2012 5 - EVE - Performance Analysis Q1 2012

QUARTERLY REPORT For the first three months ended 31st March 2012 1stQUARTER, 2012 Unit: VND bil Items Net Sales Cost of goods sold Gross Profit SG&A1 Net Profit Before Tax Net Profit After Tax Cash & Cash Equivalent Q1 /2012 134.7 88.3 46.4 30.5 18.1 14.5 87.7 Q1 /2011 160.7 70.0 90.7 25.0 47.0 37.5 165.8 incr /decr -16.2% - 2.6% - 33.7% 22.1% - 61.4% - 61.4% - 47.1% SG&A: Selling expenses, General and administration expenses  As reported by Department of Planning and Investment, at the end of Mar 21 st, 2012, there were over 2,200 enterprises that fell in dissolution and 9,700 companies has registered for stopping their operation or their tax obligation for a certain time Pursuant to report of General Statistics Office, inventory in many commodity groups increased at an alarming rate, some of them increased 100% compared to the same period of last year This point is shown clearly in the first quarter report of companies with sharp decline in profitability Up to now, there were over 10% of listed companies that reported losses in Q1/2012  In the context of economy facing many difficulties and challenges, Everpia Vietnam JSC (EVE – HSX) reports its first quarter 2012 financial performance with quarterly net revenue at VND 134.7 bil, down 16.2% from 2011 Net profit after tax (NPAT) Head Office and Factory in Hanoi Add : Duong Xa, Gia Lam, Hanoi Tel: 04 - 3827 6490 Fax: 04 - 3827 6492 Factory in Dong Nai Add : Route 4, Bien Hoa Industrial Zone, Bien Hoa City, Dong Nai Province Tel: 061– 8869 161 Fax: 061 – 8869 151 Website: www.everpia.vn Office and Showroom in Ho Chi Minh City Add : 85 An Duong Vuong, Ward 8,District 5, Ho Chi Minh City Tel: 08 – 6261 2078 Fax: 08 – 6261 1514 reached 14.5 bil., decreasing 61.4% compared with the same period of last year  1st QUARTER SALES PERFORMANCE Items Q1, 2010 Q1, 2011 Q1, 2012 Incr./decr -Bedding Sales 60.0 112.4 87.6 -22.0% -Padding Sales 21.1 48.9 47.1 -3.6% Total 81.1 161.3 134.7 -16.5% NPAT 11.4 37.5 14.5 -61.4% Accurately assessing difficulties; Everpia Vietnam has actively signed contracts with material suppliers in advance since the end of year 2011 to receive a fair and stable price for materials in 2012 Besides, in the first quarter 2012, the Company implemented a promotion program from Feb 10 th, 2012 to Mar 4th, 2012 for all bedding items However, the revenue reached only 83.5% compared to the same period of last year due to: i Disadvantageous effects of macroeconomic situation with high level of inflation and interest rates; reduced demand from foreign markets; increase in unemployment since many enterprises went bankrupt and therefore lower consumer spending etc.; ii Unfavorable weather conditions for bedding business; iii Economic recession in Europe and US has directly affected the main export markets of the Padding business  OPERATING RESULTS Net Sales Gross Profit SG&A Financial Income Financial Expense NPBT Q1/2012 134.7 46.4 30.5 2.6 0.6 18.1 14.5 % to Sales 100.0% 34.4% 22.7% 1.9% 0.5% 13.5% 10.7% Q1/2011 160.7 70.0 25.0 4.0 2.1 46.9 37.5 % to Sales 100.0% 43.4% 15.5% 2.5% 1.3% 29.1% 23.3% Incr./Decr -16.2% -33.7% However, the gross profit margin reduced from 43.4% in Q1/2011 to 34.4% in Q1/2012 mainly due to sharp increase in the price of raw materials and the promotion program for the bedding activity SG&A expenses during Q1/2012 increased by 22.1% year-on-year mainly as average salary expenses hiked by 49.2% and out-source services costs were up by 19.2% year-onyear resulting from higher energy costs Consequently, NPAT decreased in Q1/2012 by 61.4% The current and quick ratio show good capability of Everpia Vietnam to meet its shortterm obligations The current ratio increased from 4.7 in Q1/2011 to 5.2 in Q1/2012 Even though in slight decline compared to Q1/2011, the quick ratio was still high at 2.1 times as Head Office and Factory in Hanoi Add : Duong Xa, Gia Lam, Hanoi Tel: 04 - 3827 6490 Fax: 04 - 3827 6492 Factory in Dong Nai Add : Route 4, Bien Hoa Industrial Zone, Bien Hoa City, Dong Nai Province Tel: 061– 8869 161 Fax: 061 – 8869 151 Website: www.everpia.vn Office and Showroom in Ho Chi Minh City Add : 85 An Duong Vuong, Ward 8,District 5, Ho Chi Minh City Tel: 08 – 6261 2078 Fax: 08 – 6261 1514 -34.9% -70.1% -61.4% -61.4% the end of Q1/2012  FINANCIAL STATUS As the end of Q1/2012, EVE has outstanding bank loans, all on short term basis, of VND 17.2 bil to finance its working capital The financial