"The loss during the six months ended 30 June 2013 was primarily due to the sluggish global shipping market that caused significant decline in new shipbuilding orders and the delayed progress of fulfillment of existing shipbuilding orders. Amid the challenging operating environment, certain of the group’s shipbuilding customers have asked for postponement in delivery of new vessels that led to slower collection of receivables from such customers," Rongsheng said.
Net operating cash outflows of RMB719.18m have caused the group’s cash and cash equivalents to decrease by RMB1.27bn to RMB870.82m as at 30 June 2013. Some of the group’s total borrowings of RMB24.85bn, require it to comply with restrictive financial covenants. "The above conditions indicate the existence of uncertainties which may cast doubt on the group’s ability to continue as a going concern," management said.
"The global shipping market staggers to the supply-demand imbalance, thus slowing down the overall recovery of the shipbuilding industry. Although the industry has recently showed positive signs that point to a rebound, neither new order price nor volume confirms a recovery," said chairman, executive director and ceo Chen Qiang.
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