32
ANNUAL REPORT Millennium Corporation Page 1
ANNUAL REPORT
Millennium Corporation
Page 1
ANNUAL REPORT
Millennium Corporation
Page 2
CONTENTS
COMPANY PROFILE .................................................................................................................. 3
FINANCIAL HIGHLIGHTS ........................................................................................................ 3
LETTER TO SHAREHOLDERS ................................................................................................ 4
COMPANY OPERATION AND SIGNIFICANT DEVELOPMENTS ..................................... 6
FINANCIAL STATEMENT ...................................................................................................... 16
MILLENNIUM BOARD OF DIRECTORS ............................................................................. 31
ANNUAL REPORT
Millennium Corporation
Page 3
COMPANY PROFILE
Millennium Corp. is an international distributor of premium quality fragrances. Founded
in the beginning of 2010, the Company has succeeded in widening its distribution
network as well as bringing consumers the best goods with the most proper prices in the
previous year. Millennium Corp. is one of the leading enterprises in the field of allocating
scent products, with perfume for women and aftershave for men as the two main
products.The Company’s products are positioned in the prestige segment of the fragrance
market, and range from $169.00 to $189.00 for aftershave and from $299.00 to $349.00
for perfume in wholesale pricing. The Company’s licensed brands for fiscal 2012 and
2013 include ZEUS, HERA.
Distribution of these brands is carefully targeted to department stores, specialty stores,
perfumeries, and selected national chain stores in the NAFTA and Europe areas. The
Company’s worldwide headquarters are on 250 Broadway, New York City, United
States. Besides, we also built a branch at 68th floor of Victoria Building, 20 avenues
Victoria, Paris.
FINANCIAL HIGHLIGHTS
For the Year Ended December 31,
2012 2013
(in US dollars)
Operating Results
Net Sales
16644369.5 12767302.25
Net (Loss) Income
3917237.61 2351976.11
Per Share of Common Stock
Basic Net (Loss) Income
9.67 7.84
Dividend
0.5 7
Stockholders' Equity
11.25 11.63
Financial Position at Year-End
Bonds
700000 700000
Long-Term Debt
500000 0
Total Asset
5774305 4207293
Equity
4556805 3489793
ANNUAL REPORT
Millennium Corporation
Page 4
LETTER TO SHAREHOLDERS
Dear Shareholders,
First of all, Millennium is pleased to thank all the loyal shareholders to stick with company in the
past. Since the first issue of our annual report, we have added a collection of sections to help our
investors better understand our product from initial development to point of sale. As a global
competitor Millennium has positioned itself as a reliable, high end producer of quality men’s
aftershave and women’s perfume. Initially, our carefully branded Zues (Aftershave) and Hera
(Perfume) is just the start of a profitable generating product. These new products have been
released to the market and received satisfaction of consumer.
As you see, fiscal year ended December 31, 2013 was a much fluctuated year. Quarter 2 was the
quarter of the Greece crisis's public debt, and the money we spent on advertising and promotion
so inefficient. Fortunately, the crisis has been handled quickly, the revenue has been restored at
$6.607.000, rose 480% from previous quarter, caused a great increase to a new peak. General
revenue in 2013 decreased $600,000, declined 12% from the previous year.
We are pleased to announce that many of our goals have been reached, both from a financial
standpoint, as well as non-financial milestones. Stock price in 2013 is fluctuated; but in general,
increase 51 point from the previous year. Over the last year we saw the dividend per share went
up dramatically. This type of return is excellent and we are confident that the stability of our
company can maintain such average yearly returns for many years to come.
Despite the reported loss, net cash provided by our operating activities was approximately
$1150133.08. We ended the fiscal year with cash of approximately $1978367.5 and no bank
debt.
In light of the challenges and difficulties faced by the Company in fiscal 2013, the Board
determined that a change in strategy was required. Our strategic focus is to return to profitability,
and to establish a basis for growth.
This focus has been three fold: (1) evaluate the potential of our existing licensed product lines
and position these products in channels of distribution to provide profitability, (2) reduce
discretionary spending and introduce profit improvement programs to provide an effective and
efficient operating structure, (3) seek new licenses that will provide revenue growth.
I am pleased to report progress on all three fronts: (1) we have written down those licensed
product lines that did not receive the expected customer support, and are expanding our efforts
internationally and to other channels of distribution for those that have viability, (2) major
ANNUAL REPORT
Millennium Corporation
Page 5
reductions in spending have been made and a profit improvement committee was established to
provide on-going improvements, (3) we recently signed a worldwide fragrance license with
Vince Camuto, the well established creative force behind numerous successful brands, which we
believe will strengthen our position in department stores and other important channels of
distribution.
We currently have an agreement with Artistic Brands for a number of celebrity fragrances, the
first of which will be spotlighted by the major introduction of a Beyonce fragrance during next
fiscal year 2014.
In 2014, we enter the next era of growth for our business. Over the next five years, the overall
objective is to grow organically between 4.5% and 5.5% per annum, assuming a market growth
of 2-3%, and to continue on the path of market share gains.
Our firm is also proud to inform investors of our newest plan for marketing strategy to expansion
the market to Asian area, we keen on Japan, Korea and China. Our company has used the global
strategy to entry the new market. The new plan will allow us to build our brand name anywhere
in the world and in turn increasing the margin of our products and maximize value for
shareholders.
Millennium confirms its intention to return above 60% of the Company’s free cash flow to
shareholders once the targeted leverage ratio – defined as net debt,divided by net debt plus equity
– of 25% has been reached.
