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Luxking's board expects "substantial net loss" for FY19
The board of Chinese adhesive tape product manufacturer Luxking Group Holdings on Friday said that the group expects to report a "substantial net loss" for the financial year ended June 30, 2019, based on a preliminary assessment of its FY2019 unaudited financial results.
"The expected net loss of the group’s unaudited financial results for FY2019 is mainly attributable to the decrease in the group’s sales, further impairment of the trade receivables, in addition to the impairment of trade receivables...and claims from some customers due to quality issues for the group’s biaxially oriented polypropylene films."
The impairment of trade receivables is due to its inability to recover outstanding receivables from a customer which had become uncontactable after closing its factory at Guangzhou without giving any advance notice. The customer had been trading on a regular basis with the group since 2003 and the last payment received from this customer was in February 2019, but it has since shut its operations at Guangzhou and all assets were removed from its factory and the owner had allegedly absconded.
Luxking had already flagged in April this year that it expects the impairment of trade receivables at about 17.4 million yuan (S$3.5 million) to have a significant impact on the group's FY2019 results.
Luxking said it is in the process of finalising its financial results for FY2019 and will disclose further details by Aug 29, 2019.