Restructuring organization to embrace emerging opportunities
Far Eastern New Century Corporation (“FENC”, or “the Company”) held its 2011 Annual General Shareholders’ Meeting at the Auditorium of Taipei Hero House at 9:00am this morning. Chairman Douglas Tong Hsu presided the meeting. Restructuring the organization of the Company, via amendments of the Articles of Incorporation, was the primary purpose of this meeting, advocating the ambition of the management team to embrace the emerging business opportunities followed by the effectiveness of ECFA, a free trade agreement between Taipei and Beijing. In addition, the financial results of year 2010 were reported, and the operating strategies at key business territories – manufacturing of polyester products, equity investments, and property developments, were elaborated by the management team.
The Board of Directors at FENC proposed in the meeting amendments of the Incorporation of Articles, and recommended all shareholders vote for such amendments. Major amendments are: 1) the Company will have the flexibility to determine the number of General Managers as needed after the effectiveness of the amendments; 2) independent directors will be added into the Board of Directors, effective from year 2012 when the existing directors serve their three-year term. “During the post-ECFA era, FENC needs to re-define its domestic market, which no longer means Taiwan alone. The definition of domestic market, for FENC, literally means a market with a population of 1.4 billion, including both Taiwan and Mainland China. For quickly embracing the rising opportunities and accelerating the growth of the Company, a number of General Managers will be a must” according to Chairman Hsu, “and, incorporating independent directors into the Board is an important step for FENC to move toward the best corporate governance practices.”
According to the business report presented in the meeting, the financial results of FENC in year 2010 achieved a record high in the Company’s history. The consolidated revenue rose by 20% YoY to NT$200.2 billion; meanwhile realizing a net income after tax of NT$12.8 billion, substantially up by almost 60%. More impressively, FENC improved its performance further in 1Q11, raising its consolidated revenue to NT$57.9 billion and its net income after tax to NT$4.8 billion, representing a YoY growth rate of 30% and 137%, respectively. The Company delivered an EPS of NT$1 in 1Q11, “the first time in the Company’s history, and must be a satisfactory reward to our shareholders” said Chairman Hsu.
After the restructure of its organization, “FENC aims higher” said Vice Chairman Johnny Shih, “we target to boost the revenue of our polyester related business from NT$90 billion to more than NT$200 billion by year 2014.” “As we foresee a stable demand growth at the petrochemical products over next several years, we find more applications for PET resins have been created at a exponential rate, and we benefit from the zero-tariff privilege offered by the early harvest list in the ECFA agreement”, according to Vice Chairman Shih, FENC plans to aggressively expand its production capacity in both Taiwan and China. The invested capital in the first phase would be NT$40.3 billion. The capacity of PTA, a major raw material for the production of polyester polymers, is planned to be doubled in three years, rising to 3.8 million tons per annum. Polyester polymer capacity is scheduled to increase by 50%, reaching around 3 million tons per annum. “Only aggressive expansion at production capacity can allow us to capture the market share and enjoy the early-mover advantage” said Vice Chairman Shih.
In the business report, FENC clearly and firmly expressed its commitment to conserving the environment. “The tremendous business activities we undertake already have an adverse impact on the planet. We view conserving the environment as a corporate social responsibility. And we discover numerous business opportunities while promoting the awareness of environmental conservation” said Chairman Hsu. According to the business report of FENC, the Company now is the leading producer of bio-based polyester polymers and recycled polyester chips. Production capacity, being planned to be added, will be dedicated to the production of environmental-friendly products.
Developing the land assets is another target of the Company, for improving its asset turnover and return on shareholders’ equity. FENC owns a land bank with a total size of 550,000 pings (or 1.8 million square meters), and about half of these lands are available for development. The first product that FENC launched to the market was a residential product, named as “California Dream”. The entire product was fully sold soon after being launched in 2009, and the construction will be completed soon. In year 2010, FENC has already booked NT$2.1 billion, about half of the total profit from the disposal gain of the said residential product. The remaining profit will be recognized based on the percentage-construction-completion method. The target of FENC set for its property development business is to achieve a development value of more than NT$100 billion.
Reinforcing the cooperation between member companies under the Far Eastern Group is the other target of the Company. Far EasTone Telecommunications, one of the major subsidiaries owned by FENC, has received the subsidy this year from the Ministry of Economic Affairs for participating in the Smart Living Technology & Service Program initiated by the government. Taipei Far Eastern Telecom Park, a developing project located at the outskirt area of Taipei City, Banqiao, will be the center for Far EasTone to promote the said program. Retail, telecom, and some charity organizations under the umbrella of Far Eastern Group will all be invited into this project, creating synergies between FENC and its subsidiaries. “Banqiao Transform – A Smart Mobility Town is the ultimate product we are going to deliver to the society” said Chairman Hsu.
In addition to the amendments of Articles of Incorporation, the Year 2010 business report and financial statements of the Company were accepted by shareholders during the meeting. The profit allocation proposal (including a cash dividend of NT$2 per share and a share dividend of NT$0.3 per share, totaling NT$2.3 per share) and the resolution to capitalize the share dividends were approved. Proposed amendments of the Company’s bylaws on “Election procedures of Directors and Supervisors for Far Eastern New Century Corporation” were also resolved to be approved. The meeting was concluded successfully by noon on the date of 24 June.
