2013 ANNUAL REPORT BIEN HOA SUGAR JOINT STOCK COMPANY 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 efforts into new development steps to the future.
CONTENTS 04 - 07 04 Vision - Mission 06 Message from Chairman 08 - 19 20 - 35 36 - 43 44 - 57 58 - 111
COMPANY OVERVIEW BUSINESS PERFORMANCE REPORT FROM THE BOM CORPORATE GOVERNANCE FINANCIAL STATEMENTS
10 General Introduction 22 Business results 38 Report and evaluation from the 46 Board of Management (BOM) 61 Corporate Information 12 History of development 24 Organizational structure and Board of Directors (BOD) 52 Board of Supervisors (BOS) 62 Statement of the Board of 14 Scope of Business and Business Area human resources 42 Evaluation of the Board of 54 Transactions, remuneration and Management and Board of Directors 16 Organizational chart 30 Investment situation, Management on business interests of the BOM, 63 Independent auditor’s report 17 Organizational structure key project implementation performance BOD and BOS 65 Consolidated balance sheet 18 Development orientation 32 Financial situation 68 Consolidated statement of income 18 Risky factors impacting 34 Shareholder structure, 69 Consolidated statement of cash flows Company business performance changes of owner’s equity 71 Notes to the consolidated financial statements General introduction
VISION MISSION
Maintain the leading sugar brand name in Vietnam market by providing Providing customers with the best products and services. healthy and nutritious products for consumers. Expanding to South East Asia. Maximizing shareholders’ value. Being a reliable partner, accompanying the farmers to develop sugarcanes to build new rural area and ensure social security. Ensuring good working environment and opportunities for all staff to fully promote their competence, increasing their income and offer promotion opportunities.
2013 ANNUAL REPORT 2013 ANNUAL REPORT 4 BIEN HOA SUGAR JOINT STOCK COMPANY www.bhs.vn 5 General introduction
MESSAGE FROM CHAIRMAN Dear valued shareholders,
As foreseen by economic organizations and experts, 2013 went by with lots of difficulties 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. IN 2013, 178 THOUSAND TONNES The domestic sugar industry also faced to many difficulties due to oversupply. In 2013, Vietnam’s sugar industry underwent OF ASSORTED FINISHED SUGAR the record-high inventory of more than 500,000 tonnes from May to early season 2013 - 2014. In addition, The uncontrolled WERE PRODUCED AND 176 smuggled sugar has attributed to continuous drop of sugar prices. The shrunk consumption and high inventory boosted costs and reduced profits for sugar companies, some even suffered from losses. The difficulties of the sugar industry and THOUSAND TONNES WERE companies made sugar stock lose its attraction to investors and caused share price plummet SOLD, ACHIEVING THE REVENUE OF VND 2,936 BILLION, Foreseeing the macro-economy fluctuations from early 2013, Board of Directors had presumed that 2013 would be tough year for sugar industry. Hence, leaders and staff of Bien Hoa Sugar Company (BHS) always kept close to the direction and FULFILLING THE AMENDED key objectives set forth by the BOM since the beginning of the year to prepare timely action plans and appropriate behavior PROFIT PLAN, EQUIVALENT TO strategies to respond to market swings. PROFIT BEFORE TAX OF VND At the beginning of the year, the Company made a very favorable start with big order contracts. However, the general 50.3 BILLION. difficulties of the economy and the industry left significant effects 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 fixed orders kept on delaying the delivery time, causing big disturbance to the Company’s consumption plan. Finally, after the first 6 months, the Company’s business targets were adjusted to a slumping level, specifically the profit before tax of 2013 dropped from VND 162 billion to VND 50 billion.
In 2013, 178 thousand tonnes of assorted finished were produced by the Company, 176 thousand tonnes were sold, achieving the net revenue of VND 2,936 billion, with profit before tax of VND 50.3 billion, only accounting for 30% of the initial profit plan. Consolidated profit 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 difficult market situation, which would definitely 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 staffs 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.
On behalf of Board of Management Chairman
THAI VAN CHUYEN
2013 ANNUAL REPORT 2013 ANNUAL REPORT 6 BIEN HOA SUGAR JOINT STOCK COMPANY www.bhs.vn 7 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 5th capital increase since 2007.
CHARTER CAPITAL IN 2013 (Unit: VND)
COMPANY OVERVIEW
10 General introduction 12 History of development 14 Scope of business and business areas 16 Organizational chart 17 Organizational structure 18 Development orientation 18 Risky factors impacting Company business performance General introduction
COMPANY OVERVIEW
Transaction name: BIEN HOA SUGAR JOINT STOCK COMPANY
Business registration certificate No.: 3600495818 granted for the first 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
2013 ANNUAL REPORT 2013 ANNUAL REPORT 10 BIEN HOA SUGAR JOINT STOCK COMPANY www.bhs.vn 11 General introduction
HISTORY OF DEVELOPMENT
1969 2013 1969 1971 1994 1995 1997 1998 2001 2006 2007 2013 In 2001, Tay Ninh In 2006, additional On 9 September 2013, Sugar Plant capacity shares were issued Certificate on stock increased to 3,500 by the Company for public offering No. 42/ In 1997, Thanh Long tonnes of sugarcane capital mobilization. GCN-UBCK was issued Sugarcane Farm was per day. Till present, The charter capital of by the State Securities established with the the capacity has VND 81 billion was Commission to the area of 960 hectares. reached to 4,000 increased to VND Company. Thereby, tonnes of sugarcane 162 billion. On 20 the Company’s stocks per day. December 2006, the In 2007, Tri An were issued to its initial public offering Sugarcane Company existing shareholders In 1994, Bien Hoa In 2001, the company of the Company’s was acquired by the to increase the charter In 1998, Tay Ninh Sugar Plant was was transformed shares was made Company to establish capital from In 1995, the capacity Sugar Plant (now In 1971, the Plant renamed to Bien Hoa from state-owned at HCMC Stock Bien Hoa - Tri An VND 314,974,590,000 to of Bien Hoa Refined known as Bien Hoa - was invested and Sugar Company. company to joint Exchange under the Sugar Plant. After VND 629,949,180,000. Sugar Plant increased Tay Ninh Sugar Plant) upgraded to Refined stock company. On code of BHS. multi-upgrading from 200 tonnes officially stepped into Sugar Plant. 16 May 2001, Bien and equipment per day up to 300 operation with the Hoa Sugar Joint investment, Bien Hoa tonnes per day. processing capacity of Stock Company was - Tri An Sugar Plant’s Simultaneously, Tay 2,500 tonnes of sugar founded with the capacity currently Ninh Sugar Plant per day. initial charter capital reaches 2,500 tonnes construction was of VND 81 billion. of sugarcane per day. commenced. From 2007 - 2013, the charter capital was increased 5 times as follows: In 1969, Bien Hoa Sugar Plant was Dividend by share was distributed at end 2006 with rate of 4% of the charter capital. founded with Dividend by share was distributed at end of 2007 with rate of 10% of charter capital the capacity of In 2011, bonus shares were distributed to the existing shareholders at the rate of 61.88%. 400 tonnes. The In 2012, share issuance was made under ESOP (Employee Stock Ownership Plan) at key product then the total value of VND 14,998,790,000. included yellow » After 4 times of charter capital increase as mentioned above, the Company’s sugar, liquer and charter capital was VND 314,974,590,000. jute bags. 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.
2013 ANNUAL REPORT 2013 ANNUAL REPORT 12 BIEN HOA SUGAR JOINT STOCK COMPANY www.bhs.vn 13 General introduction
SCOPE OF BUSINESS AND BUSINESS AREA
The Company’s major business & production activities include:
Produce sugar;
Hoang Sa Island Planting sugarcanes;
Produce and wholesale other products from sugar, sub-products, by-products from sugar;
Produce and sell fertilizer; Head office: Provide agricultural materials. 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.
Phu Quoc Island
Truong Sa Island
2013 ANNUAL REPORT 2013 ANNUAL REPORT 14 BIEN HOA SUGAR JOINT STOCK COMPANY www.bhs.vn 15 General introduction
ORGANIZATIONAL CHART BOARD OF SHAREHOLDERS ORGANIZATION STRUCTURE
Board of Shareholders BOARD OF SUPERVISORS Board of Supervisors Board of Management Board of Directors INTERNAL INSPECTION DEPARTMENT BOARD OF MANAGEMENT Divisions of Sales, Finance, Techniques - Production - Investment Production units: Bien Hoa - Tay Ninh Sugar Plant, Bien Hoa - Tri An Sugar Plant, Refined Sugar Shop, Alcohol & New Product Shop Functional departments: 12 Subsidiaries: 2 BOARD OF DIRECTORS Branch: 01
COMPANY’S OFFICE
TECHNIQUES - PRODUCTION - BIEN HOA - TAY NINH SUGAR SALES DIVISION FINANCIAL DIVISION BIEN HOA - TRI AN SUGAR PLANT INVESTMENT DIVISION PLANT
SALES - FINANCE - TECHNIQUESTECHN - INVESTMENT MARKETING DEPARTMENT PLANNING DEPARTMENT DEPARTMENT HUMAN QUALITY ADMIN- RE- CON- ISTRA- SOURC- TROL TIVE IMPORT - ES ACCOUNTING DEPARTMENT REFINED SUGAR SHOP DEPT. DEPT. EXPORT DEPARTMENT DEPT.
ALCOHOLHOL& & NEWN PRODUCT LOGISTICS DEPARTMENT SHOP
PROJECT MANAGEMENT BOARD
BIEN HOA - THANH LONG ONE-MEMBER CO., LTD.
2013 ANNUAL REPORT 2013 ANNUAL REPORT 16 BIEN HOA SUGAR JOINT STOCK COMPANY www.bhs.vn 17 General introduction
DEVELOPMENT ORIENTATION
DEVELOPMENT ORIENTATION TILL 2018 - 2020 VISION
Resources will be focused in key operation fields 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 affect 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 affect costs and prices of sugar industry.
2013 ANNUAL REPORT 2013 ANNUAL REPORT 18 BIEN HOA SUGAR JOINT STOCK COMPANY www.bhs.vn 19 2013 SUGAR PRODUCTION (Unit: ton)
CONNECT broad & profound network
Compared to other peers, Bien Hoa Sugar enjoys a strong advantage thanks to its wide distribution network covering various provinces and cities, particularly its outstanding advantages in supermarkets nationwide. Besides, Bien Hoa Sugar focuses on potential markets to promote further its advantages. BUSINESS PERFORMANCE
22 Business results 2013 SUGAR CONSUMPTION (Unit: ton) 24 Organizational structure and human resources 30 Investment situation, key project implementation 32 Financial situation
Note: Data from page 22 - page 57 is provided by the parent Company. parent the by is provided page 22 - page 57 from Data Note: 34 Shareholder structure, changes of owner’s equity Business performance in 2013
PRODUCTION & BUSINESS PERFORMANCE 159,532 (litre) 178,328 (ton) 126% 177,687 (litre) 175,502 (ton) 112% Sugar 105%
101% production output 2013 production & consumption 101% Alcohol production compared to Sugar production the plan Alcohol consumption Sugar consumption
NET REVENUE PROFIT BEFORE TAX
VND 2,936 bl VND 50.3 bl
2,837.64 2,936 50.92 50.3 Compared Achievement 2013 2013 plan 2013 plan Achievement of amended No. Content Unit actual (initital) (amended) of initial plan plan 1 Produced sugar output tonne 178,328 196,000 175,894 91% 101% 2 Produced alcohol output litre 159,532 130,000 126,447 123% 126% 3 Consumed sugar output tonne 175,502 180,000 167,270 98% 105% 4 Consumed alcohol output litre 177,687 130,000 158,776 137% 112% 5 Net revenue VND bl. 2,935.73 3,227.38 2,837.64 91% 103% Plan 2013 Actual 2013 Plan 2013 Actual 2013 6 Profit before tax VND bl. 50.27 166.88 50.92 30% 99% Net revenue chart Profit before tax chart 7 Profit after tax VND bl. 38.90 125.16 38.19 31% 102% (VND billion) (VND billion)
Note: Data from page 22 - page 57 is provided by the parent Company.
2013 ANNUAL REPORT 2013 ANNUAL REPORT 22 BIEN HOA SUGAR JOINT STOCK COMPANY www.bhs.vn 23 Business performance in 2013
ORGANIZATIONAL STRUCTURE & HUMAN RESOURCES
The Board of Directors includes 6 members:
Mr. BUI VAN LANG : Acting General Director Ms. TRAN QUE TRANG : Deputy General Director in charge of Finance Mr. LE AN KHANG : Deputy General Director in charge of Sales Mr. LE QUANG HAI : Deputy General Director in charge of Techniques, Production & Investment Mr. PHAM CONG HAI : Deputy General Director in charge of Bien Hoa - Tay Ninh Plant Mr. NGUYEN TIEN CUONG : Deputy General Director in charge of Bien Hoa - Tri An Plant
2013 ANNUAL REPORT 2013 ANNUAL REPORT 24 BIEN HOA SUGAR JOINT STOCK COMPANY www.bhs.vn 25 Business performance in 2013
ORGANIZATIONAL STRUCTURE & HUMAN RESOURCES
Resumes of the Board of Directors members:
Full name : BUI VAN LANG Full name : LE AN KHANG Gender : Male Gender : Male Date of birth : 20 February 1962 Date of birth : 12 December 1981 Place of birth : Quang Ngai Place of birth : Tien Giang I.D. card No. : 272248688 I.D. card No. : 311635876 Date of issuance : 20 June 2008 Date of issuance : 01 September 2008 Place of issuance : Dong Nai Police of Security Place of issuance : Tien Giang Police of Security Nationality : Vietnamese Nationality : Vietnamese Ethnic group : Kinh Ethnic group : Kinh Permanent residence : 9A2 An Binh Residential Area, Permanent residence : Trung An Commune, An Binh Ward, Bien Hoa City, My Tho City, Tien Giang Dong Nai Professional level : Master of Developmental Professional level : Bachelor of Economics Economics Number of shares held : 224,390 Number of shares held : 0
Mr. BUI VAN LANG Mr. LE AN KHANG Acting General Director Deputy General Director in charge of Sales
Full name : TRAN QUE TRANG Full name : LE QUANG HAI Gender : Female Gender : Male Date of birth : 8 August 1980 Date of birth : 12 April 1964 Place of birth : Bac Lieu Place of birth : Thua Thien Hue I.D. card No. : 025658777 I.D. card No. : 271751263 Date of issuance : 31 October 2012 Date of issuance : 12 April 2002 Place of issuance : HCMC Police of Security Place of issuance : Dong Nai Police of Security Nationality : Vietnamese Nationality : Vietnamese Ethnic group : Kinh Ethnic group : Kinh Permanent residence : 173 Thai Phien, Ward 9, Permanent residence : 14A14 Road 16, An Binh Dist. 11, HCMC Residential Area, Bien Hoa City, Professional level : Bachelor of Economics Dong Nai Number of shares held : 0 Professional level : Engineer on Food Chemistry Number of shares held : 35,644 Mr. LE QUANG HAI Ms. TRAN QUE TRANG Deputy General Director in charge of Techniques - Production - Deputy General Director in charge of Finance Investment
2013 ANNUAL REPORT 2013 ANNUAL REPORT 26 BIEN HOA SUGAR JOINT STOCK COMPANY www.bhs.vn 27 Business performance in 2013
ORGANIZATIONAL STRUCTURE & HUMAN RESOURCES (cont.)
Resumes of the Board of Directors members (cont.): Resume of the Chief Accountant:
Full name : PHAM CONG HAI Full name : NGO THI THANH HANG Gender : Male Gender : Female Date of birth : 5 February 1962 Date of birth : 2 February 1983 Place of birth : Tien Giang Place of birth : Quang Tri I.D. card No. : 270069063 I.D. card No. : 271545289 Date of issuance : 11 May 2005 Date of issuance : 23 February 2008 Place of issuance : Dong Nai Police of Security Place of issuance : Dong Nai Police of Security Nationality : Vietnamese Nationality : Vietnamese Ethnic group : Kinh Ethnic group : Kinh Permanent residence : 103/23 Residential Group 6, Permanent residence : 214Q1, Quarter 1, Quarter 3, Trung Dung Ward, Long Binh Tan Ward, Bien Hoa, Bien Hoa City, Dong Nai Dong Nai Professional level : Mechanical Engineer, Bachelor Professional level : Bachelor of Economics: of Business Administration Accounting - Auditing Number of shares held : 34,693 Number of shares held : 31,460 Mr. PHAM CONG HAI Ms. NGO THI THANH HANG Deputy General Director in charge of Bien Hoa – Tay Ninh Plant Chief Accountant
The Chief Accountant was changed in 2013: As per Decision No. 140/2013/QĐ-HĐQT dated 12 June 2013, whereby the BOM appointed Ms. Ngo Thi Thanh Hang as Chief Accountant of the Company, replacing Mr. Vo Cong Minh since 17 June 2013.
