THE Commission on Audit (CoA) has issued a warning on the viability of GY Real Estate, Inc. (GYREI), a unit of the National Development Co. (NDC), after it posted eight years of consecutive operating losses totaling P54.945 million.
In its 2018 audit report, CoA said the losses “cast substantial doubt about the entity’s ability to continue as a going concern.”
The losses stemmed from a 5,000-square meter property leased to HH Asia Tyre Corp. (HH ATC) from April 2011 to November 2013.
It was later renewed for five years, from February 2014 to January 2019, with a beginning monthly gross rental rate of P504,000 with an escalation of 5% every two years.
“The continuous inactivity of the property places the company at high risk because shortly it will have no more funds to sustain its increasing maintenance cost,” the report said. It was noted that as of Dec. 31, 2018, GYREI had working capital of P24.472 million.
CoA had recommended that GYREI take the necessary action to ensure it can sustain the company’s operations.
“The management of GYREI has already made an assessment of the Company’s ability as a going concern. Three years projected cash flows were prepared, (indicating that) if the Company does not have additional sources of revenue, the shareholders may be advancing the expenses of the Company by the year 2020,” CoA said in the report.
“During the Feb. 20, 2018 board meeting, the President of GYREI discussed the said projections and proposed renewal of the HH ATC lease for another five years. However, the board agreed to renew the lease on a year to year basis only.” — Charmaine A. Tadalan
