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REPRESENTATIVE OFFICES
2 0 1 0 A N N U A L R E P O R T
KINH BAC CITY DEVELOPMENT HOLDING CORPORATIONHEAD OFFICE:Plot B7 Que Vo industrial park – Bac Ninh provinceTel: (84-241) 3634034 - (84-241) 2214688Fax: (84-241) 3634035Email: [email protected]
Ha Noi: No 34 Phan Dinh Phung, Ba Dinh district, Ha Noi, Viet NamTel: (84 4) 37346889Fax : (84 4) 37346891
Quang Ninh: Bac Dang Ward 1Phuong Nam Ward, Uong Bi TownQuang Ninh ProvinceTel: 0982 523 188
Taiwan: 12F-1, No10, Sec1, Jilung Road Taipei, Taiwan, ROCTel: (886 2) 27666317Fax: (886 2) 27533377
Japan: Osaka: Lipponbashi Asahi Building 5F-5AB, 1-18-3Lipponbashi, Chuo - ku, Osaka 542- 0073 JapanTel: 06 6636 6868
O P P O R T U N I T Y A T H A N D
2010 ANNUAL REPORT
KBC - Foundation for sustainable development
KINH BAC CITY DEVELOPMENT HOLDING CORPORATIONSTOCK CODE: KBC
Cooperate to create superior value for investors
w w w . k i n h b a c c i t y . c o m . v n
2010 Annual Report succeeds the achievements that Kinh Bac City Development Holding Corporation is pleased to introduce to Shareholders, Investors and Customers. However, 2008 and 2009 Annual Reports posted on website kinhbaccity.com are non separated parts which help you understand more profoundly about the development history and the story of value creation of the Corporation that we will not focus on presenting again, etc. Therefore, in this report, we only focus on analyzing business results of 2010, significant events, things left undone and plans for future, etc.
FOREWORDINDEX
FOREWORD 0
2
3
HISTORY 1
MESSAGE FROM THE CHAIRMAN
CORPORATE VALUE
OPERATING STATUS 7
11
15
21
DEVELOPMENT STRATEGY
REPORT OF THE BOARD OF DIRECTORS
RISK MANAGEMENT STRATEGY
BUSINESS OUTLOOK 26
31
48
49
REPORT OF THE BOARD OF MANAGEMENT
ORGANIZATIONAL STRUCTURE
THE BOARD OF MANAGEMENT
THE BOARD OF DIRECTORS 53
57
59
60
THE BOARD OF SUPERVISORS
SOCIAL RESPONSIBILITY
SUBSIDIARIES AND ASSOCIATES
INVESTOR RELATIONSHIP 64
FINANCIAL STATEMENTSList of abbreviation:KBC: Kinh Bac City Development Holding CorporationIP: Industrial park
2 0 1 0 A N N U A L R E P O R T
“Foundation for the sustainable development”is the guideline for the development of Kinhbaccity Group as well as the message we send to shareholders, investors,customers and partners.
First and foremost, on behalf of the Board of directors and and employees of Kinh Bac City Development Holding Corporation, I would like to offer my sincere thanks to all concerned government agencies, shareholders, investors, customers for their trust, support and cooperation to develop Kinhbaccity sustainably. I wish you and your family happiness, health and prosperity.
As you know, 2010 was a difficult year, financial market unfolded extraordinarily, specifically loan interest rate was up to 17% - 20%/year, FDI declined, stock market had no breakthough¸ etc. These factors impacted considerably on the Corporation’s business. So, if we continue to share the difficulties together and contribute valuable ideas to the development plans in the years to come, I believe that our KBC will increasingly grow up and develop sustainably.
Dear shareholders! I am delighted to report to you on critical success over the past year. First, being an IP investor, KBC mergered two more IPs and one big property project:
(1) Acquired a large number of shares of Northwest Sai Gon City Development Corporation (investor of project Tan Phu Trung IP - HCM City, 590 ha) to become a subsidiary of KBC. This acquisition generated goodwill for KBC of about 395 billion dong (according to figure from Knight Frank - a prestigious global real estate agency and consultancy which revaluated Tan Phu Trung IP with the price increased 5 times as much as book value). This is an important step of KBC to HCM City. I believe that with the effort and lots of experiences of the Boards KBC will continue to become investor of big project in the Southern.
(2) KBC acquired 100% Nam Son - Hap Linh IP project in Bac Ninh province with the area of 402.5 ha (of which 100 ha had been compensated).
Second, we have reported to Ha Noi People’s Committee, Ministry of Construction on the adjustment of the design of Lotus Hotel to become project Diamond Rice Flowers with the height of 400 meters and the shape of rice flowers and received the consensus from related departments and branches. This is a project of national stature, having political significance and magnitude of KBC.
Third, we achieved satisfactory results in the context of general economic difficulty, maintained the profit growth speed sustainably over the years from 50% or more in according with capital growth speed. Maintaining sustainable growth speed over the years, especially the Boards has always been setting the top priority over the last difficult year and the coming years. Thus, if a sudden growth will not happen in a few years, I hope you will not give up. Because, the most difficult period has passed, KBC has had enough land and projects to develop in the next 10 to 20 years. Therefore, with its ability KBC will actively deploy projects by solely or have joint ventures with big international corporations to deploy projects for the target of sustainable growth.
Hence, after 9 years of development, KBC has become a big corporation with 4 subsidiaries and over 20 associates and possess a series of IPs all over the countries and many urban area projects in golden location in Ha Noi, Hai Phong, Da Nang and HCM City.
This success has more and more confirmed that KBC had the strategic vision, passion and built a professional management system along with a friendly cultural environment.
To satisfy all the strict requirements for each customer, provide them with product and service packages, develop IPs to become hi-tech IPs specializing in industries with no chimney and no pollution to bring benefits for the communities and the Government. This is the mission of management team and employees of Kinh Bac City Development Holding Corporation, and also the commitment to shareholders.
MESSAGE FROM THE CHAIRMAN
Mr. Dang Thanh TamChairman & Genral Director
Dang Thanh Tam
Dear shareholders and investors!
2
HISTORYAfter 9 years of operation and development, KBC has been highly valued and granted 6 consecutive Competition Flags by Vietnamese Government. KBC has also been honored to received Third-class Labor Medal awared by President and many other prestigious in Vietnam and abroad. KBC’s reputation has been well-known internationally and considered as an enterprise having high international integration capability.
1
Chairman of the BoardGeneral Director
2 0 1 0 A N N U A L R E P O R T
Finally, I wish you a successful year for investment!
FOUNDATION ADVANTAGES OF KBC DEVELOP LAND FUND ATTRACT INVESTMENT
KBC is one of the leading companies in attracting FDI in Vietnam
KBC ensures enough land bank for development in 10 to 20 years
Clean land accounts for 50-80% of each IP and compensation cost paid is much lower than current price.Meet all strict and specific requirements of each customer to convince them to sign contract.
Build up prestige and image with local government and peopleTurn poor lands into rich IPsEstablish subsidiaries, associates in strategic location all over the countryAcquire potential and cheap projects in the context of economic declineImprove competitive capacity in all aspects to capture investment opportunities.
Understand corporate culture of countries; bring the image and investment policy of Vietnam to international investors through economic forums, promotion campaigns in Vietnam and abroad.Establish a large network of customers from Japan, Taiwan, South Korea, etc, and start doing business with big groups from Europe and the U.S.KBC is always the number-one choice when foreign customers invest in Vietnam.
IPs: Que Vo 311.6 ha, Que Vo Expanded 300 ha, Nam Son - Hap Linh 630 ha, Quang Chau 709 ha, Trang Due IP & Urban Area 402.5 ha, Phuong Nam 569 ha,Tan Phu Trung 590 ha;Urban areas: Phuc Ninh 146 ha, Quang Chau 120 ha, low income housing 6.3 ha etc.Projects are completed legal procedures: Trang Cat Hi-tech IP 860 ha in Hai Phong; Yen Phong IP 400 ha in Bac Ninh; Lotus Hotel 4ha; Diplomatic Corps project 2 ha; etc.
Total assets: 11,439 billion dong
Equity: 4,379 billion dong
Sales from operating activities: 1,664 billion dong
Profit after tax: 1,109 billion dong
IP and Urban area business plays the decisive role; besides,
expand investment in the areas of supporting industries for IP
such as Power industry and other related services.
On 18 December 2007, KBC officially became public company,
listed on HNX with the charter capital of 880 billion dong.
On 18 December �r 2009, KBC move the listing to HOSE with
the charter capital of 1,991,243,300,000 dong.
KBC was rated Top 10 best stock in Vietnam stock exchange by
Standard & Poor.
One of favorite stocks of foreign investors
Market capitalisation at 31/12/2010: nearly 10,000 billion dong.
Established on 27 March, 2002
Initial charter capital of 20 billion dong
Starting from Que Vo IP - Bac Ninh
Attracted over 50 foreign enterprise into Que Vo IP
80% of customers are foreign customers
Now, KBC focuses on investment in provinces such as
Bac Ninh, Bac Giang, Hai Phong, Quang Ninh, HCM City.
EXECUTING PROJECTS
SCALE OF ASSETS AND EQUITY (31/12/2010)
KBC STOCK
KBC has the ability to turn difficulties into opportunities: For example, create available product to catch the economic reform; diversified products such as land lease, warehouse for sales and lease, provide customers in IPs with full service like electricity, waste disposal, finance, telecommunication, etc; while, the prices are quite competitive.The business model likes centipede legs which easily creates pervasive effect.
With regard to investment activity in IP, KBC always easily
raises enough fund for IP project.
In 2009, KBC arranged 2,700 billion dong though issuing corpo-
rate bonds at low fixed interest rates from 11.5% to 12.5%.
Built prestige with banks such as Vietinbank, BIDV, Navibank,
Westernbank and other credit institutions
Focused on attracting capital from international partners by
issuing convertible bond
Kinhbaccity has become a famous brand in the field of IP
business in Vietnam and abroad.
KBC and its subsidiaries and associates possess the land bank
accounting for 20% of IP land of the country.
It is hard to determine an adequate competitor of KBC in all
aspects of KBC in IP development field
All IPs of KBC have large area and are convenient for transpor-
tation.
BUSINESS ACTIVITY
ARRANGE CAPITAL
KBC’S POSITION
43
CORPORATE VALUE CORPORATE VALUE
Be honor to receive third-class Labor Medal 2007
Received Competition Flag from the Government in 6 consecutive years;
Continuously on Top enterprises awared Vietnamese Golden Star, Top 10 of 2009, Top 100 of 2010;
Continuously awared “Prestige Security Brand” since 2008;
Continuously archieved Best Annual Report award of 2008 and 2009;
Granted Star Outstanding Enterprise Intergration Award of 2007;
Received Typical Enterprise and Typical Businessman of three countries Laos - Cambodia - Vietnam;
Awared “Goden Globe Award” for exellent enterprise since 2008;
Received ISO Gold Cup;
Received “ASIAN Exellent Award”;
Received “National Famous Brand Award” of 2010, etc.
TYPICAL AWARDS
TYPICAL EVENTS IN 2010
65 2 0 1 0 A N N U A L R E P O R T 2 0 1 0 A N N U A L R E P O R T
EVENTS
On April 16, 2010, KBC was assigned to be investor of Nam Son
- Hap Linh IP by the People’s Committee of Bac Ninh province.
On April 27, 2010, KBC inaugurated Phuong Nam IP in Uong Bi
district, Quang Ninh province.
On May 25, 2010, Prime Minister Nguyen Tan Dung visisted and
worked with KBC in Que Vo IP.
On May 27, 2010, Mr. Truong Tan Sang Politburo member and
permanent member of the Party Secretariat visited and worked in
Phuong Nam IP, Uong Bi Town, Quang Ninh province.
On June 6, 2010, Mr. Dang Thanh Tam - Chairman of KBC was a
speaker at World Economic Forum on East Asia (WEF East Asia)
19th organized by Vietnam Government and WEF in HCM City.
On August 28, 2010, in Que Vo IP - Bac Ninh province, Mr. Dang
Thanh Tam received national emulation title from the Prime
Minister. Mrs. Nguyen Thi Thu Huong - Permanent Deputy Direc-
tor received Third-class Labor Medal awarded by the President.
September 2, 2010, KBC received Vietnam Gold Star 2010
September 12, 2010 KBC was awarded “Prestige Security Brand”
for the third time
September 9, 2010 KBC received "National Famous Brand and
Vietnamese excellent entrepreneurs in 2010"
On December 12, 2010, KBC signed land lease agreement with
Wintex Group from Taiwan to lease land in Quang Chau IP.
ROAD TO SUCCESS
After 9 years of operation and development, KBC is well-known internationally and considered an enter-
prise with high integration capability. KBC has continuously received many honorable awards from the
State, Provincial/City People’s Committees and prestigious organizations.
KBC has overcome many difficulties and challenges to build a big brand in real estate business, especially
in the field of IP development. KBC’s IPs are chosen as the first choice by foreign customers when they
decide to invest in Vietnam. Hence, KBC’s target customers are in the field of hi-tech and environment –
friendly. Up to now, KBC’s IPs has been very successful with over 80% of customers are foreign investors.
Thanks to the continuous efforts in promoting and participating in economic forums between Vietnam and
other countries which have become familiar partners of KBC such as enterprises from Japan, Taiwan,
Korea, etc. Currently, KBC is expanding to attract large corporations from Europe and The United States.
This success increasingly confirms that KBC is one of the leading companies in Vietnam to attract foreign
investment, which is one of the most important factors contributing to the success of business.
Along with the success in attracting investment, KBC has also very successful in acquiring land bank.
Currently, KBC has 7 IPs in operation with total area of 3,000 ha, of which clean land is accounting for
70% with compensation cost from 2008 – 2009 at cheap price equal to 50% of current price. This is a
big advantage of KBC to make profit in the future. Besides, potential land bank of KBC may be up to 15,000
ha though gradually merging KBC’s associates which are investors of IPs and urban areas all over the
country. With this strategy, KBC has been implemented quite successfully, for example; in 2009, KBC
raised its ownership to 90% of Sai Gon – Hai Phong Industrial Park Corporation (investor of Trang Due IP
in Hai Phong, 600 ha); in 2010, KBC raised its ownership to 60.52% of Northwest Saigon City Develop-
ment Corporation (investor of Tan Phu Trung IP, 590 ha).
Currently, KBC is often welcomed by foreign partners such as Foster, Foxconn, Kumho, Credit Suisse,
Surbana, Aeon, DTZ, Marubeni, International Power, etc. to become their strategic partners in implement-
ing big projects, funding, design consulting. So, looking back at 9 years of history, we can proudly to say
that KBC has been very successful in overcoming many hardships and challenges, especially in taking
advantage of opportunities such as acquiring cheap projects, raising fund of several thousand billion dong
at low interest rates, creating low cost products to catch the economic recovery, etc. Thus, we can see that
KBC is increasingly growing sustainably and will grow strongly when the economy has positive signs.
ASSESSMENTDespite many difficulties in attracting investment in recent years due to the world economic crisis since
2008, but with all its effort the situation in attracting investment in IPs of KBC is considered quite well in
the difficult context. KBC annually puts new IPs into operation and attracts investment or mergers more
potential IPs to become its subsidiaries. In any circumstances, we always try to turn difficulties to opportu-
nities to sustain the growth of the Corporation in all aspects.
