Religion Unit 2 Review Creation, De-Creation & Re- Creation in the Bible.
Fine Creation
Transcript of Fine Creation
Fine Creation For the Future
ANNUAL REPORT 2012
25th Fl., Samsung Electronics Bldg.,Seochodaero No.74-gil 11 (1320-10, Seocho-2-dong),Seocho-gu, Seoul, South Korea(135-857)
Tel. + 82.2.2255.0700Fax. + 82.2.2255.0710
www.sfc.samsung.co.kr
04 PaSSioN oN MatErialS
06 SPEcial SEctioN
11 2012 SFc SNaPShot
13 ViSioN & StratEgy
14 FiNaNcial highlightS
15 cEo MESSagE
17 Board oF dirEctorS
BUSINESS REVIEW_Ever-Fine
21 gENEral chEMicalS
23 FiNE chEMicalS
25 ElEctroNic chEMical MatErialS
27 Eco-FriENdly rENEwaBlE ENErgy MatErialS
SUSTAINABILITY REVIEW_Ever-Trusty
31 rESEarch & dEVEloPMENt
33 iNNoVatioN
35 Quality MaNagEMENt
37 ENViroNMENt & SaFEty
43 huMaN rESourcES
45 Social coNtriButioNS
FINANCIAL REVIEW
48 Md&a
58 FiNaNcial StatEMENtS
69 corPoratE iNForMatioN
AN
NU
AL R
EPORT 2012
Fine Creation For the Future
ANNUAL REPORT 2012
25th Fl., Samsung Electronics Bldg.,Seochodaero No.74-gil 11 (1320-10, Seocho-2-dong),Seocho-gu, Seoul, South Korea(135-857)
Tel. + 82.2.2255.0700Fax. + 82.2.2255.0710
www.sfc.samsung.co.kr
04 PaSSioN oN MatErialS
06 SPEcial SEctioN
11 2012 SFc SNaPShot
13 ViSioN & StratEgy
14 FiNaNcial highlightS
15 cEo MESSagE
17 Board oF dirEctorS
BUSINESS REVIEW_Ever-Fine
21 gENEral chEMicalS
23 FiNE chEMicalS
25 ElEctroNic chEMical MatErialS
27 Eco-FriENdly rENEwaBlE ENErgy MatErialS
SUSTAINABILITY REVIEW_Ever-Trusty
31 rESEarch & dEVEloPMENt
33 iNNoVatioN
35 Quality MaNagEMENt
37 ENViroNMENt & SaFEty
43 huMaN rESourcES
45 Social coNtriButioNS
FINANCIAL REVIEW
48 Md&a
58 FiNaNcial StatEMENtS
69 corPoratE iNForMatioN
AN
NU
AL R
EPORT 2012
Basic colors – blue and green – represent
SFc’s corporate identity and the environment.
hexagonal waves denote change, growth,
takeoff and expansion for the future.
GraphicMotif
Fine Creation for the Future, Samsung Fine Chemicals (SFC) Advanced Materials for the Future
- representing SFc’s identity as a company that produces new materials for the environment, Earth and future while pursuing technology and innovation.
- Expressing steady development that contributes to the future of mankind with blue and green which symbolize growth and the environment and the vision of taking off to become a world-leading chemical company with “advanced Materials for the Future.”
Slogan
Advanced Materials for the Future
Review of Business 1
Fine Creation For the Future Passion on Materials
The company that
produces advanced materials to enrich people’s lives and make them
more convenient. The company that produces core materials which contribute to the development of industry and technological innovation. The company that produces eco-friendly materials which protect the environment for us and our next generations. All of these are meant for SFC, an advanced material leader that pursues “Fine Creation for the Future” through steady innovation in the General Chemicals, Fine Chemicals, Electronic Chemical Materials and Eco-friendly Renewable Energy Divisions. Furthermore, SFC is a company that makes ceaseless efforts for a win-win partnership with the communities under the
pursuit of “Fine Creation for the Future.” SFC’s “Fine Creation” progresses toward steady
growth and sustainable management.
AnnuAL RePoRT 2012 2sAmsung fine ChemiCALs
AnyCoatⓇ
eCh
(epi
chlo
rohy
drin
)
mecelloseⓇ hecelloseTM
Mecellose®
SFC developed Mecellose®, an eco-friendly material,
based on cellulose from trees and raw cotton. Mecellose® is
main materials or additives for construction, paint, ceramics,
cosmetics and medicines.
Hecellose™
Hecellose™ is a water-soluble polymer for cellulose relatives.
It is an eco-friendly and highly functional material used as a thickener, moistener or stabilizer
in a variety of sectors such as paint, household items and construction.
AnyCoat®
Safety and efficacy of medicines are essential to pharmaceutical products that cure patients
and keep people healthy. SFC takes part as a reliable healthcare partner through the production of
AnyCoat®, a raw material for high-function vegetable capsules and pharmaceutical coatings.
ECH (Epichlorohydrin)
Epichlorohydrin is a key material for epoxy resins used in Korea’s
leading industries such as construction, shipbuilding and electronics.
Recently, the material is enhancing the added value of the
heavy and chemical industries while expanding its use into
the wind power generation sector.
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New material technology takes lead in industrial development and makes our lives more convenient.
Ranging from environment-friendly products to materials widely used in daily lives, innovative material
technology is neither complicated nor elusive, already enriching our lives. SFC is at the center, leading the
way forward.
smart function
AnnuAL RePoRT 2012 4sAmsung fine ChemiCALs
We spend much time on information from various electronic devices in our daily lives. The devices include
smartphones, tablet PCs, digital TVs, laptops and printers. SFC supports such IT gadgets with its state
of the art materials. SFC is truly acknowledgeable in the IT industry.
imaginative iT
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TmAC
Toner for Color Laser Printer
BT Powder
Toner for Color Laser Printers
SFC developed a polymerized toner with even particles,
facilitating the production of a high-functional printer that
accommodates higher resolution images and reduces energy consumption.
TMAC
The semiconductor industry is the foundation of the IT industry. As the only producer
of TMAC in Korea, a core material of developing solutions for semiconductors and LCDs,
SFC is taking the initiative in making the IT industry become more competitive and grow further.
BT Powder
Mobile IT gadgets are very popular these days. SFC is producing BT Powder, a key material
for Multi-Layer Ceramic Capacitors (MLCCs) that makes IT devices smaller and lighter.
SELCION®(LCP)
SELCION® is a core material for high-functioning super engineering plastics,
essential in improving the functions of IT products.
SFC developed SELCION® through proprietary technology in 2007,
and is the sole supplier in Korea. The company leads the market with
differentiated competitiveness.
AnnuAL RePoRT 2012 6sAmsung fine ChemiCALs
Polysilicon
Active materials for Rechargeable Batteries
Bio-degradable Polymer
Can we make the environment cleaner for the future generations
with plastic that is completely decomposed into water and
carbon dioxide by microbes in nature such as bacteria, mold, and algae?
SFC’s EnPol® is bio-degradable plastic that can replace conventional plastic in
areas such as agriculture, fishery, automobiles and household items.
Polysilicon
The world is facing serious problems such as pollution, climate change and the exhaustion
of natural resources caused by fossil fuels such as coal, oil and gas. SFC is preparing for the development
and mass production of high-purity polysilicon in partnership with MEMC, a US polysilicon company.
Active Materials for Rechargeable Batteries
Rechargeable batteries are the center of the Energy Storage System (ESS) that powers smartphones
and connect people. SFC is preparing to produce active materials for rechargeable lithium-ion batteries
through a joint venture with TODA Corporation, a Japanese company specializing in ceramics.
EUROX®
Numerous eco-friendly cars with high fuel efficiency have been launched,
while most cars emit exhaust fumes, becoming a major culprit behind
air pollution. EUROX® is the brand name for SFC’s Urea Solution
used to remove polluting nitrogen oxides such as
exhaust fumes from vehicles.
