MIRA INFORM REPORT

Report Date :

28.04.2012

IDENTIFICATION DETAILS

Name :	COATS PHONG PHU CO., LTD
Registered Office :	Phong Phu Hamlet Tang Nhon Phu Ward, Thu Duc District, Ho Chi Minh City,
Country :	Vietnam
Financials (as on) :	31.12.2010
Date of Incorporation :	1989
Legal Form :	Limited liability company
Line of Business :	Producing and Supplying Sewing, Embroidery Threads and Footwear Threads
No. of Employees :	1,440

RATING & COMMENTS

MIRA’s Rating :

Ba

RATING		STATUS	PROPOSED CREDIT LINE
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory

Status :	Satisfactory
Payment Behaviour :	Usually Correct
Litigation :	Clear

NOTES :

Any query related to this report can be made on e-mail: infodept@mirainform.com while quoting report number, name and date.

ECGC Country Risk Classification List – September 30, 2011

Country Name	Previous Rating (30.06.2011)	Current Rating (30.09.2011)
Vietnam	B1	B1

Risk Category	ECGC Classification
Insignificant	A1
Low	A2
Moderate	B1
High	B2
Very High	C1
Restricted	C2
Off-credit	D

SUBJECT IDENTIFICATION & LEGAL FORM
Current legal status
English Name	COATS PHONG PHU CO., LTD
Vietnamese Name	CONG TY TNHH COATS PHONG PHU
Other trade name	COATS PHONG PHU CO
Short name	CPP
Type of Business	Limited liability company (Foreign invested capital)
Year Established	1989
Investment Certificate No	411022000381
Date Of Issuance	11 Dec 2008
Place of Issuance	People's Committee of Hochiminh city
Registered Investment Capital	USD 34,086,857
Chartered capital	USD 14,606,857
Tax code	0300828098
Total Employees	1,440

Historical Identification & Legal form

List	Changed Items	Date of changes
1	Subject has got former Investment Certificate No: No.68/KTDN-GPDT Changed to: 411022000381	11 Dec 2008
2	Subject has got former Registered Vietnamese Name: CONG TY LIEN DOANH COATS PHONG PHU Changed to: CONG TY TNHH COATS PHONG PHU	-

ADDRESSES
Head Office
Address	Phong Phu Hamlet Tang Nhon Phu Ward, Thu Duc District, Ho Chi Minh City, Vietnam
Telephone	(84-8) 3896 9465/3896 0309/ 38960310
Fax	(84-8) 3728 0644/3896 4052
Email	b2b@coatsvn.com.vn
Website	www.coats.vn
Total Employees	1,035
Note: The correct address is as above, not as given (Thang Phu B Ward, Dist 9, HCM)
Representative office in Da Nang
Address	No. 64 Nguyen Chi Thanh Street, Hai Chau District, Da Nang City, Vietnam
Telephone	(84-511) 382 9077
Fax	(84-511) 382 3654
Branch in Hung Yen
Address	Pho Noi B Textile & Garment Industrial Zone , Yen My District, Hung Yen Province, Vietnam
Telephone	(84-321) 397 2860/61
Fax	(84-321) 397 2871/72
Total Employees	400

DIRECTORS
1. NAME	Mr. WILLIAM HAROLD WATSON III
Position	Current General Director – Legal representative person
ID Number/Passport	444593345
Current resident	Ho Chi Minh City, Vietnam
Nationality	Belgium
Qualification	Management
NAME	Ms. KIT PING AU YEUNG
Position	Former General Director
Nationality	Australian
Email	kit.ping.auyeung@coats.com
2. NAME	Ms. NGUYEN THI TUYET VAN
Position	Finance Director
Current resident	Ho Chi Minh City, Vietnam
Qualification	Bachelor
3. NAME	Ms. LE THI HOANG QUYEN
Position	Human Resources Manager
Current resident	Ho Chi Minh City, Vietnam
Nationality	Vietnamese
Qualification	Bachelor

BUSINESS NATURE AND ACTIVITIES

The subject specializes in producing and supplying sewing, embroidery threads and footwear threads.