KBC has still focused on potential markets such as Japan, South Korea, and Taiwan. We have initially
attracted customers from the U.S such as Emerson Network Power Co., ltd. 87 2 0 1 0 A N N U A L R E P O R T
OPERATING STATUS
10%
0%
20%
30%
40%
50%
60%
70%
80%
90%
100%
INVESTMENT ATTRACTION SITUATION
STRUCTURE OF CUSTOMERS
90% 91%
10%
39.6%
55%
60.4%
45%
23%
30%
77%
QUE VO
Occupied area 2009
Expanded QUE VO QUANG CHAU TRANG DUE TAN PHU TRUNG
70%
32%
39%
68%
61%
13%14%
87% 86%
9%
Occupied area 2010 Remaining area 2009 Remaining area 2010
Note: Quang Chau IZ 426 haTrang Due IZ - stage I 150 haTan Phu Trung IZ 590 ha
Que Vo IZ 311,6 haExpanded Que Vo IZ 300 haAmong, land area for commercial in IZs accounts for 60% - 65%
Taiwan 41%
Viet Nam 14%
Other customer 1%
Korea 7%
China & HK 3%
Malaysia 4%
Philippines 1%
Singapore 6%
Japan 23%
The growth in size of charter capital has helped KBC strengthen financial capability; ensure adequate
condition for the implementation large scale projects of thousands of billion dong.
109 2 0 1 0 A N N U A L R E P O R T
CHARTER CAPITAL GROWTH
20
2002 2006 2007 2008 2009 2010
295.7
880
1340.8
1991.2
2957
CAPITAL GROW PROCESS
Private share issuing:
31% Bonus shares:2008: 7% - 6,070,540 shares
2009: 30% - 39,024,798 shares
2010: 20% - 38,634,736 shares
28%
Pay dividend in stock:
2008: 43% - 37,290,460 shares
2009: 20% - 26,016,532 shares
2010: 30% - 57,952,104 shares
41%
Become the number one company in Vietnam and one of the leading company in the region in providing
civilized and modern living and working space that develop sustainably.
VISION
MISSIONKBC supplies the society with better living and working environment by providing grounds, workshops in
green modern industrial parks; building beautiful and smart buildings, shopping Vietnams and groups of
dream houses in new urban areas. Through applying good customs on corporate administration and using
modern corporate management systems, KBC brings maximum value to shareholders, creates harmonious
working environment and encourages people’s creativeness.
DEVELOPMENT OBJECTIVES
Growth objective: Maintain growth speed of the scales of annual capital, assets, income and profit.
Product and market objective: Maintain the number 1 position in providing IPs accompanied convenient
services in Vietnam; become one of top 5 civil real estate companies in Vietnam; continue to invest in related
industries including energy and related services.
Corporate customer objective: Be the first choice of foreign customers when they invest in Vietnam; focus
on customers in the field of hi-tech and environment – friendly.
Individual customer objective: Create opportunities for individual investors to satisfy their demand of using
houses and apartments in new urban areas that KBC develops, and manages.
Management system and human objective: Continuously improve management system systematically to
advance the operating performance, attract and use high-quality human resources and build creative and
environment-friendly working space.2006: to organizations and individuals
29,570,000 shares
2007: to existing shareholders 50,430,000 shares
2007: to strategic investors 8,000,000 shares
2008: to strategic investors 2,722,000 shares
2 0 1 0 A N N U A L R E P O R T 2 0 1 0 A N N U A L R E P O R T 1211
DEVELOPMENT STRATEGY
LAND BANK DEVELOPMENT
METHOD OF INVESTMENT
GENERAL STRATEGYKBC is currently the leading enterprise in developing industrial parks in Vietnam with many years of experience, focusing on develop-
ing IPs, implementing projects at good locations where the local authorities are calling for investment in industrial field and giving
high incentives. Currently, along with developing IPs, KBC also focuses on developing real estate projects, commercial centers, and
luxury hotels. In addition, KBC is expanding investment in the fields of support services for IPs; improving the products and services
provided to IPs operation (e.g. KBC invests in energy sector to supply stable power for IPs; in present, KBC is offering free services
such as infrastructure fees and advisory fees for investment license procedures).
KBC have the most ability and experience in attracting FDI in Vietnam. Currently, over 80% of KBC’s customers are foreign investors.
Specially, because KBC concentrates on attracting hi-tech investors, the government always supports and creates incentives. Mean-
while, according to our estimates, FDI sources into Vietnam in the coming years are relatively positive that is a big advantage of KBC.
KBC is ready to attract big and famous hi-tech corporations to invest into the IPs without aiming to maximize profit. Instead, KBC is
received incentives from the Government such as tax policy, land use fees, lease fees and price support in many different forms.
With this orientation, KBC has always been supported by the Government and the local authorities.
In the past years, KBC has taken advantages of opportunities in crisis to take over some big projects with clean land at low costs
such as Trang Due IP, Nam Son Hap Linh IP (100ha has already been compensated at old price while current compensation price is
more than doubled). KBC’s strategy is to create a land fund enough to develop in 10 – 20 years.
KBC often executes projects by successive construction method in which the land compensation ranks at highest priority), then funds
are disbursed according to schedules of attracting investment in order to use capital from investors to continue constructing infrastruc-
ture. Thus, capital investment turns faster. However, depending on the macro-economic situation, the execution of the strategy was
flexible. For instance, KBC has arranged large amounts of capital at low interest rates, to build warehouses with low cost to make
available products for later sales when the economy was showing positive signs.
1413 2 0 1 0 A N N U A L R E P O R T 2 0 1 0 A N N U A L R E P O R T
DEVELOPMENT STRATEGY
PLAN WITHIN THE NEXT 3 YEARS
PRODUCT DEVELOPMENT
In term of product development: However, because of limited land fund KBC’s strategy is to often spend 50%
of the land bank for lease and 50% to construct warehouses for sales and lease. This strategy, on the other
hand, maintains a stable source of revenue for many years and creates more value for the Group in the long-
term. For example, in the circumstance when the land bank has become increasingly scare, the lease price
of warehouses has increased from USD 2.5/m2/month to USD6/m2/month within recent 3 years, meaning
incomes from KBC’s operating IPs is more and more increasing.
KBC has been constantly expanding and promoting its vigor in developing urban areas and industrial parks
in the Modern Green - Clean model. KBC constructs urban areas alongside industrial parks to provide high-
end houses to foreign experts working in the IPs and local people. This strategy create added value not only
for the company but also for provinces and cities where KBC is developing industrial parks.
In addition, KBC established good relationships with big foreign customers in IPs such as: Foxconn, Canon,
Panasonic, Lucky Gold Stars, etc. They are bridges between KBC and new customers. For instance, the can
bring their satellite companies into KBC’s IPs; simultaneously, they also become KBC’s partners together with
KBC to develop large-scale projects such as: KBC will establish a joint venture with Foxconn to invest in Trang
Cat-Hai Phong Complex project. The project is located at the end of Hanoi – Hai Phong highway on the area
of 860 ha (including hi-tech park, Urban Area- Park and recreational area - Beach villas); KBC along with Aeon
develop trade center projects, etc.
Development strategy of KBC not only brings profits for the enterprise but also for the benefits of the Govern-
ment and local communities. KBC receive consensus and supports from the Government and the localities; in
return, KBC indirectly create employment in IPs for local people, contributing to the local budget. Thus, KBC
has achieved high value urban area projects with low cost.
Cluster all projects to have enough land for 10 to 20 year development, and then estimate each project to
determine potential projects to develop before PR for the project. Thus, at present, KBC has many less well-
known projects. The potential projects attract attention gradually so that there will be millions of people know
when the projects are marketed.
OBJECTIVES AND BENEFITS
PR STRATEGY
Focus on attracting cash flow into Phuc Ninh IP and Urban area project. Especially, if the project is sold at market price, it could
be sold at any time, ensuring stable cash flow. In case there is no advanced from customers or it is too hard to issue bond or
share, we still can cooperate with foreign partners to develop the project. Presently, there are some big foreign real eastate groups
from Singapore, Taiwan and Japan are ready to participate if invited.
Why attracts more investment: Vietnam is merging as an attractive investment environment for foreign investors; thus, IPs and
urban areas are continuing to grow and companies operating in IPs are also wishing to expand their factories.
KBC’s developing projects which will generate income for the enterprise in the next few years including 7 IPs: Que Vo IP 311.6
ha, Que Vo Expanded 300 ha, Nam Son – Hap Linh IP 402.5 ha, Quang Chau IP 426 ha, Trang Due IP & Urban area 600 ha,
Phuong Nam IP 709 ha, Tan Phu Trung IP 590 ha; and 3 urban areas : Phuc Ninh Urban area 146 ha, Quang Chau Urban area
120 ha, low-income housing project 6.3ha etc.
In addition, new projects on the process of planning 1/2000, 1/5000 or completing investment procedures are promising to create
thousands of hectares of land. For example, Yen Phong IP & Urban area 400 ha, Trang Cat – Hai Phong Complex 860 ha, Lotus
Hotel in Hanoi 4 ha, Diplomatic Corps Project in Hanoi 2 ha, etc.
Currently, there are 255 industrial zones all over the country with the total area of 69,253 hectares, of which the industrial area for
lease is 45,000 hectares. There are 171 operating IPs and 83 IPs in compensation and clearance phases. The average occupancy
rate reached 51%, only approximately 30 IPs with 100% filled, about nearly 40 IPs with 80% filled. (Source: Summarized from the
Internet).
On the other hand, because of the impact of the global economic crisis and the national economic slowdown from the end of 2008
up to now, FDI inflows to Vietnam declined sharply and many FDI projects were not in IPs. Therefore, IP for leasing supply is higher
than demand. However, from our point of view the land bank will become increasingly limited, Vietnam’s economy will still grow, and
international cooperation will develop in the coming years. Within the next 10 years, the IP for leasing supply is expected to decrease.
Thus, the competitive advantage belongs to companies who are having large land bank and able to attract investment. Therefore, IP
for leasing supply is higher than demand. However, from our point of view the land bank will become increasingly limited, Vietnam’s
economy will still grow, and international cooperation will develop in the coming years. Within the next 10 years, the IP for leasing
supply is expected to decrease. Thus, the competitive advantage belongs to companies who are having large land bank and able to
attract investment.
KBC has all the above advantages. According to
our statistics, of 254 IPs all over the country,
there are only about 90 IPs with the area of 300
hectares and above, total area of about 30,000
hectares. KBC’s IPs all have the area of 300
hectares and above, total land area put in to
operation of about 3,400 hectares. Therefore, the
land bank of the Group put into operation is
accounting for 10% of the total area of IPs with
the area of 300 hectares or more. In addition, we
have not included potential land bank that KBC
may gain from new projects being completed
legal process and from the land bank of associ-
ates and joint ventures which could become
subsidiaries of KBC in the future.
Additionally, the development and business of
industrial zones often depends on the develop-
ment cycle of the economy and even develops a
year earlier than the time of the economy’s
reform. Thus, the company is currently not less
difficult, but we still maintain the activities of
attracting investment opportunities, supplying
available properties to be ready to meet
customer’s demand whenever the economy has
positive signs.
15 2 0 1 0 A N N U A L R E P O R T
REPORT OF THE BOARD OF DIRECTORS
REPORT OF THE BOARD OF DIRECTORS
162 0 1 0 A N N U A L R E P O R T
In the general context of difficult economy, the factors such as fluctuation in financial market, high
interest rates and inflation, decline in the speed of FDI attraction, etc have largely affected the business
of the Company. However, the business results still ensure growth objective, profit from main operating
activities accounting for about 70% of total profit. Total income and total profit after tax equaled to
143% and 182% compared with 2009 respectively; however, Total income and total profit after tax
only equaled to 72% and 91% compared with plan, equivalent to 1,664 billion dong and 1,095 billion
dong respectively.
ASSESS BUSINESS PERFORMANCE IN 2010Maintain sustainable growth in the general context of economic difficulty.
Income and profit after tax of 2010 against 2009
Income and profit after tax of 2010 against 2009
Unit: billion dong
Unit: billion dong
Income from operating activity
Profit after tax of Parent Company
EPS (dong)
Dividendand bonus share
Indexes 2010 2009* Changes
1.664
1.095
3.780
15%
1.160
600,6
2.063
50%
143%
182%
183%
-
Income from operating activity
Profit after tax of Parent Company
Indexes Implemented plan Changes
1.664
1.095
2.300
1.200
72%
91%
Nam Son Hap Linh IPPhuong Nam IP
See map of IPs of KBC and its subsidiaries
182 0 1 0 A N N U A L R E P O R T
INVESTMENT ACTIVITY
1. Merger and acquisitionIn 2010, Parent Company has made successful acquisition of Northwest Saigon City Development Corporation – investor of Tan Phu Trung IP project.
Parent Company only:
HOAÏT ÑOÄNG ÑAÀU TÖ
17 2 0 1 0 A N N U A L R E P O R T
The percentage of ownership of the Parent Company in the
Corporation was 60.52% and total investment capital in the
Corporation was 662 billion dong at 31/12/2010.
Tan Phu Trung IP is 19km far from HCM City, convenient for
transportation: North – South direction: (HCM City – Tay Ninh
– Moc Bai International Border Gate – Cambodia); Along
Trans-Asia road (Highway 22); East – West direction: (Long An
– HCM City – Binh Duong). Tan Phu Trung IP has begun to
attract investment and had big partners such as Viettel, Fujifilm,
Cadivi, etc. This is an important strategy to mark that KBC has
officially arrived in HCM City. More importantly, this project has
great potential and advantages to bring profit for KBC in the
future. The project was revalued by prestigious agency Knight
Frank with 5 times more than book value.
2. Invest in new projects
PHUONG NAM IP – QUANG NINH PROVINCE (709 ha)
This big project is the first project of KBC in Phuong Dong –
Phuong Nam Commune of Uong Bi Town, Quang Ninh province,
located in convenient position in the northern key economic
triangle of Hanoi – Hai Phong – Quang Ninh. Phuong Nam IP is
expected to attract 1-2 billion USD of foreign investment and
create over 50,000 jobs for local working people. These are
favourable conditions for fomestic and foreign enterprises to
continue to invest in key economic areas of Quang Ninh province.
The project was inaugurated on 27/4/2010.
Nam Son – Hap Linh IP with the area of 402.5 ha invested by KBC
is in the master plan of IP development approved by the Prime
Minister. The IP is located in a strategic position next to Que Vo IP
which is invested very successfully and has many advantages to
attract large global corporation. This project was completed more
than 100 hectares of compensation and 10 hectares of clearance at
cheap cost. Our current objective is to attract hi-tech groups from
South Korea and Japan.
NAM SON – HAP LINH IP – BAC NINH PROVINCE (402.5 ha)
About the Corporation:Investment activities mainly focus on basic construction, clear-ance, compensation and continue to complete legal procedures.
1. Structure of investment by sector accumulated as at 31/12/2010
Total investment value of the Corporation in 2010
increased by 2,760 billion dong in comparison with 2009
according to 2010 consolidated financial statement.
However, in reality, the value was only 703 billion dong
(if excluding the goodwill from revaluation of Trang Due
IP and Tan Phu Trung IP). Thus, such investment in
2010 primarily focused on building infrastructure for IPs
and the initial cost for Lotus Hotel project. In term of total
investment, accumulated value was up to 5,438 billion
dong of which investment in IP was largest accounting
for 71%, other sectors such as energy accounting for
9%, SGT shares of 7%, SQC shares of 6%, commercial
real estate of 6% of the total investment of the Corpora
tion. KBC still maintain investment in IP and Urban area as the core
business and investment in support area such as energy to provide
IPs with a stable source of energy in the future, or telecommunica-
tion technology to provide IPs with utility services like media,
telecommunication, internet, etc; besides, SGT also has property
projects related to the core business of KBC.