Full name : NGUYEN TIEN CUONG Gender : Male Date of birth : 13 October 1966 Place of birth : Quang Binh Changes in the Management Team in 2013 HUMAN RESOURCES SITUATION I.D. card No. : 280360268 Date of issuance : 7 August 2013 Mr. TRAN TUU resigned on 20 May 2013. Total staff by 31 December Place of issuance : Binh Duong Police of Security 2013: 1,198 Nationality : Vietnamese Mr. NGUYEN HOANG TUAN resigned on 01 July 2013 Ethnic group : Kinh Mr. LE AN KHANG was appointed on 01 July 2013. 2013 average monthly salary/ Permanent residence : Trung Quarter, Vinh Phu Ward, staff: VND 7,500,000/ person Mr. NGUYEN VAN LOC resigned on 01 October 2013. Thuan An, Binh Duong Employee policy: complying Professional level : Engineer Mr. BUI VAN LANG was appointed on 01 October 2013 with the collective labor Number of shares held : 0 Mr. NGUYEN TIEN CUONG was appointed on 16 September 2013. agreement and the Labor Law. Mr. NGUYEN TIEN CUONG Ms. TRAN QUE TRANG was appointed on 01 November 2013. Deputy General Director in charge of Bien Hoa – Tri An Plant
2013 ANNUAL REPORT 2013 ANNUAL REPORT 28 BIEN HOA SUGAR JOINT STOCK COMPANY www.bhs.vn 29 Business performance in 2013
In addition to the important projects mentioned above, annually, a considerable fund was reserved by the Company for the new product development projects, infrastructure construction, machinery and equipment supplementation for production. Total value of all these investment items in 2013 is VND 104 billion, 31% SITUATION ON INVESTMENT, of which: Total investment 36% KEY PROJECT IMPLEMENTATION value VND104 In Bien Hoa: VND 38 billion billion In Tri An: VND 34 billion In Tay Ninh: VND 32 billion 33% PROJECTS TO BE IMPLEMENTED IN 2014
In 2014, the Company plans to invest into the projects regarding infrastructure Bien Hoa Tri An Tay Ninh rehabilitation, warehouse expansion and construction, new investment in coal boiler for material saving, additional investment in machinery & equipment 2013 investment allocation chart for capacity enhancement, production, expansion of Thanh Long Farm. Total For the purpose of enhancing the image of (VND billion) estimated investment value is VND 139 billion, of which: BIEN HOA brand, the company has been investing In Bien Hoa: VND 96 billion In Tri An: VND 25 billion In Tay Ninh: VND 18 billion Investing into 2,942,688 and upgrading in technologies. shares of Gia Lai Thermal SUBSIDIARIES Power Sugarcane Joint Stock Company, with the book Bien Hoa – Thanh Long One-member Co., Ltd: Not yet operated. value of VND 47,227,492,034. MAJOR INVESTMENTS: 13% Hai Vi One-member Co., Ltd.: Financial Investments: In 2013, the Company’s investment activities were carried Estimated total investment out in accordance with the set strategic orientation, cautiously and in the same 18% Established as per Business Registration Certificate No. 3900244283 - 1 on 29 July 2010. industry. Thereby, the Company made long-term strategic investment in the value VND139 Head office address: Thanh Tan Hamlet, Thanh Long Commune, Chau Thanh District, following companies: billion 69% Tay Ninh Province Investing in 2,942,688 shares of Gia Lai Thermal Sugarcane Joint Stock Company with the book value of VND 47,227,472,034. Key production & business scope:
Investing in 400,920 shares of Ninh Hoa Sugar Joint Stock Company with the Sugarcane planting, fertilizer and agricultural materials production and trading. book value of VND 4,792,591,350. Bien Hoa Tri An Tay Ninh Registered capital: VND 1,500,000,000 Investing in 720,000 shares of TTC Sugarcane Research & Application Joint Stock Company with the book value of VND 7,200,000,000. 2014 investment allocationplan Basic financial information: (VND billion) Investing in projects: In 2013, For the purpose of enhancing the image of Unit: VND BIEN HOA brand, the company has been investing and upgrading in technologies. Within the year, despite market difficulties, the Company No. Target 2013 2012 fearlessly invested and expanded 2 production factories with details as follows: 1 Total revenue 10,812,936,349 15,677,952,668 The Project on “Equipment refining and production quality upgrading” at 2 Profit before tax 420,190,372 4,740,457,593 Bien Hoa – Tri An Sugar Factory was completed, inspected and accepted, and put into operation by early of 2013 production year. Total investment capital 3 Profit after tax 336,152,298 4,524,905,301 of the project is VND 108 billion. 4 Total assets 13,301,448,488 11,628,028,579
The Project on “Equipment refining and product quality upgrading” at Bien 2013 revenue of Hai Vi One-member Co., Ltd. decreased VND 4.9 billion from a Hoa – Tay Ninh Sugar Factory was completed, inspected and accepted, and year earlier as the output of the harvested sugarcanes decreased 3,698 tons and put into operation by early of 2013 production year. Total investment capital average selling price of the sugarcanes went down to VND 77,000/ ton. This was is VND 117 billion. the main reason why the Company’s profit before tax dropped to VND 4.3 billion.
2013 ANNUAL REPORT 2013 ANNUAL REPORT 30 BIEN HOA SUGAR JOINT STOCK COMPANY www.bhs.vn 31 Business performance in 2013
1.02 1.11 0.45 0.84
FINANCIAL SITUATION
FINANCIAL SITUATION
% increase/ Indicator 2012 (VND) 2013 (VND) decrease Total asset value 2,108,607,355,457 2,197,268,114,755 4% 2012 2013 2012 2013 Net revenue 3,057,156,502,099 2,935,733,752,537 - 4% Current solvency ratio Quick solvency ratio Profit from business activities 162,458,943,641 49,490,536,142 - 70%
Other profits 122,641,910 779,605,855 536% Solvency chart Profit before tax (EBT) 162,581,585,551 50,270,141,997 - 69% Profit after tax(EAT) 115,909,270,807 38,904,918,312 - 66%
KEY FINANCIAL INDICATORS Within the year, the Company successfully issued its shares to increase its registered capital from VND 314,974,590,000 to VND 629,949,180,000 for operation capital supplementation and financial re-structure. No. Indicator 2012 2013 I Growth rate 1 Net revenue growth rate 19.05% - 3.97% 2 Profit before tax growth rate 0.54% - 69.08% 3 Profit after tax growth rate - 22.17% - 66.44% II Solvency 1 Current solvency ratio 1.02 1.11 2 Quick solvency ratio 0.45 0.84 3 Cash solvency ratio 0.07 0.19 III Profitability 1 Gross profit / Net revenue 9.03% 8.09% 2 EBIT / Net revenue 6.98% 5.30% 3 Profit before tax / Net revenue 5.32% 1.71% 4 Profit after tax / Net revenue 3.79% 1.33% 5 Return on total assets (ROA) 6.82% 1.81% 6 Return on Equity (ROE) 20.56% 5.47% 7 Operating Profit/ Net revenue 5.31% 1.69% IV Operation efficiency 1 Commercial receivable turnover 49.56 20.13 2 Inventory turnover 4.87 4.71 3 Commercial payables turnover 26.77 30.14 4 Total asset turnover 1.80 1.36 V Capital structure 1 Debt/ Total owner’s equity 267.28% 159.18% 2 Debt/ Total assets 72.77% 61.42% 3 Current liabilities/Owner’s equity 248.57% 147.72%
2013 ANNUAL REPORT 2013 ANNUAL REPORT 32 BIEN HOA SUGAR JOINT STOCK COMPANY www.bhs.vn 33 Business performance in 2013
SHAREHOLDER STRUCTURE, Strategic shareholders: CHANGES OF OWNERS’ EQUITY Ownership Shareholder structure No. of percentage No. of No. Subject share (%) shareholders Organization Individual Strategic shareholder owns from 5% of the share capital or more, but not a 26,563,029 42.17% 3 3 0 SHARE PERCENTAGE SHARES 1 professional stock investors (PSI) - Local 26,563,029 42.17% 3 3 0 Total shares: 62,994,918 shares - International 0 0.00% 0 0 0 Type of currently outstanding shares: Common shares PSI who is strategic shareholder owning 9,194,986 14.60% 1 1 0 62,994,918 No. of freely transferred shares: 61,495,039 shares from 5% of the share capital or more Total shares 2 No. of limitedly transferred shares: 1,499,879 shares - Local 9,194,986 14.60% 1 1 0 Reason of limited transfer: Common shares distributed under ESOP. Freely transferred shares 98% - International 0 0.00% 0 0 0 Limitedly transferred shares 2% PSI who is the shareholder owning < 2,836,728 4.50% 59 59 0 5% of the share capital 3 - Local 13,675 0.02% 43 43 0 - International 2,823,053 4.48% 16 16 0 SHAREHOLDER STRUCTURE (BASED ON THE LIST OF SHAREHOLDERS CLOSED ON 31 DECEMBER 2013) TOTAL 38,594,743 61.27% 63 63 0 Capital ownership percentage: Change in the owners’ equity Shareholder structure No. of Ownership No. of No. Content Before change Additionally issued After change No. Subject share percentage (%) shareholders Organization Individual 1 Charter capital (VND) 314,974,590,000 314,974,590,000 629,949,180,000 1 State-owned shareholder 7,654,133 12.15% 1 1 0 2 Total shares 31,497,459 31,497,459 62,994,918 Founding shareholder 7,795,443 12.37% 4 1 3 3 No. of voting shares 31,497,459 31,497,459 62,994,918 2 - Local 7,795,443 12.37% 4 1 3 - International - 0.00% 0 0 0 Strategic shareholders (owning from 5% of the share capital or 35,758,015 56.76% 4 4 0 3 more) - Local 35,758,015 56.76% 4 4 0 - International - 0.00% 0 0 0 Company’s Trade Union 2,051,265 3.26% 2 2 0 4 - Local 2,051,265 3.26% 2 2 0 - International - 0.00% 0 0 0 5 Treasury stock - 0.00% 0 0 0 6 Preferential shareholder (if any) - 0.00% 0 0 0 Other shareholders 25,044,328 39.76% 3,401 69 3,332 7 - Local 21,435,703 34.03% 3,215 53 3,162 - International 3,608,625 5.73% 186 16 170 TOTAL 62,994,918 100.00% 3,410 75 3,335 - Local 59,386,293 94.27% 3,224 59 3,165 - International 3,608,625 5.73% 186 16 170
2013 ANNUAL REPORT 2013 ANNUAL REPORT 34 BIEN HOA SUGAR JOINT STOCK COMPANY www.bhs.vn 35 TOTAL PROFIT BEFORE TAX (UNIT: VND BILLION)
SUGAR PRODUCTION OUTPUT (UNIT: TONNE)
AFFIRM leading technology
Quality is the leading element determining the reliability of the customers and THE LEADERS’ REPORT prestige of a brand name. Therefore, Bien Hoa Sugar Joint Stock Company always focuses on investment in production technology and production lines, constantly enhancing the product quality so as to provide customers with the best products. 38 Report and evaluation from the Board of Directors 42
Note: The data from page 22 – page 57 is provided by the parent Company. the parent by 57 is provided page 22 – page from Note: The data Evaluation of the Board of Management on business performance Report from the leaders
REPORT AND EVALUATION FROM THE BOARD OF DIRECTORS
EVALUATION ON PRODUCTION & BUSINESS OPERATION RESULTS In 2013, the solvency ratios were considerably Throughout 2013, the Company produced 178 thousand tons of assorted finished improved compared from a year earlier. However, 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, accounting for 30% of the initial profit plan. some ratios of capital structure were still higher
Revenue in 2013 was mainly generated from sugar sales, the key product, than the permissible levels and needed to be REVENUE contributing 99% of the total revenue of the Company. Additionally, the Company obtained income from many other business activities such as alcohol production, gradually adjusted to reduce liquidity risks in 2014. VND 2,936 billion storage facilities rental, seed sugar sales, food & beverage business.... however, the revenue from such businesses was inconsiderable. PROFIT BEFORE TAX FINANCIAL SITUATION After the first 6 months, based on the actual situation and forecasts of the sugar industry for the last 6 months, the business plan was timely adjusted by the BOM to TOTAL ASSETS The Company’s total assets by 31 December 2013 reached VND 2,197.3 billion, VND 50.3 billion keep pace with the actual situation. increasing 4.2% compared to the end of 2012, equivalent to an increase of VND VND billion 88.7 billion; it mainly came from the new investment into the fixed assets. The Compared to the adjusted business plan, achieved targets on production, 2,197 equity by the end of 2013 varied strongly, increasing 47.7% compared to the end consumption and revenue were as follows: of 2012 mainly owning to the successful share issuance carried out in the year at the ratio of 1:1 to increase the charter capital. Sugar production output was 101% compared to the plan. 2,109 2,197 Alcohol production output reached 126% compared to the plan. In regard to the growth targets, operation efficiency and profitability: In 2013, Sugar consumption output was 105% compared to the plan. all the targets of these items decreased, indicating the decreased growth rate Alcohol consumption output reached 112% compared to the plan. of 2013 in comparison with the previous years. Targets of business efficiency Net revenue was 103% compared to the plan. and profitability did not meet the aspiration due to the effect of capital increase by the end of the year, such capital was not fully made use by the Company, In short, in 2013, though the general economic situation was not yet thriven and therefore, the corresponding efficiency was not obtained. the sugar industry was still in its price slump cycle, the Company tried to achieve certain business efficiency. Though the indicators of business growth and operation In 2013, solvency ratios show great improvement in comparison with those in 2012. efficiency of the Company in 2013 did not meet the plan and dropped in comparison However, some ratios on capital structure were still higher than the permissible with those of 2012 due to the effects of the general situation of the sugar industry, levels and needed to be gradually adjusted to reduce liquidity risks in 2014. the solvency ratios and capital structure ratios have moved positively. This proved that the orientation of internal force centralization to enhance the Company’s Briefly, the financial indicators were greatly improved from a year earlier, which competitiveness and ability of confronting with the increasingly complicated market 2012 2013 demonstrated the gradual efficiency of the Company’s investment and internal situation was an extremely proper step made by the Company’s Leadership. Total asset chart (VND billion) force improvement.
2013 ANNUAL REPORT 2013 ANNUAL REPORT 38 BIEN HOA SUGAR JOINT STOCK COMPANY www.bhs.vn 39 Report from the leaders
2014 PRODUCTION & BUSINESS PLAN
+63.60% PROFIT AFTER TAX REACHED VND 63.64 BILLION
+63.52% PROFIT BEFORE TAX REACHED VND 82.20 BILLION
-9.98% NET REVENUE REACHED VND 2,643 BILLION
+0.12% SUGAR CONSUMPTION OUTPUT REACHED 175,714 TONNES
-1.50% REPORT AND EVALUATION SUGAR PRODUCTION OUTPUT REACHED 175,651 TONNES FROM THE BOARD OF DIRECTORS (cont.)
IMPROVEMENTS IN ORGANIZATIONAL STRUCTURE, POLICIES AND MANAGEMENT
Included in the strategy of internal force improvement and competitiveness No. Content Unit Plan 2014 Actual 2013 % Growth enhancement, in 2013, the Company’s operation mechanism was 1 Sugar production output tonne 175,651 178,328 -1.50% re-structured to further enhance the operation efficiency, review and 2 Sugar consumption output tonne 175,714 175,502 0.12% renovate the whole process and regulations in the compact and scientific way and close to the actual activities. 3 Net revenue VND bl. 2,642.72 2,935.73 -9.98% 4 Profit before tax VND bl. 82.20 50.27 63.52% In the past year, the Company’s organizational structure was modified; new Regulation on the Company’s organization and operation was issued, 5 Profit after tax VND bl. 63.64 38.90 63.60% gradually making the Company’s operation more professional. Product- based lump sum salary method was applied and agricultural activities were organized in the professional farming model by BHS.
2013 ANNUAL REPORT 2013 ANNUAL REPORT 40 BIEN HOA SUGAR JOINT STOCK COMPANY www.bhs.vn 41 Report from the leaders
EVALUATION OF THE BOM ON THE COMPANY’S OPERATION
EVALUATION OF THE BOM ON THE COMPANY’S PERFORMANCE
The Company adequately fulfiled the adjusted targets. It is likely to say that in such a challenging year as 2013, it was really a great effort of the Company. Given the forecast of on-going difficulty of the sugarcane industry, the Company has promoted the strategy and action plan to reinforce its internal resourses. Reinforcing internal force would bring more competitive advantages to make it survive and develop in such difficult market situation at present, which will be more rigorous in future. In 2013, the Company was just at its initial stage of internal force reinforcement, yet the achievements were quite encouraging when 4 projects on refined equipment lines and product quality upgrading were Given the forecast of completed at 2 plants; the charter capital was doubled, i.e. VND 629,949,180,000 on-going difficulty of the till present; materials of crops 13 – 14 were better harvested; with renewed sugarcane industry, the regulation documentation system, the working processes were adjusted to be Company has promoted the more compact, unnecessary stages were eliminated yet close control of the strategy and action plan to entire system was still ensured. reinforce its internal resourses. EVALUATION OF THE BOM ON THE ACTIVITIES OF BOARD OF DIRECTORS After restructuring ORIENTATION OF THE BOM IN 2014 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, first phase, BHS was labor and brandname of the Company. organized more The Company’s overall objectives will be: Decisions from the Board of Directors were released legitimately, in proper rationally, with Fulfill the profit and revenue targets. timely competence. Based on the BOM’s Resolutions and Decisions, the Board of Directors’ duties were deployed expeditiously, with flexible and timely reactions assured efficiency, Maintain the marketshare, take care and utilize efficiently all customer segments which brought forth achievements in business operation and proved the and existing markets; invest, research and expand the market. leading position of the Company in Vietnam’s sugarcane industry. High efforts clear allocation and of the Board of Directors were recognized by Board of Management in terms Optimize the cost-efficiency; reduce the product prices. of (i) implement and deploy production and product consumption plans; (ii) determination of develop and implement investment projects; (iii) develop product systems and Continue refining the organizational structures in a more efficient, compact distribution channels; (iv) modify organizational structure and (v) re-organize responsibilities and and scientific manner. Thereby, regulation preparation system will be improved operation processes and regulations rights, well-balanced to keep close to the actual performance. After restructuring first phase, BHS was organized more rationally, with assured cooperation and better Complete the Company’s Strategy from now till 2018; make plan, deploy, efficiency, clear allocation and determination of responsibilities and rights, well- control the process, and evaluate the efficiency of each specific stage. balanced cooperation and better risk management. risk management. Train, foster and re-arrange the personnel team at all levels; particularly management training to ensure a qualified management team, ready for any variations and adaptible to the changes of the economy.
