1 annual report 2012

1Công ty Cổ phần nhựa thiếu niên tiền phongtiEn phong plastiC joint - stoCk Company

ANNUAL REPORT 2012

TIEN PHONG PLASTIC JOINT STOCK COMPANYStock symbol: NTP

Hai Phong, April 2013

2 3Công ty Cổ phần nhựa thiếu niên tiền phongtiEn phong plastiC joint - stoCk Company

Công ty Cổ phần nhựa thiếu niên tiền phongtiEn phong plastiC joint - stoCk Company

welcome

4 5Công ty Cổ phần nhựa thiếu niên tiền phongtiEn phong plastiC joint - stoCk Company

Công ty Cổ phần nhựa thiếu niên tiền phongtiEn phong plastiC joint - stoCk Company

6CÔNG TY CỔ PHẦN NHỰA THIẾU NIÊN TIỀN PHONGTIEN PHONG PLASTIC JOINT - STOCK COMPANY

The Ceremony to Offer National Quality Award and International Quality Award ofAsia-Pacific region 2012


Mr. Tran Ba Phuc, Chairman of the Management Board of Tien Phong Plastic Joint Stock Company to receive the National Quality Gold Award 2011 and Certificate of Merit from the Prime Minister


I.


PART I GENERAL INFORMATION

1.1. OvERvIEw

⦁ Trade name : TIEN PHONG PLASTIC JOINT STOCK COMPANY ⦁ Stock symbol : NTP ⦁ Address : No.02 An Da, Ngo Quyen, Hai Phong. ⦁ Phone : 031.3847533 ⦁ Fax : 031. 3640133 ⦁ Business Registration No. : 02000167782, first registered on 30 December 2004, changed for

the 7th time on 25 March 2011 in Hai Phong ⦁ website : www.nhuatienphong.vn ⦁ Charter capital : 433,379,960,000 VND (four hundred thirty-three billion three hun-

dred seventy-nine million, nine hundred and sixty thousand dongs)


1.2. FORMATION ANd dEvELOPMENT

1.2.1. COMPANY FORMATION

⦁ In december 1958, the Ministry of Light Industry (now the Ministry of Trade and Indutry) decided to set up and construct the Plastics Factory, which was the first base of plastic processing and manufacturing industry in Vietnam at An Da Road (No.2 An Da, Ngo Quyen, Hai Phong today).

⦁ On 19 May 1960, After a period of expeditious construction, on 19 May 1960, the factory was officially inaugurated. Shortly thereafter, the National Assembly of the Democratic Republic of Vietnam decided to name the factory “Tien Phong Plastic Factory”. During the time when the U.S. Army invaded the North Vietnam, the factory was also involved in the production of military

stuff such as belts, raincoats, plastic sandals ...

⦁ Since 1990, to meet the needs of social development, the factory has gradually shifted to the production of plastic pipe products u.PVC, PE-HD, PPR to serve water supply and drainage and construction projects

⦁ On 29 April 1993, the factory was renamed into Tien Phong Plastic Company under the Decision No. 386/CN/TCLD of the Ministry of Light Industry

⦁ On 17/08/2004 , To implement the equitization program of state-owned enterprises, on 17/08/2004, Tien Phong Plastic Company was converted into Tien Phong Plastic Joint Stock Company under the Decision No. 80/2004/QD- BCN of the Ministry of Industry.

⦁ As of 01 January 2005, Tien Phong Plastic Joint Stock Company began operating as a joint stock company.

1.2.2. LISTING ANd TRAdING SHARES ON THE STOCK MARKET

⦁ In 2006, the Annual General Meeting of Shareholders agreed on guidelines and assigned the Management Board of the Company to register the listing, transaction of Tien Phong shares on Vietnam stock market.

⦁ On 24 October 2006, Hanoi Securities Trading Center issued the Decision No.19/QD-TTGD-CK to approve the Company to list 14,446,000 shares (corresponding to its charter capital of 144,460,000,000 VND) at the Center under the stock symbol NTP.

⦁ On 11 december 2006, NTP shares started the first session. ⦁ In 2007, the Company increased its charter capital to VND 216,689,980,000 by paying dividends

in bonus shares to its existing shareholders. ⦁ In 2011, the company continued to pay dividends in bonus shares to existing shareholders to

increase its charter capital to VND 433,379,960,000 (corresponding to 43,337,996 shares).

Since privatization, the Company has continuously achieved good growth and development, which is reflected in main production and business indicators as follows:

MAIN INdICATORS UNIT 2008 2009 2010 2011 2012

CONSUMPTION Ton 34.180 42.960 54.400 47.210 47.766

REvENUE Billion dong 1.097 1.493 1.954 2.265 2.322

PROFIT Billion dong 154,4 349,6 366,5 346,6 384,7


Comsumption during 2008 - 2012 ( tons )

Revenue during 2008 - 2012 ( billion dong )

Profit during 2008 - 2012 ( billion dong )


1.2.3. OTHER EvENTS

The company is implementing the project to move and build a new factory in Hung Dao Ward, Duong Kinh District, Hai Phong, with an area of 13.6 hectares to continue improving the production capacity of traditional items and invest in another new site. By December 2012, the Company had completed and put into use some of the following work items: production areas of Workshop 3, Workshop 4, Workshop 5, Electromechanical workshop; Versatile warehouse; Shift cafeteria; Internal road system and infrastructure. The company made capital contribution to establish SOUTHERN TIEN PHONG PLASTIC JOINT STOCK COMPANY in Dong An Industrial Park II, Binh Duong province (the current charter capital is 135 billion dongs, of which Tien Phong Plastic Joint Stock Company contributes 37.78%, or 51 billion dongs).

The company made the capital contribution for the formation of TIEN PHONG - SMP PLASTIC JOINT vENTURE COMPANY in the Lao People’s Democratic Republic with charter capital of USd 2,500,000, of which Tien Phong Plastic Joint Stock Company contributes 51%. Since March 2010, plastic pipes manufactured by the Joint Venture Company have been provided for Laos market and are expected to provide neighboring countries (Myanmar, Thailand).

Carrying out the Resolution of the annual General Meeting of Shareholders 2011 on the agreement to expand production facilities and contruct a factory in the Middle region (in Nam Cam Industrial Park, Nghe An province), the Management Board implemented some necessary steps such as the formation of Middle Tien Phong Plastic Joint Stock Company, conducted a number of items such as site leveling, wall building, construction of operating house and production workshops.


1.3. FIELdS ANd vENUE OF BUSINESS

Tien Phong Plastic JSC conducts business operations in the following key industries: ⦁ Manufacturing and trading civil plastics and plastic products for construction, industry, agricul-

ture, fishery, transportation. ⦁ Constructing projects of industry, transportation, irrigation ⦁ Trading real estate, land use rights of the owner, the user or tenant. ⦁ Constructing apartment buildings, infrastructure, luxurious houses, office for lease, trade cen-

ters, business markets.with the motto:“Quality is above all, we serve the legitimate interests of all consumers”, Tien Phong Plastic JSC always produce and supply the market with high quality plastic products.The company’s main products currently include:

⦁ U.PVC pipes and accessories with diameter of Φ 21- Φ 800 mm. ⦁ PPR pipes and accessories with diameter of Φ 20 - Φ 200 mm ⦁ HDPE pipes and accessories with diameter of Φ 20 - Φ 1200 mm

With three manufacturing factories across the country, one factory in Lao People’s Democratic Republic and thousands of dealers and sales agents, the product distribution system of the Company has cov-ered all over the country and spread to Laos and Cambodia. Currently, Tien Phong Plastic products has achieved a solid position on the market (making for 70% market share in the North).

1.4. MOdEL OF MANAGEMENT, BUSINESS ORGANIzATION ANd MANAGEMENT APPARATUS

1.4.1. MANAGEMENT MOdEL ANd STRUCTURE

The company operates as a joint stock company, headed by the General Assembly of Shareholders; Management Board; Supervisory Board; Executive Board

▶ General Assembly of ShareholdersGeneral Assembly of Shareholders is the highest authority of the Company, including all of the share-holders entitled to vote. General Assembly of Shareholders shall meet at least once a year and within the time limit prescribed by law. General Assembly of Shareholders decides the following issues:

▸ Amend and supplement the company’s charter ▸ Reorganize and dissolve the company ▸ Decide types of shares and the total number of shares to be offered for each type ▸ Decide the annual dividend of each type of shares ▸ Elect, dismiss members of the Board of Management, members of the Supervisory Board ▸ Decide the remuneration and other benefits of the members of the Board of Directors, Board of

Supervisors. ▸ Adoption of the annual financial statements of the company; Report on the activities of the Company;

activity report of the Board of Management; Report of the Supervisory Board. ▸ Approve of the developmental orientation of the Company.

