24-07-2017, 11:55 AM
PanUnited did something similar in 2012 - share buyback to treasury shares and subsequently re-sell them higher to investors, all in the same year. And so it might be informative to check out their FS to see how it moves:
PanUnited AR12: https://www.panunited.com.sg/assets/Annu...-AR-12.pdf
- Under pg55 of "Summary of Accounting policies for Treasury shares" - Acquiring treasury shares are recognized at cost and deducted from equity. No gain or loss is recognized at P/L on the purchase/sale/issue/cancellation of the Group's own equity instruments and any differences is recognized directly in equity.
- Since there is no P/L, the differences in equity (gain) is recognized in "other reserve" portion for PanUnited (page 72). As such, it is curious that CS Mgt announced that it is retaining the amount to "pay dividends" in the future since dividends (in the strict sense) is from the "accumulated profits" portion of equity. Maybe, Mgt could do a capital reduction exercise to release cash from the "reserve" account?
PanUnited AR12: https://www.panunited.com.sg/assets/Annu...-AR-12.pdf
- Under pg55 of "Summary of Accounting policies for Treasury shares" - Acquiring treasury shares are recognized at cost and deducted from equity. No gain or loss is recognized at P/L on the purchase/sale/issue/cancellation of the Group's own equity instruments and any differences is recognized directly in equity.
- Since there is no P/L, the differences in equity (gain) is recognized in "other reserve" portion for PanUnited (page 72). As such, it is curious that CS Mgt announced that it is retaining the amount to "pay dividends" in the future since dividends (in the strict sense) is from the "accumulated profits" portion of equity. Maybe, Mgt could do a capital reduction exercise to release cash from the "reserve" account?