Too much optimism? Seroja Investments’ statement gets SGX skeptical

The company said in its 2Q results that it is “optimistic of its performance in FY2011,” but SGX asks - has this forecast actually been met?

In a release, with reference to the Company’s announcement on the financial statements for the period ended 30 September 2011 dated 9 November 2011, the Board of Directors of Seroja Investments provided additional information in response to the following query raised by the Singapore Exchange Securities Trading Limited (“SGX-ST”) on 16 November 2011. The query from the SGX-ST and the response from SIL are set out below:-

1) In paragraph 9 of the 3Q Results which reads: “Where a forecast, or a prospect statement, has been previously disclosed to shareholders, any variance between it and the actual results”. We note that the Company had indicated "Not applicable" under the above section of the 3Q Results. Please note that the Company had previously issued the following statement in paragraph 10 of the 2Q Results, "Barring any unforeseen circumstances, the Group is optimistic of its performance in FY2011" ("Prospect Statement"). As such, please provide a revised paragraph 9 of the 3Q Results which should include the following:-

(i) A statement to the effect that the Company had given the above Prospect Statement in 2Q Results;
(ii) A statement on whether the Prospect Statement has been met. If the Company had not, please address the following:-
(a) To state the bases on which the Prospects Statement had been made;
(b) When the Directors became first aware that the bases mentioned (ii)(a) above were no longer valid and why; and
(c) To state whether the Company could inform investors earlier in the form of a profit warning via SGXNET.

Response:

In our announcement for the second quarter results dated 12 August 2011, it was stated in paragraph 10 of the announcement that barring unforeseen circumstances, the Group is optimistic of its performance in FY2011. For the nine months ended 30 September 2011, the Group has achieved higher revenue of US$37.2 million compared to US$30.0 million for the nine months ended 30 September 2010.

Also, net profit attributable to shareholders of the Company for the nine months ended 30 September 2011 was US$2.4 million which was also higher than US$1.9 million for the nine months ended 30 September 2010. Hence, the Group’s performance for the nine months of FY2011 have exceeded the same corresponding period of FY2010 and this is in line with the prospect statement made in the second quarter results announcement.