EQUITIZATION STEERING COMMITTEE OF PARENT COMPANY … · VIET NAM MACHINERY INSTALLATION...
Transcript of EQUITIZATION STEERING COMMITTEE OF PARENT COMPANY … · VIET NAM MACHINERY INSTALLATION...
EQUITIZATION STEERING COMMITTEE OF PARENT COMPANY – VIETNAM MACHINERY
INSTALLATION CORPORATION AND VIETNAM MACHINERY INSTALLATION CORPORATION
RECOMMEND THAT INVESTORS SHOULD CAREFULLY READ THE INFORMATION HEREIN AND
THE AUCTION REGULATION BEFORE PARTICIPATING IN THE AUCTION
IPO ORGANISER
HANOI STOCK EXCHANGE
Address: 2 Phan Chu Trinh, Hoan Kiem, Ha Noi
Tel: (84.4) 3941 2626 Fax: (84.4) 3934 7818
IPO ISSUER
VIET NAM MACHINERY INSTALLATION CORPORATION –
ONE MEMBER COMPANY LIMITED
Address: 124 Minh Khai, Hai Ba Trung district, Ha Noi
Tel: (84.4) 3863 7747 Fax: (84.4) 3863 8104
IPO ADVISER
SAI GON – HA NOI SECURITIES JOINT STOCK COMPANY
Headquarters: Floor 3, Trade Union Center, 1 Yet Kieu, Ha Noi
Tel: (84-4) 3818 1888 Fax: (84-4) 3818 1688
October 2015
VIET NAM MACHINERY INSTALLATION CORPORATION INFORMATION DISCLOSURE
IPO Adviser: SAI GON – HA NOI SECURITIES JOINT STOCK COMPANY Page 2
TABLE OF CONTENT
I. INITIAL PUBLIC OFFERING INFORMATION .......................................................... 4
1. IPO Issuer ........................................................................................................................... 4
2. Shares offered for auction ................................................................................................... 4
3. Information disclosure on organizing of share purchase registration ................................. 5
4. Organize the auction, shares purchase payment and deposit redemption .......................... 6
5. IPO Adviser: ....................................................................................................................... 7
II. LEGAL BASIS FOR THE OFFERING ............................................................................ 7
III. PERSONS RESPONSIBLE FOR THE INFORMATION DISCLOSURE CONTENT
.............................................................................................................................................. 9
IV. DEFINITIONS AND ABBREVIATIONS USED IN THE INFORMATION
DISCLOSURE ............................................................................................................................ 10
V. INFORMATION OF EQUITIZED ENTERPRSE ........................................................ 11
1. General Information of the Equitized Enterprise ............................................................. 11
2. Organization structure of LILAMA ................................................................................. 15
3. Main lines of business and product: ................................................................................. 17
4. Past and present typical projects ....................................................................................... 22
5. Employment Situation ...................................................................................................... 24
6. Enterprise value at the time of 01/07/2015 ....................................................................... 25
7. Enterprise main assets ...................................................................................................... 27
8. List of equitized enterprise’s subsidiaries, Affiliates and financial investment ............... 33
9. Business situation and performance of 3 years prior equitization .................................... 36
10. LILAMA position in the market compare with its competitors ....................................... 53
VI. BUSINESS ACTIVITIES AFTER EQUITIZATION.................................................... 55
1. Joint stock company name, lines of business ................................................................... 55
2. Joint stock company structure .......................................................................................... 56
3. Business operation plan after equitization ........................................................................ 59
4. Charter capital and Joint Stock Company charter capital structure .................................. 67
VII. SALE METHOD AND SHARE PURCHASE PAYMENT ........................................... 68
1. Sale method ...................................................................................................................... 68
2. Payment method and deadline .......................................................................................... 69
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VIII. PLAN FOR THE USE OF PROCEEDS COLLECTED FROM EQUITIZATION . 69
1. Expected proceeds collect from the equitizaiton .............................................................. 69
2. Plan for dealing with the proceeds collected from the equitization ................................. 70
IX. PLAN TO PARTICIPATE IN THE STOCK MARKET .............................................. 70
X. RISK FACTORS AFFECT TO THE ISSUER BUSINESS PERFORMANCE .......... 71
1. Economic risks ................................................................................................................. 71
2. Legal risk .......................................................................................................................... 72
3. Business typical risk ......................................................................................................... 73
4. Risk of the offering ........................................................................................................... 74
5. Other risks......................................................................................................................... 74
XI. CONCLUSION .................................................................................................................... 75
VIET NAM MACHINERY INSTALLATION CORPORATION INFORMATION DISCLOSURE
IPO Adviser: SAI GON – HA NOI SECURITIES JOINT STOCK COMPANY Page 4
I. INITIAL PUBLIC OFFERING INFORMATION
1. IPO Issuer
- Company name in Vietnamese : Tổng công ty lắp máy Việt Nam – Công ty
TNHH một thành viên
- English name : Vietnam Machinery Installation
Corporation – One member Company
Limited
- Address : No. 124 Minh Khai, Minh Khai ward, Hai Ba
Trung district, Hanoi city
- Tel : 043.863 7747
- Fax : 043. 863 8104
- Estimated Joint Stock Company
charter capital after equitizaion : 1.500.000.000.000 VND
- Par value : 10.000 VND/share
- Total number of shares : 150.000.000 shares
In which
State owned (*) : 76.500.000 shares, occupy 51% charter capital
Shares offered to employee
at a discount : 2.399.500 shares, occupy 1,60% charter capital
Shares owned by investors
through auction : 35.550.250 shares, occupy 23,70% charter capital
Strategic investor(s) owned : 35.550.250 shares, occupy 23,70% charter capital
(*)State owned proportion will be reduced to 40% in 2017 (as scheduled)
2. Shares offered for auction
- Number of shares offering : 35.550.250 shares, occupy 23,70% charter capital
- Type of stock : Common stock
- Offering method : Initial Public Offering of 100% State owned
corporation that is equitized through auction
- Auction method :
Under the provisions of “Regulation for Initial
Public Offering through auction of Vietnam
Machinery Installation Corporation – One
member Company Limited” issued by Hanoi
Stock Exchange
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- Starting price : 10.300 VND/share
- Deposit : Equals to 10% value of total share registered to
purchase calculated in par value
- Minimum bidding volume : 100 shares
- Maximum bidding volume : 35.550.250 shares
3. Information disclosure on organizing of share purchase registration
3.1. Location provides the IPO Information Disclosure copy, receives registration form
and money deposit, provides and receives auction participation form:
In auction agencies as stated in “Regulation for Initial Public Offering through auction
of Vietnam Machinery Installation Corporation – One member Company Limited”
issued by Hanoi Stock Exchange (abbreviated as Auction Regulation)
3.2. Time to submit the auction participating registration, money deposit and receive
auction form:
According to the time as stated in the Auction Regulation
3.3. Conditions to register for auction participation:
- Having the registration for participation in regulated form and is submitted on regulated
time.
- Paying the full deposit of 10% value of total share registered to purchase calculated in
par value during the regulated time for registration.
- Ensure that all the conditions for investment and auctioning participation are in
accordance with provisions of:
Decree No. 59/2011/NĐ-CP dated 18/07/2011 of the Government on
“transformation of the 100% State – owned enterprises into the Joint stock
companies”;
Circular No. 196/2011/TT-BTC dated 26/12/2011 of the Ministry of Finance on the
guidance for initial sale of share, management and use of the proceeds from the
equitization of 100% State owned enterprises transform into Joint stock companies;
Other related legal documents.
- Having other related documents as listed below:
For native individuals:
Presenting Identity card, valid Identification document details for checking
process;
Declaring the detailed, exact and clear address.
For domestic organizations:
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If the legal representative does not directly make the registration, it is required to
have valid power of attorney issued or signed by the legal representative of the
corporation to the participant. The participant then must present ID card or valid
identity papers when he registers for and participates in the auction.
Valid notarized copies of documents that demonstrate the legal status of the
organization such as business registration certificate, decision of foundation, etc.
For foreign individuals and organizations:
Copy of ID/ passport; Vietnamese ID card (in case of giving authorization to
participate to a Vietnamese);
Valid power of attorney (if any);
Present account-opening paper at an organization, which provides payment
service and are operating in Vietnam.
For organization: Beside those above stated documents, it is required to have
valid notarized copy proving the legal status of the organization such as business
registration certificate, establishment license, etc; valid written proxy to the
participant who represents for the corporation to participate in the auction (in
case the legal representative could not directly participate into the auction).
3.4. Provision for paying deposit and share purchase payment:
Investors can pay in cash or transfer to auction agencies’ account that is announced in
the auction regulation.
3.5. Limit on the bidding volume:
- For native investors: Each investor is allowed to buy a minimum of 100 shares and
maximum of 35.550.250 shares, which equals to the total shares offering to auction.
- For foreign investors: Each investor is allowed to buy a minimum of 100 shares and
maximum of 35.550.250 shares, which equals to the total shares offering to auction.
4. Organize the auction, shares purchase payment and deposit redemption
4.1. Time of the auction:
As stipulated in Auction Regulation.
4.2. Location of the Auction:
HANOI STOCK EXCHANGE
Address: No. 02 Phan Chu Trinh, Hoan Kiem, Hanoi.
Tel: (84- 4) 3941 2626 Fax: (84-4) 39347818.
4.3. Time of payment and deposit redemption:
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- Time of payment: As stipulated in Auction Regulation.
- Payment method: Investors can make their deposits in cash or transfer to the accounts of
auction agencies where they register for their auction participation.
- Time of deposit redemption: As stipulated in Auction Regulation.
- Location: All the places where investors registered for their auction participation.
5. IPO Adviser:
SAI GON – HA NOI SECURITIES JOINT STOCK COMPANY
Headquarters:
Address: 3rd
floor – Trade Union Center – No. 1 Yet Kieu, Hanoi
Tel: 04. 3818 1888 Fax: 04. 3818 1688
Website: www.shs.com.vn
Da Nang branch:
Address: No. 97 Le Loi road, Hai Chau district, Da Nang city
Tel: 0511. 3525 777 Fax: 0511. 3523 779
Ho Chi Minh branch:
Address: 3
rd floor, Artex building, No. 236 - 238Nguyen Cong Tru, District 1, Ho
Chi Minh City
Tel: 08. 3915 1368 Fax: 08. 3915 1369
II. LEGAL BASIS FOR THE OFFERING
- Decree No. 59/2011/NĐ-CP dated 18/07/2011 of the Government on the transformation
of the 100% State – owned enterprises into the Joint stock companies; Decree No.
189/2013/NĐ-CP dated 20/11/2013 of the Government on the amending and
supplementing some articles of the Decree No. 59/2011/NĐ-CP dated 18/07/2011 of the
Government on the transformation of the 100% State owned enterprises into the Joint
Stock Companies;
- Decision No. 929/QĐ-TTg dated 17/7/2012 of the Prime Minister on the approval of the
scheme “Restructuring of State – owned enterprises, focusing on economic groups and
State-owned corporations period 2011-2015”;
- Decision No. 51/2014/QĐ-TTg dated 15/09/2014 of the Prime Minister on “Some issues
related to capital withdrawal, sale share and register for trading, listing in the stock
market of State-owned enterprises”;
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IPO Adviser: SAI GON – HA NOI SECURITIES JOINT STOCK COMPANY Page 8
- Circular No. 196/2011/TT-BTC dated 26/12/2011 of the Ministry of Finance on the
guidance for initial sale of share, management and use of the proceeds from the
equitization of 100% State owned enterprises transform into Joint stock companies;
- Circular No. 127/2014/TT-BTC dated 05/09/2014 of the Ministry of Finance on
Guidance for financial settlement and enterprise’s value determination when transfer
100% State –owned enterprises into joint stock company;
- Decision No. 26/QĐ-BXD dated 09/01/2013 of Minister of Construction on the approval
for the scheme “Restructuring and enhancing corporate governance efficiency of
Vietnam Machinery Installation Corporation period 2012-2015, orientation to 2020”;
- Document No. 1101/BXD-QLDN dated 29/05/2014 of the Ministry of Construction on
the equitization plan of the enterprises under Ministry’s control;
- Decision No. 673/QĐ-BXD dated 18/06/2014 of Minister of Construction on the
foundation of equitization steering committee of Parent company – Vietnam Machinery
Installation Corporation;
- Decision No. 717/QĐ-BCĐ dated 24/06/2014 of the equitization steering committee on
forming assistance board for the equitization steering committee of the Parent company
– Vietnam Machinery Installation Corporation;
- Contract No. 1994/2014/HĐTVTC/SHS.HS.TV dated 06/10/2014 between Sai Gon –
Ha Noi Securities Joint stock company and Vietnam Machinery Installation Corporation
on the consulting service for equitization planning, IPO process and completion of the
equitization;
- Decision No. 269/QĐ-BXD dated 10/03/2015 of the Ministry of Construction on
approving enterprise value for equitized Parent company – Vietnam Machinery
Installation Corporation;
- Decision No. 1036/QĐ-TTg dated 10/07/2015 of Prime Minister on the approval for
equitization plan of Parent company - Vietnam Machinery Installation Corporation and
transform into Joint stock company;
- Decision No.1098/QĐ-BXD dated 24/09/2015 of the Ministry of Construction on the
approval for IPO’s process of the Parent Company – Vietnam Machinery Installation
Corporation.
- The Minutes of the plan for IPO Information disclosure of the equitization steering
committee of Parent company – Vietnam Machinery Installation Corporation dated
28/09/2015.
- And other related legal documents.
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III. PERSONS RESPONSIBLE FOR THE INFORMATION DISCLOSURE CONTENT
1. Equitization Steering Committee:
Mr. Dau Minh Thanh
Position: Director of Enterprise Management Department
– Ministry of Construction – Member of LILAMA
equitization steering committee
(Based on Decision No. 1098/QĐ-BXD dated 24/09/2015 of the Ministry of Construction)
This Information disclosure is made by the equitized enterprise and advisory organization,
which has been approved by the equitization steering committee on 28/09/2015.
2. Equitized enterprise:
VIETNAM MACHINERY INSTALLATION CORPORATION – ONE MEMBER
COMPANY LIMITED
Mr. Nguyen Dinh Hai Position: Chairman – Members’ Council
Mr. Le Van Tuan Position: General Director
Mr. Bui Duc Kien Position: Chief Accountant
We hereby assure all the information and data provided in this Information Disclosure are
consistent with reality or have been investigated, collected in a reasonable manner so that
the investors may evaluate on the Corporation’s assets, financial condition, outlook of
business performance and prospect before register for the auction participation.
We take full responsibility for the accuracy, transparency, full compliance with the
provisions of the law on equitization of the information and data provided in herein
document.
3. Advisory Organization:
SAI GON – HANOI SECURITIES JOINT STOCK COMPANY (SHS)
Mr. Vu Duc Tien Position: General Director
This information disclosure has been participative made by SHS based on advisory contract
with Vietnam Machinery Installation Corporation – One member Company Limited. We
assure that the analysis, evaluation and selection of words for this Information disclosure
have been done in a reasonable and prudent manner based on the information and data that
were provided by Vietnam Machinery Installation Corporation – One member Company
Limited.
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IV. DEFINITIONS AND ABBREVIATIONS USED IN THE INFORMATION
DISCLOSURE
- MOC : Ministry of Construction
- Corp. : Vietnam Machinery Installation Corporation
- LILAMA : Vietnam Machinery Installation Corporation
- MC : Members’ Council
- BOM : Board of Management
- BOD : Board of Director
- BC : Building Construction
- EPC : Engineering, Procurement and Construction
- Equitized enterprise : Vietnam Machinery Installation Corporation
- IPO Advisor : Sai Gon – Ha Noi Securities Joint Stock Company
- Co. Ltd : One member Company Limited
- ME : Mechanical – Electrical
- C&T : Construction and Technology
- SHB : Sai Gon – Ha Noi Commercial Joint Stock Bank
- Rev : Revenue
- Prop : Proportion
- I&C : Installation and Construction
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V. INFORMATION OF EQUITIZED ENTERPRSE
1. General Information of the Equitized Enterprise
1.1. General Information
- Enterprise name: Tổng công ty lắp máy Việt Nam - Công ty TNHH
một thành viên
- English name: Vietnam Machine Installation Corporation – One
member Company Limited
- Abbreviated name: LILAMA
- Website: http://lilama.com.vn/
- Charter capital (as to
Business registration
certificate No. 0100106313)
616.000.000.000 VND
- Owner investment (as at
31/12/2014):
739.861.745.814 VND (adjusted according to
enterprise value determination).