IMPORT & EXPORT ACTIVITIES
IMPORT:
Types of products	Principal material
Market	come from COATS GROUP (80% were imported from COATS CHINA, 20% from India, Turkish and Hungary.
EXPORT:
Types of products	Most of subject’s products are supplied for domestic market

BANKERS
1. VIETNAM EXPORT IMPORT COMMERCIAL JOINT STOCK BANK
Address	8th Floor, VinCom Center, No. 72 Le Thanh Ton street , 1 District, Ho Chi Minh City, Vietnam
Telephone	(84-8) 3821 0055
Fax	(84-8) 3829 6063
2. JOINT STOCK COMMERCIAL BANK FOR FOREIGN TRADE OF VIETNAM
Address	No. 93 - 95 Ham Nghi Street, Nguyen Thai Binh Ward, 1 District, Ho Chi Minh City, Vietnam
Telephone	(84-8) 3821 0089
Fax	(84-8) 3829 0696
3. HSBC VIETNAM LTD
Address	6 Floor, No. 235 Dong Khoi Street, Ben Nghe ward, 1 District, Ho Chi Minh City, Vietnam
Telephone	(84-8) 3829 2288

SHAREHOLDERS
1. NAME	PHONG PHU JOINT STOCK CORPORATION
Business Registration	4103012492
Date of Registration	20 Feb 2009
Place of Registration	Business registration office of Hochiminh city
Registered Capital	USD 500,000,000,000
Tax code	0301446006
Address	Tang Nhon Phu B Ward, 9 District, Ho Chi Minh City, Vietnam
Tel	(84-8) 3731 0551- 3896 3533- 3896 3534 - 3896 3535 - 3896 0731
Fax	(84-8) 3896 6088
Percentage	30%
2. NAME	COATS HOLDINGS LTD
Address	1 The Square, Stockley Park, Uxbridge London UB11 1TD, United Kingdom , , Kent TH23 IRF , United Kingdom
Tel	+44(0)20 8210 5000
Fax	+44(0)20 8210 5025
Percentage	70%

FINANCIAL DATA
BALANCE SHEET
Unit: One VND
Balance sheet date	31/12/2010
Number of weeks	52
ASSETS
A – CURRENT ASSETS	542,381,504,896
I. Cash and cash equivalents	133,589,682,280
1. Cash	88,589,681,384
2. Cash equivalents	45,000,000,896
II. Short-term investments	0
1. Short-term investments	0
2. Provisions for devaluation of short-term investments	0
III. Accounts receivable	244,054,437,724
1. Receivable from customers	240,896,220,416
2. Prepayments to suppliers	2,718,994,908
3. Inter-company receivable	0
4. Receivable according to the progress of construction	0
5. Other receivable	2,176,063,012
6. Provisions for bad debts	-1,736,840,612
IV. Inventories	152,581,923,904
1. Inventories	158,788,098,552
2. Provisions for devaluation of inventories	-6,206,174,648
V. Other Current Assets	12,155,460,988
1. Short-term prepaid expenses	0
2. VAT to be deducted	12,155,460,988
3. Taxes and other accounts receivable from the State	0
4. Other current assets	0
B. LONG-TERM ASSETS	444,135,556,912
I. Long term accounts receivable	0
1. Long term account receivable from customers	0
2. Working capital in affiliates	0
3. Long-term inter-company receivable	0
4. Other long-term receivable	0
5. Provisions for bad debts from customers	0
II. Fixed assets	435,325,740,032
1. Tangible assets	391,822,843,832
- Historical costs	706,784,399,212
- Accumulated depreciation	-314,961,555,380
2. Financial leasehold assets	0
- Historical costs	0
- Accumulated depreciation	0
3. Intangible assets	23,031,459,552
- Initial costs	45,031,503,744
- Accumulated amortization	-22,000,044,192
4. Construction-in-progress	20,471,436,648
III. Investment property	0
Historical costs	0
Accumulated depreciation	0
IV. Long-term investments	0
1. Investments in affiliates	0
2. Investments in business concerns and joint ventures	0
3. Other long-term investments	0
4. Provisions for devaluation of long-term investments	0
V. Other long-term assets	8,809,816,880
1. Long-term prepaid expenses	8,809,816,880
2. Deferred income tax assets	0
3. Other long-term assets	0
VI. Goodwill	0
1. Goodwill	0
TOTAL ASSETS	986,517,061,808
LIABILITIES
A- LIABILITIES	454,557,338,932
I. Current liabilities	442,102,506,228
1. Short-term debts and loans	51,116,400,000
2. Payable to suppliers	298,050,527,448
3. Advances from customers	2,769,600,144
4. Taxes and other obligations to the State Budget	34,427,766,272
5. Payable to employees	0
6. Accrued expenses	54,694,453,340
7. Inter-company payable	0
8. Payable according to the progress of construction contracts	0
9. Other payable	1,043,759,024
10. Provisions for short-term accounts payable	0
II. Long-Term Liabilities	12,454,832,704
1. Long-term accounts payable to suppliers	0
2. Long-term inter-company payable	0
3. Other long-term payable	0
4. Long-term debts and loans	0
5. Deferred income tax payable	0
6. Provisions for unemployment allowances	12,454,832,704
7. Provisions for long-term accounts payable	0
B- OWNER’S EQUITY	531,959,722,876
I. OWNER’S EQUITY	531,959,722,876
1. Capital	266,692,376,724
2. Share premiums	0
3. Other sources of capital	0
4. Treasury stocks	0
5. Differences on asset revaluation	0
6. Foreign exchange differences	0
7. Business promotion fund	0
8. Financial reserved fund	1,137,055,920
9. Other funds	0
10. Retained earnings	264,130,290,232
11. Construction investment fund	0
II. Other sources and funds	0
1. Bonus and welfare funds	0
2. Sources of expenditure	0
3. Fund to form fixed assets	0
MINORITY’S INTEREST	0
TOTAL LIABILITIES AND OWNER’S EQUITY	986,517,061,808