2013 ANNUAL REPORT 2013 ANNUAL REPORT 42 BIEN HOA SUGAR JOINT STOCK COMPANY www.bhs.vn 43 STRONG CONFIDENCE OF Vietnamese brandname
Under the grounds of strong development and surpassing advantages in the local market, particularly in the nation-wide supermarket systems, Bien Hoa Sugar Joint Stock Company is always proud to be recognized as “High quality Vietnamese goods”, and ready to centralize all resources to develop further to the export markets.
COMPANY GOVERNANCE
46 Board of Management (BOM) 52 Board of Supervisors 54 Transactions, remunerations and other
Note: The data from page 22 – page 57 is provided by the parent Company. the parent by 57 is provided page 22 – page from Note: The data interests of the BOM, BOD and BOS Company governance
BOARD OF MANAGEMENT
CURRENT BOM OF THE COMPANY:
Mr. THAI VAN CHUYEN Mr. NGUYEN VAN LOC Mr. PHAM HONG DUONG Ms. DANG HUYNH UC MY Mr. TONG THONG BOM Chairman BOM Vice Chairman BOM member BOM member BOM member
Currently holding 398,064 Currently holding 223,240 Currently holding 0 share. Currently holding 3,048,644 Currently holding16,218 shares, equivalent to 0.63% shares, accounting for 0.35% shares, accounting for 4.84% shares, accounting for 0.03% of total shares. of total shares. Other positions at other companies: of total shares. and concurrently being a Changes in BOM members in 2013: representative of 7,654,133 Other positions at other companies: No other positions at other BOM member of Thanh Other positions at other companies: shares for shareholder Mr. Pham Dinh Manh Thu resigned companies. Thanh Cong Tay Ninh Sugarcane II Corporation from BOM Vice Chairman on 01 BOM Chairman of Gia Lai Sugarcane Joint Stock BOM Chairlady of Thanh – Joint Stock Company, October 2013 and has stopped Power Joint Stock Company Company. Thanh Cong Tay Ninh accounting for 12.15%. involving in the BOM activities since Sugarcane Joint Stock 01 October 2013. BOM member of Thanh Thanh Deputy General Director Company. Other positions at other companies: Cong Tay Ninh Sugarcane of Thanh Thanh Cong Mr. Nguyen Van Loc was elected as Joint Stock Company. Investment Joint Stock BOM Chairlady of Thanh BOM Vice Chairman of BOM member on 01 October 2013 Company. Thanh Cong Investment Sugarcane II Corporation – and appointed as BOM Vice Chairman General Director of Thanh Joint Stock Company. Joint Stock Company. since 01 October 2013. Thanh Cong Investment Joint Stock Company.
.
2013 ANNUAL REPORT 2013 ANNUAL REPORT 46 BIEN HOA SUGAR JOINT STOCK COMPANY www.bhs.vn 47 Company governance
BOARD OF MANAGEMENT (cont.)
The BOM has not established its committees but assigned duties and responsibilities to each member in accordance with the BOD’s organizational and operational Regulations.
With regard to important issues, which require more personnel for centralized leading, action and supervision, the BOD will decide to establish the corresponding Councils/ Boards.
COMMITTEES UNDER BOM:
BOM term 4th have not established its committees but assigned duties and responsibilities to each of the BOD members in accordance with the organizational Re-structure Boards for Bien Hoa – Tay Ninh Sugarcane Plant and Bien Hoa and operational Regulations. – Tri An Plant: The permanent members of the BOM’s of the 2 plants, in cooperation with the Company’s Board of Directors, the Plants’ leaders and With regard to important issues, which require more personnel for centralized leading, related department managers, carried out re-structure of the operation of the action and supervision, the BOD will decide to establish the corresponding Councils/ 2 Plants in accordance with the policy adopted by the Board of Shareholders. Boards. Last year, the following Councils/ Boards were established and operated: Council for Salary Review (for managerial levels and up): The Chairman and Investment Council: Consider and make decisions on behalf of the BOM on Board of Directors members considered, reviewed and raised the salaries the Company’s investment issues valued below 30% of the total assets as of managerial officers whose salary terms were due to review as per the stated in the latest audited financial statement and the Council operates in Company’s Salary Regulation. compliance with the Company’s investment regulation. Re-structure Board: The BOM members, Board of Supervisors, Board of Bidding Appraisal Council: Consider and select contractors, on behalf of the Directors and Department managers were responsible for making overall BOM, to execute the work items approved in the investment plans. evaluation of the Company’s activities, preparing the action plans to enhance the Company’s operation efficiency and competitiveness ability. Competition, Awarding & Disciplinary Council: The Chairman and independent BOM members and the Board of Directors considered competition, reward and disciplinary issues of the Company’s units and departments and managers who are assigned by the BOM.
2013 ANNUAL REPORT 2013 ANNUAL REPORT 48 BIEN HOA SUGAR JOINT STOCK COMPANY www.bhs.vn 49 Company governance
BOARD OF MANAGEMENT (cont.)
ACTIVITIES OF THE BOM:
In 2013, the BOM carried out the following activities: + 2nd time regarding capital contribution to establish Thanh Thanh Cong Sugarcane Research & Application Annual Shareholder Meeting of 2013 (for 2012 fiscal Joint Stock Company and an appointed person to year) on 20 April 2013. manage the Company’s contributed capital. Voting was carried out from 8 March 2013 to 13 March 2013. Number of periodical meetings: 3 times (happened on 7 March 2013, 12 August 2013 and 29 October 2013). + 3rd time regarding the material set related to 2013 Annual Shareholder Meeting (for 2012 fiscal year). Voting Number of inordinate meetings: 5 times. was carried out from 28 March 2013 to 2 April 2013. ATTENDANCE OF THE BOM MEMBERS: + On 15 January 2013, an inordinate meeting was + 4th time regarding the approval of Quarter 01/2013 held to consider the termination of the operation financial statement. Voting was carried out from 2 May No. of of HCMC Branch. 2013 to 8 May 2013. No. of involved No. BOM members meetings Percentage voting Percentage Reason of absence + On 14 March 2013, an inordinate meeting was + 5th time regarding the documents submitted to the State held to consider the termination of the operation Securities Commission of Vietnam for the registration of 1 Thai Van Chuyen 8 100% 9 100% of Can Tho Branch. additional share issuance. Voting was carried out from 2 Pham Dinh Manh Thu 8 100% 9 100% 23 May 2013 to 28 May 2013. 3 Tong Thong 8 100% 9 100% + On 18 June 2013, an inordinate meeting was held to consider the authorization made by Ms. Dang Huynh + 6th time regarding the approval of 2013 semi-annual 4 Pham Hong Duong 8 100% 9 100% Uc My to Mr. Thai Van Chuyen regarding his attendance Financial Statement. Voting was carried out from 28 Her proxy is Mr. Thai and voting at the BOM meetings on her behalf during August 2013 to 30 August 2013. Van Chuyen as per BOD 5 Dang Huynh Uc My 4 50% 6 66% her absence. Resolution No. 155/2013/ th + 7 time regarding the first dividend advance of 2013, NQ-HĐQT + On 31 October 2013, an emergency meeting was held resignations of Vice Chairman Pham Dinh Manh Thu, to consider the working capital loan to be made at General Director Nguyen Van Loc, appointment of Vietnam Joint Stock Commercial Bank for Industry & Mr. Nguyen Van Loc to be a BOD member, Mr. Bui Van Trade - Branch 01 HCMC. Long to be the Acting General Director of the Company. ACTIVITIES OF INDEPENDENT NON-MANAGING BOM MEMBERS List of BOD members involving in the Voting was carried out from 23 September 2013 to 25 Company’s administration programs + On 12 November 2013, an inordinate meeting was held September 2013. All BOM members do not involve in the management. Mr. Pham Dinh in the year: to consider the signing of the credit contract with Asia Manh Thu, BOD Vice Chairman, was appointed as independent member. Commercial Joint Stock Bank. + 8th time regarding the unsold stock settlement plan. After Mr. Pham Dinh Manh Thu resigned, his position was assigned to Mr. Thai Van Chuyen; Voting was carried out from 14 November 2013 to 19 Mr. Nguyen Van Loc. In 2013, the independent BOD member carried out Number of written voting times carried out with the November 2013. his functions and assignments properly with high responsibility, making BOM members: 9 times. Ms. Dang Huynh Uc My; th positive contribution, jointly with the BOD, to the issuance of precise, fair + 9 time regarding the amendment of the Company and timely policies and decisions. + 1st time regarding the approval of Quarter 4 financial Charter of Bien Hoa Sugar Joint Stock Company. Mr. Pham Hong Duong. statement and 2013 accrual report. Voting was carried Voting was carried out from 16 December 2013 to 18 out from 30 January 2013 to 6 February 2013. December 2013.
2013 ANNUAL REPORT 2013 ANNUAL REPORT 50 BIEN HOA SUGAR JOINT STOCK COMPANY www.bhs.vn 51 Company governance
Upon the Company organizational structure, the internal Inspection Department was managed by the Board of Supervisors. In 2013, the internal Inspection Department fulfilled their assignments, organized 49 inspections and re-examining trips on various operation aspects of the Plants, Enterprises, Departments and Branches. After the inspection, the compliance was evaluated by the Board of Supervisors as follows:
Human resources policies relating to recruitment, training, appointment and evaluation were amended and supplemented.
5S activities were deployed at 2 plants, obtaining good preliminary outcome, responded and adhered to by all staff; food safety was focused, old and backward habits were changed.
Sugarcane harvest process and sugarcane material code were adhered to by the staff of the Material Procurement Departments of the 2 Plants, resulting in decreased sugarcane waste and obviously increased quality of the sugarcanes, decreased cost prices of the sugar.
Positive changes were found at 2 Plants: Employees have engrossing, proactive and responsible mind of work, adequately conforming to the maintenance, repair and operation processes of machinery and equipment.
So far, most of the errors found in the inspection process such as: responsibility determination and separation, proof and record system, asset protection, BOARD OF SUPERVISORS information analysis and detection,.... were improved and corrected, preventing and limit the risks likely affecting the Company’s business operation.
2014 acting plan: MEMBERS AND STRUCTURE OF THE BOARD OF SUPERVISORS: Objectives: (i) involving in the establishment, refining and maintaining the Mr. Le Van Hoa – Chief Supervisor, currently holding 48,996 shares, accounting existing internal control system of the Company; (ii) regularly updating for 0.08%. new legal regulations relating to the Company’s activities; (iii) training and upgrading professionalism for the staff of the internal Inspection Department Ms. Nguyen Thuy Van – member of Board of Supervisors. Number of shares as per the set plan. holding: 0. Acting plan: Mr. Le Nho Dinh – member of Board of Supervisors. Number of shares holding: 0. + Enhance the counselling on administration – management – control activities provided to the BOM and BOD so that pre-inspection was ensured ACTIVITIES OF THE BOARD OF SUPERVISORS: to be carried out;
Outcomes of 2013 activities: + Involve in the modification of key policies, regulations and processes in the fields of: finance, materials, sales and human resources; In 2013, four meetings were held by the Board of Supervisors to report their duties of supervising the BOM and Board of Management; inspected the business + Inspect the compliance with the instructions from the Corporation’s leaders; situation and appraised the quarterly and annual financial statements. After one year of performance, the inspection activities were executed in parallel with the + Control the sugarcane materials and investment in 2014 – 2015 crop at management activities; the Board of Supervisors gained trust from the BOM for BH – TN and BH – TA; their contributed opinions related to the Company, built good relationship with the Board of Management through quarterly recommendations, which were + 40 inspections and re-examination trips were organized and made by acknowledged and agreed for correction so as to improve the management. the leaders of the internal Inspection Department on the activities of the However, the Board of Supervisors admitted their shortcoming of not covering Company’s Subsidiaries and Departments; all activities. Cooperation from the BOD and Executive Board was still required. + Inspect and re-examine the above-mentioned recommendations.
2013 ANNUAL REPORT 2013 ANNUAL REPORT 52 BIEN HOA SUGAR JOINT STOCK COMPANY www.bhs.vn 53 Company governance
TRANSACTIONS, REMUNERATIONS AND INTERESTS Board of Management: OF THE BOM, BOD AND BOS
REMUNERATIONS, BONUSES AND OTHER INTERESTS: TOTAL 2013 BONUSES Board of Management: VND757,682,903 Monthly Annual remuneration No. Full name Title remuneration (VND) (VND) 1 Thai Van Chuyen Chairman 15,000,000 180,000,000 2 Pham Dinh Manh Thu (*) Vice Chairman 15,000,000 135,000,000 3 Dang Huynh Uc My Member 15,000,000 180,000,000 4 Pham Hong Duong Member 15,000,000 180,000,000 Bonus distribution to the Board of Management complied with the Labor Regulation and the BOD’s awarding decisions. 5 Tong Thong Member 15,000,000 180,000,000 6 Nguyen Van Loc (**) Vice Chairman 15,000,000 45,000,000 SHARE TRANSACTIONS OF THE COMPANY’S SHAREHOLDERS: Total 900,000,000 Relationship No. of shares by the term No. of shares by the term Reasons Notes: with the opening ending for share Co.’s No. of No. of shares increase, (*): Mr. Pham Dinh Manh Thu resigned on 01 October 2013. No. Transaction by shareholder shares Percentage owned Percentage decrease (**): Mr. Nguyen Van Loc was appointed on 01 October 2013. I. MEMBERS OF THE BOARD OF MANAGEMENT 1. Thai Van Chuyen 199,032 0.63% 398,064 0.63% Buy In 2013, the BOM did not receive any other bonuses or interests. Thanh Thanh Cong 1.1. General Director 0 0.00% 9,194,986 14.60% Buy Board of Supervisors: Investment JSC Thanh Thanh Cong Tay Ninh 1.2. BOD member 6,815,148 21.64% 13,630,296 21.64% Buy Monthly Annual remuneration Sugarcane JSC No. Full name Title remuneration (VND) (VND) 1.3. Gia Lai Power JSC BOM Chairman 3,246,080 10.31% 5,278,600 8.38% Buy 1 Thai Van Hoa Chief 6,250,000 75,000,000 2. Nguyen Van Loc 123,781 0.39% 223,240 0.35% Buy 2 Vo Van Nhu (*) Member 6,250,000 22,916,667 2.1. Vu Thi Hang Wife 105,226 0.33% 210,452 0.33% Buy 3 Tran My Phan (**) Member - - 3. Dang Huynh Uc My 54,322 0.16% 3,048,644 4.84% Buy 4 Le Nho Dinh (***) Member 6,250,000 52,083,333 3.2. Huynh Bich Ngoc Mother 700,684 2.22% 1,401,368 2.22% Buy 5 Nguyen Thuy Van (***) Member 6,250,000 52,083,333 4. Tong Thong 16,218 0.05% 16,218 0.03% Sugarcane II Corporation – Total 202,083,333 4.1. Rep. shareholder 3,375,100 10.72% 7,654,133 12.15% Buy JSC Note: II. MEMBERS OF THE BOARD OF SUPERVISORS 5. Le Van Hoa 24,498 0.08% 48,996 0.08% Buy (*): Mr. Vo Van Nhu resigned on 20 April 2013. III. BOARD OF MANAGEMENT (**): Ms. Tran My Phan resigned on 31 December 2012 and her request was adopted by the Annual Shareholders Meetings 6. Bui Van Lang 124,356 0.39% 224,390 0.36% Buy on 20 April 2013, therefore, she received no remuneration for 2013. 7. Le Quang Hai 17,822 0.06% 35,644 0.06% Buy (***): Mr. Le Nho Dinh and Ms. Nguyen Thuy Van were appointed on 20 April 2013. IV CHIEF ACCOUNTANT In 2013, the Board of Supervisors received no other bonuses or interests. 8. Ngo Thi Thanh Hang 15,730 0.05% 31,460 0.05% Buy
2013 ANNUAL REPORT 2013 ANNUAL REPORT 54 BIEN HOA SUGAR JOINT STOCK COMPANY www.bhs.vn 55 Company governance
TRANSACTIONS, REMUNERATIONS AND INTERESTS OF THE BOM, BOD AND BOS (cont.)