- Address: No. 124 Minh Khai, Minh Khai ward, Hai Ba Trung
district, Hanoi city
- Tel: 043.863 7747
- Fax: 043. 863 8104
- Business registration
certificate:
No. 0100106313 issued by Hanoi Department of
Planning and Investment on 01/09/2010, first
amendment was issued on 05/12/2012
- Main business lines: EPC Contractor; Civil works contractor; Mechanical
building; design consulting and project management;
Trading business of lending equipment and machines;
Import-export activities of material and equipments,
labor exportation.
1.2. History of foundation and development
Vietnam Machinery Installation Corporation (abbreviated as LILAMA), whose charter
capital is 100% owned by the Ministry of Construction, operates in the field of construction,
installation, fabrication and manufacturing equipments for civil as well as industrial
construction with its high level of technological labor force and modern machinery equipment,
LILAMA.
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1) Period 1960 - 1975:
- On 01/12/1960, Machinery Installation Company was established. Since the early period
of foundation, installation workers had taken part into the successful installation projects
for civil, industrial and national defense construction. Some of projects were Thac Ba
and Cao Bang hydro-electrical power plants, thermal power plants in those provinces:
Ham Rong, Lao Cai, Viet Tri, Ninh Binh, Uong Bi; in Viet Tri industrial zone, Ha Bac
fertilizer factory, Van Diem 2 sugar factory, Lam Thao super phosphate factory, Cam
Pha mechanical factory, 8/3 textile factory, Hai Phong extension cement factory, etc.
- In 1960, the company was honored to receive President Ho Chi Minh emulation flag,
and in subsequent years, the company continued to receive the bouquets, merits,
emulation flags from the President and the Government.
2) Period 1976 - 1995:
- On 11/10/1979, Machinery Installation Company had been converted to continue
operate under the model of Machinery Installation Enterprises Union.
- New civil works and power plants had been completed such as: Hoa Binh Hydroelectric
power plant, which was the largest hydroelectric project in Southeast Asia, hydro-
electric plants in Vinh Son, An Diem, Tri An, Yaly; Pha Lai and Phu My Thermal
powerplants, Bim Son and Hoang Thach cement factories, Bai Bang paper factory, Tam
Dao and Ba Vi broadcast stations, etc.
- Since 1993 when foreign investment to Vietnam increased dramatically, many foreign
invested projects were started. Installation workers continued to complete and handed
over many other successful and high quality works such as: Oil rig platform, Bai Bang
and Tan Mai paper factories, installation works in transformer stations, fabrication of
more than 3000 tons power poles under the project of North-South 500KV electric
transmission system and thousands of television microwave broadcast poles in the
country; building and installing equipments in standard quality to VEDAN MSG
factory, Chingfon cement factory, hydroelectric plants in Tri An, Thac Mo, Yaly; took
part in many large-scaled projects in international boundary such as University of Oran
in Algeria, thermal power plants in Bulgaria, Russia and other projects in Iraq, Libya.
Especially the Machinery Installation Enterprises Union was successfully building
international standard quality types of tanks and vessels for containing gas, oil for Shell
Gas Hai Phong project, Sai Gon Petro, Vietnam Petro.
- On 01/12/1995, Vietnam equipment installation industry had transformed business
model from Machinery Installation Enterprises Union to Vietnam Machinery Installation
Corporation. This was a remarkable change for all State-owned enterprises and the
Corporation itself at that time.
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- The contributions of LILAMA into the building and protection of the country had been
acknowledged by the Government by these below honorable prizes:
1 Victory Order
5 Third class Independence Order
2 Second class Independence Order
3 First class Independence Order
3) Period 1996 - 2000:
- LILAMA management built “Development strategy of the Corporation to 2010”,
separated into 3 periods in accordance with the economic development plan of the State.
This was a rightful development strategy, suitable with both development reality of the
corporation and the country.
- The construction and installation applied modern technology and process equipment,
which contributed to the success of equipment installation industry. The product quality
had been improved, shortened the construction time. Some of projects could be named
as: Pha Lai 2 thermal power plant with nearly 2 years and capacity of almost 850MW,
Phu My 1 thermal power plant with 1.080MW was built in 2 years. Although the
construction time was shortened, the quality for each project still satisfied the austere
requirement on quality and economic effectiveness.
- Undergone through a continuously improving and developing process, the Corporation
achievements had been acknowledged by the State and was awarded Ho Chi Minh
Medal, an honorable prize in Vietnam, in 2000.
4) Period 2001 - 2005:
- It was a decisive period for LILAMA in the role of EPC Contractor in the Uong Bi
Expansion thermal power plant, 300MW capacity with investment fund of 300 million
USD. This event had turned LILAMA from subcontractor to contractor, who deals with
the higher-level job including design consultant and material, equipment supplier for the
whole construction. Besides, the project of Ca Mau 1 thermal power plant with a
capacity of 750MW and a value of 360 million USD was also accomplished in this
period.
- In 2005, LILAMA celebrated 45 years of its foundation with remarkable event: the
corporation had concentrated its best resources to accomplish the 40% assigned job on
National Convention Center project, handed over the work on time with high quality that
successfully served the APEC summit on November 2005.
- LILAMA’s contributions to the country’s development were acknowledged by the
government and awarded with “Hero of Labor in innovation period”. This event
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affirmed the corporation success in the period of renovation and development, and laid
the foundation for its future mission and strategic development.
5) Period 2006 - 2010:
- In 2006, LILAMA continued to be chosen to become EPC contractor for Ca Mau 2
thermal power plant project with the capacity of 750MW and 330.3 million USD
invested, and followed by Nhon Trach 1 thermal power plant project with the capacity of
450 MW and almost 305 million USD in value. Within 11 months, LILAMA signed 03
contracts for thermal power plants EPC contractor with total capacity 1.950MW, total
value of the projects was approximate 1 billion USD (included Ca Mau 1 thermal power
plant project).
- In the first quarter of 2009, Dung Quat oil refinery factory, where Vietnam first oil and
petrol products were produced, was handed over to its investor: PetroVietnam (Vietnam
Oil and Gas group – “PVN”). Followed by the on time handover of Nhon Trach 1
thermal power plant on Arp 2009, Song Thao cement factory on Nov 2009, and other
factories like Song Vang, Song Ong, etc also connected to national electric system.
- On 9th
April 2009, LILAMA signed 02 EPC contracts for thermal power plant projects
of Vung Ang 1 capacity of 1.200MW and Nhon Trach 2 capacity of 750MW, the total
contract’s value was almost 1.7 billion USD.
6) Period 2010 - 2015:
- In 2010, LILAMA was transformed and operated under the form of 100% State owned
One Member Company Limited according to Decision no. 93/TĐSĐ-HĐQT dated
30/06/2010 of Song Da Corporation’s Board of Management. In 2012, the Parent
company – Song Da corporation had transferred all rights and liabilities of the capital
owner to the Ministry of Construction according to Decision no. 913/QĐ-BXD dated
18/10/2012 of the Minister of Construction.
- LILAMA had successfully constructed and handed-over Vung Ang 1 - the highest
capacity coal-fired thermal power plant project in Vietnam; Hua Na hydroelectric
project, signed EPC contract with PVN for Song Hau 1 thermal power plant project.
Going through 55 years of establishment, development and growth, LILAMA has been
performing and completing thousands of projects regardless of their sizes, contributed
significantly into the construction and development of the country. At present, LILAMA is
considered as the leading EPC contractor and installation contractor of civil and industrial
works in Vietnam.
1.3. Business lines
According to the business registration certificate no. 0100106313 initially issued by
Hanoi Department for Planning and Investment dated 01/09/2010 and first amendment dated
05/12/2012, the registered business lines include:
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- Trading, export of materials, machines, equipments, spare parts, manufacturing and
consuming materials, automated technology lines, consumption goods, transportation,
acting as an agency for domestic and international companies for production and
consumption goods in accordance with the legislation.
- Translating the codes and standards, specific documents related to equipment
manufacture and installation, new technology lines; Training technicians and workers
for social needs and the corp.’s itself. Advanced training and award certificate for the
welder; Training for labor force for working abroad in determined terms;
- Checking, experimenting, adjusting the electrical equipment, I&C system, thermal
system for technical lines; Supervising, quality testing the welding joints and physical
nature of materials;
- Ship building and repair for river and sea transportation;
- Design, equipment manufacture and fabrication of steel structures for civil and industrial
works;
- Construction consultancy, EPC package contractor or sub-package contractor for civil,
industrial and infrastructure works such as project planning, design (in the registered
working scope) and cost estimate planning, supervision consultancy, project
management, supplying of process and I&C equipment;
- Trading on real estate, tourism, hotel, restaurant and amusement parks;
- Trading on goods transportation, OOG equipment, lending processing and transporting
equipments; Invest and build the works include: industrial work (hydroelectricity plants,
thermal power plants, cement, oil chemistry, paper and steel), civil, transportation,
irrigation, water supply and urban infrastructure;
- Export of labor, equipment, material, technology of machinery installation and
construction;
- Manufacturing and trading of construction material;
- Trading and developing in housing and construction consultancy;
- EPC contractor for civil, industrial, transportation, irrigation, post office, power
transformer and urban infrastructure works;
- Manufacturing and trading on construction under the State’s plan, including construction
and installation
2. Organization structure of LILAMA (in next page)
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CHART OF LILAMA ORGANIZATION STRUCTURE
Steering line
Reporting line
LEGAL – APPRAISAL
DEPARTMENT
RISK CONTROL
DEPARTMENT
FINANCE –
ACCOUNTING
DEPARTMENT
PLANNING – INVESTMENT
DEPARTMENT
RESTRUCTURING
COMITTEE
GENERAL DIRECTOR
MEMBERS’ COUNCIL
INSPECTORS INTERNAL AUDIT
COMMITTEE
DEPUTY GENERAL DIRECTOR
(Technical, Foreign Affairs)
SUBSIDIARY COMPANIES
(LILAMA holds > 51% charter capital)
1. LILAMA 5 JSC 10. LILAMA UDC JSC 2. LILAMA 7 JSC 11. Song Vang Hydroelectric JSC
3. LILAMA 10 JSC 12. LHT Internaltional Engineering JSC
4. LILAMA 18 JSC 13. Lisemco JSC 5. LILAMA 69-1 JSC 14. Song Ong hydroelectricity JSC
6. LILAMA 69-2 JSC 15. VIFA Coating JSC
7. LILAMA 69-3 JSC 8. LILAMA 45.1 JSC
9. LILAMA CKLM JSC
AFFILIATED COMPANIES AND FINANCIAL INVESTMENT
1. LILAMA 45.3 JSC 9. Lilama C&T design SJC
2. LILAMA 45.4 JSC 10. SHB 3. LILAMA ME Installation & Testing JSC 11. Lilama SHB JSC
4. CIMAS Engineering Co.Ltd 12. PetroVietnam marine shipyard JSC
5. Song Thao cement JSC 13. Thang Long Cement JSC 6. Hua Na Hydroelectric JSC 14. LILAMA 3 JSC
7. LILAMA Real estate JSC 15. LILAMA Ha Noi JSC
8. LILAMA ME environment JSC
PROJECT MANAGEMENT
BOARD
PROJECT BOARD, OPERATING
BOARD, LILAMA REPRESENTATIVE
OFFICES IN CONSTRUCTION SITES
DOMESTIC AND INTERNALTIONAL
CORPORATION REPRESENTATIVE
OFFICES
COMPANY BRANCH
BAC VINH INDUSTRIAL
ZONE INVESTMENT
AND DEVELOPMENT
HUMAN RESOURCES
DEPARTMENT
ADMINISTRATIVE
AND PERSONNEL
DEPARTMENT
ECONOMIC
TECHNICAL
DEPARTMENT
WELDING
TECHNOLOGY
INSTITUTE
VEHICLE
MANAGEMENT
DEPARTMENT
DEPUTY GENERAL DIRECTOR
(Safety, Environment)
DEPUTY GENERAL DIRECTOR
(Construction, Project 2)
DEPUTY GENERAL DIRECTOR
(Construction, Project 1) DEPUTY GENERAL DIRECTOR
(Internal Affairs, Organizing, Training)
DEPUTY GENERAL DIRECTOR
(Finance, Planning-Investment)
VIET NAM MACHINERY INSTALLATION CORPORATION INFORMATION DISCLOSURE
IPO Adviser: SAI GON – HA NOI SECURITIES JOINT STOCK COMPANY Page 17
- Departments’ Functions and Duties: Please refer to the attached Appendix 1
3. Main lines of business and product:
3.1. EPC contractor, installation:
- This is the advantageous field and core competitive strength of LILAMA. It has high
potential of growth and contributes more than 80% of company’s revenue structure.
- In 2003, LILAMA was appointed as EPC contractor for project of first Uong Bi
Extension thermal power plant (capacity of 1x300MW). After successfully completing
this project, LILAMA continued to be chosen as EPC contractor for several projects
such as: Ca Mau 1&2 gas-fired thermal power plants (capacity of 2x750 MW), Nhon
Trach 1 gas-fired thermal power plant ( capacity of 1x450 MW), Nhon Trach 2 gas-fired
thermal power plant ( capacity of 1x750 MW), Vung Ang 1 coal-fired thermal power
plant (capacity of 2x600 MW), Song Thao cement factory, Hua Na hydroelectricity
plant, Hangar A75 project. Among these projects, Nhon Trach 2 gas-fired thermal power
plant received gold award in the Fast-Track Power Plant of the Year. Vung Ang 1 plant,
which was the first highest capacity power plant in Vietnam, was handed over and put
into stable operation afterwards. In the present time, LILAMA has signed a 29.699
billion VND contract to become EPC contractor for installation project of Song Hau 1
coal-fired thermal power plant(capacity of 2x60MW), which planned to operate unit 1
on 06/2019.
Thanks to all these achievements, LILAMA has been evaluating as Vietnam leading
EPC contractor in industrial works.
- Installation is LILAMA’s traditional business line with the experience of 55 years.
LILAMA has successfully installed thousands of important industrial and civil projects
and received high level of trust from its partners. Some typical projects are hydroelectric
factories such as Thac Ba, Tri An, Hoa Binh, Son La; Coal-fired thermal power plant
projects for Uong Bi, Pha Lai 1&2, Na Duong 1, O Mon 1&2, Phu My 1-2-3-4, Mong
Duong 1&2; Cement projects for Bim Son, Kien Luong, Tam Diep, Hoang Mai, Nghi
Son, Thang Long; Dung Quat oil refinery factory; National Convention hall; Ha Noi
museum, etc.
Currently, LILAMA are processing the installation for those projects: Nghi Son Oil
refinery factory, thermal power projects for Thai Binh 2 and Vinh Tan 4 factories;
parliament house, etc with the total value of contracts is almost 10.000 billion VND.
VIET NAM MACHINERY INSTALLATION CORPORATION INFORMATION DISCLOSURE
IPO Adviser: SAI GON – HA NOI SECURITIES JOINT STOCK COMPANY Page 18
Some pictures from significant projects have been implemented by LILAMA:
Dung Quat oil chemical refinery
Dung Quat oil chemical refinery – Construction site
Dung Quat oil chemical refinery plant Nhon Trach 1 thermal power plant
– Construction site – Construction site
VIET NAM MACHINERY INSTALLATION CORPORATION INFORMATION DISCLOSURE
IPO Adviser: SAI GON – HA NOI SECURITIES JOINT STOCK COMPANY Page 19
Nhon Trach 2 thermal power plant Thai Binh 2 thermal power plant
– Construction site – Construction site
Uong Bi 1 thermal power plant Ca Mau 1&2 thermal power plants
Vung Ang 1 thermal power plant Song Thao Cement plant
3.2. Mechanical Equipment Manufacture
- Since 1995, LILAMA has expended its business line to fabrication and manufacturing of
equipments, non-standard equipments, steel structure for civil, industrial works and
projects, as well as for export purpose.
VIET NAM MACHINERY INSTALLATION CORPORATION INFORMATION DISCLOSURE
IPO Adviser: SAI GON – HA NOI SECURITIES JOINT STOCK COMPANY Page 20
- LILAMA has invested in building many mechanical manufacturing factories with many
modern machines and equipments.