PROFIT & LOSS STATEMENT

Description	FY2010
1. Total Sales	1,440,854,410,900
2. Deduction item	0
3. Net revenue	1,440,854,410,900
4. Costs of goods sold	889,602,165,948
5. Gross profit	551,252,244,952
6. Financial income	6,922,050,364
7. Financial expenses	9,176,756,904
- In which: Loan interest expenses	2,132,784,460
8. Selling expenses	110,377,819,700
9. Administrative overheads	106,791,019,776
10. Net operating profit	331,828,698,936
11. Other income	3,185,820,164
12. Other expenses	3,642,990,100
13. Other profit /(loss)	-457,169,936
14. Total accounting profit before tax	331,371,529,000
15. Current corporate income tax	81,802,048,220
16. Deferred corporate income tax	0
17. Interest from subsidiaries/related companies	0
18. Profit after tax	249,569,480,780

FINANCIAL RATIOS AND AVERAGE INDUSTRY RATIOS

Description	FY2010	Average Industry
Current liquidity ratio	1.23	1.13
Quick liquidity ratio	0.88	0.62
Inventory circle	5.83	5.92
Average receive period	61.82	55.47
Utilizing asset performance	1.46	1.39
Liability by total assets	46.08	70.41
Liability by owner's equity	85.45	301.78
Ebit / Total assets (ROA)	33.81	9.72
Ebit / Owner's equity (ROE)	62.69	34.85
Ebit / Total revenue (NPM)	23.15	7.85
Gross profit / Total revenue (GPM)	38.26	16.74
Note: The Average Industry was calculated by VietnamCredit based on our own statistical data

