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|Licogi has been floundering since its equitisation in 2016|
The Ministry of Finance (MoF) has just sent a report to related agencies about the financial statement and performance of Licogi in 2017 and the first half of 2018, showing poor results.
Accordingly, in 2017 Licogi’s revenue was VND2.721 trillion ($118.3 million), but pre-tax profit was negative VND58.7 billion ($2.55 million), while the corporation’s revenue in the first half of 2018 was VND1.313 trillion ($57.1 million), with VND9.8 billion ($0.4 million) of after-tax profit.
The report also says that this poor performance has lowered Licogi’s and its holding company’s capital preservation ratios to 0.79 and 0.83, respectively.
Queries have been raised in December 2017, when the company was warned by auditors who noted that its short-term debts exceeded short-term assets by VND1.232 trillion ($53.6 million).
"This, among other factors, cast doubt on the ability of Licogi to continue operating," the report says. It has also revealed an extremely low return on investment (ROI) of 3.06 per cent.
The MoF also outlined that Licogi has difficulties paying short-term debts, especially debts of under three months, because its short-term assets consist primarily of receivables and inventory. Cash and cash equivalents by June 30, 2016 were only about VND40 billion ($1.74 million).
This means that the company is failing to "preserve state investment capital," the report said. The MoF has directed the Ministry of Construction to appoint a representative to submit a report on the causes and identify solutions.
Licogi Corporation, an enterprise operating mainly in construction and infrastructure, was established as a state-owned company in 1960 under the name of Corporation for Infrastructure Construction and Development. The company had been responsible for the construction of many hydroelectric, thermoelectric, industrial, transport, irrigation, and airport facilities, which have important political, economic, and defense significance.
The company was equitised on January 1, 2016 and has been operating as a joint stock company since under the name Licogi. However, Licogi’s post-equitisation business has deteriorated, with accumulated losses reaching over VND530 billion ($22.9 million).
As of the end of June 2018, 40.71 per cent of Licogi was held by State Capital Investment Corporation (SCIC), while two other major shareholders and private investment companies collectively hold the remaining 57.24 per cent.