Seatrade Maritime is part of the Informa Markets Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

Provisions bring China Ocean Shipbuilding to $44m loss

Provisions bring China Ocean Shipbuilding to $44m loss
State-owned yard China Ocean Shipbuilding Industry Group (COSIG) is looking increasingly precarious as it tottered on a HKD337.4m ($43.5m) loss for 2013. Although this was a slight improvement from the HKD344.1m in 2012, and earned both material qualifications of its results as well as going concern issues from its auditors.

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.