initial public offering of shares the vietnam national … · 2015-08-19 · august, 2015 the...

The English version of the prospectus is not an official translation. It is for

information purpose only. Equitization steering committee and VINATEA recommend

that investors should read information in the prospectus and aution regulations before

participating in the auction.

PROSPECTUS

INITIAL PUBLIC OFFERING OF SHARES

THE VIETNAM NATIONAL TEA CORPORATION

LIMITED (VINATEA)

August, 2015

THE AUCTIONEER

HANOI STOCK EXCHANGE

2 Phan Chu Trinh, Hoan Kiem district, Ha Noi, Viet Nam

THE ISSUER

THE VIETNAM NATIONAL TEA CORPORATION LIMITED

92, Vo Thi Sau, Hai Ba Trung, Ha Noi, Viet Nam

THE ADVISOR

VIET CAPITAL SECURITIES

Head office: Floor 15, Bitexco Financial Tower, 2 Hai Trieu, Dist.1,

HCMC

Ha Noi Branch:

Floor 6, Capital Tower, 109 Tran Hung Dao, Hoan Kiem district, Ha

Noi, Viet Nam

PROSPECTUS

THE VIETNAM NATIONAL TEA CORPORATION LIMITED (VINATEA)

INFORMATION ABOUT THE INITIAL PUBLIC OFFERING OF SHARES


Name of the issuer: THE VIETNAM NATIONAL TEA

CORPORATION LIMITED (VINATEA)

Head office: 92 Vo Thi Sau, Hai Ba Trung, Ha Noi, Viet Nam

Charter capital: 370,000,000,000 VND (Three hundred billion VND)

Total number of shares: 37,000,000 shares (Three hundred million shares)

Par value: 10,000 VND

Type of issuing share: Ordinary share

Total shares for IPO: 11,789,000 shares, equivalent to 31,862% of total

charter capital

Starting price: 10,100 VND

Auction form: Public auction

Limited order for domestic

investors:

Minimum: 100 shares

Maximum: 11,789,000 shares

Limited order for domestic

investors:

Minimum: 100 shares

Maximum: 11,789,000 shares

Subscription quantity: Multiples of 100 shares

Incremental bidding price: 100 VND (one hundred VND)

Deposit: 10% of total value of share subscription at starting price

PROSPECTUS


TABLE OF CONTENTS

PART 1: GENERAL INFORMATION .................................................................................. 1

1. AUCTION LEGAL FRAMWORK ................................................................................. 1

2. PARTIES RESPONSIBLE FOR THE INFORMATION OF THE PROSPECTUS .. 3

3. ABBREVIATIONS AND GLOSSARY ........................................................................... 4

PART 2: VIET NAM NATIONAL TEA CORPORATE LIMITED BEFORE

EQUITIZATION ...................................................................................................................... 5

1. GENERAL INFORMATION OF THE EQUITIZED COMPANY ............................. 5

2. ENTERPRISE VALUE AND THE STATE’S CAPITAL CONTRIBUTION .......... 14

3. MAJOR ASSETS OF VINATEA ................................................................................... 16

4. FINANCIAL RESULTS 3 YEARS BEFORE EQUITIZATION ............................... 22

4.1. Business performance of VINATEA ................................................................................... 22

4.1.1. Main products ............................................................................................................ 22

4.1.2. Products sold structure .............................................................................................. 25

4.1.3. Revenues breakdown from 2012 to 2014 and first half year 2015............................. 26

4.1.4. Gross profit margin breakdown ................................................................................. 27

4.1.5. Expenses structure...................................................................................................... 27

4.1.6. Raw Materials ............................................................................................................ 28

4.1.7. Technology ................................................................................................................. 29

4.1.8. Research and development of new products .............................................................. 30

4.1.9. Quality management system ....................................................................................... 30

4.1.10. Marketing activities ................................................................................................ 30

4.1.11. Trademark, patent and copyright registration ....................................................... 31

4.1.12. Main current contracts ........................................................................................... 31

4.2. Finacial status and operational performance three years before equitization ................. 32

4.2.1. Financial indicators and operational performance from 2012 to 2014 .................... 32

4.2.2. Main finacial indicators from 2012-2014 .................................................................. 33

4.2.3. Factors affecting business activites of VINATEA in the last three years ................... 33

4.3. Position of The Vietnam National Tea Corporation Limited in the industry .................... 35

4.3.1. Position of VINATEA in the industry ......................................................................... 35

4.3.2. Industry prospects ...................................................................................................... 36

4.3.3. Compare the consistency of VINATEA’s development strategy with the sector

development, the State’s policies and global trend .................................................................. 36

PART 3: INVESTMENTS SCHEME AND DEVELOPMENT STRATEGY OF

VINATEA AFTER EQUITIZATION .................................................................................. 38

1. OBJECTIVES OF THE EQUITIZATION ................................................................... 38

2. FORM OF THE EQUITIZATION ................................................................................ 38

3. COMPANY PROFILE AFTER EQUITIZATION ...................................................... 38

3.1. General information .......................................................................................................... 38

3.2. Business activities of joint stock company ......................................................................... 39

3.3. Organisational structure after equitization ....................................................................... 40

PROSPECTUS


4. CHARTER CAPITAL, STRUCTURE OF CHARTER CAPITAL ........................... 42

4.1. Charter capital .................................................................................................................. 42

4.2. Structure of charter capital ............................................................................................... 42

5. DEVELOPMENT STRATEGY AND INVESTMENT PLAN OF VINATEA AFTER

EQUITIZATION .................................................................................................................... 43

5.1. Development strategy after equitization ............................................................................ 43

5.2. Investment plan .................................................................................................................. 44

5.3. Business plan in the period of 2014-2017 ......................................................................... 44

PART 4: GENERAL INFORMATION OF THE AUCTION ............................................ 46

1. RISKS ............................................................................................................................... 46

1.1. Economic risks .................................................................................................................. 46

1.2. Legal and regulatory risks ................................................................................................ 46

1.3. Risks of consumption market and competitive risks .......................................................... 47

1.4. Risks of public offerings .................................................................................................... 47

1.5. Other risks ......................................................................................................................... 47

2. GENERAL INFORMATION ON SHARE OFFERING ............................................. 47

2.1. Method of share offering and payment of share purchase for investors paticipating in

auction....................................................................................................................................... 47

2.2. Auction method and settlement of shares for strategic investors ...................................... 48

2.3. Auction method and settlement of shares for employees ................................................... 49

3. UTILIZATION PLAN OF THE PROCEEDS FROM THE INITIAL PUBLIC

OFFERING ............................................................................................................................. 49

4. SCHEDULE OF LISTING, REGISTRATION FOR TRADING AFTER

EQUITIZATION .................................................................................................................... 50

Advisor: Viet Capital Securities Jsc. 1

PROSPECTUS


PART 1: GENERAL INFORMATION

1. AUCTION LEGAL FRAMWORK

Enterprise Law No. 60/2005/QH11 of the National Assembly of the Socialist Republic of

Vietnam, XI period on November 29, 2005;

Securities Law No. 70/2006/QH11 of of the National Assembly of the Socialist Republic of

Vietnam, XI period on May 29, 2006;

Amendment and supplementation of the Securities Law No. 62/2010/QH12 of the National

Assembly of the Socialist Republic of Vietnam, XII period on November 24,2010;

Decree No.59/2011/NĐ-CP dated 18/07/2011 of the Government about equitisation of 100%

state-owned enterprises into joint stock companies;

Decree No.189/2013/NĐ-CP dated 20/11/2013 of the Government amending Decree no

59/2011/ND – CP on equitisation of 100% state-owned enterprises;

Decree No.71/2013/NĐ-CP dated 11/07/2013 of the Government about investment and

management of state capital in state-owned enterprises;

Decree No.108/2014/NĐ-CP dated 20/11/2014 of the Government about the staff downsizing

policy;

Resolution No.15/NQ-CP dated 06/03/2014 of the Government for speeding up equitisation and

withdrawal of State Capital from Enterprises;

Decision No.51/2014/QĐ-TTg dated 15/9/2014 of the Prime Minister about a number of

contents on capital withdrawal, share sale, trading and listing registration on securities market of

state-owned enterprises;

Circular No. 202/2011/TT-BTC dated 30/12/2011 of the Ministry of Finance guiding the

handling of finance and determination of the value of enterprises when the transformation of the

100% state-owned enterprises into joint stock companies under the provisions of decree

No.59/2011/ND-CP dated 18/07/2011 of the Government;


handling of finance and determination of the value of enterprises when the transformation of the

100% state-owned enterprises into joint stock companies under the provisions of decree

NO.59/2011/ND-CP dated 18/07/2011 of the Government;

Circular No. 196/2011/TT-BTC dated 26/12/2011 of the Ministry of Finance guiding the initial

sale of share and the management and use of proceeds from the equitisation 100% state-owned

enterprise into joint stock companies;


PROSPECTUS



mechanism of management and use of fund for support of arrangement of enterprises at the

parent company in the economic group, state corporation, parent company in the parent

company-subsidiaries conglomerate;

Decree No. 91/2010/NĐ-CP dated 20/08/2010 of the Government stating the regulations on

redundant employees in case of equitisation of state-owned one member limited companies;

Circular No.33/2012/TT-BLĐTBXH dated 20/12/2012 of Ministry of labour, invalids and social

affairs guiding the implementation of policies for employees under Decree 59/ND-CP dated

18/7/2010 of the Government about equitisation of 100% state-owned enterprises;

Circular No.184/2012/TT-BTC dated 25/10/2012 of Ministry of Finance On guiding a number

of contents of Regulation on management and use of Supporting Fund for enterprise

arrangement and development issued together with Decision No.21/2012/QD-TTg (Issued by

the Ministry of Finance on 25 October 2012);

Circular No.38/2010/TT-BLĐTBXH dated 24/12/2010 of Ministry of labour, invalids and social

affairs providing guidelines for the implementation of a number of articles of Decree No.