Shareholders Amount (VND) Shareholders Amount (VND) Thanh Thanh Cong Investment JSC (*) Sugarcane II Corporation – One-member Co., Ltd. Sales 221,841,231,097 Dividend 6,750,200,000 Advances to the sellers 25,000,000,000 Subsidiaries Loan 103,500,000,000 Hai Vi One-member Co., Ltd. Loan interest 1,386,425,295 Sales 7,693,602,170 Dividend payment 9,194,986,000 Goods purchase 10,812,936,349 Buy additional shares 45,974,930,000 Dividend 396,671,693 Consulting fee 1,621,090,910 Loan interest Thanh Thanh Cong Tay Ninh Sugarcane JSC (**) Thanh Thanh Cong Trading JSC Sales 34,223,736,928 Goods & services sales 13,925,107,072 Goods purchase 6,505,781,144 Goods & services purchase 99,457,846,762 Dividend 13,630,296,000 Advances to the sellers 100,266,666,666 Buy additional shares 68,151,480,000 Interest income from advances to the sellers 12,520,800,787 Advances to the sellers 22,591,096,355 BOD and BOM Processing fee 1,533,039,715 Remunerations 1,102,083,333 Warehouse rental 64,611,107 Salaries & bonuses 5,166,012,617
Notes:
(*) In 2012, Thanh Thanh Cong Production – Trading JSC changed its legal name to Thanh Thanh Cong Investment JSC.
(**) In 2013, Bourbon Tay Ninh JSC changed its legal name to Thanh Thanh Cong Tay Ninh Sugarcane JSC.
2013 ANNUAL REPORT 2013 ANNUAL REPORT 56 BIEN HOA SUGAR JOINT STOCK COMPANY www.bhs.vn 57 FIRMLY Affirming position CONSOLIDATED ASSETS (UNIT: VND BILLION) With stable growth, adequate benefit assured to the employees as well as contributions to the 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.
CONSOLIDATED PROFIT BEFORE TAX (UNIT: VND BILLION)
CONSOLIDATED NET REVENUE (UNIT: VND BILLION)
FINANCIAL STATEMENTS
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 flows 71 Notes to the consolidated financial statements CORPORATE INFORMATION
Establishment Decision No. 44/2011/QĐ-TTg 27 March 2001 Business Registration 3600495818 16 May 2001 Certificate No. The Company’s business registration certificate has been amended several times, the most recent of which is dated 16 May 2013. The business registration certificate and its updates were issued by the Planning and Investment Department of Dong Nai Province. Board of Management Mr. Thai Van Chuyen Chairman Vice Chairman Mr. Nguyen Van Loc (from 1 October 2013) Vice Chairman Mr. Pham Dinh Manh Thu (until 1 October 2013) Ms. Dang Huynh Uc My Member
BIEN HOA SUGAR JOINT STOCK COMPANY Mr. Tong Thong Member Mr. Pham Hong Duong Member AND ITS SUBSIDIARY General Director Board of Directors Mr. Bui Van Lang (from 1 October 2013) Consolidated Financial Statements for the year ended 31 December 2013 General Director Mr. Nguyen Van Loc (until 1 October 2013) Deputy General Director Mr. Tran Tuu (until 19 May 2013) Mr. Pham Cong Hai Deputy General Director
Mr. Le Quang Hai Deputy General Director Deputy General Director Mr. Le An Khang (from 1 July 2013) Deputy General Director Mr. Nguyen Hoang Tuan (until 30 June 2013) Deputy General Director Mr. Nguyen Tien Cuong (from 16 September 2013) Deputy General Director Ms. Tran Que Trang (from 1 November 2013) Supervisor Board Mr. Le Van Hoa Chief Supervisor Member Ms. Nguyen Thuy Van (from 20 April 2013) Member Mr. Le Nho Dinh (from 20 April 2013) Member Mr. Vo Van Nhu (until 20 April 2013) Member Ms. Tran My Phan (until 20 April 2013) Registered Office Industrial Zone 1, Bien Hoa City, Dong Nai Province, Vietnam
Auditors KPMG Limited Vietnam
2013 ANNUAL REPORT 2013 ANNUAL REPORT 60 BIEN HOA SUGAR JOINT STOCK COMPANY www.bhs.vn 61 KPMG Limited Branch 10th Floor, Sun Wah Tower 115 Nguyen Hue Street, District 1, Ho Chi Minh City, The Socialist Republic of Vietnam Telephone : +84(8) 3821 9266 Fax : +84(8) 3821 9267 Internet : www.kpmg.com.vn
STATEMENT OF THE BOARD OF MANAGEMENT AND BOARD OF DIRECTORS INDEPENDENT AUDITORS’ REPORT
The Board of Directors is responsible for the preparation and presentation of the consolidated financial statements of Bien To the Shareholders Hoa Sugar Joint Stock Company (“the Company”) and its subsidiary (collectively “the Group”) in accordance with Vietnamese Bien Hoa Sugar Joint Stock Company Accounting Standards, the Vietnamese Accounting System and the relevant statutory requirements applicable to financial reporting. In the opinion of the Board of Directors: We have audited the accompanying separate financial statements of Bien Hoa Sugar Joint Stock Company (“the Company”), which comprise the separate balance sheet as at 31 December 2013, the separate statements of income and separate cash (a) the consolidated financial statements set out on pages 65 to 111 are prepared and presented so as to give a true and flows for the year ended and the explanatory notes thereto which were authorised for issue by the Company’s Board of fair view of the consolidated financial position of the Group as at 31 December 2013, and of the consolidated results Directors on 24 March 2014, as set out on pages 65 to 111. of operations and the consolidated cash flows of the Group for the year then ended in accordance with Vietnamese Accounting Standards, the Vietnamese Accounting System and the relevant statutory requirements applicable to Management’s Responsibility for the Separate Financial Statements financial reporting; and The Company’s Board of Directors is responsible for the preparation and fair presentation of these separate financial state- (b) at the date of this statement, there are no reasons to believe that the Group will not be able to pay its debts as and when ments in accordance with Vietnamese Accounting Standards, the Vietnamese Accounting System and the relevant stat- they fall due. utory requirements applicable to financial reporting, and for such internal control as the Board of Directors determines is necessary to enable the preparation of separate financial statements that are free from material misstatement, whether due The Board of Management and Board of Directors has, on the date of this statement, authorised these consolidated financial to fraud or error. statements for issue. Auditor’s Responsibility
On behalf of the Board of Management and Board of Directors Our responsibility is to express an opinion on these separate financial statements based on our audit. We conducted our audit in accordance with Vietnamese Standards on Auditing. Those standards require that we comply with ethical require- ments and plan and perform the audit to obtain reasonable assurance about whether the separate financial statements are free of material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the separate financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the separate financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the separate financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropri- Mr. Thai Van Chuyen ateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as Chairman evaluating the overall presentation of the separate financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Dong Nai, 24 March 2014
KPMG Limited, a Vietnamese limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International“), a Swiss entity.
2013 ANNUAL REPORT 2013 ANNUAL REPORT 62 BIEN HOA SUGAR JOINT STOCK COMPANY www.bhs.vn 63 CONSOLIDATED BALANCE SHEET As at 31 December 2013 Form B 01 – DN/HN
Audit Opinion 31/12/2013 31/12/2012 Code Note In our opinion, the separate financial statements give a true and fair view, in all material respects, of the separate financial VND VND position of Bien Hoa Sugar Joint Stock Company as at 31 December 2013 and of its separate results of operations and ASSETS its separate cash flows for the year then ended in accordance with Vietnamese Accounting Standards, the Vietnamese Accounting System and the relevant statutory requirements applicable to financial reporting. Current assets (100 = 110 + 120 + 130 + 140 + 150) 100 1,396,747,826,637 1,454,281,395,972
KPMG Limited’s Branch in Ho Chi Minh City Cash and cash equivalents 110 5 238,292,387,393 98,523,586,210
Vietnam Cash 111 108,292,387,393 45,446,686,210 Operating registration certificate No.: 4114000230 Cash equivalents 112 130,000,000,000 53,076,900,000 Audit Report No: 13-01-299 Short-term investments 120 6 44,240,000,000 16,500,000,000
Accounts receivable 130 7 698,449,799,241 285,117,018,403
Accounts receivable – trade 131 225,036,601,376 62,877,137,832
Prepayments to suppliers 132 442,822,048,442 201,581,112,001
Other receivables 135 37,156,074,859 22,838,529,467
Allowance for doubtful debts 139 (6,564,925,436) (2,179,760,897)
Inventories 140 8 343,666,249,572 820,013,485,772 Nguyen Thanh Nghi Lam Thi Ngoc Hao Practicing Auditor Registration Practicing Auditor Practicing Auditor Registration Inventories 141 343,666,249,572 820,013,485,772 Registration Certificate No. 0304-2013-007-1 Certificate No. 0863-2013-007-1 Certificate No. Deputy General Director 0866-2013-007-1 Other current assets 150 72,099,390,431 234,127,305,587 Short-term prepayments 151 7,851,100,547 - Ho Chi Minh City, 24 March 2014 Deductible value added tax 152 3,264,726,031 18,452,017,267
Other current assets 158 9 60,983,563,853 215,675,288,320
Long-term assets (200 = 210 + 220 + 250 + 260 +269) 200 797,043,598,881 653,553,724,975
Accounts receivable – long-term 210 7 77,928,943,311 53,354,780,087
Other long-term receivables 218 77,928,943,311 53,354,780,087
Fixed assets 220 634,684,814,197 522,038,910,048
Tangible fixed assets 221 10 519,076,342,219 308,706,984,454
Cost 222 922,446,273,254 677,940,839,532
Accumulated depreciation 223 (403,369,931,035) (369,233,855,078)
Intangible fixed assets 227 11 9,404,296,551 10,570,518,103
Cost 228 20,483,171,543 20,440,816,437
Accumulated amortisation 229 (11,078,874,992) (9,870,298,334)
Construction in progress 230 12 106,204,175,427 202,761,407,491
The accompanying notes are an integral part of these consolidated financial statements
2013 ANNUAL REPORT 2013 ANNUAL REPORT 64 BIEN HOA SUGAR JOINT STOCK COMPANY www.bhs.vn 65 CONSOLIDATED BALANCE SHEET As at 31 December 2013 (continued) Form B 01 – DN/HN
OFF BALANCE SHEET ITEMS 31/12/2013 31/12/2012 Code Note VND VND 31/12/2013 31/12/2012 Long-term investments 250 13 63,770,153,319 43,473,300,000 VND VND Investments in associates 252 7,014,317,169 - Materials and goods held for third parties 19,684,955,396 215,359,222 Other long-term investments 258 61,020,063,384 44,527,884,439 Bad debts written off 10,818,724,834 10,876,024,834 Allowance for diminution in the value of long-term 259 (4,264,227,234) (1,054,584,439) investments Foreign currencies (USD) 16,910,546,034 2,595,314,399 Other long-term assets 260 7,026,442,881 18,872,170,439 Foreign currencies (EUR) 7,200,750 6,840,238 Long-term prepayments 261 14 6,720,818,466 15,154,122,740 Deferred tax assets 262 15 305,624,415 891,822,699 24 March 2014 Other long-term assets 268 - 2,826,225,000 Prepared by: Approved by: Goodwill 269 16 13,633,245,173 15,814,564,401 TOTAL ASSETS (270 = 100 + 200) 270 2,193,791,425,518 2,107,835,120,947 RESOURCES LIABILITIES (300 = 310 + 330) 300 1,348,932,997,207 1,535,110,846,435 Current liabilities 310 1,251,830,051,700 1,427,676,197,648 Short-term borrowings 311 17 942,986,651,315 995,494,593,762 Do Thi Thuy Tien Ngo Thi Thanh Hang Thai Van Chuyen Accounts payable – trade 312 18 55,218,751,114 122,735,044,559 General Accountant Chief Accountant Chairman Advances from customers 313 19 132,457,564,324 14,046,550,963 Taxes payable to State Treasury 314 20 6,259,841,175 18,046,576,863 Payables to employees 315 12,762,988,411 20,314,437,607 Accrued expenses 316 21 9,806,372,935 6,291,988,402 Other payables 319 22 82,971,419,194 243,728,645,405 Bonus and welfare fund 323 23 9,366,463,232 7,018,360,087 Long-term borrowings and liabilities 330 97,102,945,507 107,434,648,787 Other long-term liabilities 333 2,307,850,000 - Long-term borrowings 334 24 94,795,095,507 107,434,648,787 EQUITY (400 = 410) 400 844,858,428,311 572,724,274,512 Owners’ equity 410 25 844,858,428,311 572,724,274,512 Share capital 411 26 629,949,180,000 314,974,590,000 Capital surplus 412 39,817,240,000 39,817,240,000 Investment and development funds 417 28 105,138,664,571 87,752,273,950 Financial reserves 418 28 31,036,946,843 25,241,483,303 Retained profits 420 38,916,396,897 104,938,687,259 TOTAL RESOURCES (440 = 300 + 400) 440 2,193,791,425,518 2,107,835,120,947
The accompanying notes are an integral part of these consolidated financial statements The accompanying notes are an integral part of these consolidated financial statements
2013 ANNUAL REPORT 2013 ANNUAL REPORT 66 BIEN HOA SUGAR JOINT STOCK COMPANY www.bhs.vn 67 CONSOLIDATED STATEMENT OF INCOME CONSOLIDATED STATEMENT OF CASH FLOWS For the year ended 31 December 2013 Form B 02 – DN/HN For the year ended 31 December 2013 (Indirect method) Form B 03– DN/HN
2013 2012 2013 2012 Code Note Code Note VND VND VND VND Total revenue 01 29 2,930,013,363,824 3,045,797,906,559 CASH FLOWS FROM OPERATING ACTIVITIES Less revenue deductions 02 29 1,973,213,457 1,551,764,143 Profit before tax 01 48,813,467,044 166,097,994,666 Net revenue (10 = 01 - 02) 10 29 2,928,040,150,367 3,044,246,142,416 Adjustments for Cost of sales 11 30 2,689,264,173,044 2,764,269,972,014 Depreciation and amortisation 02 23,621,596,180 52,944,215,521 Gross profit (20 = 10 - 11) 20 238,775,977,323 279,976,170,402 Allowances and provisions 03 7,594,807,334 279,265,424 Financial income 21 31 53,903,334,338 56,130,225,149 Unrealised foreign exchange gains 04 (450,923,580) - Financial expenses 22 32 110,826,264,182 50,473,008,914 Share of loss in associates 05 185,682,831 - In which: Interest expenses 105,356,519,541 50,777,977,065 Gains on disposal fixed assets 05 (430,031,762) (338,328,451) Selling expenses 24 91,068,742,758 72,410,250,323 Interest income from deposits 05 (1,846,940,768) (9,647,951,833) General and administration expenses 25 42,629,100,701 49,431,705,374 Interest income from prepayments to sugar cane 05 (49,299,893,238) (41,248,006,300) farmers and suppliers Net operating profit 30 48,155,204,020 163,791,430,940 {30 = 20 + (21 - 22) - (24 + 25)} Dividend incomes from long-term investment in securities 05 (2,691,624,000) - Other income 31 1,155,105,066 2,984,929,750 Interest expense 06 105,356,519,541 50,777,977,065 Other expenses 32 311,159,211 678,366,024 Operating profit before changes in working capital 08 130,852,659,582 218,865,166,092 Results of other activities (40 = 31 - 32) 40 843,945,855 2,306,563,726 Change in receivables 09 (251,380,072,667) (273,801,373,110) Share of loss in associates 45 (185,682,831) - Change in inventories 10 476,347,236,200 (242,550,920,193) Profit before tax (50 = 30 + 40 + 45) 50 48,813,467,044 166,097,994,666 Change in payables and other liabilities 11 (121,584,671,123) (69,022,906,081) Income tax expense – current 51 33 10,863,063,475 46,525,384,725 Change in prepayments 12 2,022,601,868 (7,218,363,665) Income tax expense – deferred 52 33 586,198,284 362,482,311 236,257,753,860 (373,728,396,957) Net profit (60 = 50 - 51 - 52) 60 37,364,205,285 119,210,127,630 Interest paid 13 (105,551,925,927) (50,571,426,850) Attributable to: Income tax paid 14 (18,076,599,201) (15,943,231,255) Equity holders of the Company 62 37,364,205,285 119,210,127,630 Other receipts from operating activities 15 5,134,075,000 2,826,225,000 Earnings per share 34 Other payments for operating activities 16 (11,561,009,352) (15,344,621,007) Basic earnings per share 70 1,080 3,785 Net cash flows from operating activities 20 106,202,294,380 (452,761,451,069) CASH FLOWS FROM INVESTING ACTIVITIES 24 March 2014 Payments for additions to fixed assets and other 21 (135,822,092,934) (164,184,055,402) Prepared by: Approved by: long-term assets Proceeds from disposals of fixed assets 22 725,545,454 422,263,636 Payments for investments in associate 25 (7,200,000,000) - Payments for loans granted to other entities 25 (44,240,000,000) - Receipts/(payments) for investments in term deposits 25 16,500,000,000 (16,500,000,000) Payments for investments in long-term investments in 25 (16,492,178,945) (35,527,884,439) securities Do Thi Thuy Tien Ngo Thi Thanh Hang Thai Van Chuyen General Accountant Chief Accountant Chairman Proceeds from disposal of long-term investments in 26 - 23,794,650,000 securities The accompanying notes are an integral part of these consolidated financial statements
2013 ANNUAL REPORT The accompanying notes are an integral part of these consolidated financial statements 2013 ANNUAL REPORT 68 BIEN HOA SUGAR JOINT STOCK COMPANY www.bhs.vn 69 CONSOLIDATED STATEMENT OF CASH FLOWS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2013 (Indirect method – continued) Form B 03 – DN/HN For the year ended 31 December 2013 Form B 09 – DN/HN
These notes form an integral part of and should be read in conjunction with the accompanying consolidated financial 2013 2012 Code Note statements. VND VND Receipts of interests and dividends 27 32,805,437,775 21,758,330,424 1. Reporting Entity
Net cash flows from investing activities 30 (153,723,288,650) (170,236,695,781) Bien Hoa Sugar Joint Stock Company (the “Company”) is a joint-stock company incorporated in Vietnam. The CASH FLOWS FROM FINANCING ACTIVITIES 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 Proceeds from equity issued 31 314,974,590,000 - of the Company are producing sugar; planting sugar cane; producing and trading products using sugar or its by- Proceeds from short-term and long-term borrowings 33 3,833,398,811,757 2,141,031,541,924 products, waste products; producing and trading fertilizer, agricultural materials; and consulting technology and management in sugar’s production industry. Payments to settle debts loan principals 34 (3,898,095,383,904) (1,504,153,056,593) Payments of dividends 36 (62,988,222,400) (94,135,001,700) The Company’s shares are listed on the Ho Chi Minh Stock Exchange in accordance with the Licence No. 79/UBCK- GPNY dated 21 November 2006 issued by the Ho Chi Minh City Stock Exchange on 21 November 2006 and formal Net cash flows from financing activities 40 187,289,795,453 542,743,483,631 trading on 20 December 2006. Net cash flows during the year (50 = 20 + 30 + 40) 50 139,768,801,183 (80,254,663,219) The Company’s head office and factory are located at Binh Hoa Industrial Zone I, An Binh Ward, Bien Hoa City, Dong Cash and cash equivalents at the beginning of the year 60 98,523,586,210 178,778,249,429 Nai Province. The Company’s branches and other factories at 31 December 2013 included: Cash and cash equivalents at the end of the year (70 = 50 + 60) 70 5 238,292,387,393 98,523,586,210 Bien Hoa – Tay Ninh factory was established in accordance with Business Registration Certificate No. 450300000501 dated 13 June 2001 which is located at highway 22B, Tan Phuoc Hamlet, Tan Binh Ward, Tay Ninh Town, Tay Ninh Province. Bien Hoa – Tri An factory was established in accordance with Business Registration Certificate No. 4713000435 dated 7 December 2007 which is located at Hamlet 1, Tri An Ward, Vinh Cuu District, Dong Nai Province. 24 March 2013 Thanh Long Agricultural Enterprise was established in accordance with Business Registration Certificate No. Prepared by: Approved by: 3600495818-010 dated 15 July 2009 which is located at Thanh Dong Hamlet, Thanh Long Ward, Chau Thanh District, Tay Ninh Province. Thanh Long Agricultural Enterprise was terminated operation in accordance with Board of Management Decision No. 071/2013/QD-HDQT dated 25 March 2013 from this day onwards. Da Nang branch was established in accordance with Business Registration Certificate No. 3213000033 dated 11 June 2001 which is located at No. 120, Ong Ich Khiem Street, Thanh Khe District, Da Nang City. Can Tho branch was established in accordance with Business Registration Certificate No. 5713000208 dated 8 June 2001 which is located at No. 550, Cach Mang Thang Tam Street, An Thoi Ward, Binh Thuy District, Can Tho City. Can Tho branch was terminated operation in accordance with Board of Management Decision No. 129/2013/QD-HDQT dated 31 May 2013 from this day onwards. Do Thi Thuy Tien Ngo Thi Thanh Hang Thai Van Chuyen Ho Chi Minh branch was established in accordance with Business Registration Certificate No. 3600495818008- General Accountant Chief Accountant Chairman 008 dated 15 September 2003 which is located at No. 24, Nguyen Truong To Street, District 4, Ho Chi Minh City. Ho Chi Minh branch was terminated operation in accordance with Board of Management Decision No. 09/2013/ QD-HDQT dated 21 January 2013 from this day onwards.
