A Vicem cement plant. — Photo baoxaydung.com.vn
The pre-equitisation valuation of the Viet Nam Cement Industry Corporation (Vicem) done by the independent auditor was off by nearly VND1.17 trillion (US$50.3 million), according to the State Audit of Viet Nam.
The State audit agency said in a filing to the Ministry of Construction that the value of Vicem as of October 2018 was VND28.22 trillion, including the State capital value of VND27.8 trillion, Thoi bao Kinh te Viet Nam (Vietnam Economic Times) newspaper reported.
According to the corporate evaluation done by the independent auditor, the value of Vicem was VND27.05 trillion and that of the State capital was VND26.6 trillion.
By the dividend discount model, the State auditor valued State capital at Vicem at VND25.13 trillion instead of the independent auditor’s figure of VND23.38 trillion.
According to the State audit agency, the independent auditor did not value the right of Vicem’s subsidiaries on doing mining business and it also did not value the land areas owned by Vicem.
As of October 1, 2018, Vicem member companies had nine mining licences to produce cement for a period of 2-30 years.
Those companies were licensed to exploit total 11.5 million tonnes of materials each year to operate their cement production.
Based on the purchasing prices for input materials, natural resource tax rates and mining capacity, the value of those licences was VND1.2 trillion.
In addition, the independent auditor did not value long-term financial investments made by Vicem as those investments were not recorded fully in the firms’ financial reports.
Of those investment projects, the State auditor estimated Vicem had invested VND3.66 trillion in Siam City Cement Vietnam as of October 1, 2018.
The figure was up by VND2.42 trillion from the independent auditor’s calculation.
Therefore, the value of the State capital in Vicem as of October 1, 2018 would be VND27.55 trillion.
The State audit recommended Vicem and the independent auditor re-calculate the value of the State capital prior to October 1, 2018.
The two sides also have to work with local authorities of Ha Noi, Hai Phong and Nghe An to approve Vicem’s land use licences in those areas as well as recording the value of the properties in the corporate valuation.
The Ministry of Construction is suggested to review the flaws and wrongdoings conducted by Vicem and its member companies regarding financial reports, land use permits and postponed development projects.
Vicem has to complete all legal procedures for its non-approved land areas so the firm’s valuation is done. The Ministry of Construction is required to review its work in dealing with financial problems and corporate valuation stated in the filing. — VNS