▶ Management BoardManagement Board is the governing body of the Company, with full power to act on behalf of the Com-pany to decide all matters relating to the purposes and interests of the Company, except for matters un-der the jurisdiction of the General Assembly of Shareholders. The Management Board has 05 members, 02 of whom are members of the non-executive independent Management Board. The Board has a term of 05 years, its members may be re-elected.


▶ Supervisory BoardSupervisory Board, the supervisory authority of the General Assembly of Shareholders, has the right to inspect and supervise all activities of the Company. Supervisory Board has 03 members, including one member with expertise in accounting. Supervisory Board has a term of 05 years, its members may be re-elected.

▶ Executive BoardExecutive Board includes General Director, 01 Standing Deputy Director, 01 Deputy Sales Manager, 01 Deputy Finance Manager and Chief Accountant. Managing Director and Deputy Managing Directors may be at the same time members of the Board of Management, and appointed or dismissed by the Board of Management with a validly-adopted resolution.The functioning departments: including 8 departments

▸ Production Techniques Department (PT Department). ▸ Design Research Department (DR Department). ▸ Quality Control and Experimentation Department (QC&E Department). ▸ Administration Department (Admin Department). ▸ Labor Organization Department (LO Department). ▸ Basic Construction Department (BC Department). ▸ Finance and Accounting Department (F&A Department). ▸ Sales Department. ▶ The production workshops: includes 6 workshops ▸ Workshop 1: specialize in manufacturing products of u.PVC pipe from Φ 48 or higher; prepare raw

materials for production. ▸ Workshop 2: specialize in manufacturing products of u.PVC pipe up to Φ 42, profile products;

prepare of raw materials for production. ▸ Workshop 3: specialize in producing u.PVC fittings by injection molding method; prepare materials

for production. ▸ Workshop 4: specialize in producing u.PVC fittings by heat welding method; HDPE and PPR fittings

by injection molding method and heat welding; produce adhesives. ▸ Workshop 5: specialize in manufacturing HDPE pipe, PPR sizes. ▸ Electromechanical Workshop: specialize in manufacturing, repairing and maintaining machinery,

equipment and molds.

15

ORGANIzATIONAL STRUCTURE OF TIEN PHONG PLASTIC JSC

CôNG TY Cổ PHầN NHựA THIếU NIêN TIềN PHONGTIEN PHONG PLASTIC JOINT - STOCK COMPANY

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1.4.2. SUBSIdIARIES ANd ASSOCIATEd COMPANIES

NO. COMPANY NAME AddRESS BUSINESS AREAS

REAL CHAR-TER CAPITAL

dISTRIBU-TION

OwN-ERSHIP

RATE

01Southern Tien Phong Plastic Joint Stock Company

Dong An II Industrial Park, Binh Duong

Producing and trading plastic pipe products and spare parts

51 billion dongs

37.78%

02Tien Phong - SMP Plastic Joint Venture Company

Lao People's Demo-cratic Republic

1,275,000 USD

51%

03Middle Tien Phong Plastic Joint Stock Company

Nam Cam Industrial Park, Nghe An

120 billion dongs

100%

04Tien Phong Pack-aging Joint Stock Company

Hai PhongProducing packages

1.99 billion dongs

49.98%

1.5. dEvELOPMENTAL ORIENTATION

1.5.1. MAIN TARGETS

Year 2013 is considered to be still difficult for businesses because the macro-economic situation still has no signs of recovery. Although the Government have taken many measures to rescue the real estate market, it is difficult to revive the market because of the extremely large inventory. Furthermore, the demand reduces, the supply exceeds the demand, so that the competition of plastic pipe market isincreasingly fierce. Therefore, the company set targets of production and business in 2013 are as follows:

NO. INdICATOR UNIT 2012 PLAN 2012 PRACTICE 2013 PLAN

1 Consumption Ton 50,700 47,766 48,000

2 Total revenue Billion dong 2,265 2,322 2,330

3 Before-tax profit Billion dong 346.6 384.7 372

Regarding the investment plan 2013, the company plans to invest 225.8 billion dong to carry out the following main items:

⦁ Investment in machinery and equipment : 37.56 billion dong ⦁ Build in Duong Kinh - Hai Phong : 123.41 billion dong ⦁ Construction in An Da : 8.54 billion dong ⦁ Factory construction in the Middle area : 56.29 billion dong


1.5.2. MEdIUM ANd LONG-TERM dEvELOPMENT STRATEGY

The company set out growth and development plan in the next 5 years, in which the average growth rate of output and profit is 5%/year and that of revenue is 10%/year. In details:

NO. INdICATOR UNIT 2013 2014 2015 2016 2017

1 Consumption Ton 48,000 50,400 52,920 55,566 58,344

2 Total revenue Billion dong 2,330 2,563 2,819 3,101 3,411

3 Profit Billion dong 372 390,6 410,1 430,6 452,2

Consumption during 2013 - 2017 ( tons )

Total revenue during 2013 - 2017 ( billon dong )

Profit during 2013 - 2017 ( billon dong )


1.6. POSSIBLE RISKS

1.6.1. ECONOMIC RISKS

Plastic pipe products of the company serve the needs of construction, industry, agriculture, civil engineering... Therefore, the economic growth rate as well as the speed to contruct infrastructure, public facilities, residential projects have a direct impact on the consumption of products. Therefore , if the economy falls into recession, the construction speed will reduce, making the Company’s growth rate to fall.

1.6.2. LEGAL RISKS

Vietnam’s legal system is not really complete and its enforcement is not yet effective, the administrative procedures are overlapping and complex. Vietnam joined the WTO, so there will be changes in the legal system to conform with international legal standards. Therefore, the Company’s operation also bear the risks of legal changes.

1.6.3. ExCHANGE RATE RISK

The characteristics of production operation is that almost raw materials are imported from foreign coun-tries, along with the regular investment in machinery and the most modern equipment in the world for the product development strategy, the exchange rate changes should have a direct impact on the cost of materials, cost of production and business operations of the Company. Therefore, production and business operations of the Company are also subject to the risks from exchange rate changes.

1.6.4. RISKS OF INTERNATIONAL INTEGRATION

With Vietnam’s accession to the international economic organizations such as AFTA, WTO, etc., the import tariff would be gradually reduced, customs procedures would be simplified, the quota would be abolished.... These will be a major challenge for domestic manufacturers ahead of the competition by products from abroad. In addition, foreign investors will directly participate in the plastic pipe market to compete with domestic products.Plastics industry is heavily dependent on imported raw materials and auxiliary chemicals. This dependence can make the price of domestic products higher than that of imported products, a major impact on the competitiveness of enterprises during their integration.

1.6.5. OTHER RISKS

Other risks such as natural disasters, calamities, fires. etc… are irresistable risks, which may cause damage to property, people and the general operations of the Company


II.


PART IIOPERATIONAL SITUATION dURING THE YEAR

2.1. OPERATIONAL SITUATION OF PROdUCTION ANd BUSINESS ACTIvITIES IN THE YEAR

Entering 2012, the economy had been negatively affected by the world economy. The freezing of the domestic real estate market, and the continued implementation of the Government’s Resolution No.11 have enormous effect to the building materials industry in general and plastic pipes production for construction in particular. Properly defining the economic situation in the country and the world, the Board of Management, the Executive Board of the Company flexibly direct business activities, promote the advantages and limit difficulties to achieve positive production and business results as follows:

NO. INdICATORS UNIT 2011 2012 PLAN

2012 PRAC-TICE

RATE (%)

AGAINST PLAN

GROwTH

1 RevenueBillion dong

2,265 2,265 2,322 102.5 102.5

3 Consumption Ton 47,200 50,700 47,766 94.2 101.2

4 Budget PaymentBillion dong

251,5 214,6 189 88.0 75.2

5 Before-tax profitBillion dong

346.6 346.6 384.7 111.0 111.0

6 Total staff People 1.089 1.160 1.171 101.0 107.5

7Per capita income/month

Million dong

5,5 6,0 6,0 100.0 109.1

The data shows that the indicators achieved 2012 plans set out.Compared with 2011, although revenue growth was just 2.5%, before-tax profit increased by 11%.These results were achieved because the Board of Management, Executive Board of the Company has drastically directed all units to well perform all aspects of the company, which are production direction, financial affairs, technical and technological investment, labor organization, basic construction.