Bio-
degr
adab
le P
olym
er
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A power plant utilizing solar energy, a car which runs without an internal-combustion engine and exhaust fumes,
and plastic that is completely decomposed into water and carbon dioxide by microbes in nature. All of these will
become realities sooner than you think. SFC wants to become a future pioneer that helps bring better
tomorrow faster with eco-friendly renewable materials.
green innovation
01.
Expanded Mecellose® Plant
SFC completed a project to elevate its Mecellose® production capacity by 8,000 tons a year in September 2012. This product is widely used as constructional and industrial additives and pharmaceutical materials. This expansion will enable SFC to preemptively deal with an increase in demand from the downstream industries and expand its marketplace through the development emerging markets.
02.
Expanded AnyCoat® Plant
In November 2012, SFC raised its annual AnyCoat® production capacity to 7,000 tons by completing new production facilities that can produce 4,000 tons a year. AnyCoat® is a raw material for highly functional pharmaceutical coatings. AnyCoat® will take the initiative in developing global markets with differentiated technologies and sufficient capacity in the steadily growing pharmaceutical industry.
03.
AnyCoat®, Hecellose™·Mecellose® Took Part in Global Trade Shows
After integrating its BI (Business Identity) and slogan in 2011, SFC actively conducted brand marketing to reinforce the awareness of all of its products. AnyCoat® took part in “CPhI Worldwide”, the biggest trade show in the pharmaceutical industry for three days from October 9 through 11 in 2012. Hecellose™ and Mecellose® promoted the company and brands, and attracted customers by taking part in “Chinacoat 2012”, one of the world’s three biggest paint coating trade shows.
2012 sfC snAPshoT
02 03
01
AnnuAL RePoRT 2012 8sAmsung fine ChemiCALs
04.
Active Material for Secondary Cells Picked Up “Minister of Knowledge Economy Prize”
SFC’s Lithium Ferro Phosphate (LFP), an Active Material for Rechargeable Batteries, took home the “Minister of Knowledge Economy Prize” in the Nano Korea 2012 Awards in recognition of its superior heat stability and durability in August 2012. The innovative material will help SFC develop a system for continuous synthesis of uniform nanoparticles at lower cost, and reinforce its competitiveness in the
active material for the rechargeable battery sector.
05.
Hecellose™ Received 29th “IR52 Jang Yeong-Sil Prize”
Hecellose™, an eco-friendly high quality additive used in paint and shampoo, received the 29th “IR52 Jang Yeong-Sil Prize” in September 2012. The “IR52 Jang Yeong-Sil Prize” is Korea’s most authoritative prize for industrial technology established by the Korea Industrial Technology Association and the Maeil Business Newspaper. The honor was predominantly accredited with SFC’s unique technological prowess to improve productivity and save production cost of Hecellose™ by more than 30%.
06.
Selected as 2011 Excellent Company in Public Disclosures by KRX
The KRX (Korea Exchange) selected SFC as an excellent company in public disclosures by recognizing SFC’s efficient internal public disclosure infrastructure. This selection served as a chance for SFC to be recognized as a company that takes the lead in promoting sincere public disclosures and enhancing managerial transparency and reliability.
06
04 05
2012 sfC snAPshoT 9
vision& sTRATegy
BECOMING A WORLD-LEADING
CHEMICAL COMPANY
SFC is taking off to become a World-Leading Chemical Company that supplies
advanced materials and meet the needs of customers through global technological
leadership, future growth engines and ceaseless innovation. A company that
continuously changes and steadily earns trust. This is the image of a World-Leading
Chemical Company that SFC envisions.
INNOvATING CORPORATE
CULTURE
vISION
STRATEGY
AnnuAL RePoRT 2012 10sAmsung fine ChemiCALs
- Realizing Lowest Production Cost,
Best Quality and Highest Efficiency
- Strengthening Marketing and
Sales Competitiveness
- Proactive Management Innovation Including
Advancement of Management System
- Full-scale Implementation of
New Projects for Future
- Enhancing Global Technological
Leadership
- Securing Talented People Globally
- Building Dynamic and Creative Corporate
Culture
- Establishing Constant Risk Management
System
- Building Reputation as Trustworthy Company
EXPANDING GROwTH ENGINES
REINFORCING COMPETITIvE
EDGES
finAnCiALhighLighTs
Sales In billions of KRW
FY10 FY11 FY12
1,431.2
73.3
1,333.6
73.4
1,130.6
85.1
Net Income In billions of KRW
FY10 FY11 FY12
Capex In billions of KRW
FY10 FY11 FY12
Net Debt to Equity (%)
FY10 FY11 FY12
vision & sTRATegy / finAnCiAL highLighTs 11
301.7191.8
7.6-14.6
-20.7
72.3
0
CeomessAge
BY HARNESSING CHANGE AND INNOvATION, SFC WILL PREvAIL AS A 100-YEAR-OLD COMPANY.
AnnuAL RePoRT 2012 12sAmsung fine ChemiCALs
I would like to express my sincere gratitude on behalf of SFC for your support and
encouragement last year. The mayhem caused by the financial meltdown in the Eurozone
in 2012 had a sizable negative impact on the growth of advanced and emerging economies
and subsequently forestalled the growth of the global economy. This affected SFC as well
with a challenging business environment. Moreover, due to the chaotic state, borders among
companies and industries became blurred, ushering in an era of hyper-competition.
In amidst of these challenges, SFC posted a record-high KRW1,431.2 billion in sales and
KRW86.1 billion in earnings before taxes. These impressive results are credited to your
continued support for our company, and all of employees’ greater efforts for excellence.
By nature SFC’s business is to create customized high-value-added materials through
advanced material technology. Our mission is to create smarter life through ceaseless
innovation and advanced technology. We also stride to reach customers and the market
with better-quality products one step ahead of our competitors. In a bid to solidify cash
cow businesses, our company completed capacity expansion for Mecellose®, AnyCoat®
and Toner for Color Laser Printers, and is moving forward with facility investment on
ECH(Epichlorohydrin).
In addition, we are strengthening future growth engines that will spearhead a new paradigm
through expansion into the Eco-friendly Renewable Energy Material business including
Bio-degradable Polymers, Polysilicon, and Active Materials for Rechargeable Batteries.
On top of this, we are moving forward by reinforcing infrastructure in the mid- to long-term.
This will play a pivotal role in promoting synergies with electronic affiliates of the Samsung
Group and developing advanced materials for electronic products.
We are making steady efforts to elevate our system competitiveness with the aim of
enhancing the speed and efficiency of management by upgrading the ERP and SCM
Systems and innovating energy supply infrastructure.
The year 2012 was the first year of change and innovation for SFC that is set to celebrate
its 50th anniversary in 2014. By harnessing change and innovation, SFC will prevail as a
100-year-old company. All employees began to work in unity towards making SFC a
World-Leading Chemical Company while implementing innovation to achieve excellent
results in all sectors including business, human resources, corporate culture, and systems.
However, SFC alone cannot achieve the goals of growing into a 100-year-old company
and a World-Leading Chemical Company. The achievement will only be possible with
contributions from our employees, stakeholders, and shareholders. We will embrace all of
our employees’ innovation, overcome challenges, and meet the needs of our stakeholders
such as shareholders, customers, and partners.
Once again, we truly appreciate your strong support. SFC will step up its utmost efforts
to grow into a World-Leading Chemical Company by putting change and innovation into
practice. I hope that happiness and joy will always be with you and your family.
Thank you.
President & CEO
In-Hee Sung
Ceo messAge 13
SFC’s Board of Directors consists of inside directors with true devotion to
the company, a complete understanding of their jobs and a great sense of
responsibility, and outside directors with expertise and fairness. The BOD is
geared to leadership to promote employees’ passions and challenges and maps
out future plans.
BoARD of DiReCToRs
02.
Dong Geul Byun
· Outside Director
· Managing Partner, Yoon & Yang LLC.
01.
In Hee Sung
· President & CEO
01
02
SFC iS hArNeSSiNg iTS PASSiON TO grOw.
AnnuAL RePoRT 2012 14sAmsung fine ChemiCALs
03.
Kyu Cheol Lee
· Outside Director
· Professor, University of Ulsan College of Engineering
04.
