Pomina Steel (POM) accumulated loss increased to 758 billion VND in the first half of 2023

Pomina Steel accumulated loss of 758.1 billion VND on audited financial statements

Shares of Pomina Steel Corporation (POM) have repeatedly delayed submitting semi-annual financial statements and have been placed under control by the Ho Chi Minh City Stock Exchange (HoSE) since October 10, 2023. It was not until October 13, 2023, that POM announced its audited semi-annual financial statements.

In the audited semi-annual financial statements, Pomina Steel recorded revenue of VND2,192.4 billion, down 73% year-on-year. Operating below cost due to high input material prices caused POM to post a gross loss of VND32.2 billion while in the same period it had a gross profit of VND348.4 billion.

Pomina steel's turnover increased to 758 billion dong in the first half of 2023, picture 1 — Pomina Steel (POM) accumulated loss of up to 758.1 billion VND, warned by auditors due to short-term debt exceeding short-term assets (Photo TL)

After deducting expenses, POM had a loss after tax of VND504.4 billion, bringing the company's accumulated loss to VND758.1 billion. This accumulated loss was emphasized by the auditor in the report.

Pomina Steel has been in a loss-making situation for more than a year now. Including the second quarter of 2023, Pomina Steel has experienced 5 consecutive quarters of losses. In 2022 alone, the company lost up to 1,079.9 billion VND. It is worth noting that the loss trend has not cooled down but has increased in the second quarter.

Accumulated losses increased, equity was eroded, short-term debt risk increased

One of the risks mentioned in the audited semi-annual financial report of Pomina Steel is the asset structure. At the end of the second quarter, POM's total assets reached 10,717.1 billion VND, down nearly 300 billion VND compared to the beginning of the year. Cash and cash equivalents decreased from 206.3 billion VND to only 14.5 billion VND.

Short-term receivables from customers currently account for 1,733.6 billion VND. Inventory also decreased by nearly 300 billion to only 919.2 billion VND. The company is making a provision for inventory price reduction of 3.8 billion VND.

In the capital structure, POM's short-term debt accounts for a very high proportion, up to 7,770.9 billion VND, equivalent to 73% of the total capital of the enterprise. POM's short-term debt accounts for 5,426.7 billion VND, long-term debt accounts for 839.9 billion VND. The total debt is currently 3 times higher than the owner's equity.

The auditor also emphasized that Pomina Steel's short-term debt was 4,377 billion VND higher than its short-term assets. In addition, the company also has overdue loans of up to 2,200.1 billion VND, along with an overdue payment to the seller of 922.2 billion VND.

The auditors concluded that the above matters indicated the existence of material uncertainties that may cast significant doubt on Pomina Steel's ability to continue as a going concern.

In the afternoon trading session on October 13, 2023, POM shares were traded at VND 5,400/share, close to the low price range that had been maintained throughout the first half of 2023.

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