the power of reputation 2013 annual report bien hoa sugar joint stock company

2013 ANNUAL REPORT BIEN HOA SUGAR JOINT STOCK COMPANY 46 Board of Management (BOM) 52 Board of Supervisors (BOS) 54 Transactions, remuneration and interests of the BOM, BOD and BOS 61 Corporate Information 62 Statement of the Board of Management and Board of Directors 63 Independent auditor’s report 65 Consolidated balance sheet 68 Consolidated statement of income 69 Consolidated statement of cash ows 71 Notes to the consolidated nancial statements 36 - 43 44 - 57 58 - 111 38 Report and evaluation from the Board of Directors (BOD) 42 Evaluation of the Board of Management on business performance Pioneering in the sugarcane industry given 45 years of history, Bien Hoa Sugar Joint Stock Company has built its strong reputation in Vietnam market. From that background, the Company has relentlessly put eorts into new development steps to the future. CORPORATE GOVERNANCE REPORT FROM THE BOM FINANCIAL STATEMENTS 10 General Introduction 12 History of development 14 Scope of Business and Business Area 16 Organizational chart 17 Organizational structure 18 Development orientation 18 Risky factors impacting Company business performance 04 Vision - Mission 06 Message from Chairman 22 Business results 24 Organizational structure and human resources 30 Investment situation, key project implementation 32 Financial situation 34 Shareholder structure, changes of owner’s equity 08 - 19 04 - 07 CONTENTS 20 - 35 COMPANY OVERVIEW BUSINESS PERFORMANCE MISSION Providing customers with the best products and services. Maximizing shareholders’ value. Ensuring good working environment and opportunities for all sta to fully promote their competence, increasing their income and oer promotion opportunities. VISION Maintain the leading sugar brand name in Vietnam market by providing healthy and nutritious products for consumers. Expanding to South East Asia. Being a reliable partner, accompanying the farmers to develop sugarcanes to build new rural area and ensure social security. 4 2013 ANNUAL REPORT BIEN HOA SUGAR JOINT STOCK COMPANY 5 2013 ANNUAL REPORT www.bhs.vn General introduction Dear valued shareholders, As foreseen by economic organizations and experts, 2013 went by with lots of diculties and challenges to the global economy in general and Vietnam economy in particular. The world’s sugar industry remained in the circle of price decrease with the maximum surplus of 10.2 million tons of sugar. The domestic sugar industry also faced to many diculties due to oversupply. In 2013, Vietnam’s sugar industry underwent the record-high inventory of more than 500,000 tonnes from May to early season 2013 - 2014. In addition, The uncontrolled smuggled sugar has attributed to continuous drop of sugar prices. The shrunk consumption and high inventory boosted costs and reduced prots for sugar companies, some even suered from losses. The diculties of the sugar industry and companies made sugar stock lose its attraction to investors and caused share price plummet Foreseeing the macro-economy uctuations from early 2013, Board of Directors had presumed that 2013 would be tough year for sugar industry. Hence, leaders and sta of Bien Hoa Sugar Company (BHS) always kept close to the direction and key objectives set forth by the BOM since the beginning of the year to prepare timely action plans and appropriate behavior strategies to respond to market swings. At the beginning of the year, the Company made a very favorable start with big order contracts. However, the general diculties of the economy and the industry left signicant eects on the Company business operation results. In detail, at the close of Quarter 1, bad changes arose in the market, the sugar price dropped continuously. Customers with xed orders kept on delaying the delivery time, causing big disturbance to the Company’s consumption plan. Finally, after the rst 6 months, the Company’s business targets were adjusted to a slumping level, specically the prot before tax of 2013 dropped from VND 162 billion to VND 50 billion. In 2013, 178 thousand tonnes of assorted nished were produced by the Company, 176 thousand tonnes were sold, achieving the net revenue of VND 2,936 billion, with prot before tax of VND 50.3 billion, only accounting for 30% of the initial prot plan. Consolidated prot before tax reached VND 48.8 