THE LAND - MAP OFNAM SON - HAPLINH INDUSTRIAL PARK
TOTAL AREA 402,5HA
THE LAND - MAPS OF USE PLANNING INDUSTRIAL PARK SOUTH
TOTAL AREA 709,01HA
INDUSTRIAL PARK 71%
COMMERCIAL REAL ESTATE6%
OTHER 1%
MINERAL(SQC) 6%
LISTED STOCKS(SGT) 7%
ENERGY 9%
2019 2 0 1 0 A N N U A L R E P O R T
In addition, with respect to the investment in SQC, although it has not created profit for KBC, it is
assessed as a potential project by the Board because we are investing in the largest titanium slag manu-
facture plant in Vietnam. SQC met some difficulties in 2010 due to large amount of inventory not yet export
because of high export tax of 15%/year – 18%/year. However, according to Circular No. 184/2010/TT-BCT
dated November 15, 2010 of the Ministry of Finance prescribes that commencing on January 01, 2011,
item titanium slag (TiO2 # 85%) has export tax rate of 10%. Moreover, current titanium slag price
increased about 50% against 2010. So, we forecast SQC’s business will be better and bring profit for KBC
in 2011. Thus, investment strategy of KBC over the past years is to concentrate on IP investment along
with continuing to develop urban area projects such as Phuc Ninh and Quang Chau urban areas, to focus
on developing super-luxury project such as Lotus Hotel in Hanoi. Currently, investment in property projects
only occupies a small portion of the total investment of the Corporation because in 2010 the Corporation
mainly focused on completing legal procedures, master planning 1/500, basic desig, etc.
The data of investment accounts in financial statements may cause concern for investors. So, hereafter
we describe the portfolios in detail to help investors understand better. In addition to investments in
subsidiaries and associates demonstrated quite clearly above, we would go into the detail of long-term
financial investments of total 3,103 billion dong, of which there was actually 1,775 billion dong of term
deposits and loans provided to related parties. (Related parties are mainly associates who are investors
of potential real estate projects and are companies that KBC can easily increase the percentage of owner-
ship to merge those companies when necessary). Therefore, in reality, total investment in long-term
portfolios was only disbursed 1,328 billion dong, mainly invested in real estate and a small portion in
energy, mining and infrastructure sectors. Of which, energy and mining sectors were analyzed above.
With respect to investment in infrastructure, we invested in Vietnam Infrastructure Development and
finance investment JSC. (Vidifi) – Investor of Hanoi – Hai Phong Highway project. According to a report
of the Government, this project will be put into operation in 2013. Besides the implementation of the BOT
project, the investor is granted other projects such as Gia Lam Urban Area, 5 IPs in Hung Yen province,
3 IPs in Hai Duong province and some urban areas and industrial clusters in Hai Phong. This is the advan-
tage of Vidifi as well as KBC.
2. Portfolios
(See portfolio detail Chart)
PORTFOLIO DETAIL CHART
KBC Industrial ParkCommercial Real StatePhuc Ninh, Lotus Hotel,Accommodation for
low - income
Que Vo, Expaneded Que VoNam Son Hap Linh,
Phuong Nam
Khanh An IZSai Gon Bac GiangIndustrial Park JSC
Quang ChauIZ & UZ
Sai Gon Ca Mau Infrastructure JSC
Commercial Center Office for lease
20%62%
Sai Gon Hai PhongIndustrial Park JSC
Trang Due IZ & UZ
90%
Sai Gon Tay BacUrban Development JSC
Tan Phu Trung IZ & UZ
60.52%
Bac GiangThermal Power JSC
Sai Gon Can Tho(Hung Phu IZ)
Sai Gon Quy Nhon Mineral(Manufacture titanium slag)
Other(Telecom,Financial investment
99 billion dong ~ 3%)
Term depositsLoan for related parties
(1.775 billion dong ~ 57% of long term investment value)
Mineral(Binh Dinh Thermal
Power Center)
Infrastructure Development(Ha Noi Hai Phong
High - way)
Sai Gon Hue(Chan May Non -
tariff Zone)
Sai Gon Da Nang(Hoa Khanh Lien Chieu IZ)
Sai Gon Nhon Hoi(Sai Gon
Nhon Hoi IZ)
Tan Ky Cement(Sai Gon Tan Ky IZ)
Sai Gon Constructrion Material
(Phu Huu IZ)
Lang Ha Investment(Lang Ha Project)
Sai Gon Ham Tan(Resort Lagi - Ham Tan,...)
Bac GiangThermal Power Plant
OTHER LONG TERM INVESTMENT (3.103 BILLION DONG)
IZ & UZ (60%)
51%
Binh Phuoc IZ Sai Gon Binh PhuocIndustrial Park JSC
20%
Sai Gon Quang NgaiIZ
Sai Gon Dung QuatInvestment
Development JSC
40%
Ho Chi Minh CityHigh - Tech Zone
Sai Gon High-TechInfrastructure
Development JSC
27.44%
Invest in and supply real estate services
Sai Gon Binh PhuocIndustrial Park JSC
20%
Supply telecom services & invest
in real estate projects
Sai GonTelecommunication
Technology JSC (SGT)
21.5%
SUBSIDIARIES AFFILIATES
1. Structure of investment by sector accumulated as at 31/12/2010 (continued)
21 2 0 1 0 A N N U A L R E P O R T
RISK MANAGEMENT STRATEGY
GENERAL STRATEGY
222 0 1 0 A N N U A L R E P O R T
BIGGEST RISKS TO THE CORPORATION’S BUSINESS AND PERFORMANCESYSTEMATIC RISKSDECLINE IN FDI ATTRACTIONBusiness activity of the Company in IP development field depends on Vietnam’s FDI attraction because target customers of
KBC are foreign investors. FDI attraction of Vietnam in 2010 was estimated at 18.1 billion USD, registered capital was about
11 billion dong. The structure of FDI mainly shifted to commercial real estate accounting for 74.5%. Meanwhile, KBC’s IP
mainly attract hi-tech corporations. Thus, besides the risk of FDI decline, shifting FDI from industrial real estate to commer-
cial real estate is also a risk to the business activities of KBC.
However, FDI of 2010 actually disbursed mainly in factories in IPs. Thus, we has not seen any serious problem and still
believe that Vietnam is still an attractive place to invest. The more the economy develops, the more FDI goes in IPs to
construct plants. In case FDI becomes servere, KBC will be the last enterprise in the field of IP development to be affected.
HIGH LOAN INTEREST RATELoan interest rate in 2010 was higher than in 2009, especially in non-production industries, depending on each bank the
interest rate was up to 17% - 20% per year. Such high interest rate created many difficulties to enterprises. In the long-run,
over high interest rate in the context of gloomy economy will make enterprise
narrow production and stop expansion. New enterprises also reconsider
establishment and even some stop operation. This trend is expected to cause
major problems to the Company in attracting customers, particularly domestic
customers. The Company itself will encounter many difficulties in continuing
to execute projects to expand operation scale.
INSTABILITY OF REAL ESTATE MARKETReal estate market may experience periods of strong fluctuation (sometimes
stronger than the fluctuation of the economy) and sometimes not coincident
with the cycle of economic development. Besides periods of economic crisis
and recession, there exists natural oscillation cycle with slower response of real estate market compared with common
economic cycle. Similarly, when the economy grows strongly, the growth of real estate market is more slowly. This intatbility
has considerable influnce on business activities of most of real estate enterprises in general and of KBC in particular.
“With respect to urban area development, a new business area of KBC, we forcast that biggest risk to KBC will happen when Vietnam real estate market freezes”
Risk management of the Corporation focuses on controlling
business operation risks and financial risks.
Therefore, relevant functions are responsible for controlling
and identifying the types of risk including systematic risk
(market risk, interest rate risk, purchasing power risk) and
non-systematic risks (business risk, financial risk, etc.).
With regard to business activities: risk management focuses on
negotiation with customers and drafting terms of economic contract.
Normally, this work is combined with Legal Department to draft contract terms to ensure the coherence
without causing damage to consumers and the Corporation.
With respec to financial management: Following the guiding of the Boards, depending on real situations
relevant funtional divisions together create plans of using and arranging capital: Each project are budgeted
based on the progress of the approved plans, capital structure is normally 30% of equity and 70% of
loans. So, the Corporation always maximize opportunities to raise capital at low interest rates, and try to
negotiate with credit institutions to archieve lowest fixed interest rates (KBC was very successful in 2009
in arranging 2,700 billion dong bonds, of which 2,200 billion dong with fixed interest rates from 11.5%
to 12.5%).
To guarantee maximum profit from loans, KBC prioritize investment in activities that bring early profit
such as constructing available warehouses for sales and lease, etc. Also, the amount of cash every week
and month is maintained at minimum level based on expenses reported from departments and held in
payment deposit or savings deposit with original flexible withdrawal and high interest rate at various
banks. Financial risk management of KBC always stick to the complex changes of financial market that
affect the operation of enterprises such as interest rates, exchange rates, lending and mobiling capital of
credit institutions, etc.
LEGAL CHANGESPolicies in process of improvement, not comprehensive legal framework are factors having direct or
indirect impact on investment attraction activities of the Corporation. Specifically:
1. Direct impactLand policy: Compensation for ground clearance under State policy trends to increase more and more
(According to Decree No. 69/2009/NĐ-CP dated August 13, 2009 of the Government, compensation of
agricultural land increases about 4 times since the decree has validity), so rental rates in IPs of the
Group also increase remarkably. This causes considerable effect on investment attraction activities of
the Corporation.
Policy of real estate business: As stipulated in Point C, Clause 1, Article 20 of Circular No.
16/2010/TT-BXD dated 1/9/2010, real estate enterprises that are investors of new urban zones are
responsible for signing in documents certifying the transfer of contract then handing over the
document to assignor, investor shall not collect any fee from this transfer. Therefore, customer has
right to transfer houses formed in the future with unlimited number of times as well as number of
assignee. This cause many problems in organizing of human resources and time to implement the
transfer procedures upon request of customer. In estimate, the workload is too much.
Inconsistent policies and regulations happened unexpectedly: For example, in June 2010 high-rise
building projects in 4 internal districts of Hanoi were stopped to issue construction permits, and then
in December 2010 feasible projects are permitted. 1A Lang Ha project of KBC had affected by the risk.
It changed the implementation progress and investment plan of the project.
2. Indirect impact:According to trends from 2005 to the present, policy of tax exemption and reduction is gradually elimi-
nated from legal documents of Viet Nam. This has indirect effect on investment attraction activities of
the Group. Specifically:
Import/Export tax policy:According to regulations of Decree No. 149/2005/NĐ-CP dated 06/12/2005, imported machines and
equipments to create fixed assets will be exempted from import tax. Imported materials to manufacture
exported products will be exempted from import tax. However, according to regulations of Decree No.
87/2010/NĐ-CP dated 13/8/2010, only details of machines and equipments to create fixed assets that
have not yet been manufactured in Viet Nam are exempted from import tax and only materials which
have not yet been manufactured are exempted from import tax. This has affected business activities
of Companies operating in KBC’s IPs.
BIGGEST RISKS TO THE CORPORATION’S BUSINESS AND PERFORMANCESYSTEMATIC RISKSDECLINE IN FDI ATTRACTIONBusiness activity of the Company in IP development field depends on Vietnam’s FDI attraction because target customers of
KBC are foreign investors. FDI attraction of Vietnam in 2010 was estimated at 18.1 billion USD, registered capital was about
11 billion dong. The structure of FDI mainly shifted to commercial real estate accounting for 74.5%. Meanwhile, KBC’s IP
mainly attract hi-tech corporations. Thus, besides the risk of FDI decline, shifting FDI from industrial real estate to commer-
cial real estate is also a risk to the business activities of KBC.
However, FDI of 2010 actually disbursed mainly in factories in IPs. Thus, we has not seen any serious problem and still
believe that Vietnam is still an attractive place to invest. The more the economy develops, the more FDI goes in IPs to
construct plants. In case FDI becomes servere, KBC will be the last enterprise in the field of IP development to be affected.
HIGH LOAN INTEREST RATELoan interest rate in 2010 was higher than in 2009, especially in non-production industries, depending on each bank the
interest rate was up to 17% - 20% per year. Such high interest rate created many difficulties to enterprises. In the long-run,
over high interest rate in the context of gloomy economy will make enterprise
narrow production and stop expansion. New enterprises also reconsider
establishment and even some stop operation. This trend is expected to cause
major problems to the Company in attracting customers, particularly domestic
customers. The Company itself will encounter many difficulties in continuing
to execute projects to expand operation scale.
INSTABILITY OF REAL ESTATE MARKETReal estate market may experience periods of strong fluctuation (sometimes
stronger than the fluctuation of the economy) and sometimes not coincident
with the cycle of economic development. Besides periods of economic crisis
and recession, there exists natural oscillation cycle with slower response of real estate market compared with common
economic cycle. Similarly, when the economy grows strongly, the growth of real estate market is more slowly. This intatbility
has considerable influnce on business activities of most of real estate enterprises in general and of KBC in particular.
“With respect to urban area development, a new business area of KBC, we forcast that biggest risk to KBC will happen when Vietnam real estate market freezes”
23 2 0 1 0 A N N U A L R E P O R T 242 0 1 0 A N N U A L R E P O R T
LEGAL CHANGESPolicies in process of improvement, not comprehensive legal framework are factors having direct or
indirect impact on investment attraction activities of the Corporation. Specifically:
1. Direct impactLand policy: Compensation for ground clearance under State policy trends to increase more and more
(According to Decree No. 69/2009/NĐ-CP dated August 13, 2009 of the Government, compensation of
agricultural land increases about 4 times since the decree has validity), so rental rates in IPs of the
Group also increase remarkably. This causes considerable effect on investment attraction activities of
the Corporation.
Policy of real estate business: As stipulated in Point C, Clause 1, Article 20 of Circular No.
16/2010/TT-BXD dated 1/9/2010, real estate enterprises that are investors of new urban zones are
responsible for signing in documents certifying the transfer of contract then handing over the
document to assignor, investor shall not collect any fee from this transfer. Therefore, customer has
right to transfer houses formed in the future with unlimited number of times as well as number of
assignee. This cause many problems in organizing of human resources and time to implement the
transfer procedures upon request of customer. In estimate, the workload is too much.
Inconsistent policies and regulations happened unexpectedly: For example, in June 2010 high-rise
building projects in 4 internal districts of Hanoi were stopped to issue construction permits, and then
in December 2010 feasible projects are permitted. 1A Lang Ha project of KBC had affected by the risk.
It changed the implementation progress and investment plan of the project.
2. Indirect impact:According to trends from 2005 to the present, policy of tax exemption and reduction is gradually elimi-
nated from legal documents of Viet Nam. This has indirect effect on investment attraction activities of
the Group. Specifically:
Import/Export tax policy:According to regulations of Decree No. 149/2005/NĐ-CP dated 06/12/2005, imported machines and
equipments to create fixed assets will be exempted from import tax. Imported materials to manufacture
exported products will be exempted from import tax. However, according to regulations of Decree No.