We have a challenging agenda ahead but I am confident that we will continue to build on and
expand our distinct position in our scent industry.
I am grateful to our dedicated staff of employees who have contributed to strengthening the
Company’s future. The support of our customers and suppliers will continue to have our full
attention. Above all, I am appreciative of all our loyal shareholders.
The success of the Company has special meaning for me. You have my assurance that I will
make every effort to merit your continuing support.
Pham Thu Huong
Chairman and Chief Executive Officer
ANNUAL REPORT
Millennium Corporation
Page 6
COMPANY OPERATION AND SIGNIFICANT DEVELOPMENTS
Products
At present, we have four products for both of EU and NAFTA markets (including A1P1
and A1P2 products to EU market and A2P1 and A2P2 products to NAFTA market). We
focus on A1P1 and A2P2 products. Our fragance products are priced from $299 to $339
for perfume and from $169 to $ 189 for aftershave.
Nowadays, perfume is more and more necessary for modern women. Therefore, we focus
on selling perfume in the high-end segment. Besides, a lot of men use aftershave to make
a fresh, strongly and confidence, but at this market price is sensitive. Thus, we decided to
adjust the price of this product into middle – range segment.
We invested to change the design and packaging of each quarter. Additionally, we
research and improve the quality of product to suit to the needs of customers in each
quarter. Especially in the 4th
quarter of the year, when the products are consumed most,
this action should be conducted more carefully.
In detail, for Christmas 2012, we lauched special edition with very attractive red outlook.
For aftershave in winter, a cool but sexy model creates the feeling of mistery and wants
to explore. In the 1st quarter of 2013, with the Valentine topic, we made couple edition to
attract more customers and increase this product’s consumtion. In the 2nd
quarter of 2013,
ANNUAL REPORT
Millennium Corporation
Page 7
we used the orange background to bring the youth and hot of dynamic summer. The
passionate and sexy of winter collection in third quarter of 2013 lured the buyer from the
first look.
In order to distribute products to retailers and consumers, we have to make customers
believe in the quality of our products. As a result, we require the manufacturer’s caution
from selecting raw materials to production process. This process often takes twelve to
eighteen months to complete.
Marketing Report in 2012 - 2013
Millennium Corp. are always proud to be one of the leading distributors of high quality
fragrance in the industry, the company hold product quality steady at high-end segment,
the No. 3 company in group 3. In just two years, we expanded our distribution network
across the most popular cities in the NAFTA and EU. By the appropriate marketing
strategy, we had a strong brand image in the minds of consumers. In addition, every year
we commit to advance new R&D method to improve product quality.
Year in review 2012
Price
When launching the product in 2012, Millennium Corp. originally positioned our product
with the top quality in the market and the high price segment. After doing research and
ANNUAL REPORT
Millennium Corporation
Page 8
business analysis, we realized that customer demand and acceptance level for each
product, each area is different. We realized that NAFTA market was sensitive with price
while EU market was less sensitive with price. Consumers in NAFTA accept the low
price products, when the price leaps, demand will decline dramatically. On the other
hand, a fluctuation of price do not have a big impact to consumer’s demand in EU market
where is under the influence of commission and salary for Sales Rep.
In NAFTA, the demand for the high price product is lower than the EU, so our prices in
this market were the middle or up-middle range segment. Namely, perfume Hera was
sold for $299 per unit (at up-middle range) and aftershave Zeus was sold for $169 per
unit (at middle range). As for the EU, the competition tended to concentrate in the
segment of middle-range and low-end, so we decided to keep strong and focused high-
end market domination. Particularly, perfume Hera was sold for $329 per unit (the
highest price in market) and aftershave Zeus was sold for $179 per unit (the second rank
in market). In the next quarters, we continue to maintain pricing strategy based on
business results.
Till quarter 4 in 2012, basing on the forecast of the product demand in the holiday
shopping year-end season and avoiding the rival companies tending to spread into the
premium segment, Millennium Corp. decided to adopt the strategy “increasing price” in
common with “the launching a special edition” for X-mas season.We have increased the
range of $10 for each product in each area.
ANNUAL REPORT
Millennium Corporation
Page 9
In relation to other intro Firms, Posatis (Firm 36) had a competitive price strategy, pricing
their aftershaves in the middle-range and perfumes in the high-end in both with high
quality products in both market. In quarter 1 of 2012, Posatis sold aftershave in NAFTA
for $159 and $139 in EU. They sold perfume in NAFTA initially for $309 and $319 in
EU. In next quarters, Posatis Firm’s price fluctuated, up and down about $5 per unit for
each product in each market. Then in quarter 4, they have reached to our price level and
our high-end segment, becoming the main competitor. Despite this fact, Posatis Corp.
(Firm 36) still priced effective enough to be considered a high-end in perfume and
middle-range in aftershave market. Throughout the year Posatis Corp. continued with
their competitive price strategy, pricing their products slightly lower than ours.
Our pricing strategy may not have maximized the amount of market share we captured
because all our products belonged to high quality and high price segment, however,
maximizing net income due to the percentage of the proper margin profit. Therefore,
Millennium Corp. attained the goal working out our business plan.
Marketing Programs
In 2012, we carried out Marketing Programs in order to build and coverage our brand
image in the consumer’s mind in the launching new products period. We put
advertisement posters in the magazines such as Forbes, US Weekly, OK!, Cosmopolitan,
Elle, Marie Claire, Vogue, Fashion UK, Glamour, In Style and commercial TVC on Fox
Channel, Star World, Fashion TV, EPSN. Besides, we performed outdoor advertising
including the giant panels built on the top of buildings, large signs, and
posters on the public bus, subway and high-speed rail cars.
