designated as hedged item in hedge accounting, are recognised in other comprehensive income and presented in the fair value reserve in equity. When an investment is derecognised, the gain or loss accumulated in equity is reclassified to profit or loss.

Available-for-sale financial assets comprise equity securities and debt securities.

9. investments


The quoted equity securities and debt securities are classified as available-for-sale investments of the Group. The fair value of the available-for-sale financial assets is determined by reference to their quoted bid prices at the reporting date.

The end..............

[Boon]

I think it is much less complicated to look at the 1Q2015 financial statements (FS) where there was no acquisition or disposal of any investments:
 
Investments as recorded in B/S:
Investments are measured at Fair Value = (FV)
FV = 632.919 m (as at 31-Mar-2015)
FV = 591.828 m (as at 31-Dec-2014)
Change in FV = 41.091 m
 
On page 6 of the FS, it says:
 
“Increase in investments of $41 million was mainly due to the increase in market value of the Group’s investment in quoted securities. “

Now, let’s look at the “CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME” on page 3:
Net change in FV for AFS = 25. 812 m
Difference = 15.279 m
Why?
_______________________________________________________________________________________________________________________________________

[donmihaihai]

I think it is much less complicated to look at the 1Q2015 financial statements (FS) where there was no acquisition or disposal of any investments:
 
Investments as recorded in B/S:
Investments are measured at Fair Value = (FV)
FV = 632.919 m (as at 31-Mar-2015)
FV = 591.828 m (as at 31-Dec-2014)
Change in FV = 41.091 m
 
On page 6 of the FS, it says:
 
“Increase in investments of $41 million was mainly due to the increase in market value of the Group’s investment in quoted securities. “

Now, let’s look at the “CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME” on page 3:
Net change in FV for AFS = 25. 812 m
Difference = 15.279 m
Why?

I don't know for sure.
1st of all, those are unaudited number. Review of the figure by the management has even lower quality but I am not saying it is wrong. Just take it with a pinch of salt.

Understand Wheelock better.
Most operations in Singapore except a development in China. which mean we will not be expecting forex.
Go back AR2015.
note to accounts 31.

Currency risk
The Group is exposed to currency risk on investments and borrowings that are denominated in currencies other than
the respective functional currencies of the Group’s entities. The currencies giving rise to this risk are primarily the Hong
Kong Dollars (HKD), the Great British Pound (GBP), the United States Dollars (USD) and the Euro Dollars (EUR).

In respect of non-monetary and monetary assets and liabilities held in currency other than Singapore dollars, the Group
uses forward exchange contracts to hedge foreign currency risks arising from its HKD, GBP and EUR denominated equity
securities and USD denominated debt securities. Most of the forward exchange contracts would have maturities of less
than 3 months after the reporting date. Where necessary, the forward exchange contracts are rolled over at maturity.

The fair values of the forward exchange contracts designated as hedging instruments comprise derivative asset of nil
(2014: $136,000) and derivative liability of $397,000 (2014: $359,000) as at 31 December 2015.

As at 31 December 2015, the Group has 2 (2014: 4) forward exchange contracts amounting to $235,864,000 (2014:
$519,254,000).

The financial assets are pretty much hedged.

In 1Q2015, there is a net 6M gain in forex under cashflow statement.
There is another 10.5M gain in OCI which most likely belong to china development.Well exchange gain/loss on consolidation of foreign subsidiaries.


Take 15M - 6M = 9M. Pretty good. I would stop here when I see number being so close.

[Boon]

I could be wrong but here is my interpretation:
 
If there were no hedging in place, net change in FV of AFS regconized in OCI would equal to 41.091 m, same as the change in FY of “investments” as reflected in the B/S.
 
In Fair Value hedge, the hedged item is adjusted to reflect change in value in respect of the risk being hedged with any gain or loss being recognised in profit or loss.
 
The difference of 15.279 m is attributable to “hedging” -  which has been recognized in PnL.
 
The 10.653 m, being the Exchange differences arising on consolidation of foreign subsidiaries, is a completely different thing, IMO.
____________________________________________________________________
 
From page 61 of AR2015:
 
Available-for-sale financial assets
 
Available-for-sale financial assets are non-derivative financial assets that are designated as available-for-sale or are not classified in any other categories of financial assets.
 