LILAMA mechanical manufacturing factories capacity
Seq. Location Area Capacity
m2 ton/year
1 Bac Ninh province 63.000 10.000
2 Hai Duong province 250.000 31.000
3 Hai Phong province 330.000 100.000
4 Da Nang province 50.000 6.000
5 Quang Ngai province 18.000 3.000
6 Binh Duong province 94.000 10.000
7 Dong Nai province 137.000 30.000
8 Other provinces 50.000 10.000
Total 1.202.000 200.000
- Main manufactured mechanical products of LILAMA include:
Steel structures
Various types of tanks, pressure tanks and vessels
Handling and lifting equipments
Transporting equipments
Heat exchangers and air dryers.
Electrostatic Precipitators
Flue gas Desulphurization equipment
High capacity industrial fans
Reclaimers and Stackers
Penstocks, large diameter liquid pipelines
Cement kilns
Oil rig platforms
Other non-standard equipment
- The mechanical products manufactured by LILAMA are qualified for those mentioned
standards: AWS, ASTM, ANSI, DIN, DINEN, ISO, JIS, GOST, PS ...
VIET NAM MACHINERY INSTALLATION CORPORATION INFORMATION DISCLOSURE
IPO Adviser: SAI GON – HA NOI SECURITIES JOINT STOCK COMPANY Page 21
Pressure tub manufacture Steel structure manufacture
Standing crush machine manufacture Cement kiln manufacture
Mechanical equipment manufacture Oil rig base manufacture
3.3. Other business lines:
- Design consultant and project management: LILAMA has built up these business lines
so that they are qualified in term of scale and ability to support the corporation’s main
business lines in projects implementation. Despite the small proportions in the trading
profit structure, these two business lines have a high profit margin ratio, as well as their
ability to approach the market and compete in the project bids.
VIET NAM MACHINERY INSTALLATION CORPORATION INFORMATION DISCLOSURE
IPO Adviser: SAI GON – HA NOI SECURITIES JOINT STOCK COMPANY Page 22
- Import – Export activities and other trading: Some activities of these business lines can
be mentioned as Import Export of machines and equipments, ISO standard and high
qualified manufacturing process of electrostatic precipitator, steam boiler, ocean ships,
conveyors, elbow pipes, steel structures; labor exportation, lending of machines and
equipments.
4. Past and present typical projects
Seq Contract name Partner Product/Service Value In Schedule
1
Mong Duong 1
coal-fired thermal
power plant
(2x540MW)
HYUNDAI
Engineering &
Construction
Co., Ltd
Installation of the
Power Island 1.720 Billion VND 2012 - 2015
2
National
Assembly
Building
Project
management
board (PMB)
for the
construction of
the National
Assembly
Building
Installation of the
electrical, fire
alarm,
heating, ventilation
and air
conditioning (HVA
C), water supply
and drainage
systems
361 Billion VND 2012 - 2016
3
Thai Binh 2 coal-
fired thermal
power plant
(2x600MW)
PetroVietnam
Construction
Joint stock
Corporation
(PVC)
Installing all the
mechanical-
electrical
equipment of the
power plant
2.320 Billion VND 2014 - 2016
4
Vinh Tan 4 coal-
fired thermal
power plant
(2x600MW)
Doosan Heavy
Industries
Vietnam Co.,
Ltd
Installing the main
equipments of the
power plant
1.250 Billion VND 2014 - 2017
5
Lai Chau
hydroelectric
factory
(3x400MW)
PMB of Son La
hydroelectric
factory
Manufacturing,
installing hydro
mechanical
equipment,
pressure pipes and
all mechanical-
electrical
equipment of the
plant
1.450 Billion VND 2014 - 2017
6
Nghi Son oil
chemical refinery
(Capacity 10
million tons/year)
JGCS
Consortium
Material supplier,
steel structure &
pipe fabrication and
manufacturing
Installing steel
structures, pipe&
tank equipment;
electrical, I&C, and
insulation systems
5.200 Billion VND 2014 - 2017
7 Song Hau 1
thermal power
Song Hau 1
Petroleum-EPC contractor 29.699 Billion VND 2015 - 2020
VIET NAM MACHINERY INSTALLATION CORPORATION INFORMATION DISCLOSURE
IPO Adviser: SAI GON – HA NOI SECURITIES JOINT STOCK COMPANY Page 23
plant (2x600MW) Power PMB
8
Vung Ang 1
thermal power
plant (2x600MW)
Vung Ang –
Quang Trach
Power PMB
EPC contractor 1.170 Million USD 2009 - 2013
9
Nhon Trach II
combined-cycle
power plant
(750MW)
PetroVietnam
Nhon Trach 2
Power Joint
Stock
Company
LIAMA – PVC
EPC contractors 498 Million USD 2009 - 2012
10
Ca Mau 1 gas-
thermal power
plant (750MW)
PMB of Ca
Mau Gas-
Power –
Fertilizer
cluster
EPC contractor 360 Million USD 2005 - 2009
11
Ca Mau 2 gas-
thermal power
plant (750MW)
PMB of Ca
Mau Gas-
Power –
Fertilizer
cluster
EPC contractor 331 Million USD 2006 - 2009
12
Nhon Trach I
combined-cycle
power plant
(450MW)
PMB Nhon
Trach Power
Complex
LILAMA – CC1
contractors
EPC contractors
65,8
97
131
Billion VND
Million USD
Million EUR
2006 - 2008
13
Uong Bi
Extension coal-
fired thermal
power factory
(1x300MW)
Thermal Power
Plant PMB No.
1 (EVN)
EPC contractor 338,7
245
Billion VND
Million USD 2003 - 2006
14
Song Thao
cement factory
(2.500 tons
clinker/day)
Song Thao
cement JSC EPC contractor
613
19
8
Billion VND
Million USD
Million EUR
2005 - 2006
15
Dung Quat
chemical oil
refinery (capacity
6,5 million
tons/year)
Technip
Consortium
Manufacturing,
installing crude oil
tube, processed oil
tank, link pipeline,
harbor, bridge.
Manufacture pipe,
painting and
installing
equipments.
96 Million USD 2006 - 2009
16
National
Convention
Center
PMB of
investment in
building
Parliament
house and Ba
Dinh hall (new)
Processing,
manufacturing,
installing whole
steel and rooftop
structure; Purchase
and install
electricity, air
conditioner,
lighting equipment
1.178 Billion VND 2004 - 2006
VIET NAM MACHINERY INSTALLATION CORPORATION INFORMATION DISCLOSURE
IPO Adviser: SAI GON – HA NOI SECURITIES JOINT STOCK COMPANY Page 24
5. Employment Situation
5.1. Income
No. Criteria Year 2012 Year 2013 Year 2014
1 Total payroll fund (VND) 93.009.000.000 91.618.000.000 95.878.000.000
2 Total employee (person) 783 785 706
3 Average income
(VND/person/month)
9.900.000 9.730.000 11.317.000
Source: LILAMA
5.2. Labor structure and level of education
- Total employees in labor list of the Corporation before equitization is: 717 persons
- Classification of labor force as shown below (as on 10/03/2015):
Seq. Classification Employee Rate
I By level of education 717 100%
1 University degree and postgraduate 513 72%
2 College, vocational level 22 3%
3 Lower college level, technical worker 99 14%
4 Other 83 12%
II By labor contract 717 100%
1 Enterprise management officers (not
subjected to sign labor contract) 10 1%
2 Indefinite term labor contract 425
59%
3 1-3 years labor contract 233
32%
4 Other 49
7%
Source: Lilama
- Labor structure after the equitization
Seq. Degree level Employee Rate
I By level of education 717 100%
1 University degree and postgraduate 513 72%
VIET NAM MACHINERY INSTALLATION CORPORATION INFORMATION DISCLOSURE
IPO Adviser: SAI GON – HA NOI SECURITIES JOINT STOCK COMPANY Page 25
Seq. Degree level Employee Rate
2 College, vocational level 22 3%
3 Lower college level, technical worker 99 14%
4 Other 83 12%
II By labor contract 717 100%
1 Enterprise management officers (not
subjected to sign labor contract) 10 1%
2 Indefinite term labor contract 425
59%
3 1-3 years labor contract 233
32%
4 Other 49
7%
Source: Lilama
6. Enterprise value at the time of 01/07/2015
According to Decision No. 269/QĐ-BXD dated 10/03/2015 of the Ministry of Construction on
the enterprise value for equitization Parent company – Vietnam Machinery Installation
Corporation, the value of the parent company as at 0h on 01/07/2014 for equitization as
followed:
In: VND
Criteria Accounting
number
Reevaluated
number Differences
1 2 3 4=3-2
A. In use assets (I+II+III+IV) 5.647.489.584.102 5.854.977.992.429 207.488.408.327
I. Fixed assets and long-term investments 1.427.065.762.693 1.530.923.393.606 103.857.630.913
1. Fixed assets 86.885.426.704 216.470.193.402 129.584.766.698
1.1. Tangible fixed assets 86.885.426.704 216.351.059.402 129.465.632.698
1.2. Intangible fixed assets - 119.134.000 119.134.000
2. Long-term financial investments 1.262.321.664.651 1.234.342.406.797 (27.979.257.854)
3. Construction in progress 67.479.550.536 67.479.550.536 -
4. Long-term prepaid expenses 9.915.120.802 12.167.242.871 2.252.122.069
5. Other long-term assets 464.000.000 464.000.000 -
II. Current assets and short-term
investments
4.176.994.482.112 4.240.989.121.885 63.994.639.773
VIET NAM MACHINERY INSTALLATION CORPORATION INFORMATION DISCLOSURE
IPO Adviser: SAI GON – HA NOI SECURITIES JOINT STOCK COMPANY Page 26
Criteria Accounting
number
Reevaluated
number Differences
1. Cash and cash equivalent 560.157.709.179 560.157.709.648 469
+ Cash in hand 1.857.543.031 1.857.543.500 469
+ Cash in bank 428.414.159.246 428.414.159.246 -
+ Time deposit 129.886.006.902 129.886.006.902 -
2. Short-term financial investment 561.135.273.390 561.135.273.390 -
3. Receivables 2.302.489.868.193 2.368.545.714.187 66.055.845.994
4. Material and merchandise inventory 672.695.265.193 672.695.265.193 -
5. Other current assets 80.516.366.157 78.455.159.467 (2.061.206.690)
6. Non-business expenditure - - -
III. Goodwill - 5.258.589.791 5.258.589.791
IV. Land use right 43.429.339.297 77.806.887.147 34.377.547.850
B. Asset not to used 11.030.143 11.030.143 0
(Only recorded as shown in accounting
book)
I. Fixed assets and long-term investment
1. Fixed assets and long-term investment 11.030.143 11.030.143 0
II. Current assets and short-term
investment - - -
1. Receivables that are unable to be paid - - -
C. Assets waiting for liquidation 354.435.629 354.435.629 0
I. Fixed assets and long-term investment 354.435.629 354.435.629 -
1. Fixed assets and long-term investment 354.435.629 354.435.629 -
II. Current assets and short-term
investment - - -
D. Assets formed from welfare and
reward fund
- - 0
TOTAL ENTERPRISE’S ASSET
VALUE (A + B + C + D)
5.647.855.049.874 5.855.343.458.201 207.488.408.327
In which: 0
VIET NAM MACHINERY INSTALLATION CORPORATION INFORMATION DISCLOSURE
IPO Adviser: SAI GON – HA NOI SECURITIES JOINT STOCK COMPANY Page 27
Criteria Accounting
number
Reevaluated
number Differences
TOTAL REAL ENTERPRISE VALUE
(Section A)
5.647.489.584.102 5.854.977.992.429 207.488.408.327
E1. Real payables 5.074.630.954.963 5.074.653.954.963 23.000.000
In which: the value of Land use right
received that must paid to state budget - - -
E2. Non-business expenditure resources - - 0
E3. Exchange rate differences during
capital construction investment
- - 0
E4. Differences between receivables and
payables of Project management board
- - 0
TOTAL STATE OWNED VALUE IN
THE ENTERPRISE [A-(E1+E2)]
572.858.629.139 780.324.037.466 207.465.408.327
Source: Enterprise value report of LILAMA
According to the clause no. 11 of Article 1 of the Decision no. 1036/QĐ-TTg dated
10/07/2015 of Prime Minister on the approval for equitization plan of Parent company -
Vietnam Machinery Installation Corporation and transform into Joint stock company:
exclude the number of 474,97 billion VND, which is the long-term investments, as well
as bad debts at VIFA Coat., JSC (VIFA) and Lilama Hanoi., JSC from Parent company
value. Vietnam Machinery Corporation – Joint stock company has the liability to take
over the entire rights and liabilities of state investor in VIFA until VIFA has already
complete the bankruptcy procedure as decided by the court; together with transferring
the investment fund and bad debt of Lilama Hanoi., JSC to Debt and Asset Trading
Corporation (DATC). LILAMA has handed in the bad debt in 10/2015.
Until now, Tax authority has not yet checked and performed advanced tax clearing as at
30/06/2014 of LILAMA. Thus, the balance related to the liability toward the State is
being determined based on the balance in accounting book. LILAMA continue to
propose the Tax authority on checking and perform tax clearance as to enterprise value
determination time and proceed the adjustments (if any) in Financial statements from the
time of enterprise value determination to the time LILAMA will officially transfer to
Joint stock company.
7. Enterprise main assets
7.1. Land: Currently, LILAMA is managing and using 07 lots of lands for business activities
purpose. Details are as followed:
VIET NAM MACHINERY INSTALLATION CORPORATION INFORMATION DISCLOSURE
IPO Adviser: SAI GON – HA NOI SECURITIES JOINT STOCK COMPANY Page 28
No. Description Area (m2)
Works
on land
Using
purpose Used form Period of using
Plan for using land after
equitization
Value of land use
right that count
into enterprise
value
1 Land on No. 124
Minh Khai, Hai Ba
Trung district,
Hanoi
6.505,0 Office
building
Corporation
office
building
Hired land
with yearly
leasing fee
Certificate of land using right
no. 762671 dated 14/4/2015
issued by Hanoi Environment
and Natural resources
department with area of 5.777
m2
Lease contract no. 22/HĐTĐ
on 07/01/2014:
- Lease for 50 years
since1993 with 5.777 m2
beyond redline boundary.
- Annual lease of 728 m2 in
redline boundary.
Continue using for
corporation office
building purpose
0
2 Land on No. 124
Minh Khai, Hai Ba
Trung district,
Hanoi (*)
1.397,2 21 floors
mixed
building
Working
office for
lease from
1st floor to
3rd
floor
State allocated
the land with
annual using-
fee collection
In long-term according to
certificate on using right of
land, house and assets on land
no. BS 762756 date 25/6/2015
There are mixed office
and housing building on
land, in which LILAMA
owned office zone from
1st floor to 3
rd floor. As to
office zone, LILAMA
will transfer when all the
legal procedures are
completed.
10.173.967.147
VIET NAM MACHINERY INSTALLATION CORPORATION INFORMATION DISCLOSURE
IPO Adviser: SAI GON – HA NOI SECURITIES JOINT STOCK COMPANY Page 29
No. Description Area (m2)
Works
on land
Using
purpose Used form Period of using
Plan for using land after
equitization
Value of land use
right that count
into enterprise
value
3 Land on No. 124
Minh Khai, Hai Ba
Trung district,
Hanoi
1.467,4 Park
garden,
internal
roads of
21 floors
building
Park
garden,
internal
roads of 21
floors
building
Lease land
with annual
payment
50 years since 2010 as in land
lease contract no. 282/HĐTĐ
on 30/05/2014 and certificate
on using right of land, house
and assets on land no. BS
762756 on 25/6/2015
LILAMA will transfer all
the responsibilities to the
party who receives the
transferring of LILAMA’s
office zone
0
4 Lot 5, road 33 m on
Hoa Cuong Nam
ward, Hai Chau
district, Da Nang
city (**)
9.023,3 None Manufactur
e and
trading
State allocated
the land with
payment of
annual rent
In long-term according to
Certificate of land using right
no. AI 303132 dated
20/12/2007
Proceed the auction
according to current law
67.632.920.000
5 Bac Vinh industrial
zone, Hung Dong
commune, Vinh
city, Nghe An
province
530.331,2 Industrial
infrastruc
ture
Land for
lease
Lease land
with annual
payment
Until 2048 as stated in
certificates on using right of
land no. AI 189937 dated
04/06/2008, AE 761050 dated
07/09/2006 and BA 845246
dated 07/10/2010; Land lease
contracts no. 86/HĐTĐ dated
10/08/2006, No. 34/HĐTĐ
dated 21/05/2008, No.
