Hayleys MGT suffers Rs. 625 m loss in 3Q over provisioning

Hayleys MGT Knitting Mills has suffered a Rs. 625 million net loss in the third quarter of 2010/11 financial year on account of provisioning in connection with the discrepancies on inventories.

The extraordinary loss converted the first nine months bottom line to a negative Rs. 599 million as against a profit of Rs. 228 million.



Gross turnover however was up by 10% to Rs. 1.5 billion in the third quarter and up 21% to Rs. 5.2 billion in the first nine months.

The Company said that impact on the discrepancies was US$ 3.27 million ($ 1.1 million for trade receivables and $ 2 million for inventories).

It said a special audit verification carried out by Messrs B R De Silva, Chartered Accountants, and, Messrs.SJMS Charted accountants, on trade receivables and inventories respectively revealed the following.

There were discrepancies between the value of physical balance of inventories and that of financial statements.

Net realizable value of certain categories of inventories could be lower than that of weighted average cost.

Trade receivables were over stated as some credit notes due have not been recorded

The discrepancies were first announced late last year as well as likely loss in third quarter accounts though the exact impact was unknown at that time. Company’s share price yesterday closed  down by 10 cents to Rs. 31.90.