TNS explains audit opinion on financial difficulties, overdue debt of 135 billion VND

In the information disclosure document dated August 7, 2025, Thong Nhat Sheet Steel said that the 2025 semi-annual financial report (FS) received an unqualified opinion from the auditor. At the same time, the company's after-tax profit also changed by more than 10% compared to the same period.

According to the audit report of AASC Auditing Company Limited, this unit has given an exception opinion on TNS's 2025 semi-annual financial statements based on three main bases.

Firstly, the company has not fully recorded the interest expense payable to Vietnam Steel Corporation - JSC and the late interest expense to Phu My Sheet Steel Company Limited - Vnsteel, with the accumulated amount as of June 30, 2025 being VND 54.52 billion.

TNS must explain when the auditor doubts the business's ability to continue as a going concern.

Second, TNS's estimation and recognition of fixed asset depreciation expense based on actual production output instead of the straight-line method is inconsistent with accounting policy. This leads to an overstatement of accumulated depreciation of VND 5.81 billion and a corresponding understatement of undistributed profit after tax.

Third, the auditors highlighted the existence of a material uncertainty that may cast significant doubt on the company's ability to continue as a going concern. Specifically, as of June 30, 2025, TNS had total overdue liabilities of VND135.74 billion, short-term debt exceeding short-term assets by VND86.17 billion, and accumulated losses of up to VND110.06 billion.

In the explanatory document sent to the Hanoi Stock Exchange (HNX), Thong Nhat Steel Sheet gave explanations for each issue raised by the auditor.

Regarding the failure to record interest expenses and late payment interest, TNS said that due to the difficult financial situation, the company has worked with Vietnam Steel Corporation (VNS) and Phu My Sheet Steel (PFS) on a debt repayment plan and agreed not to charge interest on these outstanding debts from 2016 to 2023.

Regarding the loans due, TNS admitted that the financial situation is still difficult but said that it has sent many official dispatches requesting units to postpone debts, reduce interest rates and extend repayment periods. The company affirmed that it is still trying to maintain debt repayment on schedule.

Regarding depreciation costs, TNS explained that the estimate and depreciation of VND5.81 billion higher in the first 6 months of the year was due to the steel market situation continuing to have unpredictable developments.

The company also said that other issues raised by AASC were all issues that had been explained in previous reports and the auditors only reiterated them.

In addition to explaining the audit opinion, TNS also has a written explanation about the difference in after-tax profit in the first 6 months of 2025, which decreased by more than 10% compared to the same period.

Accordingly, TNS said that the cold-rolled steel market in the first 6 months of 2025 continued to face many difficulties from geopolitical competition, tariff wars and trade defense measures. This situation caused the company's production and consumption output to decrease by 23% and 19% respectively, leading to a decrease in revenue of VND987 billion, equivalent to a decrease of 57% and a decrease in gross profit of VND10 billion, equivalent to a decrease of 28% compared to the same period last year. This is the main reason for the decrease in profit after tax.

Minh Thu

Source: https://doanhnghiepvn.vn/doanh-nhan/tns-giai-trinh-y-kien-kiem-toan-ve-kho-khan-tai-chinh-no-qua-han-135-ty-dong/20250808040232773