91/HĐTĐ dated 07/07/2010
Capital withdrawal or
transfer to other investors
according to current law
0
VIET NAM MACHINERY INSTALLATION CORPORATION INFORMATION DISCLOSURE
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No. Description Area (m2)
Works
on land
Using
purpose Used form Period of using
Plan for using land after
equitization
Value of land use
right that count
into enterprise
value
6 Land on Phuoc
Long ward, district
9, Ho Chi Minh
city (***)
12.273,2 Combined
Office and
Apartment
Building
(19 floors)
State allocated
the land with
payment of
annual rent
Continue invest or
transfer to other investors
30.719.805.800
7 Land on lot 9 – E6
Pham Hung, Hanoi
(****)
8.157,0 None Build
headquarter
office
(certificate
for
investment
no.
011210010
12)
State allocated
the land with
payment of
annual rent
Continue invest if there
are sufficient decisions in
term of market and capital
0
Total 562.649,30
Source: LILAMA
(*) The area of 1.397 m2 of mixed office and house buildings was granted in the form of State allocated the land with annual using-fee collection and
long-term of using. This is the shared using area between inhabitants in Lilama 21 floors building and Lilama itself.
Decision no. 1323/QĐ-UBND dated 23/3/2010 of Hanoi People Committee allows LILAMA use 2.864,6 m2 in which:
+ 1.397,2 m2 of land had have mixed office and houses buildings and was granted in the form of State allocated the land with annual using-
fee collection and long-term of using. This is the shared using area between inhabitants in Lilama 21 floors building and Lilama itself. Currently,
According to Land Law in 2013, the land which is used to build working office buildings is not under the form of State allocation.
VIET NAM MACHINERY INSTALLATION CORPORATION INFORMATION DISCLOSURE
IPO Adviser: SAI GON – HA NOI SECURITIES JOINT STOCK COMPANY Page 31
Thus, LILAMA has not yet allocated, revaluated the land using right that corresponds to
03 office floors and 50% of basement area, which belong to LILAMA ownership and is
calculated in equitized enterprise value. The revaluation of this land and its using right
will depend on the official approval of Hanoi People committee. The 10.173.967.147
VND value of using right which calcuted as enterprise value is based on LILAMA
accounting book value.
+ 1.467,4 m2 land area for road, garden, auxiliary work, basement area, are
outside the allocated area with annual payment form. The period of using land is 50
years since 23/03/2010. The 1467,4 m2 land area with annual payment thus cannot be
estimate value of using right in equitized enterprise value.
(**) The value of land using right which is calculated in enterprise value for equitization
is 67.632.920.000 VND.
(***) Lilama has paid for land using right the amount of 30.719.805.800 VND and is
waiting Ho Chi Minh Departmetn of Finance and HCM People Committee approve for
additional land using fee. The value of land using right which is calculated in enterprise
value for equitization is 30.719.805.800 đồng.
Lilama proposed to change the architecture planning (from 9 floors uilding to 19 floors
building) and was approved by functional authorities in these documents: Decision no.
115/QĐ-UBND dated 24/5/2010 of district no.9 - HCM People Committe on approval on
detailed plan proportion 1/500 the mixed house with working office zone on Phuoc Long
ward, District no. 9 with the area of 12.273,2 m2; Document no. 1647/UBND-QLĐT
dated 03/11/2011 of district no.9 - HCM People Committe on approval for housing
development investment plan; mixed house with working office zone on Phuoc Long ward,
District no. 9, which has LILAMA as its main investor. Due to the changes in architecture
plan criteria, the Corporation is working with Ho Chi Minh Department of Finance and
price appraisal advisor in order to determine the additional land using fee to submit. Thus,
there is no land allocation decision to Lilama and is unable to determine the using period.
There is no party for co-investment now. Based on the guideline of the Corporation’s
management, the project will be hold until there is sufficient condition for continue
undertaking or transferring according to the current law.
(****) Lilama has just made the deposit for land using right of 8,157 billion VND. As the
Corporation has not yet fulfill its liability for its using, thus there is no land allocation
decision by Hanoi People Committee as well as land using certificate. According to Land
Law in 2013, land for building working office zone is not under the form of allocation,
therefore there is no process of evaluation to calculate into equitized enterprise value.
According to these documents: Document no. 2452/QHKT-TH dated 30/12/2003 of Hanoi
Architecture and Scheme on introducing the location for building project; Decision no.
1987/QĐ-UBND dated 11/11/2008 of Hanoi People Committee on agreeing to research
for office building on Cau Giay new Urban zone, in which LILAMA is handed to research
VIET NAM MACHINERY INSTALLATION CORPORATION INFORMATION DISCLOSURE
IPO Adviser: SAI GON – HA NOI SECURITIES JOINT STOCK COMPANY Page 32
and make project on land lot no. 09-E6; Document no. 997/QHKT-P1 dated 07/04/2010
Hanoi Architecture and Scheme on the deal of entire land surface and design plan of
LILAMA heart quarter on land lot no. E6 on Cau Giay new urban zone; Investment
certificate no. 01121001012 issued on 02/08/2011 by Hanoi People Committee, the
project scale that LILAMA intends to proceed is as followed:
30 floors tower, in which 5 floors with 2.847 m2 area will be used for trading and service,
highed-floors zone with 1.629 m2 zone will be used for the Corporation’s heart quarter and
leasing office. The main criteria of the work are:
- Land area: : 8.157 m2
- Construction area : 2.847,5 m2
- Floor area : 54.901,5 m2
- Technical floor area : 1.629 m2
- Basement area : 2 x 6.685,9 = 13.371,8 m2
- Building density : 30,6%
- Floor height : 30 floors + 2 basement floors + 1 technical floor.
- Total uilding height : 126,4 m
Currently Lilama has not yet proceeded the project due to difficulty in invested capital.
7.2. Fixed assets as on 30/06/2014
STT Assets Accounting value Revaluation
Original cost Retained value Original cost Retained value
A. In used fixed assets
450.201.017.107
130.314.766.001
546.012.215.028
294.277.080.549
1. Tangible fixed assets
406.176.007.810
86.885.426.704
467.609.657.881
216.351.059.402
1.1 Building &
architectonic model
60.303.111.722
32.484.894.299
121.180.835.940
84.666.396.083
1.2 Equipment & machine
3.128.741.416
273.658.710
3.210.294.413
1.507.858.719
1.3 Means of Transportation
296.950.604.623
46.656.560.955
297.372.554.441
111.619.726.310
1.4 Instruments & tools for
management
8.837.664.591
855.146.948
8.890.087.629
3.167.058.803
1.5 Other fixed assets
36.955.885.458
6.615.165.792
36.955.885.458
15.390.019.487
2. Intangible fixed assets
44.025.009.297
43.429.339.297
78.402.557.147
77.926.021.147
2.1 Land using right
43.429.339.297
43.429.339.297
77.806.887.147
77.806.887.147
2.2 Software
595.670.000
-
595.670.000
119.134.000
B. Not in used fixed assets
201.621.900
11.030.143
201.621.900
11.030.143
2. Intangible fixed assets
201.621.900
11.030.143
201.621.900
11.030.143
2.1 Software
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STT Assets Accounting value Revaluation
Original cost Retained value Original cost Retained value
201.621.900 11.030.143 201.621.900 11.030.143
C. Fixed assets waiting
for liquidation
27.987.822.934
354.435.629
27.987.822.934
354.435.629
1. Tangible fixed assets
27.987.822.934
354.435.629
27.987.822.934
354.435.629
1.1 Building &
architectonic model
-
-
-
-
1.2 Equipment & machine
5.228.750.550
354.435.629
5.228.750.550
354.435.629
1.3 Means of Transportation
18.917.797.200
-
18.917.797.200
-
1.4 Other fixed assets
3.841.275.184
-
3.841.275.184
-
D.
Assets formed from
welfare and reward
fund
Total
478.390.461.941
130.680.231.773
574.201.659.862
294.642.546.321
Source: Enterprise value for equitization report
Since the time of enterprise valuation, the Corporation has no significant changes in fixed assets.
8. List of equitized enterprise’s subsidiaries, Affiliates and financial investment
8.1. Subsidiary companies as at 30/6/2015:
Seq. Company name
Charter capital
Address Million
VND
Ownersh
ip (%)
1 Lisemco JSC 162.596 79,98 Km no. 6, Highway 5, Hung Vuong ward,
Hong Bang district, Hai Phong
2 Lilama 5 JSC 50.000 51,00 179 Tran Phu road, Ba Đình,
Bim Son town, Thanh Hoa
3 Lilama 7 JSC 50.000 51,00 No. 332, 2/9 road, Hoa Cuong Bac ward,
Hai chau district, Da Nang city
4 Lilama 10 JSC 90.000 51,00 Lilama 10 building, Le Van Luong
expand road, Tu Liem district, Hanoi city
5 Lilama 18 JSC 86.936 51,00 Floor 9/19 Ho Tung Mau, District 1,
Ho Chi Minh city
6 Lilama 45-1 JSC 48.000 51,00 140 Dien Bien Phu, District 1 Ho Chi Minh
city
7 Lilama 69-1 JSC 70.150 51,00 17 Ly Thai To, Bac Ninh city,
Bac Ninh province
8 Lilama 69-2 JSC 57.418 53,08 26 Tan Vien street, Thuong Ly ward, Hong
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Seq. Company name
Charter capital
Address Million
VND
Ownersh
ip (%)
Bang district, Hai Phong city
9 Lilama 69-3 JSC 77.696 66,77 515 Dien Bien Phu, Binh Han ward, Hai
Duong city
10 Lilama Mechanical
Installation JSC 32.651 51,00
72E Hoang Dieu road, Thanh Binh ward,
Ninh Binh city, Ninh Binh province
11 Lilama UDC JSC 160.000 70,31 Room 506, Building 101 Lang Ha road,
Đong Đa district, Hanoi city
12 LHT Internaltional
Engineering JSC 32.000 60,00
Floor 3, Lilama 21 floors building,
124 Minh Khai, Hanoi city
13 Song Vang hydroelectric
JSC 148.206 53,84
115 Tran Nu Vuong, Binh Hien ward, Hai
Chau district, Da Nang city
14 Song Ong hydroelectric
JSC (*) 74.000 80,99
La Vang hamlet, Quang Son commune,
Ninh Son district, Ninh Thuan province
15 VIFA Coating JSC (**) 69.000 85,67 Dong Hai industrial zone, Hai An district,
Hai Phong province
(*) As to Song Ong hydroelectric JSC: as on 14/07/2015, LILAMA has finished all related
procedures for capital withdrawal through auction to Song Da 505 JSC and Refrigeration
Electrical Engineering JSC (REE).
(**) As to VIFA Coating JSC (VIFA): According to the Decision no. 1036/QĐ-TTg dated
10/7/2015, the Prime Minister has approved to deduct the value of LILAMA’s investment
and bad debts on this subsidiary from LILAMA enterprise value for equitization with the
amount of 291,49 billion VND. Vietnam Machinery Installation JSC will inherit all the
rights and liabilities of the stakeholders on VIFA until it complete all the procedures for
bankruptcy accordance to the Court’s decision.
8.2. Affiliates and financial investments as at 30/6/2015:
Seq Company name
Charter capital
Address Million
VND
Owning
(%)
1 Lilama M & E Installation &
Testing JSC 15.000 36,18
434-436 Nguyen Trai, Trung Van,
Nam Tu Liem district, Hanoi city
2 Lilama 3 JSC 51.500 49,78 Lot 24+25 Quang Minh Industrial
zone, Me Linh, Hanoi city
3 Lilama 45-3 JSC 35.000 40,83 Lot 4K, Ton Duc Thang,
Quang Ngai city
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Seq Company name
Charter capital
Address Million
VND
Owning
(%)
4 Lilama 45-4 JSC 40.000 46,06 Binh Da ward, Bien Hoa ward,
Dong Nai province
5 Lilama construction and
technology design consultant 20.000 10,00
1st floor, E3A Building, 12 floors
building, Yen Hoa urban area, Yen Hoa
ward, Cau Giay district, Hanoi city
6 CIMAS Engineering
Company Limited 63.401 33,00
6th floor, Charmvit building, 17
Tran Duy Hung, Cau Giay, Hanoi
7 Lilama real estate JSC 209.425 27,93 Room 501, 5
th floor, DMC
building, 535 Kim Ma, Ba Đinh, Hanoi
8 Song Thao cement JSC 639.400 18,74 Ninh Dan commune, Thanh Ba
district, Phu Tho province
9 Ha Na hydroelectric JSC 2.160.004 4,04
Floor 8+9 Nghe An petro building, 7
Quang Trung, Vinh city, Nghe An
province
10
Lilama Mechanical –
Electrical – Enviromental
JSC
39.000 5,64
6th floor, VP Thang Long building,
98A Nguy Nhu Kon Tum, Thanh Xuan,
Hanoi
11 PetroVietnam Marine
Shipyard JSC 594.897 4,03
65A2, 30/4 road, Thang Nhat ward, TP
Vung Tau, Ba Ria – Vung Tau
province
12 Thang Long cement JSC 4.210.000 0,71 Le Loi commne - Hoanh Bo district -
Quang Ninh province
13 Lilama – SHB Investment
and Construction JSC 100.000 2,00 81 Hoang Dieu, TP Đa Nang
14 SHB 8.865.795 0,705 77 Tran Hung Đao, Hoan Kiem, Hanoi
15 Lilama Ha Noi JSC (*) 100.000 49,97 Lot 14, Quang Minh,
Me Linh, Vinh Phuc
(*) As to Lilama Ha Noi JSC: As at 30/06/2014, the owner capital of this company has
negative amount of (401.398.814.704) VND due to its accumulated loss of
(525.649.334.825) VND, which is 4 times of charter capital. All its activities depend on
lending fund and capital appropriated source. Total asset as at 30/06/2014 of the company
is 642 billion VND, meanwhile the liabilities is 1.043 billion VND. So, the company’s
financial source can be guaranteed for its liquidation ability. Its continuous operation
largely depends on financial restructuring, debt clearance, capital payback from undertook
projects. According to Decision no. 1036/QĐ-TTg dated 10/7/2015, the Prime Minister has
approved to deduct LILAMA’s investment and bad debt on this subsidiary from LILAMA
enterprise value for equitization with the amount of 183,47 billion VND. The corporation
will transfer the above stated investment capital and the bad debt to Vietnam Debt and
Asset Trading Corporation (DATC).
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8.3 Financial Investment Companies as at 30/6/2015:
TT Company
Charter
capital
(million
VND)
LILAMA’s
ownership
(%)
Main
business
lines
Address
1
Lilama construction
and technology
design advisory
company
20.000 10 Design
advisory
Floor 1, building E3A, 12
floors building, Yen Hoa
urban, Yen Hoa ward, Cau
Giay District, Hanoi
2 Song Thao Cement
JSC 639.400 18,74 Cement
Ninh Dan commune, Thanh
Ba district, Phu Tho
province
3 Hua Na hydroelectric
JSC 2.160.004 4,04 Hdroelectric
Floors 8+9 Nghe An
Petrolimex Building, no. 7
Quang Trung, Vinh City,
Nghe An province
4
Lilama Mechanic –
electric –
Environment JSC
39.000 5,64
Electric
mechanical,
waste
treatment
Floor 6, VP Thang Long
Building, 98A Nguy Nhu
Kon Tum, Thanh Xuan, HN
5 Oil rig fabrication
JSC 594.897 4,03
Rig
fabrication
65A2 road 30/4, Thang
Nhat ward, Vung Tau City,
Ba Ria - Vung Tau province
6 Thang Long cement
JSC 4.210.000 0,71 Cement
Le Loi commune - Hoanh
Bo district - Quang Ninh
province
7
Lilama – SHB
investment –
Construction JSC
100.000 2 Construction 81 Hoang Dieu, Đa Nang
8 SHB 8.865.795 0,705 Banking 77 Tran Hung Đạo, Hoan
Kiem, Ha Noi
9. Business situation and performance of 3 years prior equitization
9.1. Business operational situation
9.1.1. Production and Service value through years
- Consolidated revenue of the consolidated Corporation
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In: Million VND
Seq. Activity 2012 2013 2014
Value Prop
%
Value Prop
%
Value Prop
%
1 EPC, installation 9.799.200 65,34 5.673.900 64,23 5.461.958 65,37
2 Mechanical manufacture 4.233.000 28,22 2.454.600 27,79 2.305.000 27,59
3 Design consultancy 301.300 2,01 98.600 1,12 149.105 1,78
4 Other products, services 664.100 4,43 606.400 6,86 438.550 5,25
Total 14.997.700 100,00 8.833.500 100,00 8.354.613 100,00
Source: LILAMA
EPC, Installation and mechanical manufacture activities are 2 main fields of the
Corporation, which contribute large proportion into consolidated revenue of entire
Corporation (92 – 93% of consolidated revenue). In which, EPC and installation
occupies 65% in revenue structure.