91/210/ND-CP dated August 20th, 2010 providing for the policy on redundant employees upon

restructuring the State-owned one member limited liability companies;

Decision No.37/2014/QĐ-TTg dated 18/06/2014 of the Prime Minister on criteria, lists for

classification of state-owned enterprises;

Dispatch No.2130/TTg-ĐMDN dated 15/11/2011 of the Prime Minister restructuring state-

owned enterprises under the Ministry of Agriculture and Rural Development;

Decision No.2779/QĐ-BNN-ĐMDN dated 25/11/2013 of the Ministry of Agriculture and Rural

Development about equitisation of The Vietnam National Tea Corporation Limited;


Development about establishing equitisation steering committee of The Vietnam National Tea

Corporation Limited;


Development about establishing supporting group for steering committee of The Vietnam

National Tea Corporation Limited;

Decision No.1210/QĐ-BNN-ĐMDN dated March 06, 2014 of Ministry of Agriculture and

Rural Development about work breakdown structure of steering committee of The Vietnam

National Tea Corporation Limited;


PROSPECTUS


Decision No.157/QĐ-CVN-HĐTV dated 29/04/2014 of The Vietnam National Tea Corporation

Limited about work breakdown structure of supporting group for steering committee of The

Vietnam National Tea Corporation Limited;

Decision No.21/2012/QD-TTg dated 10/05/2012 of the Government about regulation on

management and use of Supporting Fund for enterprise arrangement and development;

Decision No.2040/QĐ-BNN-ĐMDN dated 27/08/2012 of Ministry of Agriculture and Rural

Development approve Restructuring plan of The Vietnam National Tea Corporation Limited;

Decision No.2660/QĐ-BNN-ĐMDN dated 07/11/2013 of Ministry of Agriculture and Rural

Development approve divestment plan of The Vietnam National Tea Corporation Limited;

Decision No.916/QĐ-BNN-QLDN dated 05/05/2014 of Ministry of Agriculture and Rural

Development about implementation of resolution 15;

Decision No. 4458a/QĐ-BNN-QLDN dated 17/10/2014 of of Ministry of Agriculture and Rural

Development approve enterprise value of The Vietnam National Tea Corporation Limited to

equitize at November 31, 2013;

Decision No. 864/QĐ-TTg dated 16/6/2015 of the Prime Minister approve Equitization Plan of

The Parent Company - Vietnam National Tea Corporation;

Decision No.2780/QĐ-BNN-QLDN dated 14/07/2015 of Ministry of Agriculture and Rural

Development of modifying and amending Decision No. 4458a/QĐ-BNN-QLDN dated

17/10/2014 of Ministry of Agriculture and Rural Development approve enterprise value of The

Vietnam National Tea Corporation Limited to equitize;

Service contract No. 32/2014/HĐ-TVHN.VCSC dated 26/12/2014 between The Vietnam

National Tea Corporation Limited and Viet Capital Securities about advisory for equitisation

plan, auction share, and initial annual meeting;

2. PARTIES RESPONSIBLE FOR THE INFORMATION OF THE PROSPECTUS

2.1. Representative of the Steering Committee

Mr. Nguyen Thien Toan

Position: Deputy of Equitization Steering Committee

(According to Dispatch 6313/BNN-QLDN dated 07/08/2015 of Ministry of Agriculture and

Rural Development about authority in innitial public offering of shares, and delegation of

supervision the innitial public offering of shares

The prospectus is written by VINATEA and Viet Capital Securities JSC., and is approved by the

Steering Committee.


PROSPECTUS


2.2. Representative of the Equitized Enterprise: Viet Nam National Tea Corporate

Limited

Mr. Nguyen Thien Toan

Position: Chairman of Members’ Council, Head of Board of Viet Nam National Tea Corporate

Limited.

We commit that all the information and data related to Viet Nam National Tea Corporate

Limited in this Prospectus is true and correct, sufficient in accordance with applicable law on

equitization.

2.3. Representative of the Advisor: Viet Capital Securities Joint Stock Company.

Mr. Nguyen Quang Bao

Position: Deputy General Director of Viet Capital Securities JSC.

(Authorized paper No. 17/2014/QĐ.VCSC dated 1/7/2014 about authorizing Deputy General

Director signs on behalf of General Director)

This Prospectus is an integral part of initial public offering documents with the preparation by

Viet Capital Securities JSC. on the basic of the Service Contract with VINATEA. We assure

that the analysis, evaluation, word choices and expressions on this Prospectus have been made

in a reasonable and prudent manner under the information and data provided by VINATEA.

3. ABBREVIATIONS AND GLOSSARY

VINATEA : Viet Nam National Tea Corporate Limited

Equitized Company : Viet Nam National Tea Corporate Limited

VCSC : Viet Capital Securities Joint Stock Company

Advisor : Viet Capital Securities Joint Stock Company

Ltd : Limited Liability


PROSPECTUS


PART 2: VIET NAM NATIONAL TEA CORPORATE LIMITED BEFORE

EQUITIZATION

1. GENERAL INFORMATION OF THE EQUITIZED COMPANY

1.1. General information

- Vietnamese name: TONG CONG TY CHE VIET NAM – CONG TY

TRACH NHIEM HUU HAN MOT THANH VIEN

- English name: THE VIETNAM NATIONAL TEA CORPORATION LIMITED

- Trading name: VINATEA Co., Ltd.

- Head office: 92 Vo Thi Sau, Hai Ba Trung, Ha Noi

- Phone: (84-4) 3622 6990

- Fax: (84-4) 3622 6991

- Email: [email protected]

- Website: http://www.vinatea.com.vn/

- Logo:

- Business licence: No. 0100103915 Hanoi Planning and Investment Department

issued on 2nd July 2010, 1st change on 31st July 2014

- Charter capital according to Business licence: 181,927,000,000 VND

- Charter capital according to financial report 2014: 317,000,083,616 VND. VINATEA is

planning to register new business licence when become joint stock company.

1.2. VINATEA’s development history

The Viet Nam National Tea Corporation Limited is estalished by restructuring Viet Nam Tea

Industrial and Agriculture Enterprises Union, according to Decision No.394/NN-TCCB/QĐ

dated December 29, 1995 of the Ministry of Agriculture and Rural Development. Through over

40 years of development, VINATEA has been adjusting its operational business models along

with every stage of the country’s renewal. In 2005, VINATEA was restructured and operated

according to the model of Parent and Subsidiary Corporation.

In 2010, the Parent Company - Viet Nam National Tea Corporation was renamed to Viet Nam

National Tea Corporation Limited 100%-owned by the Government. Today VINATEA has a

solid operated history. VINATEA recently owns high productive tea farms, high-quality tea,

modernized processing factories, completely supporting system for producing and doing

business. Moreover, VINATEA has high-qualified and full-skilled staff and employees.

http://www.vinatea.com.vn/


PROSPECTUS


VINATEA is proud to be an enterprise who have the greatest scale and market share of Viet

Nam tea industry.

1.3. Licenced business activities

According to business license No. 0100103915 Hanoi Planning and Investment Department

issued on 2nd July 2010, 1st change on 31st July 2014, business activities of VINATEA as

below:

- Producing tea, industrial foods, handicrafts, consumer goods;

- Trading tea, industrial foods, handicrafts, consumer goods;

- Wholesale trading agricultural and forestry materials (except for wood, bamboo) and

live animals;

- Trading materials, raw materials, machines and equipment related to produce tea and

install machines and equipment at tea factories;

- Supply investment advisory activities (not include: services in legal, finace, accouting,

auditing, taxation and securities);

- Trading contruction raw materials;

- Trading interior and exterior equipment;

- Build industrial and civil construction, irrigation construction, construct roads;

- Restaurant and mobile food services;

- Supply transportation sevices by car;

- Trading civil facilities, industrial electricity, electronics, information technology and

telecommunications;

- Trading real estates, the right of using real estates of owner, user or lender;

- Import and export commodities of company.

1.4. Organisational structure of VINATEA


PROSPECTUS


Organisation structure of VINATEA

Deputy Director

Board Members

General Director

Superviory Board

Deputy Director

Deputy Director

Department of Planning

and

Investment

General

Office Department of

Finance and

Accouting

Department of

Technology

and KCS

Yen Bai Tea

Company

Moc Chau

Tea

Company

Hong Tra

Trading and

Tourism

Conpany

Domestic Sales

Deparment

Russian Office

Branch

Nam Son

Business and

General Trading

Company

01 Subordinate company

Ba Dinh Tea Limited Liability Company

(in Russia)

02 Affiliate Companies

1. Nghia Lo Tea Joint Stock Company

2. Lien Son Tea Joint Stock Company

07 Associate Companies

1. Phu Da Company (Associate with

Iraq)

2. Ha Tinh Tea Joint Stock Company

3. Kim Anh Tea Joint Stock Company

4. Contruction, Materials and Technical

Supplies Joint Stock Company

5. Thai Binh Duong Trading Joint Stock

Company

6. Tran Phu Tea Joint Stock Company

7. Thai Nguyen Tea Joint Stock

Company

Import and

Export

Department

Deputy Director

Kim Anh tea

factory

Song Cau

Tea Branch

Sai Gon Tea

Company

Huong Tra

Commercial

Business

Company


PROSPECTUS


1.4.1. Company office

a) Company organisational structure of VINATEA:

- Board Members

- Supervisory Board

- Board of General Directors: 01 General Director and 04 Deputy General Directors

- Suppoting System

+ 01 Chief Accountant

+ 04 Funtional Departments: General Office, Department of Planning and Investment,

Department of Finance and Accouting, Department of Technology and KCS;

+ 06 Business Departments

+ 01 Branh Office in Russia

b) Manufacturing factory and warehouse:

- Kim Anh tea factory;

1.4.2. Dependent Units

There are 07 Dependent Units (Branches):

Branch of VINATEA in Ha Noi – Hong Tra Trading and Tourism Conpany

Branch bussines licence: Branch code 0100103915-005 first registration at 25/03/2002, 4th

change 14/12/2010.

Branch address: 92 Vo Thi Sau Street, Thanh Nhan ward, Hai Ba Trung district, Ha Noi

Main business activities:

- Manufacturing and trading tea, food industrial goods, handicraft goods, consumer goods;

- Wholesale of agricultural and forestry raw materials (except wood and bamboo)

- Sales of supplies, raw materials, machinery, spare parts, equipment and install tea-processing

equipment of tea factories, vehicles (not including design vehicles);

- Sales of building materials;

- Hotels (excluding bar, karaoke room, dance hall);

- Restaurant (not including bars, karaoke rooms, dance halls);

- Passenger transport by car;

- Real Estate;



PROSPECTUS


Branch of VINATEA in Ha Noi – Huong Tra Trading Company

Branch bussines licence: Branch code 0100103915-005 first registration at 10/05/2002, 2nd

change at 14/12/2010.

Branch address: No. 46 Tang Bat Ho Street, Hai Ba Trung District, Hanoi

The main business activities:

- Manufacturing and trading all kinds of tea, food industrial goods, handicraft goods, consumer

goods;

- Wholesale of agricultural and forestry raw materials (except wood, bamboo);


Branch of VINATEA in Ha Noi – Nam Son Business and General Commercial

Company

Branch bussines licence: Branch code 0100103915-007 first registration 10/04/2002, 4th change

at 14/12/2010.

Branch address: 92 Vo Thi Sau Street, Thanh Nhan ward, Hai Ba Trung District, Hanoi



goods;

- Wholesale of agricultural and forestry raw materials (except wood and bamboo)

- Trading supplies, raw materials, machinery, spare parts, equipment and tea-processing

equipment installation at the tea factories, vehicles (not including design vehicles);

- Trading building materials;

- Trading equipment interior and exterior;

- Supply passenger transport services by car;

- Trading of electrical equipment, industrial electrical, electronics, information technology and

telecommunications;

- Dealers buy and sell goods on consignment of e-business, information technology and

telecommunications;


Branch of VINATEA – Limited Company – Sai Gon Tea Company

Branch bussines licence: No. 0100103915-003 issued by Ho Chi Minh city Planning and

Investment Department, the first registration at 30/10/2000, change at 28/01/2011


PROSPECTUS


Address: 227 Nam Ky Khoi Nghia street, 07 ward, district 3, Ho Chi Minh city



goods (not working at the office);

- Wholesale of agricultural and forestry raw materials (except wood, bamboo) (not working at

the office);

- Trading supplies, raw materials, machinery, spare parts, installation of equipment and tea-

processing equipment at the tea factories, transport;


- Hotels (excluding bar, karaoke, disco) (not at the office);

- Restaurants (not including bars, karaoke, disco) (not at the office);

- Supply passenger transport services by car;

- Trading in real estate.