2.2. ORGANIzATIONAL STRUCTURE ANd PERSONNEL

2.2.1. ExECUTIvE BOARd

There are 05 members in the Executive Board of Tien Phong Plastic JSC, including:1. Mr. Pham Van Vien : General Director2. Mr. Nguyen Quoc Truong : Standing Deputy Director, cum Member of the Management Board.3. Mr. Nguyen Trung Kien : Deputy Finance Manager cum Member of the Management Board.4. Mr. Chu Van Phuong : Deputy Sales Manager5. Mr. Tran Ngoc Bao : Chief Accountant

1. Mr. Pham van vien – General director

Mr. Pham Van Vien was born in 1960. He is a Chemical Engineer with many years of experience in the company, has held positions as a deputy workshop manager, workshop manager, Deputy General Director.Mr. Pham Van Vien is currently assuming the position of General Director of Tien Phong Plastic JSC. He owns 57,800 shares of the Company.

2. Nguyen Quoc Truong - Standing deputy director - Member of the Management Board

Mr. Nguyen Quoc Truong was born in 1956. With a degree in electrical engineering, bachelor of economics, Mr. Nguyen Quoc Truong has undergone positions of a deputy workshop manager, workshop manager, Deputy Sales Manager.Currently he is assuming the position of Standing Deputy Director - member of the Board of Management of the Company. He owns 30,000 shares of Tien Phong Plastic JSC.


3. Mr. Nguyen Trung Kien - deputy Finance Manager - Member of the Management Board

Mr. Nguyen Trung Kien was born in 1961. As a Master of

Economics, with his experience, he has held the positions of deputy department manager, department manager and chief accountant of Tien Phong Plastic JSC.Currently Mr. Nguyen Trung Kien is Deputy Finance Manager, member of the Management Board of the Company.He owns 472,472 shares of Tien Phong Plastic JSC.

4. Mr. Chu van Phuong - deputy Sales Manager

Mr. Chu Van Phuong was born in 1972. He has a Master of Business Administration from the National Economics University. He has many years of experience in the position of Deputy Sales Manager and Sales Manager of the Company.Now Mr. Chu Van Phuong is the Deputy Sales Manager of Tien Phong Plastic JSC. He owns 14,000 shares.

5. Mr. Tran Ngoc Bao - Chief Accountant

Tran Ngoc Bao was born in 1976. He is a Bachelor of Economics, worked as the director of Hai Phong branch of Deloite Vietnam Co., Ltd., the chief accountant of Petroleum Machinery Co. – Vung Tau branch., Head of the Supervisory Board of Tien Phong Plastic JSC.Now Mr. Tran Ngoc Bao is the Chief Accountant of Tien Phong Plastic JSC.


2.2.2 CHANGES IN THE ExECUTIvE BOARd

In 2012, the Board considered and decided personnel of the Executive Board as follows: ⦁ Appointed Mr. Nguyen Quoc Truong - Member of the Board, Deputy Sales Manager as Standing

Deputy Derector. ⦁ Appointed Mr. Nguyen Trung Kien, Chief Accountant as Deputy General Director in charge of

Finance. ⦁ Appointed Mr. Chu Van Phuong, Sales Manager as Deputy General Director in charge of

Business cum Sales Department Manager. ⦁ Appointed Mr. Tran Ngoc Bao - Former Head of the Supervisory Board as Chief Accountant.

2.2.3. NUMBER OF EMPLOYEES ANd POLICIES FOR EMPLOYEES

Currently, the Company has total workforce of 1,171 employees, with the following structure:

NO. QUALIFICATION QUANTITY PERCENTAGE (%)

01 Higher degree 04 0.34

02 University and college 228 19.47

03 Intermediate school 32 2.73

04 Technical worker 626 53.46

05 Unskilled worker 281 24.00

TOTAL 1,171 100.00

Employment structure by qualification Higher degreeUniversity and collegeIntermediate schoolTechnical workerUnskilled worker

The remuneration policy for employees is always done well: ⦁ The Company made payment of salary and bonus timely and legally. All employees of the Company have

been fully paid for mandatory insurances (social insurance, health care insurance, unemployment insurance).

⦁ Training and improving professions and solving skills for employees for effective job are indirectly focused.

⦁ The company offers allowances for shift 3, toxic job, fresh water, porridge against summer heat. It maintains collective kitchens for employees, ensuring food safety, not letting the collective food poisoning..

⦁ The health care center regularly checks up employees’ health. This year, the health care center organized a gynecological examination for all female staff and checked up for 111 workers at risk of environmental and occupational diseases. Well-organized prevention of diseases, especially in summer.

⦁ Improving the spiritual life for staff, the Company organized cultural festivals of art, sightseeing, travelling


2.3. INvESTMENT ANd IMPLEMENTATION OF LARGE PROJECTS

2.3.1. IMPLEMENTATION OF THE PROJECTS

a) duong Kinh – Hai Phong Project:In 2012, despite having a lot of difficulties in funding, with the determination of the Board of Management, the Executive Board completed the following investment categories:

⦁ Completed the construction of electromechanical workshop and ancillary works, helped the workshop move to a new facility as planned with absolute safety of people and equipment. Currently, the workshop is producing stably, making practical effectiveness for the company.

⦁ Completed the 3-storey eating house; 3-storey metal warehouse. ⦁ Completed multi-purpose warehouse, and put into use in early 2013. ⦁ Completed the construction of 01 workshop of u.PVC tube production. ⦁ Completed wastewater treatment tank to ensure stable operational quality to ensure

compliance with the provisions of the Law on Protection of Natural Resources and Environment. ⦁ Installed the u.PVC pipe production line of CICINNATI - Austria to produce PVC pipe with biggest

diameter of 800mm. This is the largest diameter pipe in Vietnam for drainage projects of the provinces and cities in the coming years.

b) Project at No. 02 An da:The company is coordinating with Hai Phong City Planning Institute, DASAN Consultance Company to complete the application for public feedback for the project.The urban design profile was submitted to Hai Phong Department of Construction for submission to Hai Phong City People’s Committee for approval.

c) Project in the Middle region:This year the Company completed the procedures for the formation of Middle Tien Phong Plastic One-member Limited Company in Nam Cam Industrial Park, Nghe An province.The company started the following construction items: production workshops, multi-purpose warehouses, circulation tank and auxiliary works, the operational builidng, internal roads. Until now the whole ground has been leveled and surrounding walls have been completed. It is expected to bring the factory into production in the third quarter of 2013In 2012, the company invested an amount of about 231.8 billion dong, of which:

⦁ Investment in workshops in Duong Kinh: 103.7 billion dong ⦁ Investment in workshops in the Middle region: 74.41 billion dong ⦁ Investment in machines and equipments: 51.84 billion dong ⦁ Other investments: 1.73 billion dong


2.3.2. OPERATIONAL SITUATION OF THE SUBSIdIARIES, ASSOCIATEd COMPANIES

In 2012, all of its associated companies achieved positive operational indicators.

a) Tien Phong - SMP Plastic Joint venture Company:

NO. INdICATOR UNIT 2011 2012 2013 PLAN

1 Revenue USD 1,024,963 1,315,763 1,500,000

2 Output Ton 450 586 650

3 Profit before tax USD 13,410 14,496 100,000

b) Southern Tien Phong Plastic Joint Stock Company:


1 Revenue Billion dong 257.9 247 400

2 Output Ton 6.447 5.393 9.000

3 Profit before tax Billion dong 13.8 27.0 30.0

c) Tien Phong Packaging Joint Stock Company:


1 Revenue Billion dong 80.06 65.68 67.84

2 Output Million package 12.30 11.95 12.0

3 Profit before tax Billion dong 4.17 3.48 3.50

4 Dividend % 20 25 10


2.4. FINANCIAL SITUATION

2.4.1. FINANCIAL SITUATION Unit: vNd

NO. INdICATOR 2011 2012 RATE TRENd

1 Total asset value 1,547,372,550,854 1,651,487,080,723 106.7

2 Net revenue 2,341,195,349,285 2,360,295,243,230 100.8

3 Sales profit 347,020,944,936 372,601,779,933 107.4

4 Other profits 384,182,183 12,095,084,050 3,148.3

5 Profit before tax 346,636,762,753 384,696,863,983 111.0

6 Profit after tax 261,315,817,858 290,995,398,640 111.4

7 Dividend rate 20% Estimated: 25%

2.4.2. MAJOR FINANCIAL INdICATORS

NO. INdICATOR 2011 2012 NOTE

1 Payment capacity:

▸ Short-term payment coefficient 1.53 1.74

▸ Quick payment coefficient 0.81 1.18

2 Capital structure:

▸ Total asset/debt coefficient 0.405 0.331

▸ Ownership capital/debt coefficient 0.680 0.494

3 Operational competence:

▸ Inventory circulation 3.54 5.16

▸ Net revenue/Total asset 1.51 1.43

4 Profitability:

▸ After-tax /Net revenue coefficient 0.112 0.123

▸ After-tax/Ownership capital coefficient 0.284 0.263

▸ After-tax/Total asset coefficient 0.169 0.176

▸ Sales profit/ Net revenue coefficient 0.148 0.158


2.5. SHAREHOLdER STRUCTURE, OwNERS’ CAPITAL CHANGES

2.5.1. STOCK INFORMATION

⦁ Number of current shares: 43,337,996 shares. ⦁ Total number of ordinary shares: 43,337,996 shares. ⦁ All shares of the Company are ordinary shares, not preference shares.

