PVGas City is at risk of getting off the bench

A series of items that cannot be verified

According to information from the Hanoi Stock Exchange (HNX), Urban Gas Development Investment Joint Stock Company (PVGas City, code: PCG) is likely to be canceled from listing according to regulations because the auditing organization refuses to give opinions on the 2024 financial report. HNX will consider canceling the compulsory listing of PCG shares according to regulations.

In the independent audit report accompanied by the consolidated financial report for 2024 of the Urban Gas Development Investment Joint Stock Company (PVGas City), VACO Auditing Company Limited officially refused to give audit opinions, citing the inability to collect sufficient audit evidence to serve as a basis for evaluating the important items in the report.

At the time of the report, PVGAS City did not provide complete confirmation documents for important items such as bank deposits (including demand deposits and term savings deposits), receivable lending, other receivables, advances, loans and financial debts, payable expenses, receivables, prepayments to sellers, paid for money with about 12 billion VND; 12.5 billion; VND 9.7 billion; 18.6 billion; VND 32.2 billion; VND 8.2 billion; 15.5 billion; 3.4 billion.

Due to the inability to collect authentic evidence, the auditor cannot assess the existence or real value of these items in the company's consolidated financial statements.

The enterprise has not yet provided auditing evidence related to inventory, fixed assets and unfinished construction works - items that may need to be adjusted in large value if there are errors. Some raw materials in stock are recorded to be worth nearly 8.1 billion VND, goods for business are 850 million VND, some other works are worth 991 million VND but have not been audited and verified.

Unusual transactions with shareholders and financial amounts that are difficult to verify

Notably, in 2024, the company had a number of cash transactions with Mr. Zhu ZhiLin - a shareholder and legal representative at that time - with a value of about 3.5 billion VND. The auditor cannot determine whether this transaction violates legal regulations related to whether a public company is not allowed to provide loans to shareholders or not.

PVGas City recorded many loans and interest receivables from Viet Tu Investment Company Limited (related parties) with the amount of VND24.3 billion and VND6.2 billion respectively; Hoang Phuc Investment and Management Company Limited (VND4 billion and VND414 million), KCO Electronics Expressway Company Limited (VND3 billion and VND294 million)... At the time of issuance of the report, the company had not yet provided necessary auditing evidence to verify the ability to recover these loans.

The company has not fully reserved for bad debts (12.6 billion VND). The auditors also could not determine the reserve for inventory reduction that needed to be set aside as well as the impact of this issue on the Company's consolidated BCTC...

Many problems from internal problems

In the explanatory document sent to the State Securities Commission and the Hanoi Stock Exchange, PVGas City said that the audit's refusal to give opinions on the consolidated financial statements in 2024 mainly stemmed from problems related to legal representative personnel and internal problems.

During the period from October 28, 2024 to March 25, 2025, the company encountered problems in the procedure of changing the legal representative, resulting in the failure to complete the necessary legal procedures to implement the audit schedule. Mr. Zhu Zhilin - the legal representative registered according to the business registration certificate - did not perform the responsibility of operating the business, causing the entire company's activities in this period without a representative to perform.

On March 25, 2025, the company will complete the procedures to change the new legal representative and continue to contact the auditing unit to complete the 2024 financial report.

Regarding financial issues, the company said it had a loan and interest payment with Viet Tu Investment Company Limited, with the amounts of about 24.3 billion VND and 6.2 billion VND respectively. At the same time, the company is also undergoing an obligation to pay the overdue principal debt of VND 18.6 billion to ENN Group International Investment Company Limited. Currently, the company is negotiating and signing a tripartite agreement with Viet Tu and ENN to handle the above debt and loan.

Regarding other loans and interest earned from Hoang Phuc Investment and Management Company Limited, KCO Vietnam Express delivery & Services Company Limited, Song Khe Transport Trading Company Limited with a total value of more than 9 billion VND, the company said it is completing the lawsuit procedures and assessed the possibility of recovery as high.

PVGas City also confirmed that in 2024, there will be a cash transaction with shareholder Mr. Zhu ZhiLin worth about 3.5 billion VND. Currently, the company is implementing legal measures to collect and assess the ability to recover it as very high.

At the time of preparing the consolidated financial statements, the company had not fully excluded some internal debt payments between the parent company and its subsidiaries. PVGas City commits to implementing exclusion in the next consolidated reports, first of all the semi-annual report in 2025.

In the document, the company affirmed that it will handle all the issues raised by the auditing unit, in order to complete the 2025 semi-annual financial report and overcome the shortcomings related to the 2024 report.