- Consolidated and Gross profit
Chỉ tiêu 2012 2013 2014
Revenue 14.997,7 8.833,5 8.354,6
Gross profit 1.099,7 1.012,9 806,5
Gross profit margin 7,3,% 11,5% 9,7%
2012-2014 audited financial statements
- Revenue of Parent company
In: Million VND
Seq
.
Activity 2012 2013 2014
Value Prop
%
Value Prop
%
Value Prop
%
1 EPC, installation 9.616.564 95,58 2.879.178 89,82 3.307.799 90,59
2 Mechanical manufacture 183.404 1,82 111.806 3,49 132.258 3,62
3 Design consultancy 141.930 1,41 79.630 2,48 130.564 3,58
4 Other products, services 119.014 1,18 134.718 4,20 80.875 2,21
Total 10.060.912 100,00 3.205.332 100,00 3.651.496 100,00
Source: 2012-2014 audited financial statements of Parent company
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EPC and installation contribute largely into the Parent company’s revenue structure, 95,
58%; 89,82%; 90,59% in 2012, 2013, 2014, respectively.
The revenue of the Parent company, as well as the whole Corporation witnesses
decrease trend (mostly in EPC and installation activities) due to negative world
economic crisis, which forced Vietnam in reducing, delaying the investment in large
industrial projects and led to the decrease in EPC’s revenue. Further, in this period, some
projects that the Corporation plays role as main contractor are stepping into fulfillment
time, so the paybacks are not high. Lastly, because the Foreign Direct Investment (FDI)
for Vietnam is reduced that badly affects the increasing in new projects, the revenue of
the Corporation is below expectation.
- Gross profit of Parent company
In: Million VND
Seq. Activity 2012 2013 2014
Value Prop
%
Value Prop
%
Value Prop
%
1 EPC, installation 173.157 65,98 231.983 86,24 41.847 44,52
2 Mechanical manufacture 43.521 16,58 199 0,07 9.258 9,85
3 Design consultancy 38.320 14,60 21.897 8,14 33.947 36,11
4 Other products, services 7.433 2,83 14.907 5,54 8.949 9,52
Total 262.431 100,00 268.986 100,00 94.001 100,00
Source: 2012-2014 audited financial statements of Parent company
EPC and installation has significant contribution into gross profit structure of the Parent
company, occupies 65,98% in 212, 86,24% in 213 and 44,52% in 2014. Besides, despite
the small proportion in total revenue of the Corporation, Design consultancy field is
second contributor into gross profit structure in 2014.
- Revenue and Gross profit of Parent company:
In: Million VND
Criteria Year 2012 Year 2013 Year 2014
Revenue 10.060.912 3.205.332 3.651.496
Gross profit 262.431 268.986 94.001
Gross profit margin 2,61% 8,39% 2.57%
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Source: 2012-2014 audited financial statements of Parent company
9.1.2. Supply of goods and input materials
- Supply of goods and materials :
LILAMA has been searching for diversified supply sources, meanwhile setting up
long-term relationship with trustworthy and experienced suppliers in order to serve
the requirements of the projects.
As to the goods produced domestically, LILAMA has always oriented itself towards
building a strong relationship with capable and qualified suppliers who can satisfy
all the quality requirements for the projects with reasonable and competitive prices.
As to the types of goods that are compulsorily required for sources and quality that
cannot be produced domestically, LILAMA will choose the trustworthy and capable
international suppliers based on their product quality and competitive prices.
Some of LILAMA’s main suppliers:
Partner Country Types of
material/equipment
Foster Wheeler
Doosan
Babcock & Wilcox
Mitsubishi
USA
Korea
China
Japan
Steam boiler
GE
Siemens
Alstom
Toshiba, Mitsubishi
Doosan
USA
Germany
France
Japan
Korea
Turbine, generator
Torishima, Kawasaki, Organo
FLSmidth
FAM
Techpro
KC Cottel
Hamon
Salcon
Ghoshu Koshan
Japan
Denmark
USA
India
Korea
France
Singapore
Thailand
BOP equipment for electrical
power plant
FLSmidth
Polysius
Denmark
Germany
Equipments for cement
factory
JGC Japan Equipments for chemical oil
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Partner Country Types of
material/equipment
Technip
SK, GS
CTCI
France
Korea
Taiwan
refineries
Sumitomo, Marubeni
Hyundai, Daelim, Samsung
Japan
Korea
Equipments for electrical,
chemical oil refinery
GE, Honeywell
Siemens
Alstom
ABB
Misubishi, Yokogawa
LG
USA
Germany
France
Switzerland
Japan
Korea
Electrical and measurement
equipments
Hanwa
Sincerity, Weigang, Kingsgrating
CNT, Tan Co, Hong Ma, IPC
Kimsco
Kaefer
Japan
Taiwan
Vietnam
Korea
Thailand
Steel and iron materials,
tubes, paint, insulation
material, electrical and I&C
equipment
- The stability of the supply:
LILAMA has already built up a traditional suppliers system through the process of
implementing projects, thus the corporation can actively search for the stable material
and equipment supply that satisfied the technical and quality requirements for the
projects.
- The impact of input goods prices to revenue:
The projects, which LILAMA have been implementing, are often in long-term and
the value of materials and equipment occupies a large proportion in the contracts’
value. Therefore, the changes in prices of input goods (materials and equipments)
will affect directly LILAMA’s profit.
In order to reduce the impact of price fluctuations, besides retaining and developing
the connections with traditional suppliers, LILAMA has actively controlled its costs
by estimating the price changes and inflation at the stage of bidding dossier
preparation, negotiation and contract signing.
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9.1.3. Operation costs
Consolidated operation costs
In: million VND
TT Costs
Year 2012 Year 2013 Year 2014
Value %/Rev Value %/Rev Value %/Rev
1 COGS 13.898.012 92,67% 7.820.617 88,53% 7.548.082 90,35%
2 Financial cost 888.833 5,93% 704.432 7,97% 524.745 6,28%
3 Selling cost 3.276 0,02% 1.577 0,02% 1277 0,02%
4 Admin cost 418.281 2,79% 346.252 3,92% 331.350 3,97%
Total 15.208.402 101,41% 8.872.878 100,45% 8.405.454 100,61%
Source: 2012-2014 audited consolidated financial statement
Operation costs of the Parent company
In: million VND
TT Costs
Year 2012 Year 2013 Year 2014
Value %/Rev Value %/Rev Value %/Rev
1 COGS 9.798.481 97,39% 2.936.346 91,61% 3.557.496 97,4%
2 Financial cost 447.683 4,45% 293.009 9,14% 164.121 4,49%
3 Selling cost - 0% - 0% - 0%
4 Admin cost 136.561 1,36% 100.181 3,13% 42.355 1,16%
Total 10.382.725 98,75% 3.329.536 94,73% 3.763.972 98,59%
Source: 2012-2014 audited financial statement of parent company
Cost of goods sold: with the special characteristic of an installation enterprise, COGS is the
largest cost of the company. The proportion of this cost over years is more than 90%
revenue, even in 3 recent years the proportion is 97% of the revenue.
Financial cost: Financial cost is the second largest payment in company’s operation costs,
which has decrease trend over years because:
Decrease of cost for exchange rate difference: In recent years, foreign currency
payment of LILAMA has a decrease trend due to the drop of equipment import for
EPC contracts such as Vung Ang 1, Nhon Trach 2 projects compared to previous
years; meanwhile USD exchange rate is quite stable and has no significant changes.
Provision for financial investment: In previous years, because of economic crisis,
high lending interest, crisis in securities market, LILAMA’s subsidiaries have
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inefficiency performances. Thus, LILAMA had to make provisions for decrease in
financial investments. Together with the recovery of the economic, securities market,
and employment market, the companies that have LILAMA’s capital are getting
better, which leads to the decrease in provision amount.
Lending interest: In recent years, bank’s lending interest has been kept low, only
10%/year in the current time.
Selling cost: As operates in installation field, the Parent company has no additional amount
in selling cost like production enterprises.
Administration cost: Admin cost of the Parent company has a large fall compared to year
2013. This is because that the company is in the middle of equitization process, thus
the company made no provision for additional bad debts.
9.1.4. Quality control situation
LILAMA is applying the quality control system followed ISO 9001:2008 standard.
- Structure of quality control document:
- Quality control department: LILAMA sets up and maintains quality control department
in the corporation internally as well as in the construction site of project committees.
- Quality control process and method of production and service: LILAMA sets up a full
system of detailed process for each stage, and exact way to perform the testing and
QUALITY PROCESS 2
nd level document include:
Process of quality system * Work content
* Method
* Time
* People in charge
* Reference
* Phụ lục.
REFERENCES, FORMS OR GUIDELINES
3rd
level document include:
Detailed guidelines and references for user
on the process
* Forms
* Reports
1st level document include:
* Policy declaration
* Organization
* Rights and responsibilities
* General outline
* Process list
* Appendix
QUALITY POLICY HANDBOOK
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control procedure. This system is unified applied to the whole corporation. Kinds of
procedure are listed below:
+ Contract review
+ Design control
+ Procurement
+ Manufacturing control
+ Internal control evaluation
+ Testing and experimentation
+ Non-conforming product control
+ Correction and prevention activities
+ Data and document control
9.1.5. Policy for health, safety and environment
LILAMA applies policies for safety, health and environment followed OHSAS 18001:
2007 and ISO 14001:2004 standards.
- Structure of control system for health, safety and environment:
Handbook of safety for occupational health and environment
General control policy on safety of occupational health and environment,
Organization structure and detailed responsibility of main positions in the
corporation,
General principles in implementing the requirements under OHSAS 18001: 2007
and ISO 14001:2004 standards,
Collect all the information of activities in corporation’s departments and project
committees that satisfied all the stated requirements health and environment
safety.
Procedures
There are detailed regulations on implementing procedure in accordance with quality
system for safety, health and environment. The guidelines for processes of
implementation include:
Office HSE regulation
Project HSE regulation
Provision and control of personal safety equipment regulation
Working at height procedure
Working on water surface procedure
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Lifting equipment operating procedure
Electrical safety procedure
Working in limited space procedure
Thermogenesis working procedure
Working on day off and at night procedure
Radiation safety procedure
Excavation Safety procedure
Diving safety procedure
Toxic chemicals and materials safety procedure
Labor accidents investigation and report procedure
Rectification and preventive procedure
Document control procedure
Internal evaluation procedure
Management reviews
etc
Forms, reports, internal standards, internal decisions:
Forms, meeting minutes are made under guidelines or from meeting related to
safety, health and environment.
Internal standards and decisions related to safety, health and environment.
- Safety, health and environment control division: LILAMA sets up and maintains
quality control division in the Corporation internally as well as in the construction site of
project management boards.
9.1.6. Marketing activities:
- Method for brand name promotion LILAMA has been applying:
Direct promotion methods: advertising, direct approach to partners and customers
through marketing department; approach to social activities and projects that
LILAMA has been implementing.
Indirect promotion methods: through social media such as newspaper, television,
LILAMA website (http://www.lilama.com.vn), send email to potential partners and
customers.
- Advertising policies:
LILAMA has always understood the importance of marketing and concentrated
build up a strategic marketing plan that best suits the corporation’s periodic strategic
business plan.
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LILAMA concentrates on building up its prestigious and trademark through
implementing the projects with care, safety, high quality and in a timely manner.
LILAMA cares for and maintains the solid relationships based on the closeness and
trust with traditional customers, increasing its trustworthiness to new customers
(both domestic and foreign)
9.1.7. Logo, trademark:
The above Logo and trademark of LILAMA has been registered under:
- Certificate of product trademark registration no. 55808 dated 21/07/2004, extended by
Decision no. 15700/QĐ-SHTT issued by National Office of Intellectual Property of
Vietnam under the Ministry of Science and Technology on 30/03/2012.
- Certificate of international trademark registration “LILAMA sharp” no. 848415 issued
by World Intellectual Property Organization (WIPO) on 17/12/2004, first extension on
17/12/2014 until 17/12/2024 in 14 countries: Austria, Belgium, Switzerland, China,
Czech Republic, Germany, Spain, Italia, France, Latvia, Poland, Romania, Russia and
Ukraine.
9.1.8. Technology level:
- Project management capacity:
LILAMA has thousands of experienced employees, engineers in project management
and technology of thermal power, hydroelectric, cement, chemical plants and mature in
the field. This labor force is the crucial source that helps LILAMA successfully
implement projects, especially EPC projects. Until now, LILAMA has accomplished
full package contract from design, procurement and installation of 2x600MW capacity
coal-fired thermal power projects, 2x700MW capacity gas-fired thermal power projects,
4x600MW capacity hydroelectric plant projects, 2.4 million tons/year capacity cement
projects.
- Capacity for equipment and steel structure manufacturing
LILAMA has 20 mechanical manufacturing factories with total capacity design is
200.000 tons/year, together with modern equipments and technological lines from
Asian, Europe, America countries such as: Metal cutting processing machine CNC,
8m diameter vertical lathe, 12m length plain-bed lathe, 12x6x2,3m big sized milling
machine, automatic and semi-automatic welding machines, 100mm thick plate
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bending machines, 6.5m in diameter & 30mm thick dish-head forming machines,
testing devices and I&C instruments, etc.
Until now, LILAMA can produce domestically 70% equipments in quantity to serve
cement factory projects’ needs, and 40%-45% for thermal power plant projects.
Further, the company also has exported its mechanical manufacture to India, Japan,
Russia, Middle East, EU, etc.
Mechanical products manufactured by LILAMA are all qualified for international
standards, gained trust and good comments from investors and partners.
- Installation and Fabrication capacity
LILAMA has a well-trained labor force of more than 22.000 engineers and technical
workers, in which there are about 3.000 high-level technical welders, experienced
and certified by many international organizations. Thanks to this direct labor source,
LILAMA can take full responsibility for installing whole volume of industrial
projects. The corporation has successfully installed many heavy and special
equipment like: 190 tons drum suspension girder at 80m height, 320 tons drum at
80m height, generator stator weighted nearly 300 tons, generator rotor for the
hydropower plant weighted nearly 1000 tons, equipment modules for oil refineries
weighted nearly 1.000 tons.
LILAMA has been investing into transportation and fabrication equipment for
serving the projects implementation. In which, there are some special equipments
like 150 tons trailer, 600 tons hydraulic jack,250 tons lifting crawler crane, and 50
tons lifting tower crane.
Some of main vehicles and construction equipments of LILAMA
Seq. Assets Quantity
(piece) Origin
1 600 tons hydraulic jack 01 Germany
2 280 tons crawler crane 01 Germany
3 250 tons crawler crane 07 Japan
4 180 tons crawler crane 01 Japan
5 100 to 150 tons Crawler and wheel lifting crane 20 Japan, Germany
6 50 to 100 tons Crawler and wheel lifting crane 37 Japan, Germany,
China
7 Below 50 tons Crawler and wheel lifting crane 67 Japan, Germany,
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Seq. Assets Quantity
(piece)
Origin
China
8 40 – 50 tons crane tower 03 China
9 20 tons crane tower 01 China
10 Truck mounted crane 19 Japan, Germany,
China, Korea
11 Trailer trucks, transportation trucks 68 Japan, Germany,
USA, China,
Korea
- Welding technology
LILAMA’s unit specialized in welding technology will take responsible for research
and learning newest and most modern welding technology, train welder, quality
control of welding work on projects of LILAMA.
