Vietnam Railways 'counterattacks' press reports of losing half of revenue

Recently, some electronic newspapers have published a number of articles revolving around the decline in revenue of Vietnam Railways Corporation. According to information from some newspapers, in 2015, the entire railway industry transported only a total of 11.2 million passengers, the lowest in the past 6 years.

Along with that, the figures cited by the press from the 2015 financial report of the Vietnam Railway industry show that in 2015, the revenue of this unit unexpectedly dropped sharply compared to the same period last year, reaching only 2,658 billion VND, equivalent to a decrease of more than 50%.

According to the newspapers, this result also caused gross profit to drop sharply by 60% to VND355 billion. However, the profit result in 2015 was still higher than the previous year because the Corporation cut management costs sharply.

In response to the press, Vietnam Railways Corporation has officially responded to the above information. According to this unit, the figures and comments stated in the article were based on the 2015 financial report of Vietnam Railways Corporation which was publicly posted on the railway industry's website.

According to Vietnam Railways Corporation, there is no story of this unit's revenue decreasing by 50%. Illustrative photo.

However, it is worth mentioning that the statistics in 2015 have many different changes compared to 2014 because in 2015 the Railway industry restructured and transformed its organizational model (divested capital, equitized enterprises, etc.), so the comparison and comments in the articles are not accurate, affecting the production and business and reputation of the enterprise.

According to Vietnam Railways Corporation, this unit is the parent company in the parent company-subsidiary group of Vietnam Railways Corporation, converted from a state-owned company into a single-member limited liability company owned by the state according to Decision No. 973/QD-TTg dated June 25, 2010 of the Prime Minister.

Pursuant to Decision No. 198/QD-TTg dated January 21, 2013 of the Prime Minister approving the restructuring project of Vietnam Railways Corporation for the period 2012-2015, Vietnam Railways Corporation has organized the restructuring of the entire Railway industry, including the reduction of 4 companies (2 passenger transport companies, 1 freight transport company and 1 dependent accounting traction branch) into 2 transport companies operating under the model of a single-member LLC with 100% state capital held by the Corporation from January 1, 2015.

According to Vietnam Railways Corporation, this unit's revenue includes the parent company's revenue and the revenue of its subsidiaries.

Pursuant to the provisions of the Accounting Law, Circular No. 200/2014/TT-BTC and Circular No. 202/2014/TT-BTC dated December 22, 2014 of the Ministry of Finance guiding the enterprise accounting regime, methods of preparing and presenting consolidated financial statements: In 2014, the Parent Company's revenue includes the revenue of 2 Transport Companies (including passenger transport revenue and freight transport revenue) and financial activity revenue (dividends from subsidiaries...) and other income are aggregated into the 2014 financial statements of the Parent Company.

In 2015, due to organizational changes, the 2 Transport Companies were converted into 2 LLCs with independent accounting. The revenue of these 2 units was not included in the parent company's revenue and was consolidated into the consolidated revenue of the Corporation. The 2015 revenue of the parent company included revenue from leasing transportation management services to the 2 Transport Companies, leasing railway infrastructure, financial revenue and other income.

"Thus, the revenue accounting criteria for 2014 and 2015 at the parent company are not the same, so we cannot use 2014 revenue as the base period to compare with 2015," Vietnam Railways Corporation stated.

According to Vietnam Railways Corporation, the consolidated revenue of the whole Corporation includes the revenue of the parent company and the revenue of subsidiaries, in 2014 it reached: 8,048 billion, in 2015 it reached: 7,358 billion, equivalent to 91.42%.

"The main reason for this difference is that in 2015, some companies divested capital and no longer controlled it, so the revenue of that unit was not included in the consolidated revenue of the Corporation," said the Vietnam Railway Corporation.

According to Infonet