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Datapulse responds to SGX queries on full-year results

DATAPULSE Technology responded on Tuesday night to queries received from the Singapore Exchange (SGX) on Oct 11, regarding the company's full-year financial results announced on Sept 29.

Asked to explain the significant rise in other operating expenses to S$1.7 million from S$0.3 million in the previous financial year, Datapulse gave a breakdown of the S$1.4 million increase. It was mainly due to a S$1 million increase in legal and professional costs, lower exchange gains recognised in FY2018 of S$0.2 million, inclusion of S$0.1 million operating expenses from newly-acquired subsidiary Wayco Manufacturing (M) Sdn Bhd, and S$0.1 million in rental of office and warehouse premises.

SGX also wanted to know the reason for and financial effect of Datapulse's change in policy for measurement of its investment property, moving from measurement at cost less accumulated depreciation and accumulated impairment losses, to measurement at fair value, with changes in fair value recognised in profit and loss.

Datapulse cited its December 2017 acquisition of Wayco, which has adopted the fair-value model as measurement for its investment property. Datapulse said it changed its accounting policy "as it believes that subsequent measurement using the fair-value model provides more relevant information about the financial performance of these assets, assists users to better understand the risks associatedwith these assets and is consistent with industry practice in relation to these types of assets". This change did not have a material impact on the group's financial statements for the current or prior period, it added.

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SGX also queried Datapulse's impairment loss recognised on goodwill of S$1.1 million relating to its investment in Wayco, wanting to know how the impairment loss amount was determined and what the reasons for impairment were.

As Wayco is a distinct cash-generating unit, the goodwill recognised is subject to an impairment assessment as at July 31, said Datapulse. The assessment was evaluated by estimating the recoverable amount of this cash-generating unit based on its value in use, determined by discounting the future cash flows to be generated from the continuing use. Based on the impairment assessment, the recoverable amount was lower than the carrying amount of the goodwill. This resulted in an impairment loss recognised on goodwill.

Datapulse added that it had commissioned C H Williams Talhar & Wong Sdn Bhd to carry out a valuation exercise for the three properties owned by Wayco. Based on the valuation reports, there was no impairment on the properties and the reports supported the book values of the properties as at July 31.

Finally, SGX noted a deficit of S$5.2 million in cash from operating activities due mainly to redundancy payments made as a result of the scaling down of Datapulse's operations, and asked how these redundancy payments were reflected in the statement of profit or loss. Datapulse said they were reflected under "Discontinued Operations (Other expenses)".

Datapulse shares closed unchanged at 26 Singapore cents on Tuesday.