Gil Hwan Lee
· Executive Director
· Head of Chemicals Business Division
06.
Byung Hoon Choi
· Auditor
03
04 05
06
05.
Hee In Lee
· Executive Director
· Head of Management
Support Division
BoARD of DiReCToRs 15
BusinessReview
Review of Business 17
ever-fineDeep-rooted trees can endure strong winds
so they can bloom beautiful flowers and
produce a lot of fruit. SFC has grown into
a chemical industry leader in sectors ranging
from General Chemicals, Fine Chemicals,
Electronic Chemical Materials and
Eco-friendly and Renewable Energy Materials.
SFC’s General Chemical Division became
the linchpin of Korea’s heavy and chemical
industries while its Fine Chemical Division
helped SFC reinforce its competitiveness
and sustainable growth. Its Electronic
Chemical Material Business supplies core
materials to the IT industry.
Ever-Fine
SFC continues to make efforts to become a
strong company that can contribute to the
happiness and development of mankind
while pursuing win-win growth with local
communities and partners by producing
products that can satisfy customers.
AnnuAL RePoRT 2012 18sAmsung fine ChemiCALs
General Chemicals
SFC began its business in 1964. Its beginning was none other than the General Chemicals
Business. The growth of its General Chemicals Business synchronizes with that of the Korean
chemical industry. The General Chemicals Business produces Caustic Soda, a basic material
for the chemical industry, Methyl Chloride used in chemical, machinery and electronic
materials, and EUROX® which removes environmental pollutants by neutralizing nitrogen oxides
in exhaust gases. Through constant innovation, cost cutting, and facility expansion in response
to increasing industrial demand, the General Chemicals Business makes SFC a strong and
stable company.
DeePLy RooTeD :
AnnuAL RePoRT 2012 18sAmsung fine ChemiCALs
Review of Business 19
Main Products
Caustic Soda
Caustic Soda is a general chemical product that is an indispensable
material in the chemical industry. This material is used in soaps,
detergents and for metal surface treatment, water treatment, and
paper production.
Methyl Chloride
Methyl Chloride is an essential material for detergents used by
metal and electronics industries, and raw materials for refrigerants
and paint remover in the chemical, machinery and pharmaceutical
industries.
EUROX®
EUROX® is a brand name of SFC’s urea solutions that removes
polluting nitrogen oxides in exhaust gas.
2012 ReviewIn April 2011, the General Chemicals Business successfully completed its
rationalization of stopping production of Ammonia and urea-related products
with the goal of expanding the Fine Chemicals, Electronic Chemical Materials
and Eco-friendly and Renewable Energy Business. In 2012, the General
Chemicals Business experienced a year-on-year increase of 4.7% in sales on
the back of solid demand growth in Caustic Soda and EUROX®
Business Review 19
AnnuAL RePoRT 2012 20sAmsung fine ChemiCALs
weLL gRown :
AnnuAL RePoRT 2012 20sAmsung fine ChemiCALs
Fine Chemicals
Harnessing its strong foundation in the General Chemicals Business, SFC has expanded the
Fine Chemicals Business. The company has grown faster and more soundly thanks to stable
and profitable growth. The Fine Chemicals Business continues to build new production facilities
and expand its production capacity in line with steady growth in demand for its major products:
Mecellose®, an additive for construction; Hecellose™, an additive used in water-soluble paint;
AnyCoat®, a material for pharmaceutical capsules and coatings; and ECH (Epichlorohydrin), a
raw material for epoxy resins. The Fine Chemicals Business upholds SFC and enables SFC to
branch out into new businesses such as Electronic Chemical Materials, and Eco-friendly and
Renewable Energy Materials.
Review of Business 21
Main Products
Mecellose®
Mecellose®, excellent at absorbing humidity and holding moisture, is an additive in
the form of white powder for construction. This product is widely used in
construction materials such as cement mortar, tile cement, paint, underwater
concrete and ceramic extrusion.
Hecellose™
Hecellose™ is a water-soluble polymer which is eco-friendly and highly functional.
It enhances the qualities of finished products. This product is used in various
products such as water-soluble paint, household items and various construction
materials.
AnyCoat®
AnyCoat® is a material for pharmaceutical capsules and coatings. This product
stores and protects medicines and helps to control drug efficacy and drug delivery
durability. This material is also used as an additive in processed foods.
ECH (Epichlorohydrin)
Epichlorohydrin is a key material for epoxy resins which are used in a wide range of
industries such as construction, shipbuilding and electronics.
PTAC
PTAC enhances the quality of paper by reinforcing the strength and retention level.
*Retention level: The level of pulp and filler remaining in the end product. This determines the quality of paper.
2012 ReviewIn 2012, SFC reinforced its patronage by expanding production facilities for cellulose
products. We began a full scale commercial production of Hecellose™ that is used as an
additive for water-soluble paint, cosmetics and shampoo. Mecellose® production capacity
was expanded by 8,000 tons in September 2012. We also increased our annual production
capacity of AnyCoat® which is used in high-value-added and functional pharmaceutical
products, by 4,000 tons in November 2012 to be capable of producing 7,000 tons a year.
Consequently, the expansion allowed SFC to strengthen its competitiveness and market
leadership.
Business Review 21
AnnuAL RePoRT 2012 22sAmsung fine ChemiCALs
CARefuLLy PLAnTeD :
AnnuAL RePoRT 2012 22sAmsung fine ChemiCALs
Since 2000, SFC has focused on strategic investment in the Electronic Chemical Materials
Business as if planting and growing new trees. We are taking the initiative in the innovation of
the IT industry through the development of core electronic materials such polymerized
toner for color laser printers for high resolution and high speed printing which is more
advanced than pulverized toners; TMAC, a core material of developing solutions for
semiconductors and LCDs; BT Powder, a key material for Multi-Layer Ceramic Capacitors
(MLCCs); and SELCION®, a core material for high-functioning Super Engineering Plastics.
Electronic Chemical Materials
Review of Business 23
Main Products
Polymerized Toner for Color Laser Printers
SFC has developed a polymerized toner with particles of even sizes and shapes
which is suitable for high resolution and high speed printing.
TMAC
TMAC is a core material of developing solutions for semiconductors and LCDs.
BT Powder
BT Powder is a filling material between electrodes and a core material for
Multi-Layer Ceramic Capacitors(MLCCs).
SELCION®(LCP)
SELCION® is a core material with excellent heat resistance and electric insulation for
high-functioning Super Engineering Plastics
2012 ReviewIn 2012, the Electronic Chemical Materials Business achieved a 22.1% increase in sales from
the preceding year. Sales of the Division exceeded the KRW100 billion mark in tandem with
robust growth in sales of Toner for color laser printers, TMAC and BT Powder.
Business Review 23
AnnuAL RePoRT 2012 24sAmsung fine ChemiCALs
susTAinABLy AffoResTeD :
Eco-friendly Renewable
Energy Materials
AnnuAL RePoRT 2012 24sAmsung fine ChemiCALs
Efforts for a sustainable future, environment-friendliness and renewable energy aim to enrich
mankind and serve as another springboard for SFC to jump. SFC is preparing for another big
leap forward through the development and commercialization of Bio-degradable Polymers
which are completely decomposed into water and carbon dioxide in nature, Polysilicon,
the fundamental building block of solar energy that replace fossil fuels, and Cathode Active
Materials, a core component for semi-permanent rechargeable batteries.
Review of Business 25
Main Products
Bio-degradable Polymer
Plastic has contributed to the convenience of our lives, and industrial development.
Nevertheless, the material causes environmental problems and results in soil, water,
and air pollutions when dumped or burnt. Recently, people have become more
interested in the development and use of eco-friendly plastics that can be completely
decomposed into water and carbon dioxide by naturally occurring microbes.
SFC established S-EnPol, Inc. to produce EnPol®, bio-degradable polymers. EnPol®
is providing eco-friendly solutions by replacing conventional plastics used in industrial
and agricultural film, automotive and electronic parts, construction materials,
household and office items and various packages.