2.5.2. SHAREHOLdER STRUCTURE

The shareholder structure of the Company, according to the list of shareholders on 28 February 2013, is as follows:

NO. TYPES OF SHAREHOLdER QUANTITY SHARES OwNERSHIP RATE

01 domestic shareholders: 1,523 22,105,396 51,01%

- institutional shareholders 25 16,416,018 37,88%

- individual shareholders 1,498 5,689,378 13,13%

02 Foreign shareholders: 117 21,232,600 48,99%

- institutional shareholders 34 20,720,600 47,81%

- individual shareholders 83 512,000 1,18%

Total 1,640 43,337,996 100 %

Shareholder structure of Tien Phong Plastic JSC

Demostic institutional shareholdersForeign institutional shareholdersDomestic individual shareholdersForeign individual shareholders

The company has 03 shareholders holding more than 5% of the shares :

NO. SHAREHOLdERS SHARES OwNERSHIP RATE

1 State Capital Investment Corporation (SCIC) 16,080,000 37.10%

2 The Nawaplastic Industries (Saraburi) Co., Ltd 9,824,300 22.67%

3 Red River Holding 3,069,400 7.08%


2.5.3. CHANGES IN OwNERS’ INvESTMENT CAPITAL: N/a

2.5.4. TREASURY STOCK TRANSACTION: N/a

2.5.5. OTHER SECURITIES: N/a


III.


PART III REPORT ANd EvALUATION OF THE

MANAGEMENT BOARd

3.1. EvALUATION OF PROdUCTION ANd BUSINESS RESULTS

with the flexibility in management, promoting the advantages and minimizing the difficulties, the company have achieved the following satisfactory results:

NO. INdICATOR UNIT RESULT OF 2011

PLAN FOR 2012

RESULT OF 2012

RATIO(%)

COM-PAREd TO

2012

COM-PAREd TO

2011

1 Consumption Ton 47,210 50,700 47,766 94.2 101.2

2 Revenue Billion dong

2,265 2,265 2,322 102.5 102.5

3 Profit before tax

Billion dong

346.6 346.6 384.7 111.2 111.5

These results were achieved because the company have done its tasks very well. The tasks include production navigation, finance, technique and technology investment, labour distribution and basic construction.

3.1.1. TECHNIQUE INvESTMENT, TECHNOLOGY RENOvATIONS ANd QUALITY CONTROL

Regarding the activity of technique and technology investment, the company have implemented cost-down effectively. The main parts of production machine were purchased from developed countries, the other supplement parts have been designed and manufactured by technical staff and skilled workers. In 2012, the company invested and put into production some following machines:

▸ Received technology transfer, quickly operated WEBER and TWINEX114 lines of CINCINNATI in order to produce u.PVC pipes of up to Φ 800mm, double-wall pipes production, DESHANG machine, PE welding machine of up to Φ1200mm.

▸ Self-repaired some parts of imported machines such as screw cylinder, renewed some parts of imported machine to ensure stability and increase efficiency.

▸ Constructed 01 transformer station with the capacity of 3000KVA to supply power to the Electromechanical Workshop; received and operated 02 generators with the capacity of 630KVA at Dương Kinh; effectively performed energy saving methods.

▸ Used mold designing software for remarkable effect in design, production, ensuring the accuracy and quality of the product. In 2012, the company produced 49 moulds. Mould repair was carried out quickly to meet the demand of production.

▸ Actively supported technically for Southern Tien Phong Plastic Joint Stock Company and Tien Phong-SMP Plastic Joint Venture in Lao.

▸ Special attention was paid to quality control. In 2012, the company invested in upgrading laboratory in accordance with ISO/IEC 17025.


▸ 3.1.2. MATERIAL SUPPLY, PROdUCTION CONTROL ANd SALES PROMOTION

▸ Production plan and material supply were based on the need of market and compliance with actual situation of the company.

▸ Analyzed market development, arranged time properly and effectively to import material. ▸ Implemented concise management and distributing the product to the centers of installment sales

as well as the dealers, taking active part in stabilizing the company’s sales network. ▸ Arranged the sales staff to supervise the dealers with a view to avoid the product penetration

of other company into the company’s sales network. Positively grab the information of priority projects, innitiatively access to and supply product.

▸ Promoted “Tien Phong Plastic” trademark in different ways. ▸ Succefully organized 2012 Customer Conference, create close relationship between the company

and sales network systems.

3.1.3. ACCOUNTING ANd FINANCE, CAPITAL CONSERvATION ANd dEvELOPMENT

▸ The company set up the accounting and finance plan. The expense was used precisely and completely. The investment expense of over 200 millions dong was audited and settled, providing adequately and promptly report statistics to Board of Management, supporting the management and internal controls; financial and tax reports were strictly made under the law and regulations of the State; navigating and balancing finance resource properly in order to meet the need of production and business, avoiding bad debts and backlog.

▸ Implement effectively capital mobilization strategy, creating the competitive environment between financial suppliers, taking innitiative in using foreign and domestic currencies and exchange rates reduced over 20 billions dong compared to 2011.

▸ Effectively control finance and the activities of SMP Tien Phong Plastic Company in Lao.

3.1.4. LABOUR PROTECTION ANd dISCIPLINE-TRAINING

▸ Maintain and regularly check labour safety, industrial hygiene, fire protection by a labour protection committee stand by group.

▸ Provide protective equipments for all company staff. ▸ Train and improve technique and professional skill for workers. ▸ Follow strictly labour disciplines. ▸ Regularly pay attention to the obedience of regulations of fire protection, flood control and electrical

safety.

3.1.5. LABOUR POLICIES

▸ In 2012, the company created adequate jobs and offered social insurance, Health Insurance, and Unemployment Insurance for all staff.

▸ Offer additional supports for 3rd shift working, poisonous allowances and prepare cooked cereal and water in summer. Create space for collective kitchen and provide industrial meal for labourers, ensuring food safety and hygiene, avoiding food poisoning.

▸ Set up medical room for caring the staff’s health. Do gynaecology examination for all women staff and health check up for 111 workers who worked in the poisonous areas.

▸ Solve the retirement problems for 21 cases and 32 cases of 24/24 hour accident compensation and 07 cases of resignation.


3.1.6. BASIC CONSTRUCTION

For the project in Hưng Đạo ward - dương Kinh- Hai Phong City:Although many spending problems occurred in 2012, with the effort of Board of Management, Executive Board directed and implemented successfully some works as belows

▸ Complete construction of electrical & mechanical workshop and additional sites, helping to move the workshop to new place on schedule and safely for both human and equipment. Currently, the workshop starts coming into stable production, bringing practical effect for the company.

▸ Complete construction of 3-floored canteen; 3-floored hardware storehouse. ▸ Basically, complete construction of a PVC pipe production workshop. ▸ Complete construction of sewage treatment pool ensured quality and stable effectiveness and

compliance with the regulations of the law on natural resources and environment.

For the new factory project in the Middle region:The company constructed for the starting period a lot of works such as production workshop, multi-pur-pose warehouse, circulating pool and supplement works, operating house, internal traffic way. Until now, all the site plan has been leveled and completely covered by surrounding walls. It is estimated that in the 3rd quarter of 2013, the company will be on stream.

3.2. FINANCIAL SITUATION

3.2.1. PROPERTY SITUATION

In 2012, there was not any abnormal changes occurred in terms of property. Total property increased 104 billions dong from 1.547 billions dong to 1.651 billions dong.Money and the equivalent increased 47,9 billions and debt paying ability increased up to 18% from 8% indicating that the ability was stable.In 2012, the company proposed positive policies of pushing up the speed of inventory goods rotating with a view to reducing backward inventory, avoiding capital stagnance, enhancing business effectiveness. As a result, inventory went down 33% compared to the same period last year.In 2012 fiscal year, bad debt was not generated, the ratio of predictive value was calculated accordance with the regulations on items last year.

3.2.2. SITUATION OF dEBT dUE

In 2012, circulating capital was done very well, minimizing the use of financial lever, creating a sustainable finance. The loans from banks were remarkably reduced by 6%.Compulsory debt reduced 53% showing a really good ability of liquidity without bad debt. The USD loan balance on 31 December 2012 was as low as 18%, thanks to the policy of domestic pur-chasing. The rate of USD debt reduced to 3%. Besides, the USD exchange rate indicated unremarkable changes, which did not affect the company’s financial report.