87/2010/NĐ-CP dated 13/8/2010, only details of machines and equipments to create fixed assets that
have not yet been manufactured in Viet Nam are exempted from import tax and only materials which
have not yet been manufactured are exempted from import tax. This has affected business activities
of Companies operating in KBC’s IPs.
Enterprise income tax policy:According to regulations of Decree No. 124/2008/NĐ-CP dated 11/12/2008 detailing and guiding the implementation of a
number of articles of the Law on enterprise income tax No. 14/2008/QH12 dated 03/6/2008, enterprises operating in socialized
domains in geographical areas with socio-economic difficulties or extreme socio-economic difficulties, investment incentive
fields shall be exempted from corporate income tax within a specified period. However, according to Resolution No. 54/NQ-CP
dated 11/11/2009, the Government has proposed measures to reduce State budget deficit in 2010 by increasing State budget
collection and establish legal policies towards "stopping the implementation of tax exemption policy applied in 2009”. Although
this measure is built on the basis of proposal and not yet applied, it can be seen that trend of establishing legal policies of the
Government causes large impact on the benefit of the Corporation.
NON-SYSTEMATIC RISKOPERATING RISKIn the past, because of the global financial crisis and national economic slowdown in 2008, KBC’s operation has been affected
by the risk that customers reject land leased. However, to avoid similar cases KBC now focuses on negotiation and setting up
terms of economic contract. The Legal Deparment of the Corporation ensures benefits for both the Company and customers.
FINANCIAL RISKCapiatal structure of each project of KBC is normally 30% of equity and 70% of loans including advances from customers,
credit loan, issuing private shares and bonds domestically and internationally. This activity has always been tightly controlled;
most of IP projects are funded by advances from customers and short-term loans when necessary; thus, it is less risky. As
for large scale projects, KBC often arrange long-term fund by issuing corporate bonds, convertible bonds that also minimize
the risks may occur.
“The calculation of capital souces for projects is well planed before so that the Company is not in a passive status. KBC makes
plans of raising capital from many sources, only invest in highly feasible projects that are able to offer fastest cash flow and
ensure long-term solvency.
RISK MANAGEMENT STRATEGY
9 BAÙO CAÙO THÖÔØNG NIEÂN NAÊM 2010 262 0 1 0 A N N U A L R E P O R T
BUSINESS OUTLOOK AND PLAN FOR 2011
BUILD A STEADY FOUNDATION
KBC has establised a steady-state foundation, a good brand name in Vietnam and reputation abroad.
KBC is considered an enterprise having leading prospect in the field of IP development in Vietnam and
having high prestige with investors from Japan, Taiwan, South Korea, Singapore, etc. KBC has become
the leading enterprise in supplying utility services in IP and developed urban areas next to IPs,
provided housing to foreign experts, workers working in IPs and local people along with other support
services such as: general surgery, restaurant, school, customs, banking, telecomunication, etc.
The success of KBC firstly thanks to the Boards and the senior management team who have vision
and ability to manage in all difficult situations to lead the Company from success to success. Moreover,
KBC has professional employee staffs that have high qualification, diligence, and highest responsiblity.
Besides, KBC also attract many employees from other leading companies because they find carreer
opportunities at KBC to develop their talent and to receive deserving benefits. Thus, KBC has continu-
ously maintained growth speed though years from 50% or more, been highly valued and received
exellent competition flag from Vietnam Government, and ranked by national and abroad prestige
organization. Therefore, KBC has become an enterprise having high credit status with national and
international financial institutions which have always create favourable conditions in arranging capital
(e.g Vietinbank, BIDV, Credit Suisse).
With a lot of advantages such as the ability to acquire land bank, the ability to attract investment,
support from credit institutions to arrange fund, KBC’s main activity has been always stable even in
difficult macro-economy; thus, KBC’s cash flow has been very good.
Diamond Rice Project Design
DEVELOPMENT OUTLOOKIn the context of economic difficulties since 2008 up to now, KBC has take full advantage of opportunities
in the crisis by arranging low-cost capital, constructing infrastructure with low cost, acquiring potential
project with cheap prices, improving competive ability to attract more foreign investors into Vietnam.
So, KBC’s are always the first choice of many big corporations to invest and build factories in Vietnam.
On the other hand, based on the reputation and the ability to provide full services in IP, KBC’s operation
is always busy. Specially, when the Company attracts a big customer, it will soon attract the satellites
of that customer. In 2011, besides the business opportunities from major companies operating in the
IPs need to expand their plants such as Canon, Mitac, Sanyo, there are many other big corporations
going to lease land in KBC’s IP such as Wintex Group from Taiwan which will construct touchscreen
plant in June – July, 2011 and Emerson Group from the U.S will build plant to manufacture mobile
phone components in 2011.
Besides, those big corporations are not only just close customers of KBC but also become partners of
the Company in cooperating to develop large-scale projects; for example, cooperating with Foxconn to
construct project Hi-tech Trang Cat IP complex, etc. So far, KBC has been the pioneer enterprise in
attracting foreign investment into IPs in Vietnam and become bridge between Vietnam and foreign
investors. Thus, prospect of main business activities of KBC is always bright and promising to
contribute significant profit to the Corporation. In addition, investment in SQC in 2011 also promises
to bring profit for KBC after the Ministry of Finance reduce export tax of titanium slag and the pice
of the product in the world increased 50% compared to 2010.
With regard to developing urban areas such as Phuc Ninh and Quang Chau urban areas are promising
to create cash flow in 2011. Currently, Phuc Ninh urban area is being leveled ground to construct
infrastructure. There are only some families’ land areas left for clearing; land price of the region has
reached from 15 million dong / m2 to 20 million dong / m2, while Quang Chau urban area has
welcomed Wintex Group to plan housing for worker.
Having prestige and impressive results in operation throughout the past years, KBC has pleased local
people and governments where the Company developed projects; thus, KBC has been created favour-
able conditions to acquire IP and urban areas in good locations. Besides projects presented in this
report, KBC will continuously expand projects to big cities such as Hanoi, Hai Phong, Da Nang and
HCM City to become investor of golden land areas. Therefore, in difficult ecomic context, we still
believe that we are on the right track and, build KBC stronger, always take full advantage of of business
opportunities to overcome this difficult period and to succeed.
Execute ground clearance and investment attraction in operating IPs at the same time such
as Que Vo Expanded IP, Quang Chau IP, Trang Due IP, Nam Son ¬¬- Hap Linh IP, Phuong
Nam IP and Tan Phu Trung IP. Of which, the Nam Son - Hap Linh IP was compensated 100
ha with low compensation cost and ground cleared 10 ha to be leased in 2011; Phuong Nam
IP is speeded up compensation, ground clearance and invesment promotion. This new IPs are
focused on attracting big groups to brigh about their satellite companies.
Invest in infrastructure, level ground of Phuc Ninh Urban arrea (146 ha) in Bac Ninh to quickly
put into business in 2011 with price ranging from 15 million to 20 million dong / m2;
Complet legal procedures to bring Quang Chau urban area (120 ha) in Bac Giang into
commerce, attract big companies in IP to invest in this urban area to build housing for experts
and workers;
Invest in infrastructure of Hi-tech Trang Cat IP & urban area in Hai Phong (860 ha), create
joint venture with Foxconn to implement the project together;
Accelerate the completion of legal procedures of Diamond Rice project in Hanoi (previously
was Lotus Hotel project) to quickly inaugurate. The project is designed by a world leading
architecture designer FOSTER AND PARTNERS - UK with extreme impresive scale and disign
to create outstanding point having unique architecture. The project was approved by the
Ministry of Construction to have the height of 400m with complex functions.
Implement Kinh Bac Multi-function project in Diplomatic Corps with the area of 2 ha. The
project is currently completing technical infrastructure and legal documents by Hanoi
Construction Corporation to hand over to KBC. KBC is also currently completing the design for
the building.
Implement Tan Lap new urban area in Dan Phuong, Hanoi (26ha). This project was assigned
to KBC to do research and make detailed master plan 1/500 by Ha Tay People’s Committee.
When Ha Tay province was mergered into Hanoi, the project was incluđe in the list of projects
to be reviewed after adjusting the city’s master plan being approved by the Government.
Build one to two more new IPs; merger one to 2 IPs into the Corporation;
Implement the strategy of going toward Hanoi and HCM City to develop property projects,
build multi-function complex; contribute capital and acquire shares of other companies to brigh
more profit for the Corporation;
Carry out regularly business promotion plans abroad as well as programs to support
investors in IPs.
BUILD A STEADY FOUNDATION
KBC has establised a steady-state foundation, a good brand name in Vietnam and reputation abroad.
KBC is considered an enterprise having leading prospect in the field of IP development in Vietnam and
having high prestige with investors from Japan, Taiwan, South Korea, Singapore, etc. KBC has become
the leading enterprise in supplying utility services in IP and developed urban areas next to IPs,
provided housing to foreign experts, workers working in IPs and local people along with other support
services such as: general surgery, restaurant, school, customs, banking, telecomunication, etc.
The success of KBC firstly thanks to the Boards and the senior management team who have vision
and ability to manage in all difficult situations to lead the Company from success to success. Moreover,
KBC has professional employee staffs that have high qualification, diligence, and highest responsiblity.
Besides, KBC also attract many employees from other leading companies because they find carreer
opportunities at KBC to develop their talent and to receive deserving benefits. Thus, KBC has continu-
ously maintained growth speed though years from 50% or more, been highly valued and received
exellent competition flag from Vietnam Government, and ranked by national and abroad prestige
organization. Therefore, KBC has become an enterprise having high credit status with national and
international financial institutions which have always create favourable conditions in arranging capital
(e.g Vietinbank, BIDV, Credit Suisse).
With a lot of advantages such as the ability to acquire land bank, the ability to attract investment,
support from credit institutions to arrange fund, KBC’s main activity has been always stable even in
difficult macro-economy; thus, KBC’s cash flow has been very good.
27 2 0 1 0 A N N U A L R E P O R T 282 0 1 0 A N N U A L R E P O R T
DEVELOPMENT OUTLOOKIn the context of economic difficulties since 2008 up to now, KBC has take full advantage of opportunities
in the crisis by arranging low-cost capital, constructing infrastructure with low cost, acquiring potential
project with cheap prices, improving competive ability to attract more foreign investors into Vietnam.
So, KBC’s are always the first choice of many big corporations to invest and build factories in Vietnam.
On the other hand, based on the reputation and the ability to provide full services in IP, KBC’s operation
is always busy. Specially, when the Company attracts a big customer, it will soon attract the satellites
of that customer. In 2011, besides the business opportunities from major companies operating in the
IPs need to expand their plants such as Canon, Mitac, Sanyo, there are many other big corporations
going to lease land in KBC’s IP such as Wintex Group from Taiwan which will construct touchscreen
plant in June – July, 2011 and Emerson Group from the U.S will build plant to manufacture mobile
phone components in 2011.
Besides, those big corporations are not only just close customers of KBC but also become partners of
the Company in cooperating to develop large-scale projects; for example, cooperating with Foxconn to
construct project Hi-tech Trang Cat IP complex, etc. So far, KBC has been the pioneer enterprise in
attracting foreign investment into IPs in Vietnam and become bridge between Vietnam and foreign
investors. Thus, prospect of main business activities of KBC is always bright and promising to
contribute significant profit to the Corporation. In addition, investment in SQC in 2011 also promises
to bring profit for KBC after the Ministry of Finance reduce export tax of titanium slag and the pice
of the product in the world increased 50% compared to 2010.
With regard to developing urban areas such as Phuc Ninh and Quang Chau urban areas are promising
to create cash flow in 2011. Currently, Phuc Ninh urban area is being leveled ground to construct
infrastructure. There are only some families’ land areas left for clearing; land price of the region has
reached from 15 million dong / m2 to 20 million dong / m2, while Quang Chau urban area has
welcomed Wintex Group to plan housing for worker.
Having prestige and impressive results in operation throughout the past years, KBC has pleased local
people and governments where the Company developed projects; thus, KBC has been created favour-
able conditions to acquire IP and urban areas in good locations. Besides projects presented in this
report, KBC will continuously expand projects to big cities such as Hanoi, Hai Phong, Da Nang and
HCM City to become investor of golden land areas. Therefore, in difficult ecomic context, we still
believe that we are on the right track and, build KBC stronger, always take full advantage of of business
opportunities to overcome this difficult period and to succeed.
BUSINESS OUTLOOK AND PLAN FOR 2011 Execute ground clearance and investment attraction in operating IPs at the same time such
as Que Vo Expanded IP, Quang Chau IP, Trang Due IP, Nam Son ¬¬- Hap Linh IP, Phuong
Nam IP and Tan Phu Trung IP. Of which, the Nam Son - Hap Linh IP was compensated 100
ha with low compensation cost and ground cleared 10 ha to be leased in 2011; Phuong Nam
IP is speeded up compensation, ground clearance and invesment promotion. This new IPs are
focused on attracting big groups to brigh about their satellite companies.
Invest in infrastructure, level ground of Phuc Ninh Urban arrea (146 ha) in Bac Ninh to quickly
put into business in 2011 with price ranging from 15 million to 20 million dong / m2;
Complet legal procedures to bring Quang Chau urban area (120 ha) in Bac Giang into
commerce, attract big companies in IP to invest in this urban area to build housing for experts
and workers;
Invest in infrastructure of Hi-tech Trang Cat IP & urban area in Hai Phong (860 ha), create
joint venture with Foxconn to implement the project together;
Accelerate the completion of legal procedures of Diamond Rice project in Hanoi (previously
was Lotus Hotel project) to quickly inaugurate. The project is designed by a world leading
architecture designer FOSTER AND PARTNERS - UK with extreme impresive scale and disign
to create outstanding point having unique architecture. The project was approved by the
Ministry of Construction to have the height of 400m with complex functions.
Implement Kinh Bac Multi-function project in Diplomatic Corps with the area of 2 ha. The
project is currently completing technical infrastructure and legal documents by Hanoi
Construction Corporation to hand over to KBC. KBC is also currently completing the design for
the building.
Implement Tan Lap new urban area in Dan Phuong, Hanoi (26ha). This project was assigned
to KBC to do research and make detailed master plan 1/500 by Ha Tay People’s Committee.
When Ha Tay province was mergered into Hanoi, the project was incluđe in the list of projects
to be reviewed after adjusting the city’s master plan being approved by the Government.
Build one to two more new IPs; merger one to 2 IPs into the Corporation;
Implement the strategy of going toward Hanoi and HCM City to develop property projects,
build multi-function complex; contribute capital and acquire shares of other companies to brigh
more profit for the Corporation;
Carry out regularly business promotion plans abroad as well as programs to support
investors in IPs.
PLAN FOR 2011
1
2
3
4
5
6
7
8
9
10
29 2 0 1 0 A N N U A L R E P O R T 302 0 1 0 A N N U A L R E P O R T
We evaluate solvency in company with the
relationship between the growth of capital and
of assets.
In 2010, the growth rates of total assets and
of owners’equity are nearly equivalent,
respectively 33.1% (2,845 billion dong –
assets) and 33.3% (1,096 billion dong –
owners’ equity). Equivalence between the
growth rates of assets and of capital indicates
that KBC cut down using financial leverage in
2010. Although total liabilities increased by
20% (1,044 billion dong) compared to 2009
and lower than the growth rate of
owners’equity (1,096 billion dong), the total
real loans were significantly smaller than total
debts. The remaining in total debts is mainly
funds for reinvestment or for generating future
cash flow. They are temporarily recorded in
liabilities.
