Assignment international financial statement COMPANY VINAFREIGHT

Increasing charter capital from 56 billion VND to more than 83.9 billion VND as well as the ownership ratio in VNT Logistics associate company shown that VNF proactively and promptly res

Banking Academy of Vietnam International School of Business

Assignment International Financial Statement

COMPANY: VINAFREIGHT

Group 2: Bùi Phi Long

Lê Bá GiangTrần Minh Đức

Lê Thị Hải YếnTrần Thanh Thư

Lê Mai Phương

Class: CityU8C

Hanoi, 19/12/2021

1 Introduction about the firm

Vinafreight (VNF) was established in December, 1997, as a unit specializing in air transport, logistics services and shipping agents In order to meet different requirements and needs of customers in the face of the dynamic environment of the market economy, the company rapidly generated and provided high quality products and services with reasonable prices With the strength

of the brand positioning is the trust of customers in business and stable financial ability in logistic majors, VNF has expanded more in the field of the logistic sector To be more specific, this enterprise has 5 main activities including forwarding, air transportation, sea freight, warehouse rental services warehousing and logistics consulting services (import and export, customs declaration, VAT, etc.) Besides, based on the rapid development in all aspects particularly in their financial growth, the company was able to expand its scale throughout 6 mega cities of Vietnam which are Hanoi, Danang, Haiphong, Qui Nhon, Nha Trang, Can Tho and associate with foreign partners.

Increasing charter capital from 56 billion VND to more than 83.9 billion VND as well as the ownership ratio in VNT Logistics associate company shown that VNF proactively and promptly respond and adjust the suitable business direction when there are negative effects and unusual fluctuations of the economic situation in the country and the world.

Vinafreight was officially listed and traded on the Hanoi Stock Exchange (HNX)with the code VNF

2 Environment and strategy analysis:

+ Macro-environmental analysis

(P): Closing 2015, the world has witnessed increasingly unpredictable fluctuations

in economic, political and social situations Among them are political conflicts between countries, and the unstoppable fall of oil prices In particular, the crisis in China's stock market and the fact that the country's economy has not regained its previous growth

momentum has made the world's consumption of goods not dynamic, inadvertently

causing stagnation for the whole world At the same time, competition from Chinese

goods makes many businesses from many countries face great difficulties

(E): In that difficult context, Vietnam's economy emerged in the Asia region with

amazing growth Vietnam's GDP growth rate in 2015 was 6.68%, the highest in the last 5

years, while the inflation rate was onl0y 0.6%, this is the lowest inflation rate since 2001

Thereby promoting consumption demand and goods circulation during the year.

In the past year, the international air freight market in Vietnam has grown slightly (more than 10%) and reached 327,000 tons of output However, the growth of cargo does not correspond to the increase in supply load, making competition increasingly fierce, airlines have to reduce fares to increase market share, which greatly affects the business model of companies in the industry This trend is expected to continue in 2016.

Entering 2016, Vietnam increasingly integrates into the world economy, the

prospect of import and export activities will be increasingly developed, and opportunities for VINAFREIGHT's business activities will also be promoted more VINAFREIGHT continues to focus on developing its operations in a sustainable way, focusing on freight sales, logistics services, and at the same time focusing on the activities of subsidiaries to maximize profits and improve position and competitiveness in the market

In 2016, the world economy grew slowly with the growth rates between regions becoming increasingly different due to socio-political upheavals with wars and regional disputes Vietnam's GDP is estimated at 6.21% according to the General Statistics Office, lower than the 6.68% in 2015 and not reaching the set target of 6.7% The total import-export turnover of the whole country this year reached more than 350.74 billion USD, up 7.1%, equivalent to 23.16 billion USD increase over the same period last year Domestic logistics enterprises must compete fiercely with foreign logistics enterprises to maintain market share This competition is more intense when foreign enterprises are increasingly involved in the domestic logistics field

(S): VINAFREIGHT always upholds the sense of responsibility to the community and

society in addition to business development The company is always ready to support local

authorities in social work such as building houses of compassion; actively participate in

contributing to charity - social campaigns of the local and central; fully participate in the activities

of the Trade Union of Central Commercial Enterprises in Ho Chi Minh City In addition to

participating in the campaigns called for, the Company also actively organizes social activities and encourages, propagates and mobilizes its employees to participate such as blood donation, charity meal, etc distribute mid-autumn gifts, Tet gifts to poor children,

The Company always properly and timely complies with the policies and regulations of the State Law related to employees The company also creates conditions for employees to improve their skills and knowledge, create a professional working environment, ensure their

health status, fully enjoy health insurance, labor insurance, and have benefits The salary is

reasonable and attractive, equipped with basic skills in first aid and fire prevention.