The accompanying notes are an integral part of these consolidated financial statements
2013 ANNUAL REPORT 2013 ANNUAL REPORT 70 BIEN HOA SUGAR JOINT STOCK COMPANY www.bhs.vn 71 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2013 (continued) Form B 09 – DN/HN
(d) Accounting currency Composition of the Group is as follows: The financial statements are prepared and presented in Vietnam Dong (“VND”).
Effective ownership 3. Summary of significant accounting policies Company Principal activity Business License interest 31/12/2013 31/12/2012 The following significant accounting policies have been adopted by the Group in the preparation of these consolidated financial statements. Subsidiaries of the Company Hai Vi One Member Planting sugar cane; Business License No. 100% 100% (a) Basis of consolidation Limited Company producing and trading 3900244283 issued by the (“Hai Vi”) fertilizer, agricultural Department of Planning (i) Subsidiaries materials. and Investment of Tay Ninh Province on 29 July 2010. Subsidiaries are entities controlled by the Group. The financial statements of subsidiary are included in the consolidated financial statements from the date that control commences until the date that control ceases. Bien Hoa - Thanh Planting sugar cane; Business License No. 100% 100% (ii) Associates Long One Member producing and trading 3900854955 issued by the Limited Company fertilizer, agricultural Department of Planning Associates are those entities in which the Group has significant influence, but not control, over the financial and (“Bien Hoa - Thanh materials. and Investment of Tay Ninh operating policies. Associates are accounted for using the equity method (equity accounted investees). The Long”) Province on 8 December 2009. consolidated financial statements include the Group’s share of the income and expenses of the equity accounted Associate of the Company investees, after adjustments to align the accounting policies with those of the Group, from the date that significant influence or joint control commences until the date that significant influence or joint control ceases. When the Thanh Thanh Cong Performing research and Business License No. 24% - Group’s share of losses exceeds its interest in an equity accounted investee, the carrying amount of that interest Sugarcane Research develop sugar cane sprouts; 3901162964 issued by the (including any long-term investments) is reduced to nil and the recognition of further losses is discontinued except and Application analysis cultivation and Department of Planning to the extent that the Group has an obligation or has made payments on behalf of the investee. Joint Stock Company plant protection products; and Investment of Tay Ninh (“Thanh Thanh Cong produce and develop Province on 21 March 2013. (iii) Transactions eliminated on consolidation Sugarcane”) mechanic machineries for sugar canes production. Intra-group balances, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. Unrealised gains and losses arising from transactions with equity As at 31 December 2013, the Company has not contributed capital to Bien Hoa – Thanh Long and this company is accounted investees are eliminated against the investment to the extent of the Group’s interest in the investee. still in pre-operating stage. (b) Foreign currency As at 31 December 2013, the Group had 1,200 employees (31/12/2012: 1,206 employees). Monetary assets and liabilities denominated in currencies other than VND are translated into VND at rates of 2. Basis of preparation exchange ruling at the balance sheet date. Transactions in currencies other than VND during the year have been translated into VND at rates approximating those ruling at the transaction dates. (a) Statement of compliance All foreign exchange differences are recorded in the consolidated statement of income. The consolidated financial statements have been prepared in accordance with Vietnamese Accounting Standards, the Vietnamese Accounting System and the relevant statutory requirements applicable to financial reporting. (c) Cash and cash equivalents
(b) Basis of measurement Cash comprises cash balances and call deposits. Cash equivalents are short-term highly liquid investments that are readily convertible to known amount of cash, are subject to an insignificant risk of changes in value, and are held for The consolidated financial statements, except for the consolidated statement of cash flows, are prepared on the the purpose of meeting short-term cash commitments rather than for investment or other purposes. accrual basis using the historical cost concept. The consolidated statement of cash flows is prepared using the indirect method.
(c) Annual accounting period
The annual accounting period of the Group is from 1 January to 31 December.
2013 ANNUAL REPORT 2013 ANNUAL REPORT 72 BIEN HOA SUGAR JOINT STOCK COMPANY www.bhs.vn 73 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2013 (continued) Form B 09 – DN/HN
(d) Investment (“Circular 45”). Accordingly, the Group is not allowed to apply productivity method for these assets due to these factories currently operate under its designed capacities. The revised depreciation method has been applied since Investments are stated at cost. An allowance is made for reductions in investment values if market value of the 1 July 2013. investment falls below cost or if the investee has suffered a loss. The allowance is reversed if the subsequent increase in recoverable amount can be related objectively to an event occurring after the allowance was recognised. An From 1 July 2013, the Group also revised all tangible fixed assets’ useful lives which is computed on straight-line basis allowance is reversed only to the extent that the investment’s carrying amount does not exceed the carrying in accordance with Article 10 of Circular 45, and to better reflect the economic useful lives of these assets. amount that has been determined if no allowance had been recognised. The estimated useful lives of the Group’s tangible fixed assets before and after revised are as below: (e) Accounts receivable Before After Trade and other receivables are stated at cost less allowance for doubtful debts. buildings and structures 3 – 20 years 10 – 25 years (f) Prepayments to suppliers machinery and equipment 2 – 12 years 10 – 20 years office equipment 3 – 6 years 8 – 10 years Included in prepayment to suppliers are prepayments to sugar cane farmers which are stated at cost less allowance for overdue receivables. The Group’s policies on making allowance for overdue receivables are in accordance with motor vehicles 3 – 10 years 10 years the guidance under Circular No. 228/2009/TT-BTC issued by the Ministry of Finance on 7 December 2009. Estimated useful lives of buildings and structures and machinery and equipment of Tay Ninh and Tri An factories (g) Inventories exceeds the guidance in Circular 45. The Company reported to and obtained approval from the Department of Finance of Dong Nai Province for these estimated useful lives. Inventories are stated at the lower of cost and net realisable value. Cost is determined on a weighted average basis and includes all costs incurred in bringing the inventories to their present location and condition. Cost in the case of The effect on the depreciation charge for the year due to the changes of depreciation method and estimated useful finished goods and work in progress includes raw materials, direct labour and attributable manufacturing overheads. lives was to decrease the depreciation charge by VND12,448 million. Net realisable value is the estimated selling price of inventory items, less the estimated costs of completion and selling expenses. (i) Intangible fixed assets
The Group applies the perpetual method of accounting for inventory. (i) Land use rights
(h) Tangible fixed assets Land use rights comprise:
(i) Cost » those granted by the State for which land use payments are collected; » those acquired in a legitimate transfer; and Tangible fixed assets are stated at cost less accumulated depreciation. The initial cost of a tangible fixed asset » rights to use leased land obtained before the effective date of Land Law (2003) for which payments have been comprises its purchase price, including import duties, non-refundable purchase taxes and any directly attributable made in advance for more than 5 years and supported by land use right certificate issued by competent authority. costs of bringing the asset to its working condition for its intended use, and the costs of dismantling and removing the asset and restoring the site on which it is located. Expenditure incurred after tangible fixed assets have been put into operation, such as repair, maintenance and overhaul cost, is charged to the consolidated statement of income Land use rights are stated at cost less accumulated amortisation. The initial cost of land use rights comprises in the year in which the cost is incurred. In situations where it can be clearly demonstrated that the expenditure its purchase price and any directly attributable costs incurred in conjunction with securing the land use rights. has resulted in an increase in the future economic benefits expected to be obtained from the use of tangible fixed Amortisation is computed on a straight-line basis over 20 years. assets beyond their originally assessed standard of performance, the expenditure is capitalised as an additional cost of tangible fixed assets. (ii) Development costs
(ii) Depreciation Expenditure on development activities, whereby research findings are applied to a plan or design for the production of new or substantially improved products and process, is capitalised if the product or process is technically and Prior to 1 July 2013, the Group applied the productivity method to compute the depreciation expenses for tangible commercially feasible and the Group has sufficient resources to complete development. The expenditure capitalised fixed assets that directly involved in the production of Tay Ninh and Tri An factories and the straight line method for include the costs of materials, direct labour and an appropriate portion of overheads. Other development expenditure all remaining tangible fixed assets. is recognised in the consolidated statement of income as an expense as incurred. Capitalised development expenditure is stated at cost less accumulated amortisation, which is provided on a straight-line basis from 5 to 15 From 1 July 2013, the Group prospectively changed the depreciation method of Tri An and Tay Ninh factories’ fixed years. assets from productivity to straight-line basis in accordance with Article 13 of Circular 45/2013/TT-BTC dated 25 April 2013 of the Ministry of Finance which provides guidance on management, use and depreciation of fixed assets
2013 ANNUAL REPORT 2013 ANNUAL REPORT 74 BIEN HOA SUGAR JOINT STOCK COMPANY www.bhs.vn 75 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2013 (continued) Form B 09 – DN/HN
(iii) Software (p) Classification of financial instruments Cost of acquiring new software, which is not an integral part of the related hardware, is capitalised and treated as an intangible asset. Software is amortised on a straight-line basis over 3 years. Solely for the purpose of providing disclosures about the significance of financial instruments to the Group’s consolidated financial position and consolidated results of operations and the nature and extent of risk arising from (j) Construction in progress financial instruments, the Group classifies its financial instruments as follow:
Construction in progress represents the cost of construction and machinery which have not been fully completed or (i) Financial assets installed. No depreciation is provided for construction in progress during the period of construction and installation. Financial assets at fair value through profit or loss (k) Long-term prepayments A financial asset at fair value through profit or loss is a financial asset that meets either of the following conditions: Tools and equipment It is considered by management as held for trading. A financial asset is considered as held for trading if: Tools and equipment include assets held for use by the Group in the normal course of business whose costs of + it is acquired principally for the purpose of selling it in the near term; individual items are less than VND30 million and therefore not qualified for recognition as fixed assets under Circular + there is evidence of a recent pattern of short-term profit-taking; or 45. Cost of tools and equipment are amortised on a straight-line basis over a period ranging from 2 to 3 years. + a derivative (except for a derivative that is financial guarantee contract or a designated and effective (l) Goodwill hedging instrument).
Goodwill arises on the acquisition of subsidiaries, associates and joint ventures. Goodwill is measured at cost less Upon initial recognition, it is designated by the Group as at fair value through profit or loss. accumulated amortisation. Cost of goodwill represents the excess of the cost of the acquisition over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of the acquiree. When Held-to-maturity investments the excess is negative (negative goodwill), it is recognised immediately in the consolidated statement of income. Goodwill is amortised on a straight-line basis over 10 years. In respect of equity accounted investees, the carrying Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and a fixed amount of goodwill is included in the carrying amount of the investment. maturity that the Group has the positive intention and ability to hold to maturity, other than:
(m) Trade and other payables those that the Group upon initial recognition designates as at fair value through profit or loss; those that the Group designates as available-for-sale; and Trade and other payables are stated at their cost. those that meet the definition of loans and receivables. (n) Provisions Loans and receivables A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects in an active market, other than those: current market assessments of the time value of money and the risks specific to the liability. that the Group intends to sell immediately or in the near term, which are classified as held for trading, and those Provisions for supports for sugar cane farmers that the entity on initial recognition designates as at fair value through profit or loss; that the Group upon initial recognition designates as available-for-sale; or Provision for supports for sugar cane farmers relate to technical support costs during seasonal non-production for which the Group may not recover substantially all of its initial investment, other than because of credit periods. The estimation is based on experience, events and management best judgments. Inevitably, such deterioration, which are classified as available-for-sale. circumstances and information may be subject to change in subsequent periods and thus the eventual outcome may be better or worse than the assessments made in drawing up periodic financial reports.
(o) Bonus and welfare funds
Allocations are made to bonus and welfare funds based on shareholders’ resolution. This fund is used exclusively to pay bonus and welfare to the Group’s staff. Payments from bonus and welfare funds are not charged to consolidated statement of income.
2013 ANNUAL REPORT 2013 ANNUAL REPORT 76 BIEN HOA SUGAR JOINT STOCK COMPANY www.bhs.vn 77 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2013 (continued) Form B 09 – DN/HN
Available-for-sale financial assets (r) Revenue Available-for-sale financial assets are non-derivative financial assets that are designated as available for sale or that are not classified as: (i) Goods sold
financial assets at fair value through profit or loss; Revenue from the sale of goods is recognised in the consolidated statement of income when the significant risks held-to-maturity investments; or and rewards of ownership have been transferred to the buyer. No revenue is recognised if there are significant uncertainties regarding recovery of the consideration due or the possible return of goods. loans and receivables. (ii) Services rendered (ii) Financial liabilities Revenue from services rendered is recognised in the consolidated statement of income in proportion to the stage Financial liabilities at fair value through profit or loss of completion of the transaction at the balance sheet date. The stage of completion is assessed by reference to surveys of work performed. No revenue is recognised if there are significant uncertainties regarding recovery of the A financial liability at fair value through profit or loss is a financial liability that meets either of the following conditions: consideration due.
It is considered by management as held for trading. A financial liability is considered as held for trading if: (s) Financial income + it is incurred principally for the purpose of repurchasing it in the near term; + there is evidence of a recent pattern of short-term profit-taking; or (i) Interest income + a derivative (except for a derivative that is financial guarantee contract or a designated and effective hedging instrument). Interest income is recognised on a time proportion basis with reference to the principal outstanding and the applicable interest rate. Upon initial recognition, it is designated by the Group as at fair value through profit or loss. (ii) Dividend income Financial liabilities carried at amortised cost Dividend income is recognised when the right to receive dividend is established. Financial liabilities which are not classified as financial liabilities at fair value through profit or loss are classified as financial liabilities carried at amortised cost. (t) Operating lease payments
The above described classification of financial instruments issolely for presentation and disclosure purpose and is not Payments made under operating leases are recognised in the consolidated statement of income on a straight-line intended to be a description of how the instruments are measured. Accounting policies for measurement of financial basis over the term of the lease. Lease incentives received are recognised in the consolidated statement of income instruments are disclosed in other relevant notes. as an integral part of the total lease expense.