billion, equivalent to 29% of that in 2012. Thereby, it was explicitly acknowledged by the BOM that the key success of the Company in 2013 was that internal force was centralized and determination was made. Only centralized internal force could bring forth the competitive advantage to BHS, helping the Company survive and develop in current dicult market situation, which would denitely be more rigorous in the future. BHS determines to maintain leading sugar brand name in Vietnam; expand market share and add value to the investors. In 2014, the general orientation of the Company is STRENGTHENING THE SYSTEM ASSURING EFFICIENCY - PROMOTING INTERNAL FORCE. Alongside with the mentioned orientation, all stas of the Company are requested to work under the spirit of RESPONSIBILITY - DISCIPLINE - COOPERATION - EFFICIENCY. On behalf of the Board of Management of Bien Hoa Sugar Joint Stock Company, I would like to thank you all for believing and accompanying us over the past few years. We wish you health, success and happiness. IN 2013, 178 THOUSAND TONNES OF ASSORTED FINISHED SUGAR WERE PRODUCED AND 176 THOUSAND TONNES WERE SOLD, ACHIEVING THE REVENUE OF VND 2,936 BILLION, FULFILLING THE AMENDED PROFIT PLAN, EQUIVALENT TO PROFIT BEFORE TAX OF VND 50.3 BILLION. MESSAGE FROM CHAIRMAN On behalf of Board of Management Chairman THAI VAN CHUYEN 6 2013 ANNUAL REPORT BIEN HOA SUGAR JOINT STOCK COMPANY 7 2013 ANNUAL REPORT www.bhs.vn General introduction COMPANY OVERVIEW CONSTANTLY PROMOTE internal force In 2013, the Company successfully issued shares to its existing shareholders at the ratio of 1:1, increasing the charter capital from VND 314,974,590,000 to VND 629,949,180,000. This is the 5 th capital increase since 2007. CHARTER CAPITAL IN 2013 (Unit: VND) General introduction History of development Scope of business and business areas Organizational chart Organizational structure Development orientation Risky factors impacting Company business performance 10 12 14 16 17 18 18 Transaction name: BIEN HOA SUGAR JOINT STOCK COMPANY Business registration certicate No.: 3600495818 granted for the rst time by Dong Nai Department of Planning & Investment on 16 May 2001, and the latest amendment on 16 May 2013. Charter capital: VND 629,949,180,000 Address: Bien Hoa 1 Industrial Park, An Binh Ward, Bien Hoa City, Dong Nai. Telephone: 061.3836.199 Fax: 061.3836.213 Website: www.bhs.vn Stock code: BHS COMPANY OVERVIEW 10 2013 ANNUAL REPORT BIEN HOA SUGAR JOINT STOCK COMPANY 11 2013 ANNUAL REPORT www.bhs.vn General introduction 2013 2006 2007 2013 In 1998, Tay Ninh Sugar Plant (now known as Bien Hoa - Tay Ninh Sugar Plant) ocially stepped into operation with the processing capacity of 2,500 tonnes of sugar per day. In 2007, Tri An Sugarcane Company was acquired by the Company to establish Bien Hoa - Tri An Sugar Plant. After multi-upgrading and equipment investment, Bien Hoa - Tri An Sugar Plant’s capacity currently reaches 2,500 tonnes of sugarcane per day. On 9 September 2013, Certicate on stock public oering No. 42/ GCN-UBCK was issued by the State Securities Commission to the Company. Thereby, the Company’s stocks were issued to its existing shareholders to increase the charter capital from VND 314,974,590,000 to VND 629,949,180,000. From 2007 - 2013, the charter capital was increased 5 times as follows: Dividend by share was distributed at end 2006 with rate of 4% of the charter capital. Dividend by share was distributed at end of 2007 with rate of 10% of charter capital In 2011, bonus shares were distributed to the existing shareholders at the rate of 61.88%. In 2012, share issuance was made under ESOP (Employee Stock Ownership Plan) at the total value of VND 14,998,790,000.  After 4 times of charter capital increase as mentioned above, the Company’s charter capital was VND 314,974,590,000. In 2013, shares were issued to the existing shareholders at the ratio of 1:1. The Company’s present charter capital is VND 629,949,180,000. HISTORY OF DEVELOPMENT In 1969, Bien Hoa Sugar Plant was founded with the capacity of 400 tonnes. The key product then included yellow sugar, liquer and jute bags. 1969 1969 1971 1994 1995 1997 In 1971, the Plant was invested and upgraded to Rened Sugar Plant. In 1994, Bien Hoa Sugar Plant was renamed to Bien Hoa Sugar Company. In 1995, the capacity of Bien Hoa Rened Sugar Plant increased from 200 tonnes per day up to 300 tonnes per day. Simultaneously, Tay Ninh Sugar Plant construction was commenced. In 1997, Thanh Long Sugarcane Farm was established with the area of 960 hectares. 