structure of the Company is very sound with leverage at only 0.2 times as the Equity of EVE reached VND 694.5 bil at the end of Q1/2012 EVE had a strong cash position at the end of Q1/2012 (VND 87.7 bil.) even though in reduction compared to January 2011 (VND 119.4 bil.) Thanks to better inventory management, the net cash from operating activities is on improving trend to become positive at VND 2.8 bil while it was negative by VND74bil in Q1/2011 The Company has continued to invest an amount of VND12.2 bil for the new factory in Hung Yen and VND0.3 bil for setting up POS system at bedding agents in Q1/2012 At the end of Q1/2012, inventories were still high at VND351.5 bil due to i) steep increase prices of fiber and fabric; ii) purchase in advance for main materials to prepare 2012 and iii) lower sales that expected at the beginning of the year, causing higher inventory of finished goods (VND 162 bil.) and materials (VND 181.7 bil.) However, since year-beginning, EVE has limited its purchase of imported materials and implemented an active sales policy to gradually reduce the amount of inventories  EVE SHARES In Q1/2012, Everpia Vietnam repurchased shares for treasury shares in two session: - Session 1: from Dec 7th, 2011 to Mar 7th, 2012 Session 2: from Mar 20th, 2012 to Jun 20th, 2012 Up to now, total treasury stock is 479,300 or 2.1% of EVE’s Charter Capital On Mar 30th, the Annual Shareholder’s Meeting approved the distribution of dividend by cash at rate of 15% and by stock at rate of 20% for 2011 and possible 5% advance dividend for 2012 depending on business performance  GROWTH PERSPECTIVE In 2012, the Padding business will not be as active as in 2011 because competition intensifies, shrinking demand on foreign markets as a result of economic crisis in EU, and some Vietnamese customers have purchased machinery to produce padding by themselves Priority strategy of the Company is to take advantages of its strengths such as diversified product range, stable quality as well as long-term relationship with major and traditional customers Head Office and Factory in Hanoi Add : Duong Xa, Gia Lam, Hanoi Tel: 04 - 3827 6490 Fax: 04 - 3827 6492 Factory in Dong Nai Add : Route 4, Bien Hoa Industrial Zone, Bien Hoa City, Dong Nai Province Tel: 061– 8869 161 Fax: 061 – 8869 151 Website: www.everpia.vn Office and Showroom in Ho Chi Minh City Add : 85 An Duong Vuong, Ward 8,District 5, Ho Chi Minh City Tel: 08 – 6261 2078 Fax: 08 – 6261 1514 During the Q1/2012 which is the low season of Bedding business, Everpia Vietnam has been building up strategy to prepare market expansion of Edelin products in next three quarters Additionally, the Company is promoting Online Business channel with the brand Lovelon This new product line includes bedding designs for infants, juniors, and some special bedding items Both Edelin and Lovelon have been receiving positive feedback from consumers and expected to contribute to the Company’s sales in coming quarters  COMING EVENTS - EVE has started procedures with SSC and VSD for dividend payment The closing date for the shareholder list was on May 15 th, 2012 The dividend in cash will be paid from - May 30th and the stock dividend issuance will be completed by the end of Q2/2012 The new factory in Hung Yen is scheduled to start its operation in Aug 2012 Total estimated investment is VND145 bil For more information, please contact: Planning Team Tel: 04.3 827 6490 (ext: 347) Email: info@everpia.vn Head Office and Factory in Hanoi Add : Duong Xa, Gia Lam, Hanoi Tel: 04 - 3827 6490 Fax: 04 - 3827 6492 Factory in Dong Nai Add : Route 4, Bien Hoa Industrial Zone, Bien Hoa City, Dong Nai Province Tel: 061– 8869 161 Fax: 061 – 8869 151 Website: www.everpia.vn Office and Showroom in Ho Chi Minh City Add : 85 An Duong Vuong, Ward 8,District 5, Ho Chi Minh City Tel: 08 – 6261 2078 Fax: 08 – 6261 1514 ... Expense NPBT Q1 /2012 134.7 46.4 30 .5 2.6 0.6 18.1 14 .5 % to Sales 100.0% 34.4% 22.7% 1.9% 0 .5% 13 .5% 10.7% Q1/ 2011 160.7 70.0 25. 0 4.0 2.1 46.9 37 .5 % to Sales 100.0% 43.4% 15. 5% 2 .5% 1.3% 29.1%...reached 14 .5 bil., decreasing 61.4% compared with the same period of last year  1st QUARTER SALES PERFORMANCE Items Q1, 2010 Q1, 2011 Q1, 2012 Incr./decr -Bedding Sales 60.0 112.4 87.6 -2 2.0% -Padding... 151 Website: www.everpia.vn Office and Showroom in Ho Chi Minh City Add : 85 An Duong Vuong, Ward 8,District 5, Ho Chi Minh City Tel: 08 – 6261 2078 Fax: 08 – 6261 151 4 -3 4.9% -7 0.1% -6 1.4% -6 1.4%