(q) Taxation (u) Borrowing costs
Income tax on the consolidated profit or loss for the year comprises current and deferred tax. Income tax is recognised Borrowing costs are recognised as an expense in the year in which they are incurred, except where the borrowing in the consolidated statement of income except to the extent that it relates to items recognised directly to equity, in costs relate to borrowings in respect of the construction of qualifying assets, in which case the borrowing costs which case it is recognised in equity. incurred during the period of construction are capitalised as part of the cost of the assets concerned.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted at the balance (v) Earnings per share sheet date, and any adjustment to tax payable in respect of previous years. The Group presents basic earnings per share (“EPS”) for its ordinary shares. Basic EPS is calculated by dividing the Deferred tax is provided using the balance sheet method, providing for temporary differences between the carrying profit or loss attributable to the ordinary shareholders of the Company by the weighted average number of ordinary amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The shares outstanding during the year. The Company does not have any potential diluted earnings per share. amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amounts of assets and liabilities using the tax rates enacted or substantively enacted at the balance sheet date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
2013 ANNUAL REPORT 2013 ANNUAL REPORT 78 BIEN HOA SUGAR JOINT STOCK COMPANY www.bhs.vn 79 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2013 (continued) Form B 09 – DN/HN
Included in prepayments to suppliers were prepayments to related parties, details are as follows: (w) Segment reporting 31/12/2013 31/12/2012 A segment is a distinguishable component of the Group that is engaged either in providing related products VND VND or services (business segment), or in providing products or services within a particular economic environment (geographical segment), which is subject to risks and rewards that are different from those of other segments. The Short-term prepayments to shareholder 47,416,415,799 - Group primary format for segment reporting is based on business segments. Short-term prepayments to related companies 100,266,666,666 - (x) Related company The prepayments to related companied were unsecured and earned interest rates ranging from 7% to 8.5% per Related companies include the shareholders and their ultimate parent companies and their subsidiaries and annum during the year. associates. Included in prepayments to suppliers and other long-term receivables were prepayments to sugar cane farmers, 4. Segment reporting details are as follows:
The Group operates mainly in one business segment, which is in producing and trading sugar and sugar related 31/12/2013 31/12/2012 by-products and in one geographical segment, which is in Vietnam. VND VND 5. Cash and cash equivalents Short-term prepayments to sugar cane farmers 170,177,681,340 165,650,908,796 Long-term prepayments to sugar cane farmers 77,928,943,311 53,354,780,087 31/12/2013 31/12/2012 248,106,624,651 219,005,688,883 VND VND
Cash on hand 402,397,486 145,714,390 The prepayments to sugar cane farmers are partially secured by the farmers’ land use rights and earned interest at fixed rate of 1% per month during the year (2012: 1.125% per month). The prepayments to sugar cane farmers are Cash in banks 107,889,989,907 45,300,971,820 receivables within 1 to 4 years from each drawdown dates. Cash equivalents 130,000,000,000 53,076,900,000 During the year, the Group net off purchase of sugar cane with total amount of VND 180,213,515,725 against Cash and cash equivalents in the consolidated statement of cash flows 238,292,387,393 98,523,586,210 prepayments to sugar cane farmers (2012: VND 201,144,901,582).
6. Short-term investments Other short-term receivables comprised:
Short-term investments comprised the short-term loans granted to third parties with original maturities of less than 31/12/2013 31/12/2012 1 year from the placement dates. These loans earned interest at rates ranging from 10% to 11% per annum during VND VND the year. Interest income receivables from sugar cane farmers 12,862,384,111 9,873,511,970 7. Accounts receivable – short-term and long-term Import tax receivables 12,748,998,324 - Accounts receivables included the following amounts due from related parties: Harvest and transportation receivables from sugar cane farmers 7,843,887,058 11,568,439,445 Interest income receivables from banks 797,980,851 518,962,994 31/12/2013 31/12/2012 Personal income tax paid on behalf of employees 358,730,467 272,237,838 VND VND Others 2,544,094,048 605,377,220 Amounts due from shareholders 37,156,074,859 22,838,529,467 Trade 61,251,771,724 -
Non-trade 1,191,892,388 - At 31 December 2013 trade receivables with a carrying value of VND225,037 million (31/12/2012: VND66,590 million) were pledged with banks as security for loans granted to the Group. The trade and non-trade related amounts due from related parties were unsecured, interest free and are receivables within 15 - 20 days from invoice date.
2013 ANNUAL REPORT 2013 ANNUAL REPORT 80 BIEN HOA SUGAR JOINT STOCK COMPANY www.bhs.vn 81 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2013 (continued) Form B 09 – DN/HN
8. Inventories 10. Tangible fixed assets
31/12/2013 31/12/2012 Buildings and Machinery and Office Motor Total VND VND structures equipment equipment vehicles VND VND VND VND VND Goods in transit - 3,986,106,057 Cost Raw materials 52,738,299,288 519,372,395,143 Tools and supplies 20,379,311,879 13,629,171,965 Opening balance 116,835,765,807 530,381,577,339 7,603,790,352 23,119,706,034 677,940,839,532 Transfers from construction in Work in progress 129,779,722,577 178,611,341,207 29,405,315,172 219,887,038,524 1,538,046,050 - 250,830,399,746 progress Finished goods 139,960,371,032 104,172,566,959 Reclassifications to construction in (985,230,764) - - - (985,230,764) Merchandise inventories 808,544,796 241,904,441 progress 343,666,249,572 820,013,485,772 Reclassifications to long-term (108,436,647) (1,840,794,054) (965,514,823) (10,200,000) (2,924,945,524) prepayments (*)
At 31 December 2013 inventories with a carrying value of VND 328,144 million (31/12/2012: VND 380,405 million) Reclassifications - (73,000,000) - 73,000,000 - were pledged with banks as security for loans granted to the Group. Disposals - (361,436,045) - (2,053,353,691) (2,414,789,736) At 31 December 2013 inventories with a carrying value of VND 60,083 million (31/12/2012: VND 215,019 million) were borrowed from Vietnam Diary Products Joint Stock Company according to the asset borrowing contract dated 1 Closing balance 145,147,413,568 747,993,385,764 8,176,321,579 21,129,152,343 922,446,273,254 October 2012 (Note 22). Accumulated depreciation
9. Other current assets Opening balance 77,297,565,385 278,362,231,701 3,882,843,554 9,691,214,438 369,233,855,078
Charge for the year 4,935,079,822 31,062,987,750 663,010,457 1,988,476,871 38,649,554,900 31/12/2013 31/12/2012 Reclassifications to construction in VND VND (861,723,698) - - - (861,723,698) progress Advances to employees 898,710,919 395,720,624 Reclassifications to long-term (57,374,748) (945,404,640) (519,499,813) (10,200,000) (1,532,479,201) Short-term deposits (*) 60,083,475,900 215,279,567,696 prepayments (*)
Shortage of assets awaiting resolution 1,377,034 - Reclassifications - (73,000,000) - 73,000,000 -
60,983,563,853 215,675,288,320 Disposals - (65,922,353) - (2,053,353,691) (2,119,276,044)
(*) Included in short-term deposits at 31 December 2013 was VND60,083 million (31/12/2012: VND215,019 million) Closing balance 81,313,546,761 308,340,892,458 4,026,354,198 9,689,137,618 403,369,931,035 deposit made to Vietnam Dairy Products Joint Stock Company (“Vinamilk”) to secure for the borrowed inventories Net book value according to the asset borrowing contract dated 1 October 2012. According to the contract, the Group borrowed asset with free interest from Vinamilk. The Group shall return the equivalent value of sugar to Vinamilk in 2014 Opening balance 39,538,200,422 252,019,345,638 3,720,946,798 13,428,491,596 308,706,984,454 in accordance with revised agreement dated 6 January 2014. The deposit will be returned by Vinamilk prior to returning of the borrowed inventories. Closing balance 63,833,866,807 439,652,493,306 4,149,967,381 11,440,014,725 519,076,342,219
(*) The reclassification represents net book value of existing fixed assets which do not meet one of the criteria for recognition as fixed assets as regulated in Article 3 of Circular 45, i.e. costing VND30 million or more. These assets are reclassified to ng-Lo term prepayments (Note 14).
Included in the cost of tangible fixed assets were assets costing VND105,528 million which were fully depreciated as of 31 December 2013 (31/12/2012: VND107,713 million), but which are still in active use.
At 31 December 2013 tangible fixed assets with a carrying value of VND445,695 million (31/12/2012: VND254,068 million) were pledged with banks as security for loans granted to the Group.
2013 ANNUAL REPORT 2013 ANNUAL REPORT 82 BIEN HOA SUGAR JOINT STOCK COMPANY www.bhs.vn 83 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2013 (continued) Form B 09 – DN/HN
12. Construction in progress 11. Intangible fixed assets 2013 2012 Land use Development VND VND Software Total rights costs Opening balance 202,761,407,491 193,114,401,508 VND VND VND VND Additions during the year 154,276,942,434 166,305,251,478 Cost Transfers from tangible fixed assets – net 123,507,066 - Opening balance 14,882,785,128 4,624,939,378 933,091,931 20,440,816,437 Transfers to tangible fixed assets (250,830,399,746) (156,658,245,495) Transfers from construction in progress - - 79,350,000 79,350,000 Transfers to intangible fixed assets (79,350,000) - Reclassifications (123,712,170) 123,712,170 - Transfers to long-term prepayments (47,931,818) - Reclassifications to long-term prepayments (*) - (36,994,894) - (36,994,894) Closing balance 106,204,175,427 202,761,407,491 Closing balance 14,759,072,958 4,711,656,654 1,012,441,931 20,483,171,543 At 31 December 2013 no construction in progress (31/12/2012: VND49,278 million) were pledged with bank as Accumulated amortisation security for loans granted to the Group. Opening balance 6,158,946,457 3,711,351,877 - 9,870,298,334 During the year, borrowing costs capitalised into construction in progress amounted to VND9,083 million (2012: Charge for the year 735,530,256 262,219,812 247,821,484 1,245,571,552 VND2,200 million).
Reclassifications (123,712,170) 123,712,170 - During the year, depreciation expenses capitalised into construction in progress amounted to VND18,455 million in the trial testing period of the projects to upgrade production lines and improve quality of products of Tay Ninh Reclassifications to long-term prepayments (*) - (36,994,894) - (36,994,894) factory and Tri An factory.
Closing balance 6,770,764,543 4,060,288,965 247,821,484 11,078,874,992
Net book value
Opening balance 8,723,838,671 913,587,501 933,091,931 10,570,518,103
Closing balance 7,988,308,415 651,367,689 764,620,447 9,404,296,551
(*) The reclassification represents net book value of existing fixed assets which do not meet one of the criteria for recognition as fixed assets as regulated in Article 3 of Circular 45, i.e. costing VND30 million or more. These assets are reclassified to Long-term prepayments (Note 14).
Included in the cost of intangible fixed assets were assets costing VND1,787 million which were fully amortised as of 31 December 2013 (31/12/2012: VND1,838 million), but which are still in use.
At 31 December 2013 land use rights with a carrying value of VND6,365 million (31/12/2012: VND8,931 million) were pledged with banks as security for loans granted to the Group.
2013 ANNUAL REPORT 2013 ANNUAL REPORT 84 BIEN HOA SUGAR JOINT STOCK COMPANY www.bhs.vn 85 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2013 (continued) Form B 09 – DN/HN
Movements of long-term equity investments in associate during the year were as follows: VND
Amount 2013 2012 VND VND
Opening balance - -
Increase during the year 7,200,000,000 - right
Share of loss in associates (185,682,831) - % of voting Closing balance 7,014,317,169 -
owned Movements of long-term investments in securities during the year were as follows: % of equity 2013 2012 VND VND
Quantity Opening balance 44,527,884,439 50,239,701,076
Increase during the year 16,492,178,945 35,527,884,439 VND Disposals - (41,239,701,076) Amount
Closing balance 61,020,063,384 44,527,884,439 63,770,153,319 43,473,300,000 61,020,063,384 44,527,884,439 (4,264,227,234) (1,054,584,439)
Movements in the allowance for diminution in value of long-term investments during the year were as follows: right
2013 2012
% of voting VND VND
Opening balance 1,054,584,439 19,463,991,076 owned Increase in allowance during the year 4,261,435,824 1,054,584,439 % of equity Utilised during the year - (17,445,051,076) 400,920 0.66% 0.66% 4,792,591,350 100,000 0.33% 0.33% 1,402,791,410 750,000 5% 5% 9,000,000,000 750,000 5% 5% 9,000,000,000 720,000 24% 24% 7,014,317,169 - - - - Written back (1,051,793,029) (2,018,940,000) 2,942,688 11.15% 11.15% 47,227,472,034 1,740,700 10% 10% 34,125,093,029 Quantity Closing balance 4,264,227,234 1,054,584,439 Son Tin Commodity Exchange Joint Stock Company Gia Lai Cane Sugar Thermoelectricity Joint Stock Company Ninh Hoa Sugar Joint Stock Company Thanh Thanh Cong Sugarcane Research and Application Joint Stock Company Allowance for diminution in value of long-term investments Other long-term investment in securities: 31/12/2013 Long-term equity investments in associate: 31/12/2012 13. Long-term investments 13. Long-term
2013 ANNUAL REPORT 2013 ANNUAL REPORT 86 BIEN HOA SUGAR JOINT STOCK COMPANY www.bhs.vn 87 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2013 (continued) Form B 09 – DN/HN
14. Long-term prepayments 17. Short-term borrowings
2013 2012 31/12/2013 31/12/2012 VND VND VND VND
Opening balance 15,154,122,740 7,920,159,075 Short-term borrowings 885,329,866,995 956,477,480,427
Additions 7,864,509,958 20,599,915,744 Current portion of long-term borrowings (Note 24) 57,656,784,320 39,017,113,335
Transfers from construction in progress 47,931,818 - 942,986,651,315 995,494,593,762
Reclassification from tangible fixed assets – net (*) 1,392,466,323 - Terms and conditions of outstanding short-term borrowings were as follows: Amortisation for the year (17,738,212,373) (13,365,952,079) 31/12/2013 31/12/2012 Closing balance 6,720,818,466 15,154,122,740 Currency VND VND Loan 1 from Joint Stock Commercial Bank for Foreign Trade of (*) Reclassification from fixed assets represents the net book value of existing fixed assets which do not meet one of VND 226,033,983,508 299,122,416,178 the criteria for recognition as fixed assets, i.e. costing VND30 million or more, as regulated in Article 3 of Circular 45. Vietnam (a) These assets were reclassified from tangible and intangible fixed assets during the period (Note 10 and Note 11). The Loan 2 from Chinatrust Commercial Bank Co., Ltd (b) VND 59,900,000,000 65,527,418,493 remaining net book value of fixed assets costing less than VND30 million are amortised on a straight line basis over their remaining estimated useful lives, but not exceeding three years. Loan 3 from HSBC Bank (Vietnam) Limited (c) VND 107,018,280,244 120,346,203,334
15. Deferred tax assets Loan 4 from ANZ Bank (Vietnam) Limited (d) VND 45,370,232,500 137,916,528,000 Loan 5 from ANZ Bank (Vietnam) Limited (e) USD 103,707,078,000 - Deferred tax assets are relating to temporary difference arising from depreciation of fixed assets. Loan 6 from Vietnam International Commercial Joint Stock VND 67,745,300,000 33,710,000,000 16. Goodwill Bank (f) Loan 7 from Vietnam Joint Stock Commercial Bank for Industry VND 224,297,523,733 299,854,914,422 VND and Trade (g) VND 31,907,851,888 - Cost Loan 8 from Shinhan Bank Vietnam Limited (h) VND 19,349,617,122 - Opening balance and closing balance 21,813,192,278 Loan 9 from Military Commercial Joint Stock Bank (i) 885,329,866,995 956,477,480,427 Accumulated amortisation
Opening balance 5,998,627,877 The loans in VND and USD bore the annual interest at rates ranging from 6.4% to 7.5% (2012: from 6.05% to 13%) and 3% (2012: from 5.5% to 5.72%) during the year, respectively.. Charged for the year 2,181,319,228
Closing balance 8,179,947,105 (a) This loan has a maximum facility of VND 400,000 million (31/12/2012: VND400,000 million). This loan is secured by land use rights at Thanh Long Agricultural Enterprise, machinery and inventories with a carrying amount of Net book value VND1,234 million, VND1,843 million and VND200,000 million, respectively (31/12/2012: VND1,621 million, VND3,327 million and VND200,000 million, respectively). Opening balance 15,814,564,401
Closing balance 13,633,245,173 (b) This loan has a maximum facility of VND 156,180 million or USD 7.5 million (31/12/2012: VND 156,180 million or USD 7.5 million). This loan is secured by trade receivables with a carrying amount of VND 83,204 million (31/12/2012: VND 23,674 million).
(c) This loan has a maximum facility of VND 122,861 million or USD 5.9 million (31/12/2012: VND 122,861 million or USD 5.9 million). This loan is secured by land use rights at Tay Ninh factory with a carrying amount of VND 5,131 million (31/12/2012: VND 5,366 million).