1998 2001 In 2001, Tay Ninh Sugar Plant capacity increased to 3,500 tonnes of sugarcane per day. Till present, the capacity has reached to 4,000 tonnes of sugarcane per day. In 2001, the company was transformed from state-owned company to joint stock company. On 16 May 2001, Bien Hoa Sugar Joint Stock Company was founded with the initial charter capital of VND 81 billion. In 2006, additional shares were issued by the Company for capital mobilization. The charter capital of VND 81 billion was increased to VND 162 billion. On 20 December 2006, the initial public oering of the Company’s shares was made at HCMC Stock Exchange under the code of BHS. 12 2013 ANNUAL REPORT BIEN HOA SUGAR JOINT STOCK COMPANY 13 2013 ANNUAL REPORT www.bhs.vn General introduction The Company’s major business & production activities include: Produce sugar; Planting sugarcanes; Produce and wholesale other products from sugar, sub-products, by-products from sugar; Produce and sell fertilizer; Provide agricultural materials. SCOPE OF BUSINESS AND BUSINESS AREA Hoang Sa Island Truong Sa Island Phu Quoc Island Head oce: Bien Hoa 1 Industrial Park, An Binh Ward, Bien Hoa City, Dong Nai Province. The Company’s plants and branches: Bien Hoa - Tay Ninh Sugar Plant Bien Hoa - Tri An Sugar Plant Da Nang Branch The Company’s subsidiaries: Bien Hoa - Thanh Long One-member Co., Ltd. Hai Vi One-member Co., Ltd. 14 2013 ANNUAL REPORT BIEN HOA SUGAR JOINT STOCK COMPANY 15 2013 ANNUAL REPORT www.bhs.vn General introduction BOARD OF SHAREHOLDERS BOARD OF MANAGEMENT BOARD OF DIRECTORS HUMAN RE SOURC ES DEPT. QUALITY CON TROL DEPT. ADMIN ISTRA TIVE DEPT. Board of Shareholders Board of Supervisors Board of Management Board of Directors Divisions of Sales, Finance, Techniques - Production - Investment Production units: Bien Hoa - Tay Ninh Sugar Plant, Bien Hoa - Tri An Sugar Plant, Rened Sugar Shop, Alcohol & New Product Shop Functional departments: 12 Subsidiaries: 2 Branch: 01 ORGANIZATION STRUCTURE ORGANIZATIONAL CHART BOARD OF SUPERVISORS COMPANY’S OFFICE INTERNAL INSPECTION DEPARTMENT TECHNIQUES  INVESTMENT DEPARTMENT ALCOHOL & NEW PRODUCT SHOP PROJECT MANAGEMENT BOARD BIEN HOA  THANH LONG ONEMEMBER CO., LTD. TECHN TECHNIQUES  PRODUCTION  INVESTMENT DIVISION BIEN HOA  TRI AN SUGAR PLANT HOL&N REFINED SUGAR SHOP FINANCE  PLANNING DEPARTMENT FINANCIAL DIVISION BIEN HOA  TAY NINH SUGAR PLANT ACCOUNTING DEPARTMENT SALES  MARKETING DEPARTMENT LOGISTICS DEPARTMENT SALES DIVISION IMPORT  EXPORT DEPARTMENT 16 2013 ANNUAL REPORT BIEN HOA SUGAR JOINT STOCK COMPANY 17 2013 ANNUAL REPORT www.bhs.vn General introduction DEVELOPMENT ORIENTATION TILL 2018  2020 VISION Resources will be focused in key operation elds including sugar production and trading. Invest to diversify sugar product portfolio such as sugar-based products, by- products and new products like micro-sugar, pure yellow sugar Invest and develop material zones to ensure sustainable and long-term development. Continuously reinforce and improve distribution network, explore and maximize of the strength of Bien Hoa Sugar brandname. Constantly expand export market. RISKY FACTORS LIKELY IMPACTING COMPANY Sugar price volatiles constantly and depends greatly on the global sugar prices, in addition, the Company’s products face with the competition of imported sugar, particularly the smuggled. The changes of importers trade policies also aect considerably to the Company’s business and production plans. As for production, the sugar industry always faces with material shortage due to the competitiveness of other crop plants. Low and unstable sugar output greatly attributed to such elements as weather, land policies, which aect costs and prices of sugar industry. DEVELOPMENT ORIENTATION 18 2013 ANNUAL REPORT BIEN HOA SUGAR JOINT STOCK COMPANY 19 2013 ANNUAL REPORT www.bhs.vn General introduction [...]