Millennium Corp. established the distribution system in some metropolitan areas such as
New York, Los Angeles, Chicago, Seatle, Toronto, and Montreal, Vancouver, Mexico
City in NAFTA and London, Paris, Milan, Berlin, Geneve in EU.
To intermediate distributors, we had some Sales Promotion such as discount 5%
for new retailers in the first-three transactions and 3% for the old retailers, supporting
display shelves to new retailers and training Sales Rep, having reward for distribution
with high sales. To consumer, we held some fairs to popularize our poducts and our
brand, celebrating events in Christmas, offering VIP card for close consumer with special
price and additional services.
ANNUAL REPORT
Millennium Corporation
Page 10
Advertising Expenses
In quarter 1 of 2012, we spent $282,000 on advertising expenditures because this was the
time we launched our new products. In the two next quarters, we decided not to allocate
extensive spending towards the Marketing budget, so decreasing Advertising Expenses to
$210,000 and $110,000 respectively. We waited until the end of the year, the crucial
times of the peak demand, to disburse a heavier budget $444,000.
Our sales force has remained constant through out 2012 as we felt that our team was
sufficient enough to meet the forecasted demand and sales revenue.
Posatis Corp. (F36) spent an enormous amount of the capital on advertising. When
compared to other companies they spent the most. Spending money on advertising and
sales representatives may give the firm better awareness within the market, resulting in
more sales and greater market share. In comparison to other firms, we spent a lower
amount on advertising. However, after the extensive evaluation of the market demand
and consumer behaviour in NAFTA and EU, we realized that NAFTA market is more
sensitive with marketing than EU market while a fluctuation of advertising budget do not
have a big impact to consumer’s demand in EU market where is under the influence of
commission and salary for Sales Rep. Therefore, Millennium decided to allocate a
reasonable amount of capital in advertising in the next year, in order to compete better in
the market, but we would not spent too much budget on marketing.
Year in review 2013
Market
At the end of the second year, we have ranked third capturing the market shares for
A1P1, A1P2, A2P1 and A2P2 are 15%, 15%, 14% and 12% in the order with our net
sales being $1,150,133. The top company in the market still were 4M&W company (IF
35) dominating the market with net sales of $1,602,426 all successful selling in both
markets. Therefore, in year two in order to better compete in the market and more
adequately meet the needs of our customer we decided to raise our expenses on both
products.
Quality control
In the first haft of year two Posatis (IF 36 – main competitor) allocated $696,268.00 into
quality control and $ 3,508,785.00 for all the second year. Posatis has already built a
ANNUAL REPORT
Millennium Corporation
Page 11
reputation in the market for producing high quality products and continues to invest a
large amount in quality control to ensure that high quality goods are being produced.
In the first haft of year two, on quality control we spent to $993,939.00 and after that we
continue to increase our QC and reach $2,295,724.00 for all the second year. This
supports our strategy to produce one of the the highest quality products in the industry.
More interestingly, this will also stretch the effectiveness of our employees. We believe
that through investment in Hi-Tech technology as well as quality control in the long run
we can out perform other manufactures on quality. We experience close to zero returns
therefore we believe that with our high quality products we can satisfy a greater amount
of customers gaining a greater market share.
Price
In 2012, although our products just accounted for 9% - 16% market share, we achieved
the target of profit and stock price. In the quarters of 2013, we found that competitors
tend to go the price down. Therefore, our company decided to keep the high-price
segmentation for perfume and upgrading aftershave to the higher price in order to
enhance brand value and create more profits for shareholders. We also adjusted the price
to suit each market.
ANNUAL REPORT
Millennium Corporation
Page 12
In the first quarter 2013, we remained the price as in the end-year quarter of 2012.
Particularly, perfume Hera was sold for $309 per unit in NAFTA, $339 per unit in EU
and aftershave Zeus was sold for $179 per unit in NAFTA, $189 per unit in EU.
Posatis Corp. followed the same price strategy as in year one. They chased our segment,
selling aftershave in NAFTA for $179 and perfume for $307, aftershave in EU for $189
and perfume for $337.
Millennium Corp. decided to change our price strategy, going up our product price in the
quarter 2. In NAFTA market, we sold aftershave for $185 and perfume for $319. In the
EU market, we sold aftershave for $195 and perfume for $349. We moved up prices
further to maintain the premium segment, competing directly with Posatis because
consumers’ demand in this quarter was expected to be high.
However, in the second quarter in 2013, the EU market took a serious crisis due to
economic problems. This affected heavily our company, making a lot of product
inventory, and almost no sales in the EU. Net income plunged to -44297.1 USD.
During recovery of the market, our company reduces aftershave’s
price in quarter 3 because of of the demand reduction Millennium Corp. decided to adopt
the strategy “increasing price”.We have decreased the range of $5 for aftershave Zeus in
each area.
ANNUAL REPORT
Millennium Corporation
Page 13
In the end quarter 2013, Millennium Corp. conducted discount strategy for aftershave
product to encourage buying and increase market share, the price of aftershave Zeus was
$169 and $175 per unit in NAFTA and EU respectively.
Posatis Corp. in this quarter kept the price at high-end level for aftershave, so they did not
make up the most of market share. While due to the proper decision, we attained the goal
about market share and NPV.
