INITIAL PUBLIC OFFERING · 2016-07-14 · Binh Duong Water Supply Sewerage – Environment Co., Ltd Prospectus BINH DUONG WATER SUPPLY SEWERAGE – ENVIRONMENT CO., LTD (Business

Binh Duong Water Supply Sewerage – Environment Co., Ltd Prospectus

PROSPECTUS INITIAL PUBLIC OFFERING

BINH DUONG WATER SUPPLY SEWERAGE – ENVIRONMENT CO., LTD

Auctioneer:

HO CHI MINH STOCK EXCHANGE

Address : 16 Vo Van Kiet Street, Dist,1, Ho Chi Minh City

Phone : (84-8) 3821 7713 Fax: (84-8) 3821 7452

Issuer:


Address : 11 Ngo Van Tri Street, Phu Loi Ward, Thu Dau Mot City, Binh Duong

Phone : (0650) 3838 333 - 389 77 66 Fax: (0650) 3827 738

Financial advisor:

VIET CAPITAL SECURITIES JOINT STOCK COMPANY

Address : Bitexco Financial Tower, 15th Floor, 2 Hai Trieu Street, District 1, HCMC

Phone: : (84-8) 3914 3588 Fax: (84-8) 3914 3209

Binh Duong Water Supply Sewerage – Environment Co., Ltd Prospectus


(Business registration certificate No. 3700145694 granted by Binh Duong Department of

Planning and Investment dated 07/2/2006 and 11th amendment dated 28/5/2014)

INITIAL PUBLIC OFFERING

Issuer : Binh Duong Water Supply Sewerage – Environment Co., Ltd

Par value : 10,000 VND/share

Minimum offering

price

: 10,200 VND/share

Total offering shares

through IPO

: 17.634.200 shares

Required deposits : 10% of total registered shares x minimum offering price

Target investors : Institutional and Individual investors regulated in the Auction

Regulations issued by HOSE

Auctioneer : Ho Chi Minh Stock Exchange

Auction date : Regulated in the Auction Regulations issued by HOSE.

Venue : Ho Chi Minh Stock Exchange

Address: 16 Vo Van Kiet, District 1, Ho Chi Minh City

Prospectus – Initial Public Offering - Binh Duong Water Supply Sewerage – Environment Co., Ltd

1

TABLE OF CONTENTS

PART I: LEGAL BASIS 3

PART II: INFORMATION ABOUT RELATED COMPANIES CONDUCTING THE INITIAL PUBLIC OFFERING (IPO) 5

1. Issuer 5

2. Auctioneer 5

3. Financial advisor 5

PART III: GLOSSARY TERMS 6

PART IV: OVERVIEW OF THE COMPANY PRIOR TO EQUITIZATION 7

1. Introduction 7

1.1. Business lines 7

1.2. The process of formation and development 11

1.3. Rewards & Achievements 13

1.4. Major products and services: 13

1.5. Management and organization structure 13

1.6. Employment 15

1.7. Enterprise value at the date of equitization 15

1.8. Land use rights status 18

1.9. List of parent company, subsidiaries, and affiliates of Issuer 19

2. Business operation of the Company over the course of 2012 – 2015 (4 years prior the equitization) 19

3. Financial situation and business performance in 04 years prior to equitization 22

3.1. Financial indicators and business results throughout the years 22

3.2. Factors influencing the business operation results of the Company 23

4. The Company’s position in the industry 24

4.1. Position of the Company in clean water supply industry 24

4.2. Outlook of clean water supply industry in Binh Duong province 24

4.3. The appropriateness of the Company’s development strategy with industry orientation, State’s policy and global trend 25

PART V: INFORMATION OF THE COMPANY AFTER EQUITISATION 25

1. Introduction 25

1.1. General information 25

1.2. Legal structure 25

1.3. Business activities 26

1.4. Organizational structure 26

2. Investment Projects 29

3. Business plan post-equitization: 30

4. Chartered capital and chartered capital structure 33

4.1. Chartered capital 33

4.2. Chartered capital structure 33


2

4.3. Types of share 34

PART VI: THE OFFERING 34

1. The offering 34

1.1. Offering to employees 34

1.2. Offering to strategic investor: 36

1.3. Investors participating in the auction process: 36

2. Use of proceeds 36

2.1. Management and use of the proceeds 36

3. Expected Risks 37

3.1. Economic risks 37

3.2. Legal risk 37

3.3. Risks from spcialized sector 37

3.4. Offering risk 38

3.5. Exchange rate risk 38

3.6. Other risk 38

PART VII: CONCLUSION 38

PART VIII: RESPONSIBLE PERSONS FOR THE CONTENTS OF THE PROSPECTUS 38


3

PART I: LEGAL BASIS

Decree 59/2011/ND-CP dated 18 July 2011 issued by the Government regarding the transformation of

wholly state-owned enterprises into joint stock companies (Decree 59);

Decree 189/2013/ND-CP dated 20 November 2013 issued by the Government regarding the amendment

to some articles of Decree 59 (Decree 189);

Decree 116/2015/ND-CP dated 11 November 2015 regarding the amendments to to some articles of

Decree 59/2011/NĐ-CP dated 18 July 2011 issued by the Government regarding the transformation of

wholly state-owned enterprises into joint stock companies;

United document 02/VBHN-BTC dated 12 January 2016 of Ministry of Finance regarding transformation

of wholly state-owned enterprises into joint stock companies;

Circular 127/2014/TT-BTC dated 5 September 2014 issued by Ministry of Finance guiding financial

treatment and enterprise valuation regarding the transformation of wholly state-owned enterprises into

joint stock companies;

Circular 196/2011/TT-BTC dated 26 December 2011 issued by Ministry of Finance guiding auction, initial

public offering, management and use of proceeds from the transformation of wholly state-owned

enterprises into joint stock companies;

Decision 4295/QĐ-UBND dated 24 December 2014 of Person’s committee of Binh Duong province

regarding the equitization of Binh Duong Water Supply Sewerage – Environment Co., Ltd;

Decision 143/QĐ-UBND dated 20 January 2015 of Person’s committee of Binh Duong province regarding

the establishment of the Equitization Steering Committee of Binh Duong Water Supply Sewerage –

Environment Co., Ltd, a subsidiary of Investment And Industrial Development Corporation (Becamex

IDC);

Decision 01/QĐ-BCĐ dated 26 Febuary 2015 of the Equitization Steering Committee to the

establishment of the Assistant Team for the the Equitization Steering Committee of Binh Duong Water

Supply Sewerage – Environment Co., Ltd;

Decision 3077/QĐ-UBND dated 23 November 2015 of Person’s committee of Binh Duong province

regarding the approval of land use plan of Binh Duong Water Supply Sewerage – Environment Co., Ltd;

Decision 248/QĐ-UBND dated 02 Febuary 2016 of Person’s committee of Binh Duong province

regarding the approval the criteria for selecting strategic investors and on a plan on sale and the number

of shares to be sold to strategic investors for the equitization of Binh Duong Water Supply Sewerage –

Environment Co., Ltd;

Minutes of valuation of Binh Duong Water Supply Sewerage – Environment Co., Ltd as at 31 December

2014 No, Vc:16/05/07/DN dated 18 May 2016 issued by SIVC;

Decision 1360/QĐ-UBND dated 03 June 2016 of Person’s committee of Binh Duong province regarding

the announcement of enterprise value of Binh Duong Water Supply Sewerage – Environment Co., Ltd;

Official letter 2121/UBND-VX dated 27 June 2016 of Person’s committee of Binh Duong province

regarding the approval of the labor plan of Binh Duong Water Supply Sewerage – Environment Co., Ltd;


4

Decision 1612/QĐ-UBND dated 28 June 2016 of Person’s committee of Binh Duong province regarding

adjustments to some points of Decision 3077/QĐ-UBND;

Official letter 2269/UBND-KTTH dated 30 June 2016 Person’s committee of Binh Duong province

regarding the use of enterprise value as announced following Decision 1360/QĐ-UBND dated 03 June

2016 to propose the Initial public offerring plan;

Decision 1727/QĐ-UBND dated 01 July 2016 regarding the approval of the equitization plan of Binh

Duong Water Supply Sewerage – Environment Co., Ltd (Biwase).