3.3. REFORMS ON ORGANIzATIONAL STRUCTURE ANd MANAGING POLICY

In order to ensure the effectiveness of production and business management, in 2012, the company implemented personnel arrangement, appointing one person to the position of Standing Deputy Director, 02 for Deputy General Director, one chief accountant, 02 department managers, 02 senior managers, 16 specialists of function departments.


All qualified staff with a good technical skill were promoted to enhance managing skills for the company and its departments more effectively.

▸ Implement the adjustment of function and mission of the project management board. ▸ Change and amend some regulations of mold making, transfer the mold control from electromechanical

workshop to technology workshops. ▸ Change and amend the regulations such as providing information for customer, guiding customer

to the company, arranging company meeting. ▸ Implement some methods of improving the management at several departments and workshops

(labour orgnization department, workshop 5 and electromechanical workshop).

3.4. dEvELOPMENT PLAN FOR THE FUTURE

Year 2013 is considered to be still difficult for businesses because the macro-economic situation still has no signs of recovery. Although the Government have taken many measures to rescue the real estate market, it is difficult to revive the market because of the extremely large inventory. Furthermore, the demand reduces, the supply exceeds the demand, so that the competition of plastic pipe market is increasingly fierce. Therefore, the company set targets of production and business in 2013 are as follows:

NO. INdICATOR UNIT PLAN FOR 2012

ACTUAL 2012 PLAN FOR 2013

1 Consumption Ton 50,700 47,766 48,000

2 Total revenue Billion dong 2,265 2,322 2,330

3 Profit before tax Billion dong 346.6 384.7 372

▸ Continue investment in complete construction for Hung Dao-Duong Kinh project. ▸ Push up the progress of construction of Tien Phong Plastic Company in the Middle region, making

efforts to bring the company on stream in the third quarter 2013. ▸ Continue investing deeply in renovation of supplies and technology, improving production capacity

and competitiveness of its products in domestic and foreign market.”


Iv.


PART IvEvALUATION OF THE BOARd OF MANAGEMENT

4.1. OPERATION EvALUATION OF THE COMPANY ANd THE ExECUATIvE BOARd

In 2012, many difficulties caused by macroeconomy and the decline of the civil engineering remarkably affected the company production and bussiness.With all the efforts of the management board and labourers, the target of sales and profits exceed proposed plan. In detail, in 2012, the output achieved 47,766 tons, the revenue of 2,322 billions dong and before tax profit of 384.7 billion dong.The achieved goals above results from a smooth cooperation between Management Board and Executive Board with relating departments, ensuring the decision implementation of Management Board quickly and precisely.

The Management Board highly appreciated the implementation of following tasks of the Executive Board:

▸ Completed production and business targets ▸ Set up and deployed expense savings strategy. As a result, 2012 financial expense reduced 20

billions dong compared to 2011. ▸ Successfully deployed Φ 800 - mm u.PVC pipe production technology. ▸ Step by step computerized production control system. ▸ Guide the implementation of management solutions improving operating efficiency of the company

departments. ▸ Ensured offering jobs for 100% of labourers with proper income. ▸ Effectively managed the activities of Tien Phong-SMP Plastic Joint Venture.

4.2. PLANS ANd dIRECTIONS

Based on 2008-2012 growth statistics and Vietnam direction in socio-economic development by 2020, the development of real estate market, the investment of infrustructure for plumbing and drainage as well as the forcast of plastic pipe using demand in the coming year, management board set up the development direction for 2013-2017 period as follows:

▶ Strive to achieve yearly average growth rate as follows : ▸ Consumption increases 5%/1 year ▸ Revenue increases 10%/1 year ▸ Profit increases 5%/1 year

NO. INdICATOR UNIT 2013 2014 2015 2016 2017

1 Consumption Ton 48,000 50,400 52,920 55,566 58,344

2 Total revenue Billion dong 2,330 2,563 2,819 3,101 3,411

3 Before tax profit Billion dong 372 390.6 410.1 430.6 452.2


▸ Actively implement the investment of infrustructure, effort to move all the production workshop to new place at Duong Kinh by 2016.

▸ Keep on investing in both depth and width in order to improve production capacity of the company. ▸ Bring the company in Middle region in stream stably with a view to make use of the region

advantages and preferential policy for the companies in industrial zone. ▸ Support the operation of joint venture in order to bring the products of both companies into new

market, creating investment efficiency for the company and investors. ▸ Implement the project of using the plan at No.2 An Da, Hai Phong as Shopping Center, house for

lease, high-class villa and apartment buildings. Ensure the diversification of business services to optimize the rights of investors, at the same time, providing jobs and ensuring living standard for company labourers.

In order to achieve the above 2013-2017 development targets, the company plans to invest in basic contruction as follows:

NO. INvESTMENT ITEMS UNIT 2013 2014 2015 2016 2017

1Machines and equipment

Billions dong

37.56 45.00 45.00 65.00 75.00

2Construct new company in the Middle Region

Billions dong

56.29

3Construct new company in Dương Kinh

Billions dong

123.41 159.90 188.38 116.10 59.49

4 Investment in 02 An ĐàBillions dong

8.54

TOTALBillions dong

225.80 204.90 233.38 181.10 134.49


v.


PART vCOMPANY MANAGEMENT

5.1. BOARd OF MANAGEMENT (BOM)

5.1.1. MEMBERS ANd STRUCTURE OF THE BOM

The company’s BOM includes 5 members as follows:

1. Mr. Tran Ba Phuc : Chairman of the BOM 2. Mr. Ngo Viet Son : Vice-Chairman of the BOM 3. Mr. Nguyen Quoc Truong : Member of the BOM, Standing Deputy Director 4. Mr. Nguyen Trung Kien : Member of the BOM, Financial Deputy General Director5. Mr. Đang Quoc Dung : Member of the BOM.

Among those, 02 non-executive independent members are Mr. Ngo Viet Son and Mr. Dang Quoc Dung.

1. Mr. Tran Ba Phuc - Chairman of the BOM:

Mr. Tran Ba Phuc was born in 1956. He graduated as a mechanic en-gineer at Hanoi University of Science and Technology. He previously worked as Deputy Manager, head of Personnel Department, Deputy General Director of Tien Phong Plastic Joint Stock Company. Since 2008 up to now, Mr. Tran Ba Phuc has been the Chairman of Tien Phong Plastic Joint Stock Company’s BOM. He is holding 36,316 shares of Tien Phong Plastic Company.

2. Mr. Ngo viet Son - vice-Chairman of the BOM:

Ngo Viet Son was born in 1967. He is Master of International Finance. He was once staff of Vietnam State Treasurey, staff of Department of International Cooperation, Vice-head of Department of International Cooperation – Ministry of Finance. At present, Mr. Ngo Viet Son is the Head of Investment Board of State Capital Investment Corporation (SCIC), Vice-chairman of Tien Phong Plastic Company’s BOM.


3. Mr. Nguyen Quoc Truong – Member of the BOM

Mr. Nguyen Quoc Truong was born in 1956. As an electrical engineer, BA of finance, he has hold many positions including vice-manager, manager, Sales Deputy General Director. Currently, Mr. Nguyen Quoc Truong is undertaking the position of Standing Deputy Director of Tien Phong Plastic Company. He is holding 30,000 shares of Tien Phong Plastic Company

4. Mr. Nguyen Trung Kien Member of the BOM, Financial deputy General director

Mr. Nguyen Trung Kien was born in 1961. As the MA of Economics with his own experience, Mr. Kien previously acted as Vice-head, Head, Chief Accountant of the Company. He is now the Financial Deputy General Director and the Member of the BOM of Tien Phong Plastic Company. He is holding 472,472 shares of Tien Phong Company.

5. Mr. dang Quoc dung – Member of the BOM:

Mr. Dang Quoc Dung was born in 1968. As a BA of Economics, he previously acted as the Director of Huong Minh Limited Company. Mr Dung is now the Member of the BOM of Tien Phong Plastic Joint Stock Company and concurrently the Chairman of BOM and Gener-al Director of South Branch Tien Phong Plastic Joint Stock Company. He is holding 689,000 shares of Tien Phong Company.


5.1.2. OPERATION OF THE BOMThe operation of the BOM is shown clearly through sessions. During the year, the BOM convened 6 ses-sions. The participation rate is always 100%. In details:

1) Extended BOM session dated 17 February 2012: ⦁ Participants:

Members of the BOM, General Director, Head of the Supervisory Board (SB), Chairman of the Trade Union, Head of Sales Department, Head of Administration Department, Head of Basic Construction De-partment and Secretaries.

⦁ Contents:In this session, the BOM considered and commented on some contents as follows:

▸ Assign specific tasks to the member of 2012 Annual General Assembly of Shareholders Organization Board. The document submitted to the Meeting was approved in the next session by the BOM.

