Gome to book HK$420m windfall from jailed founder
Electrical appliance firm reports turnaround in profit on higher margins and tighter cost control
Mainland retailer Gome Electrical Appliances is expected to book the HK$420 million compensation from its jailed founder and his wife for their misconduct in the second quarter but has not yet decided how to spend the windfall.
"If the shareholders agree, then we will book the money in our cash reserve," said chief financial officer Victor Fang Wei yesterday.
"Before such an approval, it would be too early for us to decide on how to spend the money."
The meeting will be held next month.
Chairman Zhang Dazhong said stronger sales of high-margin products and effective cost control helped Gome to report a net profit 892 million yuan (HK$1.13 billion) last year - a turnaround from a loss of 728 million yuan in 2012. "We are optimistic Gome will continue to have strong growth over the next few years," Zhang said.
Wong Kwong-yu, founder and former chairman of Gome, and his wife, Du Juan, last week reached a settlement with the SFC in which they agreed to pay HK$420.6 million to the company as compensation for misconduct in a 2008 share repurchase deal. In return, the SFC would not take any further action against them.