Financial forecast

Collect the annual incomes & expenses Collect the annual incomes & expenses Assess the incomes Assess the incomes Assess the expense Total incomes & expenses => total net income Total

Financial Forecast

Financial Management

Group’s

members

Introduction about Financial Forecast

A financial forecast is simply a financial plan or budget for your business

How often should we do a

Compare: forecast vs reality

+ Identify the cause of variation -> make right decision (before it becomes a major trouble).+ Prepare the forecast more correctly next year

How to create

a financial forecast?

How to create

a financial forecast?

Collect the annual incomes & expenses

Collect the annual incomes & expenses

Assess the incomes

Assess the incomes

Assess the expense

Total incomes &

expenses => total net

income

Total incomes &

expenses => total net

income

The methods to develop forecast

Qualitative methods: Judgmental, Consensus, Expert

Quantitative methods: Trend Analysis, Multiple Regression Analysis, Time-Series Analysis

In fact, we usually combine both of 2 methods above to improve forecasting accuracy

Demonstrates the financial viability of a new business

To measure the actual financial operation of the business against the forecast financial plan => make adjustments

Guide your business in the right direction and take control of your cash flow.

Provides a benchmark against which to measure future performance

Identifies potential risks & cash shortfalls

Estimate of future cash needs and whether additional private equity or borrowing

Secure a bank loan or other funding

THE ADVANTAGES

OF AN EFFECTIVE

FINANCIAL

FORECAST

The cement of Viet Nam

Development history over 100 years with the first project in Hai Phong Cement Factory, built in 1889, marking the advent of the Vietnam Cement industry

1926 – 1936, three small cement factory with equipment from Denmark was installed

1965 - 1968, installed 4 rotary kiln cement factory by method of Romania

HISTORY

The table of cement production statistic

(Source: VLXD Duong Dai)

•

Res pon din

g th

e n eeds

of the co unt

ry unt co the of eeds e n g th din pon Res •

ry

4

•

Dec lin ing pr opo rtio

n o

f S tat

e en ter pris

es pris ter e en tat f S n o rtio opo pr ing lin Dec •

es

3

•

Attr act ing inves tm ent f rom th

e pr ivat

e en ter pris

e an

d f oreig

n in ves tm ent tm ves n in oreig d f e an pris ter e en ivat e pr th rom ent f tm inves ing act Attr •

se the tot

al g ros

s d om estic pr odu

ct ( GDP) ct ( odu pr estic om s d ros al g tot the se rea Inc •

GDP)

IMPORTANCE

The development of the cement industry involves many sectors producing services

Supply has exceeded demand pretty much

Supply and Demand

In 2012, Total products sold 53.6 million

tons of cement and clinker

46 enterprises producing and trading with a total capacity of 68.5 million tons / year

ACTUAL SITUATION

Specifically the real estate

bubble caused housing

market freezes

Specifically the real estate

bubble caused housing

market freezes

Deactivate projects Cement consumption

decreased

Cement consumption decreased

Many businesses on the brink

of bankruptcy as Dong Peng

XM, XM Ha Long, Quang Son

Cement

Many businesses on the brink

of bankruptcy as Dong Peng

XM, XM Ha Long, Quang Son

Cement

Affiliated group of Vietnam Cement Industry Corporations

Affiliated group of Vietnam Cement Industry Corporations

Cement plants are corporations and private companies invested

ACTUAL SITUATION

36%

31%

33% Vietnam Cement Corporation

The Joint Venture Enterprises

The Other Enterprises

Market share of Companies

Overview about HT1

1960

• The land breaking

of the first Ha Tien

Cement Factory

1964

• Start the cement industry in South Vietnam

1993

• Growing into two companies as Ha Tien 1 & Ha Tien 2

2007

• Evolving to Joint Stock Cement Company Ha Tien

1 & Ha Tien 2

2009

• Expanding with Phu Huu Grinding Terminal

2010

• Creating new business strength

by merging to form the one and

only VICEM HA

TIEN

OVERVIEW

History Milestones

Cement Producer and supply cement and other cement related products

Produce and supply construction materials for civil and industrial projects

Import and Export cement, raw materials, cement producing equipment and other materials

Real Estate and Construction

Port services, warehouse rental, transportation, labour services

Core Bussiness

OVERVIEW

Analysis and Forecasting

ANALYSIS AND FORECASTING

negative financial situation, there is no ability to repay the debts at maturity

short term liabilities

 => The investor feel not safe about ability of HT1 to meet short term liabilities because most of ratios were low, so HT1 needs to improve the ratios to rise liquidity and reduce risks when meeting current liabilities

ANALYSIS AND FORECASTING

1 Debt to assets ratio, HT1 has been having the high risks of finance and solvency, market

interest rates tends to increase highly, which made interest expenses to be a burden of company => Not good for the company

2 Debt to capital shows that weak financial strength of HT1

3 Debt to equity ratio: had a weak financial strength of MPC compared to industry => HT1

faces to increase risks of finance due to burden of interest expenses , less solvency

ANALYSIS AND FORECASTING

ROA over 3 years did not change but ROE went up from 0% to 1% but in 2013 it turned back

0% again => do not earn any profits from 1vnd asset, 1vnd shareholder’ equity and 1vnd investment capital

=> HT1 do not use shareholder’ equity effective, can not balance between shareholders' equity with borrowed capital to exploit its competitive advantage in the process of raising capital, scaling => the stock of the HT1 can not cause the attention of investors

Group Profitability

ANALYSIS AND FORECASTING

Payables Turnover increased over 3 years from 16% to 23% => HT1 occupied funds and pay

faster than previous years

Total asset turnover went up over 3 years from 43% to 48% but this ratio of industry is 71%

=> HT1 does not ability create revenue from asset equivalent industry

Inventories turnover in 2013 is higher than previous years => HT1 sell goods fast, not many

ANALYSIS AND FORECASTING

⇒Compared to industry HT1 had revenue growth rate high so it is in period of development However, the growth rate of revenue is not necessarily associated with growth rates higher profits

⇒HT1 had unstable growth => investors are not interested

Revenue Growth Rate

ANALYSIS AND FORECASTING

It was found that over the years, Total Assets Turnover of HT No.1 increased from 2012 to 1st quarter of 2014 This shows that HT No.1 has worked greater efficiency and has had inefficiency or relative capital intensity of the business.

The World Bank has forecast Vietnam’s GDP growth in 2014 at 5.5 percent in its latest Global Economic Prospect report, unchanged from its previous projection released earlier this year.

good production and business results: plans to sell about 4.9 million tonnes of cement and about 800,000 tonnes of clinker in 2014