▸ Ms. Phan Thi Thu Huong – the Head of Basic Construction Department reported her business trip to the Central Vietnam to survey the ground plan for the factory construction projects at Nam Cam Industrial Zone belonging to Dong Nam Economics Zone of Nghe An Province.

▸ After Mr. Nguyen Trung Kien – the member of the BOM, Chief Accountant reported financial situa-tion, the BOM agreed to implement the policy of thrift practice and assigned the Executive Board to develop the cost curb program.

▸ In terms of strengthening the Executive Board, the BOM agreed to supplement the position ofDep-uty Finance Manager and Deputy Sales Manager, the detailed personnel was decided in the BOM’s session in April 2012

2) Extended BOM session dated 28 March 2012: ⦁ Participants:

Members of the BOM, General Director, Head of the Supervisory Board (SB), Chairman of the Union, Head of Sales Department, Head of Administration Department, Head of Basic Construction Depart-ment and Secretaries.

⦁ Contents:In this session, the BOM considered and commented on some contents as follows:

▸ The BOM approved the agenda and documents submitted to the 2012 Annual General Assembly of Shareholders.

▸ On the basis of analyzing Report on the cost of the Company, the BOM assigned the Executive Board to develop the cost curb program, deliver implementing methods and report to the BOM quarterly.

▸ On the basis of analyzing market situation, the BOM agreed on some client policy and on the com-munication works in 2012. The BOM also assigned the Executive Board to direct functional units to

implement the overall survey and assessment on market situation.

3) Extended BOM session dated 04 April 2012: ⦁ Participants:

members of the BOM, General Director, Head of the Supervisory Board (SB), Head of Sales Department and Secretaries.

⦁ Contents:In this session, the BOM considered and made decisions on senior personnel as follows:

▸ Assigned Mr. Nguyen Quoc Truong – member of the BOM,Deputy Sales Manager to undertake the position of Standing Deputy Director.

▸ Appointed Mr. Nguyen Trung Kien – the Chief Accountant to the position ofDeputy Finance Manager. ▸ Appointed Mr. Chu Van Phuong – Head of Sales Department to the position ofDeputy Sales Manag-

er and Head of Sales Department concurrently. ▸ Appointed Mr. Tran Ngoc Bao – Former Head of the SB to the position of Chief Accountant. ▸ Proposed to elect one more member of the SB in the 2012 Annual General Assembly of Shareholders.


4) Extended BOM session dated 06 June 2012: ⦁ Participants:

members of the BOM, General Director, Deputy General Directors, Chief Accountant, representative of the SB and Secretaries.

⦁ Contents:In this session, the BOM considered and commented on some works as follows:

▸ Reviewed the production of the first six months of 2012 as well as the course of action for the last six months of the Company and related units.

▸ Reviewed the increase in the sales stage, implementation of products promotion; close control of products quality (especially for PEHD products); development of large sized PVC parts production technology.

▸ Considered and commented on the financial situation of the company. ▸ Assigned the Executive Board to implement cost-saving methods in production – sales stages. ▸ Approved nominated list of 03 state capital managing staffs with the State Capital Investment

Corporation (SCIC).

5) Extended BOM session dated 29 September 2012: ⦁ Participants:

Members of the BOM, General Director, Deputy General Directors, Chief Accountant, representative of the SB and Secretaries.


▸ Reviewed the production of the first eight months of 2012, the measures implemented in the fourth quarter 2012 of Tien Phong Plastic Joint Stock Company. In the fourth quarter 2012, the Company needs to promote the sales, especially for specialties, quickly repair molds to apply to the production, enhance product quality control.

▸ Reported production – sales situation of Tien Phong Joint Venture Company and some direction for management of this company in the future.

▸ Analyzed factors affecting the efficiency of productions and sales of the Company, from which practical measures of cost-saving in production and sales should be implemented.

▸ Proposed investment in 2013 (in basic construction, machinery and equipment) ▸ Considered and assigned the Executive Board to decide personnel of some units as follows:

» Appointing 01 staff to the Head of Design Research Department » Appointing of 01 staff to the Vice-head of Administration Department » Assigning tasks for 16 specialists in the Company’s units.

6) Extended BOM session dated 30 October 2012: ⦁ Participants:

Members of the BOM, General Director, Deputy General Directors, Chief Accountant, representative of the SB and Secretaries.


▸ Continued the extensive analysis of the factors affecting the efficiency of the production and sales of the Company, from which practical measures of cost-saving in production and sales should be implemented.

▸ Proposed to the authorities and the People’s Committee of Hai Phong City on expanding the Company’s premises in Hung Dao Ward, Duong Kinh Dist (projected to expand by 4 hectares).

▸ As to the Project of Central Tien Phong Plastic One Member Company Limited, assigned the Executive Board to direct the functional units in implementing the displacement of machinery, equipment and human resources as well as developing management regulations for this company.


5.1.3. OPERATION OF THE BOM’S NON-ExECUTIvE INdEPENdENT MEMBER

The BOM’s non-executive independent members in co-ordination with the executive members actively participate in managing the Company, giving objective suggestions in order to improve the leading role of the BOM.

5.1.4. OPERATION OF SUB-COMMITTEES UNdER THE BOM

Two subcommittees directly under the BOM are Project Management Subcommittee and Personnel subcommittee:

a) Operation of Project Management Subcommittee (PMS):In 2012, the Project Management Subcommittee acted as the counselor to help the BOM fulfill its management and develop important projects, in details:

▸ Displacing the electromechanical workshop to new premises (Duong Kinh Dist, Hai Phong), completing in the first quarter of 2012

▸ Implementing necessary procedures to develop the factory construction project at Nam Cam Industrial Zone, Nghe An Province: » Setting up the Central Tien Phong Plastic One Member Company Limited » Investing in some items such as: leveling, building enclosing wall, executive building and

production workshop ▸ Building some items at the Company’s premises in Duong Kinh, Hai Phong including: Workshop 2;

metals warehouse, canteen, paved road system in the company. ▸ Continuing to develop An Da Project No.2 to submit to the People’s Committee of Hai Phong City. ▸ Proposing the expansion of the Company’s premises at Duong Kinh, Hai Phong by 04 hectares to

the authorities

b) Operation of Personnel Subcommittee:During the year, the Personnel Subcommittee proposed the Company’s organization strengthening to the BOM, in details:

▸ Strengthening the Company Executive Board: appointing 02 Deputy Director, 01 Chief Accountant. ▸ Strengthening the Design Research Department: appointing Mr. Tran Nhat Ninh – the Vice-head to

Head of the Design Research Department in place of Mr. Bui Duc Hung. ▸ Issueing the Regulations on remuneration for members of the BOM, SB. ▸ Issueing the Regulations on salary payment for members of Executive Board.


5.2. SUPERvISORY BOARd

5.2.1. MEMBERS ANd STRUCTURE OF THE SUPERvISORY BOARd (SB)

The BS includes 3 members as follows:1. Ms. Nguyen Thi Quynh Huong : Chairwoman2. Ms. Nguyen Bich Thuy : Member3. Mr. Phạm Văn Bằng : Member

1. Ms. Nguyen Thi Quynh Huong – Chairwoman Ms. Nguyen Thi Quynh Huong was born in 1979. As a master of business administration, she was previously the Head of Planning Department of Bank for Investment and Development of Vietnam - Ha Thanh Branch, and specialist of Finance and Accounting Department of State Capital Investment Corporation. At present, Ms. Nguyen Thi Quynh Huong is the Chairwoman of Supervisory Board of Tien Phong Plastic Company, and specialist of Finance and Accounting Department of State Capital Investment Corporation concurrently.She is holding 200 shares of Tien Phong Plastic Company

2. Ms. Nguyen Bich Thuy – Member of the SB

Ms. Nguyen Bich Thuy was born in 1978. She has been staff of Sales Department of Tien Phong Plastic Company since 2000. At present, Ms. Nguyen Bich Thuy is the member of Supervisory Board of Tien Phong Plastic Company with 1,728 shares


3. Mr. Pham van Bang – Member of the SB Mr. Pham Van Bang was born in 1971. As a bachelor of economics, he is the Salary Specialist of Labor Organization Department of Tien Phong Plastic Company. In 2012, Mr. Pham Van Bang was appoint-ed to the position of member of Supervisory Board of Tien Phong Company.

5.2.2. OPERATION OF SUPERvISORY BOARd

Perform the functions and duties of the Supervisory Board in accordance with the Company’s Operation Regulations and Statutes. In 2012, the SB fulfilled the following tasks:

▸ Partipating in the BOM’s session, reviewing and checking internal documents issued by the Board of Management and Executive Board in order to ensure the development of executive direction and policy in compliance with the Law and guidelines of the General Assembly of Shareholders.