Polysilicon
The use of fossil fuels goes against sustainable environmental protection. Issues about
the limit to fossil fuel reserves have been steadily raised. Under these circumstances,
solar power generation is taking the lead in the renewable energy industry as it is
getting closer to grid parity. In regards to production costs, this means that the
renewable energy becomes compatible to conventional fossil fuels. SFC has joined
forces with MEMC, a US polysilicon and wafer producer, and is preparing for
mass-production of high purity polysilicon (greater than 9N). Most strikingly, high
purity polysilicon will be produced at low cost as we will apply the FBR (Fluidized Bed
Reactor) technology, a highly efficient and differentiated production method.
Active Materials for Rechargeable Batteries
People can use rechargeable batteries semi-permanently by regularly recharging
them. This completely differs from primary batteries which cannot be reused once
discharged. Therefore, more and more rechargeable batteries, which are economical
and eco-friendly, are being used in mobile phones, smart devices, electric vehicles
and electrical grids. SFC founded STM, a company that produces Active Materials
for rechargeable lithium-ion batteries in tandem with TODA Corporation, a Japanese
company specializing in ceramics. Accordingly, we are focusing on the expansion
of our Rechargeable Battery Materials Business by making a foray into the Cathode
Active Material Business that covers Nickel, Cobalt and Mananese Oxides.
susTAinABLy AffoResTeD :
Business Review 25
sustainabilityReview
Review of Business 27
ever-Trusty
Our goal is to become a
World-Leading Chemical Company.
We believe that a truly world-leading
company always receives trust from
employees, customers,
local communities and partners and
takes the initiative in environmental
stewardship.
Ever-Trusty
Every day SFC plants and grows trees
of trust for the happiness of people.
AnnuAL RePoRT 2012 28sAmsung fine ChemiCALs
SFC boosts the competitiveness of its products and preemptively secures core
future technology via relentless R&D efforts and open innovation based on
mid- to long-term strategies. Ceaseless R&D and resulting technological
leadership are none other than a driving force fueling SFC’s sustainable growth.
ReseARCh & DeveLoPmenT
Research on Biomaterials
Research on Chemical Frontiers
Research on Cellulose Derivatives
Research on Battery Materials
Research on Food Materials
Research on Toner
Research on BT Powder
Research on LCP
susTAinABiLiTy Review 29
We have been working on water-soluble polymers used in various products such as high-
performance additives for construction, pharmaceutical coating, food, and water-soluble paint.
Hecellose™, a new cellulose ether polymer which SFC successfully commercialized, won the
IR52 Jang Yeong-Sil Prize in 2012 in recognition of its technological excellence. We will continue
to develop highly functional materials that can satisfy the diverse needs of our customers through
proactive R&D initiatives on cellulose derivatives.
SFC continues to work on research and technology support for medical and food chemicals by
developing new applications of water-soluble polymers to cellulose relatives. We commercialized
AnyCoat®, a pharmaceutical coating material and AnyAddy®, a food additive. We have also
secured technologies that moderate major issues in the food industry such as high fat content and
food safety, and are actively developing health foods based on natural substances.
SFC is strengthening its business foundation by successfully developing and commercializing
polymerized toner for color laser printers. At the same time, we are developing toners as a future
growth engine by securing advanced technologies on environment-friendlier and high-performing
toners and conducting R&D activities on printed electronics as a new growth momentum for the
future.
SFC was selected as the leading organizer of a Korean government project of “developing
demand-pull parts materials”. The selection proved SFC’s technological prowess in the material
development sector. We are strengthening the electronic material business by developing
products of various grades and their applications.
SFC is developing new applications of LCP with its outstanding high heat resistance, high strength
and strong durability. We are spurring the development of new and value-added applications of
LCP, i.e. liquid crystal polymers for injection used in electric and electronic components and textile
composites.
Demand for high-capacity rechargeable batteries has increased rapidly due to the advancement
of mobile IT gadgets such as smartphones and tablet PCs, and the development of technology
for electric vehicles. SFC’s R&D leadership was acknowledged as the company took home
the Minister of Knowledge Economy Prize in the Nano Korea 2012 Awards in recognition of its
development of a core material for Rechargeable Batteries.
Demand for eco-friendly materials is increasing rapidly because of stricter environmental
regulations and more environmental activities by NGOs. Environmental issues have been receiving
more attention all over the world. By proactively coping with this trend, SFC became the first
company ever to develop bio-degradable etheric polymers and is the only company that can
produce them in Korea. We were certified with international environmental mark from the U.S.,
Germany and Japan. We will expand our growth spectrum by gradually developing applications of
biomaterials from food packages and agricultural films to materials for smartphones.
Next-generation materials and platform technology are the foundation for sustainable growth
engines. Therefore, we are concentrating on carrying out R&D activities for functional, energy and
nano materials. We will secure core technology for future growth in various sectors such as printed
electronics that replace existing processes, oxides for semiconductors and materials for metal
plating.
Research on Cellulose Derivatives
Research on Food Materials
Research on Toner
Research on BT Powder
Research on LCP
Research on Battery Materials
Research on Biomaterials
Research on Chemical Frontiers
※ERP:EnterpriseResourcePlanning
PLM:ProductLifecycleManagement
Elevating Level of SCM Operation,
Stabilizing ERP/PLM※Processes
Establishing Governance Management System Improving Level of Master Data
Management
Improving IT Infrastructure for Mobile Business Environment
ADvANCING CORPORATE MANAGEMENT
INFRASTRUCTURE
ENHANCING CAPABILITIES FOR
INNOvATION
UPGRADING OPERATIONAL
COMPETITIvENESS
AnnuAL RePoRT 2012 30sAmsung fine ChemiCALs
SFC ceaselessly pursues change and innovation in external factors such as business,
products and services and internal factors such as systems and infrastructure.
This is because we know that SFC cannot take off without efforts for innovation and
change.
innovATion
SFC upgraded the S-ERP System by defining standard systems by eight core processes
(marketing, development, procurement, production, logistics, sales, service and management)
and re-establishing operation standards through process innovation in July 2012. The S-ERP
is duly recognized for its optimized combination of Samsung Electronics’ advanced processes
and the unique elements of the chemical industry. The S-ERP is all the more meaningful in that
SFC laid the foundation for securing future competitiveness by accumulating and developing
business and job processes by bringing innovation with a focus on processes, standards and
systems to individual capability-oriented tasks.
Upon the completion of the S-ERP, SFC built an SCM system that manages the whole supply
chains such as sales, production and logistics. This change allowed SFC to make quick
decisions by transforming the monthly operation system into a weekly operation system.
This also laid the foundation for objectivity and steadily improving the company’s operation
level through indices such as demand prediction accuracy, SOP execution rates, and
efficiency indices on production, purchases and inventory management.
SFC’s main goals in business innovation for 2013 are to enhance operational competitiveness,
to advance management infrastructure and to increase capabilities for innovation. To this end,
we are planning on making our systems such as SCM, PLM and ERP efficient and advanced
and making improvements to our mobile and IT infrastructure. In addition, we will steadily
reinforce our management system and improve the level of management.
“ BUILDING 「ADvANCED BUSINESS MANAGEMENT FOUNDATION」 THROUGH INNOVATION ON THE WAY OF WORKING”
2012 Implementation Policies
Rebuilding S-ERP Management System
Building SCM System
Securing Strong Competitive Edge by Increasing Practical Capabilities
susTAinABiLiTy Review 31
※S-ERP System
▶ECC (ERP Central Component) : Building an ERP system based on ECC 6.0.
▶BI (Business Intelligence): Creating dashboards and standard report screens by 122 KPIs
▶EP (Enterprise Portal): Building a business portal (business screens by business packages)
▶MDM (Master Data Management): Building a companywide master life-cycle management system and a
master data quality management system.
