'CEO didn't say full-year revenue was more than $1b': PropNex on SGX queries

SGX issued the query last 17 February 2022. 

PropNex Limited responded to the queries it received from the Singapore Exchange (SGX), saying that its CEO, Mohamed Ismail, did not say that the group's full-year revenue for 2021 was more than $1b.

For context, here is a part of SGX' statement sent to PropNex: "We have received feedback that the company’s chairman and CEO, Mohamed Ismail, had disclosed to the company's property agents in a private event on 9 January 2022, that the group's full-year commission for 2021 is more than $1b and hence one could deduce that the group’s full-year revenue would be more than $1b." 

To answer this, PropNex clarified that commission is earned and considered as revenue only when the transaction is completed upon the execution of the sale and purchase agreement. Should the transaction be aborted, no revenue will be recognised. 

"Our CEO highlighted that the volume of property transactions for 2021 exceeded 86,000. He had indicated that the commission relating to those property transactions carried out by its salespersons exceeded $1b, which was factual. However, as stated above, there is a difference in the commission related to the property transactions and the recognition of those commissions as revenue. As not all transactions were completed at the end of the financial period, he had not said that the group’s full-year revenue for 2021 was more than $1b," PropNex said.

Reasons for delayed completion of the transaction include the buyer needing more time to dispose of his/her existing property, to arrange a bank loan, or to review the sales and purchase agreement.

Consequently, the amount of commission when transactions are carried out within a financial period is different from the amount of revenue recognised for that period.