China's Evergrande Property Services eyes up to 37% decline in annual profit

(This March 7 story has been corrected to say that related parties were also ordered to repay pledges, in paragraph 2)

(Reuters) - China's Evergrande Property Services Group said on Friday it expects to record a decrease of up to 37% in its annual profit for the year ended December 31, 2024, due to legal expenses related to a deposit pledge, among other reasons.

In early January, a Guangzhou city court ordered the firm's parent China Evergrande, together with Hengda Real Estate Group and other related parties, to repay pledge guarantees on deposit certificates totalling 13.4 billion yuan ($1.85 billion).

Evergrande Property began legal proceedings against its parent, the world's most heavily indebted property developer, early last year for using its deposits as collateral for pledge guarantees.

Evergrande Property expects to record an unaudited net profit between 980 million yuan and 1,120 million yuan in fiscal 2024, compared with 1,563.8 million yuan from a year before.

"The aforesaid decrease in profit was mainly due to non-operating expenses, such as late tax payments, and the adoption of a more prudent revenue recognition approach, rather than as a result of business operations," it said.

The unaudited consolidated revenue for fiscal 2024 is expected to be between 12,650 million yuan and 12,850 million yuan, compared with 12,486.5 million yuan from a year before.

The company is still in the process of finalizing its annual results.

($1 = 7.2350 Chinese yuan renminbi)

(Reporting by Sherin Sunny in Bengaluru; Editing by Mrigank Dhaniwala and Vijay Kishore)