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Many of Vicem's subsidiaries are not doing well. Photo: internet.

Growth but low dividend yield

Assessing the situation of the corporation, the Ministry of Finance said that Vicem's total revenue in 2019 reached VND 1,393 billion (equal to 82% of that in 2018), of which revenue from dividends and profits was VND 971 billion (down by VND 370 billion dong compared to 2018), the realised profit was VND 1,181 billion, up by 11 % from 2018, mainly due to the refunds of financial investment provision.

The total investment value (original value) was VND 13,643 billion, dividends and profits were VND 971 billion (mainly from Hoang Thach Cement Company, Ha Tien 1 Cement Company, Siam City Cement Company, Nghi Son Cement Corporation andChinfon Cement Corporation).

According to the Ministry of Finance, the dividend payout and profit rate of total investment value was7.1% (down 2.7% compared to 2018), mainly due to the decrease in dividends by of Ha Tien 1 Cement Company (down VND 92 billion), Siam City Cement Company (down VND 96 billion), Nghi Son Cement Corporation (down VND 150 billion), and Chinfon Cement Corporation (down VND 32 billion).

As of December 31, 2019, the parent company has debt receivables of VND 2,242 billion, of which, the debt of Tam Diep Cement Company was VND 700 billion, Ha Long Cement Joint Stock Company VND 100 billion and Song Thao VND 288 billion. These companies have suffered great accumulated losses and are in difficult financial situations, so the debts are difficult to collect or collected slowly.

In addition, the Ministry of Finance cited Vicem's report in 2019: some units such as But Son Cement Joint Stock Company, Hoang Mai Cement Joint Stock Company andHai Van Cement Joint Stock Company operated inefficiently, of which some firms had low payment ratio of short-term debts and faced difficulties in short-term debt payment.

Although Tam Diep Cement Company, Ha Long Cement Joint Stock Company and Song Thaogained financial improvements, due to great accumulated losses, causing imbalance and financial insecurity and insolvency, their production and business activities dependedcompletely on loans, appropriation and support from the parent firm and they were subject to special financial supervision.

The Ministry of Finance also stated that in 2019, Vicem's production and consumption of cement and clinker increased compared to 2018 with total revenue of VND 29,305 billion (an increase of 4.05% compared to 2018), realised profit was VND 2,490 billion VND (up 2.43% compared to 2018).

However, the parent company's dividend and profit was only equal to 72.4% compared to 2018 and specifically,the dividend of Ha Tien 1 Cement Joint Stock Company was only 80% of that in 2018, the dividend of its associateswas also less than half compared to 2018, leading to a decrease in the parent company's financial investment revenue compared to the prior year.

Handling ineffective investments

Facing the abovesituation, the Ministry of Finance requested Vicemtake measures to control and recover debts for subsidiaries,evaluate investments to ensure investment efficiency and have solutions for ineffective investments and make provisions for bad receivable debts according to regulations.

The Ministry of Finance requested avoiding the situation that there is a growth in production and business activities, but the dividendyieldis lower than the prior year.

The Ministry of Finance also asked Vicem to direct representatives at its subsidiaries, joint ventures and associates to increase annual dividend yield to ensure efficient use of capital, especially in foreign joint ventures.

In addition, to strengthen analysis and assessment of the causes and to plans to overcome difficulties for subsidiaries with low solvency ratios and restructured mobilised capital sources to ensure financial risks; to strengthen supervision for Tam Diep Cement Company, Ha Long Cement Company and Song Thao Cement Company so that these firms can soon overcome difficulties and repay their loans.

On the side of the Ministry of Construction, the Ministry of Finance recommended this unit inspect and supervise Vicem in management and use of capital invested in other enterprises to ensure investment efficiency and to review the provision for devaluation of Vicem's financial investments in compliance with regulations.

In particular, to urgently re-approve the plan of arranging and handling Vicem's real estate facilities and implementing the equitisation of the parent company - Vicemas planned, to take responsibility for reporting to the Prime Minister on handling of the difference between the equity and charter capital of the parent company - Vicem as of December 31, 2019 in the case that the Vicem’sequitisation plan changes.