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No Signboard responds to SGX queries on change in accounting rules

SEAFOOD restaurant operator No Signboard Holdings on Wednesday responded to queries from the Singapore Exchange on the rationale behind the significant restatement in its financial numbers after the adoption of actual group accounting principles for its first quarter 2018 results.

Earlier in February, the group reported a net loss for the fiscal first quarter ended Dec 31, 2017, significantly worse than the S$1.4 million net profit it had initially reported under the old accounting rules.

The group explained that its restructuring exercise – which involves the acquisition of the restaurant and beer businesses from its holding company – was completed on Oct 31 2017. Even though the transfer of the legal interest in the restaurant business and its subsidiaries was on that date, the transfer of economic interest in the restaurant business was on July 1 2017.

The management had prepared the financial statements based on actual group accounting principles for its results announcements for 1Q18, 2Q18 and 3Q18 on the basis that the company obtained control over the subsidiaries on Oct 31 2017, it being the legal completion date of the restructuring exercise, said the group.

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However, during the year-end audit, the company and its external auditors Deloitte & Touche concluded that the continuation of the use of the merger accounting principles adopted in FY2017 would be "more appropriate to better reflect the group's financial performance" to better compare FY18's financial statements and FY17's statements, in which merger accounting principles were used.

The company further said that it has decided to expand an audit to cover the financial periods 2Q18 ended March 31 2018 and 3Q18 ended June 30 2018 "out of prudence".