HK$785m goodwill writedown sees Wanjia record second-quarter loss
Hong Kong-listed Wanjia Group, a wholesaler and distributor of pharmaceutical and healthcare products in Fujian province, has revealed a loss attributable to shareholders in the second quarter of HK$774.9 million, compared with a profit of HK$13.8 million for the same period last year.
The loss is more than double the firm’s market capitalisation of HK$330 million.
Turnover dropped 29 per cent year on year, with sales of HK$398.5 million.
Wanjia attributed the loss to a one-time writedown of goodwill, for which it took a hit of HK$785 million.
In a profit warning earlier this month, the firm said the Fujian Food and Drug Administration had said in April that only selected distributors would be allowed to distribute medicine to public hospitals and healthcare institutions.
It said the new rules, which would cause a “significant decrease in sales to our distributor customers”, would take effect in 2016.
While one of the firm’s subsidiaries is on the list of approved distributors in Fujian, other units are likely to see their sales restricted, and Wanjia said it had accordingly written down the goodwill value of those entities.
Shares in Wanjia have lost about 10 per cent so far this year.