Revenue plunged to HK$491.1m from HKD1.87bn previously as orders dried up and yard efficiency fell.
To make matters worse, the group agreed to give concessions to a long-term customer. Amounts owed by this customer amounted to HKD167.9m and COSIG expects to give a hair cut. It has accordingly made a provision of HKD84.0m for impairment of trade receivables.
Furthermore, the group's independent auditor gave this qualifying statement, which was cited in its stock market release. "In addition to a number of operational issues, the group’s current liabilities exceeded its current assets by approximately HKD1,507,637,000 and the Group had net liabilities of approximately HKD1,037,202,000 as at 31 December 2013. These conditions indicate the existence of material uncertainty which may cast significant doubt on the group’s ability to continue as a going concern and therefore it may be unable to realise its assets and discharge its liabilities in the normal course of business," it said.
The auditors also pointed out that the group has borrowings of approximately HKD6.9m which are overdue during the year ended 31 December 2013, and have become repayable on demand.
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