The corporation is applying the most modern welding methods in the works like
welding in protective gas atmosphere (TIG, MIG, MAG), and apply of Surface
Tenion Transfer welding method.
Welds are checked by advanced equipments such as X-ray machine, ultrasound
machine, and magnetic testing equipments.
The Corporation’s welding technology has satisfied welding standards of:
o The American Society of Mechanical Engineers,
o The American Welding Society
o America Petroleum Institute – standard API – 1104
o European Union – EN 287-288 standard
o Japanese Industrial Standard (JIS) – JIS Welding standard
o The American Society of Nondestructive Testing standards
Corporation’s welder has done well on weld to link the steam pipe system in
thermal power plant, sugar plant, water piping system in hydroelectric plants.
9.1.9. Research and Development situation
- Besides remaining the current market share in mechanical manufacturing products,
LILAMA has been researching and developing high technique equipments that have
high value return. Details are: heat exchange equipment, the air dryer equipment,
handling equipment, large capacity industrial fans, crushing machine, etc.
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- LILAMA has been exporting its mechanical products, together with new product
development; the company is preparing to enter into global product chain of big
international corporations. LILAMA implements this plan through every single project,
by researching, applying new technology, and engaged into relationship with capable
and experienced parties both inland and outland markets.
- LILAMA has started to study, research and plan for expanding the installation activity to
international markets.
9.1.10. The past and current contracts:
Seq. Contract name Partner Product/Service Value In Progress
1
Mong Duong 1
coal-fired
thermal power
plant
(2x540MW)
HYUNDAI
Engineering &
Construction
Co., Ltd
Installation of the
Power Island 1.720 Billion VND 2012 - 2015
2
Parliament
house and Ba
Dinh new hall
Project
management
board(PMB) of
investment in
building
Parliament
house and Ba
Dinh hall (new)
Set up the system
of electric, fire
alarm, air
conditioner and
ventilation, water
supply and
drainage
361 Billion VND 2012 - 2016
3
Thai Binh 2
coal-fired
thermal power
plant
(2x600MW)
PetroVietnam
Construction
Joint stock
corporation
(PVC)
Installing all the
mechanical-
electrical
equipment of the
power plant
2.320 Billion VND 2014 - 2016
4
Vinh Tan 4
coal-fired
thermal power
plant
(2x600MW)
Doosan Heavy
Industries
Vietnam Co.,
Ltd
Installing the main
equipments of the
power plant
1.250 Billion VND 2014 - 2017
5
Lai Chau hydro
power plant
(3x400MW)
PMB of Son La
hydro power
plant
Manufacturing,
installing hydro
mechanical
equipment,
pressure pipes and
all mechanical-
electric equipment
of the plant
1.450 Billion VND 2014 - 2017
6
Nghi Son oil
chemical
refinery
(Capacity 10
million
tons/year)
JGCS
Consortium
Material supply,
steel structure &
pipe processing
and manufacturing
Installing of steel
structure, pipes&
tanks; electrical,
I&C, insulation
systems
5.200 Billion VND 2014 - 2017
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Seq. Contract name Partner Product/Service Value In Progress
7
Song Hau 1
thermal power
plant
(2x600MW)
Song Hau 1
Petroleum
Power PMB
EPC contractor 29.699 Billion VND 2015 - 2020
8
Vung Ang 1
thermal power
plant
(2x600MW)
Vung Ang –
Quang Trach
Power PMB
EPC contractor 1.170 Million
USD 2009 - 2013
Source: LILAMA
9.2. Financial condition and business results of the last 3 years prior to equitization
9.2.1. Account receivables
In: Million VND
Criteria 31/12/2012 31/12/2013 31/12/2014
Account receivables from customers 1.209.593 1.062.408 1.263.224
Advanced payment to suppliers 910.874 1.008.405 826.197
Internal short-term receivables 160.437 503.247 187.889
Other receivables
118.773 122.712 130.110
Provision for bad debts (*) (172.718) (417.890) -
Total 2.226.959 2.278.882 2.407.420
Source: 2012 – 2014 audited financial statements of Parent company
(*) Provision for bad debt in 2014 is equal 0 is because LILAMA has to pay back the
provision for bad debts according to the law when determining enterprise value for
equitization.
9.2.2. Liabilities
In: Million VND
Criteria 31/12/2012 31/12/2013 31/12/2014
Short-term liabilities 4.752.855 3.927.845 4.499.619
Short-term debt and liabilities 1.829.687 1.402.961 1.081.460
Account payable to suppliers 1.898.370 1.804.460 2.109.315
Deferred revenue 89.235 275.551 723.972
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Criteria 31/12/2012 31/12/2013 31/12/2014
Welfare and rewards fund 4.473 2.315 1.283
Taxes and payable to State budget 65.830 21.380 2.664
Payables to employee 19.123 10.297 18.342
Accruals 800.943 359.373 523.244
Internal payables 203 287 -
Other payables 42.017 50.085 39.338
Provision for short-term payables 2.973 1.135 -
Long-term liabilities 1.285.125 1.273.765 1.028.230
Long-term debt and liabilities 1.035.364 1.020.524 1.006.025
Account payable to suppliers 225.196 229.749 -
Other long-term payables 1.207 1.168 1.147
Provision for severance allowances - - -
Unearned revenue 23.358 22.323 21.059
Total 6.037.980 5.201.610 5.527.849
Source: 2012 – 2014 audited financial statements of Parent company
9.2.3. Production and Operation results
Seq. Criteria ĐVT 2012 2013 2014
1 Total assets Mil. VND 6.565.006 5.746.323 6.311.135
2 State owned capital Mil. VND 525.799 544.713 783.310
3 Short-term debt Mil. VND 1.829.686 1.402.961 1.081.459
4 Long-term debt Mil. VND 1.035.364 1.020.524 1.006.024
5 Sales Mil. VND 10.060.912 3.205.332 3.651.496
6 Operation costs Mil. VND 9.937.761 3.044.110 3.763.971
7 Bad debts (*) Mil. VND 172.718 417.890 0
8 Average employee person 783 785 706
9 Total salary fund Mil. VND 93.009 91.618 95.878
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10 Average income VND/person/month 9.900.000 9.730.000 11.317.000
11 Profit before tax Mil. VND 51.501 20.428 33.599
12 Profit after tax Mil. VND 51.501 18.913 31.497
13 ROE % 10,3% 3,5% 4,3%
Source: 2012 – 2014 audited financial statements of Parent company
As to 31/12/2014, all the bad debts that have to make provisions according to accounting rules
are about 200 billion VND. But the Corporation has being in the middle of the equitization, thus
the company did not make the provision according to equitization law.
9.2.4. Financial ratios in 2012 – 2014
Criteria 2012 2013 2014
Liquidity (times)
Current ratio 1,02 1,03 1,03
Quick ratio 0,78 0,85 0.86
Leverage
Debt/Total assets 0,92 0,91 0.88
Debt/ Owner equity 11,46 9,55 7.06
Operation
Total asset turnover 1,34 0,52 0,61
Fixed asset turnover 35,48 12,03 11,76
Working capital turnover 1,73 0,72 0,84
Receivables turnover 11,65 2,82 1,20
Payable turnover 6,75 1,59 0,70
Inventories turnover 6,94 3,20 4,85
Profitability
Profit after tax/Revenue 0,51% 0,59% 0.86%
ROE 10,29% 3,53% 4,74%
ROA 0,69% 0,31% 0.52%
Net profit margin 0,40% 0,46% 0.65%
Source: 2012 – 2014 audited financial statements of Parent company
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9.3. Factors affect the business performance of the last 3 years prior to the equitization
Advantages
- LILAMA has always received care, guidance and instructions from the Government, the
Ministry of Construction and other related departments during its operation and
implementation of projects.
- Vietnam is a developing country, thus, there are many special projects for electrical,
cement, and petroleum works will need to be accomplished.
- With 55 years of experiences, LILAMA has become a leading EPC contractor,
installation, and mechanical contractor, and has received high appreciation from
investors, partners and customers.
- LILAMA is a prestigious trademark that is affirmed in the construction of civil and
industrial works.
- LILAMA’s human resource with more than 22.000 well-trained and professional
employee, engineers and technical workers is one of key factors that create competitive
advantage of the corporation compared to its competitors.
- The corporation’s ability on fabrication and installation equipment, mechanical
manufacture has satisfied projects’ requirements, especially with large and special
machines that serve the installation of super size and weight equipments.
- Based on mutual trust and close collaboration, LILAMA has traditional customers both
inside and outside the country’s boundary in order to accomplish many projects together.
Difficulties
- In the world’s context of recovering after crisis, Vietnam economy has also faced
challenges in many fields, including construction project investment. Inflation and loan
interest rates are high and caused the difficulty in access for enterprises. Furthermore,
the State has decreased fund for public investment and postpones many ongoing
projects. Installation enterprises thus meet challenges in accessing to the job source as
well as the fund for their business and operation.
- LILAMA’s charter capital is low and not commensurate to its operational scale; high
cost of borrowing and debt proportion, all has adversely impacted the business
performance of the corporation.
- Investment for mechanical manufacture requires large amounts of capital fund and has a
long payback period.
- Main equipments and input material provide to projects are mostly imported, thus
LILAMA has to face with the difficulty of input cost control due to unforeseeable
changes in the market.
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- In the context of world economy integration in Vietnam, LILAMA has to face with
drastically competition from foreign contractors, as well as potential domestic
contractor.
10. LILAMA position in the market in comparison with its competitors
10.1. LILAMA position in the industry
- Currently, LILAMA is a leading EPC contractor and installation contractor, mechanical
manufacture in Vietnam. The corporation has implemented full package from
engineering, procurement, supply, installation, testing, commissioning and successfully
hand over many projects to its customers.
- However, LILAMA will have to face with challenges in the process of maintaining and
developing its position in the industry, due to the competition comes from:
Strong foreign contractors compete for EPC projects;
Domestic potential contractors compete on small scale of installing contracts, which
require much less technology;
Foreign contractors who have a potential financial strength in the product
manufacture segment that have high both in technical content and in its added value,
as well a domestic contractor in the segment of simple manufactured products that
have low adding value.
10.2. Industry potential development
- EPC contractor, installation:
EPC market in Vietnam is quite attractive due to the estimated 7%/year increase of
growth for construction market from now to 2020; reach the accrued investment
fund of 340 billion USD, in which investment in power, transportation infrastructure
and manufacturing industry occupy 180 billion USD (more than 50%).
In these current integration trends, the needs for finding partners to implement the
contracts of foreign investors will increase. This is an opportunity for domestic
contractors take part into those projects.
Since the revenue is proportionate with the complication of the value chain, being an
EPC contractor will have higher revenue compared to simple installation.
- Mechanical manufacture:
Vietnam mechanical manufacture is forecasted to grow fast with a stable rate of
approximately 8.5%/year from now to 2020. In which mechanical construction,
mover machine and mechanical ship building segments have possibilities to bring
high profit margin and faster grow:
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Mechanical construction: Growth rate 9.3%; Profit margin 4.8%
Hydraulic machines: Growth rate 9.3%; Profit margin 4.7%
Mechanical ship building: Growth rate 11.6%; Profit margin 6.5%
- Design consultant and project management:
The growth of consulting industry (design, project management) proportionate with
EPC industry’s growth and mechanical manufacture, forecasted growth rates are
7%/year and 8.5%/year respectively from now to 2020.
In this severe competitive market, foreign consultants are more likely chosen based
on their financial ability, experience, technical application, independent level and
level of trust for high value and large-scale projects, especially electrical and oil
refinery projects.
10.3. Evaluation on the suitability of the corporation’s development orientation to industry
orientation, State policy and world’s common trend:
- During its operation process, LILAMA always focuses on sticking its business to
installing industry’s mission and determinations. After equitization, the corporation will
continue its operation with targeted goals including:
Continue promoting those achieved results in order to utilize the value from
LILAMA trademark, so that the Corporation can be changed from the inside to
whole scale, enhancing equipment-manufacturing ability, expanding export market,
increasing market share for maintaining and replacing service to industrial plant. All
of these changes and development will create big competitive advantage both inland
and international markets, and affirm the leading trademark for LILAMA in the
position of EPC contractor, synchronized equipment lines manufacture for industrial
projects, heading to global product chain of multinational corporation and take
responsibility for foreign projects.
Maintain and develop the EPC and installation contractor segment, improve the
manufacturing ability in order to provide 80% in volume and 70% in value of
cement factories, 60% in volume and 40% in value of electric power plans and thus
reduce the imported value, saving foreign currency for the country. Enhancing the
ability in design, consultancy, supervise and project management, original
technology purchasing, together with developing currently owned consultant
companies in compliance with determination of in-depth specialization and increase
localization proportion so that the ability of EPC contractor will be improved
gradually.
Pushing import – export activities; expanding in term of partnership, market,
manufacturing field to power, cement and industrial plants; increasing the proportion
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of exported revenue to 60% of total revenue from manufacture for participating into
global connected product chains and fabrication works internationally.
- With joint stock company model, LILAMA can raise up all the resources include fund
and human resources from all economic organization, native or foreign individuals.
Whoever takes part into the business and operation of LILAMA will help the firm
change and develop, create more jobs for employees, increase the State budget;
changing of corporate governance, creates development motivation, improve efficiency
and also competitive capacity.
- In brief, the developing orientation of the corporation is completely suitable with
industry’s orientation, the State policy and the world’s common trends.
VI. BUSINESS ACTIVITIES AFTER EQUITIZATION
1. Joint stock company name, lines of business
Company name : TỔNG CÔNG TY LẮP MÁY VIỆT NAM – CTCP
English name : VIET NAM MACHINERY INSTALLATION CORPORATION – JSC
Abbreviated name : LILAMA
Head office : No.124 Minh Khai, Hai Ba Trung district, Ha Noi
Tel : 043.863 7747
Fax : 043. 863 8104
- Lines of business
Inheriting business lines in the certificate issued by Hanoi Department of Planning and
Investment on initial business registration no 0100106313 on 01/09/2010, 1st
amendment issued on 05/12/2012, the Corporation business lines after equitization
include:
Trading , export of materials, machines, equipments, spare parts, manufacturing and
consuming materials, automated technology lines, consumption goods, means of
transportation, agency for consumption of for domestic and international goods in
accordance with current laws and regulations ;
Translate the codes and standards, specific documents related to construction and
installation, new technology lines; Training technicians and workers for social needs
and the corp.’s itself. Advanced training and award certificate for the welder;
Training for labor force for working abroad in determined terms;
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Checking, experimenting, adjusting the electrical equipment, I&C system, thermal
power system for technical lines; Supervising, quality testing the welding joints and
physical nature of materials;
Ship building and repair for river and sea transportation;
Design, equipment manufacture and processing steel structure for civil and industrial
works;
Construction consultancy, EPC contractor and package contractor for civil, industrial
and infrastructure works such as project planning, designing (in the registered
working scope) and financial estimate planning, supervision consultancy, project
management, supplying of technical and auto-controller equipment;
Trading on real estate, tourism, hotel, restaurant and amusement parks;
Trading on goods transportation, OOG equipment, lending processing and
transporting equipments; Invest and build the works include: industrial work
(hydroelectricity plants, thermal power plants, cement, oil chemistry, paper and
steel), civil, transportation, irrigation, water supply and urban infrastructure;
Export of labor, equipment, material, technology of machinery installation and
construction;
Manufacturing and trading of construction material;
Trading and developing in housing and construction consultancy;
EPC contractor for civil, industrial, transportation, irrigation, post office, electric
transformer and urban infrastructure works;
Manufacturing and trading on construction under the State’s plan, including
equipment building and installing
2. Joint stock company organization structure
(Please refer to next page)
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JOINT STOCK COMPANY ORGANIZATION STRUCTURE CHART
Steering line
Supervising line
SUBSIDIARIES
AFFILIATES
DEPUTY GENERAL
DIRECTOR
DEPUTY GENERAL
DIRECTOR
DEPUTY GENERAL
DIRECTOR
DEPUTY GENERAL
DIRECTOR
ADMINISTRATIVE
AND PERSONNEL
DEPARTMENT
PROJECT MANAGEMENT
BOARDS
PROJECT MANAGEMENT BOARDS,
STEERING BOARD, LILAMA
REPRESENTATIVE OFFICES IN
CONSTRUCTION SITES
DOMESTIC AND INTERNATIONAL
CORPORATION REPRESENTATIVE
OFFICES
COMPANY BRANCH
BAC VINH INDUSTRIAL
ZONE INVESTMENT AND
DEVELOPMENT
RESTRUCTURING
BOARD WELDING
TECHNOLOGY
INSTITUTE
ECONOMIC TECHNICAL
DEPARTMENT
DEPUTY GENERAL
DIRECTOR
HUMAN RESOURCES
DEPARTMENT
VEHICLE
MANAGEMENT
DEPARTMENT
LEGAL -
APPRAISAL
DEPARTMENT
PLANNING –
INVESTMENT
DEPARTMENT
FINANCE – ACCOUNTING
DEPARTMENT
DEPUTY GENERAL
DIRECTOR
RISK MANAGEMENT
DEPARTMENT
BOAD OF DIRECTORS
GENERAL
DIRECTOR
GENERAL MEETING OF
SHAREHOLDERS
INTERNAL AUDIT
BOARD
BOARD OF
CONTROLLERS
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2.1. General meeting of shareholder (GMOS)
GMOS consists of all shareholders with voting rights and has the highest power
authority of the company, decides all the issued that stipulated by law and company
regulation. GMOS will vote for Board of Management and Board of Controllers of the
company.
