Qunxing Paper's full-year profit to 'decline significantly'

No thanks to fixed asset depreciation.

According to HKEx release, the board of directors of the Company announced that upon receiving the Group’s management accounts for the year ended 31 December 2012, the Board has conducted a preliminary assessment of the Management Accounts and expected that the profit of the Group for the year ended 31 December 2012 may decline significantly as compared with that for the corresponding period in 2011. 

The Board considers that the expected decline in the Group’s profit was mainly attributable to the increase in the depreciation of fixed assets as compared with that for the corresponding period last year due to the commercial operation of rebuilt Production line no. 2 since March 2012.

Nevertheless, the sales volume of products did not increase as expected, leading to the increase in average product cost which in turn caused a decline in gross profit margin.

Further, loss on disposal recognised on the disposal of the aged Production line no. 2 and increment in administrative expense resulting from the Company’s measures to investigate audit issues raised by its former auditors.

However, the Board would like to emphasise that the Group’s financial position remains solid with sufficient cash resources.