Emeco to incur Indonesian debtor impairment

Australia-listed earth-moving solution provider Emeco Holdings Limited reported on Monday it will incur a post-tax impairment charge of A$5.9 million ($7.85 million pre-tax) in its first half results relating to an undisclosed debtor in its Indonesian business.

Managing Director Keith Gordon said the impairment was very disappointing.

Gordon said ?Over the last six months, Emeco Indonesia has continued trading with this customer, a mining contractor, while it faced equipment and operational issues beyond its control. Continuation of trading was predicated on a transparent mine plan which demonstrated that the debt incurred would be recoverable. However, information received from the customer over the weekend has now cast serious doubt over the recoverability of the debt owing at 31 December and management feels it is now prudent to impair it. Management will assess its commercial and operational options with this customer over the next few days, which include the potential re-deployment or stand down of equipment.?

Emeco has operated in Indonesia since 2000 and remains committed to the region. Gordon said ?Despite this impairment, we see strong commodity fundamentals in the market and we have high levels of enquiry for our equipment from customers which will limit the impact on future earnings with respect to this fleet. Although this is a localised one-off event, we will take steps to ensure that circumstances such as this will not be repeated.? (alex)