5

PART II: INFORMATION ABOUT RELATED COMPANIES CONDUCTING THE

INITIAL PUBLIC OFFERING (IPO)

1. Issuer


Address : 11 Ngo Van Tri Street, Phu Loi Ward, Thu Dau Mot City, Binh Duong Province

Phone : (0650) 3838 333 - 389 77 66 Fax: (0650) 3827 738

Website : .www.biwase.com.vn

2. Auctioneer

HO CHI MINH STOCK EXCHANGE

Address : 16 Vo Van Kiet Street, Dist,1, Ho Chi Minh City

Phone : (84-8) 3821 7713 Fax: (84-8) 3821 7452

Website : www.hsx.vn

3. Financial advisor

VIET CAPITAL SECURITIES JOINT STOCK COMPANY

Address : Bitexco Financial Tower, 15th Floor, 2 Hai Trieu Street, District 1, HCMC

Phone: : (84-8) 3914 3588 Fax: (84-8) 3914 3209

Website : www.vcsc.com.vn


6

PART III: GLOSSARY TERMS

Shares Share of Binh Duong Water Supply Sewerage – Environment Co., Ltd

(Biwase or “the Company”)

Ltd Limited

JSC Joint stock company

HOSE Ho Chi Minh Stock Exchange

FS Financial Statement

BIWASE Binh Duong Water Supply Sewerage and Environment Co., Ltd

Becamex IDC Investment and Industrial Development Corporation (Becamex IDC)


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PART IV: OVERVIEW OF THE COMPANY PRIOR TO EQUITIZATION

1. Introduction

Binh Duong Water Supply Sewerage – Environment was founded in 1975. It has experienced a journey

of more than 40 years of investment and development, from difficult early days with an initial capacity of

5,000m3/day, up to now, with its water supply capacity exceeding 200,000 m3/day - an increase of 40

times; a 15 times increase in its labor force; and serving 100% of urban centers in the province and more

than 25 suburban communes. The Company meets the needs of all manufacturers in the province with

the most competitive prices in the region.

General information:

Vietnamese name: CÔNG TY TNHH MTV CẤP THOÁT NƯỚC – MÔI TRƯỜNG BÌNH DƯƠNG

English name : BINH DUONG WATER SUPPLY SEWERAGE – ENVIRONMENT CO., LTD

Abbreviation name: BIWASE

Headquarter : No.11 – Ngo Van Tri Street – Phu Loi ward – Thu Dau Mot City – Binh Duong

Phone : (0650) 3838 333 - 389 77 66

Fax : (0650) 3827 738

Tax code : 3700145694

Website : www.biwase.com.vn

Email : [email protected]

Logo :

1.1. Business lines

According to Business Registration Certificate No 3700145694 dated 7 February 2006 issued by

Department of Planning and Investment of Binh Duong Province and eleventh amendment dated 28 May

2014, The Company’s main business activities are as follows:

No, Sector Code

1. Installation of water supply and drainage, heater and air conditioning

Details: Construction and repair of water supply and drainage

4322

(Main)

2.

Architectural engineering and related technical consultancy

Details:

- Architectural design of civil and industrial works;

7110


8

No, Sector Code

- Structural design of civil and industrial works;

- Design and construction of transport infrastructure (bridges, roads);

- Design and construction of urban infrastructure;

- Design of small and medium-sized irrigation works;

- Design of water supply and drainage;

- Electrical design of civil and industrial works;

- Supervision of construction activity and completion of civil and industrial works;

- Supervision of construction activity and completion of water supply and drainage;

- Preparation of estimated investment cost projects;

- Provision of services for underground water exploration, survey and exploitation,

3.

Other unclassified retail sales

Details: Retail sales of material, equipment, tools and provision of services for water supply

segment,

4799

4. Non-hazardous waste collection 3811

5. Other road passenger transport 4932

6. Waste recycling 3830

7. Hazardous waste collection 3812

8. Handling and disposal of non-hazardous waste 3821

9. Handling and disposal of hazardous waste 3822

10. Production of non-alcoholic drinks and mineral water 1104

11. Restaurant and mobile catering services 5610

12. Mechanical processing; metal coatings and treatment

Details: mechanical processing (except plating and coating) 2592

13. Housing construction 4100

14. Road passenger transport in urban & suburban area (except buses) 4931

15. Wholesale of material, equipment installed in construction works (except sand) 4663

16.

Exploitation, treatment and supply of water

Details: Investment, exploitation, treatment and supply of clean water for consumption and

production

3600

17. Drainage and wastewater treatment

Details: Investment and management of sewer system 3700


9

No, Sector Code

18.

Construction of public works

Details:

- Management, exploitation and provision of services for irrigation works

- Construction and repair of irrigation works, waste treatment works

4220

19. Motor vehicles for rent

Details: Car for rent 7710

20. Trading of real estate, land-use right and land ownership right 6810

21. Production and distribution of steam, hot water, air conditioning and ice

Details: Ice production 3530

22. Growing of vegetables, beans, flowers and ornamental plants

Details: Growing of flowers and ornamental plants 0118

23. Construction of railway and road works

Details: Construction of road works 4210

24.

Unclassified other specialized wholesale

Details:

- Wholesale of scrap, scrap metal, non-metal (not at head office, except trading all kinds

of imported scrap which may pollute the environment)

- Wholesale of material relating to water segment

- Wholesale of wet paper towel, labor protection items, hygiene products

4669

25.

Management consulting

Details:

- Management consulting for construction investment project

- Advice on bidding strategies

- Advice on design verification, cost estimation and construction investment project

- Advice on design evaluation, cost estimation and construction investment project

7020

26. Installation of other construction systems 4329

27. Construction of other civil works 4290

28. Other specialized construction activities 4390

29. Unclassified professional activities, science and technology

Details: Environmental consulting 7490

30. Lease of machinery, equipment and tangible items 7730


10

No, Sector Code

31.

Vocational education

(Only allowable when such education complies with all of the requirements of vocational

education)

8532

32.

Unclassified education

Details: Non-degree education program at training centers (only allowable when such

training centers comply with all of the requirements of the law on education)

8559

33. Testing and technical analysis

Details: Analytical services, water and environmental quality assessment 7120

34. Production of concrete, cement and plaster

Details: Production of building material 2395

35. Supply of temporary workers

(Only allowable after being licensed to job placement, except labor export) 7820

36. Supply and management of labor resources

(Only allowable after being licensed to job placement, except labor export) 7830

37. Educational support services 8560

38. Road freight transport 4933

39. Installation of electrical systems

Details: Construction of medium & low voltage, 35kV electrical substation, Street lighting 4321

40.

Pollution treatment and waste management activities

Details: Provision of services relating to sewer dredging, septic tanks, cesspool cleaning

and street cleaning

3900

41. Wholesale of agricultural and forestry material (except wood and bamboo) and live animals

Details: Wholesale of flowers and plants 4620

42. Production of fertilizers and nitrogen compounds

Details : Production of compost fertiliser 2012

43. Wholesale of other household appliances

Details: Wholesale of stationery 4649

44. Retail sales of books, newspapers, magazine and stationery in specialized stores

Details: Retail sales of stationery 4761

45.

Retail sales of other goods either at mobile shops or markets

Details: Retail sales of flowers, bonsai, worship, joss paper and other foods for religious

purpose, goods used for cleaning, sweeping (brooms, brushes, mops, etc.)

4789


11

No, Sector Code

46. Retail sales of other goods in specialized stores

Details: Retail sales of fresh flowers, plants, seeds, fertilizers, pet and pet food 4773

47. Wholesale of food

Wholesale of fresh, frozen and processed fruit, juice 4632

48. Retail sales of food in specialized stores

Retail sales of vegetables, fresh, frozen/preserved or processed fruit 4722

49.

Retail sales of beverage in specialized stores

Details: Retail sales of alcoholic drinks (beer, wine) and non-alcoholic drinks (coke, orange

juice, lemon juice; other fruit juices, soft drinks, mineral water, purified bottled water

4723

50.

Retail sales of drugs, medical devices, cosmetics and hygiene products in specialized

stores

Details: Retail sales of shampoo, shower gel, fragrant tissues

4772

Source: Biwase

1.2. The process of formation and development

1.2.1. 1975 – 1991 period:

Before 1975: formerly called "Binh Duong Water Supply Center" with five underground pumping

stations: Cong An, Ngo Quyen, Ong Danh Brigde, Yersin I và Go Dau I.

5/1975: Renamed Thu Dau Mot Water Treatment Plant – belonging to Song Be’s Department of

Transportation, the Company built new pumping stations: Ben Bac, Nam Sanh, Phu Hoa, Tinh Doi,

Hoang Hoa Tham, Kiem Lam, Phu Thuan, Mui Tau, Trung Vuong, Ngo Chi Quoc, Yersin II, Ong

Danh Brigde II, Go Dau II with a total capacity of 5,000m³/day, primarily supplying clean water for

residents in the inner town area. Number of customers: 2,000 including agencies and individuals.

1979: Renamed "Utilities enterprises of housing and public works" – belonging to Song Be’s

Department of Construction.

1.2.2. 1991 – 2000 period:

1991: Renamed "Song Be Water Supply Enterprise".

