DNVN - An independent auditor has just released many figures showing the existence of uncertain factors regarding the ability to continue operating of Vietnam Electricity Construction Joint Stock Corporation (VNECO, stock code: VNE).
In the audited consolidated interim financial statements (FS) for the accounting period ending June 30, 2024 of Vietnam Electricity Construction Joint Stock Corporation, the auditor emphasized: “In the accounting period ending June 30, 2024, the Corporation's sales and service revenue decreased by 49.78% compared to the previous year; net profit from business activities in the period was negative VND 56.3 billion. In the accounting period ending on the same day, the Corporation had a net cash flow from business activities of negative VND 6.2 billion.
The ability of the Corporation to continue as a going concern is dependent upon its ability to collect receivables, extend loans, pay payables from commercial banks, suppliers and future business performance.
These conditions indicate the existence of material uncertainties about the Corporation's ability to continue as a going concern”.
Auditors doubt the ability of Vietnam Electricity Construction Joint Stock Corporation to continue operating.
In the official dispatch explaining this issue issued on September 23, VNECO said that VNECO's production and business activities are greatly affected by the following force majeure risks.
The severe and prolonged COVID-19 pandemic from 2020-2022 has led to a halt in construction activities. The extension of construction time increases construction management costs, working capital interest, fluctuations in input material prices and inflation affecting labor costs. Meanwhile, the bidding price for projects with investors is a fixed price. This leads to projects after the construction period to the final settlement stage having reduced profits or losses.
In 2022-2023, banks tightened credit room from mid-year, so capital support for regular company operations changed, working capital needs were higher, and the time was longer. High interest rates reduced cash flow profits to grow business operations, leading to reduced revenue and reduced opportunities for new job growth.
According to VNECO, the overlap in legal regulations and lack of legal basis in investment procedures have directly affected the Thuan Nhien Phong Wind Power Plant project, of which VNECO owns 100% of the capital and is also the EPC contractor to complete the construction of 8 turbines from 2021.
Meanwhile, on the audited consolidated interim financial statements for the accounting period ending June 30, 2024, the auditor emphasized: "In the accounting period ending June 30, 2024, the Corporation's sales and service revenue decreased by 34.4% compared to the previous year. The Corporation's business results during the period were a loss of VND 70.9 billion, of which the loss allocated to the parent company was VND 67.5 billion.
During the accounting period ended on the same day, the Corporation had a negative net cash flow from operating activities of VND 28.8 billion. The Corporation's ability to continue operating depends on the ability to collect receivables, extend loans, pay debts from commercial banks, suppliers and future business performance. These conditions indicate the existence of factors that do not provide certainty about the Corporation's ability to continue as a going concern".
Responding to this doubt, VNECO explained as follows: The reason is in the consolidated report and the reasons explained above. In terms of value, it is the sum of similar amounts arising in subsidiaries and affiliated companies.
The Board of Directors of the Corporation has and will continue to make efforts to gradually remove the remaining legal shortcomings of the project to complete the project and increase revenue. At the same time, focus on restructuring unprofitable or slow-moving assets to increase liquidity for VNECO.
Also according to VNECO, currently, the implementation of real estate restructuring is slow and there are obstacles in approaching investors because from August 1, 2024, the new Land Law will take effect but the new land price list has not been issued, affecting the implementation of real estate transfer tax and leasing transactions.
Previously, on August 6, VNECO announced unusual information about receiving a notice from the People's Court of Da Nang City regarding the acceptance of the petition to open bankruptcy proceedings against VNE. The reason was that VNECO had not yet paid the remaining amount of nearly 7 billion VND related to the cooperation with Song Da 11 Joint Stock Company (stock code: SJE).
Regarding business performance, the consolidated financial report for the second quarter of 2024 shows that VNECO lost more than 67 billion VND, a sharp increase compared to the loss of 2.3 billion recorded in the same period in 2023. Accumulated in the first 6 months of 2024, this enterprise lost 65.8 billion VND.
Thu An
Source: https://doanhnghiepvn.vn/kinh-te/chung-khoan/kiem-toan-nghi-ngo-ve-kha-nang-hoat-dong-lien-tuc-cua-cong-ty-xay-dung-dien-viet-nam-vne/20240923094200452
Comment (0)