Branch of VINATEA in Son La – Moc Chau Tea Company

Branch bussines licence: No. 0100103915-017 issued by Planning and Investment Department of

Son La province, the first registration at 24/12/2008, 2nd change at 14/04/2011.

Address: Moc Chau ward, Moc Chau district, Son La province.\


- Farming, purchasing, processing and trading all kinds of tea

- Trading agricultural products, forest products and handicrafts, consumer goods

- Transportation services, trading technical supplies, machinery and equipment for production

and processing of tea.

Branch of VINATEA in Thai Nguyen – Song Cau Tea Branch


Thai Nguyen province, the first registration at 16/06/2009, changed at 06/01/2014.

Address: Tan Lap hamlet, Song Cau town, Dong Hy district, Thai Nguyen province

Business activities

- Plant tea;

- Produce tea;

- Wholesale food (wholesale tea);


PROSPECTUS


- Retail sale of foods in specialized stores (retail tea);

- Manufacture of machinery and spare parts, tea processing equipment;

- Transport goods by road.

Branch of VINATEA in Yen Bai – Yen Bai Tea Company


Yen Bai province, , first registration at 18/12/2008, change at 09/04/2011.

Address: Block 6, Viet Cuong commune, Tran Yen district, Yen Bai province.

Main activities:

- Production, sales and export of teas, agriculture, forestry and fishery, food industrial goods,

handicraft goods, consumer goods;

- Trading supplies, raw materials, machinery, spare parts, equipment and tea-processing

equipment installation at the tea factories, transport;



- Hotels (excluding bar, karaoke, dance hall);

- Restaurant (not including bars, karaoke, dance hall);

- Supply passenger transport services by automobile;

- Trading real estate.

1.4.3. Subordinate company and Affiliate Companies

Table: Subordinate company and Affiliate Companies

No. Companies Contributed

equity ratio

Actual

contributed

equity

(million

VND)

Business activites

1 Nghia Lo Tea Joint Stock

Company 51.03% 3,617

Produce, process and refine black

tea, green tea

2 Lien Son Tea Joint Stock

Company 51.19% 1,893 Produce and trading tea

3 Ba Dinh Tea Limited

Liability Company 100% 5,718 Trading tea

Source: VINATEA


PROSPECTUS


Note: Ba Dinh Tea Limited Liability Company has been liquidated according to Dispatch

645/BNN-QLDN of Ministry of Agriculture and Rural Development dated 21/01/2015.

1.4.4. Associate Companies


Table: Associate Companies

No. Associate Companies

Contribute

d equity

ratio

Actual

contributed

equity

(million

VND)

Business activites

1 Ha Tinh Tea Joint

Stock Company 17.39% 365 Produce, trade, export green tea

2 Kim Anh Tea Joint

Stock Company 28.87% 3,024

Produce and trade internal and

external black tea and green tea

3

Contruction, Materials

and Technical Supplies

Joint Stock Company

3.75% 1.513 Construction services

4

Thai Binh Duong

Trading Joint Stock

Company

12.96% 140 Trading tea

5 Tran Phu Tea Joint

Stock Company 36.02% 3.243

Produce and process black tea

and green tea

6 Thai Nguyen Tea Joint

Stock Company 8.50% 177

Produce, process and trade

internal and external black tea

and green tea

7 Phu Da Company

(Associate with Iraq) 45.03% 143.045

Produce and trade exported

black tea

Source: VINATEA

1.5. Total number of employees will be transferred to the Joint Stock Compamy

- There will be 1.180 people continuing working for VINATEA after the equitization, in

details:

STT Types of labours Quantity (people) Percentage (%)

Total 1.180 100%

Labour classification according to

location

1 Company office 118 10.0%

2 Song Cau Tea Branch 189 16.0%


PROSPECTUS


STT Types of labours Quantity (people) Percentage (%)

3 Yen Bai Tea Company 106 9.0%

4 Moc Chau Tea Company 753 63.8%

5 Sai Gon Tea Company 14 1.2%

Labour classification according to

qualifications 1,180 100%

Bachelor and above 181 15.3%

College graduate 87 7.4%

High school 811 68.7%

Other 101 8.6%

2. ENTERPRISE VALUE AND THE STATE’S CAPITAL CONTRIBUTION

Decision No. 4458a/QĐ-BNN-QLDN dated October 17, 2014 of of Ministry of Agriculture

and Rural Development approve enterprise value of The Vietnam National Tea Corporation

Limited to equitize at November 31, 2013.

Actual value of equitizing enterprise is VND 436,413,306,380, in which actual value of

State’s capital contribution is VND 317,000,083,616.

Assets are not accounted in the enterprise’s value (according to book value):

− Assets handed over to Debt and Asset Trading Corporation including:

Fixed assets: VND 2,182,672,877

Materials and goods: VND 163,949,594

− Assets handed over to the local council: VND 462,680,618

− Disposal assets of Phu Luong tea factory: VND 8,088,185,723

Estimated value of tea processing equipment of Au Lau tea factory that invested by ODA:

VND 728,300,000

Asset, that are temporarily not accounted in enterprise’s value, is tea field (handed over to

farmers): VND 2,555,393,940

Table: Enterprise value of VINATEA

and the State’s capital contribution as at December 21, 2013

Unit: VND

Category Book value

After the

financial

settlement

Re-evaluated

value Difference

1 2 3 4 5 = 4 - 3

A. In-used assets 344,549,882,881 340,161,155,124 436,413,306,380 96,252,151,256


PROSPECTUS


(I+II+III+IV)

I. Fixed assets and Long-

term investments 216,890,708,301 189,931,274,704 285,922,956,444 95,991,681,740

1. Fixed assets 55,839,695,898 47,412,500,386 95,470,287,077 48,057,786,691

a. Tangible fixed assets 55,811,695,898 47,384,500,386 95,442,287,077 48,057,786,691

b. Intangible fixed assets 28,000,000 28,000,000 28,000,000 -

2. Real estate investments 6,844,151,953 -

-

3. Long-term financial

investments 113,956,432,334 118,871,044,372 169,301,751,216 50,430,706,844

4. Construction in progress 2,754,445,892 2,754,445,892 2,754,445,892 -

5. Long - term receivables 27,054,476,387 14,735,775,176 14,735,775,176 -

6. Long - term prepaid

expenses 10,441,505,837 6,157,508,878 3,660,697,083 (2,496,811,795)

II. Current assets and short-

term investments 127,659,174,580 150,229,880,420 150,040,819,743 (189,060,677)

1. Cash: 7,175,753,233 7,148,769,913 7,149,589,650 819,737

+ Cash in hand 774,527,396 748,480,071 748,479,100 (971)

+ Cash in bank 6,401,225,837 6,400,289,842 6,401,110,550 820,708

2. Short-term Financial

investment 900,000,000 937,021,066 937,021,066 -

3. Receivables 69,000,559,038 91,473,373,074 91,482,835,101 9,462,027

4. Inventories 36,336,033,958 36,425,848,850 36,209,448,489 (216,400,361)

5. Other current asset 14,246,828,351 14,244,867,517 14,261,925,437 17,057,920

III. Goodwill - - 449,530,193 449,530,193

IV. Value of land using right - - - -

B. Not-in-used assets - 462,680,618 462,680,618 -

I. Fixed assets and long term

investments - 462,680,618 462,680,618 -

1. Fixed assets - 462,680,618 462,680,618 -

2. Long-term financial

investments - - - -

3. Construction in progress - - - -

4. Long-term escrow - - - -

II. Current assets & short-

term investments - - - -

C. Disposal assets - 10,434,808,194 10,434,808,194 -

I. Non-current assets & long

term investments - 10,270,858,600 10,270,858,600 -

1. Non-current assets - 10,270,858,600 10,270,858,600 -

2. Long-term prepaid expenses

(CCDC) - - - -

II. Current assets & short

term investments - 163,949,594 163,949,594 -

1. Bad debts - - - -

2. Inventories - 163,949,594 163,949,594 -


PROSPECTUS


D. Assets formed from the

welfare and bonus funds - - - -

E. Assets that temporary not

accounted in enterprise value

(Valuea of tea field handed

over to farmers according to

Deree 01 and Decree 135)

2,555,393,940 2,555,393,940

TOTAL ENTERPRISE

VALUE (A+B+C+D+E) 344,549,882,881 351,058,643,936 449,866,189,132 98,807,545,196

In which:

TOTAL ENTERPRISE

VALUE (A) 344,549,882,881 340,161,155,124 436,413,306,380 96,252,151,256

F1. Actual value of Liabilities 172,853,624,625 130,534,015,799 119,413,222,764 (11,120,793,035)

F2. Professional Fund - - - -

TOTAL ACTUAL VALUE

OF THE STATE’S

CAPITAL

CONTRIBUTION [A-

(F1+F2)]

171,696,258,256 209,627,139,325 317,000,083,616 107,372,944,291

According to Decision No. 864/QĐ-TTg dated 16/6/2015 of the Prime Minister approve

Equitization Plan of the Parent company - The Vietnam National Tea Corporation Limited

and Decision No.2780/QĐ-BNN-QLDN dated 14/07/2015 of Ministry of Agriculture and

Rural Development of modifying and amending Decision No. 4458a/QĐ-BNN-QLDN dated

17/10/2014 of Ministry of Agriculture and Rural Development approve enterprise value of

The Vietnam National Tea Corporation Limited to equitize at November 31, 2013:

”Add the value of handed-over tea field according to book value is VND 2,555,393,940 (two

billion, five hundred fifty five million, three hundred ninety thee, nine hundred and forty VND)

into VINATEA’s value to equitize. After the guideline of evaluating the value of tree field is

effective, the Ministry of Agriculture and Rural Development re-evaluate the value of the tea

field to revaluate the total value of the State’s capital contribution as at formly convert into

Joint stock company in accordance with Decree No. 59/2011/NĐ-CP dated July 18, 2011 of

the Government”

Thus total actual value of the State’s capital contribution is VND 319,555,477,556.

3. MAJOR ASSETS OF VINATEA

3.1. Fixed assets


PROSPECTUS


Fixed assets of VINATEA according to Enterprise Valuation Documents at December 31, 2013 and Annual Report 2014 at December 31,

2014:

N

o. Assets

2013 2014

Historical book value Re-evaluated value Difference Historical book value

Cost Accumulated

depreciation Cost

Accumulated

depreciation Cost

Accumulated

depreciation Cost

Accumulated

depreciation

A In-used assets 124,447 47,413 217,572 95,470 93,125 48,058 220,336 93,971

1 Tangible fixed assets 123,942 47,385 217,067 95,442 93,125 48,058 219,831 93,957

1.1 Buildings and structures 64,771 29,188 166,136 73,132 101,365 43,944 165,795 71,280

1.2 Machinery and equipment 38,720 13,902 39,204 17,798 484 3,896 42,254 18,432

1.3 Transportation 7,001 1,596 10,618 4,180 3,617 2,584 10,618 3,886

1.4 Other fixed assets 13,449 2,699 1,109 333 (12,340) (2,366) 1,164 359

2 Intangible fixed assets 505 28 505 28 - - 505 14

2.1 Value of land using license 70 28 70 28 - - 70 14

2.2 Software 237 - 237 - - - 237 -

2.3 Other 198 - 198 - - - 198 -

B. Not –in-used assets 4,274 463 4,274 463 - -

1 Tangible fixed assets 4,274 463 4,274 463 - -

1.1 Buildings and structures 4,274 463 4,274 463

1.2 Machinery and equipment - - -

C. Disposal assets 15,625 10,271 15,625 10,271 - -

1 Tangible fixed assets 15,625 10,271 15,625 10,271 - -

1.1 Buildings and structures 6,566 5,175 6,566 5,175

1.2 Machinery and equipment 8,949 5,095 8,949 5,095

1.3 Other fixed assets 109 - 109 -

D. Assets formed from the

welfare and bonus funds - - - -


PROSPECTUS


E.