15/10/1992: Song Be Water Supply Enterprise decided to establish state enterprises. The Company

was tasked with producing, distributing clean water and construction and installation of water supply

specialized works. The Company uses independent accountants, its own seal and subject to the

direction and management of the Person's Committee of Song Be province. Continued exploitation

and management of ground water pumping stations. Capacity of 5,000m3/ day, providing around

5,000 households, mainly located in the inner region.

1995: The first water treatment plant – Thu Dau Mot Water Treatment Plant in operation with a

capacity of 7,500 m3/day; some groundwater wells are no longer used for backup.

1996: Song Be Water Supply Enterprise renamed “Song Be Water Supply Company”.


12

13/06/1997: Binh Duong Water Supply Sewerage Company was established, renamed to suit the

nature of production and business activities. As a State-owned enterprise, the Company is under the

leadership of the Person's Committee of Binh Duong Province under the Department of Construction.

Capacity was increased to 21,600 m3/day.

1.2.3. 2000 – 2010 period:

21/12/2005, implements business transformation, Binh Duong Person’s Comittee decided to rename

Binh Duong Water Supply Severage Company into Binh Duong Water Supply Sewerage -

Environment One Member Limited Company (BIWASE).

Strong growth phase and diversification; in this period the Company decided to establish 08

enterprises: Thu Dau Mot Water Supply Enterprise, Di An Thu Dau Mot Water Supply Enterprise,

Complex Water Supply Enterprise, Waste Treatment Enterprise, Water Supply Consulting

Enterprise, Construction Enterprise, Exploitation Water Resources Consulting Enterprise, Urban

Construction Enterprise and three Project Management Units, meeting the development needs of

different types of service companies in particular and Binh Duong province in general. Functions and

main tasks of the Company: business in the field of urban water supply and drainage; management

and exploitation of irrigation; collection and disposal of waste - waste water; design consulting,

estimating, project of water supply and drainage works; specialized services business, Annual

revenue growth of approximately 20%.

Total employees: 768 persons.

Clean water capacity: 150,000 m3/day, supply to 55,000 customers.

Waste treatment capacity: 400 tons/day.

1.2.4. 2010 – 2014 Period:

In June 2010, according to principal approvement of Binh Duong’s Person Commitee, Binh Duong

Water Supply Sewerage - Environment One Member Limited Company’s State Ownership was

transfered to the Corporation for Investment and Development of Industry One Member Limited

Company (Becamex IDC), where it remained until today.

Continuing its momentum of development, the Company established two subsidiaries: Tan Uyen

Water Supply Enterprise (2011) và Thu Dau Mot Waste Water treatment Plant (2012) bringing the

total number of subsidiaries up to 10 Enterprises, 02 Water Plants, 12 Departments - and

Headquarters.

Total employees: 955 persons (2014)

Clean water capacity more than 200,000 m3/day, supply to more than 118,000 customers

Waste treatment: 1,000 tons/day

The annual turnover of the company grew from about 15%, revenue from clean water production

accounted for over 80%

This is considered a concentrated phase for the construction tasks of Environmental Improvement

Project of the South Binh Duong and take the first waste water treatment plant in operation


13

1.3. Rewards & Achievements

Third Class Labour Medal of President dated 29/06/2005 for its excellence performance in 2000-2004, on

the development of National Socialism of Vietnam;

Merit from the Prime Minister dated 08/12/2010 for its excellence performance in 2007-2009, on the

development of National Socialism of Vietnam;

Second Class Labour Medal of President dated 09/10/2012 for its excellence performance in 2007-2011,

on the development of National Socialism of Vietnam;

First Class Labour Medal of President dated 30/3/2016 for its excellence performance, on the

development of National Socialism of Vietnam;

Merit from Ministry of Construction dated 26/10/2015 for its excellence performance in the development of

construction industry in 2010-2015;

Emulation Flag of the President of Binh Duong dated 12/04/2013 – Leading State Enterprise belong to

Binh Duong Province Đơn; and

Various Merits from Binh Duong’s Person Committee.

1.4. Major products and services:

The main business activity of the Company is exploitation, processing and supply clean water for urban

living and industry. Biwase currently manages and operates the water supply system and water plants with

a total capacity of 200,000 m3/day. Output of water production and consumption over the years of Biwase

are as follows:

Clean water output Production (m3) Sold (m3)

2012 62,798,478 56,791,577

2013 74,394,351 66,476,152

2014 80,908,752 73,570,643

Source: Biwase

In addition, waste disposal is the second-most important activity of the Company after the exploitation, processing and supply of clean water.

1.5. Management and organization structure

The organization structure of BIWASE comprises of:

Board of member: 03 members

Board of Manangement: 01 General Director and 05 Deputy General Directors

Board of Supervisors: 01 member

9 Departments including: HR Department, Finance and Accounting Department, Procurement

planning Department, Waste Reduction & Customer Service Department, Laboratory Department,

Project Management Committee, Centre of Training and Raising Quality of Human Resource

10 Enterprises and 2 Water Treatment plants


14

CHAIRMAN and –

GENERAL DIRECTOR

COMPLEX WATER SUPPLY ENTERPRISE

VICE GENERAL DIRECTORS, CHIEF ACCOUNTANT

PUBLIC ORGANIZATIONS

URBAN SERVICE ENTERPRISE

WATER SUPPLY, SEWERAGE CONSULTING ENTERPRISE

THU DAU MOT WASTE WATER TREATMENT ENTERPRISE

WASTE TREATMENT ENTERPRISE

BAU BANG WATER TREATMENT PLANT

PHUOC VINH WATER TREATMENT PLANT

DAU TIENG WATER TREATMENT PLANT

THUAN AN WATER SUPPLY ENTERPRISE

TAN UYEN WATER SUPPLY ENTERPRISE

THU DAU MOT WATER SUPPLY ENTERPRISE

DI AN WATER SUPPLY ENTERPRISE

SUBSIDIARY UNITS SUBSIDIARY DEPARTMENTS

ADMINISTRATIVE &PERSONNEL DEPARTMENT

FINANCIAL-ACCOUNTANCY DEPARTMENT

MATERIAL -PLANNING- DEPARTMENT

PROJECT MANAGEMENT UNIT (PMU)

WATER QUALITY MANAGEMENT CENTER

VOCATIONAL TRAINING CENTER

WATER LOSS CONTROL AND CUSTOMER SERVICE DEPT.ØNG

LEAKAGE DETECTION

AND FINDING

OLD EQUIPMENT

GROUP

CONSTRUCTI

ON

SUPERVISION

GROUP

GIS DATA

GROUP

TECHNIQUE

ZONING

DESIGN

GROUP

SPECIALIST CHECKING

METER READING

WATER LOSS

CONTROL OF

ENTERPRISES

LEAKAGE

CHECKING

GROUP

AREA CONTROLLING

GROUP (ZONE

CONTROLLER)

ZONING,

WATER LOSS CONTROL

GROUP


15

1.6. Employment

Pursuant to Decision 2121/QD-UBND dated 27/06/2016 by People’s Committee of Binh Duong on

Employment Plan of Binh Duong Water Supply Sewerage Co., Ltd, total number of employment of the

Company is 924 employees, who are classified as following:

Type Employee (person) Percentage (%)

Educational level 924 100%

Bachelor and Post-graduate

College, intermediate, primary

Technical workers and unskilled workers

193

257

474

20,9%

27,8%

51,3%

Labor contract 924 100%

Indefinite term contracts

6-month contract

1-3 years contract

514

4

406

55,6%

0,4%

43,9%

Gender 924 100%

Male

Female

740

184

80,1%

19,9%

Source: Biwase

1.7. Enterprise value at the date of equitization

Pursuant to Decision 1360/QĐ-UBND dated on 03/06/2016 by Person's Committee of Binh Duong

Province publishing the enterprise value to equitize Binh Duong Water Supply Sewerage - Environment

Company Limited, the actual value of the company and the actual value of state – owned capital as of

31/12/2014 as follows:

Unit: VND

Item Book value Revaluation Balance

1 2 3 4=3-2

A. ASSETS (I+II+III+IV) 3,662,549,780,889 4,170,412,727,702 507,862,946,812

I. Fixed and long-term assets 2,559,335,351,407 3,034,443,252,823 475,107,901,415

1. Fixed assets 2,149,366,861,645 2,610,450,748,928 461,083,887,283

1.1. Tangible assets 1,201,894,364,531 1,660,900,833,590 459,006,469,059

- Buildings and architecture 314,230,102,340 510,328,442,849 196,098,340,509

-Machinery, transportation, transmission, management equipment,… 887,664,262,191 1,150,572,390,741 262,908,128,550

