Friday, October 28, 2011

Financial report October 2011

LEM ended October 2011 with a net profit of 33'842 $L which represents a significative increase since last month. The overall value of our portfolio (NAV),evaluated at market prices, remained stable at 0.65 $L/share. However, LEM changed its assets evaluating system. The titles in the portfolio will only be evaluated by purchase prices in the future and we will apply depreciations on those. Such should permit us to present much more balanced and meaningful financial reports in the future.

The detailed financial report is given here.
https://docs.google.com/spreadsheet/ccc?key=0AmsUoA28lTawdHFZekc2X3pneXhqM1R5V3VJUDRaSGc&hl=en_GB&pli=1#gid=1

Shareholder’s equity: 827'582 (1'031'000) $L
Net Profit: 33'842 (27'049) $L
Dividend: 12'209 (9'424) $L
1’500’000 shares, nominative value: 0.5 $L
EPS: 0.0144 (0.0118) $L
NAV: 0.53 (0.65) $L

----------------------- Figures in ( ) of last month

LEM continued to extend its portfolio during October in order to diversify and to create a basis for our derivative products we are working on. Watch out to see any activities from us in regard of such products.

LEM continued to build up and diverse its portfolio. The most important participation for us is BOTS which has quite a lot of development potential. Another investment is Marix Group (MRG). It is only small right now but nevertheless, we built up our tents at one of their spots during last month. That place will become our new home for the future. Thank you Marishka....Hopefully there is a place around where we can buy some pindakaas...;-)

About our new method to evaluate our portfolio. We all know that the virtual stock exchange market at CAPX is rather volatile and has limited liquidity. Such is a major problem if you compare it with the automated portfolio evaluation what CAPX is applying. Those generated values are far too optmisitic. To explain you this just try to sell 10'000 shares in any title and you will see what I mean, you simply would crash the prices. And such can happen easily, even if somebody is making a false trade. CAPX is using circuit breakers to counter-fight such unnatural fluctations, but still those don't overcome the general problem.

After our opinion is meaningless to use the CAPX portfolio evaluation to measure the value of our CAPX titles we own. Much more realistic is an approach where we evaluate the titles with purchase prices and then use depreciations to put the portfolio into the right picture. If we then publish at the end of the month the number of titles we own, we can show transparency wihtout showing too much... But don't understand us wrong. THis strategy change in communication is not that we are per se pessimistic about the market it is just a way for us to become more coherent in what we are doing.

Moreover, each investor can easily estimate how much cash we could generate when we would have to sell our titles in short time and what liabilities we have. They then get quite a clear picture what the real value of LEM might be. Just as a by note, we stick normally to our premisses as we liquidated LEM already twice (in 2008 at WSE and in 2009 at ISE) and such rather successfully, at least nobody was throwing things at us... I don't know why I'm mentioning this, possibly because of the latest development at CAPX about VSIF and DDE. It's always sad to see somebody leaving and when it is only to step back from SL. All the best Del, it was always a pleasure.

Dividend will be distributed on 31th October 2011.

Thank you again for your confidence….If you have further questions, don’t hesitate to contact us.

Greetz
Cas
http://lemurinvest.blogspot.com

Wednesday, October 26, 2011

Changes in financial reporting

LEM decided to be modify the evaluation policy of its assets in the balance sheet. From this period on we will present our results with purchase prices instead of market prices but consider depreciations.

There is a whole discussion ongoing at CAPX about reporting and evaluation of listed companies. Independently of that we have our own needs. As liquidity is not always given in the titles we have in our portfolio it makes little sense to present the assets with marketprices. They wouldn't be relevent if we suddenly would be forced to sell our shares as share prices would dump. Also price fluctations can be very important which are complicating interpretation.

A system which only considers purchase prices is much more meaningful, especially if coupled with depreciations. That is nothing new and is normally applied in a similar way in RL. And that is exactly what we will do for LEM. In the report we will list the titles we have in our portfolio and their values expressed as purchase prices. The balance sheet becomes then much more balanced and together with the depreciations the investor receives a much better impression about the financial situation of LEM.

If it would come to a liquidation, the difference between realised sell price and purchase price minus accumulated depreciations will then reflect the liquidation dividend an investor might expect to receive.

Our NAV will be smaller for next period, because of this evaluation change, however, that is just a theoretical value. In the mid- and long run, the investors will profit as the new system lead to greater transparency. The new scheme permits us to be build up a more robust base for further expansion.

The financial report for LEM for October 2011 will follow on 28th October 2011. It shall incorporate already the new portfolio evaluation method.

Greetz
Cas