※SCM : Supply Chain Management
Business Management System Based on Rules and Systems
▶Processinnovationbasedonglobalbest
practices
▶Establishment of process management
system
weekly Process Synchronization
▶Synchronization of business plans based on
demand forecast and sales and production
execution
▶Policy-based allocation
COMPLIANCE wITH PROCESSES/RULES
PROACTIvE QUALITY MANAGEMENT
PROCESS MANAGEMENT
INNOvATION
PROMPT CUSTOMER SUPPORT
AnnuAL RePoRT 2012 32sAmsung fine ChemiCALs
SFC believes that customers should always come first. We always listen to
customers’ compliments as well as complaints and endeavor to reflect them for
quality improvement. Customer satisfaction is the core value of the “quality-first”
philosophy that SFC pursues.
QuALiTymAnAgemenT
SFC’s quality guideline, “Achieving top quality & implementing customer-oriented quality
management,” was derived from customers’ demand, the Samsung Group’s business
philosophy and SFC’s policies. The suggested strategic goals are “achieving zero customer
complaints,” “improving the quality of our products by comparing it with that of competitors”
and “enhancing product quality indexes”.
Our employees are required to attend education programs to prevent any work related
accidents or injuries and to understand the company’s quality policies and strategic goals.
With an eye towards providing the best-quality products to customers, SFC discovered and
executed four core tasks for a company-wide improvement. The four tasks are (1) following
processes and rules, (2) innovative process management, (3) proactive quality management
and (4) quick and accurate responses to customer needs. With the goal of accomplishing
these tasks, we pushed forward with detailed measures such as process optimization,
inspections of processes and overhauls of standards. Our ardent desire for the best qualities
enables us to make ceaseless efforts for the steady management of change at workplaces and
discover components to improve on.
We systematically manage customer visit records through the VOC System, since we are
aware of the importance of proper responses to customer needs and customer satisfaction.
Moreover, we endeavor to better cope with customer needs by sending out alarm mails and
short text messages. The Quality Responsibility System makes sure customer needs to be
satisfied as quickly as possible by transferring to relevant departments depending on causes.
Quality Policies and Goals
Strategies for Achieving Best Quality
Customer-oriented work
2012 2011
Inquiry about physical properties 10 13
Analysis methods 10 17
Regulation of harmful materials 20 28
Environmental safety 7 15
Product warranties 12 23
Technical support 5 2
Quality system 5 16
Appearance 6 -
wrapping 9 6
Others 2 7
Total 86 127
Number of Customer Inquiries by Categories
86(2012)
127 (2011)
susTAinABiLiTy Review 33
2 CORE vALUES
3 MAIN AREAS
SAMSUNG GREEN MANAGEMENT VISION 2020
GREEN MANAGEMENT GLOBAL TOP
• Pursuing SUSTAINABLE GROwTH
• FulFilling social RESPONSIBILITIES
Preserving Natural Resources
and Curbing Greenhouse Gas
Emissions
Setting Standards on Global Green
Management and Leading the
Market
Preventing Environmental Accidents and
Ensuring Sustainable
Management
AnnuAL RePoRT 2012 34sAmsung fine ChemiCALs
Growth that SFC pursues is sustainable and eco-friendly. It is SFC’s firm belief about
growth. SFC is on its way to become an environment-friendly company through the
implementation of various strategies and plans built upon a companywide consensus
about the importance of safe, clean and beautiful environments.
enviRonmenT & sAfeTy
The Samsung Group announced Green Management Vision 2020 by taking into consideration the
environment, safety and health for the sake of better lives of mankind and the preservation of nature
as key business activities. The foundation of the vision is a business philosophy for mutual prosperity.
The Samsung Group suggested two core values – pursuing sustainable growth and fulfilling social
responsibilities – to become the best company in green management in the year 2020. The group
selected three key areas for implementation: conserving resources and reducing energy consumption
and greenhouse gas emissions; establishing criteria for green management and becoming a market
leader; and preventing environmental safety failures and ensuring business sustainability.
The Samsung Group’s emblem of green management is a green
“S” surrounding the blue Earth. The emblem means that Samsung puts
its utmost efforts into preserving nature and protecting the environment
and helps keep the Earth clean.
Ever since acquiring an environmental manage-
ment system certificate in 1996, SFC has steadily
upgraded the Environmental Management System.
The Basic Act on Low-carbon Green Growth was
approved in 2010, and eco-friendly companies have
been designated as green enterprises. We have
implemented voluntary green management and
swiftly addressed environmental issues such
as climate change.
Green Management vision 2020
Emblem of Green Management
Implementation Strategy for Environmental Safety
Environmental Management Certification
With EnvironmentWith Customers
Dates of Recent Certification and Re-designation
ISO - 14001(KGS) '11. 12. 05
OHSAS 18001(KGS) '11. 12. 05
GREEN COMPANY (THE MINISTRY OF ENvIRONMENT)
'09. 04. 13
susTAinABiLiTy Review 35
▶ Establishing Self-Control-led Safety Culture
▶ Removing Risk in Dangerous Work
▶ Implementing Perfect Regular Maintenance
▶ Weaving Safety Awareness into the Corporate DNA
▶ Ensuring Safety for Suppliers
▶ Reinforcing Manage-ment of Patients
▶ Making Improve-ment to Working Environment
▶ Green Company Recertification
▶ Continuance of Zero Environmental Accident Record
▶ Support for Expansion of Production and Facilities
▶ Putting Two-Stage In-novation into Practice
▶ Compliance with Stricter Regulations
▶Solidifying the PSM▶Increasing PSM Capacity▶ Self-Regulated Safety
Management
ENvIRONMENT SAFETY
PSM※ HEALTH
※PSM:ProcessSafetyManagement
SFC is pursuing the maximization of positive impacts from environment-friendly
management with various attempts at improving the environment. We have also built the
Department-based Environmental Management Systems. In addition, we accurately evaluate
the implementation of our Environmental Management System by conducting regular internal
and external audits.
SFC launched the Wide Smart Steam Network project to supply steam to companies in
demand for steam in the Yeocheon Industrial Complex by utilizing surplus steam from the Ulsan
Petrochemical Industrial Complex. This initiative saved 69,000 tons of Bunker C oil, reduced
energy costs by about KRW35 billion and CO2 gas emissions by 46,000 tons and brought
about an effect as good as that of planting 6.9 million pine trees on the environment. These
efforts paid off considerably, and SFC picked up the 2012 Samsung Green Management Prize.
SFC invested a total of KRW111.7 billion in
overall environmental protection for the past five
years. In particular, we considerably reduced
the amount of air pollutants such as sulfuric
compounds and dust by changing fuels for
cogeneration facilities from Bunker C oil to LNG,
a cleaner fuel in 2012. We also reduced much of
greenhouse gas emissions through a wide smart
steam network project.
2012
AirNo. of Investments 4
Amount (in million KRW) 24,652
waterNo. of Investments 15
Amount (in million KRW) 2,301
wasteNo. of Investments 1
Amount (in million KRW) 95
Hazardous Chemicals
No. of Investments 3
Amount (in million KRW) 351
vOCNo. of Investments 4
Amount (in million KRW) 338
OthersNo. of Investments 1
Amount (in million KRW) 134
TotalNo. of Investments 28
Amount (in million KRW) 27,871
Environmental Management System
2012 Samsung Green Management Prize
Environmental Investment
▼ Cumulative
Environmental Investment
Amount (in billion KRw)
2008 64.7
2009 69.8
2010 77.2
2011 83.8
2012 111.7
AnnuAL RePoRT 2012 36sAmsung fine ChemiCALs
Air Pollutant Management
As for fuel for the second and third boilers, SFC switched from Bunker C oil to eco-friendlier
LNG in 2011 and 2012, respectively. As a result, in 2012, the volume of air pollutants decreased
59% compared to 2011. TMS was installed in main outlets to monitor the concentration of
pollutant emissions in real time and maintaining it within 30% of the legal standard.
This measure allowed us to preemptively prevent environmental accidents. On the other hand,
we are striving to realize odor-free plants by operating a flare stack to curtail unpleasant odors
and VOC.
