Industrial group SP Corporation’s unaudited results gets SGX confused

SGX then requested the company to disclose 7 facts about its income in 3QFY2011.

In a release, SP Corporation Limited provides the following supplementary information in response to queries raised by the SGX-ST dated 2 November 2011 in connection with the announcement made by the Company on 28 October 2011 on its unaudited results for the third quarter and nine months ended 30 September 2011.

SGX Query:
We note that the Finance Income of the Group increased from $168,000 in 3QFY2010 to $323,000 in 3QFY2011. The Finance Income comprised mainly interest income from refundable deposits placed with coal suppliers and late payment interest arising from past due trade receivables owing from an Indonesian gold mine. Please disclose the following:-

(a) The identity of the customer from whom the Group has not received payment;
(b) The amount owing by the customer;
(c) The period that is overdue;
(d) The reason(s) for the late payment;
(e) The penalty rate payable;
(f) Whether the Group expects to make a provision in respect of these outstanding receivables. If not, to disclose the reasons why provision is not necessary;
(g) Steps taken by the Company to recover the outstanding payment.

Company's Response to SGX Query (a) to (e):
The increase in finance income is largely attributable to late payment interest arising from past due trade receivables owing from an Indonesian gold mine, PT Kasongan Bumi Kencana (“KBK”), to whom the Group provides drilling services. As announced by the Company on 7 April 2010, this drilling contract is an Interested Person Transaction.

As at 30 September 2011, the trade receivables from KBK was S$4.4 million; comprising S$4.0 million arising from the drilling services and $0.4 million late payment interest.

The Company understands from KBK that its late payment was due to a delay in its commencement of the gold mine production. Upon which commencement, KBK should be in a position to make payment.

The late payment penalty interest rate is 18% per annum.

Company's Response to SGX Query (f) and (g):
The Group had not made a provision in respect of the trade receivables owed by KBK as at 30 September 2011, as the Group was not aware of any dispute with KBK and had received KBK’s confirmation in this respect, prior to the results announcement. The Company had also been kept abreast of KBK’s progress in the mine development through its meetings with KBK and was not aware of any evidence that indicated possibilities of a non-payment. The Group will continuously assess the recoverability of the amounts outstanding and the need to make impairment, if any.