Marketing Programs
In 2013, we expanded the distribution system in some potential areas such as Houston
(Texas), Philadelphia (Pennsylvania), Phoenix (Arizona), SanDiego (California), Detroit
(Michigan), Denver (Ohio), Lousiville (Kentucky), New Orlean (Louisiana), Miami
(Florida) in US; Ottawa (Ontario - Quebec), Winniepeg (Manitoba), Quebec City
(Quebec) in Canada; Manchester, Liverpool, Marseille, Lyon, Roma, Vernice,
Copenhagen, Marid in EU market. We also had Duty free shop in some International
Airport. In addition, with online store and Catalogue, customers will be scheduled for a
pre-arranged delivery day once or twice a week, depending on the quantity and timeline
of product needed.
In stable development period, our company concentrated on Publicity and Public
Relations by introducing products and firm on the press, posting some news related to
firm on the media, organizing the press conference, drafting the press release such as
Finance Release, Pictorial Release, Video news Release. Moreover, we enhanced the
brand and reputation of the company in social activities such as charity for poor people,
campaign for environment.
ANNUAL REPORT
Millennium Corporation
Page 14
Advertising Expenses
In 2013, customers were aware of the company's image, so Millennium Corp. reduced the
advertising expenditure. Especially, we raised advertising expenditure of all products of
two areas in the fourth quarter. Total costs of advertising in 2013 were about 1,4million
USD, including over $700,000 for quarter 4.
Market Trends
Perfume is just one of the many faces of fashion, and it has its phases and fads, too. There
are some types of perfume which are really being eclipsed, and the trends might surprise
our modern customers.
Millenium manufactures perfume with exclusive quality. We constantly search new
suppliers of organic raw materials for the best quality of our products. Besides, we
negotiate the best purchasing prices to increase margins of goods.
ANNUAL REPORT
Millennium Corporation
Page 15
About the Price: Natural perfuming ingredients are always more expensive than man
made. The modern noses are cued to modern fragrance elements. Since the ingredients in
natural perfume are limited, the things man can come up with are limited and the public
clamors for new new new all the time. Naturals just can't deliver on that score. Finally,
naturals never are that strong smelling. Naturals fade fast and just don't deliver the
novelty which everyone is craving now.
Have a strong attachment to nature will be a very popular trend in perfume the future.
Our perfume manufacturers are more interested in nature in the production process. They
add odorless compounds in perfume recipes to preserve them from infection after one
year or just a few drops of musk are enough to keep odors longer.
Shaving has been a part of the male experience. But even with today’s high-tech razors,
there is a lots of men aftershave. Mens today is ussually difficult to choose the good ones.
The new trends for the global aftershave, in which men with fresh natural scents,
convincing style strong man, masculine, young and liberal... with the woody scent.
So, the current positive trends? Sandalwood, banana, and jasmine are real leaders. Sounds
like India & Pakistan are the trend setters here, and they are. Art follows success. Add a
good dollop of coconut and that is the sexiest way to smell circa 2012.
It is always difficult to predict sales levels, and is even more difficult in a challenging
economic environment. We continue to take steps to reduce our expenses by reducing
employee headcount and advertising expenses, where feasible, as we anticipate launching
newly licensed brands in fiscal year 2012, and are cautiously optimistic that we are
positioned for a profitable fiscal year 2012 with our expected product mix and revised
cost structure. The cost structure requires additional spending for development and
advertising and promotional expenses. In addition, the new launch are with celebrities
(either entertainers or athletes), which require substantial royalty commitments and
whose careers and/or appeal could change drastically, both positively and negatively,
based on a single event. If our new product introductions is unsuccessful, or the appeal of
a celebrity that is tied to any of our fragrances or accessory product brands diminishes, it
could result in a substantial reduction in profitability and operating cash flows.
We also continue developing our new market in Asia. Launched for the most part in
Japan, Singapore, Hong Kong and department stores in another Asia country, fuels the
growth of our industry.
ANNUAL REPORT
Millennium Corporation
Page 16
FINANCIAL STATEMENT
Financial Review
$ $
2012 2013
Sales Revenue 16656000.5 12776552.25
Gross Margin 63.76% 67.08%
Net income 3917237.61 2351976.11
as % of Sales 24% 18%
Earning per share 9.67 7.84
(a) The Common shares in the end of 2012 were 405,000 shares and in the end of
2013 were 300,000 shares.
Sales Revenue and Net Income
The Sales revenue and net income have
significant changes between years. We
can see that sales revenue in 2012 is
higher than in 2013, because in 2013 our
industry in particular and other industries
had to face the crisis in Greece-EU. As a
result, the second quarters of 2013, all
firms in the scent industry were declined
seriously in sales revenue, especially in
EU. The return on sales (ROS ratio) of
our firm was not high, approximately
23.5% in 2012 and 18% in 2013, it
proves that our firm is not get high
earnings rate on a product. We ready use
a large amount of costs to stimulate sales,
which will enable Millennium Corp
sustainable development.
0
2000000
4000000
6000000
8000000
10000000
12000000
14000000
16000000
18000000
2012 2013
Sales Revenue Net income
ANNUAL REPORT
Millennium Corporation
Page 17
14.50%
85.50%
Sale Revenue 2013
$ $
NAFTA EU
Sales Revenue
2012
4152336 12503664.5
2013 4728087 8048465.25
Millennium Corp's main markets are NAFTA area
and Europe, the sales revenue of them is completely different. The market that brought
large revenues to the company is Europe; this is also
the target market that we have aimed from the
beginning. But we also do not under estimate any
markets at all; especially NAFTA is a stable market
and good growth from 24.93% in 2012 increased to
37.01% in 2013. The goals in EU we initially set out
to accomplish. In the following years, we will
embark on developing market in NAFTA and make
it a large market, potentially profitable market
equivalent to EU.