FINANCIAL RATIOS AND AVERAGE INDUSTRY RATIOS

Description				FY2010		Average Industry
Current liquidity ratio				1.23		1.13
Quick liquidity ratio				0.88		0.62
Inventory circle				5.83		5.92
Average receive period				61.82		55.47
Utilizing asset performance				1.46		1.39
Liability by total assets				46.08		70.41
Liability by owner's equity				85.45		301.78
Ebit / Total assets (ROA)				33.81		9.72
Ebit / Owner's equity (ROE)				62.69		34.85
Ebit / Total revenue (NPM)				23.15		7.85
Gross profit / Total revenue (GPM)				38.26		16.74
Note: The Average Industry was calculated by VietnamCredit based on our own statistical data
PAYMENT HISTORY & PERFORMANCE EXPERIENCES
Trade Morality		Good
Liquidity		Medium
Payment status		Above Average
Financial Situation		Strong
Development trend		Uptrend
Litigation data		No recorded
Bankruptcy		No recorded
Payment Methods		by cash or through the bank
Sale Methods		Wholesaler
RATINGS & CREDIT RECOMMENDATIONS
Factor	Criterion		Evaluated Score		Total Score
Management Factors			21		30
	Organization		7		10
	Facilities		7		10
	Management capabilities		7		10
Financial Factors			27		40
Other Factors			21		30
	Trademark		7		10
	Current position in the industry		7		10
	Future prospect		7		10
Total Evaluated Scores			69		100
With total scores of 69, the Subject is graded at: BBB
The subject has capacity to meet this credit inquiry!

INTERPRETATION ON THE SCORES

The subject – COATS PHONG PHU CO., LTD was established in 1989. At present, the subject is operating under investment certificate no.411022000381 issued by People's Committee of Ho Chi Minh City with total investment capital USD 34,086,857

The subject is one of the leading suppliers of threads for use in textiles, leather products and knitwear for embroidery purposes. The subject materials from COATS GROUP (80% were imported from COATS CHINA, 20% from India, Turkish and Hungary.

Premises and facilities of the subject are standard. Production lines are equipped with modern machines. The subject has successfully established an integrated management system incorporating documented and certified partial systems on:

Quality management to ISO 9001:2000

Environmental management to ISO 14001

Management of occupational safety and health to ISO 18001

As reported financial data, financial situation of the subject is healthy. Its turnover & profit capability is increasing high (its revenue and profit after tax in 2009 were VND 1,069,977 million and VND 207,658 million. Subject’s market share is remarkable in Vietnam market. CPP is currently the leading thread supplier in Vietnam with nearly half of the total market share and approximately 800 customers. In overview, subject is a big company. Although the macro-economic seems to be not good on recent years but its business situation is developing. It is reliable for any normal credit commitments.

INDUSTRY DATA

Industry code	Growth speed by price compared with 1994 (%)		Total enterprises 2009		Total employees 2010 (Thous. pers.)	Annual average capital of enterprises 2009 (billion dongs)
	2011	2010
Agriculture, Forestry and Fishing	4.00	2.78	8,749		23,896.3	81,559
Industry and Construction	5.53	7.70	85,115		10,630	2,751,975
Trade and Services	6.69	7.52	154,978		14,522	4,939,069
ECONOMIC INDICATORS
			2011	2010		2009
Population (Million person)			87.84	86.93		86.02
Gross Domestic Products (USD billion)			119	102.2		91
GDP Growth (%)			5.89	6.78		5.32
GDP Per Capita (USD/person/year)			1,300	1,160		1,080
Inflation (% Change in Composite CPI)			18.58	11.75		6.88
State Budget Deficit compared with GDP (%)			4.9	5.8		6.9
SERVICE TRADE PERFORMANCE
Billion USD			2011	2010		2009
Exports			96.3	72.2		57.1
Imports			105.8	84.8		69.9
Trade Balance			-9.5	-12.6		-12.8

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.52.68
UK Pound	1	Rs.85.12
Euro	1	Rs.69.38

INFORMATION DETAILS

Report Prepared by :

SDA

RATING EXPLANATIONS

RATING		STATUS	PROPOSED CREDIT LINE
>86	Aaa	Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums	Unlimited
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory
26-40	B	Capability to overcome financial difficulties seems comparatively below average.	Small
11-25	Ca	Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity	Limited with full security
<10	C	Absolute credit risk exists. Caution needed to be exercised	Credit not recommended
----	NB	New Business	----

This score serves as a reference to assess SC’s credit risk and to set the amount of credit to be extended. It is calculated from a composite of weighted scores obtained from each of the major sections of this report. The assessed factors and their relative weights (as indicated through %) are as follows:

Financial condition (40%) Ownership background (20%) Payment record (10%)

Credit history (10%) Market trend (10%) Operational size (10%)

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This report is issued at your request without any risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL) or its officials.