Xian Leng's 52 Million Ringgit Loss Provision!!!

Sae the following news clip on Xian Leng posted on Business Times.

• Xian Leng impairment loss provision
  
  Published: 2012/01/11
  
  KUALA LUMPUR: Xian Leng Holdings Bhd is of the view that the provision of RM52.11 million for impairment loss provided for in its last quarterly report will not be recovered in the forseeable future.
  The impairment was in respect of the value of fish ponds incurred by another unit involved in breeding of Arowana fish. The impairment loss exercise and provision is independent of the special audit that is still ongoing.
  Shares of Xian Leng rose 3 sen yesterday to close at 40 sen.

Stock rose 3 sen yesterday? LOL!

Ok the special audit was highlighted in the posting Special Audit To Be Carried Out On Xian Leng!

A loss provision of 52.1 million???

What? What?? What???

I decided to check Xian Leng's announcements on Bursa website.

This is what Xian Leng said yesterday:

• With reference to the announcement dated 27 December 2011 on the third quarterly result for the quarter ended 31 October 2011 in respect of the Provision for impairment loss on property, plant and equipment, the Board of Directors ("Board") wishes to furnish the following additional information for public release.
  
  Impairment loss testing exercise is carried out based on information prevailing and available to the Board prior to the release of every quarterly results. In compliance with FRS 136, the Board will deliberate on the impairment loss computation based on discounted cash flow basis method as adopted in concurrence with the external auditors.
  
  During the third quarter results which were under reviewed then, RM11.39 million impairment loss was provided for a subsidiary involved in the breeding of other tropical fish, such as guppy, platy fish and cat fish. No provision was provided to this subsidiary in previous years/quarters due to gestation period provided to assess the profitability of this said subsidiary project in respect of start-up period. As this subsidiary continues to incur losses after a reasonable period and based on information currently available, the Board is of the view that provision for impairment loss of RM11.39 million on property, plant and equipment relating to this project should be fully provided in this Quarter onwards. Revision will be made in the future if this subsidiary could generate positive contribution to the Group thereafter.
  
  In addition, RM52.11 million of impairment loss was provided for in respect of the value of fish ponds incurred by another subsidiary involved in the breeding of Arowana fishes. Due to continuous and persistent drop in productivity and selling prices as compared to the previous year/quarters results, the forecast for future yearly/quarterly revenue (discounted cash flow basis) of the Company has deteriorated further and likely to trend downwards. In view of this latest development and assessment, , higher amount of fish ponds value incurred in respect of capital expenditures incurred with regard to expansion plan carried out in previous years is not envisaged to be recovered in the forseeable future. As such, the Board is of the view that the additional provision of RM52.11 million is necessary in accordance to the FRS 136 and thus impairment loss was provided in this Quarter onwards.
  
  We wish to highlight that this impairment loss exercise and provision is independent to the Special Audit that was announced on 17 October 2011. Special audit is still on-going and the Board will re-assess the impairment loss ( if any) quantum and its impact to the financial statements once the Special Audit is concluded and the Final Report is received.
  
  
  This announcement is dated 10 January, 2012

WOW!

Does it really cost that much?

11.39 million for the breeding of tropical fish such as guppy, platy fish and cat fish?????

Seriously that much money??????

Damn!

How much did you last pay for your guppies?

oO