China Bearing (Singapore) responds to SGX queries

Trade Receivables were involved.

The Board of Directors of China Bearing (Singapore) Limited said the company received the following questions from SGX-ST on 5 November 2012:

"We note that Trade Receivables increased by 17% from RMB 19.86 million (as at 30 September 2011) to RMB 23.24 million as at 30 September 2012. In view that revenue for the period decreased by about 24%, please clarify the reason(s) for the increase in Trade Receivables. Please also disclose the debtor turnover days and clarify whether the Company foresees any issue with collectability of the Trade Receivables."

In response, China Bearing (Singapore) said:

When credit terms are granted to customers, there is a credit limit and a credit period (which is normally 90 days) granted. When sales decrease, as the credit limit may not be breached, the customers will pay within the credit period. However, when sales increase, the credit limit may be breached even though the credit period is not due, and the customer will have to make payment to keep within the credit limit.

This was the reason Trade Receivables increased by 17% as at 30 September 2012 compared to 30 September 2011 despite revenue decreased by about 24% comparing FY2012 Q3 against FY2011 Q3. The customers paid within the credit period for FY2012 Q3.

As a result, debtor turnover days increased from 65 days as at 30 September 2011 to 89 days as at 30 September 2012. However, 99.8% of the Trade Receivables as at 30 September 2012 were within 90 days, which is the normal credit period, compared to 98.8% within 90 days as at 30 September 2011. The collection for October 2012 was approximately RMB14 million. The Company does not foresee any collectability issue with regard to the Trade Receivables.