Loc Troi Group (LTG) has just had to dissolve a subsidiary.
Loc Troi - Vien Thi Company, a joint venture between Loc Troi and Vien Thi Hunan Group (China) was established in 2018 with 51% ownership of Loc Troi Group.
This is the main joint venture company with activities of producing plant seeds, researching and developing biotechnology; agricultural science, hybridizing new varieties, researching and testing plant varieties...
Loc Troi Group (LTG) borrowed an additional 3,100 billion VND and just dissolved a subsidiary (Photo TL)
Recently, Loc Troi Group also announced the Board of Directors' resolution on terminating the project's operations and dissolving Loc Troi - Vien Thi Joint Stock Company. This decision was made after Loc Troi Group recorded business results with record profits.
However, Loc Troi Group is still recording high debt, accompanied by a sharp increase in interest expenses.
Record profit thanks to financial revenue
In the second quarter of 2023, Loc Troi Group's revenue reached VND 3,678 billion, and its after-tax profit increased to a record level of VND 424.7 billion. Meanwhile, in the same period last year, it was still losing VND 44.3 billion. Thanks to the second quarter business results, LTG's accumulated after-tax profit in the first 6 months of the year reached VND 357.8 billion, an increase of 88.1%.
In fact, the increase in profit that LTG recorded did not come from its core business activities. Revenue in the second quarter also increased slightly by 3.7% compared to the same period. Gross profit in the period reached VND 526.3 billion, corresponding to a cost of goods sold of VND 3,151.7 billion.
Financial revenue in the period increased 9 times, from 5.9 billion to 49.4 billion VND. However, financial expenses in the period also doubled, from 114.6 billion to 231.4 billion VND.
The biggest increase was in interest expense, which increased from VND53.9 billion to VND168.4 billion. Thus, it can be seen that in just 3 months of the second quarter, Loc Troi Group's interest expense increased 3 times compared to the same period last year. Business management expenses and sales expenses were recorded at VND128.4 billion and VND135.8 billion, respectively.
The real driving force that helped Loc Troi record a record profit came from the profit (loss) in the associated company of up to 326.9 billion VND. This sudden revenue helped push LTG's profit to an unusually high level.
According to the explanation on the financial statements, this profit was obtained from the revaluation of investments in associated companies including Loc Troi Quang Dong and Loc Nhan. In which, Loc Nhan Food has an investment value of 184.9 billion VND, Loc Troi Quang Dong has an investment value of 3.4 billion VND.
The profit of this investment is recorded with the value of Loc Nhan up to 326.9 billion VND, Loc Troi Quang Dong is negative 3.4 billion VND.
Another noteworthy point is that the explanatory notes to the financial statements of Loc Troi Group explain that the initial accounting for the transaction of receiving the transfer of shares at Luong Thuc Loc Nhan is provisionally determined based on the book value of the net assets of this company at the date of purchase. Therefore, the Group will make necessary adjustments (if any) when completing the official assessment of the fair value of the net assets purchased within 12 months from the date of purchase.
Thus, the profit of 326.9 billion VND that Loc Troi recorded from buying and selling shares at Loc Nhan may still be an inaccurate figure.
Loc Troi issues shares to pay dividends, short-term debt increases by 3,100 billion VND
Loc Troi Group has just approved a plan to issue up to 20.15 million shares to pay dividends in 2022 at a rate of 25%. This rate corresponds to each shareholder owning 100 shares will receive an additional 25 issued shares. The capital source is taken from undistributed after-tax profit at the end of 2022.
Another notable point is that LTG's total capital was recorded at VND 12,183.5 billion, an increase of 39.5% compared to the beginning of the year. The increase mainly came from loans. Of which, short-term loans nearly doubled, from VND 3,747.8 billion to VND 6,869.8 billion. Correspondingly, LTG increased its debt by VND 3,100 billion in the first half of 2023 alone.
Loc Troi Group's net cash flow from operating activities during the period was also negative at VND3,310.8 billion. Meanwhile, in the same period, the company's net cash flow from operating activities was also negative at VND1,816.7 billion. This shows an imbalance in cash flow, forcing the company to increase short-term borrowing to compensate for the cash shortage.
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