2013 ANNUAL REPORT 2013 ANNUAL REPORT 88 BIEN HOA SUGAR JOINT STOCK COMPANY www.bhs.vn 89 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2013 (continued) Form B 09 – DN/HN
(d) This loan has a maximum facility of VND 150,000 million or USD 7 million (31/12/2012: VND 145,768 million or USD 7 million). 20. Taxes payable to State Treasury This loan is secured by inventories and receivables with a carrying amount of VND 8,618 million and VND 140,459 million, respectively (31/12/2012: land use rights at Tay Ninh factory, inventories and trade receivables with carrying amount of 31/12/2013 31/12/2012 VND 1,944 million, VND 137,917 million and VND 42,916 million, respectively). VND VND
(e) This loan has a maximum facility of USD 12 million. The loan is also secured by the same assets secured for loan 4. Value added tax 1,754,656,445 6,325,797,300
(f) This loan has a maximum facility of VND 150,000 million (31/12/2012: VND 150,000 million). This loan is secured by Special consumption tax 147,189,363 181,140,714 inventories with a carrying amount of VND 67,745 million (31/12/2012: VND 2,574 million). Import tax - 3,416,313
(g) This loan has a maximum facility of VND 300,000 million (31/12/2012: VND 300,000 million). This loan is secured by Corporate income tax 4,194,318,348 11,407,854,074 inventories and trade receivable with a carrying amount of VND 51,781 million and VND 1,374 million, respectively (31/12/2012: inventories with a carrying amount VND 41,795 million). A part of these inventories was also used to Other taxes 163,677,019 128,368,462 pledge for short-term loan (f) with amount of VND 7,063 million (31/12/2012: VND 1,881 million). 6,259,841,175 18,046,576,863
(h) This loan has a maximum facility of VND 60,000 million or USD 2 million. This loan is unsecured. 21. Accrued expenses (i) This loan has a maximum facility of VND 100,000 million. This loan is unsecured. 31/12/2013 31/12/2012 18. Accounts payable – trade VND VND
Accounts payable - trade included the following amounts due to related parties: Transportation fees 2,444,979,244 2,890,167,098 Interest expense 2,211,455,360 2,406,861,746 31/12/2013 31/12/2012 VND VND Supporting fees to sugar cane farmers 569,719,875 20,340,087 Others 4,580,218,456 974,619,471 Amounts due to shareholders - 7,979,128,344 9,806,372,935 6,291,988,402 19. Advance from customers 22. Other payables Advances from customers included the following amounts due to related parties: 31/12/2013 31/12/2012 31/12/2013 31/12/2012 VND VND VND VND Asset borrowings from Vinamilk (Note 8) 60,083,475,900 215,019,000,000
Amounts due to shareholders - 9,363,095,534 Borrowing from Trade Union of the Group 2,758,535,555 15,183,780,818
Amounts due to other related parties 535,619,788 691,229,641 Dividends payables 1,660,640,700 1,653,945,100
Harvest, transportation deposit payables to sugar cane farmers at Tay Ninh 11,649,193,744 2,131,902,134
Board of Management, Board of Directors and Supervisor Board remuneration 3,300,610,989 -
Social insurance 901,215,042 150,453,892
Short-term deposits and collaterals received 717,200,000 930,440,000
Others 1,900,547,264 8,659,123,461
82,971,419,194 243,728,645,405
2013 ANNUAL REPORT 2013 ANNUAL REPORT 90 BIEN HOA SUGAR JOINT STOCK COMPANY www.bhs.vn 91 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2013 (continued) Form B 09 – DN/HN
23. Bonus and welfare fund The loans bore the annual interest at rates ranging from 3.9% to 12.9% (2012: from 3.9% to 14.5%) during the year.
Movements of bonus and welfare fund during the year were: (a) This loan is secured by machinery at Tay Ninh factory with a carrying amount of VND49,187 million (31/12/2012: VND 57,223 million). Principal outstanding as at 31 December 2013 is repayable in 3 equal quarterly instalments of VND 2,975 million each and a final instalment of VND 2,966 million on 25 December 2014. 2013 2012 VND VND (b) This loan has a maximum facility of VND 51,513 million and is unsecured. Principal outstanding as at 31 December Opening balance 7,018,360,087 16,092,327,357 2013 is repayable in 5 equal annually instalments of VND 3,680 million each. The final instalment will be on 20 September 2018. Allocation from retained profits 13,909,112,497 4,270,648,883 Utilisation of funds (11,561,009,352) (13,344,616,153) (c) This loan has a maximum facility of VND 30,195 million and is unsecured. Principal outstanding as at 31 December 2013 is repayable in 12 equal semi-annual instalments of VND1,006 million each and a final instalment of VND 198 million Closing balance 9,366,463,232 7,018,360,087 on 15 April 2020.
24. Long-term borrowings (d) This loan has a maximum facility of VND 40,000 and is secured by machinery at the Bien Hoa factory with a carrying amount of VND 24,500 million (31/12/2012: VND 21,328 million) and buildings and structures, machinery and office equipment at Tay Ninh factory with a carrying value of VND 6,039 million, VND 70,857 million and VND 220 31/12/2013 31/12/2012 million, respectively (31/12/2012: VND 6,266 million, VND 76,012 million and VND 382 million, respectively). Principal VND VND outstanding as at 31 December 2013 is repayable in 6 equal quarterly instalments amounting to VND 2,350 million Long-term borrowings 152,451,879,827 146,451,762,122 each and a final instalment of VND 2,400 million on 22 September 2015. Repayable within twelve months (Note 17) (57,656,784,320) (39,017,113,335) (e) This loan has a maximum facility of VND 7,700 million and is secured by motor vehicles at Bien Hoa factory with a 94,795,095,507 107,434,648,787 carrying amount of VND 4,199 million (31/12/2012: VND 4,972 million). Principal outstanding as at 31 December 2013 is repayable in 7 equal quarterly instalments of VND 850 million each. The final instalment will be on 21 September 2015. Terms and conditions of outstanding long-term borrowings were as follows: (f) This loan has a maximum facility of VND 40,000 million and is secured by machinery at Tay Ninh factory with a carrying amount of VND 82,130 million (31/12/2012: VND 49,278 million). Principal outstanding as at 31 December Year of 31/12/2013 31/12/2012 Currency 2013 is repayable in 14 equal quarterly instalments of VND 2,021 million each and a final instalment of VND 2,019 maturity VND VND million on 8 November 2017. Loan 1 from Joint Stock Commercial Bank for VND 2014 11,891,900,000 23,792,900,000 (g) This loan has a maximum facility of VND 24,000 million and is secured by machinery at Tay Ninh factory with a Investment and Development of Vietnam (a) carrying amount of VND 37,525 million. Principal outstanding as at 31 December 2013 is repayable in 17 equal Loan 2 from Vietnam Bank for Agriculture and quarterly instalments of VND 437 million each. The final instalment will be on 26 March 2018. VND 2018 18,397,536,611 22,077,043,932 Rural Development (b) (h) This loan has a maximum facility of VND 32,000 million and is secured by buildings and structures, machinery, office Loan 3 from The Vietnam Development Bank (c) VND 2020 12,275,425,200 14,288,396,000 equipment and motor vehicles at Tri An factory with a carrying value of VND 19,808 million, VND 53,289 million, VND 1,895 million and VND 1,126 million, respectively (31/12/2012: VND 20,680 million, VND 59,210 million, VND Loan 4 from Joint Stock Commercial Bank for VND 2015 16,500,000,000 28,250,000,000 2,406 million and nil, respectively). Principal outstanding as at 31 December 2013 is repayable in 7 equal quarterly Foreign Trade of Vietnam (d) instalments of VND 2,493 million each, an instalment of VND 461 million on 25 December 2015 and a final instalment Loan 5 from Joint Stock Commercial Bank for of VND 2,117 million on 31 December 2015. VND 2015 5,949,825,000 7,649,825,000 Foreign Trade of Vietnam (e) (i) This loan has a maximum facility of VND 48,212 million and is secured by machinery and equipment at Tri An factory Loan 6 from Joint Stock Commercial Bank for VND 2017 30,305,701,572 36,367,201,572 with carrying value of VND 93,077 million. Principal outstanding as at 31 December 2013 is repayable in 16 equal Foreign Trade of Vietnam (f) quarterly instalments of VND 1,817 million each and a final instalment of VND 595 million on 25 March 2018. Loan 9 from Joint Stock Commercial Bank for VND 2018 7,431,185,030 - Foreign Trade of Vietnam (g)
Loan 10 from Saigon – Hanoi Commercial Joint VND 2015 20,030,482,213 14,026,395,618 Stock Bank (h)
Loan 11 from Saigon – Hanoi Commercial Joint VND 2018 29,669,824,201 - Stock Bank (i) 152,451,879,827 146,451,762,122
2013 ANNUAL REPORT 2013 ANNUAL REPORT 92 BIEN HOA SUGAR JOINT STOCK COMPANY www.bhs.vn 93 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2013 (continued) Form B 09 – DN/HN
25. Changes in owners’ equity
Investment and Total owners’ Share capital Capital surplus development funds Financial reserves Other equity funds Retained profits equity VND VND VND VND VND VND VND
Balance as at 1 January 2012 299,975,800,000 39,817,240,000 65,413,962,846 17,795,379,602 - 125,496,631,095 548,499,013,543
Share capital issued 14,998,790,000 - - - - (14,998,790,000) -
Net profit for the year - - - - - 119,210,127,630 119,210,127,630
Dividends - - - - - (89,992,740,000) (89,992,740,000)
Appropriations to bonus and welfare fund - - - - - (4,270,648,883) (4,270,648,883)
Appropriations to equity funds - - 22,338,311,104 7,446,103,701 721,477,778 (30,505,892,583) -
Utilisation of funds - - - - (721,477,778) - (721,477,778)
Balance as at 1 January 2013 314,974,590,000 39,817,240,000 87,752,273,950 25,241,483,303 - 104,938,687,259 572,724,274,512
Share capital issued 314,974,590,000 - ----314,974,590,000
Net profit for the year - - - - - 37,364,205,285 37,364,205,285
Dividends (Note 27) - - - - - (62,994,918,000) (62,994,918,000)
Appropriations to bonus and welfare fund (Note 23) - - - - - (13,909,112,497) (13,909,112,497)
Appropriations to equity funds - - 17,386,390,621 5,795,463,540 3,300,610,989 (26,482,465,150) -
Utilisation of funds - - - - (3,300,610,989) - (3,300,610,989)
Balance as at 31 December 2013 629,949,180,000 39,817,240,000 105,138,664,571 31,036,946,843 - 38,916,396,897 844,858,428,311
2013 ANNUAL REPORT 2013 ANNUAL REPORT 94 BIEN HOA SUGAR JOINT STOCK COMPANY www.bhs.vn 95 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2013 (continued) Form B 09 – DN/HN
26. Share capital 28. Equity funds The Company’s authorised and issued share capitals are: (i) Investment and development funds 31/12/2013 31/12/2012 Investment and development funds were appropriated from retained profits in accordance with the resolution of Number of Number of General Meeting of Shareholders. These funds were established for the purpose of future business expansion. VND VND shares shares (ii) Financial reserves Authorised and issued share capital – Par value
Ordinary shares 62,994,918 629,949,180,000 31,497,459 314,974,590,000 Financial reserves were appropriated from retained profits in accordance with the resolution of General Meeting of Shareholders. The reserves are established as recourse for the Group’s future general business risks. Shares in circulation – Par value (iii) Other equity funds Ordinary shares 62,994,918 629,949,180,000 31,497,459 314,974,590,000 During the year, according to shareholders’ general meeting, the Company transferred VND 3,301 million (2012: VND 721 All ordinary shares have a par value of VND10,000. Each share is entitled to one vote at meetings of the Company. million) to established management fund. These funds were established for the purpose of conferring rewards and Shareholders are entitled to receive dividend as declared from time to time. All ordinary shares are ranked equally other purposes relating to managing activities of the Company’s Board of Directors and Board of Management. with regard to the Company’s residual assets. In respect of shares bought back by the Company, all rights are suspended until those shares are reissued. 29. Total revenue
Movements in share capital during the year were as follows: Total revenue represented the gross invoiced value of goods sold and services provided exclusive of value added tax.
Net sales comprised: 2013 2012 Number of Number of VND VND 2013 2012 shares shares VND VND
Balance at the beginning of the year 31,497,459 314,974,590,000 29,997,580 299,975,800,000 Total revenue Shares issued during the year 31,497,459 314,974,590,000 - - Sales of goods 2,911,703,701,899 3,021,904,838,208 Shares issued according to ESOP program - - 1,499,879 14,998,790,000 18,309,661,925 23,893,068,351 during the year (*) Services
Balance at the end of the year 62,994,918 629,949,180,000 31,497,459 314,974,590,000 Less sales deductions Sales returns (232,826,916) (209,476,445) (*) The General Meeting of Shareholders of the Company on 20 April 2012 and the General Meeting of Board of Management on 24 August 2012 resolved to issued shares to employees according to Employee stock ownership Special consumption tax (1,740,386,541) (1,342,287,698) plan (“ESOP”) program amounting to 1,499,879 shares, from its retained profits amounting to VND 14,999 million. Net sales 2,928,040,150,367 3,044,246,142,416 27. Dividends 30. Cost of sales The General Meeting of Shareholders of the Company on 20 April 2013 resolved to distribute cash dividends amounting to VND47,246 million equivalent to VND1,500 per share for the second payment of 2012 profit. In addition, 2013 2012 Board of Management on 25 September 2013 resolved to distribute cash dividends amounting to VND15,749 million VND VND equivalent to VND500 per share for the first payment of 2013 profit (2012: VND44,996 million in cash dividend equivalent to VND1,500 per share for the second payment of 2011 profit and VND44,996 million in cash dividend Total cost of sales: equivalent to VND1,500 per share for the first payment of 2012 profit, respectively). Cost of goods sold 2,683,462,011,725 2,744,581,136,333
Services provided 5,802,161,319 19,688,835,681 2,689,264,173,044 2,764,269,972,014
2013 ANNUAL REPORT 2013 ANNUAL REPORT 96 BIEN HOA SUGAR JOINT STOCK COMPANY www.bhs.vn 97 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2013 (continued) Form B 09 – DN/HN
31. Financial income (b) Reconciliation of effective tax rate 2013 2012 VND VND 2013 2012 VND VND Interest income from deposits 1,846,940,768 9,647,951,833 Profit before tax 48,813,467,044 166,097,994,666 Interest income from prepayments to sugar cane farmers 31,143,032,993 41,248,006,300 Tax at the Company’s tax rate 12,203,366,761 24,914,699,200 Interest income from prepayments to suppliers and loans to other entities 17,760,188,552 2,157,836,746 Tax incentives - (3,085,173,206) Dividend receipts from investment in securities 2,691,624,000 - Effect of different tax rate applied in subsidiary (21,009,519) 237,022,880 Foreign exchange gains 461,548,025 2,462,259,403 Effect of different tax rate applied to trading activities and other income - 214,158,191 Others - 614,170,867 Non-deductible expenses 896,882,228 1,578,927,539 53,903,334,338 56,130,225,149 Tax exempt income (672,906,000) -
32. Financial expenses Tax losses utilised - (640,159,673)
(Over)/under provision in prior years (957,071,711) 23,668,392,105 2013 2012 VND VND 11,449,261,759 46,887,867,036 Interest expense from borrowings 105,356,519,541 50,777,977,065 (c) Applicable tax rates Allowance for diminution in the value of other long-term investments 4,261,435,824 1,054,584,439
Written back allowance for diminution in the value of other (i) Bien Hoa Sugar Joint Stock Company (1,051,793,029) (2,018,940,000) long-term investments Manufacturing operation Foreign exchange losses 210,288,756 194,263,694 Under the terms of Business Registration Certificate the Company has an obligation to pay the government income Others 2,049,813,090 465,123,716 tax at the rate of 15% of taxable profits for the first 12 years starting from the first year of operation (2001 to 2012) 110,826,264,182 50,473,008,914 and 25% for the succeeding years.
Trading operation 33. Income tax Under the terms of Business Registration Certificate the Company has an obligation to pay the government income (a) Recognised in the consolidated statement of income tax at the rate of 20% of taxable profits for the first 10 years starting from the first year of operation (2001 to 2012) and 25% for the succeeding years. 2013 2012 VND VND All the above tax exemption and reduction are not applicable to other income which is taxed at a rate of 25%.
Current tax expense (ii) Hai Vi One Member Limited Company Current year 11,820,135,186 22,856,992,620 Under the terms of Investment Licence the Company has an obligation to pay the government income tax at the (Over)/under provision in prior years (957,071,711) 23,668,392,105 rate of 20% of taxable profits.
10,863,063,475 46,525,384,725 On 19 June 2013, the National Assembly approved the Law on amendments and supplements to a number of Deferred tax expense articles of the Corporate Income Tax Law. Accordingly, the highest income tax rate shall be reduced from 25% to 22% for 2014 and 2015, and to 20% from 2016. Origination and reversal of temporary differences 586,198,284 362,482,311
Income tax expense 11,449,261,759 46,887,867,036
2013 ANNUAL REPORT 2013 ANNUAL REPORT 98 BIEN HOA SUGAR JOINT STOCK COMPANY www.bhs.vn 99 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2013 (continued) Form B 09 – DN/HN
34. Basic earnings per share The Group’s risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies The calculation of basic earnings per share for the year ended 31 December 2013 was based on the profit attributable and systems are reviewed regularly to reflect changes in market conditions and the Group’s activities. The Group, to ordinary shareholders of VND 37,364,205,285 (2012: VND 119,210,127,630) and a weighted average number of through its training and management standards and procedures, aims to develop a disciplined and constructive ordinary shares outstanding of 34,604,058 (2012: 31,497,459 shares), calculated as follows: control environment in which all employees understand their roles and obligations.
