Remy Cointreau halves value of stake in Dynasty

Remy Cointreau has halved the estimated value of its stake in Chinese winemaker Dynasty over the past two years, amid ongoing uncertainty around the group’s financial situation.

Remy Cointreau wrote down an additional €10.9m impairment charge on its 27% stake in Dynasty in its most recent financial year, which ran to the end of March. It also recognised an extra €2.6m charge related to currency fluctuations. That effectively halved Remy’s valuation of its shareholding in the Chinese wine group.

In its annual financial statement, Remy Cointreau said that the decision was due to concern about a drop in Dynasty’s profits and the group’s failure to publish its 2012 and 2013 financial statements. Dynasty’s delay in releasing results was caused by an ongoing internal investigation into fraud, which last year led to a suspension of trading of the company’s stocks on the Hong Kong stock exchange.

Originally established by Remy Cointreau and the government of Tianjin, Dynasty was one of the first joint-venture wine companies between a domestic and foreign entity in the People’s Republic of China (PRC). The municipality of Tianjin still holds 45% of Dynasty’s shares. A further 28% was freely traded on the Hong Kong stock exchange.

The situation has threatened to cause tension in Dynasty’s boardroom, and between it and Remy. There were signs of frustration from Remy, which said earlier this month, ‘As at 30 September 2013 Dynasty Group had still not published its 2012 or 2013 financial statements, nor had it given the slightest indication to the market of when its shares would recommence trading or of how the investigations were proceeding… At 31 March 2014, the situation was more or less unchanged.’

However, a spokesperson for Dynasty denied any tension to DecanterChina.com, stating that ‘Mr. Heriard-Dubreuil Francois [chairman and CEO of Remy Cointreau] is still the vice-chairman and director of Dynasty. Remy Cointreau is still Dynasty’s long term strategic partner and the second largest shareholder since 1980.’

The spokesperson said that no deadline for its internal audit of the 2012 and 2013 annual results can be fixed

‘Since the update of the Internal Investigation has not been finalised as at the date of this announcement, no timetable for completion of the audit on the 2012 Annual Results and the 2013 Annual Results can be fixed.’ Dynasty said in a statement published at the end of May regarding the suspension of trade and the delay on the financial reports.

Dynasty would not give an opinion on its French partner’s decision to take an impairment charge. ‘Remy Cointreau has used external data such as financial analyses performed by stockbrokers and other expertise available on the market to test the value of the investment,’ it said.

Early this month, Dynasty appointed the current deputy general manager Yin Jitai as executive director and general manager, in place of Hao Feifei. Hao remains as an executive director, as well as chairman of the group.