Why was Cienco4 fined?

The State Securities Commission has just issued a decision to sanction administrative violations in the securities sector against Cienco4 Group Joint Stock Company.

According to the decision, Cienco4 was fined VND125 million for violating regulations on transactions with shareholders, business managers and related persons of these subjects.

Specifically, according to the list of shareholders finalized by the Vietnam Securities Depository and Clearing Corporation on March 26, 2024, Trustlink Investment and Service JSC (Trustlink) is a shareholder of Cienco4.

However, from April 1, 2024, Cienco4 used the proceeds from the 2023 public offering to lend to Trustlink under signed loan agreements.

Also related to this incident, the Securities Commission fined Cienco 4 VND 350 million for changing the capital use plan, the amount of money collected from the public securities offering but not through the general meeting of shareholders.

Specifically, according to the plan for using capital from the 2023 public offering, the proceeds will be used for Cienco4 to pay off bank loans, expected debts payable to subcontractors and suppliers of goods/services; money for purchasing raw materials and supplies; advances to contractors; and management costs.

However, from May 11, 2023 to May 18, 2023, Cienco4 used VND 600 billion collected from the public offering of shares to lend to Trustlink.

Thus, the company has changed the plan to use the proceeds from the offering with a change value greater than 50% of the proceeds from the offering (VND 1,123.6 billion) without being approved by the general meeting of shareholders , the decision of the Securities Commission clearly stated.

In addition to paying the fine, Cienco4 is required to remedy the consequences by forcing the nearest general meeting of shareholders to approve a change in the plan to use the proceeds from the 2023 public offering of securities.

How does Cienco4 Group do business?

According to the consolidated financial report for the third quarter of 2024, Cienco4 Group recorded revenue of more than 789 billion VND, an increase of nearly 11% over the same period last year.

Cost of goods sold increased lower, Cienco4's gross profit this period improved, reaching 106 billion VND. However, financial revenue decreased by 26%, to 22 billion VND.

In return, most of the costs incurred to operate the business were reduced. As a result, Cienco4 reported a profit after tax of nearly 55.2 billion VND, an increase of 93% over the same period.

In the first 9 months of this year, the group recorded revenue of more than 2,216 billion VND, an increase of nearly 24% over the same period last year, and after-tax profit reached nearly 155 billion VND, an increase of 50%.

At the end of September this year, Cienco4's total assets reached VND9,518 billion, a slight decrease compared to the beginning of the year.

On the other side of the balance sheet, total liabilities are nearly VND5,620 billion, down more than 4% compared to the beginning of the year. Most of which is short-term debt with more than VND3,027 billion, up nearly 5%.

According to the 2023 annual report, Cienco4 is introduced as a unit participating in investing and constructing traffic works with business locations from North to South. In 2023, this enterprise participated in the construction of 21 works in many provinces and cities.

The number of employees at the end of 2024 of this group is 480 people, with an average income of 21 million VND/person/month.