VNG reports massive loss from affiliated companies
VNG reports massive loss from affiliated companies
VNG saw soaring losses from affiliated companies, with the estimated loss of VND151 billion ($6.57 million) in the three first quarters of this year, nearly doubling the figure on-year.
VNG has announced the third quarter fiscal report for 2018. Accordingly, losses in VNG’s affiliated companies increased sharply, while VNG’s revenue in the third quarter increased only slightly.
VNG’s net revenue from sales and services reached VND1.095 trillion ($47.6 million), slightly up compared to the corresponding period of 2017 (VND1.076 trillion – $46.78 million). However, throughout the first three quarters of 2018, revenue was VND3.161 trillion ($137.43 million), slightly down compared to the VND3.177 trillion ($138.13 million) in 2017.
Financial income increased from VND90 billion ($3.9 million) to VND115 billion ($5 million) mainly from collecting interest, but financial expenses also increased sharply from VND700 million ($30,434) to VND2.4 billion ($104,347). Meanwhile, affiliated company’s losses surged to an estimated VND151 billion ($6.56 million) in the first three quarters of 2018, which is double the figure of VND74.8 billion ($3.25 million) in 2017.
Sales and management costs increased simultaneously, causing after-tax profit plunging to less than half since 2017 to VND391 billion ($17 million).
VNG’s revenue from online games also dropped sharply. According to the parent company's financial statement, online gaming revenue in the first nine months was only VND1.736 trillion ($75.48 million), down sharply from VND2.123 trillion ($92.3 million) in the corresponding period last year.
It is noteworthy that the investment in the affiliated company continued to shrink in value, although was not included in the company’s losses, but the financial report showed that the investment in Tiki at the end of 2017 as worth VND384.4 billion ($16.7 million). As of the last day of September, the total investment in Tiki increased to VND506.2 billion ($22 million), equalling 28.8 per cent of Tiki shares.
In 2017, VNG recorded a loss of VND219 billion ($9.5 million) from Tiki. In the first half of this year, this loss rose by VND102 billion ($4.43 million). Thereby, the total losses in Tiki reached VND321.2 billion ($13.96 million) as of June 30 and the value of VNG’s investment in Tiki fell to VND185 billion ($8.04 million).
In 2017, VNG had a splendid year with fast business growth and revenue of VND 4,267 billion ($185.52 million) and after-tax profit increasing by 73 per cent to VND938 billion ($40.78 million).
In 2018, VNG set an ambitious revenue target at VND5.006 trillion ($217.65 million). However, it reduced the target by 41.5 per cent to VND549 billion ($23.87 million) – equivalent its 2016 profit. With the results announced, VNG seems on track to achieve its higher revenue target with lower profit performance due to various new investments and expenses.
