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SHN: Explanation for auditor's reports in the Audited FY2011
Hanoi Investment General Corporation (HANIC) (Stock code: SHN) on 18/04/2012 received a document from the HNX asking for explanation relating to the auditor’s report on the continuous operration of the company. The company explained as follows:
In the audited financial reports No.165/2012/UHY-BCKT: “As of 31/12/2012, total short-term liabilities were VND358,986,225,263, total current assets were VND355,229,392,100 in which receivables relating to the overdue debt of BETA-BQP JSC (BETA) and Mr. Nguyen Anh Quan were VND238,000,000,000. The Company set up provision for bad debt of VND71,400,000,000; accumulated loss as of 31/12/2012 were VND147,016,818,530. With this financial situation, the ability of continuous operation of the Company depends largely on the debt recovery from BETA-BQP JSC (BETA) and Mr. Nguyen Anh Quan as well as the handling of short-term loans of the Company”.
In the audited financial reports No.166/2012/UHY-BCKT: “As of 31/12/2012, total short-term liabilities were VND359,214,226,868, total current assets were VND359,694,536,992 in which receivables relating to the overdue debt of BETA-BQP JSC (BETA) and Mr. Nguyen Anh Quan were VND238,000,000,000. The Company set up provision for bad debt of VND71,400,000,000; accumulated loss as of 31/12/2012 were VND141,215,203,623. With this financial situation, the ability of continuous operation of the Company depends largely on the debt recovery from BETA-BQP JSC (BETA) and Mr. Nguyen Anh Quan as well as the handling of short-term loans of the Company”.
The Company would like to supplement some information as belows:
According to the document No.26/2011/CV-TDM dated 14/06/2011 of BETA, all principals and interests relating to the capital loan contract No.111-11/HDVV/SHN-BETA dated will be transferred to Mr. Nguyen Anh Quan, General Manager of BETA-BQP JSC. This loan is secured by Au Lac Real Estates JSC and Au Lac will transfer 90% of charter capital of Au Lac Real Estates JSC to Mr. Nguyen Thanh Tung, Head of Administrative Department of HANIC, who voluntarily acted as a guarantee for the payment of Mr. Nguyen Anh Quan to HANIC. The transfer value is VND335 billion and shown as the ownership of 65% of charter capital of Tan Phu Invetment and Construction Company Limited (according to the agreement, the charter capital of Tan Phu is VND 200 billion and Au Lac Real Estates JSC contributed 70% of charter capital). Mr. Duong Dinh Tam (representative of shareholders owning 90% of paid-up capital at Au Lac Real Estates JSC) had signed the transfer contract worth VND335 billion but until the time of report, Mr. Tung was not present in the Business Registration License. Since 24/12/2011, a wanted notice has been issued for Mr. Nguyen Anh Quan. The Company does not have enough grounds to evaluate the collateral for the receivables as described above.
At the time of the report, the Management Board is still working relating to ownership transfer at Au Lac Real Estates JSC and working with agents, organizations and individual to recover debts from BETA-BQP JSC (BETA) and Mr. Nguyen Anh Quan. As there is not enough information, the Company has not assessed the possibility of this debt recovery.
Accumulated loss was mainly incurred by the setting up of provision for bad debt (VND73,545,163,212) and provision for long-term financial investment (VND11,089,031,786).
Among short-term liabilities, VND93 billion relating to The Pride project will be offseted when customers sign contracts with contractor.
Short-term debts that the Company borrowed from Lien Viet Holding JSC have collaterals as apartments that the Company is entitled to buy at The Pride project.
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