1.2. Intangible assets 64,559,959,341 65,831,906,698 1,271,947,357

1.3. Construction in progress 882,912,537,773 883,718,008,640 805,470,867


16


1 2 3 4=3-2

2. Long-term receivables - - -

- Trade receivables - - -

- Other long term receivables - - -

3. Long-term investments 392,609,409,787 393,761,137,589 1,151,727,802

- Investment in subsidiaries - - -

- Investment in associates and joints ventures 392,609,409,787 393,761,137,589 1,151,727,802

- Other long-term investments - - -

- Provision for devaluation of long–term investments - - -

4. Other long-term assets 17,359,079,975 30,231,366,305 12,872,286,330

- Long–term prepaid expenses 17,359,079,975 30,231,366,305 12,872,286,330

+ Tools & Equipment 1,246,901,394 2,031,706,217 784,804,823

+ Other long-term assets 16,112,178,581 28,199,660,088 12,087,481,507

II. Current assets and short–term investment 1,103,214,429,482 1,124,082,644,303 20,868,214,821

1. Cash and cash equivalents 160,318,905,385 160,318,905,511 126

- Cash 116,818,905,385 116,818,905,511 126

- Cash equivalents 43,500,000,000 43,500,000,000 -

2. Short–term investments 209,540,000,000 209,540,000,000 -

- Short–term investment 209,540,000,000 209,540,000,000 -

- Provision for devaluation of short–term investments - - -

3. Receivables 446,149,864,999 464,450,299,599 18,300,434,600

- Trade receivables 164,521,171,392 164,521,171,392 -

- Advance to suppliers 192,237,537,873 192,237,537,873 -

- Other receivables 96,772,829,961 107,691,590,334 10,918,760,373

- Provision for bad debts (7,381,674,227) - 7,381,674,227

4. Inventories 215,432,351,760 215,432,351,760 -

- Inventories 215,432,351,760 215,432,351,760 -

- Provision for devaluation of inventory - -

5. Other current assets 71,773,307,338 74,341,087,433 2,567,780,095

- Short–term prepaid expenses 8,606,445,560 11,174,225,655 2,567,780,095

+ Tools & Equipment 768,032,333 3,335,812,428 2,567,780,095


17


1 2 3 4=3-2

+ Prepaid expenses 7,838,413,227 7,838,413,227 -

- VAT deducted 276,838,245 276,838,245 -

- Taxes and State receivables 22,194,155,439 22,194,155,439 -

- Other current assets 40,695,868,094 40,695,868,094 -

III. Goodwill - 10,127,080,576 10,127,080,576

1. From trademarks - 944,711,547 944,711,547

2. From potential development of enterprise - 9,182,369,029 9,182,369,029

IV. Value of land use rights - 1,759,750,000 1,759,750,000

B. UNUSED ASSETS 7,738,581,980 7,738,581,980 -

1. Tangible fixed assets 7,722,915,180 7,722,915,180 -

2. Tools and Equipment 15,666,800 15,666,800 -

C. ASSETS NOT ACCOUNTED FOR ENTERPRISE VALUE 2,889,581,054,092 2,889,581,054,092 -

1. Cash 1,265,932,281 1,265,932,281 -

2. Inventories 22,956,687,369 22,956,687,369

3. Account receivables 476,428,325 476,428,325

4.Tangible fixed assets 1,791,533,749,792 1,791,533,749,792 -

5. Construction in progress 1,073,348,256,325 1,073,348,256,325 -

D. ASSETS TO BE LIQUIDATED - - -

TOTAL ASSETS (A+B+C+D) 6,559,869,416,961 7,067,732,363,774 507,862,946,812

TOTAL ACTUAL VALUE OF ENTERPRISE (A) 3,662,549,780,889 4,170,412,727,702 507,862,946,812

E1. Actual Liabilities 2,282,687,612,169 2,278,359,692,921 (4,327,919,248)

1. Liabilities 4,215,228,215,545 4,210,900,296,297 (4,327,919,248)

2. Liabilities not accounted for Enterprise value 1,932,540,603,376 1,932,540,603,376 -

- Trade payables 80,192,782,408 80,192,782,408 -

- Other short–term payables 34,672,249,811 34,672,249,811

- Other long-term payables 1,817,675,571,157 1,817,675,571,157 -

E2. Actual non–business expenditure source - - -

1. Non–business expenditure source 155,055,458,647 155,055,458,647 -


18


1 2 3 4=3-2

2. Non–business expenditure source not accounted for Enterprise value 155,055,458,647 155,055,458,647 -

TOTAL ACTUAL VALUE OF STATE – OWNED CAPITAL [A-(E1+E2)] 1,379,862,168,720 1,892,053,034,781 512,190,866,060

Source: Biwase

Summary of enterprise valuation

Total actual enterpise value of Biwase as of 31/12/2014

Book value: 3,662,549,780,889 VND

Revaluation: 4,170,412,727,702 VND

Balance: 507,862,946,812 VND

Total actual value of state-owned capital as of 31/12/2014 to equitize:

Book value: 1,379,862,168,720 VND

Revaluation: 1,892,053,034,781 VND

Balance: 512,190,866,060 VND

Asset value excluded when valuating the company as of 31/12/2014: 2,889,581,054,092 VND

Cash : 1,265,932,281 VND

Tài sản cố định hữu hình : 1,791,533,749,792 VND

Chánh Nghĩa resettlement residence: 18,224,667,425 VND

Waste water treatment plant : 1,618,884,530,533 VND

project management Unit : 834,444,610 VND

Inventories : 22,956,687,369 VND

Receivables : 476,428,325 VND

Construction in progress : 1,073,348,256,325 VND

1.8. Land use rights status

Pursuant to Decision 3077/QĐ-UBND dated 23/11/2015 by Person's Committee of Binh Duong Province

on approving the land use plan of Biwase for equitisation in which the company may proceed to use the

land that was allocated and leased as prescribed with a total area of 1,132,425,27 m2, handing over local

management or Agriculture and Rural Development Department to continue using or returning the land to

families and individuals with an area of 115,153,1 m2 (detailed in Decision 3077/QĐ-UBND).

In the land use plan above, there is a land of Waste water Treatment Plant with an area of 109,820,2 m2


19

(at row 31 Section 1 Appendix 1 of Decision 3077/QĐ-UBND) has been excluded by Decision 1612/QĐ-

UBND dated 28/6/2016,

1.9. List of parent company, subsidiaries, and affiliates of Issuer

1.9.1. Parent company:

Investment and Industrial Development Corporation – One member limited liabilities (Becamex

IDC)

Address: 230 Binh Duong Boulevard, Thu Dau Mot City, Binh Duong province

Tel: (84) 650 3 822655 - Fax: (84) 650 3822713

Scope of business: investment in construction and trading infrastructure of industrial parks;

investment, development and sales of residential areas; real estate trading; civil construction;

industry and transportation; project investment in infrastructure in the form of b,o,t, and other

mechanisms; mining, rock crushing and cement; produce and process raw material for rubber

industry, construction material; commercial trading, import – export service; financial

investment into local and foreign companies; financing, banking and securities; operation in

health and education fields; producing and trading pharmaceutical, cosmetic and health

materials

Charter capital: VND 8,500 billion

Percentage of ownership of Biwase of parent company: 100% charter capital

1.9.2. List of subsidiaries

NA

1.9.3. List of affiliates

TT Name of affiliates Ownership Charter

capital (VND

billion)

Main operation

1 Chanh Phu Hoa Investment and

Construction JSC

43,15% 179,2 Construction

2 Thu Dau Mot Water JSC 26,00% 360 Supplying clean water

3 Green Material Recycle JSC 25,00% 15 Recycling scraps, producing

construction materials

4 Dong Nai Water JSC 20,00% 1,000 Supplying clean water

From 22 April 2016, Thu Dau Mot Water JSC was no longer an affiliate of Binh Duong Water Supply

Sewerage and Environment Co., Ltd,

2. Business operation of the Company over the course of 2012 – 2015 (4 years

prior the equitization)

2.1. Revenue analysis


20

The revenue breakdown of the Company is as follows:

Unit: VND million

Product/Service

2012 2013 2014 2015

Value Weight

(%) Value

Weight

(%) Value

Weigh

t (%) Value

Weight

(%)

Supplying water 397,390 67% 523,197 63% 588,227 57% 721,326 56%

Waste management 120,007 21% 143,786 17% 204,218 19% 250,934 20%

Trading construction

material

1,722 - 71,039 9% 86,720 8% 91,308 7%

Construction 9,319 2% 16,039 2% 45,683 4% 35,784 3%

Bottled water 5,130 1% 7,270 1% 10,945 1% 13,746 1%

Other activities 23,316 4% 38,916 5% 59,664 5% 116,621 9%

Financial activities 28,120 5% 22,405 3% 56,101 6% 53,125 4%

TOTAL 589,501 100% 822,652 100% 1,051,558 100% 1,282,844 100%

Source: Biwase

Supplying clean water was the core business operation of the Company and contributed over half of

annual revenue of Biwase. In 2015, Supplying clean water achieved over VND721bn compared to

VND588bn of in 2014, accounted for 56% revenue. Waste management was the second largest revenue

segment, contributed around 20% revenue in the past few years. The remaining segments all grew in line

with the growth of revenue of Biwase.