KBC’s gross profit margin has always maintained at high levels over the past years, with rates rising
by 56.6% compared to 2009 year. This affirms KBC’s effectiveness in controlling business expenses.
Compared to other companies in the same industry of the same size, this ratio of KBC is better, for
example, ITA (22%), OGC (26%), HAG (51%), etc.
Indicators ROA, ROE improved significantly compared with 2009. Currently, indicator ROE is 25%
and considered suitable for a large-scale company in early stage of project development like KBC. In
comparison with other companies in the same industry, of the same size, financial indicators of KBC
are equivalent or better. We believe that, with the stable growth momentum during the years, when
projects are put into business, these indicators will improve much more.
Considering margin ratios (pre-tax profit/total revenue and after-tax profit/total revenue reached 79% and 66.6% respectively), these ratios rose sharply compared to gross profit margin ratio and compared to 2009. The reason is that the surge of other income (395 billion dong) in the profit structure. This increase is due to revaluation of Tan Phu Trung IP when KBC acquired Northwest Saigon City Development Corporation. Although this profit is not reflected in cash flow of KBC, in the terms of goodwill, KBC has made a successful M&A deal at the cost of 50% cheaper than present value of revaluated assets. The importance is that this project is very feasible, profitable for KBC right from 2010 and promises a stream of future earnings.
Gross profit / Net Revenue
Pre-tax profit / Total revenue
After – tax profit / Total revenue
After – tax profit / Total assets (ROA)
After – tax profit / Owners’ equity (ROE)
Indexes Unit 2010 2009 2008
%
%
%
%
%
56,6
79,0
66,6
10,0
25,0
54,7
57,5
53,3
7,2
19,0
61,7
49,4
31,2
6,0
10,5
11,439
REPORT OF THE BOARD OF MANAGEMENT
FINANCIAL STATUS REVIEW
•PROFITABILITY
According to Consolidated Financial Statements
Capital structure
Liabilities / Total capital
Owners’ equity / Total capital
Solvency
Current solvency ratio
Short – term solvency ratio
Quick solvency ratio
Indexes Unit 2010 2009 2008
%
%
Times
Times
Times
54,22
38,29
1.85
2,94
1,48
60,02
38,21
1,67
2,23
1,8
40,97
57,22
2,44
1,22
0,82
According to Consolidated Financial Statements
THE GROWTH RATES OF EQUITY AND TOTAL ASSETS (Billion dong)
Note:
SOLVENCY
2006
378
1,027
2,170
3,2372,735
4,781
3,284
8,594
4,379
2007 2008 2009 2010
EqiytyTotal assets
31 2 0 1 0 A N N U A L R E P O R T 322 0 1 0 A N N U A L R E P O R T
Ratios of capital structure: Liabilities / Total capital (54.22%) and Owners’ equity / Total capital (
38.29%), these ratios are considered suitable for large scale real estate companies; ensure the ability
to provide counterpart funds to mobilize capital from credit institutions when necessary.
Ratios of solvency: In 2010, these ratios are much improved compared to 2009, they are all greater
than 1 while still guarantee a high level of safety. Of wich, short-term solvency ratio of 2.94, quick
solvency ratio of1.48 are considered pretty good and put no great pressure on short-term debts of
the Corporation.
In comparison with companies in the same industry of the same size such as HAG, ITA, OGC, the
ratios of solvency of KBC are equivalent or better.
However, when considering the detailed items in total liabilities, ratios of KBC’s solvency will be much
better.
As of December 31, 2010, total liabilities was 6,202 billion dong, rising by 20% (1,044 billion dong)
compared to 2009 year. Notable changes in debts are short-term loans increasing by 217 billion
dong, five-year bonds (issued by Northwest Saigon City Development Corporation) rising by 300
billion dong and long-term loans growing by 108 billion dong. Compared to 2009 year, KBC reduced
its financial leverage, utilized available financial capacity and focused on key investment.
On the other hand, with regard to structure of total liabilities, there are 48% of 5-year corporate bonds
(due in 2014 – 2015) mostly at fixed-rates on the average of about 12% per year. In addition, short-
term loans accounted for 9% and long-term loans accounted for 7% against total debts on the
average interest rate of about 14. 5%. Thus, total real debts just accounted for 64% of total debts
(equivalent to 3,969 billion dong), while, owners’ equity was 4,414 billion dong. This means that
KBC’s financial capacity remains at high security level. Therefore, if only considering the possibility
Unit: billion dong
ADVANCES FROM CUSTOMERS 9%
TAX 7%
PAYABLE EXPENSES13%
DEFERRED TAX 6%
OTHERS 1%
REAL DEBTS 64%
Total liabilities
Short – term loans and debts
Advances from customers
Taxes and payables to the State
Payable expenses
Long term bank loans
Bonds
Deferred taxes
Other loans and debts
6.202.118.615.129
543.025.413.490
522.489.633.073
459.230.848.217
821.791.589.411
421.843.198.601
3.000.000.000.000
360.755.403.452
72.982.528.884
5.157.956.349.853
326.539.714.076
615.074.524.472
423.230.665.495
586.893.368.867
313.560.546.941
2.700.000.000.000
49.895.747.921
142.761.782.081
20%
66%
-15%
8,5%
40%
35%
11%
623%
-49%
100%
9%
9%
7%
13%
7%
48%
6%
1%
2010proportionIndexes 31/12/2010 31/12/2009 Changes
of paying real debt, indicators of solvency are improved dramatically: the ratio of real loans over total
capital only accounted for 32%, current solvency ratio for real loans increased from 1.85 times to
2.85 times. This means that in reality, pressure on debts reduces significantly.
Furthermore, in term of debt structure there are some large accounts such as payable costs of 821
billion dong (accrued costs corresponding to recorded revenue and used for reinvestment); advances
from customers of 522 billion dong (to generate around 2,000 billion dong in revenue for KBC in the
future).
A deferred income taxes were 360.7 billion dong; in fact, do not arise but only shown on consolidated
financial statements when consolidating financial statements from subsidiaries. These income taxes
were due to revaluation of assets of Northwest Saigon City Development Corporation and Sai Gon –
Hai Phong Industrial Park JSC when KBC acquired them. Taxes and payables to the State actually
accounted for 7% (459 billion dong). These taxes must be amortized to the State after tax authority
conducts tax settlement.
So, we have analyzed the solvency of the corporation in details on the basis of considering debts in
comparison with the value of assets. In general, indicators of KBC are considered suitable compared
to companies in the same industry, but when looking closer, these indicators are much better. They
affirm financial capacity of the Corporation and ensurea high level of security
SOLVENCY (Continued)
REPORT OF THE BOARD OF MANAGEMENT
33 2 0 1 0 A N N U A L R E P O R T 342 0 1 0 A N N U A L R E P O R T
OTHER FACTORS REFLECT A STABLE AND SUSTAINABLE FINANCIAL STATUSAt the time of December 31, 2010 the balance of cash and cash equivalents was 444 billion dong,
equaled to 80% of short – term borrowings, thus, ensures high liquidity for short – term borrowings.
Short – term receivables was approximately 3,067 billion dong. Of which, significant accounts are
receivables from customers (around 1,099 billion dong); remaining is mainly from advances payment
to sellers (this account pays for compensation; KBC pays in advances to facilitate compensation to
inhabitants. This work does not depend on plan of the investor, but on the time when inhabitants are
willing to receive compensation). Other receivables from related parties are low – risk receivables.
There is a surge in the value of inventories which equaled to 394% of 2009 year, up to 3,542 billion
dong. The reason is the revaluation of the areas which have been cleared and have land allocation
decision in Trang Due IP and Tan Phu Trung IP by Knight Frank Viet Nam at fair value after KBC
raised its stake in Sai Gon – Hai Phong Industrial Park JSC and Northwest Saigon City Development
Corporation. Accordingly, Trang Due IP is revaluated at 345,841,200,000 dong (book value is
2,211,429,391 dong) and Tan Phu Trung IP is revaluated at 2,403,302,400,000 dong (book value
is 754,736,034,044 dong. The difference creates a great goodwill for KBC. Therefore, in fact,
inventories are just about 1,590 billion dong and these inventories are mainly the value of pure land
areas in IPs cleared and compensated. This is a huge advantage of KBC because at the present
time compensation cost has been adjusted double than that of KBC incurred before.
FUNDARRANGEMENT AND CASH FLOW MANAGEMENT Structure of owner’s equity includes contributed charter capital,
share capital surplus and undistributed profits. Since listing, owner’s
equity has been continuously added from undistributed profits
through payment of dividends in stock to shareholders. This policy
may be unattractive to investors, but considered suitable for a
company having rapid growth speed like KBC. We believe that
increasing capital from additional profits is more reasonable than
issuing additional shares to existing shareholders. Until projects are put into operation and the Corpo-
ration can itself balance its capital, the Board will consider the plan to pay dividends in cash to share-
holders. Therefore, using inner force to raise financial capacity is the first priority in the context of
the early process of developing projects. In addition, the Corporation always plans the budget for each
project based on its own budget and expected progress of each project. The ratio of owner’s
equity/loans of each project is commonly 30:70. This is the general principle of the Corporation. Of
wich, borrowings are often raised from various sources such as bonds, stock issuance, loans from
credit institutions, etc. Especially, when issuing bonds, the Corporation always tries to negotiate at
fixed rate as low as possible.
Until now, using financial instruments of KBC has been as quite effective. KBC has taken advantage
of any low interest rate opportunity to arrange funds and reduces financial instruments at periods of
high interest rates that do not bring investment effectiveness for the Corporation. For example, in
2009, KBC arranged a large capital amount at fixed rates within 5 years and lower than saving rates
at the present time.
Along with fund arrangement plan, cash flow management plan of KBC also has been good. Arranged
funds are prior to invest in product lines and services that have fastest profitability to increase cash
flow and ensure instant liquidity as well as contribute to strong financial foundation. For example,
when investors were in downsizing period and did not care about expanding plants, the Corporation
took advantage of low interest rate capital to build plants so that when the economy shows the sign
of recovery, investors would have demand of plants available for operation to welcome the reform of
the economy. KBC has been very successful with this revolving fund strategy. In contrast, in 2010
because all costs (cost of capital, price of materials…) rose, KBC did no focus on building available
warehouses but acquiring potential operating projects that promise immediate profit. For example, in
2010 acquiring Tan Phu Trung IP not only created goodwill of 395 billion dong, but also contributed
to the profit of KBC in 2010 and the project would be very profitable in the future.
KBC’s policy in cash flow management is very flexible and suits the general situation of the market.
KBC takes advantage of financial leverages when suitable, invests in product lines that bring the most
early profitability, utilizes inner force in the context of economic difficulty, maintains the minimum
mount of cash weekly, monthly based on reports from departments and held in payment deposit or
savings deposit with original flexible withdrawal and high interest rate at various banks.
Consequently, KBC has built up a great reputation to credit institutions.
ASSESS BUSINESS PERFORMANCE
•BUSINESS RESULTS
Net Sales
- Sales from land lease
- Sales from selling warehouses
- Other revenue
Financial income
Other profit
Operating total income
Profit after-tax of Parent Company
EPS (dong)
Dividend and bonus shares
Indexes 2010 2009 Changes
913,9
794,8
107,3
11,8
750,1
395,2
1.664
1.095
3.7080
15%
889,6
365,4
517,8
6,4
270,7
1,15
1.160
600,6
2.063
50%
103%
218%
21%
184%
278%
34.365%
143,4%
182%
189%
50%
REPORT OF THE BOARD OF MANAGEMENT
35 2 0 1 0 A N N U A L R E P O R T 362 0 1 0 A N N U A L R E P O R T
In the context of difficult economy, the Corporation was also affected in attracting investment and
developing projects. However, the growth of business results in 2010 remained at high level
compared to 2009, specifically: total business revenue reached more than 1,664 billion dong, equaled
to 143% of 2009. Profit after tax of the Parent company reached over 1,095 billion dong, equaled to
182% of 2009.
REVENUE STRUCTURE
•STRUCTURE OF PROFITS
Profit structure chart
It can be seen that profits from core business activities accounted for 31%, financial profits
accounted for 39% (which mainly come from the transfer of exploitation right of project at 1A,
Lang Ha Street, Dong Da district, Ha Noi, analyzed in this report). However, other income also
accounted for 30% (equals to 395.2 billion dong), generated from revaluation of assets in Tan
Phu Trung IP – HCM City with an area of 590 ha when the Parent Company has successfully
implemented acquisition of Northwest Saigon City Development Corporation at the cost lower
than the present value of revaluated assets by Knight Frank Viet Nam. Accordingly, Tan Phu
Trung IP project is worth 5 times than book value. Importantly, this project has great potential
and advantages to bring KBC huge profit. Presently, the project begins to attract investment and
and to generate cash flow in 2010.
INVESTMENT ATTRACTING SITUATION IN 2010Attracting investment KBC in 2010 mainly occurred in Expanded Que Vo industrial zone, Quang Chau
industrial zone, Trang Due industrial zone and Tan Phu Trung industrial zone. The organization of
KBC’s business activities is based on close cooperation between the parent company and subsidiar-
ies. Business model is arranged like centipede – foot – shaped network, easy to bring spillover effect.
Customers are always introduced the whole system of industrial zones of the parent company and
subsidiaries no matter where customers come to work. In 2010, KBC held investment promotion
campaigns in Japan, Korea, Taiwan…Through these promotion campaigns, some enterprises signed
minutes of land lease agreement with KBC and many enterprises promised to consider KBC to be
the first choice when they come to Viet Nam
In spite of difficulty context of macro economy, activities of leasing land and sale of factories account
It can be seen that business revenue is mainly
generated from land lease and sales from warehouses.
Nevertheless, financial income of around 750 billion
dong, accounting for 45% of total revenue and
equivalent to 278% of 2009 year, is mostly generated
from transferring 75% of exploitation right in the project
which lies at 1A, Lang Ha Street, Dong Da district, Ha
Noi of the corporation. Although this revenue is
recorded as financial income under accounting policy,
it is related to real estate business activity. Though
this transfer, KBC gains a huge profit and avoids
some of risks in policy of the State which constantly
changes in 2010 related to regulations on the height
of building.
for more than 50% of total revenue. However, this figure do not reflect the whole of investment attrac-
tion activities because the period from depositing, handling land over the investors to revenue recog-
nition often lasts from 6 months to 1 year. Therefore, for over 1 - year investment activities, we head
toward the future and prospect rather than what is reported in financial data that year.
INVESTMENT ATTRACTING PROSPECT
Currently, KBC is focusing on some large customers from Japan, South Korea, Taiwan, etc. Among,
(1) the group of Japanese customers is having plans to shift investment from China to other countries
including Viet Nam. Basically, there are two major investment groups: large enterprises and support indus-
try companies;
(2) the group of Korean customers including large corporations and small-medium companies spending
more and more attention to Viet Nam, especially, when the relationship between Viet Nam and Korea
is elevated to strategic partnership. In addition, South Korea spends more and more ODA for Viet
Nam and preferential investment fields are mainly projects of infrastructure construction that has a
positive impact on FDI inflow from South Korea into Viet Nam.
