Danh Khoi's ability to continue operating was doubted by auditors, profits "evaporated" into losses after audit

Profit turned into loss after review, auditor doubts ability to continue operation

According to the audited consolidated financial statements for the first half of 2024, Danh Khoi Group Corporation (code NRC) recorded net revenue in the first half of 2024 of only VND 2.5 billion. Excluding expenses and taxes, NRC had a net loss of nearly VND 10.4 billion. The figure is surprising because the company previously reported a net profit in the second quarter of 2024 of nearly VND 4.5 billion, and a profit in the first half of 2024 of more than VND 7.1 billion.

The 2024 Annual General Meeting of Shareholders of Danh Khoi Group Joint Stock Company approved the 2024 business plan with a revenue growth target of 432.09%.

In addition to business difficulties, Danh Khoi also has problems with debt when the short-term debt balance is 342.4 billion VND, of which overdue bond debt is 139.5 billion VND and interest is 24 billion VND. In addition, this group also owes 102.2 billion VND in taxes; interest expense for late payment of taxes is 25.6 billion VND. This enterprise also has to pay nearly 6.8 billion VND to employees.

In the first half of 2024 financial statements, Moore AISC auditors gave an exception opinion on the fact that the group recorded income from the penalty for breach of contract with Danh Khoi Holdings (related party) during the period, with a book value of VND 66 billion. This amount was used by Danh Khoi Group to contribute capital to cooperate in business with ABFAST JSC in Area C, Dai Nam Residential Area project, Phu Tan ward, Thu Dau Mot city, Binh Duong province.

However, at the time of preparing the financial statements, the auditor stated that it had not yet collected sufficient appropriate audit evidence to assess the effectiveness of this cooperation in the short term. Therefore, the auditor could not determine whether it was necessary to adjust these figures or the impact, if any, on other items in the interim financial statements. The auditor also emphasized the going concern assumption and the commitment to going concern of Danh Khoi's management.

Thousands of billions of dong lie in receivables

In addition to the receivables from Danh Khoi Holdings Investment, Danh Khoi also has a short-term receivable of nearly VND 89.4 billion from Vi Nam Construction - Trade and Service Company Limited regarding the Group's acceptance of the Market and Trade Center of the LaGi New City project. In addition, there is a short-term receivable of nearly VND 160 billion from NTR Real Estate Investment Joint Stock Company.

This is the deposit under contract No. 01 dated December 20, 2021 signed with NTR Real Estate JSC (formerly related party) on the exclusive brokerage agreement for future real estate products at the urban development investment project in subdivision No. 4 at Nhon Hoi Eco-tourism Urban Area. Danh Khoi Group said that the remaining balance to be collected at the end of the second quarter was nearly 160 billion VND and the Group will collect this debt to repay the bond debt to bondholders related to the bond package coded NRCH2123002.

Notably, Danh Khoi also has two business cooperation contracts with ABFAST JSC (VND 258 billion) to implement subdivision D, Area C of Dai Nam Residential Area project (Thu Dau Mot City, Binh Duong Province); ABFAST was established in April 2021 with a charter capital of VND 5 billion, contributed by Mr. Trinh Nguyen Khoa (90%) and Trinh Thu Huong (10%).

At the end of 2023, this company increased its charter capital to 440 billion VND, the shareholder structure now includes: Ms. Tran Thi My Le (3%), Ms. Nguyen Ha Kim Trang (88.18%), Do Xuan Phuoc (2%), Mr. Trinh Nguyen Khoa (3.41%), Mr. Bui The Nguyen (3.41%). The General Director and representative of the company is Ms. Nguyen Ha Kim Trang (born in 1997).

In March 2019, this businesswoman, born in 1997, contributed VND 262.64 billion (accounting for 98%) to establish Saigon Non Nuoc Tourism Real Estate Company Limited, the remaining 2% of capital was contributed by Danh Khoi Holdings Investment Joint Stock Company. By May 2020, this company increased its capital to VND 418 billion, of which AKV CO., LTD held 35.88%.

In addition, Danh Khoi also cooperated with Tan Tien Trading and Investment Company Limited in The Balé – Mui Ne Tourist Area project (Binh Thuan province). These are all legal entities more or less related to Danh Khoi, established in 2007. By February 2024, Tan Tien had a charter capital of VND 390 billion, with 99% of the capital held by Libra Real Estate Company Limited. The authorized person to hold the above shares is Mr. Nguyen Dinh Tu. Mr. Tu is the Chairman of Phu My Infrastructure Construction Company Limited - a legal entity whose major shareholder was Danh Khoi Holdings.

In the context of the difficult real estate market, some business cooperation agreements with related parties have fallen into a state of project implementation delays, extending the period of principal recovery and profit sharing from business cooperation contracts. Many receivables from related/affiliated legal entities of the group have even become a “burden” of bad debt.

Source: https://www.congluan.vn/danh-khoi-bi-kiem-toan-nghi-ngo-kha-nang-hoat-dong-lien-tuc-loi-nhuan-boc-hoi-thanh-lo-sau-soat-xet-post313617.html