Mirach Energy: Revenue in form of durian trees as part of partnership deal; provides breakdown of other receivables

OIL and gas company Mirach Energy has provided on Monday, a breakdown of its trade and other receivables in response to queries from the Singapore Exchange (SGX) regarding its fiscal 2018 financial results.

The company said that it had done an impairment assessment for its trade and other receivables, and does not expect any collection issues. The breakdown for "other receivables" included US$185,222 for sundry debtors, which were mainly proceeds from the disposal of a subsidiary; US$52,261 for rental and other deposits; US$495,996 for a performance bond; and US$1,892 for VAT/GST outstanding/recoverable. Trade receivables accounted for about US$2.4 million.

Of the US$2.4 million in trade receivables, about US$1.8 million were current, US$539,410 were past due between zero to 180 days, while US$25,759 were over 180 days overdue.

The company said that its deferred revenues arose from durian trees entitled to RCL Kelstar Sdn Bhd (RCL) as part of cooperation agreements relating to agriculture crops, specifically durian trees. According to Mirach's full-year results announcement, RCL was set up to manage the development of a multi-storey agricultural project in Malaysia in cooperation with the Kelantan State Economic Development Corporation (KSEDC).

The durian trees were recognised as deferred revenue as RCL had yet to obtain the land use rights and perform service obligations under the agreements to three business partners. Once it has done so, the deferred revenue will start to be recognised as revenue.

The consideration consists of service fees and durian trees, with the payment terms derived from negotiations between RCL and the business partners, said the company. The value of the trees were derived from market research on selling prices quoted in the market by various competitors in the same industry.

The company said that it recognised deferred revenue as current deferred revenue based when service obligations to the business partners are to be completed within 12 months. Service obligations that are to be done after 12 months would be recognised as non-current deferred revenue. The company added that RCL could perform its service obligations only after obtaining the land use rights.

Mirach Energy also said that its developer has yet to sell any unit for its first housing project as it is still in the midst of getting the permit to sell. However, its developer has started paying Premier Mirach Sdn Bhd (PMSB) based on progress billings. PMSB is a joint venture company Mirach Energy set up with PRG Construction Sdn Bhd, a wholly owned subsidiary of PRG Holdings Berhad.