Assets that temporaryly

not accounted in enterprise

value (Valuea of tea field

handed over to farmers

- - 12,191 2,555 12,191 2,555 - -

Total 144,345 58,146 249,661 108,759 105,315 50,613 220,336 93,971

3.2. Lands

Currently, VINATEA is managing and utilizing the areas of 3,544.091632 ha (in which 134.829,32 m2 for general construction, and

3.530,6089 ha for agricultural purpose) at five provinces and cities in Vietnam: 05 areas for general construction purpose in Hanoi, 02 areas

for general construction purpose in Ho Chi Minh city, 02 areas for general construction purpose in Son La, 14 areas for general construction

purpose in Thai Nguyen, and 04 areas for general construction purpose in Yen Bai. Currently, VINATEA rearranged lands according to legal

documents of equitization, the plans of using lands is confirmed and approved by the Councils of Ha Noi, Son La, Thai Nguyen and Yen Bai.

These lands are not in any dispute and town planing at the moment.

Table: List of current VINATEA lands

No. Name Location

The area

under the

current

used map

(m2)

Commision/L

easing Current

purpose Lease period

Value

added in

the

enterprise

value

Note

I VINATEA

35,311.32

1 VINATEA

office

92 Vo Thi Sau, Hai Ba

Trung, Hanoi 689.50 Annual leasing

Capital

construction 01/10/1997 -

01/10/2047 0

46 Tang Bat Ho, Hai Ba

Trung, Hanoi 600.00 Annual leasing

Holding

office 15/10/1993-

15/10/2043 0


PROSPECTUS


9 Lane 43 Phung Khoang,

Trung Van, Tu Liem, Hanoi

(New address: 17 Lane 67,

Phung Khoang, Trung Van,

Tu Liem, Hanii)

557.72 Annual leasing Office To 01/2016 0

2 Kim Anh

Tea

Factory

Thai Phu, Mai Dinh, Soc

Son, Hanoi (land of Mai

Dinh mechanics before). 6,485.30 Annual leasing

Business

purpose,

office

To

01/01/2020 0

Mai Dinh, Soc Son, Hanoi –

Separate from Kim Anh tea

company 16,232.00 Annual leasing

Business

purpose,

office

To

01/01/2016 0

3 Saigon Tea

Company

59 An Binh, ward 6, District

5, HCM city 490.00 Annual leasing Office

5 year from

01/01/1998 0

Saigon Tea

Company

is currently

using and

applying

for

extended

date

225 Nam Ky Khoi Nghia,

ward 7, district 3, HCM city 446.80 Annual leasing

Office, and

showroom Until 2020 0

4 Tuc Tranh

Tea

Factory

Tuc Tranh, Phu Luong, Thai

Nguyen 9,810.00 Annual leasing

until

31/1/2042 0

II Branch –

Moc Chau

Tea

38,426.00


PROSPECTUS


Company

1 To Mua tea factory: Van Ho,

Moc Chau, Son La 9,427.00 Annual leasing

Factory and

office 11/5/2004 to

11/5/2034 0

2 Thao Nguyen ward office 28,999.00 Annual leasing Office, and

factory 0

III

Branch –

Song Cau

Tea

Branch

24,612.00

1 Company Office, Song Cau,

Dong Hy, Thai Nguyen 2,818.00 Annual leasing Office

24/10/2012-

03/02/2047 0

2 Production team 02 office –

Hoa Thuong Dong Hy, Thai

Nguyen 1,621.00 Annual leasing Office

24/10/2012-

03/02/2047 0

3 Production team 03 office –

Hoa Thuong Dong Hy, Thai

Nguyen 557.00 Annual leasing Office

24/10/2012-

02/03/2047 0

4 Production team 04 office -

Song Cau, Dong Hy, Thai


24/10/2012-

02/03/2047 0

5 Production team 05 office 130.00 Annual leasing Office 24/10/2012-

02/03/2047 0

6 Production team 07office -


Nguyen 2,147.00 Annual leasing Office

24/10/2012-

02/03/2047 0


Song Cau, Dong Hy, Thai 422.00 Annual leasing Office

24/10/2012-

02/03/2047 0


PROSPECTUS


Nguyen




24/10/2012-

02/03/2047 0




24/10/2012-

02/03/2047 0




24/10/2012-

02/03/2047 0

11 Song Cau tea factory, Song

Cau, Dong Hy, Thai Nguyen 9,801.00 Annual leasing Factory

24/10/2012-

02/03/2047 0

12 Khe Mo tea factory, Dong

Hy, Thai Nguyen 4,498.00 Annual leasing Factory

02/10/2012-

02/03/2037 0

13 Worker dormitory of Khe

Mo factory 829.00 Annual leasing Canteen

02/10/2012-

02/03/2037 0

IV

Branch –

Yen Bai

Tea

Company

36,480.00

1 Real estate at Viet Cuong

ward- Tran Yen district-Yen

Bai province 21,500.00 Annual leasing

Office and

manufacturin

g facility

13/01/1997 -

13/01/2017 0

2 Real estate at Van Hoi ward-

Tran Yen district-Yen Bai

province 8,550.00 Annual leasing

Capital

construction 13/01/1997 -

13/01/2017 0

3 Real estate at Minh Quan

ward - Tran Yen district-Yen 5,950.00 Annual leasing Canteen

13/01/1997 -

13/01/2017 0


PROSPECTUS


Bai province

4 Real estate at Au Lau ward-

Tran Yen district-Yen Bai

province 480.00 Annual leasing

Manufacturin

g facility 13/01/1997 -

13/01/2017 0

TOTAL 134,829.32

Table: List of VINATEA current argricultural lands before etiquization

No. TYPES OF LANDS Area (ha) YEN BAI TEA

COMPANY

SONG CAU

TEA

BRANCH

MOC CHAU

TEA

COMPANY

VINATEA

OFFICE

Area (ha) Area (ha) Area (ha) Area (ha)

Total current area of agricultural

lands 3,530.6089 451.596 1,944.2385 1,134.7744 0.00

1 Agricultural lands (Tea field

managing by VINATEA) 1,261.6859 379.410 302.8215 579.4544

a Tea field which is handed over to

farmers according to Decree 135 420.5078 150.240 7.1000 263.1678

b Tea field which is handed over to

farmers according to Decree 01 709.6181 97.610 295.7215 316.2866

c Liquidated tea 40.2000 40.200 0.0000 0.0000

d Waiting liquidated tea 91.3600 91.360 0.0000 0.0000

2 Lake area 16.0300 0.570 12.9200 2.5400

3 Other area 2,118.8530 71.616 1,580.4970 466.7400

4 Road area 134.0400 0.000 48.0000 86.0400 Source: VINATEA


PROSPECTUS


4. FINANCIAL RESULTS 3 YEARS BEFORE EQUITIZATION

4.1. Business performance of VINATEA

4.1.1. Main products

VINATEA mainly provides types of tea as follow:

No. Products Image Main features

Finished tea products

1 Oolong tea vacuum

– packed bag

- Weight: 100g

- Ingredient: Oolong tea

- Feature: vacuum – packed bag

2

Tan Cuong Thai

Nguyen

6 stars vacuum –

packed bag

- Weight: 500g

- Ingredient: Tan Cuong Thai Nguyen tea

- Feature: vacuum – packed bag

3 Tan Cuong Thai

Nguyen tea special

- Weight: 500g

- Ingredient: Tan Cuong Thai Nguyen tea

special

- Feature: zip ovan bag

4 Thai tea – Long

Dinh

- Weight: 100g

- Ingredient: Finest Thai tea

- Feature:

5 Thien Huong tea

150g

- Weight: 150g Uneven octagon

- Ingredient: high qualitifed Thai Nguyen

tea

- Feature: Uneven octagon


PROSPECTUS


6 Set of Long Dinh tea

- Weight: 200g

- Ingredient: Oolong tea – Thai tea

- Feature: hard carton box

7

Tan Cuong Thai

Nguyen tea No. 1

500g

- Weight: 500g

- Ingredient: Green tea No.1

- Feature: Nilon bag

8

Tan Cuong Thai

Nguyen tea No. 1

200g

- Weight: 200g

- Ingredient: Green tea No.1

- Feature: Nilon bag

9

Tan Cuong Thai

Nguyen tea 5 stars

500g

- Weight: 500g

- Ingredient: High qualified Tan Cuong

Thai Nguyen

- Feature: Zip ovan bag

10 Suoi giang tea 100g

- Weight: 100g

- Ingredient: Snowy Shan tea

- Feature: vacuum – packed nilon bag

11 Shan tea 100g

- Weight: 100g

- Ingredient: Shan tea

- Feature: vacuum – packed nilon bag

12 Lotus tea 80g

- Weight: 100g

- Ingredient: Lotus tea

- Feature: Round iron box

13 OoLong Long Đinh

100g

- Weight: 100g

- Ingredient: finest Oolong tea

- Feature: vacuum – packed bag in carton

box


PROSPECTUS


14 Nhai tea

- Weight: 100g

- Ingredient: green tea, nhai odour


15 Long Van 200g

- Weight: 200g

- Ingredient: Thai Nguyen tea

- Feature: uneven octagon

16 Long Van 100g

- Weight: 100g



17 Long tea

- Weight: 100g

- Ingredient: Thai tea


18 Oolong tea brocaded

box

- Weight: 100g


- Feature: vacuum-packed bag in

brocaded box

Semi - finished tea products

19 OPA black tea

20 OP black tea

21 F black tea


PROSPECTUS


22 BPS black tea

4.1.2. Products sold structure

The VINATEA products sold structure from 2012 to 2014 and first half year 2015 as below:

Table: Products sold structure

Products FY 2012 FY 2013 FY 2014

First half year

2015

Ton (%) Ton (%) Ton (%) Ton (%)

Total

amount

of

products

sold

6,624.45 100.00% 5,090.87 100.00% 4,734.66 100.00% 1,721.18 100.00%

I. Export

tea 4,618.98 69.73% 3,774.52 74.14% 3,748.25 79.17% 1,451.46 84.33%

II. Home

market

tea

2,005.47 30.27% 1,316.35 25.86% 986.41 20.83% 269.72 15.67%

- Home

market

tea to

export

1,894.68 28.60% 1,186.69 23.31% 866.87 18.31% 224.86 13.06%

+ Black

tea 1,118.43 16.88% 516.15 10.14% 211.55 4.47% 78.98 4.59%

+Green

tea 776.25 11.72% 670.54 13.17% 655.32 13.84% 145.88 8.48%

- Inner

sold tea 110.79 1.67% 129.66 2.55% 119.54 2.52% 44.86 2.61%

Source: VINATEA’s annual audited reports financial year 2012,2013,2014 and data 2015

Total amount of VINATEA tea sold decreased significantly in the last 3 years. In particular, the

total amount of tea sold in 2013 declined by more than 1,500 tons compared to 2012, and the

number of 2014 continuously decreased by 350 tons compared to 2013. The figure of export tea

accounted for the highest proportion of total amount of tea consumed, rougly 70% - 80% of the

total amount of tea. The amount of export tea fell from 4.618 tons in 2012 to 3.748 tons in 2014.

