JESCO Holdings (CEO Han Sangmin) issued an official statement on July 23 to clarify misunderstandings and present its position regarding key issues raised by some media outlets, including ▲revenue recognition structure ▲location of its Philippine subsidiary office ▲disclosure requirements ▲changes in the largest shareholder's stake.
The company has secured nickel sales rights through a contract with its Philippine partner EVMDC, and its Philippine subsidiary, JSCO PH, has signed a supply agreement with China’s Baoli Energy for a minimum of 8 million tons.
Regarding reports claiming that “only 5% of the contract revenue is recognized,” a company representative explained, “This contract recognizes revenue on a ‘net’ basis, not on a ‘gross’ basis, according to accounting standards. The entire 5% revenue is recognized as income, which is directly reflected in operating profit.”
The company further added, “Through its equity holding in EVMDC, we have established a structure to secure additional income such as dividend income and equity method gains.” The company also emphasized that this contract is not merely for expanding external scale, but is based on actual business operations at local mines and a profit structure built on an exclusive distribution network.
Addressing concerns that JSCO PH’s contract address is listed within a resort complex, a company official stated, “It is a formal office space leased in the administrative building (ADMIN BUILDING) of the commercial zone in M Town Village. Mining development and related operations are conducted from a separate office at the Philippine mine site, and the relocation was made to improve accessibility to partners and administrative efficiency.” In fact, the office in M Town Village is currently used for administrative tasks such as partner collaboration and financial operations.
Regarding the difference from the address in the previous quarterly report, the company explained, “The office relocation took place in June, so it was not reflected in the first quarter report, which is based on the end of March.”
On suspicions that the supply contract with China’s Baoli Energy was not disclosed, a company representative stated, “This contract was signed solely in the name of our subsidiary (JSCO PH), so under KOSDAQ disclosure regulations, it is not subject to mandatory disclosure. However, considering the importance of the contract, we formally requested the exchange to review whether disclosure was possible, and confirmed through an authoritative interpretation that disclosure is restricted.”
The company representative added, “We are transparently disclosing the contract summary and on-site materials through the media and our website, and we are also planning investor briefings in the future.”
Regarding concerns that the largest shareholder’s stake was diluted due to convertible bond conversions and paid-in capital increases, a company representative explained, “These measures were planned in advance, taking into account the possibility of convertible bond conversion, and were intended to secure operating funds necessary for new business initiatives.” The representative also emphasized, “We have already established various measures such as securing friendly shares and linking voting rights to ensure that the largest shareholder can maintain effective management control, so there is no impact on management rights.”
The company announced that as of the first half of this year, sales in the steel division turned to an increase compared to the same period last year. Although the company experienced temporary setbacks due to falling global steel product prices and weakened demand, it explained that its strategy of restructuring its product portfolio to focus on profitability has proven effective, leading to improved results. In particular, strengthening competitiveness in its main product, low-carbon steel wire rods, led to a significant increase in sales. A company representative stated, “We expect to continue the sales recovery trend in the second half of the year by expanding supply based on real demand.”
In conclusion, the company stated, “We will accelerate the transformation of our business structure based on mid- to long-term growth potential rather than short-term performance,” and added, “Along with the recovery of our steel division, we will realize a full-fledged turnaround by making the profitability of our nickel mining business visible.”
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
