Audit revealed extra $10 million in losses for HAGL Agrico

Hoang Anh Gia Lai Agricultural JSC (HAGL Agrico) Reports Losses and Debt Issues

Hoang Anh Gia Lai Agricultural JSC (HAGL Agrico) has reported a loss of VNĐ259 billion (US$10 million) after six months, with short-term debt accounting for the majority of its liabilities, amounting to VNĐ15.7 trillion.

The company's shares are currently trading at around VNĐ6,500, down from nearly VNĐ8,000 at the beginning of the year. This decline in share price reflects the challenges the company is currently facing.

The losses have been attributed to increased interest expenses, which spiked to VNĐ230 billion, completely eroding HAGL Agrico's profits from core business activities. Thaco Agri, the parent company, is HAGL Agrico's largest creditor, with outstanding debts exceeding VNĐ9.33 trillion.

Despite these challenges, HAGL Agrico is working to resolve outstanding debts and complete legal procedures for projects in Laos and Cambodia to attract investment capital. The company is also restructuring some of its debts and implementing projects to ensure business cash flow.

Total assets reached VNĐ18.28 trillion, an increase of 9.5 per cent compared to the beginning of the year, primarily due to an increase in long-term unfinished assets to 7.4 trillion. However, total liabilities increased by 10.7 per cent to VND16.67 trillion.

The audit revealed that before the audit, other expenses mainly came from depreciation of discontinued assets amounting to nearly VNĐ69 billion, but after the audit, this figure was reduced to just over VNĐ5 billion. Total other expenses rose from VNĐ43 billion to VNĐ104 billion after the audit.

The increase in losses was due to the recognition of an additional VNĐ125 billion in costs for writing off ineffective assets, leading to a pre-tax loss of nearly VNĐ260 billion, marking a reduction in losses of about VNĐ100 billion compared to the same period last year.

It's worth noting that HAGL Agrico is financially supported by various Vietnamese and international banks, including BIDV, VietinBank, and Techcombank. The loans typically involve mid- to long-term maturities, interest rates tied to Vietnamese Dong reference rates, and collateral requirements based on company assets.

However, auditors from Ernst & Young have identified risks that could prevent HAGL Agrico from remaining a going concern due to its significant losses and short-term debts exceeding short-term assets. As of June 30 this year, HAGL Agrico's cumulative losses increased to VNĐ9.64 trillion.

In light of these challenges, HAGL Agrico has forecast a full-year loss of up to VNĐ854 billion. The company's cash balance dropped sharply by 74 per cent, leaving only VNĐ18 billion in cash.

Despite these difficulties, HAGL Agrico remains optimistic about its future and is committed to addressing its financial issues and ensuring a sustainable future for the company.