ACESSSMENT

KBC
In 2012, the affecting of the world economic crisis in 2011 accompany by high
inflation rate, and quiet stock market make the operation of business fall into
difficult situation. Especially, real estate market in 2012 changed dramatically
and this affected significantly to many companies, including KBC and FLC. This
would be shown through their financial statements and ratios.
With the difficult situations of the real estate in 2012, KBC face many difficulties
while revenue declined severely affected by the instability of the economy led to a
sharp decline of FDI inflows besides freezing the real estate market along with
higher interest expenses made companies faced considerable loss of up to 483.9
billion. KBC closed the year 2012 with disappointing business results. Net revenue
posted only VND281.37 billion (-55.6% yoy), causing a huge loss before tax of
VND486.65billion and net loss of

VND435.64 billion accordingly. The

inventories of KBC reached over 7,000 billion, mainly invested in industrial zone
projects. Two main reasons could be cited for KBCs poor performance: (1) FDI
deceleration amid global and domestic economic downturn negatively affected the
companys core business and (2) its diverse portfolio of investments distracted
KBC from its core, consumed a lot of its resources, and could not bring back
positive returns as the overall market turned worse.
In 2013, real estate market was quite quiet. Many companies went bankruptcy
while others had to restructure about scale, organization. Many organization cut
down money from many projects. Money policy was loosened so capital for real
estate market reduced. At the beginning of 2013, inventories were numerous. Many
projects were slow. However, at the end of 2013, market had some significant
changes. There would be some good point for business. KBCs inventories were
too high. The ability of paying debts was too weak. In 2012 2013, banks limited

KBC to borrow money. They paid debts accumulatively but they did not complete
through 3 years. However, in 2013, they received supporting investment from
Trang Due industrial area in Haiphong and signed big contracts with LG
corporations. Therefore, they increased money dramatically.
In 2014, net sales revenue reaches 1,069 billion, equivalent to 2013, but is the
highest level from 2006. The main reason is KBC had signed many major contracts
in that year, including the contract signed with the Group LG rent another 40
hectares in Trang Due Industrial Park. This is the biggest FDI project so far which
had been invested in Hai Phong with total investment of 1.5 billion dollars. The
total estimated value of this contract is about 650 billion. Also in 2014, the costs as
cost of goods sold, operating expenses and interest expenses were cut pretty much,
that helped operating profit strongly increased. Also, thanks to 103.6 billion
financial profit from the transfer of real estate Nam Viet JSC and Song Tranh
Hydropower JSC 4, the profit after tax for 2014 reached 312 billion, surged
295.8% compared to 2013.
FLC
To FLC, it tended to invest. Cash flow used to investing activities too much. In
2012, its trend was merge and acquisition. At the same time, they broaden business
to other industries and opened small companies. This was evaluated that its
traditional business had problems. In 2013, it distributed shares for shareholders
with 1:1 rate to increase authorized capital. In 2014, cash flow came mainly from
shareholders and loan activities. The main business was weak and it expensed
much for main projects.
increased dramatically.

In 2013 2014, FLC issued more stocks so profit

KBC
It should maintain activities like 2014. It is good for company. However, it will
have difficulties because of the real estate market changes. It should cut down
investment for other industries which are not related to main business. It should
restructure and invest to industrial area to attract foreign investors. Otherwise, it
should adjust to have low factory cost.
FLC
It should adjust cash flow which is not too much for financial investment. It should
implement projects with high speed and issue stock to grow up authorized capital.
It should ensure financial safety and have a clearly financial policy. It should
mobilize cash flow from other activities.