2.2. Board of Directors (BOD)
BOD is the management authority, which has full representative rights of the company
to decide all related issues to company’s purpose and rights except issues under the
decision right of GMOS. Rights and obligations of BOD are stipulated under the Law,
regulation and internal rules of the company.
2.3. Board of Controllers
Control all corporate governance and business operation activities on behalf of
shareholders. Be responsible before GMOS and the law for the tasks and liabilities as
listed below:
- Check on company’s accounting books and financial report, check on the
reasonableness, legal status of business operation and finance of the company, check
on the implementation on BOD’s decisions.
- Present checking reports on financial documents, and independent opinions of
checking results on issues related to business operations, as well as activities of BOD
and Board of Management of the company;
- Require BOD convokes extraordinary meeting of shareholders in case of necessary;
- Other rights as stated in company regulation.
2.4. Board of management (BOM)
Implementing all decision of BOD and GMOS, business plan and investment plan of the
corporation, which have been approved by BOD and GMOS. Other tasks are as
stipulated in company regulation.
2.5. Functional departments and institute: The joint stock company has 08 functional
departments and 01 welding technology institute. Details of duties and functions of
departments and institute are detailed in 02 attached appendixes.
2.6. Subsidiaries and affiliates to 2017
- Subsidiaries: 08 companies include Lilama 18 JSC; Lilama 10 JSC; Lilama 45.1
JSC; Lilama 69.1 JSC; Lilama 69.2 JSC; Lilama 69.3 JSC; LISEMCO JSC; LHT
Engineering International JSC.
- Affiliates: 08 companies include: Lilama 3, Lilama 5, Lilama 7, Lilama 45.3, Lilama
45.4, Lilama erection mechanical JSC, Lilama ME Testing JSC, CIMAS
Engineering JSC.
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2.7. Political and political – social parties: The joint stock company has a party
organization, trade union, youth union.
3. Business operation plan after equitization
3.1. Main economical criteria of business and production plan in 3 years adjacent to year
after equitization
Seq. Criteria In Year 2015 Year 2016 Year 2017
1 Charter capital Million VND 1.500.000 1.500.000 1.900.000
- State owned proportion % 51% 51% 40%
2 Total asset Million VND 5.004.916 12.019.656 10.927.689
3 Owner Equity Million VND 1.508.495 1.579.162 1.986.978
4 Total revenue Million VND 4.213.935 13.971.588 13.987.325
EPC,
installation
- Equipment supply Million VND 0 6.308.670 7.360.120
- Installation Million VND 2.828.730 5.844.976 4.924.440
- Mechanical Manufacture Million VND 261.710 1.461.244 1.231.110
- Project management and
consultancy Million VND 58.690 198.270 198.270
- Other product, service
trading activities Million VND 1.017.820 100.000 200.000
- Financial revenue Million VND 46.985 58.428 73.385
- Other revenue Million VND 0 0 0
5 Total expenses Million VND 4.163.334 13.748.439 13.765.358
6 Tax Million VND 36.428 88.781 83.817
7 Profit after tax Million VND 40.521 178.519 177.573
8 ROE % 2,7% 11,9% 9,3%
9 EPS VND 270 1.190 935
10 Dividend/charter capital % year 2% 6% 8%
11 Investment plan Million VND 26.000 633.506 493.819
- Equipment and Machinery Million VND 26.000 26.000 194.700
- Invest in subsidiaries Million VND - 607.506 299.119
12 Average employee Person 860 880 890
13 Total salary fund Million VND 142.416 159.456 165.540
14 Average
income/person/month VND 13.800.000 15.100.000 15.500.000
Source: Equitization plan of parent company – Vietnam Machinery Corporation
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3.2. Solutions to implement the planned targets
In order to implement planned targets for 3 years 2015 – 2017, the corporation presents
these below group of solutions, which include:
3.2.1. Solution for business lines, trademark and market:
- Concentrate on 02 main business lines that LILAMA has potential growth, high
competitive capacity: (1) EPC; (2) Mechanical manufacturing.
Main lines of
business Proportion General development strategy
EPC 73,5-75,5% Main products are industrial construction
projects (power, cement, petroleum and gas
complex, chemistry, etc), which are
implemented under the form of EPC or partially
E,P,C.
Mechanical
Manufacturing
24,5-26,5% - In-depth specialization and focus on
accumulation of facilities as well as potential
foundations of LILAMA.
- Increase proportion in EPC’s contract value of
LILAMA.
- Participate in global supporting products supply
chain to big international organizations in the
world.
- Stop the investment and withdraw capital from nonessential business fields.
- Enhance quality control activity in the company; apply quality control systems that are
suitable with global practices. Parent company and subsidiaries will set up an efficient
quality management policy, in order to increase level of trust in the market, satisfy high
requirements from customers.
- Continue to fulfill and improve quality control system in order to satisfy increasingly
high requirements from customers.
- The parent company and its subsidiaries have a comprehensive, synchronize program for
improving company’s trademark. Reasonable invest in finance and human resource to
develop and promote trademark. This is an important solution to enhance company’s
competitive ability and to develop markets.
- As to EPC market: prioritizes to exploit power projects, especially those projects in “List
of power projects will operate in period 2013-2020”, meanwhile participates more
balance into fabrication or manufacturing industrial projects and expands the “E” and
“P” parts for a higher profit rate.
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- As to mechanical manufacturing market: expands current technical product list, in
which, pay highly attention for high-class auxiliary products, as well as takes part into
the design and project management activities. Furthermore, the company will build up
its capacity in order to participate into global product chain.
3.2.2. Solution for applying technical and technology improvements:
Implementing strategy for technology transformation, improvement, supplementation of
automated equipments; applying science and technology into industrial production;
increase investment in application of advanced-technical for productivity and quality
improvement.
3.2.3. Solution for finance and capital
- Restructuring of debts: structuralize all debts as soon as there is an approval for
searching to replace short-term debt with high interest by long-term borrowing, low
interest. By doing so, LILAMA can improve its fund flows and liquidity, as well as
creates more capitals provide to business production.
- Restructuring of investments: stop investing widely, withdraw capital from inefficiently
companies and outside of main business lines, which include:
Remain invested capital and no additional investment in 05 companies:
LILAMA 45-1 JSC
LILAMA 69-2 JSC
LILAMA 69-3 JSC
LHT International Consultant JSC
CIMAS Design Consultancy Co. Ltd
Capital withdrawal below 50% charter capital in 05 companies:
LILAMA 5 JSC
LILAMA 7 JSC
LILAMA Mechanical Machinery Installation JSC
LILAMA 45.3 JSC
Withdraw entire capital in 13 companies:
LILAMA 3 JSC
LILAMA 45.4 JSC
Lilama Urban Development and Construction Investment JSC (UDC)
Song Vang hydroelectric JSC
Hua Na hydroelectric JSC
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Song Thao Cement JSC
Thang Long Cement JSC
PetroVietnam Marine Shipyard JSC (PVY)
LILAMA Real estate JSC (Lilama Land)
LILAMA construction design consultancy & technology JSC
LILAMA Mechanical – electronic – Environment JSC
LILAMA SHB construction investment JSC
Sai Gon – Ha Noi Commercial Bank JSC
- Increase charter capital and owning proportion in 04 core companies that operate in
main business lines:
LILAMA 10 JSC
LILAMA 18 JSC
LILAMA 69-1 JSC
LISEMCO JSC
(According to Decision no 715/QĐ-BXD dated 18/06/2015 of the Ministry of
Construction on the adjustment of scheme “Restructuring and enhancing corporate
governance efficiency of Vietnam Machinery Installation Corporation period 2012-
2015, orientation to 2020”)
Currently, LILAMA is taking part in the program “State-owned enterprises Reform and
corporate governance facilitation” funded by Asia Development Bank (ADB) and the Ministry
of Finance. If there is an approval for lending fund, LILAMA plans to borrow 80 million USD
(the company has not yet determined the lending rate and time because it is in the negotiation
process), including OCR borrowing (Ordinary Capital Resources) and ADF borrowing (Asian
Development Fund) in order to:
Restructure middle and long terms debts of parent and core companies;
Increase ownership proportion of parent company in core companies;
Technical support for enhancing corporate governance capacity.
- Enhance efficiency of using fund, and use fund in the manner of flexibility,
effectiveness, concentration and these control schemes:
As to outstanding debts: pushing up the collection of debts through establishment of
specialized debt collecting units, which responsible for debt classification, planning
for suitable debt collecting method with individual customer. Make provisions with
bad debts and plan for selling outstanding debts, bad debts to preserve State capital.
As to debts of member companies: increase rights and responsibilities through
capital representative in each company to push up debt collection. Collecting debts
through deduction on economic contracts sign with the corporation.
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- Heading to stock listing in securities market for enhancing the transparency to attract
investors and improve production efficiency.
3.2.4. Corporate governance solutions:
a. Restructuring Corporate Governance
- Fulfill corporate governance structure including separation of functions between
BOD and BOM so that the independence, the routine accountability will be ensure
and comply with the law’s regulation.
- Improve the operating efficiency of BOD and BOM include building the effective
working scheme and evaluation system (KPI) between BOD and BOM.
- Fulfill internal control system for risk supervision, evaluation and supervision
procedures, and management system.
- Enhance risk management activity: set up strategy for risk management, organization
structure and reporting scheme as the foundation for internal audit plan.
- Enhance internal audit activities include checking on effectiveness, efficiency of risk
management system and internal audit framework.
- Fulfill information system to serve the corporate management, implement
information disclosure transparently.
- Fulfill supervision system on member companies include instruments, guidelines to
supervise regularly and effectively, track and evaluate subsidiaries’ operation.
b. Restructure management model:
Parent company – the Corporation will take the role as strategic planner, effective
operator and financial investor:
- The Parent company build up overall development strategy to determine
subsidiaries’ operation follow main business lines; the parent company will support
and supervise the construction process, implement strategy in member companies.
- The Parent company will remain its own production, which has large proportion in
revenue structure of the whole corporation; the Parent company will concentrated
manage information of customer, projects, and has overall strategy in promote for
project bidding; Assign the subsidiaries to participate in bidding, receiving contracts,
and implement small scale project in accordance with their capacity.. As to large
scale projects having complex technical requirements, the Parent company will still
be responsible for bidding promotion and take charge as EPC contractor.
- The Parent company will continue to invest capital to increase owning proportion in
effective subsidiaries that operate in main business lines; withdraw all capital in
subsidiaries operate in main business lines but not yet effectively and others that
operate in non-core business lines.
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c. Restructuring organization and employment structure:
- Rearranging and streamlining management line and other department. Continue with
new recruitment, training and retraining for labor force; make training plan for
enhancing knowledge of managers to satisfy corporate governance requirements.
- Decrease indirect employee to suitable rate to improve operation management
efficiency: (1) Tracking number of indirect employee for transferring to direct
production units. (2) Utilize current indirect workforce for training on new
specializations that the corporation needs, after that they will directly implement
technical service such as operating, trial running, maintenance for industrial plants.
- Set up operation scheme for project management boards, management board of
LILAMA in construction sites towards increase activeness under 2 methods: (1)
independent financial operation; (2) dependent operation with cost allocation.
d. Restructuring member companies
- LILAMA’s core companies will be determined to increase invest towards
specialization in 02 main business lines, in which there are 03 companies will be the
core for EPC field, and installations (1) EPC for power plants, (2) Gas and petroleum
EPC, (3) other industrial EPC; the 01 other member company will be the core for
mechanical export pilot.
- Based on current situation, strength of each company, LILAMA will arrange,
restructure all its subsidiaries into EPC lines and mechanical exportation and testing.
In each line, the corporation will choose 01 strongest company to be the core, and
other will play a role as satellite companies.
- Strengthening organization structure and managers of subsidiaries so that they work
effectively yet slightly, meanwhile implement solution for improve labor efficiency.
3.2.5. Solution for improving labor efficiency
- Perfecting of unit and production team structure; training and retraining for
improving management skill for team leaders; rearrange production line, remove
redundant and unreasonable stages.
- Assigning job in production team with flexibility and suitable with reality
requirement, ensure that there is no temporary stop of operation that causes the
employee has to stop their jobs such as lack of equipment, working tools or
materials, etc.
- Invest in purchasing modern processing equipments to improve labor efficiency.
- Improve the allocation in production: publicly implement the direct allocation
scheme to employee, so that they know how much they will get after finishing the
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job. The settlement of physical benefits for employee is the most important
motivator to push up and improve production efficiency.
3.2.6. Solution for labor force development:
In the future, the corporation will try to ensure the qualified management team as well as
the inheritance in the corporation. It will assist member companies in term of building
high and middle level of management team, manage the human transferring internally
within corporation system, checking and supplementing member for BOM, controllers
board, BOD. Further, training and developing the labor force to have new ability and
ready for a new organization structure in the future will be also implemented.
Developing an internal human resource management center in order to determine the
best fit and potential talent for job requirement, in the mean time, individuals also can
find the best developing chance for themselves.
The Corporation will invest and develop its own human resource through main activities
that shown below:
- Improving mechanism of recruitment, salary, remuneration and benefits to
employees:
Set up and standardized the process of recruitment, labor training by completing
the system of regulations, rules for labor recruitment. The process includes the
set up for labor evaluation criteria through work result indicators, set up of salary
scheme and bonus stick to working result.
Set up and perform some special policies to employees work in machine
installing industry, who usually move and work under projects, unstable job, and
work in remote areas.
Set up professional working environment that ensure the fairness, democratic,
long-term stability and create chances for employee to reveal their talents. It is
required to have the mobilization scheme for encouraging enthusiastic people,
promoting friendly behavior culture between owner and employee.
- Training, fostering and developing human resources:
Build up and perform the plan for developing the labor source to satisfy the
requirement of business in both quantity and quality, according to the structure
and scale of main business lines.
Build up and perform the plan, training program for improving labor’s ability,
technique, specialization in all level of management in the Corporation with
various methods that fit with corporation’s strategy on development.
Concentrate on language training for engineer, technical workers. Increase the
rate of engineer/technical worker for 1/5 to 2/5.
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Strategic training plan to labor force like financial assisting for employee’s
abroad training, enhancing the international cooperation on training, nurturing
and developing human resources.
Financial assisting for employee’s abroad training for modern technology,
prioritize for new science and technology study that can serve the corporation
main business lines, as well as corporate governance study.
Renovating, breakthrough in the relationship with world famous organizations
who are supplier and partner of LILAMA such as GE, Siemens, FLSmitdth,
Alstom, etc, in training, and improving skills, knowledge for corporate
management of the labor force.
- Plan to foster the management staff:
Continue to fulfill dossier system providing guidance on and instructions for
standard condition of staff planning and appointment, together with checking and
supervising its implementation.
Choosing those employees who are capable, qualified, experienced and dedicated
to LILAMA and who have ethical qualities for training and appointment to
important tasks.
Training enhancement for increasing employee’s qualification through internal,
external and international training so that the labor force can update and be well
trained for new knowledge on corporate governance and ready for new tasks,
missions.
