Debt-ridden electronics goods maker Orient Power Holdings plunged into a $1.25 billion net loss last year from a $38.05 million net profit a year ago as a result of provisions and restructuring costs.
The maker of compact disc and DVD players said it had to make 'necessary' provisions of $903.14 million as it sought to put operations back on track and settle outstanding debts of $1.5 billion.
News of the staggering loss caused the company's share price to tumble 6 per cent to 18.8 cents, with 2.7 million shares trading within the first four minutes of the stock market opening yesterday. The group halted stock trading at 10.04am after realising its results announcement had not been published in print media yesterday.
Amid the hefty provisions, an ongoing debt restructuring and civil lawsuits with electronics giant Philips, auditor Ernst & Young clarified that its work on the group's profit and loss account was only of a limited scope. It concluded the report with a disclaimer.
The auditor said the Philips suit posed significant contingent liabilities, pending a High Court ruling.
Last year, Philips sued Orient Power and its subsidiaries for allegedly infringing its CD and DVD patents. Philips claimed unpaid royalties of more than US$60 million.
Contesting the claims, Orient Power said it had valid defence and believed it had made sufficient provision for the legal expenses. However, it did not expect the dispute to be resolved in the near future.