(T): The company started to provide a package of transporting machinery, equipment, and raw materials to a number of large customers from abroad The subsidiary of Vector International Air Service officially assumes the operation of cargo feeder flights from Ho Chi Minh, Vietnam to Bangkok, Thailand VINAFREIGHT became the first GSA company in Vietnam to hire a large transport aircraft to transport a helicopter overseas for repair.

+ Industry analysis Bargaining power of buyers

Customers have a wide choice in terms of price, quality, and service The company'sservices with wide and regular coverage still receive the attention of customers Whencustomers love specific services, they will pay more for that one service, which positivelyaffects buyer power As a result, bargaining power is reduced

Bargaining power of suppliers

Vinafreight produces and trades in a variety of industries with many essential services inVietnam Vinafreight can ensure a stable source of services from shipping agents, freightagents, container management agents for shipping lines, ship suppliers, forwarding agentsfor foreign freight forwarders, and confidently compete with transport enterprises insideand outside Vietnam

Threat of substitutes

The subsitutes are large domestic and international logistics transport companies such as Germanmadept, DHL, Since they have global connectivity, the level of integration ishigher The companies in the same industry have modern technology with cheaper costs, overseas taxes and fees

Industry competitors

Vinafreight is one of the largest air transport companies in the Ho Chi Minh City area The company is a partner of major air and sea transport service providers with major competitors such as Gemadept, Vitranschart, Samtra, Saigonship These companies have similar capabilities, business lines, equipment and financial capacity, and are highly competitive with Vinafreight In recent times with the characteristics of Vietnam's economy, businesses must focus on improving their competitiveness by: expanding the scale of operations, increasing

investment in machinery, increasing training and upgrading high capacity in business

administration

Threat of potential entrants

Bad debt and capital misappropriation is one of the disadvantages of the logistics industrybecause companies have to pay a fee in advance to partner carriers If the transportcontracts with customers are not paid in time and in full, the Company will have financialproblems due to the inability to rotate capital, the Company will have to raise more money

to supplement the working capital that has been occupied by carriers and customers, andbad debts are also at risk of increasing

+ Business Strategy analysis

Regarding external affairs, with the business philosophy of "we win together", Vinafreightalways operates with a customer-oriented mindset, for customers, putting the interests ofcustomers first Internally, the Company always aims at a flexible business strategy,constantly innovating with the biggest goal: "The Board of Directors and staff aredetermined to build Vinafreight Joint Stock Company to become a Logistics Group that hasgrown up on a stable and effective foundation”

VINAFREIGHT maintains stable and sustainable development of its main businessactivities in aviation services, and at the same time strongly develops seaborne services forboth import and export First, continuing to develop freight services by air and sea

Maintaining stability in air services and developing sea services for both import andexport At the same time, focus on investing in human resources and facilities

Maintaining and promoting the strength of GSA general agents in the air freight market, focusing on domestic logistics services consumed by the market in the country still has a lot of potential

3 Interpret financial results through Income statements

a, Vertical analysis

Looking at the first 3 items, we can see revenue deduction of VNF is in the average with other items It’s under 0.6% in three years from 2018 to 2020 and in the acceptable range

Next, looking at the income statement, it can be seen that in 2018 to have 100% of net revenue, the company had to spend 96.48%% of COGS, and it’s quite high compared to net revenue Besides, 3.52% gross profit on sales and service provision is quite lower than Average Profit on Sales Moreover, operating profit accounted for 2.18 %, lower than GPOS profits It’s easy understand when total profit before tax take 2.37% when profits from operating activities bring effective In

2019, to have 100% of net revenue, the company had to spend 96.89% of COGS and 3.11% of GPOS profits And by 2020 to have 100% of net revenue, enterprises have to spend 98.04% of cost price and 1.96% of administrative expenses There is a gradual decrease in GOP over the years, due

to the increase in COGS, VNF's COGS index accounts for a relatively high percentage, which is understandable because this is a transportation company They have to pay a lot of money for advanced goods and profits mainly come from their services This decrease in the value of profit from business activities shows that in 2020, the company's business is not efficient, profits from production and business activities tend to decrease, causing losses for businesses Transportation business activities were also affected a lot due to the Covid 19 epidemic situation that began to appear in our country Moreover, profit from operating activities has also decreased in the following years although we see financial income increase and selling expenses decrease year by year, but administrative expense still increase combined with declining GPOS makes operating profit go down Finally, we can see total profits before tax has also decreased partly due to the year-on-year decrease of other profit.