Because the biggest concern of large corporations investing in Viet Nam is infrastructure and
when this concern is reduced, more and more investors will determine long –term investment
in Viet Nam;
(3) Taiwanese enterprises are still big customers of KBC. When Taiwan’s economy gradually
recovers and develops, continuing abroad investment of Taiwanese companies is very positive;
(4) According to our assessment, corporations and enterprises in many countries are restructur-
ing production and business system after economic crisis. This is an opportunity for Viet Nam to
appoach and to attract investment. After considering such investment trend, KBC has prepared
specific strategies to attract each type of customers to be able to catch future demands.
As expected, in 2011 revenue from IPs is KBC’s major source of revenue. Presently, we have
attracted some of potential customers such as Wintek, Aichi Tokei denki, Citizen watch, Sanko
Seisaku, Motec, Creativotip, etc. with the demand up to 100 ha. Of which, some customers has
completed signing land leasing contract, even Wintek Group is negotiating to lease land in Quang
Chau urban area to build houses for workers. Besides Que Vo IP, Quang Chau IP, Trang Due IP and
Tan Phu Trung IP, in 2011 KBC will focus on attracting investment into Nam Son Hap Linh IP where
concentrate on attracting Sam Sung Corporation and its satellite companies. About Phuong Nam IP,
KBC conducts promotion to attract Chinese companies such as Dong Nhat Engineering Co., Ltd with
the investment of 70 million USD; An Thoi Long Electronic Technology and Science Co., Ltd with the
investment of 50 million USD; Ai Duc Dac Electric Co., Ltd with the investment of 30 million USD.
601
1.160
1.664
1.129
2009 2010
Total revenuaProfitafter tax of paren company
Others 1%
Financial income 45%
Warehouse sales 6%
Land lease 48%
Others 30%
Financial profit 39%
Profit from core
business 31%
Revenue structure chart
tyû ñoàng
REPORT OF THE BOARD OF MANAGEMENT
37 2 0 1 0 A N N U A L R E P O R T 382 0 1 0 A N N U A L R E P O R T
•STRUCTURE OF PROFITS
Profit structure chart
It can be seen that profits from core business activities accounted for 31%, financial profits
accounted for 39% (which mainly come from the transfer of exploitation right of project at 1A,
Lang Ha Street, Dong Da district, Ha Noi, analyzed in this report). However, other income also
accounted for 30% (equals to 395.2 billion dong), generated from revaluation of assets in Tan
Phu Trung IP – HCM City with an area of 590 ha when the Parent Company has successfully
implemented acquisition of Northwest Saigon City Development Corporation at the cost lower
than the present value of revaluated assets by Knight Frank Viet Nam. Accordingly, Tan Phu
Trung IP project is worth 5 times than book value. Importantly, this project has great potential
and advantages to bring KBC huge profit. Presently, the project begins to attract investment and
and to generate cash flow in 2010.
INVESTMENT ATTRACTING SITUATION IN 2010Attracting investment KBC in 2010 mainly occurred in Expanded Que Vo industrial zone, Quang Chau
industrial zone, Trang Due industrial zone and Tan Phu Trung industrial zone. The organization of
KBC’s business activities is based on close cooperation between the parent company and subsidiar-
ies. Business model is arranged like centipede – foot – shaped network, easy to bring spillover effect.
Customers are always introduced the whole system of industrial zones of the parent company and
subsidiaries no matter where customers come to work. In 2010, KBC held investment promotion
campaigns in Japan, Korea, Taiwan…Through these promotion campaigns, some enterprises signed
minutes of land lease agreement with KBC and many enterprises promised to consider KBC to be
the first choice when they come to Viet Nam
In spite of difficulty context of macro economy, activities of leasing land and sale of factories account
for more than 50% of total revenue. However, this figure do not reflect the whole of investment attrac-
tion activities because the period from depositing, handling land over the investors to revenue recog-
nition often lasts from 6 months to 1 year. Therefore, for over 1 - year investment activities, we head
toward the future and prospect rather than what is reported in financial data that year.
INVESTMENT ATTRACTING PROSPECT
Currently, KBC is focusing on some large customers from Japan, South Korea, Taiwan, etc. Among,
(1) the group of Japanese customers is having plans to shift investment from China to other countries
including Viet Nam. Basically, there are two major investment groups: large enterprises and support indus-
try companies;
(2) the group of Korean customers including large corporations and small-medium companies spending
more and more attention to Viet Nam, especially, when the relationship between Viet Nam and Korea
is elevated to strategic partnership. In addition, South Korea spends more and more ODA for Viet
Nam and preferential investment fields are mainly projects of infrastructure construction that has a
positive impact on FDI inflow from South Korea into Viet Nam.
Because the biggest concern of large corporations investing in Viet Nam is infrastructure and
when this concern is reduced, more and more investors will determine long –term investment
in Viet Nam;
(3) Taiwanese enterprises are still big customers of KBC. When Taiwan’s economy gradually
recovers and develops, continuing abroad investment of Taiwanese companies is very positive;
(4) According to our assessment, corporations and enterprises in many countries are restructur-
ing production and business system after economic crisis. This is an opportunity for Viet Nam to
appoach and to attract investment. After considering such investment trend, KBC has prepared
specific strategies to attract each type of customers to be able to catch future demands.
As expected, in 2011 revenue from IPs is KBC’s major source of revenue. Presently, we have
attracted some of potential customers such as Wintek, Aichi Tokei denki, Citizen watch, Sanko
Seisaku, Motec, Creativotip, etc. with the demand up to 100 ha. Of which, some customers has
completed signing land leasing contract, even Wintek Group is negotiating to lease land in Quang
Chau urban area to build houses for workers. Besides Que Vo IP, Quang Chau IP, Trang Due IP and
Tan Phu Trung IP, in 2011 KBC will focus on attracting investment into Nam Son Hap Linh IP where
concentrate on attracting Sam Sung Corporation and its satellite companies. About Phuong Nam IP,
KBC conducts promotion to attract Chinese companies such as Dong Nhat Engineering Co., Ltd with
the investment of 70 million USD; An Thoi Long Electronic Technology and Science Co., Ltd with the
investment of 50 million USD; Ai Duc Dac Electric Co., Ltd with the investment of 30 million USD.
Signing ceremony with Wintex - Tainan
Signing ceremony with Chinese enterprises
REPORT OF THE BOARD OF MANAGEMENT
39 2 0 1 0 A N N U A L R E P O R T 402 0 1 0 A N N U A L R E P O R T
COMPETITIVE ADVANTAGES OF KBC
In fact, it is very difficult to define adequate competitors of KBC in the field of developing IP in the North. Because KBC is the number 1 group in attracting foreign investment in Viet Nam and capable to create a huge land bank, with the following advantages:
Established reputation and brand for developing IPs in the country and overseas, be invited
to implement IP projects by many provincial
authorities;
Diversified and full products and services, modern infrastructure;
Competitive rental price in comparison with other Northern industrial parks;
There are some rivals that are investors of modern industrial parks such as Thang Long
industrial zone or Viet Nam – Singapore industrial zone, but their land fund is limited and
their rental price is quite high.
Furthermore, the model of IP development of KBC is associated with development of urban areas
has not yet been implemented by any other investors. KBC always has its own way and separate
direction to create products and services different from its competitors. For residential real estate,
specifically in the field of urban area development, KBC just begins with some of projects.
Although this is a challenge of KBC because there are a lot of rivals, this is also opportunity to
affirm KBC’s capacity.
DIRECT COMPETITORS OF KBC IN THE FIELD OF INDUSTRIAL PARK CAN BE DIVIDED INTO THE FOLLOWING GROUPS:
NoArticles
IPs of the GroupIPs of big rivals (Thang Long, VSIP, Yen Phong)
IPs of small rivals
Trademark1 Strong trademark Weak trademarkStronger and longer trademark
2 Location
3 Infrastructure in IPs Fair Good Medium
4 Rental rates Higher Lower
5
6
7
8
9
10
11
12
Management and maintenance fees Higher Equivalent or lower
Good Good Fair
Connectivity ability between investors and State agencies
Customer care services Rather good Rather good Bad
Support for customer Good Rather good Medium
Ability to attract large customers
Have ability to attract many large customers, followed by many satellite enterprises
Have ability to attract many large customers, followed by many satellite enterprises
Not have ability to attract big customers
Marketing Have many clues to attract customers, relationship to hold investment promotion seminars domestic and abroad
Have relationship with agencies, foreign investment promotion organization. Have support from foreign organizations when holding seminars abroad
Directly approach customers. There is few relationship with foreign organizations
Other Have support IPs
Less LessOpportunities for customers
More opportunities for customers, many IPs are put into operation
REPORT OF THE BOARD OF MANAGEMENT
Convenient to develop, convenient for transportation by road, by waterway and by
Convenient to develop, convenient transportation
Inconvenient, not near important highways
41 2 0 1 0 A N N U A L R E P O R T 422 0 1 0 A N N U A L R E P O R T
RISK CONTROL AND PERFORMANCE ENHANCEMENT MEASURESOrganize business activities systematically, tightly associate with subsidiaries, give customers
more choices of positions in IPs of the Corporation, creating spillover effect from the Parent
company to subsidiaries;
Build comprehensive preferential policies for customers including freely supporting them in apply-
ing for investment license, helping them to complete procedures quickly, reducing risks for
customers as well as for the Corporation;
Organize investment promotion campaigns in foreign countries quarterly or extraordinarily;
Participate in economic forums between Viet Nam and other countries, held by Vietnamese
organizations;
Concentrate on attracting large corporations in new IPs, accordingly, attract their satellite
companies;
Negotiate carefully terms of contract, avoid causing damage for customers as well as for the
Corporation;
In business activities, focus on reducing costs at maximum level, maintain the ratio gross
profit/revenue at 50%;
Choose appropriate period to invest in developing new products to catch up future demand, in
order to generate early profit and to have quick return on capital.
BUSINESS ADMINISTRATIONA pioneer in being the bridge between Viet Nam and international corporations and guideline for business activities of KBC
KBC’s success in the field of business management of IPs firstly thanks to the management ability of the Management
Board and the capacity of implementation of the business staffs. Although business result only equals to 93% of
proposed plan, this is still a great effort of the Management Board in the context of Viet Nam’s difficult macro economy
and the decline in FDI, while KBC depends deeply on FDI.
Our business staffs have great experience in organizing investment promotion in foreign countries. They are the bridge
between Viet Nam and foreign corporations. They not only bring the image of KBC to overseas but also play an important
role in transmission of investment policy and macro policy of Viet Nam to large corporations in the world. We are proud
of them. It can be said that KBC is the pioneer company in spreading image and investment environment of Viet
Nam to foreign corporations and investors.
In spite of facing many difficulties while domestic economy is still erratic and global economy has not fully recovered,
we still maintain our current business strategies which concentrate on foreign customers, turning IPs into high – tech
IPs without chimneys nor environment pollution and bringing image of KBC to the world.
REPORT OF THE BOARD OF MANAGEMENT
43 2 0 1 0 A N N U A L R E P O R T 442 0 1 0 A N N U A L R E P O R T
(*) The floating rate of KBCbond005 is calculated at the arithmetic mean of 12 – month savings rates of (Viettinbank, Vietcombank, BIDV, Agribank) plus margin of 3.5% per year.
In addition, Northwest City Development JSC also has 3 bond issuing contracts, as followings:
At 31 December, 2010 book value of the Corporation is 4,379,960,163,305 dong
In 2010, the Corporation continued to increase equity through paying dividends of year 2009 (20%) and
issuing bonus shares (30%) to existing shareholders, raising total equity from 1,991,243,300,000 dong up to 2,957,111,670.000 dong
Currently, KBC applies the policy of paying dividends in stock to reinvest shareholders’ capital in new
projects. This is a reasonable dividend policy of the company which is in the first stage of implementing
many large projects with objectives of developing both equity and assets to attract more capital from
investment organizations in the country and overseas.
In 2011, the Corporation will pay dividend of year 2010 to shareholders in stock at the rate of 15%. For
the rest, depended on business status of KBC, particularly, on forecasts as well as macroeconomic
policies of Viet Nam in the last months of this year and years ahead, The Board will carefully consider
and asks for shareholders’ opinion in writing.
OTHER FACTORS
BOOK VALUE
KBC BONDS
In 2010, KBC has implemented many activities to improve the organization and to enhance the quality
of corporate administration, including:
Appoint two foreigners as independent members of the Board: Mr. Mistu Okada (Japanese) and Mr.
Piet Steel (Belgian)
Appoint Mr. Phan Anh Dung as Deputy Director in charge of management and implementation of urban
area projects.
INNOVATION IN ADMINISTRATION
CHANGES IN EQUITY
STOCK INFORMATION
DIVIDEND POLICY
Common stock
Treasury
Total shares
Outstanding shares
289.760.188 stock
5.950.979 stock
295.711.167 stock
289.760.188 stock
Bonds Total value (billion dong) Issuing dates Maturity dates Interest rates
KBCbond001
KBCbond002
KBCbond003
KBCbond004
KBCbond005
KBCbond006
KBCbond007
700
300
200
400
500
300
300
8/5/2009
11/8/2009
1/9/2009
30/11/2009
28/12/2009
24/12/2009
30/12/2009
8/5/2014
11/8/2014
1/9/2014
30/11/2014
28/12/2014
24/12/2014
30/12/2014
11,5%
12,5%
12,5%
12%
Thaû noåi *
12%
11,5%
Bonds Issuing date Maturity date Interest rates
001/2009/TPSCD01/HĐMB
002/2009/TPSCD01/HĐMB
003/2009/TPSCD01/HĐMB
86,868
98,856
114,276
17/9/2009
18/12/2009
18/12/2009
17/9/2014
18/12/2014
18/12/2014
12,5%
12,5%
12,5%
Total value(billion dong)
REPORT OF THE BOARD OF MANAGEMENT
45 2 0 1 0 A N N U A L R E P O R T 462 0 1 0 A N N U A L R E P O R T
Revenue – Profit
In 2011, the Board of Management plans revenue and profit as below:
Expected revenue: 2,000 billion dong
Expected after – tax profit: 1,000 billion dong
Of which:
Revenues are primarily generated from Que Vo Expanded IP, Quang Chau IP, Trang Due IP, Tan Phu
Trung IP, Nam Son Hap Linh IP and Phuong Nam IP. Some revenues are expected to come from
Phuc Ninh Urban area project.
Fund arrangement With the implementation of a series of large scale
projects such as Lotus hotel, industrial zones and
urban towns which were or are about to be put
into operation, so, in 2011, the demand for capital
of KBC is estimated to increase from additional
2,000 billion to 3,000 billion dong, through chan-
nels as followings:
• Issuance of private shares
• Issuance of international convertible bonds
• Issuance of domestic corporate bond
• Borrowings from credit institutions
• Mobilize advances from customers
PLANS FOR 2011
REPORT OF THE BOARD OF MANAGEMENT
Picture: The chairman of KBC – Mr. Dang Thanh Tam, the Prime Minister – Mr. Nguyen Tan Dung and leaders of Credit Suisse signed memorandum of understanding on the issuance of international convertible bond of 200 million USD in Swiss
47 BAÙO CAÙO THÖÔØNG NIEÂN NAÊM 2010 482 0 1 0 A N N U A L R E P O R T
BAN ÑIEÀU HAØNHORGANIZATIONAL STRUCTURE
GENERAL MEETING OF SHAREHOLDERS
BOARD OF DIRECTORS
GENERAL DIRECTOR
DEPUTY DIRECTOR DEPUTY DIRECTOR
CONSTRUCTION
TECHNICAL
DEPART
URBAN
&
ACCOMMODATION
MANGAMENT
DEPART
LAW
DEPART
MEDIA
&
INVESTOR
RELATION
DEPART
HUMAN
RESOURCE
DEPART
SALES
&
MARKETING
DEPART
COMPENSATION
&
SUBSIDIARY
MANAGEMENT
DEPART
ACCOUNTING
&
FINANCE
DEPART
DEPUTY DIRECTOR
SUPERVISORY BOARD
Organization structure of the corporation is established by the functional model. Accordingly, the
manager of each division takes charge of reporting to Management Board. This structure creates deep
specialization, allows each staff to focus on his/her expertise, and facilitates recruitment of new staff
with skills appropriate for each functional division.