$ $
Aftershave Perfume
Sales Revenue
2012
1754263.308 14901737.19
2013 1852834.907 10923717.34
Our main products are perfume for women and aftershave for men, both products have
brought sales revenue to our firm, and the sales ratio of products is totally different. In
our strategy, we planned to focus in perfume market at the beginning. This ratio was
relatively stable over two years, in which the proportion of Perfume was stood out, in our
24.93%
75.07%
Sales Revenue 2012
NAFTA
EU
37.01%
62.99%
Sales Revenue 2013
10.53%
89.47%
Sales Revenue 2012
Aftershave
Perfume
ANNUAL REPORT
Millennium Corporation
Page 18
oppinion was not due to quality or price. The fact that Perfume's prices are always higher
than Aftershave's, so the reason is that Perfume is a substitute for Aftershave, and the
trend of consumers now prefer the perfume, especially in Europe. But we still not
underestimate the profit of aftershave products, and we are making a plan to stimulate
sales of this product.
NPV is driven by stock price and
dividends.Despite the crisis in 2013,
but in general our NPV steadily
increased over the quarter and
average growth 30, 38% per quarter,
prove that our perfomance is really
stable, so shareholders can rest
assuredy our investment in our firm.
Stock price growth steadily in 2012
and average growth 22, 54% per
quarter and the fourth quarter of
2012 is the highest growth rate with
27, 69% showed the investors
belived in our stock and business,
also demonstrate the perfomance of
our firm was great, but in the second
quarter of 2013 the stock price
declined 10, 96% because of the
crisis mentioned above. In the
fourth quarter of 2013, stock price
began to rise marked a recovery
phase.
Board succession planning
In order to facilitate a smooth Board succession planning over the next years, the Board
of Directors will propose to the Annual General Meeting, two changes to the Articles of
Incorporation, allowing flexible terms of office between one and three years and allowing
to increase the number of Board members from 5 to a maximum of 7. The Board will
propose the election of Prof Henner Carlos for a term of one year. He will then have
0.00
5.00
10.00
15.00
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2012 2013
NPV
0
2
4
6
8
10
12
14
IPO Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Stock Price
ANNUAL REPORT
Millennium Corporation
Page 19
served for ten years as a Board member and will no longer stand for re-election. In
addition, Ms Lilian Huang, a Chinese national, will be proposed as a new member for a
term of three years. Ms Huang is a Board member of Shiseido Corporate.
Consolidated Income Statement
Consolidated Income Statement of 2012
$ $ $ $
Q1 Q2 Q3 Q4
Sales Revenue 4660653 2245948 2245296.5 7504103
Less: Processing Costs 7016 355 217 4043
Net Sales 4653637 2245593 2245079.5 7500060
Cost of Goods Sold 1701370 836215 814960 2679810
Gross Margin 2952267 1409378 1430119.5 4820250
Gross Margin % 63.44% 62.76% 63.70% 64.27%
Expenses
Advertising 281280 218280 109270 444000
Quality Control 184452 158100 71100 237735
Bad Debts 10423.27 8534.67 5692.98 26402.11
Product Improvement 0 0 0 0
Engineering Studies 0 0 0 0
Sales Expense 101160 65972.5 81135.6 352716
Administrative Expense 50000 50000 50000 50000
Invt./Shipping Charges 7864.8 8202.9 2256.3 247.8
Maintenance 0 0 0 0
Depreciation 0 0 0 0
Interest Expense 277518.47 32682.74 32673.6 32664.92
Factor Cost 0 0 0 0
Miscellaneous Expense 111000 3000 9000 18000
Total Operating Expenses 1023698.54 544772.81 361128.48 1161765.83
Income Before Taxes 1928568.5 864605.25 1068991.02 3658484.25
Income Taxes 924087.88 413385.50 511490.66 1754447
Net Income 1004480.63 451219.75 557500.36 1904036.87
ANNUAL REPORT
Millennium Corporation
Page 20
Consolidated Income Statement of 2013
$ $ $ $
Q1 Q2 Q3 Q4
Sales Revenue 3837947.5 615465.75 1716224 6606915
Less: Processing Costs 1972 716 701 5861
Net Sales 3835975.5 614749.75 1715523 6601054
Cost of Goods Sold 1337390 207874.75 555439.38 2102361
Gross Margin 2498585.5 406875 1160083.62 4498693
Gross Margin % 65.14% 66.19% 67.62% 68.15%
Expenses
Advertising 250790 224705 163868 789112
Quality Control 156415 108095 116633 656132
Bad Debts 10321.63 2494.8 7733.68 31839.18
Product Improvement 0 0 0 0
Engineering Studies 0 0 0 0
Sales Expense 253444 79869.5 147898 622692
Administrative Expense 50000 50000 50000 50000
Invt./Shipping Charges 3175.8 6123.6 7918.6 5114.1
Maintenance 0 0 0 0
Depreciation 0 0 0 0
Interest Expense 17656.68 17648.84 17641.4 17634.33
Factor Cost 0 0 0 42500
Miscellaneous Expense 0 0 15000 75000
Total Operating Expenses 741803.11 488936.74 526692.68 2290023.61
Income Before Taxes 1756782.39 (82061.74) 633391 2208669
Income Taxes 841630.55 (37764.64) 302402.65 1058536.31
Net Income 915151.84 (44297.10) 330988.29 1150133.08
ANNUAL REPORT
Millennium Corporation
Page 21
Consolidated Balance Sheet
Consolidated Balance Sheet of 2012
$ $ $ $
Q1 Q2 Q3 Q4
Assets
