Viet Nam Textile Group – Vinatex (code VGT-UPCoM) has just announced the resolution of its Board of Directors on the transfer of capital owned by VGT invested in Lien Phuong Garment Joint Stock Company.
Accordingly, Vinatex will transfer all 4.5 million shares, accounting for 19.11% of the actually contributed charter capital of Lien Phuong Garment Joint Stock Company. The starting price for competitive offering is VND 12,000/share.
The method of transfer is that Vinatex will offer for sale to less than 100 interested investors with price competition through a securities company. The expected implementation time is from September 2024.
Temporarily calculated at the starting price offered by Vinatex, the Group can collect a minimum of VND 54 billion from divesting Lien Phuong Garment.
Earlier, on July 1, 2022, Vinatex also announced a plan to divest 4.5 million shares of Lien Phuong Garment with a starting price at that time of VND 19,800/share but was not successful.
Thus, at present, Vinatex continues to divest Lien Phuong Garment at an offering price 39% lower than 2 years ago.
According to our understanding, Lien Phuong Garment was established in 1960, located at 18 Tang Nhon Phu, Phuoc Long B Ward, Thu Duc City, Ho Chi Minh City. The company owns more than 40,000m2 of workshops in an area of nearly 80,000m2, owning a chain of fabric production lines from yarn, weaving, dyeing, finishing and garment, including modern and advanced equipment and technology from Germany, Italy, Belgium, Japan, etc.
Earlier, in August, Vinatex also announced the offering of more than 2.81 million shares of Dong Nai Garment Corporation (Donagamex) that it is holding, equivalent to 25.7% of its capital, to less than 100 investors at a starting price of VND 35,000/share. The implementation time is from Q3 2024. It is expected that Vinatex will collect a minimum of VND 98 billion after successfully divesting its capital.
According to the reviewed semi-annual financial statements for 2024, Vinatex recorded net revenue of nearly VND 7,954 billion, slightly down compared to the same period (VND 8,098 billion); after-tax profit reached VND 176 billion, up 50% over the same period (VND 117.4 billion) – in which, the profit of the Parent Company alone was more than VND 42 billion.
Notably, the auditor gave a basis for the conclusion of the review, except for the profit in the associated company.
Specifically: Viet Nam Textile Group is recognizing its investment in Coats Phong Phu Co., Ltd., an associated company of the Group, accounted for by the equity method, with a carrying amount of VND 1,215,189 million on the consolidated balance sheet as of June 30, 2024 (January 1, 2024: VND 1,227,918 million). The profit of Coats Phong Phu Co., Ltd. that Viet Nam Textile Group recognized in the consolidated income statement of Viet Nam Textile Group for the six-month period ended June 30, 2024 was VND 217,774 million (six-month period ended June 30, 2023: profit of VND 232,322 million)
The auditor stated that they were unable to access the books and accounting records of Coats Phong Phu Co., Ltd. for the six-month periods ended June 30, 2024, and June 30, 2023, as well as unable to communicate with the audit firm of this associated company, so they could not perform the necessary review procedures for the investment in Coats Phong Phu Co., Ltd. as of June 30, 2024, and the profit in Coats Phong Phu Co., Ltd. that Viet Nam Textile Group has recorded for the six-month periods ended June 30, 2024, and June 30, 2023.
Therefore, the auditor is unable to determine the adjustments that may be necessary for these amounts if they had been able to access the books and accounting records of Coats Phong Phu Co., Ltd. as well as communicate with the audit firm of this associated company to perform the necessary review procedures.
Regarding land rent and late payment: As stated in Note 50 of the mid-year 2024 consolidated financial statements, when preparing the financial statements for the six-month period ended June 30, 2024, the Management Board of Phong Phu Joint Stock Company, a subsidiary of the Group, has adjusted some comparative data related to land rent expenses for the period from 2007 to 2020 at Land lot No. 2 Truong Chinh, Tay Thanh Ward, Tan Phu District, Ho Chi Minh City with an amount of VND 47,323 million based on the calculation of the Management Board according to the guidance in Document No. 6238/STNMT-QLD dated June 27, 2024 of the Ho Chi Minh City Department of Natural Resources and Environment on determining the area and land use purpose of the above-mentioned land lot No. 2 Truong Chinh and relevant legal provisions.
As of the reporting date, Phong Phu Joint Stock Company is still in the process of working with competent authorities to determine the exact amount of land rent to be paid for the above-mentioned land lot for the period from 2007 to 2020 and related late payment charges, if any.
Due to the regulations on land rent changing from time to time and the application of regulations that can be interpreted in many different ways, as well as the official land rent amount is still in the process of determination, the auditor has not been able to perform the necessary review procedures related to the land rent that Phong Phu Joint Stock Company has to pay for the above-mentioned land lot and related late payment charges, if any.
Accordingly, the auditor is unable to determine the adjustments that may be necessary for the tax items and the amounts payable to the State and undistributed profit after tax as of June 30, 2024, and January 1, 2024; and the items of management expenses and profit after corporate income tax for the six-month periods ended June 30, 2024, and June 30, 2023.
In addition, the auditor would like to draw attention to Note 50 of the consolidated financial statements, which mentions that some comparative information as of January 1, 2024, related to land rent and late payment of land rent at Phong Phu Joint Stock Company, a subsidiary of the Group, has been adjusted. The conclusion of the audit firm’s review contains the above-mentioned exceptions, which may affect this adjusted comparative information.
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