▸ Proposing suggestions to manage the Company in terms of finance, personnel management and investment;

▸ Supervising the publication of information and verifying the authenticity of the information declared to the Company’s Shareholders;

▸ Updating the regulations of law and sending recommendations to the Board of Management and Executive Board in order to amend the Company’s regulations to comply with the regulations of law;

▸ Reviewing regularly the financial situation of the Company, organizing thematic reviews on the Company’s investment and construction;

▸ Meeting and exchanging information regularly to grasp the Company management situation, gathering and analyzing information to identify the way to bring common benefits to the Company.

▶ Results of supervising the operation situation: The SB acknowledges the BOM and Executive Board’s efforts in executing the Company during the last year, especially in the following issues:

▸ The BOM and Executive Board delivered timely and appropriate decisions on the Company’s per-sonnel, selected and restructured management personnel reasonably to improve the general man-agement capacity;

▸ The BOM and Executive Board made great efforts in reducing financial cost of 20 billion VND in comparison with the last year and could hold market share in the difficult context of the economy.

▶ Results of supervising financial situation :The Company’s Periodic financial reports are made honestly which reflect the financial situation of the Company at each period and strictly comply with the Accounting Standards and other current account-ing regulations of Vietnam.


▶ Results of supervising members of the Board of Management, Executive Board and managing officials:

Through the supervising process, the Supervisory Board found that members of the Board of Management and Executive Board made great efforts in building guidelines and directing the Company bringing positive results. The Supervisory Board did not see the signs of fraud or mercenary behavior in the Company.

▶ Assessment on the co-ordination between the Supervisory Board and the Board of Management, Executive Board and shareholders:

During the year, the Supervisory Board participated in the sessions with the Board of Management and Executive Board. The Supervisory Board received most of the documents delivered during the directing and executing process of the Board of Management and Executive Board, and at the same time, gave feedbacks and suggestions in order to ensure that the direction and execution process were obeying the resolutions of the General Assembly of Shareholders. The Supervisory Board also approached and discussed the operation and financial situation with the shareholders, apprehended suggestions and explained issues that need clarifying to the shareholders.

▶ Suggestion and RecommendationIn 2013, the Company continues to encounter a great deal of difficulties; especially on one hand, under the impacts of macro-economy, the price of raw material is likely to increase with large amplitude to-gether with the the increasing trend of crude oil prices in the international market. On the other hand, the reduced investment in the private sector is a factor which will make a large impact on the Compa-ny’s product market.Accordingly, the Company should have more close management and administration, continuously up-date to follow up the changes of the market, have appropriate adjustments in cost and revenues in order to adapt tothe real situation. The Company should strengthen the comprehensive strategic plan-ning so as to utilize the resources in an optimal way, improve competitiveness and ensure the medium and long-term increase in the earnings per equity (EPS) of the shareholders.


5.3. TRANSACTIONS, PAYS ANd BENEFITS OF THE BOM, dIRECTORATE ANd SB

5.3.1. SALARIES, BONUSES, PAYS ANd BENEFITS

In 2012, the Company paid salaries, bonuses, pays and benefits for the BOM, directorate, and SB as follows:

NO. FULL NAME POSITION SALARIES, BONUSES, PAYS

1 Tran Ba Phuc Chairman of the BOM 1,432,817,800

2 Ngo Viet Son Vice-chairman of the BOM 100,000,000

3 Nguyen Quoc Truong Member of the BOM – Standing Deputy Director

1,343,145,940

4 Nguyen Trung Kien Member of the BOM – Deputy General Director

1,162,265,960

5 Đang Quoc Dung Member of the BOM 473,586,750

6 Pham Van Vien General Director 1,320,435,026

7 Chu Van Phuong Deputy General Director 1,088,114,520

8 Tran Ngoc Bao Chief Accountant 1,060,989,678

9 Nguyen Thi Quynh Huong Chairwoman of Supervisory Board

60,000,000

10 Nguyen Thi Bich Thuy Member of SB 360,217,460

11 Pham Van Bang Member of SB 385,549,998

5.3.2. SHARE TRANSACTION OF INTERNAL ANd MAJOR SHAREHOLdERS

NO. CONdUCTORS RELATIONSHIP wITH

INTERNAL SHAREHOLdERS

OPENING SHARES NUMBER

CLOSING SHARES NUMBER

REASON FOR THE

INCREASE/dECREASE NUMBER

OF SHAREOwNER-

SHIP RATENUMBER

OF SHAREOwNER-

SHIP RATE

1The Nawaplastic Industries (Saraburi) Co.. Ltd

Major shareholder

x x 9,824,300 22.67Buy on 15 March 2012

2 Chu Van PhuongDeputy General Director

42,900 x 14,000 xSell 30,000 shares

3Nguyen Trung Kien

Deputy General Director

166,672 0.38% 472,472 1.09%Buy 305,800 shares

5.3.3. CONTRACTS OR TRANSACTION wITH INTERNAL SHAREHOLdERS: N/a


5.3.4. IMPLEMENTATION OF COMPANY MANAGEMENT REGULATIONS

during its operation, the Company always complies with the Company management Regulations. In details:

▸ The BOM includes 05 members, 02 of whom are non-executive independent member. This is in compliance with the Company Management Regulation applied to listed companies.

▸ The number of SB’s members is 03 who have expertise in accounting as stipulated. ▸ Extraordinary General Assembly of Shareholderss are held conformable to Enterprise Law. ▸ The Company has issued Management Regulations. They co-ordinate the activities of the BOM, SB

and Directorate. ▸ Pursuant to the Ordinance No. 52/2012/TT-BTC guiding information declaration on the stock mar-

ket, the Company issued the amended regulations for “Information Declaration Process” on 26 De-cember 2012.


vi.


PART vI FINANCIAL STATEMENT

Reference No.: 60859103 / 15504263

6.1. REPORT OF INdEPENdENT AUdIT

Respectfully to: Shareholders of Tien Phong Plastic Joint Stock Company

We have audited Consolidated Financial statements of Tien Phong Plastic Joint Stock Company (“the Company”) and its subsidiaries (hereinafter referred to as “the Company and its subsidiaries”) shown from page 5 to page 52 including the Consolidated Balance Sheet dated 31 December 2012, Consolidated Income Statement and Consolidated Cash Flow Statement for the fiscal year ended the same day, together with Notes to the Financial Statements.

The Board of Directors is responsible for making and presenting those Consolidated Financial statements. And we are in charge of giving comments on the statements basing on our auditing outcome.

Auditing bases

We implemented the audit in compliance with Vietnam Standards on Auditing which requires us to plan and implement the audit so as to acquire reasonable credibility in determining whether the consolidated financial statements still remain major mistakes. Auditing work includes checking data and notes to financial statements with sampling method. Auditing work also includes assessing accounting principles applied and important estimations of the Directorate as well as the overall presentation of consolidated financial statements. We believe that our auditing work provides rational basis for the audit opinion.

Audit opinion

In our opinion, the consolidated financial statements dated 31 December 2012 reflected honestly and reasonably the Company’s financial status in terms of major aspects. The consolidated income and cash flow statements dated the same day are conformable to the Accounting Standards and Accounting Regime of Vietnam as well as related legal regulations. Ernst & Young Limited Company vietnam Bui Anh Tuan Trinh Xuan HoaDeputy General Director AuditorAuditor Certificate No.: N.1067/KTV Auditor Certificate No.: 0754/KTV

Hanoi, Vietnam30 March 2013


6.2. AUdITEd FINANCIAL STATEMENTS

CONSOLIdATEd BALANCE SHEET( 31 december 2012)

Unit: vNd

COdE ASSETS NOTES CLOSING BALANCE BEGINNING BALANCE

100 A. CURRENT ASSETS 878.311.567.083 960.569.946.784

110 I. . CASH ANd CASH EQUIPvALENTS 4 98.035.825.035 49.454.713.518

111 1. Cash 17.535.825.035 49.454.713.518

112 2. Cash equipvalents 80.500.000.000 -

130 II. SHORT-TERM RECEIvABLE 465.205.640.713 454.014.027.665

131 1. Trade accounts receivable 5 466.860.366.630 434.654.781.476

132 2. Advances to suppliers 10.464.479.442 22.491.920.534

135 3. Other receivables 6 4.313.143.892 10.624.782.008

139 4. Provision for doubtful debts 5 (16.432.349.251) (13.757.456.353)

140 III. INvENTORIES 7 305.810.186.721 453.931.587.708

141 1. Inventories 306.736.034.139 454.220.364.738

149 2. Provision for devaluation of inventories

(925.847.418) (288.777.030)

