Jetion - an awful announcement this morning!
They might produce high performance solar cells but communication is distinctly low performance – a further illustration of the risks associated with investing in the shares of China based small caps!
Having announced in January that they would meet market expectations Jetion has now issued a trading update stating that profit before tax is now expected to be reduced by approximately US$5 million and that profit before tax will be below market expectations - but not below US$20 million!
Despite the seemingly lowly valuation (c3x December 2008 numbers, haven’t a clue now for 2009!) management’s credibility is surely destroyed with today’s statement.
Management confirmed that the audited results for 2008 will show sales and gross profit in line with market expectations but as the audit has not actually been completed could further surprises await!
A sudden change of accounting policy relating to additional provisions against inventory and prepayments to suppliers has been the cause, but surely this was known!
Additional provisions against inventory and prepayments to suppliers at the year end total approximately US$3 million. Of this figure, US$1.8 million relates to prepayments to suppliers for silicon raw materials that, whilst paid for by the Company, have not yet been received post the year end. Does this mean that the suppliers in question have gone out of business?
How many more accounting adjustments can we anticipate?
Even the house broker agrees that management should not have made the January statement without knowing what the audited results would look like.
Having announced in January that they would meet market expectations Jetion has now issued a trading update stating that profit before tax is now expected to be reduced by approximately US$5 million and that profit before tax will be below market expectations - but not below US$20 million!
Despite the seemingly lowly valuation (c3x December 2008 numbers, haven’t a clue now for 2009!) management’s credibility is surely destroyed with today’s statement.
Management confirmed that the audited results for 2008 will show sales and gross profit in line with market expectations but as the audit has not actually been completed could further surprises await!
A sudden change of accounting policy relating to additional provisions against inventory and prepayments to suppliers has been the cause, but surely this was known!
Additional provisions against inventory and prepayments to suppliers at the year end total approximately US$3 million. Of this figure, US$1.8 million relates to prepayments to suppliers for silicon raw materials that, whilst paid for by the Company, have not yet been received post the year end. Does this mean that the suppliers in question have gone out of business?
How many more accounting adjustments can we anticipate?
Even the house broker agrees that management should not have made the January statement without knowing what the audited results would look like.