Recently, Van Dien Fused Phosphate JSC (stock code: VAF) has submitted a report to the Ho Chi Minh City Stock Exchange (HoSE) explaining the qualified opinion in the independent audit report for the first half of 2024 and measures to rectify the controlled stock.
The Court ordered HUD4 to pay VAF VND 74.85 billion
In the reviewed semi-annual financial statements of VAF for 2024, the independent auditor issued a qualified opinion regarding the issue of “The Company is in the process of initiating legal proceedings against Housing and Urban Development Corporation 4 (HUD4) to claim compensation for investment costs that the Company has incurred in the construction of the Van Dien fused phosphate and NPK fertilizer plant project in Thanh Hoa. The value of unfinished basic construction investment costs as of January 1 and June 30 was VND 24.51 billion.”
The auditor argued that the collected documents and records did not provide them with sufficient appropriate evidence to assess the recoverability, the possibility of continuing the project, and the benefits (if any) and losses to be recognized related to the unfinished basic construction investment costs presented in the Company’s interim financial statements.
Regarding this issue, VAF’s management stated that since the effective date of the First Instance Judgment No. 03/2022/KDTM-ST dated September 5, 2022, of the People’s Court of Bim Son Town, HUD4 has not signed the land lease contract as committed and agreed upon, and the principle contract signed between the two parties before the court hearing. This has led to a potential risk of causing damage to the rights and legal interests of VAF.
VAF has initiated the cassation procedure for the first-instance judgment No. 03/2022/LDTM-ST of the People’s Court of Bim Son Town. On January 3, 2024, the Company’s Board of Directors passed a resolution to continue the lawsuit against HUD4, requesting compensation for the investment costs incurred by VAF in the project implementation. The Hanoi People’s Court has accepted the petition.
The Company sent a request for enforcement to the Bim Son Town Enforcement Office to enforce Judgment No. 03 in accordance with the law. On May 7, 2024, the Bim Son Town Enforcement Office issued a decision on enforcement upon request, deciding to enforce the judgment with HUD4 in accordance with the court’s rulings in Judgment No. 03.
Accordingly, the Court ordered HUD4 to pay VAF an amount of VND 74.85 billion and bank interest as prescribed corresponding to the amount of principal overdue (overdue principal amount of VND 66.5 billion) during the period of non-enforcement. This amount has been fully recovered by VAF according to documents No. 320 and No. 364 of the Bim Son Town Enforcement Office.
Continue to sue for compensation for damages
However, as the Company’s project has been terminated by the Management Board of Nghi Son Economic Zone and Industrial Zones in Thanh Hoa Province since May 18, to protect its rights and interests, the Company will continue the cassation procedure for Judgment No. 03/2022/LDTM-ST. The Supreme People’s Court in Hanoi has accepted the case for cassation proceedings.
To protect its rights, VAF will continue to sue HUD4 for compensation for damages due to the annulment of the Land Lease Contract No. 05/HDTĐ-HUD4. On January 3, 2024, the Company’s Board of Directors issued a resolution to continue the lawsuit against HUD4, claiming compensation for damages due to the annulment of the aforementioned contract dated May 31, 2013.
On May 6, VAF filed a lawsuit against HUD4 for compensation for damages due to the annulment of the contract, claiming compensation for costs already invested in the land totaling approximately VND 43 billion. On June 20, the People’s Court of Bim Son Town, Thanh Hoa province, issued Notice No. 08/TB-TLVA on the acceptance of the commercial case “Dispute over compensation for damages due to the annulment of the contract.”
The Company stated that after the ruling of the Higher Court, VAF will implement the next steps in accordance with the law and will record the above costs in accordance with the current accounting regime of the Ministry of Finance.
VAF stock has been placed under warning status since March 21, 2024, due to the qualified opinion of the auditing organization on the audited 2023 financial statements.
In terms of business results, in the first six months of 2024, VAF’s net revenue from sales and services provision reached over VND 809 billion, up 22.2% over the same period last year. Profit after tax reached VND 25.3 billion, down 13.3% compared to the same period last year.