Performing the policies that encourage young generation to do their best, willing
to assign them on leader, manager position if qualified, and rejuvenates the
management team.
3.2.7. Solution for risk management
- Building general policy on risk management, which creates full perception as well as
responsibility of LILAMA management lines and department, specialized in risk
control.
- Set up of handbook for risk management process in particular operating field; set up
of recognition method, evaluation and solution for risk control in specified
department.
- Set up, publish, update and amend the regulation for internal control so that the
corporate governance, management and consultancy must be clear and open. There
is a clear task appointment in risk control and prevention among the departments.
- Strengthen and improve employee knowledge in general, especially to those who
directly control the risks such as internal control department, legal and appraisal
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department, etc. Further, the corporation will set up a specific risk control
department or appoint current internal control department to be responsible to
consult on the risk management and risk statistics.
- Renovate and strictly perform internal checking, controlling as well as to
subsidiaries followed the gorvernment’s regulations.
- Improve professional knowledge and level of safety management positions in
projects, construction sites.
- Risk statistic.
4. Charter capital and Joint Stock Company charter capital structure
4.1. Charter capital
- Charter capital: 1.500.000.000.000 VND
- Share par value: 10.000 VND/share
- Toal number of shares: 150.000.000 shares
4.2. Shareholders structure
Seq. Category No. of shares Value of share
(VND)
Holding
rate (%)
1 Shares owned by the State 76.500.000 765.000.000.000 51,00%
2 Shares offered to the Employee, in
which: 2.399.500 23.995.000.000 1,60%
2.1 Shares offered at a discount of 60% lowest
successful bidding price 626.300 6.263.000.000 0,42%
2.2 Additional shares register to buy under
commitment of long-term working in the
Corporation (200 shares/commited year)
1.005.200 10.052.000.000 0,67%
2.3 Additional shares register to buy under
commitment of long-term working in the
Corporation (500 shares/commited year)
768.000 7.680.000.000 0,51%
3 Shares offered to the auction 35.550.250 355.502.500.000 23,70%
4 Shares offered to Strategic investors 35.550.250 355.502.500.000 23,70%
In total 150.000.000 1.500.000.000.000 100,00%
Source: Equitization plan of Parent company – Vietnam Machinery Installation Corporation
4.3. Plan for increase/decrease the charter capital after transforming into joint stock
company:
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According to the plan, the Corporation intend to increase the charter capital into 1.900
billion VND in 2017, however, based on the reality of business performance, together
with the changes in working capital and investment funds, LILAMA will build up the
detailed plan that flexible suits the periodic business of the Corporation.
VII. SALE METHOD AND SHARE PURCHASE PAYMENT
1. Sale method
1.1. To the employee
Shares offer to employees who are listed in regular labor list of the corporation as at the
time of declaration of enterprise value (on 10/03/2015)
- Total number of employee who are entitled to purchase at a discount: 561 persons
- Total working years: 6.263 years
- Total shares that registered to buy by the employee: 2.399.500 shares, in which:
Purchase at a discount under working years: 626.300 shares
Additional purchase under working for long-term commitment in the
Corporation: 1.773.200 shares
- Occupy 1.6% of charter capital
1.2. To the share offered to public auction
- Number of share offering: 35.550.250 shares, corresponds 23.70% charter capital.
- Offering method: through auction in Hanoi Stock Exchange
1.3. To the share offered to strategic investor
- Number of shares offering: 35.550.250 shares, corresponds to 23.70% of charter
capital
- Criteria for strategic investor selection:
Being domestically or foreign investor who has financial ability, having positive
business performance of 2 years prior to the time register as strategic investors.
The priority belongs to the one who has same business lines as LILAMA’s;
Having written commitment to hold shares of LILAMA at least 05 years since
LILAMA is granted initial business registration certificate, operates in
accordance with the business law under the form of Joint stock company; Each
strategic investor register to buy minimum of 7.500.000 shares, corresponds 5%
of charter capital;
Having written commitment to support LILAMA after the equitization in: new
technology transfer; human resource training; improving financial ability;
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corporate governance; materials and equipments supply; market development;
Having written commitment to make NO transaction which could lead to profit
conflict with LILAMA and LILAMA’s other investors after chosen as strategic
investor;
Having written commitment to implement together with the Corporation on the
restructuring scheme of Project 3 that under “Reform program for State owned
enterprises and corporate governance facilitation” which is funded by Asia
Development Bank (ADB);
Besides all above stated criteria, foreign investors must have account in the
company that provide payment service and operates in Vietnam. All the activities
related to shares purchase must be announced with this account and under
regulations of Vietnam legal system.
- Number of strategic investors: maximum 3 investors. LILAMA is searching for
strategic investors currently.
- Sale method: direct negotiation.
- Time of share sale to strategic investors: After the public auction.
- Sale price: Not below the successful bid in the auction
- Share sale organizer: The equitization steering committee directs LILAMA to
proceed the selling procedure to strategic investor.
2. Payment method and deadline
- As to shares offer to public auction: the offering method and payment due date will
be regulated in IPO auction regulation issued by Hanoi Stock Exchange;
- As to shares offer to employee: decided by the equilization steering committee;
- As to shares offer to strategic investors: decided by the equilization steering
committee.
VIII. PLAN FOR THE USE OF PROCEEDS COLLECTED FROM EQUITIZATION
1. Expected proceeds collect from the equitizaiton
TT Costs category Value (VND)
1 JSC charter capital 1.500.000.000.000
2 Actual State capital in the enterprise after the revaluation 780.324.037.466
3 Proceeds collected from equitization 754.469.644.000
a From shares offered to employee at a discount 3.870.534.000
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TT Costs category Value (VND)
b From shares offered to employee under the commitment to work
for a long-term 18.263.960.000
c From shares offered to strategic investors 366.167.575.000
d From shares offered to public auction 366.167.575.000
4 Share value calculated by starting price offered to employee,
strategic investors and public auction 735.000.000.000
5 Additional issued shares calculated in par value (5) = (1) - (2) 719.675.962.534
6 Implemented equitization costs 2.545.000.000
7 Costs for implementing the policy for redundant employees 0
8 Surplus left in the enterprise that corresponds with the rate of
additional issued share/charter capital (8) = { (3) - (4) - (6) -
(7)} x { (5)/(4)}
16.571.781.580
9 Payback to the State Budget (9) = (3) - (5) - (6) - (7) - (8) 15.676.899.886
Source: Lilama
2. Plan for dealing with the proceeds collected from the equitization
- The proceeds from equitization will leave to the enterprise a amount that corresponds to
additional issued shares calculated in par value; The capital surplus (if any) will be used
to pay for equitization costs and policy for redundant workers (if any). If it is not
enough, the supplement will be added from Assistance funds for Restructuring and
Developmetnt of Enterprises.
- The remainings (if any) will be dealt as belowed:
Pay to Assistance funds for Restructuring and Developmetnt of Enterprises when
equitized 100% State-owned enterprise the share value that the State sells calculated
in par value;
The remaining (if any) will be distributed in two ways: leave to the corporation the
proportion corresponded with the additional issued shares in capital structure; the
other remaining pay to Assistance funds for Restructuring and Development of
Enterprises.
IX. PLAN TO PARTICIPATE IN THE STOCK MARKET
In the case that the Corporation is qualified as a public company, in the period of ninety
(90) days since the day of receiving business registration certificate, the Corporation has
to complete dossier for publicly-traded company registration, register for share custody
on Vietnam Securities Depository and trading on the stock market in accordance with
current regulations.
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In the case that the Corporation is qualified for listing share in the stock exchange, in the
period of one (01) year since the day of receiving business registration certificate, the
Corporation will complete the listing profile for share listed on stock exchange
according to the law on securities and stock market.
X. RISK FACTORS AFFECT TO THE ISSUER BUSINESS PERFORMANCE
1. Economic risks
1.1. Economic Growth:
The reality and potential of economy’s development have always had the impacts on the
survival and growth of firms. When the economy is in the periods of high growth will
create many opportunities for firms to develop. On a contrary, as the economy declines,
the recession will cause a negative impact to the businesses.
GDP Growth period 2004 - 2014
Source: Vietnam General Statistics Office
GDP in 2014 reached 5.98%, surpassed the nation plan of 5.8% and was the highest rate
in the past 4 years. In which, the construction industry has become the main motivator of
the economy with the rise of 7.14% compared with 5.42% in 2013, in the context of
slow growth of service industry.
Moving to 2015, the domestic economic witness significant recovery and achieved high
growth rate compared to stated plan (6,2%) and much higher than the same periods in
previous years. GDP growth rate of first 9 months is 6,5%.
The economy’s difficulties and instabilities recent years have being affected directly to
the Corp. trading and operating activities. Although the nation economy has gradually
escaped from recession stage, the Corp. must continuously being active and having the
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timely solutions for all unpredictable situations, as well as taking all the available
opportunities for its own survival and development.
1.2. Inflation:
Inflation indicators affect the business operation through its manufacturing and trading
costs. In 2004-2014, the Vietnam’s inflation rate has grow approximately 9.8% per year,
which is far higher than the rate of some Asian countries like Thailand (2.7%) or China
(2.1%).
Source: Vietnam General Statistics Office
In 2014, CPI (consumer price index) movement was entirely beyond experts’
predictions, when it only raised 1.84% compared to year-end 2013, and had become the
lowest rate for the past 13 years. The reason caused this fact was food and foodstuff,
which are the highest proportion group in the basket calculation, grew only 2.61%
meanwhile other groups like houses, construction materials group and transportation
group witnessed the fall of 1.95% and 5.57% (due to a 12 times decrease of fuel price),
respectively. Some other groups such as education and medical just grew slightly
relative to the past years.
In 2015, the country average 9 months CPI only raised 0,75% in comparison with same
previous period. This is the lowest point in the past 10 years of Vietnam.
The low inflation rate will have positive effect on enterprise operation, which helps the
Corporation control the inputs’ prices and costs, ensures the stable performance of the
business. However, low inflation indicator also shows a weak consumer demand, which
leads to the increase of deflation and a negative impact on economic growth target.
2. Legal risk
Vietnam is currently on the development process, thus its legal system is being
completed gradually. The policies are changed to become suitable with every
development stage of the economy. Therefore, the present legal documents are
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unavoidable from the inadequacy and overlap, which creates difficulties for not only
individuals but also enterprises’ activities. Because the corporation after equitization will
operate under the provisions of the Business Law and other related legal documents, all
the changes in legal enviroment will all affect on the firm’s business.
3. Business typical risk
- Operational risk:
Based on the firm’s main business lines, the typical time for construction is always long,
which has caused the slowness in disbursement, checking and taking over the projects.
Not to mentioned that it takes considerable time to get agreement and payment between
the investors and contractors. Besides, due to the improper estimates that are not
commensurate with the investment funds, the working period has been stretched, again,
leads to the slow disbursement. For all the stated reasons, the corporation’s financial
condition has been significantly affected and could not reflect properly the business
efficiency, the results of revenues, income between the operational quarters, as well as in
the fiscal year.
- Competitive risk:
Competition situation in the field of building and installing civil construction is
increasing intensely day by day, especially when the public investment is not as copious
as previous periods; many companies have to face the challenges from the competitive
pressure in order to gain construction contracts. As one of possible solutions, installing
corporations have to find a way to improve their own technical technology, enhance
their competitive advantages to reduce those risks that could negatively affect to firm’s
growth, as well as number of contracts and revenues.
- Risk from price fluctuation of input material and equipment:
The projects that LILAMA has been involving in the implementation are normally long-
term; inputs values occupy large proportion in contract value. Thus, price fluctuation has
greatly impact on LILAMA’s revenue recognition. In order to reduce these effects from
pricing changes, besides remaining and developing the traditional supplying systems,
LILAMA has actively control the costs by calculating the changing price factors,
inflation at the point of preparing the bidding profile, negotiating and signing the
contract.
- Risk of loan costs:
Due to the quite low rate of Owner equity/total equity, loan cost has become the factor
that directly affects the business and investment result of the Corp. Although this cost is
calculated at the planning stage, there are many out-of-control factors that have effects
on loan interests. Thus, the business and investment plans might be under the effections
of the loan cost risk.
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4. Risk of the offering
The relationship between demand and supply in the market, which relies on the
economic as well as investor’s psychological factors, has a great impact on the stock
prices. There is a possibility that the number of shares offering for the auction cannot be
fully distributed.
5. Other risks
According to the provision on Clause 4 Article 21 Decree No. 59/2011/NĐ-CP dated
18/07/2011 of the Government on the transformation of the 100% State – owned
enterprises into the Joint stock companies, if there is a decrease between the actual value
of the State owned capital portions as at the time when the enterprise officially transform
to a joint stock company compared to the time the enterprise is valued (to LILAMA was
on 01/07/2014), that decrease should be dealt with as followed.
5.1. Due to objective causes:
If causes by objective reasons such as natural disasters, enemy sabotage, changing in the
State policies or international markets,etc, the enterprise has to report to the authorised
agencies who can approve for equitization plan so that they can evaluate, and decide to
use the source from share sale to offset the losses after deduct the insurance
compensations (if any). In case the money from selling share is not enough for the
offset, the authorised agencies may present the issue to the General meeting of
shareholders to get agreement on charter capital’s size and structure adjustment.
5.2. Due to subjective causes:
- If the loss was due to a failure to deal completely with existing financial issues in
accordance with current State regulations, then liability of relevant bodies such as
the enterprise itself, consultants, auditors or the body which made the equitization
decision must be clearly confirmed, in order to process compensation for material
loss; caused by the improper solve;
- If the loss was due to executive operation of production and business activities; or if
management caused a loss of capital and assets, then senior managerial staff of the
enterprise shall be liable to pay compensation for the loss subjectively caused in
accordance with the current regulations;;
- If for the reasons of force majeure a person liable to pay compensation is unable to
do so in accordance with the decision of the authorised body, then the remaining loss
shall be dealt with as if it was due to objective reasons as stipulated in sub-clause 5.2
above.
Furthermore, there are many other risks that are force majeures such as natural disasters,
epidemics, war, fires, etc that would cause the damages for assets, human and business
operation of Corporation if happen.
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XI. CONCLUSION
This information disclosure is a part of IPO profile of Vietnam Machinery Installation
Corporation – One Member Company Limited, which is provided to investors with the
purpose to assist them in their own evaluation on the assets, business performance, financial
condition and the prospect of the Corporation in the future. These herein information do not
mean to guarantee for the share’s value.
This information disclosure is made on the basis of information as well as the data provided
by Vietnam Machinery Installation Corporation which ensure the openness, transparency,
fairness, together with the protection of the investors’ legitimate interests.
Investors should take the reference on this information disclosure before making the
decision to participate in the auction.
Lastly, this English version of LILAMA IPO Information Disclosure is only for translation
and reference purposes. The official IPO Information Disclosure, which has been approved
by the equitization steering committee, is in Vietnamese.
VIET NAM MACHINERY INSTALLATION CORPORATION INFORMATION DISCLOSURE
Hanoi, ............... 2015
REPRESENTATIVE OF EQUITIZATION STEERING COMMITTEE
DIRECTOR OF ENTERPRISE MANAGEMENT DEPARTMENT
MINISTRY OF CONSTRUCTION
MEMBER OF EQUITIZATION STEERING COMMITTEE
DAU MINH THANH
REPRESENTATIVE OF OFFERING ORGANIZATION
VIETNAM MACHINERY INSTALLATION CORPORATION
CHAIRMAN – MEMBERS’ COUNCIL
NGUYEN DINH HAI
GENERAL DIRECTOR
LE VAN TUAN
REPRESENTATIVE OF ADVISORY ORGANIZATION
SAI GON – HA NOI SECURITIES JOINT STOCK COMPANY
GENERAL DIRECTOR
VU DUC TIEN
CÁC CÔNG TY LIÊN KẾT
PHÓ TỔNG GIÁM ĐỐC
CHI NHÁNH
CÔNG TY ĐT&PT
KCN BẮC VINH
PHÒNG
PHÁP CHẾ -
THẨM ĐỊNH
PHÒNG
KẾ HOẠCH
-ĐẦU TƯ
PHÒNG TÀI CHÍNH
KẾ TOÁN
PHÓ TỔNG GIÁM ĐỐC