Chinese refrigerator maker Guangdong Kelon Electrical Holdings Co. Ltd. said Monday its net loss for the year sharply widened to US$472 million (euro370 million) partly due to substantial bad debts.
The company, whose Hong Kong-listed shares have been suspended since June 2005, posted a net loss of 3.77 billion Chinese yuan (US$472 million; euro370 million) for the year ending December 2005, compared to a restated net loss of 236.75 million yuan a year ago.
Revenue fell to 6.98 billion yuan (US$874 million; euro686 million) from 7.92 billion yuan.
Trading in Kelon’s shares was suspended due to its legal troubles in China. The company’s former chairman, Gu Chujun, was arrested for alleged embezzlement. The stock will remain suspended until further notice, the company said in a statement.
Kelon has taken legal action against its largest shareholder Guangdong Greencool Enterprise Development Co., which is suspected to be connected to Gu.
Kelon said Guangdong Greencool had carried out a series of transactions during 2001 to 2005 harmful to the company.
Some of the transactions included unauthorized use of the group’s funds, fictitious sales of goods and scrap materials, as well as unreasonable prepayments and purchases of raw materials, property and plant at unreasonable quantities and prices, the company said.
Kelon said its single largest shareholder will soon be changed, but it didn’t elaborate.
The incident hindered Kelon’s financing ability and halted nearly all of the company’s production during the reporting period’s peak season of refrigerators and air conditioners from May to September, the company said.
The Chinese refrigerator maker, which was fined in early July by China’s securities regulator for inflating profits between 2002 and 2004, also attributed 2005 net losses to “substantial bad debts, substantial accrued expenses, defective inventories, excessive non-performing investments, idle assets and economic disputes.”
The company was fined in early July by China’s securities regulator for inflating profits between 2002 and 2004.
From chron.com