2.2. Costs analysis

Cost breakdown by type of costs over the past 4 years is as follows:

Đvt: triệu đồng

Costs

2012 2013 2014 2015

Value

%

Revenu

e

Value

%

Revenu

e

Value

%

Reven

ue

Value

%

Revenu

e

Cost of goods sold 294,356 53% 519,078 66% 667,429 69% 801,018 66%

Financial expenses 65,661 12% 66,246 8% 56,328 6% 86,100 7%

Selling expenses 72,356 13% 80,970 10% 97,631 10% 130,947 11%

General and

administrative expenses 48,072 9% 26,844 3% 43,757 4%

58,403 5%

Other expenses 4,663 1% 5,389 1% 4,741 0,5% 13,779 1%


21

Costs

2012 2013 2014 2015

Value

%

Revenu

e

Value

%

Revenu

e

Value

%

Reven

ue

Value

%

Revenu

e

Total 485,108 87% 698,528 88% 869,885 89,5% 1,090,247 90%

Source: Biwase

Main costs of the Company were cost of goods sold, financial costs, and general and administrative costs.

In 2014, total cost was 89% over revenue, increase 3% yoy. Cost of goods sold was the fastest growth of

2015. Cost of goods sold in 2015 comprised mainly of depreciation, energy, waste management costs,

and employee cost.

Financial costs as a percentage over revenue were controlled strictly and declined over the years. The

Company has contracted several loans over the year to finance for its operation; however, it has benefited

from the lower interest rate together with more efficient operation margin. This has proved the better

capital management of Biwase.

To improve and control the costs more effectively and more strictly, the Board of Management of the

Company has applied several quality control into its business operation such as: the implementation of the

CRM system and investment into equipment in order to decrease the leakage rate, both invisible and

visible.

2.3. Techology

All the water treatment plant, sewage treatment, garbage disposal are managed by the SCADA system.

This is one of the areas where application software reduces human labor, helps to detect incidents of

operation and maintenance of the system on a timely basis, and helps the Company with the

implementation of rapid remedial measures to help improve results of operation and maintenance.

In the water supply industry, the Company is one of the pioneers of water treatment technology through

the application of advanced equipment such as variable levels, electromagnetic meter, intelligent pressure

regulator, meter C household etc.

The Company currently applies remote corporate governance protocol, internal control systems by

application software programmed by in-house team, and is ready for technology transfer from partners.

The Company also established a vocational training center and improved human resources since 2008.

The center is also affiliated with the University of Construction of the West, University of Thu Dau Mot,

Binh Duong technology College in training to technical staff, skilled workers to serve in water and

environmental industries.

2.4. Research and development

The Company mainly invests in expanding and improving distribution networks to ensure better service to

meet the water supply demand in the province of Binh Duong.

In addition, the Company maintains regular checks in order to limit leakage rates during the supply of

water. The current leakage rate of the Company is approximately 7.6%, down from 37.2% in 2002.


22

In the waste treatment industry, in addition to treating the waste, the Company also conducts research on

and develops green recycle products to launch into the market such as: composit fertilizer, tile, concrete,

etc.

2.5. Quality control and supply of water services

The company constantly improves coporate governance, and reduces leakage rates to a minimum level

so the selling price is always at a competitive level in the key economic areas of the South.

The Company also applies quality management systems in order to improve the quality of services

provided such as quality management system ISO 9001: 2008 and environmental management system -

BS EN ISO 14001: 2004 / Cor1: 2009.

3. Financial situation and business performance in 04 years prior to equitization

3.1. Financial indicators and business results in the period:

Unit: VND million

No Indicator FY2012 FY013 FY2014 FY2015

1 Volume

a) Water

Production (m3/year) 62,798,478 74,394,351 80,908,752 91,250,613

Consumption (m3/year) 56,791,577 66,476,152 73,570,643 82,621,479

b) Sewage

Domestic (ton/year) 287,650 307,438 349,547 399,240

Industrial (ton/year) 21,266 31,109 54,094 93,376

2 Total assets 4,229,900 5,160,831 6,580,834 7,140,429

3 State capital according to book value 1,528,972 1,884,114 2,365,554 2,656,105

4 Short-term liabilities

In which: overdue

527,337

-

753,266

-

1,019,369

-

1,030,805

-

5 Long-term liabilities

In which: overdue

2,173,591

-

2,523,450

-

3,195,911

-

3,453,519

-

6 Bad debts 7,408 7,408 7,941 7,466

7 Number of headcounts (persons) 857 914 952 963

8 Salary 88,527 98,309 134,080 125,425

9 Average income/ person/ month 6,0 7,8 10,4 11,0

10 Total revenue * 589,501 822,652 1,051,558 1,282,844

11 Total expenses ** 485,108 698,528 869,885 1,090,247


23

No Indicator FY2012 FY013 FY2014 FY2015

12 Profit before tax 104,393 124,125 181,673 192,596

13 Profit after tax 89,479 99,741 156, 370 170,593

14 Profit after tax/ State capital margin 6% 5% 7% 6%

Source: Biwase

(*) including net revenue, financial revenue and other revenue

(**) including Cost of goods sold, selling expenses, administration expenses, financial expenses and

other expenses

3.2. Factors influencing the business operation results of the Company

3.2.1. Advantages

The Company’s Management team have many years of industrial experience and are highly passionate

and responsible. The staff possess high level of professional knowledge, experience, solidarity and

awareness.

Biwase has accumulated deep experience in the water supply segment, such as: construction of water

supply systems and development of water supply networks; effective management of water supply

systems under equipment from developed countries which minimizes water leakage rates; Management

team and technical team have experience in ODA sponsored projects from negotiation stage, selection of

overseas contractors for consulting work, supply of materials and equipment, to on-field construction.

The projects with intensive capital investment such as expansion of water factories, water supply system,

plants and equipment etc. of the Company are sponsored by ODA funding and bank credits from local

financial institutions.

In addition to ODA funding, the Company can also mobilize capital from the private sector to invest in

those headwork projects, partly solving the capital demand for new investments.

3.2.2. Disavantages

Selling price of clean water by the Company is determined by Binh Duong Person’s Committee, whereas

prices of input materials of the Company have constantly been rising. It takes a long time for the

Company to adjust selling prices due to the necessity of constructing and presenting a proposal to the

authorities for appraisal and approval, which reduces the Company’s pricing scheme flexibilities and

ultimately influences the business operation results of the Company.

The residential distribution of Binh Duong stretches over large geographical areas, lacking concentration,

whereas the Company is facing difficulties in finding funding for its investments. As a result, meeting the

water demand of residents require the support from State budget which is allocated for cities, towns, and

districts for the development of water supply systems.

The water supply stations in the countryside after being taken over by the Company have been

renovated, water supply source switched from ground water to surface water; investment and

rennovations have been made to the water supply network and end-user water meters have been


24

replaced for higher precision and measures have been implemented to significantly reduce leakage

rates. As such, significant investment costs have been incurred whereas selling prices are still under

subsidized schemes applied for countryside users.

Investments into projects of public interests usually require high expenses that enterprises have to

mobilize capital from various sources, of which ODA is an important source as ODA funds carry

preferential interest rates, grace period and longer loan tenure, which all help to reduce repayment

burden for borrowers. However, at the moment, there has not been an appropriate pricing modification

pathway for products of public interests, as such, the ODA donors’ requirements have not been met,

presenting difficulties for the Company in the process of approaching ODA sources and securing ODA

funds have become more and more difficult.

In general, the quality of water sources have been deteriorating as a result of the industrialization process

as well as domestic wastes when the level of awareness by residents remains limited. In those industrial

areas of rapid development, the ground water sources have shown signs of pollution and reduction such

as Lai Thieu, Vinh Phu – Thuan An etc. due to which the cost of water treatment has been increasing

sharply, ultimately raising the cost of water production.

To promote sales of clean water, the Company has implemented different methods to better serve

clients. However, some companies do not have cooperative attitude and on the contrary, have

increasingly drilled underground wells that impacts the quality and reduces the flow of ground water.

Several industrial areas that register for water usage are just to cope with reguations, in fact the usage of

treated water is very limited and the majority is from self-drilled wells, which also impacts the return to

investment on the Company’s water supply system.

Those projects invested with ODA funding are subject to foreign exchange risk (out of the Company’s

management control).

The majority of the Company’s staff have many years of experience, but at different levels. Those

technical staff coming from other training sources still lack practice, management skill is weak and have

not met requirements in the managing and manufacturing by the Company.