(i) Net profit attributable to ordinary shareholders The Group Supervisory Committee is assisted in its oversight role by Internal Audit. Internal Audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the Supervisory Committee. 2013 2012 VND VND (b) Credit risk Net profit for the year and attributable to ordinary shareholders 37,364,205,285 119,210,127,630 Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet (ii) Weighted average number of ordinary shares its contractual obligations, and arises principally from the Group’s receivables from customers and investments in debt securities.
2013 2012 (i) Exposure to credit risk
Issued ordinary shares at the beginning of the year 31,497,459 29,997,580 The total of carrying amounts of financial assets represents the maximum credit exposure. The maximum exposure Effect of shares issued on 26 November 2013 to existing shareholders 3,106,599 - to credit risk at the reporting date was as follows: Effect of shares issued according to ESOP program during the year - 1,499,879 31/12/2013 31/12/2012 VND VND Weighted average number of ordinary shares for the year ended 34,604,058 31,497,459 31 December Cash in bank and cash equivalents (*) 237,889,989,907 98,377,871,820 Short-term investments (**) 44,240,000,000 16,500,000,000 As at 31 December 2013 and 31 December 2012, the Group does not have any potentially diluted shares. Trade and other receivables (***) 255,240,376,229 85,054,887,638 35. Financial instruments Prepayments to sugar cane farmers (****) 242,676,831,387 217,486,707,647
(a) Financial risk management 780,047,197,523 417,419,467,105
(i) Overview (*) Cash in bank and cash equivalents
The Group has exposure to the following risks from its use of financial instruments: The cash, cash equivalents and short-term investments at bank of the Group is mainly held with well-known financial institutions. Management does not foresee any significant credit risks from these deposits and does not expect that credit risk these financial institutions may default and cause losses to the Group. liquidity risk; and market risk (**) Short-term investments
This note presents information about the Group’s exposure to each of the above risks, the Group’s objectives, In response to the risk, the management of the Group analysed creditworthiness individually. Allowance for policies and processes for measuring and managing risk. diminution in the value incurred when the Management foresee and in accordance with Vietnamese Accounting Standards, the Vietnamese Accounting System and the relevant statutory requirements.
The Supervisory Board oversees how management monitors compliance with the Group’s risk management The Group believes that no allowance for diminution in value of short-term investment is necessary in respect of policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks the short-term investments. faced by the Group. (***) Trade and other receivables (ii) Risk management framework The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. In The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management response to the risk, the risk management committee of the Group has established a credit policy under which each framework. The Board is responsible for developing and monitoring the Group’s risk management policies. new customer is analysed individually for creditworthiness before the Group’s standard payment and delivery terms and conditions are offered. In addition, customers are required to make advances for all sales orders. Receivables are due within 30 days from the date of billing. Debtors with balances that are more than 30 days outstanding are requested to settle the balances before further credit is granted.
2013 ANNUAL REPORT 2013 ANNUAL REPORT 100 BIEN HOA SUGAR JOINT STOCK COMPANY www.bhs.vn 101 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2013 (continued) Form B 09 – DN/HN
Trade and other receivables are mostly companies with good collection track records with the Group. Management The aging of prepayments to sugar cane farmers at year-end is as follows: believes that those receivables are of high credit quality. 31/12/2013 31/12/2012 The aging of trade receivables and other receivables is as follows: VND VND
31/12/2013 31/12/2012 Not past due 239,900,461,387 216,812,392,888 VND VND Past due 31 – 180 days - 173,000,000
Not past due 175,340,683,718 56,208,595,262 Past due more than 180 days 8,206,163,264 2,020,295,995
Past due 0 – 30 days 4,280,257,536 28,195,382,107 248,106,624,651 219,005,688,883 Past due 31 – 180 days 75,310,403,823 55,054,363 The movements of allowances for doubtful debts during the year as follows: Past due more than 180 days 1,649,633,694 1,256,635,567
256,580,978,771 85,715,667,299 31/12/2013 31/12/2012 VND VND (****) Prepayments to sugar cane farmers Opening balance 2,179,760,897 10,154,767,211
The Group’s exposure to credit risk in relation with loans granted to sugar cane farmers is mainly influenced by the Additions during the year 4,930,186,268 981,626,913 individual characteristics of each farmer. In response to the risk, management of the Group has established a loans policy under which each financial support request from each farmer is analysed individually for creditworthiness Utilisation during the year - (8,714,823,052) before the Group’s standard drawdown and loans terms and conditions are offered. The sugar cane farmers are required to pledged their land use rights as the security for the prepayments. In addition, sugar cane farmers are Written back (545,021,729) (241,810,175) also required to sell all of their sugar cane to the Group and this amount will be net off with the relevant loans. The Closing balance 6,564,925,436 2,179,760,897 loans are collected according to each drawdown and based on the schedule to be mutually agreed between the farmers and the Group. Farmers with balances that are overdue are requested to settle the balances before further credit is granted. (c) Liquidity risk Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation.
2013 ANNUAL REPORT 2013 ANNUAL REPORT 102 BIEN HOA SUGAR JOINT STOCK COMPANY www.bhs.vn 103 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2013 (continued) Form B 09 – DN/HN
The financial liabilities with fixed or determinable payments have the following contractual maturities including the estimated interest payments:
31 December 2013
Carrying amount Contractual cash flows Within 1 year 1 – 2 years 2 – 5 years More than 5 years VND VND VND VND VND VND
Short-term borrowings and liabilities
Short-term borrowings 885,329,866,995 901,505,748,356 901,505,748,356 - - -
Accounts payable-trade 55,218,751,114 55,218,751,114 55,218,751,114 - - -
Payables to employees 12,762,988,411 12,762,988,411 12,762,988,411 - - -
Other payables 82,971,419,194 82,971,419,194 82,971,419,194 - - -
Accrued expenses 9,806,372,935 9,806,372,935 9,806,372,935 - - -
Long-term borrowings and liabilities
Long-term borrowings 152,451,879,827 180,469,603,797 71,236,610,146 50,308,204,839 56,655,057,493 2,269,731,319
Other long-term liabilities 2,307,850,000 2,307,850,000 - 2,307,850,000 - -
1,200,849,128,476 1,245,042,733,807 1,133,501,890,156 52,616,054,839 56,655,057,493 2,269,731,319
31 December 2012
Carrying amount Contractual cash flows Within 1 year 1 – 2 years 2 – 5 years More than 5 years VND VND VND VND VND VND
Short-term borrowings and liabilities
Short-term borrowings 956,477,480,427 975,782,090,905 975,782,090,905 - - -
Accounts payable-trade 122,735,044,559 122,735,044,559 122,735,044,559 - - -
Payables to employees 20,314,437,607 20,314,437,607 20,314,437,607 - - -
Other payables 243,728,645,405 243,728,645,405 243,728,645,405 - - -
Accrued expenses 6,291,988,402 6,291,988,402 6,291,988,402 - - -
Long-term borrowings and liabilities
Long-term borrowings 146,451,762,122 178,731,004,360 52,643,383,979 46,497,447,202 71,332,526,443 8,257,646,736
1,495,999,358,522 1,547,583,211,238 1,421,495,590,857 46,497,447,202 71,332,526,443 8,257,646,736
The Group manages its ability to meet the expected operational expenses and servicing its debts by investing its cash surpluses in short-term investments and maintaining several bank facilities.
2013 ANNUAL REPORT 2013 ANNUAL REPORT 104 BIEN HOA SUGAR JOINT STOCK COMPANY www.bhs.vn 105 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2013 (continued) Form B 09 – DN/HN
(d) Market risk At the reporting date the interest rate profile of the Group’s interest-bearing financial instruments was:
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices Carrying amount will affect the Group’s results of operations or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while 31/12/2013 31/12/2012 optimising the return. VND VND
(i) Currency risk Fixed rate instruments Cash equivalents 130,000,000,000 53,076,900,000 The Group is exposed to currency risk on sales, purchases and borrowings that are denominated in a currency other than the accounting currencies of the Group, which is the VND. The currencies in which these transactions primarily Short-term investments 44,240,000,000 16,500,000,000 are denominated are in United States Dollars (USD) and Euro (EUR). Prepayments to sugar cane farmers 248,493,999,221 217,486,707,647
The Group’s exposure to currency risk is managed by keeping the exposure to an acceptable level by buying or Long-term borrowings (42,564,861,811) (60,158,339,932) selling foreign currencies at spot rates when necessary to address short-term over-exposures. 380,169,137,410 226,905,267,715
Exposure to currency risk Variable rate instruments Cash in banks 107,889,989,907 45,300,971,820 The Group had the following net monetary asset/(liability) position exposed to currency risk: Short-term borrowings (885,329,866,995) (956,477,480,427) 31/12/2013 31/12/2012 Long-term borrowings (109,887,018,016) (86,293,422,190) USD EUR USD EUR (887,326,895,104) (997,469,930,797)
Cash and cash equivalents 803,237 250 124,489 250 An increase of 100 basis points in interest rates would have decreased the net profit of the Group by VND 6,655 Other monetary assets - - 10,746 1,340 million (31/12/2012: VND 8,479 million). This analysis assumes that all other variables, in particular foreign currency rates, remain constant. Accounts payable – trade (77,276) (1,165) (453,730) (7,865)
725,961 (915) (318,495) (6,275)
The followings are the significant exchange rates applied by the Group:
Exchange rate as at 31/12/2013 31/12/2012 VND VND USD 1 21,051 20,824 EUR 1 28,803 27,361
As at 31 December 2013, 1% strengthen of USD and 5% strengthen of EUR would have no significant impact to the net profit of the Group, after taking into account the current level of exchange rates and the historical volatility as well as market expectations. This analysis assumes that all other variables, in particular interest rates, remain constant and ignores any impact of forecasted sales and purchases.
(ii) Interest rate risk
As at 31 December 2013, VND1,052,874 million of the liabilities obtained or issued by the Group was at variable interest rate. No policy was in place pertaining to the mitigation of any potential volatility of the interest rate.
2013 ANNUAL REPORT 2013 ANNUAL REPORT 106 BIEN HOA SUGAR JOINT STOCK COMPANY www.bhs.vn 107 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2013 (continued) Form B 09 – DN/HN
(e) Fair values (ii) Basis for determining fair values
(i) Fair values versus carrying amounts (*) The Group has not determined fair values of these financial instruments for disclosure in the separate financial statements because information about their market prices is not available and there is currently no guidance The fair values of financial assets and liabilities, together with the carrying amounts shown in the balance sheet, on determination of fair value using valuation techniques under the Vietnamese Accounting Standards or the are as follows: Vietnamese Accounting System. There fair values of these financial instruments may differ from their carrying amounts.
Investments in equity instrument 31/12/2013 31/12/2012 Carrying Carrying 31/12/2013 amount Fair value amount Fair value VND VND VND VND Carrying amount Fair value Note VND VND Categorised as held-to-maturity investments: Ninh Hoa Sugar Joint Stock Company (i) 4,792,591,350 4,891,224,000 - Short-term investments 44,240,000,000 (*) 16,500,000,000 (*) Gia Lai Cane Sugar Thermoelectricity Joint Stock Company (i) 42,963,244,800 42,963,244,800
Categorised as loans and receivables: Son Tin Commodity Exchange Joint Stock Company (ii) 9,000,000,000 (ii) - Cash and cash equivalents 237,889,989,907 237,889,989,907 98,377,871,820 98,377,871,820 56.755.836.150 - Trade and other receivables 255,240,376,229 (*) 85,054,887,638 (*) (i) The fair value of investment in Ninh Hoa Sugar Joint Stock Company and Gia Lai Cane Sugar Thermoelectricity Joint Stock - Prepayments to sugar cane farmers 242,676,831,387 (*) 217,486,707,647 (*) Company are determined by reference to the market price on Ho Chi Minh Stock Exchange as at 31 December 2013.
(ii) Son Tin Commodity Exchange Joint Stock Company is an unlisted company which was making profits during the Categorised as available-for-sale: period. The Group has not determined fair value of investments in equity for disclosure in accordance with Article 28 of Circular No. 210/2009/TT-BTC dated 6 November 2009 of the Ministry of Finance because (i) quoted prices - Investments in equity instruments 56,755,836,150 (*) 43,473,300,000 (*) in active market is not available for these financial instruments; and (ii) Vietnamese Accounting Standards and the Vietnamese Accounting System do not provide guidance on measurement of fair values in the case where quoted prices in active market is not available. Fair value of these financial instruments may be different from their carrying value. Categorised as liabilities at amortised cost: - Trade and other payables 138,190,170,308 (*) 366,463,689,964 (*) 36. Non-cash investing activities - Other short-term liabilities 22,569,361,346 (*) 26,606,426,009 (*) 31/12/2013 31/12/2012 - Short-term borrowings 885,329,866,995 (*) 956,477,480,427 (*) VND VND - Long-term borrowings 152,451,879,827 (*) 146,451,762,122 (*) Net off corporate income tax under provision in prior years against - 22,169,504,924 - Other long-term liabilities 2,307,850,000 (*) - (*) deductible value added tax Net off purchase of sugar cane against interest income receivables from 25,377,248,176 29,375,725,826 sugar cane farmers
Asset borrowings recorded in inventories (Note 8 and 22) 60,083,475,900 215,019,000,000
Depreciation expenses capitalised into construction in progress during 18,454,849,500 - the trial testing period of Tri An factory and Tay Ninh factory
2013 ANNUAL REPORT 2013 ANNUAL REPORT 108 BIEN HOA SUGAR JOINT STOCK COMPANY www.bhs.vn 109 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2013 (continued) Form B 09 – DN/HN
37. Significant transactions with related parties (*) In 2012, Thanh Thanh Cong Manufacturing and Trading Joint Stock Company has changed its legal name into Thanh Thanh Cong Investment Joint Stock Company. In addition to related party balances disclosed in other notes to the consolidated financial statements, the Group (**) In 2013, Société De Bourbon Tay Ninh has changed its legal name into Thanh Thanh Cong Tay Ninh Joint Stock Company. had the following transactions with related parties during the year: (***) Significant transactions with Saigon Thuong Tin Commercial Joint Stock Bank were disclosed as related parties transactions for the period from 1 January 2011 up to the disposal date of investments in this bank. Transaction value 38. Commitments 2013 2012 VND VND (a) Capital expenditure Shareholders As at 31 December 2013 the Group had the following outstanding capital commitments approved but not provided Thanh Thanh Cong Investment Joint Stock Company (*) for in the balance sheet:
Sales of goods 221,841,231,097 51,414,917,702 31/12/2013 31/12/2012 Prepayment to suppliers 25,000,000,000 - VND VND Loans 103,500,000,000 - Approved but not contracted 873,647,415,586 714,078,323,171 Interest income from loans 1,386,425,295 .- (b) Leases Dividends 9,194,986,000 150,000,000 The future minimum lease payments under non-cancellable operating leases were: Purchase additional share capital issuance 45,974,930,000 - Consultant fees 1,621,090,910 - 31/12/2013 31/12/2012 VND VND Thanh Thanh Cong Tay Ninh Joint Stock Company (**) Within one year 3,486,489,810 2,889,732,790 Sales of goods 34,223,736,928 3,188,429,301 Purchase of goods 6,505,781,144 10,859,500,590 Within two to five years 8,512,922,321 9,224,639,493 Dividends 13,630,296,000 20,445,444,000 More than five years 57,790,364,057 61,330,841,957
Purchase additional share capital issuance 68,151,480,000 - 69,789,776,188 73,445,214,240 Prepayment to suppliers 22,591,096,355 - 39. Production and business costs by element Processing fees 1,533,039,715 - Warehouse rental fees 64,611,107 - 2013 2012 Sugar Corporation II – Company Limited VND VND Dividends 6,750,200,000 10,125,300,000 Raw material costs included in production costs 2,208,086,042,088 1,932,969,751,422 Saigon Thuong Tin Commercial Joint Stock Bank (***) Labour costs and staff costs 141,013,080,938 137,932,406,734 Short-term borrowings - 58,535,000,000 Depreciation and amortisation 23,621,596,180 52,944,215,521 Interest expenses - 3,224,265,400 Outside services 140,842,640,467 78,904,776,833 Dividends - 4,502,260,500 Other expenses 51,581,766,139 114,875,462,211 Other related parties Thanh Thanh Cong Trading Joint Stock Company 24 March 2014 Sales of goods and services 13,925,107,072 16,464,209,886 Prepared by: Approved by: Purchase of goods and services 99,457,846,762 115,746,123,823 Prepayment to suppliers 100,266,666,666 - Interest income from prepayments to suppliers 12,520,800,787 - Board of Directors and Board of Management Remuneration 1,102,083,333 1,110,000,000 Salary and compensation 5,166,012,617 5,156,114,768 Do Thi Thuy Tien Ngo Thi Thanh Hang Thai Van Chuyen General Accountant Chief Accountant Chairman 2013 ANNUAL REPORT 2013 ANNUAL REPORT 110 BIEN HOA SUGAR JOINT STOCK COMPANY www.bhs.vn 111 BIEN HOA SUGAR JOINT STOCK COMPANY Address: Bien Hoa 1 Industrial Zone, Dong Nai Province Tel: (061) 3836 199 - Fax: (061) 3836 213 Email: [email protected] www.bhs.vn