Swee Hong clarifies change in bonuses reporting

Singapore Exchange demanded an explanation as to the change in treatment for the bonuses.

SGX said Swee Hong Limited stated that its significant drop in employee compensation costs of 61% from $2.493 million in FY2011 to $971,000 in FY2012 was due to bonuses for project staff that were now charged to costs of work.

With respect to these bonuses, SGX asked Swee Hong to disclose the reasons for the change in treatment for the bonuses and the reasons for the bonuses being recorded under costs of work.

In response, Swee Hong said:

In FY2011, all provision for staff bonuses were recognised as Administrative expenses. In FY2012, the Company decided to further categorise such bonuses into Cost of Works and Administrative expenses. All bonuses in relation to the project team were charged to Cost of Works directly, while bonuses for other staff (ie. Head Office and workshops) were recognized as Administrative expenses.

As the bonus for project team relates to cost for the project, the Company believes this change will better reflect the cost and profitability of each project.

In addition, the change was to include project performance and productivity as one of the key performance indicators used in determining annual bonuses. The Company is constantly reviewing key profit drivers and will modify our remuneration system to ensure that our staff is appropriately incentivized.