Hock Lian Seng

[valuebuddies]

....
So the commissions are now capitalized instead of being expensed.
anyone has any comments on any significant effects this may have?

Per the 2013AR,

"The accounting policies adopted are consistent with those of the previous financial year except in the current financial year, the Group has adopted all the new and revised standards which are effective for annual financial periods beginning on or after 1 January 2013. The adoption of these standards did not have any effect on the financial performance or position of the Group and the Company."

It is not known whether the treatment in the commission expenses has changed, or just a different term used which gives the same meaning, could it be just a re-phrase since the AR claims no change in accounting policies?

Even if it is a change in accounting policies, I think the impact is not significant. If the company anticipates losses from the segment, it should have made provision accordingly. If the properties development are profitable, then the agent commission can be capitalised and charge to P&L later when the profits are recognised. If the company try to manipulate the figures, the best approach will be on the loss provision on its project rather to capitalise the commissions.

I didn't spend much time on the AR, but did HLS make loss provisions on its Skywoods projects?