China New Energy flags “going concern” risk after 2015 loss

Biorefineries builder China New Energy Ltd (LON:CNEL) on Thursday posted an attributable net loss of CNY 25.6 million (USD 3.9m/EUR 3.5m) for 2015 and said there is “significant doubt” as to its ability to continue as a going concern.

The Chinese firm booked a CNY-8.5-million loss a year ago.

"Due to the uncertainty of the industry and economic slowdown in P.R. China, together with working capital risks, the Directors consider 2016 is not going to be a good year." Projects in Africa, Thailand and Hungary are facing delays.

As at end-2015, the firm had net liabilities of CNY 5.7 million. Blaming its troubled position on significant operating losses during 2015 and the the low level of investment in the industry, the company is now evaluating new funding options. It said it is relying on advance project payments from customers and delaying payments to suppliers.

China New Energy's gross profit went up to CNY 7.7 million last year from CNY 4.3 million in 2014. Revenues in 2015 grew by 7.6% year-on-year to CNY 61.7 million, chiefly thanks to the provision of maintenance services to existing clients.

“Despite the low oil price and, consequently, the lower level of investment in the biofuel industry during the year under review, I am pleased that we have increased our revenue and have won contracts and opportunities to expand into new regions,” chairman Yu Weijun said.

(CNY 1.0 = USD 0.150/EUR 0.136)

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