Cash 970711.55 2346687 3314857 2752331
Account Receivable 1863694.25 896355.38 898938 2988934
Marketable Securities 0 0 0 0
Inventories 1008920 1051685 289225 33040
Net Plant 0 0 0 0
Total Assets 3843326 4294728 4503020 5774305
Liabilities and Equity
Accounts Payable 17500 17500 17500 17500
Special Loan 0 0 0 0
Short Term Loan 0 0 0 0
Term Loan 500000 500000 500000 500000
Bonds 700000 700000 700000 700000
Total Liabilities 1217500 1217500 1217500 1217500
Common Stock 500000 500000 450000 405000
Other Paid In 1125000 1125000 1012153 910608.13
Unmort. Disc. (3654.78) (3472.04) (3298) (3133.51)
Retained Earnings 1004480.75 1455700 1826665 3244330
Total Equity 2625825.97 3077228 3285520 4556805
Total Liability & Equity 3843326 4294728 4503020 5774305
ANNUAL REPORT
Millennium Corporation
Page 22
Consolidated Balance Sheet of 2013
$ $ $ $
Q1 Q2 Q3 Q4
Assets
Cash 3472055.75 3436743.5 2927339.25 1978367.5
Account Receivable 1536005.5 245684.83 684999.69 1644199.5
Marketable Securities 0 0 0 0
Inventories 406010 733215.25 194785.88 584725.75
Net Plant 0 0 0 0
Total Assets 5414071 4415644 3807025 4207293
Liabilities and Equity
Accounts Payable 17500 17500 17500 17500
Special Loan 0 0 0 0
Short Term Loan 0 0 0 0
Term Loan 0 0 0 0
Bonds 700000 700000 700000 700000
Total Liabilities 717500 717500 717500 717500
Common Stock 364500 328050 300000 300000
Other Paid In 819234.13 737013.25 673753 673753
Unmort. Disc. (2976.84) (2828.00) (2687) (2552.27)
Retained Earnings 3515813.25 2635908.5 2118458.75 2518592
Total Equity 4696570.54 3698144 3089525 3489793
Total Liability & Equity 5414071 4415644 3807025 4207293
ANNUAL REPORT
Millennium Corporation
Page 23
Consolidated Cash Flow
Consolidated Cash Flow of 2012 $
Q1 Q2 Q3 Q4
Beginning Cash Balance 10000 91731.5 2294187 891232
Cash Inflows
Net Cash Sales 2789942.75 1349237.63 1346141.88 4511126
Investment Income 0 0 0 0
Income from Subsidiary 0 0 0 0
Collection of Receivables 0 1863694 896355.38 898937.63
Receivables Factored 0 0 0 0
New Special Loan 0 0 0 0
New Short Term Loan 0 0 0 0
Change in Term Loan 500000 0 0 0
New Bond Less Discount 696152.88 0 0 0
New Stock Issue 1625000 0 0 0
Cash Available for Operations 5621095.63 3304663.13 4536684.26 6301295.63
Cash Dispursements
Bad Debts Expense 10,423 8,534.67 5,693 26402.11
Advertising Expense 281280 218280 109270 444000
Quality Control Expense 184452 158100 71100 237735
Sales Expense 101160 65972.5 81135.6 352716
Administrative Expense *.65 32500 32500 32500 32500
Inventory and Shipping Costs 7864.8 8202.9 2256.3 247.8
Maintenance Expense 0 0 0 0
Interest Expense 277326.13 32500 32500 32500
Factoring Expense 0 0 0 0
Miscellaneous Expense 111000 3000 9000 18000
Income Tax 924087.88 413385.50 511490.66 1754447
Beginning Accounts Payable 0 17500 17500 17500
Beginning Short Term Loan 0 0 0 0
Beginning Special Loan 2720290 0 0 0
Prepay Bonds 0 0 0 0
Repurchase Common Shares 0 0 349500 430200
Cash Dividends Paid 0 0 0 202500
Total Cash Dispursements 4650384.08 957975.57 1221945.54 3548748.29
Computed Ending Cash Bal. 970711.55 2346687.56 3314738.72 2752547.34
Quarterly Stmt Cash Bal. 970711.55 2346687 3314857 2752331
Computed minus Actual Bal. 0 0.56 -118.28 216.34
ANNUAL REPORT
Millennium Corporation
Page 24
Consolidated Cash Flow of 2013 $
Q1 Q2 Q3 Q4
Beginning Cash Balance 1041971 2936976 3419734 434939
Cash Inflows
Net Cash Sales 2299970 369064.94 1030523.31 3956854.5
Investment Income 0 0 0 0
Income from Subsidiary 0 0 0 0
Collection of Receivables 2988934 1536006 245684.8 684999.69
Receivables Factored 0 0 0 1000000
New Special Loan 0 0 0 0
New Short Term Loan 0 0 0 0
Change in Term Loan (500000.00) 0 0 0
New Bond Less Discount 0 0 0 0
New Stock Issue 0 0 0 0
Cash Available for Operations 5830875 4842047 4695942 6076793
Cash Dispursements
Bad Debts Expense 10322 2495 7734 31839
Advertising Expense 250790 224705 163868 789112
Quality Control Expense 156415 108095 116633 656132
Sales Expense 253444 79869.5 147898 622692
Administrative Expense *.65 32500 32500 32500 32500
Inventory and Shipping Costs 3175.8 6123.6 7918.6 5114.1
Maintenance Expense 0 0 0 0
Interest Expense 17500 17500 17500 17500
Factoring Expense 0 0 0 42500
Miscellaneous Expense 0 0 15000 75000
Income Tax 841630.55 (37764.64) 302402.65 1058536.31
Beginning Accounts Payable 17500 17500 17500 17500
Beginning Short Term Loan 0 0 0 0
Beginning Special Loan 0 0 0 0
Prepay Bonds 0 0 0 0
Repurchase Common Shares 411075 462186 339685.5 0
Cash Dividends Paid 364500 492075 600000 750000
Total Cash Dispursements 2358852 1405284.26 1768639.43 4098425.6
Computed Ending Cash Bal. 3472023 3436762.68 2927302.68 1978367.6
Quarterly Stmt Cash Bal. 3472055.75 3436743.5 2927239.25 1978367.5
Computed minus Actual Bal. -32.73 19.18 63.43 0.10
ANNUAL REPORT
Millennium Corporation
Page 25
Notes to the consolidated financial statements
Consolidated Income Statement
Sales Revenue and Net Income
This is two important accounts in the consolidated income statement and they show the