... Members of the Board of Directors and managers fulfilled their rights and assigned duties, used and made good use of the resources on capital, assets, labor and brandname of the Company EVALUATION OF THE BOM ON THE ACTIVITIES OF BOARD OF DIRECTORS BIEN HOA SUGAR JOINT STOCK COMPANY 2013 ANNUAL REPORT Given the forecast of on-going difficulty of the sugarcane industry, the Company has promoted the strategy... with the set strategic orientation, cautiously and in the same industry Thereby, the Company made long-term strategic investment in the following companies: MAJOR INVESTMENTS: BIEN HOA SUGAR JOINT STOCK COMPANY 2013 ANNUAL REPORT Investing into 2,942,688 shares of Gia Lai Thermal Power Sugarcane Joint Stock Company, with the book value of VND 47,227,492,034 For the purpose of enhancing the image of BIEN. .. December 2006 Bien Hoa Sugar Joint Stock Company (the Company ) is a joint- stock company incorporated in Vietnam The consolidated financial statements of the Company for the year ended 31 December 2013 comprises the Company and its subsidiary (together referred to as the “Group”) and the Group’s interest in associate The principal activities of the Company are producing sugar; planting sugar cane; producing... community and society, Bien Hoa Sugar Joint Stock Company has built a firm trust in the shareholders and investors and stood firmly as the leading brandname in Vietnam Affirming position FIRMLY 60 BIEN HOA SUGAR JOINT STOCK COMPANY 2013 ANNUAL REPORT Consolidated Financial Statements for the year ended 31 December 2013 AND ITS SUBSIDIARY BIEN HOA SUGAR JOINT STOCK COMPANY Auditors Registered Office Supervisor... in 720,000 shares of TTC Sugarcane Research & Application Joint Stock Company with the book value of VND 7,200,000,000 Investing in 400,920 shares of Ninh Hoa Sugar Joint Stock Company with the book value of VND 4,792,591,350 Investing in 2,942,688 shares of Gia Lai Thermal Sugarcane Joint Stock Company with the book value of VND 47,227,472,034 Financial Investments: In 2013, the Company s investment... consider the signing of the credit contract with Asia Commercial Joint Stock Bank + + + + On 14 March 2013, an inordinate meeting was held to consider the termination of the operation of Can Tho Branch + BIEN HOA SUGAR JOINT STOCK COMPANY 2013 ANNUAL REPORT 1st time regarding the approval of Quarter 4 financial statement and 2013 accrual report Voting was carried out from 30 January 2013 to 6 February 2013. .. ACTIVITIES OF THE BOARD OF SUPERVISORS: Mr Le Nho Dinh – member of Board of Supervisors Number of shares holding: 0 Ms Nguyen Thuy Van – member of Board of Supervisors Number of shares holding: 0 Mr Le Van Hoa – Chief Supervisor, currently holding 48,996 shares, accounting for 0.08% MEMBERS AND STRUCTURE OF THE BOARD OF SUPERVISORS: BOARD OF SUPERVISORS BIEN HOA SUGAR JOINT STOCK COMPANY 2013 ANNUAL REPORT Company. .. rental, seed sugar sales, food & beverage business however, the revenue from such businesses was inconsiderable BIEN HOA SUGAR JOINT STOCK COMPANY 2013 ANNUAL REPORT 50.3 PROFIT BEFORE TAX VND REVENUE Throughout 2013, the Company produced 178 thousand tons of assorted finished sugar; 176 thousand tons of sugar were sold, reaching the net revenue of VND 2,936 billion, profit before tax of VND 50.3 billion,... develop further to the export markets Vietnamese brandname STRONG CONFIDENCE OF 46 No other positions at other companies Other positions at other companies: General Director of Thanh Thanh Cong Investment Joint Stock Company BOM member of Thanh Thanh Cong Tay Ninh Sugarcane Joint Stock Company BOM Chairman of Gia Lai Power Joint Stock Company Currently holding 223,240 shares, accounting for 0.35% of total... business performance Report and evaluation from the Board of Directors Evaluation of the Board of Management THE LEADERS REPORT SUGAR PRODUCTION OUTPUT (UNIT: TONNE) TOTAL PROFIT BEFORE TAX (UNIT: VND BILLION) Quality is the leading element determining the reliability of the customers and prestige of a brand name Therefore, Bien Hoa Sugar Joint Stock Company always focuses on investment in production . www.bhs.vn Stock code: BHS COMPANY OVERVIEW 10 2013 ANNUAL REPORT BIEN HOA SUGAR JOINT STOCK COMPANY 11 2013 ANNUAL REPORT www.bhs.vn General introduction 2013 2006 2007 2013 In 1998, Tay Ninh Sugar. Bien Hoa Tri An Tay Ninh Bien Hoa Tri An Tay Ninh 36% 69% 18% 13% 33% 31% 30 2013 ANNUAL REPORT BIEN HOA SUGAR JOINT STOCK COMPANY 31 2013 ANNUAL REPORT www.bhs.vn Business performance in 2013 KEY. by the parent Company. 22 2013 ANNUAL REPORT BIEN HOA SUGAR JOINT STOCK COMPANY 23 2013 ANNUAL REPORT www.bhs.vn Business performance in 2013 ORGANIZATIONAL STRUCTURE & HUMAN RESOURCES The