This is due to the fact that the political instability in the South China Sea leads to the difficulties

of exporting tea to the great market which is China. In Russian market, Vinatea is curently


PROSPECTUS


competing harshly in price with Vietnamese private tea enterprises. Vinatea is also facing with the

tightening test of chemical residue of exported tea in European market and this results in the

significant decrease of the amount of export tea.

The amount of home market tea accounted for only 20% to 30% of the total exported amount

from 2012 to 2014. This data had an obvious downward trend in this period because of the sharp

decrease of 900 tons in the amount of black tea that Vinatea sold to inner companies to export.

Black tea that Vinatea supplies to inner companies for export purpose is exported to Chinese and

Taiwan markets. In this political instability, inner export tea companies find difficulties in

shipping to China and this affect significantly to Vinatea’s business. The amount of exported

green and inner sold tea stay stable around 600 tons and 110 tons per year between 2012 and 2014

respectively and accounted for minor proportions of the total amount of tea.

4.1.3. Revenues breakdown from 2012 to 2014 and first half year 2015

Table: Revenues from 2012 to 2014 and first half year 2015

Unit: Million VND

Revenues 2012 2013 2014

First half year

2015

Value (%) Value (%) Value (%) Value (%)

Selling

goods and

provide

services

249,728 97.8% 233,454 97.8% 217,084 97.8% 87,652 97.2%

Lending

offices 5,592 2.2% 5,365 2.2% 4,802 2.2% 2,514 2.8%

Total 255,321 100% 238,819 100% 221,886 100% 90,166 100%

Source: VINATEA’s annual audited reports financial year 2012,2013,2014 and data 2015

Total revenue generated by Vinatea tends to decline over the period 2012-2014. Particularly, total

revenue declined by 6,52% to 238,82 billion VND in 2013 mainly due to a decrease of 16,2

billion VND in revenues from selling tea products and from providing tea processing services

compared to in 2012. In 2014, its revenue kept declining by 16,9 billion VND driven by a

decrease of over 16 billion VND in revenues from selling tea products and from providing tea

processing services.

Apart from its main activities in sale of tea products and tea processing service (revenue

generated by this two activities has accounted for about 97% of its total revenue over that period),

another source of Vinatea’s revenue is from rental income from letting office and building located

at 92 Võ Thị Sáu, Thanh Nhàn, Hai Bà Trưng, Hà Nội and at 49 Tăng Bạt Hổ, Phạm Đình Hổ,

Hai Bà Trưng, Hà Nội. This source of revenue has only made up of around 2,2% of its total

revenue.


PROSPECTUS


4.1.4. Gross profit margin breakdown

Table: Gross profit margin breakdown from 2012 to 2014 and first half year 2015

Unit: Million VND

Gross

income

2012 2013 2014 First half year 2015

Value % Value % Value % Value %

Selling

goods and

provide

services

31.201 86,6% 33.426 87,0% 33.906 88,4% 11.523 82,1%

Lending

offices 4.831 13,4% 4.993 13,0% 4.428 11,6% 2.514 17,9%

Total 36.033 100% 38.419 100% 38.334 100% 14.037 100%

In contrast with total revenue, Vinatea’s gross profit margin (GPM) tend to increase over that

period. Particularly, GPM increased by 6,6% to 38,42 billion VND in 2013 mainly due to a

decrease of 8,47% in cost of sales. Its GPM remained stable at over 38 billion VND in 2013 and

2014. GPM generated from sale of tea product and from tea processing service accounted the

most for Vinatea’s total GPM. GPM annually generated from this two activities stood at over 30

billion VND annually and account for about 86%-88% of total GPM. GPM generated from letting

office and building has only account for 11% - 13% of total GPM over that period.

4.1.5. Expenses structure

Table: Expenses from 2012 to 2014 and first half year 2015

Unit: Million VND

2012 2013 2014 First half year

2015

Value %/

revenue Value

%/

revenue Value

%/

revenue Value

%/

revenue

Cost of

goods sold 216.209 85,71% 197.891 83,74% 183.507 82,72% 76.103 84,43%

In which:

Selling

goods and

provide

services

215.448 85,4% 197.519 83,6% 183.133 82,6% 76.103 84,4%

Lending

offices 761 0,3% 371 0,2% 374 0,2% 0 0,0%

Financial

expenses 12.435 4,93% 14.744 6,24% 7.971 3,59% 1.071 1,19%

Selling

expenses 26.472 10,49% 23.268 9,85% 25.280 11,40% 7.062 7,83%

Operating

expenses 31.296 12,41% 28.789 12,18% 25.651 11,56% 14.124 15,67%

Total 286.411 113,5% 264.692 112,0% 242.410 109,3% 98.359 109,1%


PROSPECTUS


From 2012 – 2014, the total expenses of VINATEA had an slightly downward trend (about 8%

per years). Vinatea’s cost of sales declined by 32,5 billion VND compared to in 2012 driven by a

decrease in its total revenue. Selling cost and general & administration cost accounted for around

10-12% of total net revenue and tend to decrease annually. Particularly, Selling cost and general

& administration cost in 2014 decreased by 1 billion VND and over 5 billion VND respectively

compared to in 2012. In 2014, financial expenses decreased by 4 billion VND compared to in

2012 since Vinatea paid a significant amount of principal of its long term bank loan.

The total expenses of VINATEA is always higher than revenue around 10% is because of the

tough competitiveness of the price of buying tea in the farms. Although VINATEA is managing

over 1,000 ha of tea lands, the tea lands is handed over to the farmers according to Decree

01/1995/CP and Decree 135/2005/NĐ-CP so that the collection of tea has to follow the

competitiveness of the market. Meanwhile, VINATEA spent force and money on guiding the

farmers how to taking care and harvesting tea. This is an issue that VINATEA has to struggle in

the recent years. In the result, the total expenses of VINATEA is always higher than its revenues.

4.1.6. Raw Materials

VINATEA is currently operating in spacious raw material areas (1,130 ha) in three provinces

such as Son La, Yen Bai and Thai Nguyen. However, the problem of handing tea farm over to

farmers brought many difficulties to VINATEA in managing, growing and collecting tea,

especially in chemicals controlling process. VINATEA with the experiences and reputation had

the trust of the tea farmers. Therefore, VINATEA can buy raw materials actively and they are

brought by branches of VINATEA directly purchasing from farmers at tea farms.

Moc Chau Tea Company is located in Son La province and currently growing tea on 580 ha area.

The Moc Chau plateau has cool and fresh climate along with advantageous weather that are

appropriate for the growth of tea. In these recent years, tea material named Trung du due to the

fact of long-time growing becomes low productive and low quality and not suitable to the

consumers’ tastes. In the period of 2015 to 2017, VINATEA is planning to regrow and replace

200 ha Trung du tea area by Shan tea and Thom tea. This investment will bring up to a plentiful

raw material with high quality in the future.

Yen Bai Tea Company is operarting in the raw material area of roughly 240 ha in four districts

of Yen Bai province. There are a black tea produce factory with two workshops which produce


PROSPECTUS


black tea and green tea (in Tran Yen district, Yen Bai province) and a Yen Bai tea produce

factory (in Yen Bai province). Yen Bai Tea Company is invested by VINATEA with the purpose

of producing exported tea.

Song Cau Tea Branch in Thai Nguyen province owns two tea produce factories and over 302 ha

raw material area. Song Cau Tea Branch has a consistant tea source because of directly collecting

tea from the tea area which VINATEA handed over to the farmers. In recent years, the branch still

continues the production of black tea which is one of the most valuable export goods.

4.1.7. Technology

The Vietnam National Tea Corporation Limited constantly pays attention to improving the

techonology and employing new techniques to enhance the efficiency of the production process

and the quality of the products. Currently, VinaTea has been using the tea processing technology

and equipments imported from United Kingdom, Japan, South Korea, India etc.

Source: VINATEA

No. Name of fixed assets Producer Started year Number of the

assets

1 Máy tách cẫng NANTA Korea 2011 1

2 Máy tách cẫng Soter Anh England 2008 1

3 Máy tách cẫng mầu SHIZUOKA-NS80 Japan 2003 1

4 Máy tách cẫng Shizuoka Japan 2003 2

5 Máy tách tạp chất nhập ngoại India 2007 4

6 Hệ thống máy trộn chè (2 thùng trộn) Vietnam 1999 1

7 Bàn vò 115 cm mô tơ 15HP Vietnam 1999 4

8 Bàn vò 90 cm mô tơ 10HP Vietnam 1999 1

9 Máy tách tạp chất sắt tự sản xuất Vietnam 2007 2

10 Máy tách cẫng ấn độ India 2007 1

11 Thiết bị điện (Lô) Vietnam 1999 1

12 Máy sấy Vietnam 1999 3


PROSPECTUS


4.1.8. Research and development of new products

In the upcoming years, VINATEA will focus on expanding the domestic and international market.

The company will put more effort in the research and development in order to create new

products with various tastes which would attract the increasingly demanding customers.

4.1.9. Quality management system

VINATEA is now employing the standardized quality management system ISO 9001:2008 in the

process of producing, refining black tea and green tea and selling these products. Besides, the

Kim Anh Tea Refining Enterprise is following the environment management system of ISO

14001:2004/Cor.1:2009 standard.

Being aware of the importance of supplying various products of high quality to create the

competitive advantages, VINATEA has been continuously upgrading the management system in

accordance with the ISO 9001:2008 and ISO 14001:2004 standard in order to maintain the

sustainable growth. VINATEA has Department of Technology and KCS examining inputs and

outputs according to ISO system. Department of Technology and KCS will merge with

Department of Planning and Investment to Department of General plan after the equitization.

4.1.10. Marketing activities

VinaTea is now concentrating on sustaining the current market and expanding to new markets

such as China, Russia, Germany, Pakistan etc. by actively marketing the VINATEA brand in

these markets.

The company’s marketing strategies focus on these followings:

- Research and determine the potential customer segments especially in the growing China

market.

- Promote the brand and sales by participating in expos and advertising using social media.

- Improve and perfect the customer care services.

VINATEA has been collaborating well with the Vietnam Tea Association and other relevant units

to trigger the commercial promotion, enhancing the VinaTea prestige on the global scale.

Moreover, the company will utilize the support from the government by intensifying the

promotional activites at expos in order to do surveys and thus understand the tea cultures and

customs, tax policies, market barriers and exporting issues in the new markets to have high

efficienct exports.


PROSPECTUS


4.1.11. Trademark, patent and copyright registration

Currently, VINATEA has Trademark Registration Certificate No. 46100 issued by National

Office of Intellectual Propery of Vietnam, Ministry of Science and Technology, Vietnam

according to Decision No. 1390/QĐ-ĐK dated 11/04/2003 and Decision of expention No.

