In the last quarter of last year, Ricons for the first time set aside more than VND227 billion to reserve receivables from Coteccons, which means it was determined to be a bad debt.
According to its recent independent financial report, Ricons Construction Investment Joint Stock Company has set aside a provision of more than VND227 billion, equivalent to 70% of short-term receivables from Coteccons (CTD). This is the first time Ricons has set aside a provision for the above receivables, meaning that it is considered a bad debt.
This enterprise currently has more than VND 322.5 billion in short-term receivables from Coteccons, an increase of about VND 28 million compared to the end of 2022. This figure accounts for more than 8% of total short-term receivables from customers and is the second largest short-term receivable, after VND 1,086 billion from Phuong Nam 3A-1 Real Estate (investor of The Nexus building in District 1, Ho Chi Minh City). Meanwhile, Ricons did not make provisions for this enterprise's receivables.
On Coteccons' side, the self-prepared fourth quarter financial report did not clearly explain the payable amount to Ricons.
Receivables are amounts owed by customers to the company for goods or services that have been delivered or used but not yet paid for. According to regulations, at the time of preparing the annual financial report, if the receivables are determined to be difficult to collect, the enterprise must estimate the level of loss and make provisions with evidence. These provisions will be included in expenses and deducted when determining taxable income. Therefore, this is considered a way to compensate for losses for the enterprise.
With Coteccons not yet paying its debts, at the end of July 2023, Ricons announced that it had filed a petition with the Ho Chi Minh City People's Court to initiate bankruptcy proceedings against Coteccons. However, the Court rejected the petition in early October 2023.
Coteccons said that both companies had transactions including receivables and payables (debts) from the period before 2019 when they were still part of the ecosystem under Mr. Nguyen Ba Duong. The reason this company did not pay its debt to Ricons was because it had not received payment from the project investor and the contract signed between the two parties had a clear provision that only when Coteccons received payment from the investor would it pay the subcontractors.
Having to set aside bad debt from Coteccons caused Ricons' expenses in the fourth quarter of 2023 to increase sharply, pushing the company's net profit from business operations to negative VND8 billion.
For the whole year, Ricons had about VND 7,575 billion in revenue and VND 83 billion in after-tax profit. Both indexes decreased by 33% and 9% respectively compared to 2022. The company exceeded its business plan, but revenue fell to the lowest level in the past 6 years and profit hit an 8-year low, excluding the 2021 pandemic period.
Siddhartha
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