49 2 0 1 0 A N N U A L R E P O R T 502 0 1 0 A N N U A L R E P O R T
During the past 9 years, the talented captain who has led the ship KBC to go through many waves,
to get success after success is Mr. Dang Thanh Tam. He has ever been a marine engineer with the
ability of learning continuously. Whether it is big or small issue he has considerate plans and
preparation.
He is like an anonymous lawyer understanding thoroughly the laws of Viet Nam as well as international
practices. He grasps the direction of social and economic development of locality, of Vietnam as well as
the world economic situation. He is a familiar speaker who represents Viet Nam businessmen in economic
conferences and forums in the world and regionally such as APEC, ABAC, World Economic Forum Annual
Meeting in Davos, World Economic Forum on East Asia 2010, etc. With confidence, knowledge and
business skills he has met many entrepreneurs in the world, had dialoguges with heads of many states
and hundreds of leaders of large international corporations. These are opportunities for him to seek
cooperation and business chances for the Corporation.
He is not only the captain of KBC, but also to play an important role of Viet Nam businessmen
community and of the State. Therefore, KBC ship is always guided to take the right direction in
accordance with the development orientation of Viet Nam and integration with the world.
One of the most effective supporters of Mr. Dang Thanh Tam is Mrs. Nguyen Thi Thu Huong –
Deputy Director, who helps him to implement successfully detailed investment strategies and
business plans. During the past 9 years, she has built a friendly and professional culture for KBC.
More importantly, she is the diplomat of KBC and takes charge of attracting and training business
MANAGEMENT BOARD MANAGEMENT BOARD
staffs who are proficient at least 2 foreign languages, expert in business culture of many countries
and able to transmit investment opportunities in Viet Nam to foreign investors. Therefore, she is an
integral part in building the brand of Kinhbaccity, one of the leading real estate companies in Viet
Nam. She is the person who holds the key to open the door of success for KBC.
Together with Mrs. Nguyen Thi Thu Huong, the next supporter of Mr. Dang Thanh Tam is Mr. Dao
Hung Tien – Deputy Director who has a strong attachment to KBC over the past 9 years. He is the
companion with the development of KBC to establish, manage and implement projects. Presently, he
mainly takes charge of managing compensation task and administrative activities in subsidiaries to
ensure the growth of subsidiaries corresponding to the Parent company. Now, Mr. Tien is appointed
as General Director of Sai Gon – Hai Phong Industrial Park JSC, in charge of developing business in
Trang Due IP and urban area. He plays an important role in developing KBC’s projects and its brand
in Hai Phong city such as the project Trang Cat hi – tech IP and urban area.
In 2010, in order to strengthen the power and to meet timely the growth speed of KBC, the Board
appointed Mr. Phan Anh Dung as Deputy Director who has many years of experience in developing
urban town and housing projects. He is responsible for construction techniques and implementation
of commercial real estate projects such as urban towns and superior commercial center complexes.
Mr. Dang Thanh Tam Take speech confidently in front of hundreds of leaders of enterprises in the country and oversea.
From left to right: Mrs. Nguyen T.Thu Huong, Mr. Dang Thanh Tam, Mrs. Le Hai Anh (Deputy Direc-tor of Sai Gon Bac Giang), Mr. Phan Anh Dung, Mr. Dao Hung Tien
51 2 0 1 0 A N N U A L R E P O R T 522 0 1 0 A N N U A L R E P O R T
HUMAN RESOURCE POLICY
THE NUMBER OF STAFFS, THE POLICY OF RECRUITMENT AND TRAININGOn 31 December, 2010 the total number of staffs of KBC is 128 people, increased by 16 people
compared to 2009 year. KBC’s personnel structure is mainly high qualified staffs university graduates,
post-graduates and technical workers. Recruitment motto of KBC is to attract talent staffs and put
them in right positions that is suitable for their capacities and strengths. KBC always creates good
conditions to support each individuals to develop his/her career. Management staffs are also given
intensive training on professional management.
SALARYPresently, the average salary of staffs in KBC is 8,500,000 dong/person/month. Salary is reviewed
depended on the entire working process of each staff during the year and promotion of the head of
his/her department. Adjustment of salary increase is appropriate for the title and new tasks which
staffs will be responsible for after having decision of assignment to higher position.
REWARDKBC’s staffs are rewarded corresponding to their achievements. For each year, staffs receive at least
salary of 13 months. Moreover, KBC have the regimes of additional salary and bonus for typical units
and individuals of the year, for excellent ideas and holidays.
ALLOWANCES, SOCIAL INSURANCE AND LEAVEBesides salary and bonus, employees also enjoy other allowances depending on specific jobs such
as: responsibility allowances, allowances for supporting other departments, allowances for holding
more than one position, allowances for lunch, work expenses, cell phone, travel expenses, etc. In
addition, in order to create friendly atmosphere between departments, on the basis of financial status
KBC organizes a vacation trip for all employees each year. All employees of KBC have social insurance,
health insurance and allowed to have leave days under provisions of Labor law. Especially, female
employees are entitled to receive 100% of normal salary on the period of maternity leave.
KBC is proud of the ability of building, managing and using human resource efficiently. Human
resource is the most value asset of the corporation, with professional working manner and spirit of
devotion to work in order to ensure stable and sustainable development of the corporation.
SHARES HELD BY THE MANAGEMENT BOARD
Note: the ownership proportion of the Board of Management has not changed since listing. There has not ever been any trade of shares by members of the Board of Management.
Name Position Number of shares Ownership proportion
1
2
3
4
Dang Thanh Tam
Nguyen Thi Thu Huong
Dao Hung Tien
Phan Anh Dung
General Director
Deputy Director
Deputy Director
Deputy Director
101.250.000
299.478
279.647
0
34.2%
0.1%
0.1%
0%
INTERESTS OF MANAGEMENT BOARD
Issue bonus shares at appropriate rate for senior management officials to encourage them to
attach and contribute to the development of the corporation;
Reward villas in some urban towns to ensure that they have sufficient and stable lives;
Reward cash in time and appropriately based on achievements of each individual on the
occasion of year – end summation;
Other interests: private car to go to work everyday and travel in business, armed with laptop
and cell phone for work;
The total of salary and bonus of the Board of Directors is 4 billion dong per year.
MANAGEMENT BOARD
(Note: Mr. Piet and Mr. Mitsu are independent members)
53 2 0 1 0 A N N U A L R E P O R T 542 0 1 0 A N N U A L R E P O R T
THE BOARD OF DIRECTORSStrategies for development of the corporation that are approved by General Meeting of Shareholders
such as business development plan, new project investment, funding arrangement are executed by
the Board of Directors. The Board include the following members:
THOÂNG TIN VEÀ COÅ ÑOÂNG VAØ QUAÛN TRÒ COÂNG TY
ACTIVITIES OF THE BOARD IN 2010
In 2010, the Board continues to focus on setting up diplomatic relationships with international corpo-rations, working with senior managers, with State ministries and departments, with authorities in provinces and cities in order to build strategies for stable development of the Corporation with target of leading KBC to become the investor of potential projects across the country. The Board always concentrates on participating social and economic events, economic forums and awards for enter-prises to enhance the status and the image of KBC.On February 26, in Ha Long City, Quang Ninh provincial People’s Committee and the Board of KBC
held a meeting to sign cooperation arrangement on developing key industrial and services projects in
Quang Ninh.
On March 4, Mr. Dang Thanh Tam – Chairman and General Director of KBC attended the ceremony
night “Viet Nam entrepreneur with Hoa Lu – Thang Long – Ha Noi, 1000 years of stable construction
and development”. There, Mr. Dang Thanh Tam was honored to represent for 1,000 typical business-
men to speak about responsibility of entrepreneurs and enterprises in the process of integration and
development.
Name Position Number of shares Ownership Change
1
2
3
4
5
6
7
Mr. Dang Thanh Tam
Mrs. Dang Thi Hoang Phuong
Mr. Ngo Manh Hung
Mr. Tran Quang Son
Mr. Chung Tri Phong
Mr. Piet Steel
Mr. Mitsu Okada
The chairman
Member
Member
Member
Member
Member
Member
101.250.000
21.937.500
317.077
135.232
101.250
0
0
0.34%
0,08%
0%
0%
0%
0%
0%
34,24%
7,42%
0,11%
0,05%
0,03%
0
0
On April 16, with the consensus of ministries and departments, the President of Bac Ninh provincial
People’s Committee worked with the Board of KBC to sign the decision of approving KBC to become
the investor of Nam Son – Hap Linh IP in order to quickly construct infrastructure under international
standards.
On April 27, in Uong Bi town – Quang Ninh province, the Board of KBC directed to hold the launching
ceremony of Phuong Nam IP with the total investment capital of 1.108 billion dong in an area of
1,569.27 ha. This is a large project and the first project of KBC in Quang Ninh. Only within 2 months,
KBC completed all procedures to begin construction of this major project.
On May 3, while visiting and working in Viet Nam, Mr. Yoshito – Japanese Minister of State in charge
of National strategy and the third character of Democratic party in Japan who plays a very important
role in planning strategies and newest policies of Japan, invited Mr. Dang Thanh Tam personally to
visit and discuss about important issues related to Japanese national strategies on Viet Nam’s economy
and enterprises.
On May 4, the Board of KBC participated in the launching ceremony of Le Meridien Da Nang resort &
spa invested by Sai Gon – Da Nang Investment JSC (SDN). This is one of the largest scale projects
at the Son Tra – Dien Ngoc Sandy beach. Currently, KBC is the largest shareholders of SDN.
On May 25, the Board and senior managers of KBC welcomed the visitation of Mr. Nguyen Tan Dung
– Politburo member, the Prime Minister in Que Vo IP, Bac Ninh province. The Prime Minister recog-
nized, praised and highly appriciated KBC’s outstanding achievements. The Prime Minister affirmed
that KBC is the leading enterprise in attracting high – tech companies and building support industrial
zones. For business activities, KBC needs to improve the ability of attracting investment better,
especially in high – tech industry which makes added value and high content of grey – matter, accord-
ingly, in order to develop sustainably, to bring Viet Nam’s products to the world and integration in
global added value chain.
On May 27, the Board and managers of KBC welcomed the visitation of Mr. Truong Tan Sang –Polit-
buro member, permanent member of the Party Secretariat in Phuong Nam IP, Uong Bi town, Quang
Ninh province, invested by KBC. Mr. Truong Tan Sang directed leaders of KBC to focus on attracting
investors in high – tech industry and support industries to create added value for the country as well
as jobs for local people.
From 6 to 7 of July, Mr. Dang Thanh Tam participated in the World Economic Forum on East Asia
2010 as a speaker at the conference. Attendants in this forum include the Prime Minister of Viet Nam,
Laos, Cambodia, Myanmar, Secretary – General of Asean, WTO Director – General Mr. Pascal Lamy,
Deputy Secretary – General of the OECD, Ministers of Economy of some countries, regional and
international senior officials of financial institutions such as ADB, IMF, and other world leading enter-
prises. Mr. Dang Thanh Tam worked with 5 major global groups of enterprises and achieved some
THE BOARD OF DIRECTORS
proportion
55 2 0 1 0 A N N U A L R E P O R T 562 0 1 0 A N N U A L R E P O R T
very important agreements with encouraging results. After the first working day, the Prime Minister of
Lao People’s Democratic Republic Mr. Bouasone Bouphavanh greeted Mr. Dang Thanh Tam informally.
The Prime Minister acclaimed KBC’s contribution to Laos and promised to create better conditions for
KBC to implement important projects here.
On July 22, at Gala Dinner of Asean Foreign Ministers hosted by Deputy Prime Minister - Foreign
Minister Mr. Pham Gia Khiem, with the participation of American Foreign Minister Mrs. Hillary Clinton
and Foreign Ministers of 27 countries including China, Russia, Japan, Australia, Canada, etc. Sai Gon
Invest Group was honored to be the only sponsor of the party night. At the dinner, Mr. Dang Thanh
Tam met and discussed with Foreign Ministers of other countries.
On August 29, in framework of Viet Nam Gold – Star Award, a walk parade with the subject “Viet Nam
Gold Star – For children in difficult situations” is organized. There, on behalf of KBC, Mr. Dang Thanh
Tam contributed 1 billion dong to Tay Ninh provincial People’s Committee. This is a noble gesture
aiming at sharing with difficult and unlucky lives under the traditional spirit of solidarity of Vietnamese
people.
From August 31 to September 2, in the sequence of events to celebrate August Revolution and National
Day, KBC took the team of Ba accompanied Bac Ninh love duet to Laos to celebrate National day of
Social Republic of Viet Nam at Viet Nam Embassy with Vietnamese community in Lao People’s
Democratic Republic.
On October 15, KBC gave 1 billion dong to support compatriots in Central Vietnam through Viet Nam
Youth Federation and Youth magazine.
On December 12, representative of the Board attended the ceremony of signing agreement with Wintek
Group from Taiwan to lease land in Quang Chau IP invested by Sai Gon – Bac Giang Industrial Park
JSC, one of subsidiaries of KBC. Wintek is the group of developing high – tech, specialized in manufac-
turing touch screen, one of two manufacturers of Ipad’s touch screen in the world.
SUMMARY OF MEETINGS AND RESOLUTIONS OF THE BOARD OF DIRECTORS
In 2010, with functions, power and responsibility entrusted by General Meeting of Shareholders, the
Board of KBC has conducted regular and extraordinary meetings to discuss and approve important
issues related to business and investment activities of the corporation. Resolutions and decisions
approved by the Board in 2010 mainly concentrate on following problems: issuing bonus shares and
paying dividends to existing shareholders, investment in new projects, merger and acquisition, selec-
tion of contractors, permit of deploying projects, decision on remuneration for two independent foreign
members of the Board, appointment of Deputy General Director, etc. Quarterly, the Board submits on
corporate governance report to State Security Commission and HOSE in accordance with regulations
for public companies.
In 2010, GMS approved the addition of two independent members to the Board: Mr. Piet Steel
(Belgian) and Mr. Mitsuru Okada (Japanese). These two members have much experience and capacity
of management in multinational corporations. Therefore, in 2010 year they have made significant
contribution and given objective ideas to governance activities of the Corporation, especially, they play
the role as the bridge between the Corporation and foreign investors.
The Board adopted the resolution to change auditor and choose Ernst and Young Viet Nam as new
auditor in order to improve quality of financial statements, to ensure accuracy and transparency.