performance of our firm. If considered separately for each year, as we analyzed above,
second and third quarter are two difficult quarters in sales, so the sales revenue and net
income is the lowest, especially when the crisis took place in Greece, our firm has been
affected quite seriously, net income was -44297$. At present we are in the recovery
phase, as evidenced by sales revenue and net income in the 4th quarter of 2013 are
6606915$ and 1150133$. The 4th quarter of 2012 is the quarter with the highest sales
revenue and net income, 7504103$ and 1904037$. The Sales Revenue and Net Income in
2012 are higher than 2013 for each quarter, indicating the competitive environment is
increasingly fiercely, and customers' demand increased strongly, so we had creat a new
development plan for our firm for the years after.
Less: Progressing Cost
This cost presents the reprogressing
product and turn them back in
inventory. This cost helps us to control
the payment for quality control to make
our products better.
Less progressing proportional to market
demand, which is low in the second and
the third quarter and high in the first and
the fourth quarter. Because customers' s
demand inscreased highly, so even
though our firm had increased the
quality control cost but still increased cost less progressing, so we will adjust the quality
control cost increases strongly, further aims to reduce this account to zero.
Advertising and Quality Control
These two types of costs kept increasing year by year shows that our firm always
concentrates in stimulating sales through Pull-strategy. But we also use Push-strategy by
increasing commission and base salary of sales reps (presented by Sales Expense). Both
0 2000 4000 6000 8000
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
20
122
013
ANNUAL REPORT
Millennium Corporation
Page 26
0
100000
200000
300000
400000
500000
600000
700000
Q1 Q2 Q3 Q4
sales expense 2012 sales expense 2013
strategies we use are very effective, the evidence although we faced the crisis in the EU
but we have recovered very quickly and now after only two quarters our stoch price, sales
revenue, net income... are approximately the highest in the past and keep increasing,
promises to increase dramatically over the past. Those charts below are the changes in
advertising cost, quality control cost and sales expense.
0
100000
200000
300000
400000
500000
600000
700000
Q1 Q2 Q3 Q4
quality control 2012 quality control 2013
0
100000
200000
300000
400000
500000
600000
700000
800000
Q1 Q2 Q3 Q4
Advertising 2012 Advertising 2013
ANNUAL REPORT
Millennium Corporation
Page 27
Bad Debt
This account can be viewed as a risk,
when customers lose their ability to pay,
our firm is affected. The rate of bad debts
of our firm is stable and is not
disproportionately large. The lowest was
in the first quarter of 2012 with 0.22% and
the highest is in the fourth quarter of 2013
with 0.48%.
Interest Expense
This was very low, since the first
quarter of 2013 the interest expense is
17500 per quarter; this is the bond
interest, indicating a very strong
financial capacity. When we first
started the business we had to borrow
a special loan, so interest expense was
very high in the first quarter, but only
after a quarter of operation, we solved
this special loan, and not to borrow
more in the next quarter. In 2012, our dept structure contained special loan, long term
dept and bonds. But after a year, we just had to pay bonds interest, it proved that our
business was really great and we could pay back after a year of operation. We now retain
the bonds simply because of leverage and bonds have the lowest interest rate in the dept
tools.
Receivables Factored and Factor Cost
These are based on our risk management program. By paying factor cost, we may soon
receive money from receivable account for the next quarter, which increases an amount
of cash-in-hand to be able to manage those changes arise. Our firm's cash-in-hand is
always available in five beginning quarters, so we do not use them, But after facing crisis
in Eu, and preparing for fourth quarter - the most favorable sales quarter, we planned to
apply them. And the factor cost is 4, 25% of receivable factor.
0.00%
0.10%
0.20%
0.30%
0.40%
0.50%
0.60%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2012 2013
0
50000
100000
150000
200000
250000
300000
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2012 2013
ANNUAL REPORT
Millennium Corporation
Page 28
Miscellaneous Expense
This is our hiring and training cost. Based on the Human Resource's plan, we set out a
training program and then measured cost for this. This figure is quite low but it does not
mean we do not focus on training staff, but because our employees have confidence in
our firm so we do not have to spend too much money on hiring new employees, in the
fourth quarter of 2013 we spent a huge amount for training for new knowledge in the new
environment.