11782/QĐ-SHTT dated 12/03/2012 to 10/01/2022.

Moreover, VINATEA also has registered worldwide trademark according to Renewal Certificate

No. 781449 issued by World Intellectual Property Organization (WIPO) registered date

25/04/2015, renew date 25/04/2012 and expired date 25/04/2022.

Trademark sample

4.1.12. Main current contracts

The characteristics of tea export contracts are short term. The contracts are signed and active

when tea was produced and the quality, quantity and kind of tea are all detemined. Thus besides

contracts listed below VINATEA has unplanted customers who purchase large scale.

List of main current contracts in 2015

Name

Contract

value

(USD)

Contract

value

(VND)

Signed

date

Active

time Content Partners

36/VNTKD2-

AKL 82,320 1,786 6/5/2014 2015

Two containers of

To Mua green tea

Aziz

Kouchai

Company

Ltd

32/VNTKD2-

AKL +

56/VNTKD2-

AKL

640,115 13,890 8/4/2015 2015

Eight containers of

Moc Chau pekoe

green tea

35/VNTKD2-

AKL 51,013 1,107 20/4/2015 2015

01 containers of Bat

tien tea

10/VNTKD2-

UHL 249,480 5,414 29/1/2015 2015

Four containers of

Moc Chau green tea

Usman

Haroon Ltd

61/VNTKD2-

NBL 55,250 1,199 27/06/2014 2015

One container of

green tea boxes

500gr

Masood

Najeeb

Company

Ltd


PROSPECTUS


84/VNTKD2-

NBL 120,000 2,604 3/7/2014 2015

Two containers of

Sencha tea

05/VNTKD2-

OHL 38,913 844 13/1/2015 2015

One containers of

Moc Chau pekoe

green tea

Obai

Hassan Ltd

S018 658,583 14,291 24/2/2009 2015 18 containers of

black tea BPS OOO

"Sunty"

Ltd S038 44,429 964 4/6/2009 2015

Five containers of

black tea

OPA+BPS

4.2. Finacial status and operational performance three years before equitization

4.2.1. Financial indicators and operational performance from 2012 to 2014

Table: Operational performance from 2012 to 2014

No. Items Unit 2012 FY 2013 FY 2014 FY First half

year 2015

1 Total assets Million VND 356,921 436,413 433,575 430,666

2 Total State’s equity Million VND 170,732 317,000 316,071 308,480

3 Short-term liabilities Million VND 38,280 29,949 25,753 27,901

In which:

Over-dued debt Million VND 0 0 0 0

4 Long-term liabilities Million VND 32,198 6,805 6,603 6,603

In which:

Over-dued debt Million VND 0 0 0 0

5 Doubtful debts Million VND 0 0 0 0

6 Total number of

employees Person 664 574 574 574

7 Total salary budget Million VND 25,285 29,220 15,886 15,886

8 Average salary Million VND

/person/month 3.2 4 4.6 4.6

9 Total revenue Million VND 290,133 269,972 246,026 90,166

10 Total costs Million VND 288,943 268,985 244,874 99,149

11 Profit before tax Million VND 1,190 987 1,152 (7,119)

12 Profit after tax Million VND 1,190 987 1,152 (7,119)

13 Profit after tax/the State’s

capital ratio % 0.7% 0.3% 0.4% -

Source: VINATEA’s annual audited reports financial year 2012,2013,20141

Note: Data of 2013 and 2014 is data in VINATEA’s audited reports 2014 after the annoucement

of VINATEA’s value. Because of the revaluation, total assets and total State’s equity 2013 is

higher than those of 2012. The long-term liabilities sharply decreased due to the disposal of

Indian ODA debts of tea factory according to decision of the Government, the Ministry of

1 VINATEA do not build up consolidated annual reports.


PROSPECTUS


Finance, Ministry of Agriculture and Rural Development. VINATEA transferred 18.7 million

dong to companies which borrowed ODA debts.

From 2012 to 2014, VINATEA still have sustained losses from 2010 backwards so in the priod of

time, VINATEA did not pay corporate taxes.

4.2.2. Main finacial indicators from 2012-2014

Table: Main finacial indicators

Items Unit 2012 FY 2013 FY

Re-

evaluated

2013 FY

2014 FY

1. Liquidity ratios

+ Current ratio Times 0,97 0,94 1,48 1,54

+ Quick ratio Times 0,67 0,67 1,12 1,05

2. Leverage ratios

+ Debt-to-assets ratio Times 0,52 0,50 0,27 0,27

+ Debt-to-equity ratio Times 1,09 1,01 0,38 0,37

3. Activity ratios

+ Inventory ratio Times 4,75 4,99 5,44 4,41

+ Accounts receivable turnover Times 3,57 3,98 4,35 4,32

+ Accounts payable turnover 7,20 7,89 8,13 8,25

+ Revenues/Total assets Lần 0,71 0,69 0,54 0,51

4. Profitability ratios

+ Net profit margin (Profits after

taxes/sales ratio) % 0,47% 0,42% 0,42% 0,52%

+ Return on equity (ROE) % 0,70% 0,57% 0,31% 0,36%

+ Return on total assets (ROA) % 0,33% 0,29% 0,23% 0,27%

Source: VINATEA’s annual audited reports financial year 2012,2013,2014

4.2.3. Factors affecting business activites of VINATEA in the last three years

Advantages:

VINATEA has had solid experiences of more than 40 years of history in the tea business in

Vietnam since it was Enterprise Tea Union. Thanks to the intensifying collaborations and

affiliations with relevant units, the members of VINATEA have formed a solid organization


PROSPECTUS


and brought out sustainable benefits by working harmoniously and efficiently together. In the

past years, the application of handing tea land over to farmers in the business has ignited the

active vibe, improved the creativity and enhanced the sense of responsibility amongst

different departments of the company.

Disadvantages:

Objective factors:

The global financial crisis obviously had negative impacts on the company’s tea business,

leading to decreased revenues in some essential markets. Customers did not consume as fast

as before the crisis, the purchasing speed of customers became slower to adapt to the

consuming speed.

Besides that, some important foreign markets are not stable as expected because of various

reasons. The Middle East market including Iran, Iraq and Syria is now currently at unstable

status. The Afghanistan market is also having troubles ensuring national security as the U.S.

and NATO army were withdrawn. The Russia market is also affected by the economic

punishments and the tension in Crimea. The exchange rate suspension, increasing costs, low

capital accessibility and hiking interest rate lead to the increase of tea price in Vietnam which

is higher than that of Indonesia, reaching the tea price of Sri Lanka and India, top countries in

producing top-quality tea, and this lower the competitiveness of Vietnamese tea in the

international markets. The political instability in the South Sea leads to the difficulties of

exporting tea to the great market which is China.

Another reason is that handing tea farms over to farmers certainly makes it harder for

chemicals controlling process. The difficulty in managing and supervising chemical residue of

exported tea to Europe, Japan and America will affect quantity and quality of exported tea due

to the fact that these markets are tightening the test of chemical residue of tea.

Subjective factors:

Because of the application of handing tea farms over, the preconstructions of the tea farms

and the factories are not lack of orientation and consistency, which leads to the carelessness of

the nurture and harvesting process. Moreover the increasing competition in buying raw inputs

also seriously lowers the quality of the fresh tea.

The factories belonging to the company and the tea industry in general are not really that

renovated with new technology, procedures and equipment. Plus, the fact of many factories

utilize mainly manual labour leads to high labor costs while still lacking those labors

sometimes. Furthermore, these factories have not been aware enough of the necessity of high-


PROSPECTUS


quality tea products to level up their competitive advantage in the domestic market as the

private tea companies start to flourish.

The ability to collect and analyze market data has not been concentrated on enough as a result

of the inefficient current methods and limited sources.

Another disadvantage is the insufficient capital for the business also limits the inventory

capability between time of producing and selling of the company. Besides, the financial

management is not well handled either, leading to inefficient use of the capital.

4.3. Position of The Vietnam National Tea Corporation Limited in the industry

4.3.1. Position of VINATEA in the industry

The Vietnam National Tea Corporation Limited, formerly known as Industrial and

Agricultural Tea Enterprises Union, was establised in 1973. Through the history of 40 years,

the company has accomplised great achievements and gained valuable experiences in the tea

business in Vietnam.

Since the establishment, the VinaTea has successfully accumulated their capital which was at

first gathered and given by other smaller firms, not the government to invest in its

infrastructure and purchase other fixed assets.

VinaTea has been a role model in following the state rules and policies, awaring of its

responsibility to make better products, ensuring consumer’s safety, committing to protect the

environment, guaranteeing employees’ benefits and actively contributing to the social security

and economic welfare.

The company is now one of top firms which have the best management and thus can maintain

the efficiency in cultivating tea farms assigned to families according to Decree 01/CP in 1995.

The tea farms under company’s management have much higher productivity than the country

average. Therefore, even though the output is not that great in terms of quantity, the products

have been of high standard that are taken as samples for other economic entities to learn from.

The company also has a complete office system, a force of talented and experienced managers

and staffs, high-tech equipments and modern techniques. These factors still remain as a strong

momentum to drive the company forwards.

The conventional market of VinaTea has always been sustained and taken care of with proper

supply. Besides, the company always keeps searching for new challenges in other potential

markets.


PROSPECTUS


4.3.2. Industry prospects

Besides Vietnamese market, VINATEA is now focusing on exploiting several international

markets such as Germany, Afghanistan, Pakistan and Russia.

German and European market in general are ones of the markets which have highest demand

on food safety standard in the world. VINATEA exports about 1,000 tons of premium-quality

black tea and green tea to these markets per year.

Middle East market including Afghanistan and Pakistan is a market with high consumption of

the black tea and green tea. The company exports about 2,000 tons of tea from Moc Chau,

Thai Nguyen, Yen Bai annually. This area is now dealing with political instability which

increases the risk of exporting tea products here. However, this market is a potential market

for Vietnamese tea in the long-term when these countries’ politics become stable.

Russian market is one of those which have the highest tea imports and consumption in the

world, around 170,000 tons per annum due to the fact of around 96% of the Russian

population love drinking tea. Currently, VINATEA’s business department 5 and business

department 2 export goods to Russia. Annually, the company exports around 1,000 tons of tea

to this market. Russian market is known as a competitive one and it is difficult for newbie to

enter. It even gets more competitive as Indian suppliers have a well-founded position here.

And in the near future, as the Russian government applies European food safety standard the

market share of Vietnam tea would be likely narrowed down.

VINATEA needs to not only maintain but also increase the exports to these markets by

varying products to attract new customers and thus expanding its customer base. Besides the

main markets, the Company is also trying to find solutions to penetrate into other markets

such as Uzbekistan, Kazakhstan, Taiwan, Middle East, China, Turkey and North America.

4.3.3. Compare the consistency of VINATEA’s development strategy with the sector

development, the State’s policies and global trend

In the operation and development, VINATEA has always been developing its business

following the target and development orientation of the Argiculture industry. VINATEA

handed tea farm lands over farmers promptly and effectively according to Decree 01/CP dated

04/01/1995 of the Government and Decree 135/2005/NĐ-CP dated 08/11/2005 of the

Government. Currently, although VINATEA finds difficulties in managing tea farm,

VINATEA still tries to manage and guide the farmers how to growth and cultivate tea

standardisely and effectively.