THE BOARD OF DIRECTORS
57 2 0 1 0 A N N U A L R E P O R T 582 0 1 0 A N N U A L R E P O R T
Name Position Number of share Ownership Changes
1
2
3
Mr. Nguyen Tri Ho
Mr. Bui Ngoc Quan
Mr. Nguyen Chung Thuy
Head
Member
Member
103.690
51.356
47.500
0.01%
0.017%
0%
0.04%
7,42%
0,02%
The Board of Supervisors is directly under GMS and elected by GMS to ensure common interests for
shareholders. The Board of Supervisors consists of 3 members, responsible for checking the rationality
and legality of administrative activities of the Board of Directors, business management activities of the
Management Board, accounting and finance management of the Corporation, independent operation
with the Boards. Over the past years, The Board of Supervisors has carried out exchanging necessary
information with senior leaders as well as with departments to grasp thoroughly the situation and timely
to comment to the Boards. Specifically, the Board of Supervisors implemented examination of financial
statements quarterly, semiannually and annually, evaluating reports of the the Board of Directors, review
plans of the Management Board before submitting to GMS.
Remuneration of the Board of Supervisors: No
RECOMMENDATION OF BOARD OF SUPERVISORS FOR THE BOARD OF DIRECTORS AND MANAGE-MENT BOARD
Due to rapidly expanding operation scale of the Corporation, the Supervisory Board recommends the
Board to focus more on developing operation engine to catch up with growth speed.
Continue to supplement and improve internal regulations and to standardize processes and functions in
all business aspects of the Corporation.
Improve the policy of recruiting and training high qualification staffs.
No Shareholders Number of shares (shares) Proportion Change
1
2
3
Organization
Among:
- Organizations in the country
- Foreign organizations
Personal
Among:
- Personals in the country
- Foreign personals
Treasury
Total(6.284 shareholders)
65.683.461
33.482.889
32.200.572
224.076.728
180.418.588
43.658.140
5.950.655
194.124.330
9,1%
0,76%
8,34%
-8,12%
-10,39%
2,26%
-0,98%
0,00%
22,21%
11,32%
10,89%
75,78%
61,01%
14,76%
2,01%
100,00%
Treasury 2%
Management Board
42%
Foreign sharedolders 26%
Shareholders in the country 11%
Personals in the country 19%
SHAREHOLDER STRUCTURE (according to shareholder list dated 18/03/2011)(Changes against shareholder list dated 16/11/2009)
1
2
3
4
Mr. Dang Thanh Tam
Mrs. Dang Thi Hoang Phuong
Sai Gon Investment JSC
Mrs. Nguyen Thi Kim Xuan
101.250.000
21.937.500
16.875.000
43.432.647
183.495.147
34,24%
7,42%
5,71%
14,69%
62,05%
0.34%
0.08%
0.05%
2.27%
2.74%
No Shareholder Address Number of shares Proportion Change
20, Phung Khac Khoan, DaKao Ward, District I, HCM city140/11 Su Van Hanh, Ward 12, District 10, HCM city20 Phung Khac Khoan, DaKao Ward, District 1, HCM city
69, Ba Huyen Thanh Quan, Ha Noi
MAJOR SHAREHOLDERS
THE BOARD OF SUPERVISORS
proportion
Total
59 2 0 1 0 A N N U A L R E P O R T 602 0 1 0 A N N U A L R E P O R T
SOCIAL RESPONSIBILITY Sustainable business development is a solid foundation of KBC to conduct more social and charitable
activities practically and meaningly. This is one of significant strategies to create the value for corporate
culture. In 2010, following traditional activities for social benefits, the corporation contributed billions
dong to social activities.
In the framework of Viet Nam Gold – Star Award with the subject “Viet Nam Gold Star – For children
in difficult situations”, on the behalf of KBC Mr. Dang Thanh Tam contributed 1 billion dong to Tay Ninh
provincial People’s Committee. This is a noble gesture aiming at sharing with hard and unlucky lives
with traditional spirit of solidarity of Vietnamese people. At the ceremony, Mr. Dang Thanh Tam repre-
sented for Viet Nam Gold Star Club to read the commitment expressing good deep, enthusiasm and
dedication of Viet Nam Gold Star enterprises to social community and to the bright future of Viet Nam.
In the evening of October 10, Mr. Nguyen Thi Thu Huong – Deputy Director of KBC attended the
program “thousand year of shining spirit, Festival of youth doing business well for the development of
the country”, on behalf of KBC she gave 1 billion dong to support compatriots in Central Vietnam. At
the press interview after the program, Mrs. Huong said: “we do business with all spirit of an enterprise
and always wish best things for community and society. We hope with our deep sympathy that compa-
triots in Central Vietnam will overcome present difficulties”.
Moreover, KBC is also interested in developing education and training. In 2010, KBC continues to invest
8 billion dong in Hung Vuong University, Ho Chi Minh City under the motto “non – profit”. KBC considers
that contributing capital to construct schools is social responsibility of KBC for education. Accordingly,
KBC also calls on other enterprises to join and contribute to the socialization of education in Viet Nam.
In addition, the corporation also spent hundreds of scholarships for Laos students to study in Viet Nam
worth tens of billions dong to foster the traditional friendship between Viet Nam and Laos more sustain-
ably. With the spirit of combination between enterprise development and social development, KBC
promises to continue to implement this work and consider it a good cultural tradition of the Corporation.
(Pictures: 1. Mr. Dang Thanh Tam represents Viet Nam Gold Star Club reading the commitment in
the program “Viet Nam Gold Star – Accompanying with children of difficulty situations”. 2. Mr. Dang
Thanh Tam and the organization Board take photo with unfortunate children. 3. Mr. Nguyen Thi Thu
Huong – Deputy Director supports compatriots in Central Vietnam)
Mr. Dang Thanh Tam represents for Viet Nam Gold - Star Club to read the commitment in the program “Viet Nam Gold - Star - Accompany with children having difficult stituation”
Mr. Dang Thanh Tam and organiz-ing board take photo with unfortu-nate children in walk charade
Mrs. Nguyen Thi Thu Huong – Deputy Director of KBC support compatriots in Central area.
As of 12 December, 2010 there is not any company holding more than 50% equity of the corporation.
KThe corporation has 4 subsidiaries:
1
2
3
4
200
200
300
3.000
62%
90%
60,52%
51%
No. Companies Business field Register KBC’s ownership
Industrial park
Industrial park
Industrial park
Electricity
Sai gon - Bac Giang Industrial Park Corporation
Sai Gon - Hai Phong Industrial Park Corporation
Northwest City Development Corporation
Bac Giang Thermal Power Corporation
SAI GON – BAC GIANG INDUSTRIAL PARK JOINT STOCK COMPANY
SBG is the investor of Quang Chau industrial zone (with an area of 426 ha) and Quang Chau urban area
(with an area of 126 ha) in Bac Giang province. Currently, Quang Chau is considered to be the industrial
zone having the fastest clearance speed and ability of investment attracting in Bac Giang province. So
far, this industrial zone attracted some large corporations such as Sanyo, Tawang, Nichirin, UMEC,
Hosiden, Crystal Apprel, and Wintek, etc. In 2010, business activity of this IP witnessed a unprec-
edented growth compared to 2009 year. Among, total revenue reaches 88.3 billion dong, after – tax
profit reaches 28.1 billion dong (after – tax profit in 2009 is just only 2.24 billion dong). In 2011,
although the overall situation is expected to be still difficult, according to our view, the prospect of this
industrial zone is not alarming. Now, there are some big contracts signed but have not been recorded
as revenue such as the contract with Wintek Group worth of nearly 2 million USD, the contract with
HOPE Viet Nam Breeding Special Zone Co. Ltd worth of nearly 1.3 million USD, the contract with
Crystal Apprel Company worth 3.3 million USD.
Beside, SBG is also the investor of Quang Chau urban area project. This project is developed in parallel
with Quang Chau industrial zone project aiming at creating housing fund for professionals and workers
in industrial zones in Bac Giang province. Presently, Wintek Group has expressed a wish to lease land
in this urban area to build housings for their workers.
SUBSIDIARIES AND ASSOCIATES
Charter capital proportion
61 2 0 1 0 A N N U A L R E P O R T 622 0 1 0 A N N U A L R E P O R T
SAI GON – HAI PHONG INDUSTRIAL PARK JOINT STOCK COMPANY
SHP is the investor of Trang Due industrial zone project. Stage 1 of the project deployed and beginning
to attract investment is 150 ha. Currently, the industrial zone has attracted over 20 companies in the
country and overseas, consisting of some large corporations such as Bucheon Vina, Aichi Tokei Denki,
Emerson Network Power… Among, Emerson Network Power, one of American leading corporations with
a deep history, has planned to put their plant into operation in mid – 2011. Therefore, in 2011 Trang
Due industrial zone promises to attract investors of high stature, to raise prestige and competitive capac-
ity in comparison with rivals in Hai Phong city. In 2010, business result from Trang Due contributed
significantly to business result of KBC, among, revenue reaches 209 billion dong and profit reaches 101
billion dong.
SAI GON – TAY BAC URBAN DEVELOPMENT JOINT STOCK COMPANY
STB operates in fields of investment, construction and development of industrial zones and urban areas
and officially becomes the subsidiary of KBC in June 2010. Presently, the company is the investor of
Tan Phu Trung industrial zone with an area of 590 ha inside the master planning of Tay Bac urban area
of 6,000 ha. Currently, this industrial zone has comprehensive and modern infrastructure, attracts more
than 20 investors. In 2010, business activities of STB have gained dramatic results compared to 2009
year, specifically, total revenue reaches 55 billion dong and after – tax profit reaches 8.4 billion dong.
Big customers in this industrial zone with the total value of contract from 2 million USD to 5 million USD
consist of Viet Nam electricity cable JSC, Nam Phuong Co. Ltd, Hung Hau Import – Export JSC, etc.
From 2011, business strategy in industrial zone will follow general direction of KBC. KBC will focus on
attracting investment in this industrial zone to affirm its power and to raise competitiveness of KBC
compared to peers in South area.
KBC PARTICIPATES IN JOINT – VENTURES WITH 6 COMPANIES MAINLY IN FIELDS OF REAL ESTATE, ENERGY AND TELECOMMUNICATION. BELOWS ARE ASSOCIATES OF KBC
1
2
3
4
5
6
70
100
200
300
100
672,74998
20%
20%
40%
27,44%
20%
21,48%
STT Coâng ty Lónh vöïc hoaït ñoäng VÑL ñaêng kyù Tyû leä sôû höõu
Real estate business
Industrial park construction, investment and business
Real estate inside and outside industrial zone construction, investment and business
Real estate construction, investment and business
Construction
Telecommunication
Ca Mau Infrastructure JSC
Sai Gon – Binh Phuoc Industrial Park JSC
Sai Gon – Dung Quat Investment and Development JSC
Sai Gon High – Tech Industrial Park Investment and Development JSC
Saøi Goøn Nam Viet Real Estate JSC Sai Gon Telecommunication Technology JSC
(tyû VND) cuûa KBC
BAC GIANG THERMAL POWER JOINT STOCK COMPANY
BGC operates in the fields of investment, construction, operation and exploitation projects of electricity
resources and grids. The company is now the investor of Bac Giang thermal power plant, the coal –
fired thermal power project with the total capacity of 600 MW with investment of 800 million dong.
In 2010, the company has still been in the process of receiving capital contributed by shareholders
and not yet conducted business activities. On the date of December 31, 2010 KBC has not yet contrib-
uted capital in BGC.
SUBSIDIARIES AND ASSOCIATES
63 2 0 1 0 A N N U A L R E P O R T 642 0 1 0 A N N U A L R E P O R T
FURTHERMORE, KBC CONSTANTLY EXPANDS INVESTMENT AND CAPITAL CONTRIBUTION TO ESTABLISHMENT AND HOLDING DOMINANT SHARES OF MANY COMPANIES IN FIELDS OF REAL ESTATE, ENERGY, TELECOMMUNICATION, MINERAL AND FINANCE.
STT Coâng ty VÑL ñaêng kyù Tyû leä goùp voán/(tyû VND) soá tieàn goùp (ñoàng)
1
2
3
4
5
6
7
8
9
10
11
12
13
Sai Gon – Can Tho Industrial Park JSC
Sai Gon – Nhon Hoi Industrial Park JSC
Sai Gon – Hue Investment JSC
Sai Gon – Quy Nhon Mining JSC
Sai Gon – Da Nang Investment JSC
Ban Viet Health Sercurities Fund
Sai Gon Construction Investment and Materials JSC
VTC – SaigonTel Telecommunication JSC
Sai Gon – Ham Tam Travel JSC
Viet Nam Infrastructure Development and Financial Investment JSC
Sai Gon – Binh Thuan Power Plant Investment Development JSC
Sai Gon – Binh Dinh Energy JSC
Lang Ha Investment JSC
100
100
200
1.200
200
500
50
160
108
5.000
1.000
10.000
23,64
10%
10%
11,86%
5,75%
19,5
15 tỷ
19%
19,2%
6,5%
6%
0.35%
11,23%
5%
SUBSIDIARIES AND ASSOCIATES INVESTOR RELATION
We are ready to welcome and answer questions of investors
and shareholders through any means of information such as:
direct conversation, email, phone and letters, etc.
We always update information in time on main
information ports to help investors to track such as
websites http://www.kinhbaccity.com and
http://www.hsx.vn and other websites related to finance,
securities in Viet Nam.
KBC always strive to become professional listed company
disclosing information transparently and timely. KBC stock is
considered to be a favorite stock of organization investors and careful i n d i v i d u a l
investors, especially, to be very popular with foreign investors because of transparency in providing
figures and development potentials of the corporation.
KBC is a familiar address for investors in the country and overseas to find out investment opportunities,
update financial figures and business status. On average, we welcome at least one organization finding
out investment opportunities per week. During the past year, there are many organizations, investment
funds and securities companies to come back often in order to update figures, business status and to visit
industrial zones and projects of KBC.
KBC always is the attention of stock analysts. The reason is that we are always willing to help them to
update information quickly and accurately. For example, according to comment of analysts from Sacom-
bank Securities Company, the reason for them to list KBC in typical stocks to track and analyze is that
figures what they want are easily provided. It is different from other large companies which in spite of
strong fluctuation of their stocks often refuse to provide information. That is what investors do not want,
especially foreign investors. As we see, there are many securities companies to analyze and update KBC
stock often such as HSBC, Thang Long SC, Tan Viet SC, SHS, Woori CBV, etc. In addition, there are
many reports of investment funds about KBC stock but not posted on the internet and we are respect of
investors’ private ideas. As we were notified, some investment funds have announced their analysis
reports and updates about KBC stock on Bloomberg, etc. Therefore, information about KBC stock not only
spreads over the mass media in the country, but also, often updated on international news channels.
65 2 0 1 0 A N N U A L R E P O R T 66BAÙO CAÙO THÖÔØNG NIEÂN NAÊM 2010
INVESTOR RELATION
We do not hold regular meetings to answer questions and to introduce investment opportunities like
other companies and as recommendation of some organizations. We find that this is not the only
way to satisfy requirements of all types of investors. On the other hand, information must be
updated to investors immediately, so, through main ports of information, email, phone or direct
conversation, we are always willing to answer questions to satisfy all subjects of investors. We
believe that all organizations and investors who contact with us feel pleased with our welcome.
However, in 2010 the disclosure of financial statements of KBC has been delayed for some times.
The reason is due to objective factors but not entirely due to poor business results. Thus, we wish
for the understanding of shareholders and potential investors; and look forward to opinions of share-
holders and investors to improve ourselves.
Many thanks!
Contact information
Email: [email protected]
Tel: (+84.4) 3734 6889
Fax: (+84.4) 37346891