2012 2011
Emission Amount (kg/yr)
Per Ton (kg/ton)
Emission Amount (kg/yr)
Per Ton (kg/ton)
Dirt 20,546 0.0126 29,036 0.0170
SOx 50,837 0.0311 145,419 0.0851
NOx 113,868 0.0697 259,285 0.1517
HCl 257 0.0002 253 0.0001
Cl2 232 0.0001 313 0.0002
NH3 - 0.0000 1,812 0.0011
Atmospheric Emissions
185,740 0.1136 436,118 0.2552
Amount of Goods Produced
1,634,468 - 1,709,034 -
water Pollutant Management
All wastewater is first processed at each plant’s ECH (Epichlorohydrin) treatment facility and sent
to a sewage treatment center. To prevent environmental accidents, we have set up emergency
valves and recovery pumps in the rainwater reservoir. We continue to strive to enhance efficiency
in treating water pollutants such as introducing pre-treatment facilities that agglutinate, settle and
remove color-polluted wastewater by using concentrated sludge at our toner plants.
2012 2011
Emission Concentration
(ppm)
Total Amount (kg/yr)
Per ton (kg/ton)
Emission Concentration
(ppm)
Total Amount (kg/yr)
Per Ton (kg/ton)
COD(Mn) 28.8 168,397 0.1013 30.3 174,907 0.1023
BOD 19.6 114,778 0.0690 15.8 90,973 0.0532
SS 17.7 103,610 0.0623 10.3 59,465 0.0348
T-N 11.3 66,134 0.0398 14.4 82,956 0.0485
T-P 1.3 7,418 0.0045 1 5,772 0.0034
Total Amount
- 460,337 0.2768 - 414,072 0.2423
wastewater Emissions
- - 5,841,660 - - 5,769,860
Amount of Goods Produced
- - 1,634,468 - - 1,709,034
Pollutant Management Status
susTAinABiLiTy Review 37
Managing waste
SFC manages the entire waste treatment process from discharges to the final handling
through an online system. Every year, we set goals and map out plans to substantially reduce
waste. In 2012, we decreased the volume of waste from all of our plants by 17%, including
the reduction of volume of wastewater by 25% year on year through the installation of a
centrifugal hydroextractor.
Name of waste(2012)
waste Status(Unit : tons)
Landfill Incineration Discharged at Sea Recycling Total
General wastes
Dust 40.62 - - - 40.62
Refractories 44.94 - - - 44.94
Catalysts 220.77 - - - 220.77
Absorbents 1,839.22 - - 61.32 1,900.54
wood - - - 307.86 307.86
Insulation Materials 54.25 - - - 54.25
Synthetic Resins - 879.55 - 133.09 1,012.64
Process Sludge 1,462.52 - - - 1,462.52
wastewater Sludge 16,215.58 - 13,827.46 - 30,043.04
Concrete - - - 2,522.33 2,522.33
Food - - - 156.74 156.74
waste Contain-ing Earth and
Sand- - - 14.88 14.88
Total General wastes 19,877.90 879.55 13,827.46 3,196.22 37,781.13
Desig-nated
wastes
Organic Solvents - 1,685.34 - 38.26 1,723.60
Oils - 18.34 - 54.43 72.77
Asbestos 693.78 - - - 693.78
Oils for Machines and
Operation- - - 36.66 36.66
Spent Batteries - - - 6.39 6.39
Total Designated wastes 693.78 1,703.68 - 135.74 2,533.20
Total wastes 20,571.68 2,583.23 13,827.46 3,331.96 40,314.33
Management of Hazardous Chemicals
SFC practices the efficient and careful management of hazardous chemicals by controlling
detailed information on all chemical materials from procurement and consumption to
production and abolition. In addition, prior to the approval of any new chemical material, we
systematically review the potential impacts of the material in terms of environment, safety
and health. In particular, we are preemptively dealing with the regulation of chemical materials
at home and abroad by applying the Korean REACH when introducing a new management
system. We are also taking the lead in protecting the environment through the survey of
chemical materials used and the control of pollutants discharged.
Pollutant Management Status
AnnuAL RePoRT 2012 38sAmsung fine ChemiCALs
SFC has fire and disaster prevention organizations that diagnose the company’s safety.
SFC regularly replaced firefighting pipes with new ones, making steady improvements to facilities.
Moreover, we spare no investment in safety management stricter than a level set by regulations
and standards such as the construction of a room for water spray facility valves which aims to
prevent firefighting facilities from bursting in the winter.
SFC operates the Internal Industrial Safety and Health Committee where safety matters are
discussed. With the aim of actively listening to the opinions of employees, the company holds
monthly safety meetings and conducts monthly safety check-ups. 137 matters about safety and
health were dealt with and upwards of 95% of them were reflected for improvements.
We keep our workplaces safe via Safety Check-up Day, safety check-ups before long holidays
and special safety check-ups. In 2012, we discovered 1,135 matters to be improved and took
follow-up measures on 1,058 matters more than 93%.
Certification of Excellent Health Management
SFC obtained a 2012 certificate in the Excellent Health Management Company Certification
Program from the Ministry of Employment and Labor and the Korea Occupational Safety and
Health Agency which assesses activities to enhance the health of employees such as
anti-smoking and anti-obesity campaigns, exercises, and diets.
Healthcare Room
SFC is running Healthcare Room with hospital beds, medical equipments, medicines and a
sphygmomanometer. This enables the Healthcare Room to check up the medical conditions
such as basal metabolism and blood composition of individuals with the use of body composition
analyzer and blood analyzer. In addition, the company carries out customized health management
for employees such as prescription services for food and exercises. Healthcare Room is open not
only to employees of SFC but also to those of SFC’s partners.
Health Education Program
SFC is implementing its annual health education plan in order to take care of employees’ health,
in regards to respiration and hearing. The company selects protective gears appropriate for
employees by conducting fit tests. Employees receive education on the effects of harmful factors
and the kinds of protective gears and how to use them properly.
Decent working Environment
With an eye towards creating nice and safe working environments, SFC established and
implemented its own standards (30% or lower compared to the legal standards) to manage
chemical materials. We measure employees’ exposure to harmful factors during their work and
take proper measures to minimize such exposure. In addition, monthly checks are conducted to
improve irrational working conditions. We monitor working environments by taking measurements
every six months.
Safety Management
Companywide Safety Management
Safety Check-Ups and Improvements
Healthcare for Employees
susTAinABiLiTy Review 39
PARTNERSHIP
ENERGIZING ORGANIZATION
WELFARE AND BENEFITS
HR DEvELOPMENT
AnnuAL RePoRT 2012 40sAmsung fine ChemiCALs
Our management philosophy about human resources is that corporate
competitiveness and growth depend on employees’ happiness and satisfaction.
SFC aims to become a great company by establishing a great workplace.
humAn ResouRCes
We intend to develop core human resources to take the lead for the future of SFC.
SFC is running the Core HR Development Courses such as MBA, and the regional specialist
program, foreign language programs, the Global Education Curriculum and Tiered Curriculum.
In addition, our specialized curriculum to improve core capabilities on R&D, production,
technology, sales and marketing enables employees to constantly develop knowledge and skills
for their jobs and duties.
SFC is running programs to give financial support to all employees with children who go to
middle schools, high schools, technical colleges or universities. To take care of employees’ health,
the company is operating systems to support them with medical and dental costs.
Also, we offer home loans to employees who want to buy houses as the heads of their families.
In addition, we provide financial support to single employees who live in areas without company
housing and dormitories so that they can rent houses.
SFC is maintaining the proportion of female workers in total workers higher than the designated
level (10.34% in the Korean chemical industry set by the Ministry of Labor and Employment) for
two consecutive years. Besides, we support female workers by offering a variety of maternity
programs.
In order to create a corporate culture of cooperation and co-prosperity, SFC implements a
merit system to give advantages to the handicapped and those who are eligible for
Korean veterans’ benefits according to the relevant laws.
Theme Lectures (Special Lectures on Sensitivity)
SFC has hosted special lectures and counseling sessions on sensitivity, children education,
asset management and cultural events for employees with the objectives of creating a bright and
creative corporate culture.