PROSPECTUS


In recent years, because of many subjective and objective factors, the amount of exported tea

decreased significantly. VINATEA now is actively researching and managing activities,

supervising chemical residue of exported tea to meet the quality standards of export markets

in the world in order to expand the market share of VINATEA.


PROSPECTUS


PART 3: INVESTMENTS SCHEME AND DEVELOPMENT STRATEGY

OF VINATEA AFTER EQUITIZATION

1. OBJECTIVES OF THE EQUITIZATION

The ultimate objective of VinaTea is to keep its number one position in the industry. The

company will also put more effort in searching for new potential domestic markets which have

not yet been exploited.

The company has set these followings as its goals for the period from 2015 to 2017:

- The consolidated business keeps growing with a stable the revenue growth rate of 10% per

year.

- Restructure subsidiary companies and build strong relationships with affiliated companies to

utilize the strengths of one another in order to form a network which facilitates goods

circulation with respect to mutual benefits, reducing internal competitions and thus creating a

strong and sustainable growth.

- Emphasize on the R&D to find new solutions which help saving costs, enhancing

productivity, increase the value added in the process in order to improve the products’

competitiveness. Moreover, R&D will also play an important part in searching for potential

investments which are highly profitable.

- Continuously refine the management, create an active and competitive working environment

to build up the motivation amongst the employees and staffs. Focus on training to create a

competent labor force with advanced knowledge in tea farming and production processing.

- Build up the knowledge of producing and exporting tea products of premium quality.

- Sell a part of existing state-owned capital and issue more shares to raise the charter capital.

- Make the shares available for transaction in the stock market within 1 year after the

equitization.

2. FORM OF THE EQUITIZATION

According to Clause 2 of Article 4 of Decree No, 59/2011/ ND-CP on 18/7/2011 of conversion of

enterprises with 100% State-owned capital into joint stock company, VINATEA will “combine

the sale of the State’s shareholding with the issuance of additional shares to raise charter capital”.

3. COMPANY PROFILE AFTER EQUITIZATION

3.1. General information

Vietnamese name: TONG CONG TY CHE VIET NAM – CONG TY CO PHAN


PROSPECTUS


English name: THE VIETNAM NATIONAL TEA - JOINT STOCK CORPORATION

Trading name: VINATEA

Head office: 92 Vo Thi Sau, Thanh Nhan ward, Hai Ba Trung District, Ha Noi

Phone: 04,36226990

Fax: 04,36226991

Website: www,vinatea,com,vn

Email: info@vinatea,com,vn

Logo:

3.2. Business activities of joint stock company

a) Main business activities as follows:

- Producing tea, industrial foods, handicrafts, consumer goods;

- Trading tea, industrial foods, handicrafts, consumer goods;

- Wholesale trading agricultural and forestry materials (except for wood, bamboo) and live

animals;

- Trading materials, raw materials, machines and equipment related to produce tea and

install machines and equipment at tea factories;

- Supply investment advisory activities (not include: services in legal, finace, accouting,

auditing, taxation and securities);

- Trading contruction raw materials;


- Build industrial and civil construction, irrigation construction, construct roads;

- Restaurant and mobile food services;

- Supply transportation sevices by car;

- Trading civil facilities, industrial electricity, electronics, information technology and

telecommunications;

- Trading real estates, the right of using real estates of owner, user or lender;

- Import and export goods that the company is allowed to trade,

c) Other activities which are not prohibited.

http://www.vinatea.com.vn/

mailto:[email protected]


PROSPECTUS


3.3. Organisational structure after equitization

On the basic of current organisational structure of VINATEA, to simultaneously implement

the restructuring plan which is one of the targets of equitization plan and to stabilize the

business operation in accordance with the labour handling plan of VINATEA, VINATEA

builds a new organisational structure as below:

3.3.1. Company office

a) Organisational structure of VINATEA:

- General Shareholders’ Meeting;

- Board of Management;

- Supervisor Commitee;

- Board of General Directors: 01 General Director and 04 Deputy General Directors;

- Supporting system:

+ 01 Chief Accountant + 01 Branh Office in Russia

+ 04 Funtional Departments; + 02 Business Departments

b) Manufacturing factory and warehouse:

- Kim Anh tea factory;

3.3.2. Dependent Units: There are 07 Dependent Units (Branches)

- Branch of VINATEA – Limited Company – Sai Gon Tea Company;

- Branch of VINATEA in Son La – Moc Chau Tea Company;

- Branch of VINATEA in Thai Nguyen – Song Cau Tea Branch;

- Branch of VINATEA in Yen Bai – Yen Bai Tea Company;

3.3.3. Affiliate Companies: 02 Affiliate Companies

- Nghia Lo Tea Joint Stock Company

- Lien Son Tea Joint Stock Company

3.3.4. Associate Companies: 07 Associate Companies

- Phu Da Company (Associate with Iraq)

- Ha Tinh Tea Joint Stock Company

- Kim Anh Tea Joint Stock Company

- Contruction, Materials and Technical Supplies Joint Stock Company

- Thai Binh Duong Trading Joint Stock Company

- Tran Phu Tea Joint Stock Company

- Thai Nguyen Tea Joint Stock Company.


PROSPECTUS


Sơ đổ tổ chức của VINATEA sau cổ phần hóa

Deputy General Directors

General Shareholders’

Meeting

General Director

Supervisor Commitee

Board of Management

Deputy General Directors Deputy General Directors

Department

of General

Plan

General

Office

Department

of Finance

and

Accouting

Debt

Department

Yen Bai Tea

Company

Moc Chau

Tea Company

Song Cau Tea

Branch

Import and

Export

Department

Domestic

Sales

Deparment

Sai Gon Tea

Company

02 Affiliate Companies

1. Nghia Lo Tea Joint Stock

Company

2. Lien Son Tea Joint Stock

Company


1. Phu Da Company (Associate with Iraq)

2. Ha Tinh Tea Joint Stock Company

3. Kim Anh Tea Joint Stock Company

4. Contruction, Materials and Technical

Supplies Joint Stock Company

5. Thai Binh Duong Trading Joint Stock

Company

6. Tran Phu Tea Joint Stock Company

7. Thai Nguyen Tea Joint Stock Company

Kim Anh Tea

Factory

Russian

Office Branch


PROSPECTUS


4. CHARTER CAPITAL, STRUCTURE OF CHARTER CAPITAL

4.1. Charter capital

In order to ensure the capital for the normal operations after equitization, the suggested charter

capital is determined as follows:

Charter capital: 370,000,000,000 VND (Thirty hundred and seventy billion Vietnamese

Dong)

Par value: 10,000 VND (Ten thousand Vietnamese Dong)

Number of shares: 37,000,000 (Thirty seven million shares)

4.2. Structure of charter capital

According to Decision No, 864/QĐ-TTg dated 16/6/2015 of the Prime Minister approve

Equitization Plan of The Parent Company - Vietnam National Tea Corporation, the charter capital

structure of VINATEA as follows:

Table: Charter capital structure

UNITS: Đồng

STT Shareholder Number of

shares Par value

Percentage

of charter

capital

1 State 0 0 0.000%

2 Employees 1,627,200 16,272,000,000 4.398%

2,1 Employees purchase incentive

shares based on number of

working years (100 shares per

year)

1,516,400 15,164,000,000 4.098%

2,2 Employees purchase incentive

shares based on committed

working year (200 shares per

year)

73,800 738,000,000 0.199%

2,3 Employees who are high -

qualified purchase incentive

shares (500 shares per year) 37,000 370,000,000 0.100%

3 Strategic investors 23,583,800 235,838,000,000 63.740%

4 Other investors 11,789,000 117,890,000,000 31.862%

Total 37,000,000 370,000,000,000 100.000%


PROSPECTUS


5. DEVELOPMENT STRATEGY AND INVESTMENT PLAN OF VINATEA AFTER

EQUITIZATION

5.1. Development strategy after equitization

The Vietnam National Tea Corporation Limited will be converted to The Vietnam National Tea

Joint Stock Corporation, With the experiences and prestige gained in the past, the company has

set these followings as its main strategy after equitization:

Improve the quality of fresh tea in raw materials area by increasing productivity and replacing

unproductive tea farms which are low quality and scale efficiency with new types of tea which

are much better. Moreover, VINATEA will co-operate with associated companies and other

companies who own large tea farms as well as local council to passing the knowledge of the

right techniques to the farmers in order to helps them cultivate and harvest tea effectively.

Renovate the management in order to elevate sense of responsibility and productivity amongst

the departments and the employees. Refine the administration system along with investing

more in human resouces, and apply the ISO quality control system in VINATEA.

Improve the management, follow rules and policies, review economic indicators in order to

save costs in the production, enhance competitiveness, raise labor income, as well as upgrade

the allocated business between VINATEA and other departments.

Invest in the new technology, new equipment in order to produce high quality and unique tea

products to bring extra profits. Continue renewing the package to appropriate to

consumers’taste.

Preserve current markets while reach out and make efforts to enter new markets by

advertising and solidifying VINATEA brand in potential markets such as China, Russia,

Germany, Pakistan and so on,

Employ an appropriate raw materials utilization, take care of tea farm following a

standardized procedure. Replace unproductive types of tea raw materials with more

productive and high-quality ones which are also more suitable with the climate and approved

by the Ministry of Agriculture and Rural Development of Vietnam. Apply widely the better

tea materials to bringing up the tea productivity from 9 tons/ha to 11 tons/ha and the total

production of fresh tea leaves from 17,600 tons to 21,600 tons in 2017.

Adjust the production structure to meet the market’s demand; invest more and upgrade new

machinery and equipment, apply updated technology and mechanise tea factory to increase tea

quality, matching the taste of customers which is higher and higher.

Exploit efficiently the available resources, apply new techniques and managing methods,

enhance the competitiveness and thus increase profits and returns on equity of VINATEA and

companies which VINATEA invested in. Level up the business scale and market share, hence

assuring the jobs and incomes of the employees.


PROSPECTUS


5.2. Investment plan

VINATEA is implementing following project:

- Van Son Tea Factory, belonging to Moc Chau Tea Branch.

- Olong Tea Factory belonging to Moc Chau Tea Branch.

- The upgradation of Kim Anh Tea Refining Factory which belongs to VINATEA’s Office.

Continue the Constructuring Project at 225 Nam Ky Khoi nghia, Dist, 3, Ho Chi Minh city

with the purpose of office building, tea products introducing department. The project is

invested efficiently in order to introduce tea products and advertise VINATEA branch in the

Southern of Vietnam.

