Pom27 Jan 2018 01:30
Pom,
Since you have an accountancy background, do you consider what I have written below a correct understanding of the income and profit and loss over the coming months/years ?
The Profit warning was a little higher than I expected, but then again. Given that RPG effectively paid 172.98mill USD in March 2016, maybe its not. Just to recap: The markets were advised of a positive profit alert in July of that same year of between 14 and 17 mill USD due to a bargain purchase gain arisen from the re-valuation of the Company�s holding and newly acquired interest in Plethora Solutions Holdings. Then in Feb 2017 a profit warning of between 2 to 3mill USD was issued followed by another in July 2017 of between 19 and 22mill USD and now between 27 to 29mill USD.
Am I right in thinking that since the purchase of PLE there is now a yearly write down requirement by the HKSX accounting methods of the product based on a specific % such that the loss should reduce each year approximately inversely exponentially ?. As such, given that In the 6 months to June there was a 19 to 22mill deficit which ended up now being between 27 and 29mill, doesnt that mean effectively that there was a loss of between 7 and 8 mill USD for H2. Doesnt this then indicates that there was some money coming into the company in H2 to reduce the 2nd half year loss ?
Although this is probably a very simplistic approach, does it not indicate that there has possibly been some income generated (although I have no idea and dont consider what adjustments have been made for asset re-evaluation) ?
Given the above magnitudes, am I correct in thinking that there is a good possibility that there will be another profit warning at the end of June this year (I cannot see sales in the E5 between March and June being so large that a loss will not still be attributable). Hopefully by year end we will have received additional license payments from the ROW as well as sales from the remaining 6 territories which will be coming on stream before year end, as well as HK and Macau. So the income will offset the write down for the remaining 6 months such that we, at a minimum, break even by year end. Noting that as time progresses the write down loss reduces as income increases.
Just my take on whats happening and please correct me if what I have written is wrong or if you have a different approach/thinking to how this will progress.
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