Summer and winter Camps for Employees’ Children
SFC operates camps for children of employees twice a year to improve their learning and
creativity. The summer camp is a cultural camp that includes leisure activities such as trips to
water parks and on-site job experience programs, while the winter camp is an English camp
focusing on language skills.
HR Development Programs
welfare and Benefits
Gender Neutral Employment and Diversity
Partnership
Energizing Organization
susTAinABiLiTy Review 41
FOUR-CHANGE SYSTEM
“Change” for Future that Supports Children’s Dreams and Hopes
Eco-Friendly “Change” to Create Sustainable Future
Happy “Change” to Communicate with Local Communities
Employees’ Participation in “Change” to Share Our Profits with the Marginalized
fuTuRe ChAnge
eCo ChAnge
hAPPy ChAnge
wiThChAnge
FUTURE GENERATIONS
ENvIRONMENT
LOCAL COMMUNITIES
EMPLOYEES
AnnuAL RePoRT 2012 42sAmsung fine ChemiCALs
SFC, a self-professed responsible member of local communities, is striving for mutual
benefits while forming a warm corporate culture and reaching out to those in need.
We will sincerely fulfill our responsibilities as a corporate citizen in the future.
soCiAL ConTRiBuTion
With its slogan for social contribution, “Fine Change,” SFC commits itself to creating a sustainable
future by improving the lives of children and reaching out to people in its communities.
“Fine Change” implies the convergence of chemicals and the world. Community service teams
are being operated around volunteer activity centers in SFC’s business sites in Ulsan, Seoul,
Daejeon and Incheon. These teams carry out a wide array of social contribution activities such as
supporting the marginalized people, protecting the environment and sharing activities with local
communities.
Box Garden Campaign
SFC is spearheading a box garden cultivation campaign to turn small spaces in downtown areas
into small gardens with vegetables and flowers as part of its green downtown movement. Local
residents can learn the value of nature while they monitor the box gardens, learn about them,
spread manure on them and take part in box garden contests. The box gardens contribute to the
prevention of global warming through green curtain effects.
Activities to Preserve Environment of Grand Taehwa River Park
We have been operating an environmental protection group for Grand Taehwa River Park, the first
ecological park in Ulsan since 2005. We are carrying out various activities such as a hope-sharing
walkathon, a campaign to protect bamboo shoots and spreading manure in partnership with
volunteer groups such as the Taehwa River Protection Group and the Sipridae Forest Keepers.
Ecological Activities on Dotjil Mountain for Low-Carbon Green Growth
Since 2008, SFC has been taking the lead in planting and taking care of trees at its plants in
cooperation with many groups such as the Nam-gu Office of Ulsan, the Forest of Life in Ulsan,
Ulsan General Forestry Co. and the Yangsan Forestry Technology Education Center in order to
help forests grow. This is respected as a best practice of the prevention of global warming and the
creation of environment-friendly plants.
Ecological Activities for the Yeocheon River
SFC is going ahead with environmental protection activities for the Yeocheon River in partnership
with the Nam-gu Office in Ulsan. The main activities are cleaning rainwater reservoirs and
removing foreign materials and planting flowers.
Others
SFC is carrying out various social contribution activities such as “Planting for Forests of Hope” to
make elementary schools in Ulsan an environment-friendly forum for education, “Forest Camp for
Disabled Children,” which matches marginalized disabled children with employees, and “Taking
Care of Tall Old Trees,” an activity to take care of unattended old trees.
Social Contribution vision: Sharing with Communities
Main Activities
susTAinABiLiTy Review 43
FinancialReviewManagement’s Discussion & Analysis
The financial statements for the current period (2012) and the two previous periods (2011 and 2010) that are included as information
in this section are based on the Korean International Financial Reporting Standard (K-IFRS, Consolidated Financial Statements). They
contain forward-looking statements regarding the company’s financial conditions, operating performance, and business plans. Such
forward-looking statements involve known and unknown risks, uncertainties and other factors not within control of the company, which
may cause the actual results or performance of the company to be materially different from any future results or performance explicitly
stated or implied in the forward-looking statements. Samsung Fine Chemicals (SFC) does not assume responsibility on the accuracy or
completeness of the information contained or implied in this section, and statements on the past and future cannot be construed as the
company’s promise or claims.
The information herein is based on the company’s plans, estimations and projections as well as assumptions regarding the political
and economic environment in Korea and other countries in which the company currently operates or will operate in the future.
Such estimations and projections are subject to change due to the operating environments. Therefore, users of this report should take
reasonable care when relying on the information contained herein. Estimations, plans and projections are based on conditions as of the
day this report was prepared. SFC does not bear responsibility for providing additional information on future events. The term “company”
used herein without any other qualifying description refers to “SFC.”
ExEcutivE Summary
In addition to the global financial crisis, the fiscal crisis in Eurozone countries compounded economic uncertainties in 2012. As a
result, the growth of developed and emerging economies slowed down. In the midst of the challenges posed by uncertain business
environments, SFC continued to pursue fundamental change and innovation for enhancing core competencies, turning crisis into
opportunity.
SFC has prepared for sustainable growth through active R&D and capital expenditures on core products. In 2012, SFC completed
capacity expansion for Mecellose® and AnyCoat® in response to an increase in demand and development of diverse applications.
In addition, the company also strengthened overall business competitiveness with facility investment on polymerized toner for color laser
printers and Ammonia dome tank. Separately, SFC expects to complete the ongoing capacity expansion for ECH and Caustic Soda in
the offing.
Moreover, SFC has secured future growth engines in eco-friendly business which presents a new paradigm. The company already
developed Bio-degradable polymers and improved process efficiency and productivity for commercial production. Also, facility
investment on new plants is underway for polysilicon, a renewable energy material, and Active Materials for Rechargeable Batteries.
SFC continues to reinforce mid- to long-term momentum through ceaseless R&D efforts for advanced materials.
In 2012, the company recorded the another historic-high sales of KRW1,431.2 billion and pre-tax income of KRW86.1 billion. Despite
greater uncertainty in the global economy, all employees of SFC are stepping up toward the vision of growing into a World-Leading
Chemical Company through change and innovation.
maNaGEmENt’S DiScuSSiON aND aNaLySiS
MD&A
FinAnciAl Review 45
maNaGEmENt’S DiScuSSiON aND aNaLySiS
MD&A
1. analysis of Operating resultsThe global economic growth was dampened in 2012 due mainly to the fiscal crisis in some Eurozone countries. However, SFC posted record-high sales of KRW1,431.2 billion, a 7.3% increase from the previous year, despite tough business conditions. This achievement was attributable to the balanced growth among major business divisions: General Chemicals, Fine Chemicals, and Electronic Chemical Materials. In particular, sales of Electronic Chemical Materials jumped 22.1% year on year. Meanwhile, operating income temporarily decreased 25.5% to KRW55.6 billion, and net income remained stable at KRW73.3 billion.
1.1. analysis of SalesSFC’s core business can be segmented into three parts: the Fine Chemicals Division growing with competitive products; the Electronic Chemical Materials Division notching up with full-scale operation; the General Chemicals Division recovering the profitability with business rationalization. At the same time, SFC is reinforcing the foundation for sustainable growth with new business engines such as Eco-friendly and Renewable energy materials.
In spite of a slowdown in the global economy, sales grew 7.3% in 2012 compared to the previous year in line with capacity expansion of main products and steady market demand of each business division. In particular, sales of toner for color laser printers soared 50.1% year on year; sales of BT Powder, a key material for MLCC, surged 42.0%; and sales of TMAC, a core material for developing solutions for semiconductors and LCDs, jumped 19.0%. Overall, sales of the Electronic Chemical Materials Division climbed 22.1% year on year, the KRW100 billion mark for the first time.
The Fine Chemicals Division also recorded robust growth as sales of Mecellose® and AnyCoat® increased 19.2% and 11.9% year on year, respectively. Last but not least, the General Chemicals Division grew 4.7% on the back of solid demand and sales increases of Caustic Soda and Ammonia.