Plan to purchase fixed assets within 3 years after equitization is as follows:

Table: Fixed assets investment plan from 2015 to 2017

Unit: thousand VND

No, Fixed assets/Projects Projected capital

2015 2016 2017

1 Equipment at Central Tea Factory and Van Son

Tea Factory - Moc Chau Tea Company 3,392,280

2 Tea investment in a 200ha - area in Moc Chau 10,000,000 10,000,000 10,000,000

Total 13,392,280 10,000,000 10,000,000

Source: VINATEA

5.3. Business plan in the period of 2014-2017

Business plan:

The business plans after equitizaiton are based on VINATEA’s business strategy and

restructuring plans of other member units in order to boost the efficiency in operations. In details,

VINATEA is going to restructure, shakedown the management system as well as rearrange

money - losing company such as Huong Tra Commercial Business Company, Hong Tra Trading

and Tourism Conpany, Nam Son Business and General Trading Company. The history data from

2011 to 2014 are also used to forecast the future data shown in the table below:

Table: Business plans within 3 years after equitization from 2015 to 2017

Unit 2015 2016 2017

Sales Ton 3,185 3,370 3,550

Total revenues Million VND 241,039 255,891 279,612

Total expenses Million VND 233,653 244,005 265,880

Earnings before tax Million VND 7,386 11,886 13,732

Earnings after tax Million VND 5,908 9,509 10,986

Charter capital Million VND 370,000 370,000 370,000


PROSPECTUS


Unit 2015 2016 2017

Number of total

employees People 1,180 1,180 1,180

Number of industrial

employees People 563 563 563

Salary budget Million VND 31,771 35,131 38,509

Average income

Million

VND/person/mo

nth

4.6 5.2 5.7

Dividend ratio % 1.36% 2.18% 2.52%

Profit allocation

Bonus and welfare Fund

(5%) Million VND 295 475 549

Finacial provision Fund

(5%) Million VND 295 475 549

Investment development

Fund (5%) Million VND 295 475 549

Dividends payment Million VND 5,022 8,082 9,337

Source: VINATEA


PROSPECTUS


PART 4: GENERAL INFORMATION OF THE AUCTION

1. RISKS

1.1. Economic risks

As a company operating in the marketable company, VINATEA’s business performance as well

as its development strategy is affected by the fluctuation of the domestic macroeconomic. In 2014

and the first half of 2015, it experienced the positive signs of recovery of the world economy and

the Government’s effort to stimulate the economy by flexible monetary and financial policy but

stll achieving basic targets such as controlled inflation and stabilized exchange rate that help to

support the manufacturing companies and VINATEA.

GDP growth: The GDP growth increased from 5,42% in 2013 to 5,98% in 2014. In the QI

of 2015, GDP has increased 6,03% y,o,y, also the highest rate within the last 3 years,

These recent movement showsour economy is recovering, demand capacity is increasing

and business performance of companies is also improving.

Inflation: From 2-digit inflation in 2012 backwards, by operating the inflation control

policy and stabilizing the macro economy drastically, the Government has led the inflation

fallen to 6,04% in 2013 and 4,09% in 2014. Infation rate was only 0,74% in quater I 2015

and has became the lowest since 13 years.

Interest rate: Presently, State Bank of Vietnam continues to operate interest policy with

declining interest rates, in consistent with macroeconomic situation, monetary policy and

inflation in order to decrease lending interest rate and unlug difficulties for the economy in

general and corporations in particular. From beginning of 2012 up to now, deposit interest

rate fell sharply the helps local corporations to access loans with lower interest expenses.

From high interest rate of 20% in 2010 – 2011, lending rate plunged to common rate of 5

– 7% p.a recently.

1.2. Legal and regulatory risks

Being a state-owned enterprise converted into joint stock company, the operation of VINATEA

will not be regulated in compliance with Decree No.09/2009/NĐ-CP by the Government with

respects to financial management regulations and State capital management for state-owned

enterprise but will regulated under Corporate Law 2015 and other related regulations. Hence,

VINATEA will be regulated by other legal documents of securities and stock exchange when

having converted into public listed company. Law and other legal documents in this field are in

completing stage, any changes in policies may incur at any time and when it incurs, adversely

impacts may affect business performance and management of an entity,


PROSPECTUS


1.3. Risks of consumption market and competitive risks

In the tea processing and export business: VINATEA’s tea products must follow strict hygiene,

safety and quality issues. Currently, the emtire production process of VINATEA is in compliance

with the achieved quality management system required by each strict import market such as

Europe and Russia. Howerver, if there is any changes in food hygiene standards of any market

will lead to disruption in production and hence, will increase the company’s costs.

There are hundreds of companies in Vietnam operating in the the field of aquaculture, processing

and export of tea products. However, the overall industry is not well organized that leads to many

small companies with unfair competiton that makes the market unstable and affect the company’s

performance in some way. In addition, Vietnam tea export has been competed by other countries

such as China, India due to high production costs and low rate of quality.

1.4. Risks of public offerings

Public offerings of shares by the company are subject to the status of the stock market and

macroeconomic conditions. Negative signs of those factors affect judgement of investors and

absorption capacity of the market.

1.5. Other risks

Besides the above specific risks of tea business, other risks such as asfire, war, disaster, epidemic

diseases etc. Are inevitable risks that will cause damage to assests, people and business operation

of VINATEA.

2. GENERAL INFORMATION ON SHARE OFFERING

2.1. Method of share offering and payment of share purchase for investors paticipating in

auction

a) Auction form

- Number of offered shares: 11,789,000 shares

- Type of shares Ordinary shares

- Par value: VND 10,000 per share

- Starting price: VND 10,100 per share

- Auction method: Public auction of shares at Hanoi Stock

Exchange

b) Auction participants and number of shares registered to buy

- Auction participants: Foreign and domestic organizations, individuals

satisfying conditions as required by the Regulation of

the initial public offering of VINATEA


PROSPECTUS


- Minimum number of shares

subscribed to buy:

100 shares

- Maximum number of shares 11,789,000 shares

- Limited amount for local investors: maximum 11,789,000 shares

- Limited amount for foreign investors: maximum 11,789,000 shares

- Subscription quantity: Multiple of 100

- Deposit: 10% total value of shares subscribled to buy at

starting price

c) Time schedule and location

- Time schedule and location of disclosure of information, auction subcription, deposits,

distributing tickets to attend the auction and other information: Following provisions of

Regulations of initial public offering of VINATEA.

- Location of the auction: Hanoi Stock Exchange.

2.2. Auction method and settlement of shares for strategic investors

a) Offering price

According to Decree 59//2011/NĐ-CP, share price offered for strategic investors depends on the

agreement between VINATEA’s Equitization Steering Committee and the strategic investors but

must not be lower than the lowest successful bidding price”.

b) Offering volume

Number of shares is offered for the strategic investors 23,583,800 shares accounted for 63,740%

new charter capital of VINATEA.

c) Strategic investors

According to Dispatch No. 5868/BNN-QLDN dated 23/07/2015 of Ministry of of Agriculture and

Rural Development about selecting the strategic investor and the starting price, the strategic

investor of VINATEA is Thong Nhat Production and Investment Jsc.

- Vietnamese name: CONG TY CO PHAN DAU TU VA SAN XUAT THONG NHAT

- Business licence No. 0105334948 Hanoi Planning and Investment Department issued on

30/05/2011, 7th

change on 07/05/2014.

- Main office: Floor 2, CEO tower, HH2 lot – 1 Me Tri Ha, Pham Hung streer, Me Tri,

Nam Tu Lien, Ha Noi, Viet Nam.

- Charter capital: 680,000,000,000 VND (Six hundred and eighty billion dong)

- Phone: 04 627 66366


PROSPECTUS


- Fax: 04 627 66466

- Website: www.thongnhatcorp.vn

2.3. Auction method and settlement of shares for employees

a) Offering price

According to Decree 59//2011/NĐ-CP:

- For employees satisfying conditions to buy with preferential price, the price of share

offered equals to 60% of the lowest successful bidding price.

- For additional shares offered for employees according to commitment working year ans

for high qualified experts of VINATEA, the price of shares equals the lowest successful

bidding price.

b) Offering volume

No, Shareholder Number of

shares Percentage of charter

capital

1 Employees purchase incentive

shares based on number of

working years (100 shares per

year)

1,516,400 4,098%

2 Employees purchase incentive

shares based on committed

working year (200 shares per

year)

73,800 0,200%

3 Employees who are high -

qualified purchase incentive

shares (500 shares per year)

37,000 0,100%

Total 1,627,200 4,398%

3. UTILIZATION PLAN OF THE PROCEEDS FROM THE INITIAL PUBLIC

OFFERING

According to Article 42 of the Decree 59/2011/NĐ-CP dated July 18, 2011 relating to tranferring

of 100% state-owned enterprise to joint stock company, the proceeds from the equitilization

which include par value and capital surplus will be utilized for settlement of equitization costs and

payment for employee redundancy in accordance with prevailing regulations. The remaining

balance (if any) will be transferred to the Arrangement and Business Development Supporting

fund.

http://www.thongnhatcorp.vn/


PROSPECTUS


The expected funds collected from the equitization to be returned to the Arrangement and

Business Development Supporting fund is: VND 306,726,897,019.

Table: Expected funds collected from the equitization Unit: VND

No, Content Amount of money

1 Total actual value of the State’s capital contribution according to

Decision of approving the Enterprise Value and Equitization Plan

of VINATEA

319,555,477,556

2 Charter Capital of Joint stock company 370,000,000,000

2.1 State -

2.2 Employees 16,272,000,000

2.3 Other investors 353,728,000,000

3 Starting price 10,100

4 The value of new issued shares at par (4 = 2-1) 50,444,522,444

5 Total value of the State’s capital contribution at par needed to be

returned (5 = 1 -2.1) 319,555,477,556

6 The proceeds from equitization 367,573,744,000

The proceeds from sale of shares to employees (Recieve 60%) 9,189,384,000

The proceeds from sale of shares to employees (Additional

purchase) 1,119,080,000

The proceeds from sale of shares in public auction 357,265,280,000

7 Total value at par of the sale of State’s capital contribution and

shares issued additionaly (7 = 4+5) 370,000,000,000

8 The extra capital,which is kept in company, is equivalent to the

percentage of new shares issued and new charter capital 504,445,224

9 Cost of equitilization 1,505,000,000

10 Cost of settlement for staff redundancy 8,392,879,313

11 Total amout returned to Enterprise Arrangement Supporting

Fund (11= 5+6-7-8-9-10) 306,726,897,019

Source: VCSC estimated

4. SCHEDULE OF LISTING, REGISTRATION FOR TRADING AFTER

EQUITIZATION

According to Clause 1, Article 4, Decision No, 51/2014/QD-TTg of the Prime Minister regulating the

divestment, sale of shares and registration for trading, listing on stock exchange of State-owned

enterprises, the Corporation has the following obligations:

(a) Within ninety (90) days from the date of issuance of Business Registration Certificate, equitized

enterprises must complete registration procedures for public company, registration of shares to be

centrally deposited at the Vietnam Securities Depository and registration of trading on Upcom in

accordance with laws on securities and securities market;


PROSPECTUS


(b) In the event that the equitized enterprise meets all listing criteria at stock exchange, after

completing all procedures to enable trading of shares in the securities market as specified in

Paragraph a Clause 1 in this Article, within the maximum period of one (01) year from the date of

issuance of Business Registration Certificate, the equitized enterprise must supplement documents to

complete the list procedures at stock exchange in accordance with laws on securities and securities

market,

After the completion of equitization, in the event that the Corporation meets all criteria specified by

laws on securities regulating public company, the Corporation commits to follow the above

regulations.


PROSPECTUS


Ha Noi, … August 2015

Representative of the Steering Committee

Signed

NGUYEN THIEN TOAN

Representative of the Equitized Enterprise


General Director

Signed

NGUYEN THIEN TOAN

Representative of the Advisor

VIET CAPITAL SECURITIES JSC, – HANOI BRANCH

Deputy General Director

Signed

NGUYEN QUANG BAO