The decision of HNX is based on the 2023 financial statements of VE8 audited by the Auditing, Valuation, and Consulting Company ECOVIS AFA Vietnam.

Specifically, at the end of 2023, VE8 had a trade receivable from Ecoplastics Solutions Co., Ltd. of VND 18.5 billion that was overdue for more than 6 months according to the terms of the contract, but the Company had not made any provision for bad debts. The auditor was unable to obtain sufficient appropriate audit evidence regarding the recoverable value and therefore could not determine whether any adjustments to the related figures were necessary.

In its explanation, VE8 stated that according to the sales contract between the two parties, there was a payment term of 120 days. However, recently, the production and business activities have not met the plan, and the slow consumption of goods has affected the progress of capital recovery. Therefore, the two parties have discussed and agreed to extend the payment period from 120 days to 360 days. Currently, Ecoplastics Solutions is arranging capital to pay VE8 the above amount.

The audit firm ECOVIS AFA Vietnam also emphasized the accumulated loss of VND 17.4 billion at the end of 2023, excluding the aforementioned exceptions, and the short-term debt exceeding short-term assets by VND 4.2 billion. At the same time, the Company currently has outstanding insurance payables, principal and interest payments overdue by VND 2.8 billion, VND 64.5 billion, and VND 3.4 billion, respectively. These conditions indicate the existence of a material uncertainty that may cast significant doubt on the Company’s ability to continue as a going concern.

In this regard, VE8 said that its production and business operations have encountered many difficulties in the past due to the impact of the COVID-19 pandemic from 2020 to the present, social unrest in some parts of the world, tightening monetary policy, high bank interest rates, and limited access to capital.

Revenue from the core business has been declining, and the land clearance for the construction of some projects has not been smooth. The construction period of the projects has been extended, resulting in the loss of materials and supplies that have been assembled on the construction site, leading to an increase in the cost of goods sold. The production and business activities have achieved low results, leading to continuous heavy losses in many periods.

Currently, VE8 is gradually restructuring its production and business operations, seeking partners to transfer some assets, paying the above debts, and supplementing working capital in order to gradually stabilize and develop.

In the owner’s commitment section, VE8 stated that the Company’s ability to continue as a going concern depends on profitable business operations, the support of creditors in extending debts, and the continued funding of investors in the future. The Chairman and General Director have no reason to believe that the investors will not continue to provide financing so that the Company can continue to operate in the future.

VE8‘s 2023 business results continued to be gloomy, with a net loss of nearly VND 12 billion, which was worse than in 2022 (loss of VND 6.7 billion). In the past 10 years, the Company has had four years of net loss, with an after-tax loss of more than VND 17 billion, “eating” up almost the entire charter capital of VND 18 billion, resulting in VE8‘s current equity capital of only VND 1 billion, while its total assets are VND 105 billion.

Early last year, VE8 shares were put on the watchlist due to negative after-tax profit in 2022. In its explanation at that time, the Company stated that the Board of Directors and the Board of Management had a production and business plan for 2023 and the following years with the aim of gradually stabilizing, increasing revenue, reducing costs to offset losses, and returning to profit.

Respectfully

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