Available-for-sale financial assets are recognised initially at fair value plus any directly attributable transactions costs. Subsequent to initial recognition, they are measured at fair value and changes therein, other than impairment losses and foreign currency differences on available-for-sale debt instruments and foreign currency differences on available-for-sale equity instruments designated as hedged item in hedge accounting, are recognised in other comprehensive income and presented in the fair value reserve in equity. When an investment is derecognised, the gain or loss accumulated in equity is reclassified to profit or loss.
 
Available-for-sale financial assets comprise equity securities and debt securities.
___________________________________________________________________________________________
 
From page 63 of AR2015:
 
3.3 financial instruments (cont'd)
(iv) Derivative financial instruments, including hedge accounting
 
The Group holds derivative financial instruments to hedge its foreign currency risk exposure. Embedded derivatives are separated from the host contract and accounted for separately if the economic characteristics and risks of the host contract and the embedded derivative are not closely related, a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative, and the combined instrument is not measured at fair value through profit or loss.
 
On initial designation of the derivative as the hedging instrument, the Group formally documents the relationship between the hedging instrument and the hedged item, including the risk management objectives and strategy in undertaking the hedge transaction and the hedged risk, together with the methods that will be used to assess the effectiveness of the hedging relationship. The Group makes an assessment, both at the inception of the hedge relationship as well as on an ongoing basis, of whether the hedging instruments are expected to be ‘highly effective’ in offsetting the changes in the fair value of the respective hedged items attributable to the hedged risk, and whether the actual results of each hedge are within a range of 80 - 125%.
 
Derivatives are recognised initially at fair value; attributable transaction costs are recognised in profit or loss as incurred. Subsequent to initial recognition, derivatives are measured at fair value, and all changes in its fair value are recognised immediately in profit or loss.
 
Fair value hedges
Changes in fair value of a derivative hedging instrument designated as a fair value hedge are recognised in profit or loss. The hedged item is adjusted to reflect change in value in respect of the risk being hedged with any gain or loss being recognised in profit or loss.
 
Other non-trading derivatives
When a derivative financial instruments is not recognised in a hedge relationship that qualifies for hedge accounting, all changes in its fair value are recognised immediately in profit or loss. 
_______________________________________________________________________________________________________________________________________

[soros]

This company has paid 6 cents per year dividend since 2000 except for 2006 when $2.07 special payment was made. Basically company has no record of dividend growth.

https://www.dividends.sg/view/M35

This company is now member of Wheelock & Co, based in Hong Kong ( 00020.HK) and not likely to give up its presence in Singapore..

I think the company is unlikely to be privatised and vbuddies should expect to continue getting 6 cents dividend per year unless shareholders complain at the next AGM and ask for 7 cents ??..

[tonylim]

This company has paid 6 cents per year dividend since 2000 except for 2006 when $2.07  special payment was made.  Basically company has no record of dividend growth.

https://www.dividends.sg/view/M35

This company is now  member of Wheelock & Co, based in  Hong Kong  (  00020.HK) and not likely to give up its presence in Singapore..

I think the company is unlikely to be privatised and vbuddies should expect to continue  getting  6 cents dividend per year unless shareholders complain at the next AGM and ask for 7 cents ??..

Most of the times , the 6 cents DPS  are always higher than the EPS , how long can it be maintained is another question .

[Scg8866t]

This company has paid 6 cents per year dividend since 2000 except for 2006 when $2.07  special payment was made.  Basically company has no record of dividend growth.

https://www.dividends.sg/view/M35

This company is now  member of Wheelock & Co, based in  Hong Kong  (  00020.HK) and not likely to give up its presence in Singapore..

I think the company is unlikely to be privatised and vbuddies should expect to continue  getting  6 cents dividend per year unless shareholders complain at the next AGM and ask for 7 cents ??..

Most of the times , the 6 cents DPS  are always higher than the EPS , how long can it be maintained is another question .

Property developers have choppy earnings I suggest you look at wheelocks earnings in five consecutive years period and compare with their payout within that five years. By next year, wheelock will have close to 1bil sgd in their coffeurs too. Try finding a property developer listed on sgx that has such an enormous net cash, trading at ard 0.6x books and has such good synergy with their associate investment which is understated.

[Scg8866t]

HK now impose 30% stamp duty to foreign buyers. Singapore still at 18%. Should see some foreign fund inflow here. WHeelock moving up nicely now 1.55 1.555.

https://www.bloomberg.com/news/articles/...year-slump