Shareholders hold off on Gresik accounts

Rendi A. Witular, Jakarta

Shareholders of publicly listed PT Semen Gresik (SG), the country's largest cement producer, declined to approve the company's financial accounts, pending the completion of an ongoing forensic audit into subsidiary PT Semen Padang.

"We cannot approve something that is incomplete. We just have to wait for the company to restate its financial accounts after finishing the audit of Semen Padang," said a deputy at the Office of the State Minister for State Enterprises, Roes Aryawidjaya, after SG's annual shareholders meeting on Wednesday.

Roes is representing the government as the majority shareholder in the company during the meeting. The government controls 51 percent of SG, Mexican cement giant Cemex SA owns a 25.5 percent stake and the remaining 23.5 percent is held by the public.

Semen Padang assets and net profit account for 26.77 percent and 16.75 percent of SG's total assets and net profit, respectively.

The Jakarta Stock Exchange (JSX) suspended trading in shares of SG on Monday after auditor PricewaterhouseCoopers (PwC) issued a disclaimer for SG's 2002 and 2003 consolidated financial accounts due to the unaudited financial figures from Semen Padang.

Roes said that because SG's financial accounts were incomplete, the government had also decided to delay its plan to change the composition of the company's current management until the next shareholders meeting, which is scheduled for November.

"We are giving the current management a chance to finish its job. It is feared that replacing them during this bad time would disturb efforts to settle the audit problem," he said.

SG president Satriyo said the company's auditor, PwC, was in the process of conducting a forensic audit of Semen Padang to ensure there were no irregularities committed by the rebellious previous management of Semen Padang, which was replaced last year.

"The delay in completing the audit of Semen Padang is due to this forensic audit. We need such an audit because of poor document filing by Semen Padang's former management ... several documents have gone missing," said Satriyo.

But some analysts believe the forensic audit was launched in response to rumors that about Rp 550 million (US$58.5 million) of Semen Padang's assets, which are valued in total at about Rp 2 trillion, was pillaged by the previous management, which had demanded that the West Sumatra-based unit be separated from SG. That demand received the support of some local politicians.

Satriyo said there were no reports yet from PwC on the rumored "lost" Semen Padang assets.

"If there was a loss, the amount would be less than the rumored Rp 550 billion," said Satriyo.

The forensic audit is expected to be concluded in October.

The East Java-based SG has been facing difficulties in finalizing its 2002 financial report, which in turn has affected the completion of its 2003 report, due to problems at Semen Padang.

For months the new management team at Semen Padang could not enter the company's headquarters because of a blockade by the old management team. It was only in September last year that the new management was finally able to gain access to headquarters.

Many believe that during the blockade, the old management destroyed or stole some of the company's asset records.

"That is what the forensic audit is for. We will see whether there were any irregularities on the part of the old management during the blockade," said Satriyo.

Also during the meeting, SG shareholders voted to allocate Rp 103 billion, or Rp 174.68 per share, for dividend payments.

The dividend accounts for 30 percent of the combined net profit of SG and its South Sulawesi-based subsidiary PT Semen Tonasa. Their combined net profit reached Rp 345 billion last year.