HONG KONG, July 12 (Reuters) - China’s top hypermarket operator Sun Art Retail Group Ltd said on Wednesday it expected to post a significant increase in first-half net profit, thanks to unused balances on prepaid cards issued before June 30, 2012.
The joint venture of Taiwanese conglomerate Ruentex Group and French retailer Groupe Auchan SA said it had 9.702 billion yuan ($1.43 billion) in “advance receipts from customers” under “trade and other payables” as of end-2016.
The amount was attributable to the unused balances on pre-paid cards issued a number of years ago, Sun Art said in a filing to the Hong Kong bourse.
“As the number of long-aging pre-paid cards has continued to increase over time, the total unutilised balance on such prepaid cards ... has also gradually accumulated and began contributing to a larger percentage of the total balance of all prepaid cards in issue,” Chairman Cheng Chuan-tai said in the statement.
Many Chinese buy pre-paid cards as gifts.
Preliminary analysis showed that the estimated mid-2012 unutilised balance amounted to over 15 percent of the total balance of all pre-paid cards issued as at Dec. 31, 2016, and the portion of the unutilised balance unlikely to be used is estimated at 460 million yuan.
The amount will contribute to about 345 million yuan after tax to the company’s consolidated net profit for the six months ended in June, Sun Art said.
It said it may recognise further amounts in future.
In a separate statement, Sun Art said Bruno Robert Mercier had resigned as chief executive officer with immediate effect to pursue personal and entrepreneurial projects, but would stay on as a senior adviser until the end of 2019.
Ludovic Frédéric Pierre Holinier has been appointed as the new chief executive.
Sun Art earlier this year had offered a slightly downbeat outlook for growth in its mainstay hypermarket business, and slowed store openings amid increasing competition from e-commerce.
$1 = 6.8010 Chinese yuan renminbi Reporting by Donny Kwok; Editing by Stephen Coates