21st Jan 2015 11:42
LONDON (Alliance News) - Gowin New Energy Group Ltd saw its shares slide Wednesday after it warned investors to expect a big writedown when it reports full-year results for 2014, blaming difficulties in collecting money owed to the company by its debtors.
In a statement, Gowin New Energy said its working capital position has been "severely constrained" by continued delays with debtor recoverability.
Since October last year, the company has collected less than CNY1 million from its debtors. At the end of last year, the unaudited balance of accounts receivable was CNY157 million, up from CNY91 million a year earlier.
"The company has engaged with its debtors aggressively: many of them cite their own liquidity challenges, some commit to payment dates and then defer; notwithstanding that most of the company's debtors remain committed to paying their aged debts, the company anticipates a significant write down of its aged receivables in its 2014 report and accounts," Gowin New Energy said in a statement.
Gowin New Energy said it is executing "stringent" credit risk management policies with clients, including postponing sales to clients with aged accounts receivable.
The company said it is continuing to look for external financing to alleviate the constraints to its working capital position but has had to look for alternatives to banks in China, which it said have become less willing to provide debt financing.
"A slowdown in economic growth, tighter prudential regulation and increased liability have made banks in China much more risk-averse to lending. The company has therefore been in discussions with certain other potential financiers, including strategic partners in fund raising, and a further announcement will be made in due course," Gowin New Energy said.
The company said it has made "encouraging progress" with export sales, with a number of overseas contracts under negotiation.
It said its directors are "optimistic" that the contracts will be signed within the first half of 2015.
Gowin New Energy Group shares were down 37% at 0.690 pence on Wednesday, making it the worst-performing stock on the AIM All-Share index.
By Samuel Agini; [email protected]; @samuelagini
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