- POSTED: 15 Aug 2014 19:54
A film production unit recently purchased by Chinese e-commerce giant Alibaba suspended trading of its stock Friday after the discovery of possible accounting inconsistencies.
HONG KONG: A film production unit recently purchased by Chinese e-commerce giant Alibaba suspended trading of its stock on Friday (Aug 15) after the discovery of possible accounting inconsistencies.
Alibaba Pictures, formerly ChinaVision Media Group, has said the possible irregularities happened before Alibaba's purchase of a 60 per cent stake in the film production firm in June. "The new management has identified certain possibly non-compliant treatment of financial information in the company's accounting records," it said in a filing to the Hong Kong stock exchange.
The announcement comes as Alibaba prepares for a highly-anticipated multi-billion-dollar New York stock market launch, expected to take place after September 1. Analysts have said the Initial Public Offering (IPO) could raise US$15 billion (S$19 billion) or more, putting it on par with Facebook's US$16 billion listing in 2012.
Alibaba Pictures added there was "insufficient provision for impairments of certain assets" for the year leading up to June 30, 2014, without giving further details.
In a statement released on Friday, Alibaba said it "fully supports" the new management of Alibaba Pictures as it undertook to "thoroughly review and rectify the possible financial non-compliance."
Alibaba has been bolstering its investments in Chinese entertainment companies, including a US$1.22 billion stake acquisition in Youku Tudou, a Chinese video streaming service similar to YouTube, in April.
The e-commerce firm is often described as China's version of Amazon or eBay, and operates the country's most popular internet retail platform, Taobao. Taobao is estimated to represent more than 90 per cent of the online market for consumer-to-consumer transactions.
Founder Jack Ma set up Alibaba in 1999, convincing friends to give him US$60,000 to launch the company. Alibaba began life as a platform for Chinese manufacturers to connect with foreign buyers, followed by the launch of Taobao in 2003.