Indebted property giant China Evergrande said that the arrest of certain members of staff from its insurance unit Evergrande Wealth Management would have no impact on its operations, according to a filing by the property developer with Hong Kong Exchanges and Clearing (HKEX).
China Evergrande said that the detention of personnel from Evergrande Wealth Management, its wholly-owned subsidiary, “will not affect the company’s operations”.
Police in China detained – for the first time – a number of employees at China Evergrande Wealth two weeks after the group again failed to make payments on its investment products.
“The group has incurred significant losses as a result of the ‘13.4 billion yuan deposit pledge’ incident,” said Duan Shengli, Evergrande Property Services chairman. “The Group’s ability to continue as a going concern is dependent on having sufficient working capital to meet its financial obligations as they fall due over the next 12 months.”
“However, subject to the liquidity crisis of the related party, the group’s recovery of such losses is subject to material uncertainties and the company will keep the market informed of any progress in a timely manner by way of further announcements,” Duan added.
Aside from the loans extended to China Evergrande, Evergrande Property Services’ financial position improved with net profit attributable to the owners of the company rising by 43 per cent to 781.3 million yuan in the first half of 2023 from a year ago, according to the filing issued on Monday. Revenue was up 5.2 per cent to 6.14 billion yuan in the period.
As of June 30, total bank deposits and cash rose by 16.5 million yuan to 1.67 billion yuan owing to the “increase in the net cash inflow generated from operating activities of the group during the period”.
Net current liabilities, meanwhile, declined by about 24 per cent to about 2.525 billion yuan, Evergrande Property Services said. Its shares closed 5.5 per cent lower at HK$0.69 in Hong Kong on Monday.
According to the filing by China Evergrande on the arrested staff, the detained suspects were subject to “criminal coercive measures”, a term that usually refers to detention or restriction of movement.
China Evergrande also said that the reported takeover of Evergrande Life Insurance by Haigang Life Insurance, a new state-owned insurer, “has no significant impact on the company’s current business operations”.
Evergrande Life is 50 per cent owned by China Evergrande. The developer’s shares slumped by 1.61 per cent to HK$0.61 apiece on Monday in Hong Kong, before the filings were made.
The news is published by EMEA Tribune & SCMP