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SQC Organized Press Conference Relating to The Company Trading Activities
Tuesday, 12 October 2010 09:19

Hanoi Stock Exchange - October 11, 2010 – SQC’s management board organized a press conference, which revolved around issues relating to the company operational and trading activities.

SQC’s Management Resolution, which was sent to the State Securities and Exchange Commission, including information of SQC’s General Meeting on three issues: new business plan, to stop listing on HNX, to partner with foreign firms.

At the press conference, Ms. Nguyen Tran Trieu Thanh, SQC’s General Director, answered related questions that caused media attention recently.

Questions related to SQC’s Operational Activities

Regarding to question of SQC’s decision to temporarily shut down the company’s titanium production and its impact, Ms. Trieu Thanh expressed:

"SQC has multiple operational activities and production’s stages. Titanium slag production is the last stage. Besides the titanium slag production stage, other production activities will continue to operate normally. The last stage consumed the most capital resource, and labor costs.”

The temporary shutdown will produce absolutely no effect on SQC’s operational income. Since the current tariff is inadequate, SQC’s management board sees the need to shut down its titanium slag production to stop lost and to protect the company’s profitability.

SQC has been operating in moderately since July, 2010. The company planned to stop producing deep process titanium in the first quarter of 2011 since the taxation policy is unlikely to change within this year. The company's warehouse already reached its maximum capacity."


Overview of SQC Press Conference

Questions related to the current tax rate

At the press conference, Ms. Trieu Thanh cited difficulties related to high tax rate which SQC is facing.

According to international common taxation, there are little different in tax rate between processed ores and crudes. The current tax rate on a unit of processed ore is many times higher than a unit of crude output. Titanium slags with purity ranging from 82% to 92% in purity are imposed the same 15% tax rate. When the higher added value is created, the lower tax seemed to be reasonable.

With such a high tax rate, the deep processing of titanium slag (92%) will not generate any profit. The tax issue directly affects production activities and SQC trading volume on HNX.

In response to question concerning the process of lowering the taxation, Ms. Trieu Thanh said:

"At the time SQC's factory was built, State authorities strongly encouraged deep processing over crude one. Titanium slag products were not on the list of export goods. We believed that the tax rates of 0-3% would be reasonable. However, the Ministry of Finance came up with the first tax rate of 18% and later to lower the rate to 15%. SQC didn’t directly communicate with the Ministry of Finance but to contact the Titanium Association, the Ministry of Trade and the Ministry of Natural Resources and Environment."

SQC representatives also believed when the tax rate was more reasonable, SQC would have significant competitive advantages, not only in the production of titanium slag, but also in titanium processing plant consulting, EPC contractor of design, construction and equipment supply, or to provide complete solutions to build titanium processing plant.

Questions related to SQC shares on HNX

First, to answer questions about SQC decision to stop listing on HNX, Ms. Trieu Thanh said “it would depend on SQC’s shareholder’s decision.”

Second, to answer questions regarding to SQC’s public announcement, Ms. Trieu Thanh commented: "SQC will accept SEC’s decision and if it is found guilty, the company will act accordingly and comply with decision from the authority. This is an opportunity for SQC to improve its Public Relation."

In addition, to answer questions related to investor’s interests, SQC will acquire outstanding shares accordingly.

Huyen Le

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Updated: 21-October-2011