How is EVN doing business?
The proposal of the Ministry of Industry and Trade to include the accumulated loss of more than VND44,000 billion of Vietnam Electricity Group (EVN) in the average retail price of electricity is currently attracting great attention from public opinion. So how is EVN's financial and business situation reflected in the financial report?
According to the separate financial statements for 2024, EVN recorded a accumulated loss of VND 45,374 billion, down 10% compared to the previous year. This result is achieved thanks to the enterprise returning to a state of after-tax profit of VND 5,237 billion in 2023, after two consecutive years of heavy losses.
EVN's accumulated losses are concentrated in the period of 2022 - 2023, with losses of VND 26,498 billion and VND 23,529 billion respectively, the accumulated losses in these 2 years are about VND 50,027 billion.
According to EVN's report, due to the impact of the geopolitical situation in the world, the cost of electricity purchase increased in the period of 2022-2023, leading to many difficulties for EVN in production and business activities. This leads to a decrease in State investment capital in EVN, which cannot preserve State investment capital in enterprises.
Analysis of the business results report shows that in both of the years with the heaviest losses, the parent company EVN fell into a situation of selling below capital, meaning revenue could not cover expenses.
However, this problem has improved significantly when entering 2024, EVN recorded revenue of VND 479,835 billion, while the capital price was VND 470,910 billion. Therefore, EVN had a consolidated profit of VND 8,924 billion compared to the same period of VND 27,707 billion. As a result, parent company EVN reported after-tax profit of VND 5,237 billion.
In the consolidation report for the whole group, EVN's net revenue in 2024 reached a record level of VND 580,537 billion, up 16% compared to 2023. The cost of capital for sales and service provision reached VND 530,948 billion, up about 9%.
It can be seen that after increasing electricity prices, EVN's gross profit from electricity sales has improved significantly to more than VND 46,400 billion. Finally, EVN still recorded consolidated pre-tax profit of VND9,436 billion, despite the profit from affiliated companies and decreased financial revenue, while sales and business management expenses increased.
Large assets, many debts to be paid
According to the consolidated report, as of the end of 2024, EVN's total assets were VND 675,872 billion, up more than 4% over the year. Of which, EVN's cash and bank deposits reached about VND91,300 billion.
On the other hand, EVN is also recording a debt payable of VND 474,630 billion, up 5% over the beginning of the year. Of which, short-term debt is VND195,716 billion, nearly VND7,000 billion higher than total short-term assets.
In the short-term debt structure, the majority is the amount payable to the seller with VND 111,758 billion, followed by short-term financial loans and rents with VND 47,774 billion.
As for long-term debt, financial loans and rents account for the majority with VND 276,296 billion. Thus, the total of long-term and short-term financial loans and rents is more than 324,000 billion VND, most of which are long-term.
Regarding EVN's proposal to allocate EVN's losses to electricity prices, Mr. Ha Dang Son - Director of the Center for Energy and Green Growth Research said that EVN needs to report in detail the costs of the loss and only approve the allocation of reasonable costs to the average retail electricity price, instead of approving the allocation of the entire loss according to the audited financial report.
Mr. Son explained that the financial reports for 2022, 2023 and 2024 that have been audited and published on the EVN website do not show details of the costs that constitut the loss. Therefore, there is a potential to include unsuitable costs due to not optimizing costs in the process of managing, producing, transmitting, and distributing electricity.
In the past, the Ministry of Industry and Trade also proposed accounting EVN's loss for the average retail price of electricity.
Accordingly, in September 2023, when issuing a draft amendment to Decision 24/2017 on the mechanism for adjusting average retail electricity prices, the Ministry of Industry and Trade proposed that average retail electricity prices calculate additional exchange rate differences and production and business losses.
EVN's loss account for electricity prices has also encountered mixed opinions, energy experts said that proposal is inappropriate, even not in accordance with the law.
At that time, the Electricity Regulatory Authority (Ministry of Industry and Trade) explained that if there are no specific regulations on considering the recovery of past losses in electricity production and business, it could affect EVN's ability to develop and preserve State capital if production and business activities suffer prolonged losses.
