China Evergrande rejects claims it was never profitable in report centred on changes to its accounting method
- Evergrande changed its revenue-recognition method in its published accounts from 2021, prompting claims it was ‘never profitable’
- Chinese developer rejects claims about its past profit history, without identifying the report or authors
“The company’s financial statements for the previous years were audited by PricewaterhouseCoopers and received standard unqualified opinions,” executive director Shawn Siu said in a stock exchange filing on Tuesday. “In PricewaterhouseCoopers’ resignation letter, the revenue recognition in previous years was not questioned.”
Evergrande, whose US$20 billion offshore debt reorganisation collapsed last month, changed the revenue-recognition methodology for 2021 to be consistent with the standards under current circumstances, according to the latest filing. The decision was made in light of its liquidity crisis and the substantial loss of staff, it added.
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The Guangdong-based developer did not identify the firm or the analysts making the allegations about its profit history.
GMT Research, a Hong Kong-based accounting research firm founded by former CLSA and Nomura analyst Gillem Tulloch, published a report on December 1 focusing on the changes to the developer’s accounting treatments. The firm was among the earliest to raise red flags on the developer more than five years ago, citing many unfinished housing projects.