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2004 Annual Results15 March 2005
2004 Annual Results15 March 2005
2004 Annual Results15 March 2005
Highlights
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Highlights
This is the third consecutive year it recorded double-digit growth in both turnover and net profit.
Dominant position in Vietnam further enhanced; also deeper penetration in the PRC, ASEAN and European markets
Significant sales growth in major products including MSG, lysine and cassava starch-based products
Completed acquisition of Shanghai Vedan Foods’ MSG business; started to bring in revenue
Research and development capability enhanced through establishment of a technology research and development centre
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Summary of Final Results
* 2003 Weighted average of ordinary shares in issue was 1,264,508,000 while it is 1,514,746,000 in 2004.
2003 2004 Change
Turnover
Gross Profit
Net Profit
EPS (US cents)
Gross profit margin
Net profit margin
225.0
64.8
24.3
1.61*
28.8%
10.8%
+10.4%
+18.6%
+10.2%
-6%
N/A
N/A
203.8
54.6
22.1
1.72
26.8%
10.8%
Twelve months ended 31 December, USD million
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Factors Undermined Growth (I)
Short Term Influences Undermined Robust Growth:
Temporary suspension of the co-generation power plant, the rise in prices of raw materials, packaging materials and transportation costs affected overall production cost
Some of the plants expansion works delayed due to shortage of building materials
These influences, however, are seen as temporary; the Group is confident in its long term growth and profit margin is expected to improve
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• Production Cost (2H 2004 compared with 2H 2003):
Change
Raw materials 21%~40% (such as Molasses, Cassava, etc.)
Packing materials 20%~25%
Transportation 10%
Admin. & Sales Expenses 12%
2H 2003 2H 2004
Gross Profit Margin 28.1% 23.7%
Factors Undermined Growth (II)
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Strong Balance Sheet
Cash
Short-term Debt
Long-term Debt
Total Debt
Shareholders’ Equity
Debt to Equity Ratio
As of 31 Dec 2003 (USD million)
35.4
31.5
24.3
55.8
225.1
24.8%
As of 31 Dec 2004 (USD million)
33.2
41.2
25.7
66.9
234.5
28.5%
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Key Financial Figures
* net debt / equity
31 Dec 2003 31 Dec 2004
Current Ratio (Times)
Net Gearing Ratio* (%)
ROE Ratio (%)
1.79
14.4%
10.6%
2.09
9.0%
11.2%
Business
Review
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Market Analysis
Taiwan & others 3.8%
Vietnam58.4%
Japan22.9%
PRC10.6%
2003 For the year ended 31 December
Europe1.5% ASEAN
Countries2.8%
Taiwan & others 2.2%
Vietnam56.3%
Japan21.9%
PRC13.1%
2004
Europe2.4%
ASEAN Countries
4.1
Revenue Growth Across all Markets
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Market Analysis
2003
2004
0.0
20.0
40.0
60.0
80.0
100.0
120.0
140.0
Vietnam Japan PRC ASEAN
USD Million
119.0126.7
46.6 49.3
21.629.5
5.79.2
3.2 5.3
Europe
For the year ended 31 December
+6.4%
+5.7%
+36.4%
+61.1% +67.8%
Revenue Growth Across all Markets
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Major Market Analysis
Vietnam Growth in sales volume and turnover; driven by higher MSG
sales
Higher sales due to effective nationwide promotional activities and deeper market penetration into rural areas
Japan Main boost came from growing lysine sales at higher price
ASEAN Sales growth through aggressive and effective market
expansion activities
5.7% to US$49.3 million
6.4% to US$126.7 million
61.1% to US$9.2 million
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Major Market Analysis
PRC Contribution from Shanghai Vedan; MSG sales grew at an
average rate of 28% per month since July
Sales of modified starch enjoyed significant growth
Overall prospects remain promising
Europe MSG and modified starch sales up significantly
36.4% to US$29.5 million
67.8% to US$5.3 million
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Product Analysis
Turnover by Products
2003 2004For the year ended 31 December
MSG69.0%Lysine
13.5%
G.A.6.3%
Cassava starch based products
6.4%
Specialty chemicals
2.7%Others2.2%
MSG69.5%
Lysine14.4%
G.A.4.2%
Cassava starch based products
6.6%
Others2.3%
Specialty chemicals
3.0%
