Water purification company Ozner listed on the Hong Kong Exchange in 2014. In February 2015, it was attacked by short-seller Glaucus Research alleging that sales and profits had been faked and its depreciation period of ten years was double what it should be. Ozner denied the allegations which failed to prompt any resignations. In March 2020, Ozner issued a profit warning, indicating a loss of between RMB600-700m relating to COVID. In April, the company announced a delay in the publication of its audited FY19 financial statements ostensibly owing to COVID. When it finally published its audited financials in June, the losses of RMB1.2bn were far larger than initially indicated owing to impairments. In July, Ozner then disclosed that it had received a winding up petition on 30 June owing to its failure to repay a HK$327m debt. In August, Ozner issued another profit warning, indicating a loss of RMB1.2-1.5bn, relating primarily to COVID. It also changed the estimated useful life of the revenue-generating assets from ten to five years, in line with Glaucus' report five years earlier. Our A&G Screen indicated that Ozner's financials had traits similar to past frauds; however, auditor Ernst & Young consistently signed off on the financials. As such, although there is a strong suspicion that Ozner was a fraud, the allegations have only been partially proven. 

Last updated October 2021

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