Apparently SGX had issued query to Blumont Group regarding the stuck-off of dormant subsidiary worth S$1.8mil.
SGX.Observer just mentioned about this in the previous article: Blumont Group and Its New & Ultimate Horizon
- On 20 June 2017, Blumont Group announced –
The Board of Directors of Blumont Group Ltd. (the “Company”) wishes to announce that Blumont Copper Pte. Ltd. (“Blumont Copper”), a dormant wholly-owned subsidiary of the Company, has submitted an application for striking-off pursuant to Section 344A of the Companies Act, Chapter 50 to the Accounting and Corporate Regulatory Authority on 20 June 2017. The striking-off of Blumont Copper is not expected to have any material impact on the net tangible assets and earnings per share of the Company for the current financial year.
2. On 10 Aug 2017, Blumont Group issued profit warning, citing
(b) loss incurred on strike-off of a dormant subsidiary of the Company, Blumont Copper Pte. Ltd. as announced on 20 June 2017.
3. On 11 Aug 2017, Blumont Group quoted S$1.89mil of losses under ‘Other Losses’ in the published 2Q2017 financial statements.
The net other losses was S$1.89 million for 2Q2017 (2Q2016: net other gains of S$0.28 million) and S$1.74 million for 1H2017 (1H2016: net other gains of S$1.64 million) mainly comprise of: (a) loss on strike-off of a dormant subsidiary of $1.87 million for 2Q2017 and 1H2017 (2Q2016 and 1H2016: Nil);….
Singapore Financial Reporting Standards + Section 344A of the Companies Act
Blumont Group published responses to SGX’s queries on 30 Aug 2017.
Please provide a details of the “dormant subsidiary” that was struck off, and the nature of the loss on strike-off.
The “dormant subsidiary” refers to Blumont Copper Pte. Ltd. (“BCPL”), a wholly owned subsidiary held directly by the Company, previously incorporated for mineral, energy and resources business. As announced on 20 June 2017, BCPL has submitted an application for striking-off pursuant to Section 344A of the Companies Act, Chapter 50 to the Accounting and Corporate Regulatory Authority on 20 June 2017. The foreign exchange reserve and fair value reserve which were previously recognised in equity in accordance with Singapore Financial Reporting Standards (“SFRS”) are reclassified to profit or loss as “loss on strike off of a dormant subsidiary” upon derecognition of assets in accordance with SFRS.
Blumont Group did the right thing by submitting the application to strike off the “dormant subsidiary” is done according to the Company Act.
“The foreign exchange reserve and fair value reserve which were previously recognised in equity” worth S$1.87mil was previously filed according to Singapore Financial Reporting Standards.
So… is it due to “Singapore Financial Reporting Standards”, the worthless “dormant subsidiary” has to be recognised as S$1.87mil previously?
SGX.Observer is not a lawyer hence couldn’t comment on “Company Act”. SGX.Observer is not an accountant hence don’t know what is “foreign exchange reserve” and what is “fair value reserve”….
SGX.Observer is just a layman, who find the ability to make the sudden disappearing of S$1.87mil without any ashes left behind, quite… magical!
SGX.Observer also wonder, does such response considered a case closed for SGX’s query? Will SGX (or rather, can SGX) demand further clarification about this?
On the hindsight, when SGX.Observer read the announcement again –
The striking-off of Blumont Copper is not expected to have any material impact on the net tangible assets and earnings per share of the Company for the current financial year.
… honestly, SGX.Observer don’t really know the definition of “material impact”, “net tangible assets”, “earning per share of the company for the current financial year”…
S$1.87mil could be just a peanut to some, a sesame to others. It could also be ‘nothing’.