RCG Holdings (HKG:0082) expects a significant net loss for the full year ended 31 December 2011. The company said that, during 2011, it focused on the Solutions, Projects and Services business segment, reduced its reliance on the less profitable distributorship model and divested less profitable and non-core businesses. As a result of the reduction in distribution sales and continuing delays on certain projects in the company's Solutions, Projects and Services business segment, revenues for the year ended 31 December 2011 are estimated to have decreased by approximately half compared with the prior year.

The group continues to experience margin pressure in both the Consumer and Enterprise business segments with lower selling prices arising from increased competition, coupled with rising cost of sales. These trends, together with the substantial disposal of surplus inventory by the group in the second half of the year at discounted prices, have resulted in substantially lower gross margins than have been achieved in the past, the company said.

The board has decided to make very substantial further impairment provisions against the carrying value of trade receivables, in addition to the impairment provisions made at the half year stage; this, combined with the lower revenues and margins referred to above, has contributed to a significant net loss for the full year ended 31 December 2011 which is estimated to be materially larger than the net loss reported for the first half of 2011.