150 Iv. OTHER SHORT-TERM ASSETS 9.259.914.614 3.169.617.893

152 1. VAT deductibles 7.498.674.319 161.257.061

154 2. Other receivables from the State budget

8 1.082.514.762 1.197.905.344

158 3. Other short-term assets 9 678.725.533 1.810.455.488

200 B. LONG-TERM ASSETS 781.776.984.864 595.110.294.225

220 I. FIxEd ASSETS 661.499.494.821 495.436.356.723

221 1. Tangible fixed assets 10 464.286.241.021 338.337.587.633

222 ▸ Cost 769.823.609.647 581.694.640.544

223 ▸ Accumulated depreciation (305.537.368.626) (243.357.052.911)

230 2. Construction in progress 11 197.213.253.800 157.098.769.090

250 II. LONG-TERM FINANCIAL INvESTMENTS

12 102.456.535.544 77.966.234.921

252 1. Investments in associates 100.856.535.544 76.366.234.921

258 2. Other long-term investments 1.600.000.000 1.600.000.000

260 III. OTHER LONG-TERM ASSETS 17.820.954.499 21.707.702.581

261 1. Long-term prepayments 13 17.820.954.499 19.187.477.649

262 2. Deferred tax assets 26.3 - 2.520.224.932

270 TOTAL ASSETS 1.660.088.551.947 1.555.680.241.009


COdE LIABILITIES ANd OwNER’S EQUITY NOTES CLOSING BALANCE BEGINNING BALANCE

300 A. LIABILITIES 546.204.523.749 626.191.011.105

310 I. CURRENT LIABILITIES 546.204.523.749 626.191.011.105

311 1. Short-term borrowings and liabilities 14 356.999.127.633 381.309.759.058

312 2. Trade accounts payable 15 47.669.162.984 101.402.561.681

313 3. Advances from customers 2.260.938.042 3.102.493.618

314 4. Taxes and amounts payable to the State budget

16 52.590.247.322 17.017.134.519

315 5. Payables to employees 24.128.478.767 26.378.931.586

316 6. Accrued expenses 17 51.858.009.258 45.446.396.063

319 7. Other current payables 18 10.691.060.483 50.780.329.570

323 8. Bonus and welfare funds 19 7.499.260 753.405.010

400 B. OwNER’S EQUITY 1.113.884.028.198 929.489.229.904

410 I. OwNER’S EQUITY 1.113.884.028.198 929.489.229.904

411 1. Legal capital 433.379.960.000 433.379.960.000

413 2. Other legal capital 1.263.974.235 -

417 3. Investment and development funds 347.134.076.608 175.139.331.251

418 4. Financial reserve funds 43.337.996.000 40.208.144.516

420 5. Retained earnings (Accumulated losses)

288.768.021.355 280.761.794.137

439 C. PROFITS OF MINORITY SHAREHOLdERS

- -

440 TOTAL LIABILITIES ANd OwNER’S EQUITY

1.660.088.551.947 1.555.680.241.009

OFF BALANCE SHEET INdICATORS

INdICATORS INdICATORS

1. TREATEd BAd dEBTS (vNd) - -

2. FOREIGN CURRENCIES

USd 44.461 1.729


CONSOLIdATEd INCOME STATEMENT ( For financial year as of 31 december 2012 )

Unit: vNdCOdE INdICATORS NOTES THIS YEAR LAST YEAR

01 1. Gross sales of merchandise

21.1 2.363.895.016.496 2.429.835.248.880

In which: Product sales 21.1 2.326.697.524.911 2.346.536.329.87803 2. Revenue deductions 21.1 (3.599.773.266) (4.298.580.161)10 3. Net sales 21.1 2.360.295.243.230 2.425.536.668.71911 4. Cost of goods sold 22 (1.577.991.316.463) (1.648.972.137.821) 20 5. Gross profit 782.303.926.767 776.564.530.898 21 6. Financial Income 21.2 2.526.664.224 11.831.970.49122 7. Financial expenses 23 (41.232.332.808) (76.312.829.751) 23 In which: Interest expenses (39.842.528.866) (42.647.306.476) 24 8. Selling expenses (296.447.001.923) (257.290.482.887) 25 9. General and

administration expenses(82.680.836.316) (95.841.377.700)

30 10. Net operating profit 364.470.419.944 358.951.811.051 31 11. Other income 24 13.281.784.520 1.476.765.24132 12. Other expenses 24 (1.186.700.470) (1.832.372.771) 40 13. Other profit/(loss) 24 12.095.084.050 (355.607.530) 45 14. Profit from associate

companies 12.1, 12.2 8.425.141.058 2.904.515.593

50 15. Total profit before taxes 384.990.645.052 361.500.719.114 51 16. Current income tax

expense26.2 (91.185.844.164) (77.554.731.349)

52 17. deferred income tax expense

26.3 (2.520.224.932) (7.766.213.546)

60 18. Net profit after tax 291.284.575.956 276.179.774.219 In which:

61 ▸ Profits of minoritiy shareholders

- 7.208.291.611

62 ▸ Profits belonging to parent company’s shareholders

20.1 291.284.575.956 268.971.482.608

70 19. Earnings per share (EPS) ▸ Basic EPS 28 6.721 6.206 ▸ Diluted EPS 28 6.721 6.206


CONSOLIdATEd CASH FLOw STATEMENT ( For financial year as of 31 december 2012 )

Unit: vNd

COdE INdICATORS NOTES THIS YEAR LAST YEAR

CASH FLOwS FROM OPERATING ACTIvITIES

01 Total income before tax 384.990.645.052 361.500.719.114

Adjustment for:

02 Depreciation of fixed assets 65.736.424.421 49.079.045.553

03 Provisions 3.311.963.286 (8.096.261.619)

04 Loss (gain) from unrealized foreign exchangethực hiện

21.2, 23 120.350.114 (3.517.098.075)

05 Gain from investment activities (9.723.436.525) (8.524.115.934)

06 Interest expense 23 39.842.528.866 42.647.306.476

08 Operating income before working capital changes

484.278.475.214 433.089.595.515

09 Increase in trade receivables (55.722.409.129) (47.897.041.726)

10 Increase/(decrease) in inventories 146.384.330.599 (31.775.872.537)

11 Decrease in payables (32.408.375.043) 19.251.429.978

12 Decrease/(increase) in prepaid 2.321.523.152 (4.165.395.758)

13 Expenses (38.821.518.202) (41.784.486.837)

14 Interest paid 26.2 (70.973.098.258) (102.149.766.859)

16 Other expenses for operating activities (22.224.065.647) (34.890.792.537)

20 Net cash flow from operating activities

412.834.862.686 189.677.669.239

II. CASH FLOwS FROM INvESTING ACTIvITIES

21 Purchases of fixed assets and other long-term assets

(220.166.067.863) (237.236.759.528)

22 Proceeds from disposals of fixed assets/long-term assets

- 636.576.700

24 Recovery of loans given c - 2.000.000.000

26 Investments into other entities - (4.423.856.766)

27 Proceeds from deposit interests, dividends and profits shared

10.025.891.693 5.528.933.394

30 Net cash flow used in investing activities

(210.140.176.170) (233.495.106.200)

III. CASH FLOwS FROM FINANCING ACTIvITIES


32 Capital from minority shareholders - 34.300.000.000

33 Proceeds from short-term borrowings 1.194.445.193.657 1.378.117.498.284

34 Repayments of borrowings (1.218.545.069.503) (1.344.301.831.927)

36 Dividends and profits paid to the owners

20.4 (130.013.588.000) (43.337.996.000)

40 Net cash (used in)/from financing activities

(154.113.463.847) 24.777.670.357

50 Increase/(decrease) in cash and cash equipvalents during the year

48.581.222.669 (19.039.766.604)

60 Cash and cash equipvalents at the beginning

49.454.713.518 68.490.447.599

61 Effects of fluctuations in foreign exchange rates

(111.152) 4.032.523

70 Cash and cash equipvalents at the end of the year

4 98.035.825.035 49.454.713.518

The Company’s full financial report of 2012 was uploaded on the company’s website(http://nhuatienphong.vn/ntp/index.php/home/quanhecodong) Hanoi Stock Exchange and State Securities Commision of Vietnam

Tien Phong Plastic Joint Stock Company is honored to proclaim the Annual Report to the Shareholders, clients and all people who are interested in “TIEN PHONG PLASTIC” trademark. Respectfully!

ON BEHALF OF THE BOARd OF MANAGEMENT CHAIRMAN

TRAN BA PHUC


TIEN PHONG PLASTIC JOINT STOCK COMPANYAdd: No.02 An da, Lach Tray ward, Ngo Quyen district, Hai PhongTel: (84 - 31) 3847533 / (84 - 31) 3640352 Fax: (84 - 31) 3640133website: www.nhuatienphong.vnEmail: [email protected]

1 annual report 2012

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