New accounting standards to value timber plantations
The Sri Lanka Accounting and Auditing Standard Monitoring Board is now in the process of devising a new accounting standard to value plantation assets in consultation with the Institute of Chartered Accountants.
A Touchwood Investments Ltd (TIL) official said they plan to follow the guidelines of the Sri Lankan regulator, although they had adopted the International Accounting Standard (IAS) 41 to value plants and plant growth for their books.
He added that “fair value of a consumable biological asset is determined based on the growth of the trees and the present market value.” Speaking to The Sunday Times FT, TIL Chief Executive Officer Asitha Koralage said that they have recorded a profit of Rs.51 million during the last quarter of last year in spite of low tree sales and adverse economic conditions for long term investments in the country. He disclosed that the company has made a profit of Rs. 613 million during the same period in 2006. TIL gains profits from plot sales.
The company, a pioneer in marketing and managing private forestry plantations in Sri Lanka, plans to achieve sales level of over Rs. 1 billion per annum by 2015. The target of the company is to sell plots in Mahogany, Sandalwood, Vanilla and other commercially viable tree plantations in over 5,000 acres per month, while generating income for their clients and halting destruction of rain forests in the country.
Koralage said the company will invest Rs.450 million to plant mahogany and other commercially viable trees and its target is to plant over 1000 acres of Mahogany before the end of March 2009.
TIL has taken far reaching initiatives such as transferring the land deed to the client as collateral, maintaining a 100 percent replacement buffer stock of trees to meet any contingency loss and provide insurance cover to safeguard the client’s interest.
The company manages more than 1300 acres in Matugama, Ratnapura, Matale and Badulla and it has more than 15,000 clients.