4. The Company’s position in the industry

4.1. Position of the Company in clean water supply industry

The Company currently manages water supply systems in Binh Duong province, where there are no

rivals in the segment. The Company is now ranked number three in Vietnam in terms of water supply

capacity. The Company is also a provincial institution which owns many overseas ODA funded projects.

4.2. Outlook of clean water supply industry in Binh Duong province

Binh Duong province is situated in key economic region of South, which are calling for foreign

investment. Therefore, infrastructure development including water supply system development becomes

an imperative and priority task.

Clean water is essensial for daily life and production. It is necessary to improve clean water supply

system both in quantity and in quality for economic development.


25

Being situated in the key economic region of the South, Binh Duong province is one of the most active

provinces in economic activity and foreign investment attraction. There are currently 28 industrial zones

and centralised industrial complexes in Binh Duong with total area of 8,700 ha with more than 1,200 on-

going domestic and foreign enterprises. The demand for clean water in both civillian and industrial

consumption thus increases more and more.

4.3. The appropriateness of the Company’s development strategy with industry orientation,

State’s policy and global trend

To meet the demand for social economic development of Binh Duong province according to the plan of

water supply and waste treatment, the Company has built up an extensive investment plan to improve

capacity of water treatment plants, expand water supply network, invest in equipment to raise water

output, fully meet the demand for clean water of centers, districts, towns and cities of the province. The

Company aims to ensure the requirements of local waste collection and treatment, contribute to

environment protection, continue to be the leading in technology of waste treatment industry. The

orientation of the Company is completely in line with the development plan of Binh Duong to 2020 and

vision to 2050, in line with the rate of urbanization and the development of industry in the coming years.

PART V: INFORMATION OF THE COMPANY AFTER EQUITISATION

1. Introduction

1.1. General information

Vietnamese name: CÔNG TY CỔ PHẦN NƯỚC VÀ MÔI TRƯỜNG BÌNH DƯƠNG

English name: BINH DUONG WATER AND ENVIRONMENT JOINT STOCK COMPANY

Abbreviated name: BIWASE

Headquarter: No, 11 – Ngo Van Tri Street – Phu Loi ward – Thu Dau Mot City – Binh

Duong

Phone: (84) 650 3838 333 Fax: (84) 650 3827 738

Website: www.biwase.com.vn

Logo:

1.2. Legal structure

After equitisation, BIWASE will operate under the form of joint stock company, in compliance with

Enterprise Law No. 68/2014/QH13 dated 26/11/2014 approved by the Parliament of the Socialist

Republic of Vietnam.


26

1.3. Business activities

The Company’s business activities will remain unchanged and will add other business lines according to

the law in force.

1.4. Organizational structure

Binh Duong Water Supply Joint Stock Company operates under the Company’s regulations on

organization and the operation is approved by the shareholders’ general meeting which bases on the

regulation of Enterprise Law, under the management, supervision and control by Board of Directors,

Board of Supervisors and Board of Management.

Shareholders’ general meeting

Board of Directors: 07 persons for the term of 05 years

Board of Supervisors: 03 persons for the term of 05 years

Board of Management: 01 CEO and 05 Deputy CEO

Chief Accountant: 01 person

Departments, Project management units include:

o Financial – Accounting Dept: 15 person

o HR and Administration Dept: 47 person

o Planning Dept: 5 person

o Water loss control and Customer Services Dept 19 person

o Water Quality Control Center: 5 person

o Vocational training Center: 2 person

o Thủ Dầu Một South Water Supply Project Management: 9 person

o Water Supply – Environment Project Management: 7 person

o Tân Hiệp Water Treatment Plant Project Management: 3 person

o Chơn Thành Water Supply System Investment Unit 4 person

o Dĩ An Water Supply Enterprise: 147 person

o Complex Water Supply Enterprise: 134 person

o Thủ Dầu Một Water Supply Enterprise: 68 person

o Thuận An Water Supply Enterprise: 31 person

o Tân Uyên Water Supply Enterprise: 46 person

o Phước Vĩnh Water Treatment Plant: 5 person

o Dầu Tiếng Water Treatment Plant: 8 person


27

o Bàu Bàng Water Treatment Plant: 11 person

o Construction Enterprise: 2 person

o Consulting Designs of Water Works Enterprise 12 person

o Waste Treatment Enterprise: 231 person

o Urban Service Enterprise: 27 person

Public Service Units of Binh Duong Water Supply – Environment JSC continue to support Binh

Duong Province in operating and managing. They will have separate financial mechanisms,

independent financial statement including:

o Thủ Dầu Một Waste Water Treatment Enterprise: 62 person

o Bình Dương South Water Improvement Project Management: 18 person

Organization structure of the company after equitization:


28

SHAREHOLDERS MEETING

BOARD OF DIRECTORS

BOARD OF SUPERVISORS

FACTORIES UNITS SUPPORTED BY

BIWASE

DEPARTMENTS

THỦ DẦU MỘT WASTE WATER

TREATMENT ENTERPRISE

BÌNH DƯƠNG SOUTH IMPROVING

WATER ENVIRONMENT

PROJECT MANAGEMENT

HR – ADMINISTRATION

DEPT

FINANCE – ACCOUNTING DEPT

PLANNING DEPT

WATER QUALITY CONTROL CENTER

PROJECT MANAGEMENT

VOCATIONAL TRAINING CENTER

WATER LOSS CONTEOL AND

CUSTOMER SERVICES DEPT

CUSTOMER SERVICES

TEAM

DĨ AN WATER SUPPLY

ENTERPRISE

COMPLEX WATER SUPPLY

ENTERPRISE

THỦ DẦU MỘT WATER SUPPLY

ENTERPRISE

TÂN UYÊN WATER SUPPLY

ENTERPRISE

DẦU TIẾNG WATER ENTERPRISE

PHƯỚC VĨNH WATER

ENTERPRISE

WASTE MANAGEMENT ENTERPRISE

CONSULTING DESIGNS OF

WATER WORKS

CONSTRUCTION ENTERPRISE

URBAN SERVICE ENTERPRISE

CONSTRUCTI-ON

SUPERVISION TEAM

DATA STORAGE

TEAM

ZONING TECHNICAL, SPLITTING NETWORK

TEAM

LEAK TESTING AND

DEVICE LOOKING

TEAM

PREVENTING LOSSES FROM

WATER ENTERPRISE

AREA MANAGEMENT

TEAM

BÀU BÀNG WATER ENTERPRISE

BOARD OF MANAGEMENT

THUẬN AN WATER SUPPLY

ENTERPRISE


29

2. Investment Projects

Project Description Location Total investment

(VND)

Duration

Extended water

supply network

– South Thu

Dau Mot

Capacity 45,000 m3/day

Extension of the completed

clean water supply system in

Binh Duong Province, solving

the shortage of clean water

and improving living

conditions of local residents

Thuan An and Di

An town, Binh

Duong Province

966,515,200,000 2011-2015

Land clearance

of raw water

supply network

from Phuoc Hoa

Lake to Binh

Duong CBD

Land clearance to speed up

the construction of raw water

supply network from Phuoc

Hoa Lake to Binh Duong CBD

The project

covering territory

of 5 communes:

Tru Van Tho, Lai

Uyen, Tan Hung,

Lai Hung and

Chanh Phu Hoa

542,955,054,660 2015

Water supply for

Bau Bang

District with

capacity of

30,000 m3/day

Meeting the demand for clean

water in Bau Bang District

Bau Bang District,

Binh Duong

Province

550,000,000,000 2015-2017

Water supply for

Becamex

Complexes –

Binh Phuoc

Meeting the demand for clean

water in the complexes and

adjacent areas

Chon Thanh

District, Binh

Duong Province

419,315,000,000 2015-2017

Increase

network

connections in

coastal districts

of Binh Duong

Increase of number of

customers using water in

coastal districts of Binh

Duong; restriction of

groundwater usage due to

pollution and resources

depletion

Coastal provinces

of Binh Duong

1,000,000,000,000 2015-2017

Solid waste

handling project

in South Binh

Duong (revised)

