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Saturday, 7 March 2009
Late payers making it ugly for Beauty China
The financial crisis has exacted a heavy toll on Beauty China’s balance sheet, with a startling rise in the number of cash-strapped customers defaulting or deferring payments.
The financial crisis has exacted a heavy toll on Beauty China’s balance sheet, with a startling rise in the number of cash-strapped customers defaulting or deferring payments.
A 90-minute results briefing yesterday heard how the cosmetics and skin-care firm wrote down HK$42.4 million (S$8.5million) for impairment in trade receivables for the full year, more than eight times the HK$5.2 million it allowed for in 2007.
It had earlier announced a 28.9 per cent fall in full-year net profit to HK$115 million, from HK$161.9 million in 2007.
‘Trade debtor collections will be an area of management attention,’ said its financial controller, Mr. Joe Wong.
The company, which owns the CharmingLady and Colour Zone brands, has also ceased trading with 11 of its 90 distributors after the firms, all small and medium-sized players, ‘persistently’ failed to make payments, he added.
This has led to a closure of about 50 of the 2,200 or so retail outlets in China.
He said a portion of money outstanding is recoverable but it will require a longer period because the pace of repayments has slowed.
Beauty China has utilised various resources to collect trade receivables in the last couple of months, including appointing debt recovery agents and taking legal action, he said.
He also warned of a challenging operating environment as consumers tighten their belts. While sales were brisk over Chinese New Year, there has been an ‘obvious decline in same-store sales in February’, he said.
The company will review and adjust retail expansion plans based on its working capital position and market demand.
Its shares plunged 70 per cent on Monday, due largely to the forced sale of mortgaged shares owned by Mr. Wong Hon Wai, the company’s major shareholder, founder and chairman.
Its shares were trading at as low as 12.5 cents before closing one cent or 6.9 per cent down at 13.5 cents yesterday.
The firm’s executive director, Mr. Stephen Tsim, said it was not appropriate for the company to comment as it is a ‘personal matter’.
Mr. Wong Hon Wai is in talks with an unnamed party to sell his 38.57 per cent stake in the cosmetics company.
Mr. Tsim said the company was unable to provide additional information on the unnamed party who had approached the chairman on a personal basis, he said.
He added that while Mr. Wong Hon Wai has committed himself to assisting the company for a certain period, there should be no direct impact if he decides to leave.
1 comment:
Late payers making it ugly for Beauty China
YANG HUIWEN
7 March 2009
The financial crisis has exacted a heavy toll on Beauty China’s balance sheet, with a startling rise in the number of cash-strapped customers defaulting or deferring payments.
A 90-minute results briefing yesterday heard how the cosmetics and skin-care firm wrote down HK$42.4 million (S$8.5million) for impairment in trade receivables for the full year, more than eight times the HK$5.2 million it allowed for in 2007.
It had earlier announced a 28.9 per cent fall in full-year net profit to HK$115 million, from HK$161.9 million in 2007.
‘Trade debtor collections will be an area of management attention,’ said its financial controller, Mr. Joe Wong.
The company, which owns the CharmingLady and Colour Zone brands, has also ceased trading with 11 of its 90 distributors after the firms, all small and medium-sized players, ‘persistently’ failed to make payments, he added.
This has led to a closure of about 50 of the 2,200 or so retail outlets in China.
He said a portion of money outstanding is recoverable but it will require a longer period because the pace of repayments has slowed.
Beauty China has utilised various resources to collect trade receivables in the last couple of months, including appointing debt recovery agents and taking legal action, he said.
He also warned of a challenging operating environment as consumers tighten their belts. While sales were brisk over Chinese New Year, there has been an ‘obvious decline in same-store sales in February’, he said.
The company will review and adjust retail expansion plans based on its working capital position and market demand.
Its shares plunged 70 per cent on Monday, due largely to the forced sale of mortgaged shares owned by Mr. Wong Hon Wai, the company’s major shareholder, founder and chairman.
Its shares were trading at as low as 12.5 cents before closing one cent or 6.9 per cent down at 13.5 cents yesterday.
The firm’s executive director, Mr. Stephen Tsim, said it was not appropriate for the company to comment as it is a ‘personal matter’.
Mr. Wong Hon Wai is in talks with an unnamed party to sell his 38.57 per cent stake in the cosmetics company.
Mr. Tsim said the company was unable to provide additional information on the unnamed party who had approached the chairman on a personal basis, he said.
He added that while Mr. Wong Hon Wai has committed himself to assisting the company for a certain period, there should be no direct impact if he decides to leave.
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