China’s Hanergy Thin Film unveils huge loss as auditor flags concerns

Hanergy Thin Film Power Group, majority-owned by mainland businessman Li Hejun whose brief status as China’s richest man ended when its share price plunged 47 per cent in an hour last May, said its net loss for last year was a whopping HK$12.23 billion.

The bulk of the loss incurred by the solar farm developer and maker of the production lines for solar power panel parts was HK$9.65 billion of asset impairments, HK$7.92 billion of which were on goodwill booked in the past when it acquired assets at higher prices than their net asset value, to reflect their current valuation.

The loss compared with a net profit of HK$3.2 billion in 2014, it said in a filing to Hong Kong’s stock exchange late on Thursday.

Revenue dived 70.7 per cent to HK$2.81 billion, which the firm said was due predominantly to its failure to deliver new production lines to its parent Hanergy Holding, its biggest client.

It also blamed the suspension of its shares’ trading by Hong Kong’s securities regulator for a “material negative impact on [its] reputation” that saw customers and suppliers cut, suspend or delay cooperation with it.

Despite slumping sales, employee compensation expenses jumped a third to HK$977.4 million.