The Social Insurance of Ho Chi Minh City recently announced a list of units that have been slow to pay social insurance (SI) contributions for more than 3 months (as of January 31, 2024, updated UNC until February 20, 2024).
Among them, Hoa Binh Construction Group Joint Stock Company (HBC) (HBC code, HoSE floor) is also included, with 10 months of delayed SI contributions, equivalent to over 38.4 billion VND. This means that HBC has not fulfilled its obligation to contribute SI for employees from April 2023 until now. With this amount, HBC is one of the companies with the highest SI debts on this list.
HBC operates at a loss and owes tens of billions of VND in SI contributions
Previously, according to the list of units that have been slow to pay SI contributions for more than 3 months (as of December 31, 2023), HBC topped the list with 9 months, equivalent to 39.34 billion VND.
It is known that the Social Insurance of Vietnam is coordinating with the Ministry of Labor, Invalids and Social Affairs and other departments to amend and impose stricter sanctions.
For cases of delayed SI contributions, currently only administrative fines are imposed, but in the future, heavier sanctions such as travel bans and increased tax penalties will be imposed.
In the draft amended Law on Social Insurance, the Ministry of Labor, Invalids and Social Affairs proposes to supplement regulations on the responsibilities of agencies in identifying and managing subjects participating in social insurance, as well as amending and supplementing many measures and sanctions to address the issue of evading SI contributions.
Specifically, it is proposed that employers with SI debts must pay 0.03% of the overdue amount per day (similar to tax); decisions to suspend the use of invoices for employers who have evaded SI contributions for more than 6 months.
At the same time, decisions to postpone departing the country for employers who have evaded SI contributions for more than 12 months; the social insurance agency suggests initiating prosecution for cases with signs of criminal offenses in evading SI contributions as prescribed by the Criminal Code…
In addition to owing SI contributions for employees, Hoa Binh Construction also posted a loss for the second consecutive year. Specifically, according to the consolidated financial statements for the fourth quarter of 2023, HBC achieved revenue of 2,190 billion VND, down 32% compared to the fourth quarter of 2022. Lower cost of goods sold helped the company achieve a gross profit of 53 billion VND, while in the same period last year, it incurred a loss of over 426 billion VND.
Notably, HBC received a refund of 223 billion VND for enterprise management fees. HBC stated that this is a refund of the provision for difficult-to-collect receivables of 310 billion VND.
As a result, Hoa Binh Construction reported a net profit of 101 billion VND for the fourth quarter of 2023, while in the same period last year, it incurred a loss of over 1,200 billion VND. This is the first time that HBC has returned to profitability after 4 consecutive quarters of losses.
Accumulated in 2023, HBC recorded revenue of 7,546 billion VND, down 47% compared to 2022. Although it returned to profitability in the fourth quarter of 2023, HBC still incurred a net loss of 777 billion VND for the whole year. This is the second consecutive year that HBC has incurred a net loss for the whole year, but this figure has improved significantly compared to the nearly 2,600 billion VND loss in 2022.
With continued losses in 2023, HBC has increased accumulated losses to 2,878 billion VND (equivalent to 105% of charter capital). HBC’s owner’s equity is now only 453 billion VND.
As of December 31, 2023, Hoa Binh Construction’s total assets stood at 13,055 billion VND, down 16% compared to the beginning of the year. Among them, short-term receivables accounted for 65% of total assets, reaching 8,492 billion VND, down 20%.
In terms of capital structure, HBC’s total liabilities amounted to over 12,600 billion VND, an increase of nearly 2,000 billion VND compared to the beginning of the year. Among them, short-term and long-term borrowings decreased by over 1,400 billion VND to 4,718 billion VND, including 684 billion VND in bond debts, and the rest are loans from banks and other organizations.
In another development, HBC has also been cautioned by HoSE about the possibility of delisting. Specifically, HBC shares are currently under HoSE’s control due to the company’s late submission of annual audit financial statements for 2 consecutive years.
According to regulations, if the late submission continues for 3 consecutive years, the shares of public companies will be delisted. Therefore, HoSE has warned that HBC shares may be delisted if the company continues to be late in submitting audit financial statements for 2023.
