The Production Fee is an important source of revenue. How does SinterCast ensure that the production volumes are accurately reported, particularly as the number of licensees increases? Will the growth of the business require more administrative resources and costs in the future? Shareholder, name withheld

The reporting of the Production Fee has been well established over the last 15 years.  Customers report the production on a monthly basis and the majority of reports are received on time.  SinterCast’s Finance and Administration team has good contact to each customer and the initial follow-up of tardy reports is made on a personal level.  In the event of longer delays, the responsible sales person or the local country manager can also follow up.  In practice, there have not been any significant problems with timely and accurate reporting.

The production reporting is largely an honour system.  However, there are checks and balances.  The primary check is via the ladle-by-ladle production records in the computer of the SinterCast process control systems installed in the foundry.  Every month, SinterCast downloads and reviews the production statistics at each customer and generates a “Benchmarking Efficiency Report” to provide recommendations for process optimisation.  If there is a divergence between the number of ladles treated by the SinterCast system and the volume reported by the foundry, a follow-up enquiry can be made to the customer.

In the event of an ongoing divergence between the SinterCast production records and the reported volume, the contracts provide for SinterCast to request a production certificate from an auditor.  However, in our experience, there has never been a significant problem with the accuracy of the production reporting.  Indeed, our routine checks have identified a few errors over the years and these cases have been quickly and positively resolved. 

Overall, we understand that reporting errors can be made, but we have no reason to be concerned about the integrity of the reporting.  The process works well and the customers understand that SinterCast has ladle-by-ladle documentation of the production. Based on past experience and the current outlook, we don´t see any need for changes or additional administration in the future.