Duc Long Gia Lai's post-audit financial statements Loss of more than 1.1 trillion dong

DNHN - Duc Long Gia Lai ended 2022 with a loss of nearly VND 1.2 trillion, a variance of more than VND 312 billion compared to its financial statements, making it the company's record loss year after 10 years of listing.

Recently, Duc Long Gia Lai Group Joint Stock Company (DLG/HoSE) published a written explanation of the additional loss incurred after the audit, as well as the exception to be included in the audited consolidated financial statements. 2022.

Compared to its independent financial statements, the audit revealed that DLG ended 2022 with a loss of more than 312 billion dongs. The company explained that this loss resulted primarily from an increase of nearly VND 324 billion in administrative expenses following the audit, as a result of an increase in the provision for bad debts of the parent company and an adjustment to the cost of services purchased externally.

This loss makes 2022, after 10 years of listing, the worst loss year for DLG.

Other expenses were reduced as well, including sales, which decreased by 11.8 billion dong due to a decrease in the cost of services purchased from the subsidiary and administrative expenses; and current corporate income tax (CIT) expense, which decreased by 2.9 billion dong. Specifically, the deferred CIT expense rose by 2,4 billion Vietnamese Dong. DLG was also required to obtain two audit opinions, except the audited financial statements for 2022, and to explain.

First, the audit unit, Standard Viet Auditing and Consulting Co., Ltd., reported that DLG has loaned over VND 422 billion to various organizations and individuals and has made a full provision for bad debts. However, DLG has not assessed actual recoverability, and the auditor was unable to obtain sufficient evidence to conclude that the provision is adequate concerning actual recoverability.

Regarding this opinion, DLG stated that it complied with regulations and that the contracts and transactions related to the loans were approved and implemented at the 2022 Annual General Meeting of Shareholders. All of the loans are of lesser value. 35 percent of DLG's total assets after aafter2022. Currently, the Company continues to pursue and collect receivables, while also making provisions for delinquent receivables. According to DLG, this provision is prudent and consistent with the information available to the Enterprise at the time the financial statements for 2022 are being prepared.

The following is an estimate of DLG's cumulative net loss. Short-term debt exceeded total short-term assets by 944,7 billion dongs as of the 31st of December, 2022. From 2023 to 2025, DLG intends to liquidate and sell collateral and collateral assets to repay bank loans. Nonetheless, the auditing firm has not gathered sufficient evidence to determine the value of these assets.

DLG concurs that the Company's short-term liabilities exceeding its total current assets represent a material uncertainty that casts doubt on its ability to continue as a going concern. DLG stated, however, that the Company underwent a financial restructuring in 2022, cutting costs, divesting capital from inefficient subsidiaries to concentrate capital, and progressively reducing short-term and long-term bank loans. Some existing assets that are inefficient will also be transferred, including the Duc Long Tower Project, the Duc Long Bao Loc bus station, and the Duc Long Hotel project at 95-97 Hai Ba Trung. Additionally, the Board of Directors collaborated with the bank to draught an agreement for the Company to settle the debt and waive interest.

The company stated that it is coordinating with banks and credit institutions to find partners to continue the transfer of assets and the gradual reduction of outstanding debt. Several energy projects are accelerating the completion of legal procedures to transfer these projects to the national grid.

Previously, Duc Long Gia Lai had losses of VND 7,500,000,000 in 2019 and VND 930,000,000,000 in 2020. The primary reason for the loss was the unusually large increase in corporate administration costs, which amounted to an increase of VND 412 billion. corresponding to 515%, to 492 billion VND in the fourth quarter of 2022; accumulated for the entire year, 966 billion VND, an increase of 846 billion VND, or 705% compared to 2021.

As of December 31, 2022, the company incurred an accumulated loss of VND 1,747 billion, resulting in a loss of VND 2,993 billion in owner-contributed capital, and a decrease in equity from VND 2,319 billion to VND 1,419 billion. As a result, Duc Long Gia Lai's total assets decreased significantly by 1,169 billion VND, or 16.5%, to only 5,901 billion VND compared to 2021.

The company has substantial debt. At the end of 2022, the company's liabilities totaled VND 4,493 billion, which was 3,2 times greater than its equity and represented 76% of its total capital. Which reached 2,972 billion dongs in total debt. Notably, short-term loans and finance lease obligations are extremely high, totaling 1.126 trillion Vietnamese Dong. Therefore, the debt repayment pressure at Duc Long Gia Lai is enormous.

PV (t/h)