China Forestry Holdings Co., a timber supply company partly owned by the Carlyle Group, said it has resumed harvesting after irregularities in its accounts led to a first-half loss and spurred an investigation.
Net loss was 130 million yuan ($20 million), or 0.04 yuan a share, for the six months ended June 30, compared with net income of 429.3 million yuan, or 0.14 yuan, a year earlier, the company said today in a filing to the Hong Kong Stock Exchange.
China Forestry disclosed accounting irregularities and blamed former managers in statements earlier this year. China’s reputation among investors has been strained in recent months after short sellers said Chinese companies from Longtop Financial Technologies Ltd. to Sino-Forest Corp. were exaggerating operations.
With a new management team, “we have resumed harvesting activities since August,” China Forestry said in the statement. “A targeted marketing campaign is underway to explore new markets and gain new customers.”
China Forestry, which has been suspended from trading since Jan. 26, halted harvesting work in the first half of the year. The company on July 13 said it would report a first-half net loss because of “irregularities” in its financial statements and interest expenses.
The company today said it is still conducting an investigation.
Cash Balances
China Forestry said it had cash and bank balances of about 1.2 billion yuan as of Aug. 26. Together with financing facilities, it has the resources to rebuild its business, the statement said. It has started trading timber logs, it said.
Bank statements provided by former executives to auditor KPMG LLP were falsified, China Forestry said in its April filing. Li Han Chun, the former chief executive officer, was detained in China in February for allegedly embezzling 30 million yuan, the company said.
Li and his personal company engaged in insider dealing when they sold 119 million shares of China Forestry through a share placement on Jan. 12, Hong Kong’s Securities and Futures Commission said in a March statement.
China Forestry operates timber lands in southwestern China’s Sichuan and Yunnan provinces.