LONDON (Alliance News) - Chinese sorbates producer Sorbic International PLC on Tuesday said trading remains challenging as it works to repair damage done by its former chief, as its swung to a pretax loss in the first six months of its financial year.
The company said its pretax loss for the six months to the end of March was GBP453,895, compared to a GBP34,323 profit a year earlier. The loss was driven by higher administrative expenses and a weaker gross margin for the company.
Revenue was down to GBP6.6 million in the half, from GBP7.5 million a year earlier, primarily due to lower selling prices and due to an element of adverse foreign exchange translation. The group said its sales continue to be dominated by exports to the US and to the Chinese domestic market.
Non-Executive Chairman John McLean said that while demand for the group's products remains solid, cash transfer issues, negotiations in Inner Mongolia, the move to a new production site and issues with former Chief Executive Wang Yan Ting have made the current year challenging for the company.
Ting is refusing to hand over the corporate seals and business licenses of its Chinese operating subsidiary, and he is also refusing to handover about GBP7.7 million in cash that Sorbic claims belongs to it, meaning its financial position remains uncertain.
Sorbic in April removed Wang as group CEO and as CEO of its Chinese subsidary, Linyi Van Science and Technique, because it was still frustrated by its inability to move money out of China, a move that Wang was blocking. It wanted the money to repay outstanding loan stock of about GBP3.75 million and to cover its own costs. It also terminated Wang's role as its legal representative in China, replacing him with a Chinese lawyer, and said it would focus on releasing the funds held within China, but has so far failed to do so.
Sorbic shares remain suspended.
By Sam Unsted; samunsted@alliancenews.com; @SamUAtAlliance
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