Neighborhood 1B,

Chanh Phu Hoa

Ward, Ben Cat

Town, Binh Duong

Province

466,342,163,576 2015-2016


30

Increase

capacity of

waste treatment

plant in South

Binh Duong

Added capacity of 410

tons/day

Solid waste

handling

complexes in

South Binh Duong,

Neighborhood 1B,

Chanh Phu Hoa

Ward, Ben Cat

Town, Binh Duong

Province

370,222,896,952 2015-2018

3. Business plan post-equitization:

Unit: VND million

No, Indicator 2017 2018 2019

1 Output

a) Water output

Produced clean water (m3/year) 89,200,000 93,700,000 98,390,000

Consumed clean water (m3/year) 81,110,000 85,160,000 89,420,000

b) Waste

Household waste (ton/year) 385,000 404,000 404,250

Industrial waste (ton/year) 59,000 62,600 65,730

2 Revenue 1,337,542 1,440,419 1,474,640

Growth 5% 5% 5%

3 Net Profit 87,681 92,065 96,668

Net profit margin 6,6% 6,6% 6,6%

Profit Distribution 21,920 23,015 24,167

-Development Fund (10%) 8,768 9,206 9,667

-Financial Provision Fund (5%) 4,384 4,603 4,833

-Welfare Fund (10%) 8,768 9,206 9,667

Dividend 65,761 69,049 72,501

Dividend ratio (%) 3.0% 3.5% 4.0%

4 Charter Capital 1,500,000 1,500,000 1,500,000

Net Profit / Charter Capital 5.8% 6.1% 6.4%

5 Employees (person) 924 922 922


31

No, Indicator 2017 2018 2019

6 Total payroll 140 150 160

7 Average income/person/month 11 11,5 12

Execution plan:

Production Management

To achieve these objectives and implement the above strategy, the Company will carry out the following

measures:

Production management:

o Excellent management and operation of Company’s plants: Maintenance/Overhaul of

machinery and equipment; raw material management

o Successful implementation of regulations on mining and discharge, and environmental

protection measures in accordance with the Law on Water Resources

o Management of water quality standards regulated by the Ministry of Health

Customer management and increasing water consumption:

o Investment and expansion of water supply networks in areas without water

o Successful implementation of service and customer care, reasonable water pricing

o Improved payment collection records to reduce accounts receivable

Cost-saving measures through reduction of water loss: The company will actively carry out the fight

against water losses by specific measures such as:

o Increased water meter management: new investments, selection of high standard meter type;

initial and periodic inspection, replacement, increased inspection of water loss

o Investment in software that runs on GIS technology to manage the technical infrastructure

system, customer management, application of information technology in hydraulic and network

management

o Collaboration among Company’s departments with production units to strengthen the technical

management, find suitable alternatives to the current state of water supply in each area to

reduce leakage rate

o Plans to renovate water supply networks annually

o Development and coordination of community programs in water loss reduction

o Strengthened responsibility for direct repairement work, ensuring quick detection and prompt

repairement

Power cost saving: Power and electricity costs are major cost items, therefore the Company will take

measures to save energy, such as:


32

o Operation of water pumps and water treatment equipments at off-peak electricity prices for

water storage in reservoirs, then pumping out the network during peak hours. Restricting level

1- pumping tank during peak hours unless lacking pumping pressure to reduce power costs at

peak-hour

o Replacement of pump and electrical equipments in water treatment plants with high electricity

consumption and power loss by ones with low electricity consumption and power loss

o Launch of compaigns of production efficiency, power and electricity costs reduction

Other cost-saving measures:

o Anti-wastage of labor time: work norms, labor forces manning at all departments/units to reduce

costs and increase revenue

o Continued improvements of organizational structures, to ensure enough human resources by

using seasonal labor forces, conduct innovative work arrangements, work norms and implement

payroll budget

o Establishment of regulations on internal expenses, equipment procurement, investment and

construction works

Financial measures

Pay attention to capital accumulation for remaining a strong financial position to carry out the

expansion of investment projects, reconstruction of water treatment plants, investment in equipment

to increase production of water in order to meet clean water needs of the towns and districts in the

province

Enhance efficiency of investment capital through measures such as investment in each period

according to the needs, investment and development by using the Company’s earnings, maximize

the capacity of investment projects

Human resources measures

Appraise the abilities of managers and employees in order to continue to strengthen and consolidate

the management apparatus operating, to ensure the Company has a team of leaders, engineers and

skilled professionals qualified to run the business and production activities of the Company effectively

On the basis of the evaluation results, the Company will carry out the rotation of employees,

managers to match the level and facilitate to fulfill personal capacity

Annual training courses for employees and managers such as foreign languages, professional skills

etc.

Increase the loyalty of the employees by building appropriate remuneration for staffs and employees

and have more interest to the competent staffs. In addition, create a flexible mechanism as

motivation for training the employees strive to become the key personnel of the Company

Treat employees as an important factor in the development of the Company. The training, retraining

and recruitment of staff skilled workers, experienced in a number of key positions are always

appreciated


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Market measures

Branding and product quality, services in water industry, continues implementation of quality

management system of machinery, equipment, pipe water supply to ensure quality, prestige brand and to

meet the needs of the customers.

Technology measures

Apply the information technology as the foundation for management systems, application software on the

management of human resources, document management, project management, production and

financial management.

Other measures

To concentrate all efforts to implement the receipt and expansion projects in water supply projects in

the district and effective management, investment projects to expand business scope, rational use of

human resources, management and administration gradually to the new structure of the joint stock

company

Strict management of capital, expenses, assets, materials. Also strengthen the promotion of the

services with the guideline “Prestige – Quality – Effect”

Implementing regulations on wage labor, social insurance, health insurance and the other applicable

regulations as stipulated by law

4. Chartered capital and chartered capital structure

4.1. Chartered capital

Based on the scope of the business, the total assets and the business plan of the Company, and taking

into account the cost of capital for the owner’s equity and debt, the chartered capital of the Company at

the time of equitization is VND1,500,000,000,000

4.2. Chartered capital structure

Chartered capital structure of the Company will be as follows:

No Investors Number of shares Par value (VND)

% of

chartered

capital

1 State 76,500,000 765,000,000,000 51.00%

2 Employees who are entitled to buy

shares at the preferential price

3,365,800 33,658,000,000 2.24%

2,1 Seniority in the public sector 753,700 7,537,000,000 0.50%

2,2 Working commitment to the Company

post equitization

2,612,100 26,121,000,000 1.74%

3 Strategic investor 52,500,000 525,000,000,000 35.00%

4 Investors participating in the auction

process

17,634,200 176,342,000,000 11.76%


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Total 150,000,000 1,500,000,000,000 100.00%

Source: Biwase

4.3. Types of share

All shares of the Company at the time of establishment will be common shares according to Decree

59/2011/ND-CP.

All transfers and inheritances of shares need to adhere to the Company’s charter and all other relevant

regulations.

PART VI: THE OFFERING

1. The offering

According to approved equitization plan, the investors and offering mechanism will be as follows:

No Investors Offering price Number of

offering shares

% of

chartered

capital

1 Employees who are entitled to

buy shares at the preferential

price

3,365,800 2.24%

1,1 Seniority in the public sector 60% of minimum successful

selling price to strategic

investors

753,700 0.50%

1,2 Working commitment to the

Company post equitization

At minimum successful

selling price to strategic

investors

2,612,100 1.74%

2 Strategic investors Pursuant to point đ Item 3 of

Article 6 in Decree 59/2011/NĐ-

CP

52,500,000 35.00%

3 Investors participating in the

auction process

Minimum offer price at

VND10,200 per share

17,634,200 11.76%

Total 73,500,000 49.00%

1.1. Offering to employees

1.1.1. Employees who are entitled to buy shares at the preferential price thanks to their senority in

the public sector:

Pursuant to Item 1 Article 48 Decree 59/2011/NĐ-CP dated 18/07/2011 of the Government on

transformation of enterprises with 100% state capital into joint-stock companies, the offer price to the

employees in such case is regulated as that “Employees whose name are in the list of regular

employees as of the date of equity valuation announcement are entitled to buy a maximum amount of

100 shares for each year of working in the State sector at 60% of the minimum succesful bidding price of

the public auction (in the event that the IPO takes place before the offering to strategic investor(s)); or at

60% of the minimum successful selling price to strategic investor(s) (in the event that the offering to


35

strategic investor(s) takes place before the IPO). Details are as follows:

Total number of employees in the regular employees list of the Company as of 03/06/2016 (the date

of Biwase equity valuation announcement for equitization by Binh Duong People’s Committee: 924

employees, of which 19 employees are not entitled to buy shares at preferential price in accordance

with the seniority in the public sector due to lack of required working time and 6 employees refused to

buy shares at preferential price

Total employees who are entitled to buy shares at the preferential price thanks to their seniority in the

public sector: 905 employees

Total working time of the employees who are entitled to buy shares in accordance with the seniority

in the public sector: 7,545 years

However, there are 899 employees who have already registered to buy shares with total number of

753,700 shares (equivalent to 7,537 working years in the public sector) with total par value of VND

