DENTED by a bad debt provision of 139.5 million yuan, Bio-Treat Technology said yesterday its net profit for the full year ended June 30 slumped 62 per cent to 125.43 million yuan (S$26 million).
The fall came as revenue also slid 11.6 per cent to 1.41 billion yuan, mainly because of fewer turnkey projects, resulting in a 19 per cent decline in revenue from its wastewater treatment services to 1.1 billion yuan. At the same time, administrative costs, tax expenses and other operating costs - of which bad debt provisions were a part - rose.
Earnings per share fell to 0.14 yuan from 0.37 yuan.
Bio-Treat explained there were fewer turnkey projects in the fiscal year because of slower business activities and longer credit cycles in China.
The group will continue its practice of cherry-picking quality wastewater treatment projects while avoiding long credit periods and minimising its risk exposure, Bio-Treat said in a release. It will also seek out suitable strategic partners in developing new businesses.
'Bio-Treat's sound business fundamentals have mitigated the effects of difficult market conditions to post a reasonable set of results,' Bio-Treat chief executive Dennis Chan said. The group expects to stay profitable in fiscal 2009.
He added that the group will continue to focus on renewing its business model, including reducing its reliance on turnkey projects and growing its build-operate-transfer (BOT) and transfer-operate-transfer (TOT) segment.
Higher water tariffs from BOT and TOT projects in the near future is expected to cushion some of the group's cost pressures and improve operating margins, he said.
In a separate filing with SGX, Bio-Treat said it has received notices from Morley Fund Management, Highbridge Asia Opportunities Master Fund, Highbridge International and Citigroup Global Markets, each claiming that the group failed to redeem the full amount of bonds that were put to the company on Jan 18.
The financial houses said this constitutes an event of default which entitles them to accelerate the bonds held by them, making them immediately due and payable. They stated that they held bonds with a total face value of $23 million.
In response, Bio-Treat said it is seeking legal advice.
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