Consolidated Balance Sheet
Cash
This is the amount of cash in hand,
used to prepare next quarter
operation. In addition to costs for
business, we also spent a great
amount of cash in hand for
repurchasing shares, dividends but
our cash was still high that
demonstrate strong financial
performance of our firm. The cash of
our firm tend to rise in the three
beginning quarters and declined in the
last quarter, because in the 4th
quarter we usually increase the costs for business because
this is the hot sales quarter of year as well as the time for increasing massively our
spending for the dividends.
Inventories
Our inventories are expected in addition
to fully satisfy customer's demand, it use
to control product prices. Usually
Inventories are higher in the second
quarter becourse this is the most
difficult in years, and in 2013 this is the
time of the crisis in Greece. And now
we have a very good estimate of
customer demand, so the amount of
0
500000
1000000
1500000
2000000
2500000
3000000
3500000
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2012 2013
0
500000
1000000
1500000
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q42012
2013
ANNUAL REPORT
Millennium Corporation
Page 29
inventories in the last quarter was maintained at a low number, in 4th
quarter of 2013
inventories of ours only $584725.75.
Account receivable
Approximately 40% of Sales revenue that is deferred accounts of customers, shall
comply with firm policy, we use it to stimulate sales, which customers can be proactive
in the distribution of funds. However, it also has risks, and is expressed through Bad
Dept; we always try to maintain it as low as possible.
Account Payable
This is the amount of capital that companies can take up with the interest rate by zero and
equivalent to 25% administrative costs of a quarter.
Since 2013, We does not use financing in the long term dept, our firm's capital structure
is simple, only including bonds and equity, this simplifies the management of capital
budgets, ensure the solvency of our company. When the company has no debt, will be
much easier in the mobilization dept when require, but our firm retains this structure even
though we have just dealed with the crisis, demonstrating our firm's capacity. We issued
700,000 bonds with low interest rates 1.75%, as mentioned above is the lowest interest
rates in debt instruments, so we maintain the number of bonds.
Number of shares of our firm was on a decline, because we had run shares repurchase
program since the 3rd of 2012, to maximize the value of shareholders investment. And
we stopped at 300,000 shares, since that is the best number. If more than 300,000, the
profit shareholders will be lower, but less than 300,000, the shares will become less
attractive because the number is too low, that is what we concern. And now with 300000
shares issued, we easily increased the EPS and of course the dividends. We promise in
next year, our dividends will be the highest in the stock market due to our strong financial
capability.
Retained earnings
This is the account where gains and losses
are recorded to the Stockholder. Retained
earnings of our firm was always positive, so
shareholders can assured that we always have
the ability to pay high dividends. Especially
whether the crisis in Greece, in addition to 0
500000
1000000
1500000
2000000
2500000
3000000
3500000
4000000
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2012 2013
ANNUAL REPORT
Millennium Corporation
Page 30
we mentioned above, we ran stock repurchase program and increased dividend massively
over the quarter, but retained earnings was still very high.
Consolidated Cash Flow
Beginning Cash Balance
This is calculated by the last quarterly statement cash balance less the cost of imported
goods the quarter after, through quarters, this number is always positive, prove that our
firm's financial calculations were correct, so our firm hasn't had special loan since the
second quarter of 2012.
Net Cash Sales
Approximately 60% of that quarter sales revenue. This is the amount customers pay first;
the rest is recorded in account receivable the balance sheet. The birth of this clause has
been mentioned above.
Collect of Receivable
As mentioned above this is the customer's debt, and it is collected at the beginning of our
next quarter. Similarly, beginning Account Payable is the money paid for the occupancy
of Administrative Expense from the previous quarter.
Beginning Special Loan
This is the special dept that is applied when our firm does not have enough money to
operate; it has the highest interest rate, so we try hard to avoid it. Liked we mentiones
above, when we first started the business we had to borrow this kind of dept with
$2720290. But after a quarter of operation, we could pay back this dept. After that we
succeed in avoiding special loan by using long term dept and bonds. Now we only have
to repay bonds prove that our financial capability is high.
Repurchase Common Shares
Like we mentioned above, since the third quarter of 2012, we had run stock repurchase
program, this account present how much we have to pay to repurchase stock. And the
repurchase stock is 10% of the standout stock.
ANNUAL REPORT
Millennium Corporation
Page 31
MILLENNIUM BOARD OF DIRECTORS
Pham Thu Huong
Chairman of the Board and
Chief Executive Officer
Huynh Thi Nhat Phuong
Senior Vice President and
Chief Financial Officer
Nguyen Hoa Hung
Senior Vice President and
Chief Marketing Officer
Tran Thuy Nhat Hy
Board Member and
Sales Director
Tran Dang Thanh Quyen
Board Member and
HR Director
ANNUAL REPORT
Millennium Corporation
Page 32
Millennium Board of Management
Pham Thu Huong
Chief Executive Officer
Tran Dang Thanh Quyen
HR Director
Huynh Thi Nhat
Phuong
Chief Financial Officer
Vu Huy Quoc Cuong
Vice Financial Director
Nguyen Hoa Hung
Chief Marketing
Officer
Tran Thi Thu Thuy
Vice Marketing Director
Tran Thi Mai Thao
Vice Marketing
Director
Luong Van Quang
Vice Marketing Director
Tran Thuy Nhat Hy
Sales Director
Nguyen Pham Minh Tam
Vice Sales Director