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Product Analysis
0
20
40
60
80
100
120
140
160
Turnover by Products
2003
2004
MSG G.A.Lysine Cassava starchbased products
USDMillion
140.6
156.3
12.8 9.5
27.432.5
13.1 14.76.85.5
Specialty Chemicals
For the year ended 31 December
+11.2%
+18.6%
-25.4% +12.9%+25.2%
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Major Product Analysis
MSG Rising living standard in Vietnam boosted food processing industry resulting in
even stronger eemand
Lysine Strong demand from PRC drove prices up significantly in the first half
Starch : Native Starch : Modified Starch
Strategically reduced sales of native starch to focus on the modified starch market that enjoys a higher margin
Specialty Chemicals Industrialization and modernization of Vietnam prompted market demand
11.2% to US$156.3 million
18.6% to US$32.5 million
25.4% to US$6.8 million
12.9% to US$14.7 million44.4% to US$4.9 million
132.2% to US$9.8 million
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Establishment of a Technology R&D Centre
- Hired a new R & D director
- Equipped with new laboratory and facilities
- To enhance technical expertise and boost research and development capabilities
- Responsible for the development of new products and new production processes
- Initial focus on starch and food related areas
- Diversify source of carbohydrates
Research and Development
Prospects For 2005
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Major Growth Drivers
Continual capacity expansion to capture rising market demand
Further expansion into new markets especially in ASEAN countries and PRC
Excellent market potential of new products: r-PGA and high value-added seasonings
Enhance cost structure by reducing production and raw material costs
Growth Drivers
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Enhance Cost Structure
- Expanded GA production facilities: to enhance the scale of production efficiency
- To set up 2 more starch raw material processing plants in central and central northern part of Vietnam
- Explore an alternative source of carbohydrates
- Improve existing processing technology
Cost Reduction Measures:
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- Expanded GA production facilities: increasing annual production capacity from 140,000 tons to 180,000 tons (Dec. 2004)
- Expanded specialty chemicals production facilities: increase annual production capacity of 100% Caustic Soda from 60,000 tons to 80,000 tons (Dec. 2004)
- Increased annual production capacity of modified starch from 40,000 tons to 60,000 tons (Mar. 2005)
Expansion works, completed in 2004, increases production capacity for 2005:
Capacity Expansion
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New Product Launch
• Plant construction delayed due to material storage. Estimated completion is 4th quarter 2005
• Work underway on application for Sales permit
• Cooperate with potential sales agent to develop sales and marketing plan
• Continue to work with clients and research institutions on various industrial applications
r-PGA
• Versatile flavor enhancers made from MSG and
various natural seasonings
• Enjoys strong demand due to diverse tastes of
Asian dishes
• Product launch expected in second quarter of
2005
High Value-addedSeasonings
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New Market Expansion
I) PRC: growth by mergers, acquisitions and strategic alliances
- Shanghai Vedan as base in the central region and Xiamen Mao Tai plant as base in the south to support future expansion into second and third-tier cities
- M & A strategy remained; several targets identified, discussion underway
- Strategic alliance with local GA suppliers to secure raw material supplies
II) ASEAN: a major growth market with total population over 500 million;
comprised of some of Asia’s fastest growing economies
- Explore opportunities for M & A and strategic alliances
III) Europe: a largely unexplored market with high growth potential
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“To be Asia’s leading manufacturer of
fermentation-based amino acids,
food additive products and
cassava starch based products”
Mission
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2004 Annual Results15 March 2005
2004 Annual Results15 March 2005
2004 Annual Results15 March 2005