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Truong Thanh Furniture racks up heavy losses

Released at: 15:35, 04/11/2016

Truong Thanh Furniture racks up heavy losses

Photos: TTF

$18 million lost in Q3 and $67.5 million this year.

by Quynh Anh

The Truong Thanh Furniture Corporation (TTF) has released its 2016 third quarter financial statements, revealing dismal business results and a net loss of nearly VND1.5 trillion ($67.5 million) for the first nine months of the year.

It recorded a loss of nearly VND399 billion ($17.9 million) in the third quarter. Total assets as at September 30 stood at VND3.2 trillion ($144 million), down VND1 trillion ($45 million) compared to the start of the year.

Cost of goods sold reached VND130 billion ($5.8 million), administrative expenses increased significantly, to VND281 billion ($12.6 million), and financial expenses were VND81 billion ($3.6 million).

Net revenue in the third quarter fell by a substantial 75 per cent year-on-year, to VND103 billion ($4.63 million). In the first nine months its revenue was VND986 billion ($44.3 million), down 44 per cent year-on-year with net losses at nearly VND1.5 trillion ($67.5 million).

As at September 30, short-term receivables stood at VND640 billion ($28.7 million), including other receivables of VND222 billion ($9.9 million) and provision expenses for short-term receivables of VND508 billion ($22.7 million). Inventories as at the end of September were recorded at VND2.01 trillion ($90 million), down VND460 billion ($20.6 million) compared to the start of the year.

TTF’s shares fell dramatically after the Tan Lien Phat Company, a subsidiary of Vingroup, suddenly announced in mid-July the suspension of its loan to TTF of VND1.2 trillion ($53.8 million) in exchange for 69 million TTF’s shares, after finding serious discrepancies in data relating to inventories and questionable debts.

In August, the Ho Chi Minh City Stock Exchange (HoSE) put TTF on its special control list. In September, Ernst & Young Vietnam (EY Vietnam) expressed doubts about the ability of the Truong Thanh Furniture Corporation (TTF) to continue as a going concern.

TTF’s cumulative losses as at June 30 increased by a further VND130 billion ($5.8 million) to VND1.2 trillion ($53.8 million) due to VND127 trillion ($5.7 million) in stock found to be missing.

Moreover, short-term debts had exceeded current assets by VND425 billion ($19 million) as at June 30. “Those conditions reveal that uncertainty exists and raises substantial doubts about the entity’s ability to continue as a going concern,” EY Vietnam wrote in its report.

EY Vietnam was appointed to review TTF’s interim consolidated financial statements since December 31, 2015. The company therefore could not confirm the calculation of TTF’s inventory as at December 31, 2015 and inspections have also not provided EY Vietnam with appropriate evidence to clarify the level of inventory as at that date.

Tan Lien Phat became a major shareholder in TTF in May this year after acquiring 72 million shares. TTF then saw some instability in its senior personnel. On August 12, founder Mr. Vo Truong Thanh was dismissed from his duties as Chairman of the Board of Management after not taking sufficient responsibility as Chairman given TTF’s tough times. His was replaced by Vingroup’s Deputy Managing Director Ms. Vu Tuyet Hang.

Tan Lien Phat now is the investor of major projects under Vingroup, with the most prominent being Vinhomes Central Park Tan Cang in Ho Chi Minh City.

Mr. Vo Truong Thanh was born in 1958 in central Binh Dinh province. In 1993, he and his colleagues established the Truong Thanh Wood Co., He and his company have gone through many ups and downs, even bankruptcy, but he had gradually restructured the company.

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