(Yicai) Dec. 19 -- Shares of Country Garden Holdings’ listed property management arm tumbled after the unit said profit for this year will likely fall by as much as CNY4.1 billion (USD576 million) because of impairment provisions.

Country Garden Services Holdings [HKG: 6098] closed down 11.7 percent at HKD6.11 (78 US cents) per share in Hong Kong today, extending the stock’s decline this year to nearly 70 percent.

Net profit will fall by CNY3.2 billion to CNY4.1 billion (USD449 million to USD576 million) in the 12 months ending Dec. 31, the Foshan-based manager of residential buildings and industrial parks said in a bourse filing yesterday.

It will book an impairment charge on goodwill and other intangible assets to the tune of CNY1.4 billion to CNY1.8 billion, mainly because some subsidiaries failed to develop as expected and some existing businesses are undergoing adjustments. The payment cycles of some clients are getting longer, resulting in less-than-ideal cash flow, it added.

Moreover, trade receivables owed by related parties will result in impairments of CNY1.8 billion to CNY2.3 billion, the company said, explaining that these parties are involved in property development and related businesses and face liquidity pressures. It is prudent to book such large impairments, the firm added.

Country Garden Services said the provisions will not impact its cash flow, adding that the group has ample funds for sustained and stable operations. The company has adjusted its business strategy as the scale of related-party business was already pared from last year. It will make every effort to recover the outstanding payments, the firm added.

In the first half, trade receivables from related parties reached CNY2.3 billion, up 33 percent from a year ago, per the company’s interim results. Receivables from third parties rose by 13 percent to CNY16.1 billion (USD2.3 billion).

Chief Financial Officer Huang Peng said in August that Country Garden Services would reduce some unnecessary services related to transactions when necessary.

Editor: Emmi Laine