I am still confused by the deferred tax expenses and how the company thinks the temporary difference will be reversed in the future. Grateful if an accounting student familiar in agriculture could clarify the following:
"Rivalea has not been paying income tax due to its carry forward tax losses which
have been fully utilised in 2016. Rivalea now records deferred tax expense based on approximately 30% on
its taxable profits. The deferred tax expense mainly relates to tax adjustments on its biological assets
resulting in no tax being payable for financial year ending 31 December 2017. Rivalea expects to pay taxes
only when the temporary differences on these tax adjustments are reversed in the future."
Reply to @heartlandboy : Let me try and attempt to answer this. I believe TTI's understanding of Deferred Tax is mostly correct except for the part "Rivalea has tax expenses on 30% of its net profits that are not recognized in the income statement". In fact, tax expenses was recognized based on taxable profits from Rivalea and that is the main reason why we have seen an increase in tax expense in the income statement. However, instead of recognizing a corresponding increase in Provision for Tax (ie. tax payable to tax authority), the adjustment was made against Deferred Tax Asset (DTA) or Deferred Tax Liabilities (DTL). In this case I believe the adjustment was made against DTA, which perhaps explains why there was a decrease of S$1.6mio. My guess is that there were unutilised tax allowances from Rivalea's biological assets that was recognised as DTA in the prior years (FY2016 QAF Annual Report, Note 25 "Fair Value Adjustment on Biological Assets") and the deferred tax expense adjustment was made against these.
I am not a tax accountant so this is based on my limited knowledge on tax accounting and what I could make out from reading the AR and Announcements.
seems like the strategic review would be listing of the Primary production business? Although we are not clear in which exchange it will be listed. they also named this strategic review as project pollen!
"The Group has commenced preparatory work and has appointed the relevant professional parties to assist
with the Strategic Review. The Singapore Exchange Securities Trading Limited (“SGX-ST”) had on 4 May
2017 confirmed that the proposed listing of the Primary Production Business is not a chain listing under the
SGX-ST Listing Manual."
I have sold 2/3 of my stake in $QAF(Q01) today. This decision was influenced by my interaction with management at the AGM. I am not optimistic about the upcoming results. I am leaving 1/3 for a small chance to at the potential strategic review of primary production
Reply to @thatsasecret : thanks but don't be mistaken. I very much still hope that $QAF(Q01) continues to do well. i am still vested, albeit at a smaller stake after today!
I am still confused by the deferred tax expenses and how the company thinks the temporary difference will be reversed in the future. Grateful if an accounting student familiar in agriculture could clarify the following:
"Rivalea has not been paying income tax due to its carry forward tax losses which
have been fully utilised in 2016. Rivalea now records deferred tax expense based on approximately 30% on
its taxable profits. The deferred tax expense mainly relates to tax adjustments on its biological assets
resulting in no tax being payable for financial year ending 31 December 2017. Rivalea expects to pay taxes
only when the temporary differences on these tax adjustments are reversed in the future."
Reply to @heartlandboy : Let me try and attempt to answer this. I believe TTI's understanding of Deferred Tax is mostly correct except for the part "Rivalea has tax expenses on 30% of its net profits that are not recognized in the income statement". In fact, tax expenses was recognized based on taxable profits from Rivalea and that is the main reason why we have seen an increase in tax expense in the income statement. However, instead of recognizing a corresponding increase in Provision for Tax (ie. tax payable to tax authority), the adjustment was made against Deferred Tax Asset (DTA) or Deferred Tax Liabilities (DTL). In this case I believe the adjustment was made against DTA, which perhaps explains why there was a decrease of S$1.6mio. My guess is that there were unutilised tax allowances from Rivalea's biological assets that was recognised as DTA in the prior years (FY2016 QAF Annual Report, Note 25 "Fair Value Adjustment on Biological Assets") and the deferred tax expense adjustment was made against these.
I am not a tax accountant so this is based on my limited knowledge on tax accounting and what I could make out from reading the AR and Announcements.
seems like the strategic review would be listing of the Primary production business? Although we are not clear in which exchange it will be listed. they also named this strategic review as project pollen!
"The Group has commenced preparatory work and has appointed the relevant professional parties to assist
with the Strategic Review. The Singapore Exchange Securities Trading Limited (“SGX-ST”) had on 4 May
2017 confirmed that the proposed listing of the Primary Production Business is not a chain listing under the
SGX-ST Listing Manual."
Reply to @ThumbTackInvestor : Understood.
I would think that QAF is considering listing the business in SGX since it requires SGX to confirm non chain listing under SGX-ST listing manual.
Hope others can confirm this.
I have sold 2/3 of my stake in $QAF(Q01) today. This decision was influenced by my interaction with management at the AGM. I am not optimistic about the upcoming results. I am leaving 1/3 for a small chance to at the potential strategic review of primary production
Reply to @thatsasecret : thanks but don't be mistaken. I very much still hope that $QAF(Q01) continues to do well. i am still vested, albeit at a smaller stake after today!