7,537,000,000 (Seven billion five hundred thirty seven million Vietnam Dong), accounting for 0.50%

of the charter capital

Expected timing for the offering to the employees: after the auction date

1.1.2. Employees who buy additional shares with working commitment to the Company post

equitization

Pursuant to Item 2(c) Article 48 Decree 59/2011/NĐ-CP dated 18/07/2011 of the Government on

transformation of enterprises with 100% state capital into joint-stock companies, the right of purchasing

additional shares is regulated as follows: ”An additional two hundred (200) shares for each year the

employee commits to work for the Company post equitization, with maximum two thousand (2,000)

shares for each employee, For employees who are experts with high professional skills shall be entitled

to purchase additional five hundred (500) shares for each year they commit to work for the Company

post equitization, with maximum five thousand (5,000) shares for each employee. The Company under

the equitization plan shall, based on its sector and business lines, formulate and decide criteria for

identifying who are the experts with high professional skills which must be approved by the general

meeting of the employees before equitization”

Total employees who registered to buy additional shares with working commitment: 687 employees

with 2,612,100 shares, equivalent to total par value of VND26,121,000,000 (Twenty six billion one

hundred twenty one million Vietnam Dong), accounting for 1.74% of the charter capital

Expected timing for offering to the employees: after the auction date

Pursuant to Item 2(c) Article 48 Decree 59/2011/NĐ-CP, the offer price to the employees in such case is

regulated as that “The preferential rate for addtional shares offered to employees, pursuant to Point b

Item 2 Article 48 Decree 59/2011/NĐ-CP dated 18/07/2011 by the Government, is determined using the

minimum successful bidding price (in case of that the IPO takes place before the offering to strategic

investor(s) or equal to the minimum successful selling price to strategic investor(s) (in case of that the

offering to strategic investor(s) takes place before the IPO)”.

Therefore, the offer price to employees this case shall be equal to the minimum sucessful selling price

to strategic investor(s) as the Company shall offer to strategic investor(s) before the public auction.


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1.2. Offering to strategic investor:

In accordance with the approved equitization plan, total number of shares offered to strategic investor is

52,500,000 shares, equivalent to VND525,000,000,000 (Five hundred twenty five billion Vietnam Dong),

accouting for 35.0% of the charter capital.

List of strategic investors:

Unit: VND million

No, Investor Address Total Equity as

of 31/12/2015

Total Assets

as of

31/12/2015

% of the

charter

capital

1 Thu Dau Mot Water

JSC

07 Ngo Van Tri, Phu Loi

Ward, TDM City, Binh Duong

304,679 860,943 35%

Source: Equitization plan

1.3. Investors participating in the auction process:

Offering shares: 17,634,200 shares, equivalent to VND176,342,000,000 (One hundred seventy six

billion three hundred forty two million Vietnam Dong), accounting to 11.76% of the charter capital

Timing: Estimated in August 2016

The offering of shares to the public will be conducted in the form of public auction through Ho Chi

Minh Stock Exchange (HOSE)

Auction Participants: local and foreign individuals and institutions in accordance with the law

The minimum offer price: VND10,200 per share

2. Use of proceeds

2.1. Management and use of the proceeds

The management and use of proceeds from equitization shall comply with article 42 of Decree

59/2011/ND-CP and section III of the Circular 196/2011/TT-BTC.

The remaining proceeds from the sale of the State capital will be deposited into the Rearrangement and

Development Enterprise Fund.

On the basis of the actual value of the State capital in enterprise and the proportion of the State capital in

the joint stock company, the Company expects the following plan for the use of the proceeds from

equitization, at the starting price of VND 10,200/share:

No Content Value (VND)

1 Estimated proceeds from the issuing shares 746,624,904,000

1,1 Proceeds from employees’ subscriptions 31,256,064,000

Seniority in the public sector 4,612,644,000


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Working commitment to the Company post equitization 26,643,420,000

1,2 IPO 179,868,840,000

1,3 Strategic investor 535,500,000,000

2 Total expenses 800,000,000

2,1 Equitization expenses 500,000,000

2,2 Organizing auction at Hose* 300,000,000

3 Proceeds from the sale of State capital 745,824,904,000

(*) Costs of organizing the auction to pay for Ho Chi Minh Stock exchanges is determined by 0.3% on

the total value of shares offered successful but at least 20,000,000/auction and shall not exceed

VND300,000,000/auction as stipulated in Circular 09/2014/TT-BTC dated 16/01/2014.

3. Expected Risks

3.1. Economic risks

The economy in the country and the world are affected by many factors that have led to instability in

recent years. This has been a significant impact on the situation of production and business activities of

enterprises in general and to the Company in particular.

However, with the signs of recovery in Vietnam's economy as GDP growth has steadily increased every

years, reached 5,42% in 2013, 5,98% in 2014 and 6,68% in 2015. The inflation rate is under control at

0,68% in 2015, contributing to the positive impact of business activities of enterprises in the future.

On the other hand, the core business of the Company are mining, treating and supply of clean water - the

essential products, so overall production and business activities of the Company is less affected from

economic risks.

3.2. Legal risk

Legal risk arises from any failure to apply and adhere to legal regulations on time during operations.

Vietnamese Law system and sub-law documents are still under finalization, so many amendments have

led to many changes and the gaps may arise which will affect the business operations of the Company.

Therefore, to minimize the risks arising in relation to the legal elements of the operation, the Company

always monitors, research and update legal documents related to its activities while references and hiring

consultants for legal matters beyond the company.

3.3. Risks from specialized sector

The Company’s specific risk is the water loss during the water supply to customers. Currently, the

leakage rate of the Company is 7.6% - a very low rate compared to the other companies in nearby areas.

To reduce losses, the Company has and continues to apply advanced techniques in management

systems such as geographic information systems (GIS), customer management software, to propagate

the awareness of saving water and protecting water resources. Furthermore, the Company collaborates


38

closely with other units of technical infrastructure construction, transportation to minimize water loss

during the construction.

3.4. Offering risk

An Initial Public Offering (IPO) involves a significant risk of unsold shares offered. The successful offering

depends on many factors such as the Vietnam's volatile stock market at the auction time, investor

sentiment as well as the attractive feature of the Company’s shares. Therefore, there is the risk of not

selling all the number of shares offered.

3.5. Exchange rate risk

Currently, the Company has a number of ODA loans disbursed to several investment projects have been

implemented. The exchange rate has been fluctated in recent years which causes the difference in

foreign exchange rate with the adverse trend to the Company. This risk is out of control of the Company.

3.6. Other risks

In addition to the risks mentioned above, the Company's operations may be affected by natural disasters

including earthquakes, epidemics, floods, etc. which may occur and damage the Company's assets as

well as affect business operation. These risks are less common in reality but when it happens, it often

causes huge losses in terms of material and human resources as well as the business operations of the

Company.

PART VII: CONCLUSION

This Prospectus is prepared to provide information to investors so investors are able to evaluate assets,

capital, financial performance and the business outlook of the Company before deciding whether to

register to purchase shares.

This Prospectus is prepared based on approved equitization plan by the People's Committee of Binh

Duong Province and information, data provided by the Company for transparency and protecting

investors’ legitimate interest. The valuation, selection of information and the wording in this Prospectus

has carefully selected based on information and data provided by the Company.

We do not analyse, make any comments to imply about the value of shares. Whenever investors make

an investment decision should based on their own opinions and take responsibility. Therefore, we

respectfully request investors to learn more information about the business, and ensure the registration of

purchase or the transaction will be paid in lawful money, legitimate authority, in accordance with the

provisions of current law.

PART VIII: RESPONSIBLE PERSONS FOR THE CONTENTS OF THE

PROSPECTUS

1. Equitization Steering Board

Mr. Nguyen Van Danh Deputy General Director of Becamex IDC - Head of Steering Board

Mr. Nguyen Van Thien Chairman – General Director of Biwase – Deputy Head


39

Mrs. Nguyen Thi Thanh Nhan Supervisor of Becamex IDC - Member

Mr. Nguyen Danh Tung Member of Board of Members – Administration and Organization of Becamex IDC - Member

Mr. Quang Van Viet Cuong Investment Director of Becamex IDC - Member

Mr. Nguyen Hoan Vu Business Director of Becamex IDC – Member

Mr. Giang Quoc Dung Secretary of Board of Members – Assistant to General Director of Becamex IDC – Member

Mr. Duong Hoang Son Deputy General Director of Biwase – Member

Mr. Lê Van Gon Deputy General Director of Biwase – Member

Mrs. Nguyen Thi Dien Chairwoman of Labor Union of Biwase – Member

Mr. Tran Tan Đuc Chief Account of Biwase – Member

Mrs. Duong Anh Thu Supervisor of Biwase – Member

2. Issuer

Mr. Nguyen Van Thien Chairman – General Director of Biwase

3. Financial Advisor

Mr. To Hai CEO of VCSC

Documents

INITIAL PUBLIC OFFERING · 2016-07-14 · Binh Duong Water Supply Sewerage – Environment Co., Ltd Prospectus BINH DUONG WATER SUPPLY SEWERAGE – ENVIRONMENT CO., LTD (Business