In conclusion, it can be seen that in 2018, 2019 and 2020 the business has continuously promoted cost of goods sold Especially, in 2020, in order to increase net revenue, which not only increases profits but also facilitates a rapid increase in capital turnover However, GOPS

decrease in 3 years Enterprises need to study whether the increase in sales is due toincreased product sales or because the enterprise increases the selling price of products andthe reasons for that change and the situation of the cost of goods sold in the enterprise Wecan see that net revenue of 2020 has increased by nearly 1.5 times compared to theremaining 2 years but the cost of capital is up to 98% That proves that businesses are notoperating effectively in 2020 That leads to the lowest total profit before tax in 3 years.Financial income has the highest increase compared to 3 years but administrative expensealso increased and even Profit or loss in the joint venture is negative up to 0.66%.Therefore, enterprises need to make a reasonable adjustment between the use of loans andequity, and at the same time, enterprises also need to take measures to increase revenuefrom financial activities in the following periods.

b) Horizontal analysis:

Looking at the 2019-2018 comparison table, we can see that all indicators are negative It is understandable total profit before tax decreased quite a lot, up to nearly 40% compared to the previous year Besides, it can be seen that other expenses used by enterprises in this year are quite high, and it is clearer to see is the decrease in the value of the company's stock.

Until 2020, we can see a strong increase to more than 62%, deductions also decreasesignificantly at 65% promising a better result However, most of total revenue is accountedfor by COGS, profit on sales and service provision also only increased slightly at 3.06% Interms of operating profit, there is an acceptable decrease compared to last year because loss

in the joint venture quite a lot Other profit has a significant decrease compared to theprevious year because businesses may be focusing on promoting services However, the

number total profit before tax shows the inefficient operation of the business, which leads

to a sharp decrease of the company's stock

In general, we can see that VNF company’s profit decreased in 2019 and 2020 Therevenue reduced in 2020 may be because of the Covid 19 pandemic that affected thebusiness activities of the company Although the company has increased capital quite a lot

in 2020, the company's profit after tax has still decreased sharply In 2019, there was also adecrease in price compared to the same period in the previous year Finally, financialincome and financial expenses will increase in 2020 which means businesses can raisemore money to run the business

150% compared to 2018 And about basic earnings per share still decreased steadily in 3

years.

Looking at the overview of the Income statement, we can see that the business situation of

the business is really inefficient Especially in the situation of Covid-19, transportation and

storage businesses will be strongly affected Therefore, businesses should consider more

about other profits or balance investment capital, limit the use of financial accelerators to

increase revenue

4 Interpret changes and structure of Assets and Capital on the Balance sheet

4.1 Common size Analysis

Common size BS for VNF Assets:

Current Assets:

short-term receivables from customers 25.85% 17.12% 23.64%provision for bad debts -0.31% -0.88% -1.16%

Overall, current assets have a relatively slight increase from 61.23% in 2018 to 66.14% in

2020, accounting for more than half of total assets despite a slight decrease of 5% in 2019, so it can

be said that only in 1 year, VNF Company did an excellent job in increasing current

assets by nearly 10% And evidence of this increase comes from an significant increase

in cash and cash equivalents (9% - raise from 12.99% to 21.42%)

· But in return, VNF decided to reduce short-term investments when this part had a decrease from 4.79% in 2018 to 2.41% in 2020

· In addition, in short-term receivables, this section only shows the up and down fluctuations

in the company's receivables, when it dropped to 33.75% in 2019 from 42.97% in 2018, thenincreased from 33.75% in 2019 to 41.86% in 2020

· VNF also manages assets very well when the other current assets account for only a very

small amount of the total current assets (0.45% in 2020)

-> The reason for the percentage increase in current assets came from an 8% increase in

cash and cash equivalents

The part of long-term assets shows a slight decrease, although it increased to 43.43% in

2019 from 38.77% in 2018, finally down to 33.86% in 2020 This is probably due to the impact of

the Covid-19 epidemic when in 2018-2019 the covid epidemic did not spread too much and

people's demand increased for necessities -> increased in the transportation sector, and In 2020 and

onwards, the covid epidemic took a serious turn, causing businesses to stall,