(in billions of KRW) Fy12 % yoy Fy11 Fy10
Sales 1,431.2 7.3% 1,333.6 1,130.6
Operating profit 55.6 -25.5% 74.6 84.5
Net Income 73.3 -0.1% 73.4 85.1
2012 Sales Breakdown by Division
Fine Chemicals 33.8 %
Electronic Chemical Materials 7.7 %
General Chemicals 58.5 %
AnnUAl RePORT 2012 46SAMSUng Fine cheMicAlS
Sales (in billions of KRW) FY12 FY11 FY10
1,333.6
1,431.2
1,130.6
(in billions of KRW) Fy12 % yoy Fy11 Fy10
Fine Chemicals 483.3 9.1% 443.0 428.0
Electronic Chemical Materials 110.1 22.1% 90.2 74.4
General Chemicals 837.8 4.7% 800.4 628.2
(in billions of KRW) Fy12 % yoy Fy11 Fy10
Domestic 839.3 8.0% 777.0 622.6
Export 591.9 6.3% 556.6 508.0
Export Ratio (%) 41.4 -0.3%p 41.7 45.0
Separately, SFC showed remarkable achievements both at home and abroad. Even though the domestic economy suffered from an overall slump, its domestic sales amounted to KRW839.3 billion, up 8.0% compared to the previous year. Exports also rose 6.3% year on year to KRW591.9 billion. By region, SFC’s exports have been well diversified among Asia, Europe, China, the Middle East and the Americas.
1.2. Profitability analysisIn 2012, Cost Of Goods Sold (COGS) totaled KRW1,266.2 billion, and the gross profit margin edged down by 0.5%p to 11.5% because of sizable capacity expansion and the resulting increase in depreciation expenses.
Operating income amounted to KRW55.6 billion, a drop of 25.5% from the year earlier since SG&A expenses jumped 35.1% year on year in tandem with increases in logistics cost and R&D expenses. On the other hand, EBITDA rose 8.0% year on year to KRW154.3 billion, and EBITDA margin gained 0.1%p to 10.8% in 2012.
Operating Profit (in billions of KRW) FY12 FY11 FY10
55.674.6
84.5
FinAnciAl Review 47
maNaGEmENt’S DiScuSSiON aND aNaLySiS
MD&A
2012 Exports by Region
Asia 24.7 %
Europe 18.6 %
China 17.6 %
Middle East, Africa 11.4 %
Latin America 8.4 %
Japan 7.6 %
North America 7.0 %
CIS 4.7 %
While other income edged down by 2.7% year on year to KRW36.4 billion with slight decreases in dividend income and
gains on FX translation, other expenses plummeted 55.7% to KRW17.6 billion.
(in billions of KRW) Fy12 % yoy Fy11 Fy10
Other Income 36.4 -2.7% 37.4 44.6
Dividend Income 6.8 -8.1% 7.4 10.3
Gains on FX Translation 12.9 -1.5% 13.1 13.1
Gains on Currency Forwards 1.2 -60.0% 3.0 3.6
Other Expenses 17.6 -55.7% 39.7 20.3
Losses on FX Translation 12.5 -10.7% 14.0 14.3
Loss on Currency Forwards 1.7 -57.5% 4.0 3.6
Miscellaneous Losses 1.7 -85.5% 11.7 1.3
Financial Income 3.9 -27.8% 5.4 6.9
Finance Costs 0.2 -75.0% 0.8 0.5
Share of Profit or Loss of Joint Ventures 8.1 -25.0% 10.8 12.9
(in billions of KRW) Fy12 % yoy Fy11 Fy10
COGS 1,266.2 7.8% 1,174.2 988.9
COGS to Sales(%) 88.5 0.5%p 88.0 87.5
Selling & Administrative Expenses 80.5 35.1% 59.6 51.0
Logistics Cost 28.8 14.3% 25.2 30.5
Operating Profit 55.6 -25.5% 74.6 84.5
Operating Profit Margin (%) 3.9 -1.7%p 5.6 7.5
EBITDA 154.3 8.0% 142.9 153.8
EBITDA margin (%) 10.8 0.1%p 10.7 13.6
AnnUAl RePORT 2012 48SAMSUng Fine cheMicAlS
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On the back of a sharp drop in other expenses, the company reported net income of KRW73.3 billion in 2012 at the level similar to that of the previous year. Net profit margin also remained stable at 5.1% in 2012.
SFC has practiced a consistent dividend policy to maximize shareholder value by returning its profit in the form of cash dividends every year. In 2012, the cash dividend per share was KRW650, maintaining the dividend payout ratio over 20%.
2. analysis & Outlook by Business Division
2.1. Fine chemicalsIn 2012, sales of the Fine Chemicals Division amounted to KRW483.3 billion, an increase of 9.1% from the year earlier. The growth of the Fine Chemicals Division was led by globally competitive products such as Mecellose® and AnyCoat® which recorded sales increases of 19.2% and 11.9%, respectively. In addition, the company not only launched a high-value-added new product, Hecellose™, an eco-friendly additive for paint, household items and construction materials, but also completed the large-scale capacity expansion for Mecellose® and AnyCoat® in 2012. All in all, the Fine Chemicals Division will likely sustain its growth path in 2013.
(in billions of KRW) Fy12 % yoy Fy11 Fy10
Net Income 73.3 -0.1% 73.4 85.1
Net Profit Margin (%) 5.1 -0.4%p 5.5 7.5
EPS (KRW) 2,878 -3.0% 2,889 3,359
PER (X) 21.2 - 21.1 24.7
※PER is based on year-end share price(KRW 61,000)
Divisional Sales (in billions of KRW) FY12 FY11 FY10
483.3443.0
428.0
(in billions of KRW) Fy12 % yoy Fy11 Fy10
Divisional Sales 483.3 9.1% 443.0 428.0
Divisional Sales Contribution (%) 33.8 0.6%p 33.2 37.8
FinAnciAl Review 49
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Net Income (in billions of KRW) FY12 FY11 FY10
73.385.1
73.4
Fy12 % yoy Fy11 Fy10
Divisional Sales (in billions of KRW) 110.1 22.1% 90.2 74.4
Divisional Sales Contribution (%) 7.7 0.9%p 6.8 6.6
2.2. Electronic chemical materialsThe Electronic Chemical Materials Division achieved robust growth of 22.1% year on year amid the explosive volatility of its downstream industry. In particular, as the Division enhanced its competitiveness and market leadership and gradually expanded its contribution to the company’s top line, sales in 2012 exceeded the KRW100 billion mark for the first time. For a while, SFC will nurture the Electronic Chemical Materials Division to secure sustainable growth and improve profitability.
By product, toner for color laser printers, TMAC and BT Powder drove overall sales growth of the Division. Sales of toner for color laser printers surged 50.1% compared to the previous year on the back of robust demand growth. Sales of TMAC jumped 19.0% year on year to KRW40.1 billion in line with solid growth
of the downstream industry such as semiconductors. In addition, sales of BT Powder swelled 42.0% from the year earlier, powered by buoyant demand from the IT industry.
Fy12 % yoy Fy11 Fy10
Divisional Sales (in billions of KRW) 837.8 4.7 800.4 628.2
Divisional Sales Contribution (%) 58.5 -1.5%p 60.0 55.6
2.3. General chemicalsSales of the General Chemicals Division rose 4.7% year on year to KRW837.8 billion in 2012. Propelled by international price hikes, sales of Ammonia and Caustic Soda jumped 11.0% and 17.2% year on year, driving the growth of the General Chemicals Division. At the same time, SFC has restructured the Division’s operations and upgraded its product mix in order to enhance profitability and reinforce sustainable growth momentum.
Divisional Sales (in billions of KRW) FY12 FY11 FY10
837.8800.4
628.2
AnnUAl RePORT 2012 50SAMSUng Fine cheMicAlS
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MD&A
Divisional Sales (in billions of KRW) FY12 FY11 FY10
110.190.2
74.4
3. analysis of Financial conditions SFC’s assets at the end of fiscal 2012 totaled KRW1,607.9 billion, up 14.8% from a year earlier. The company is able to maintain a sound financial structure on the back of excellent management efficiency and sufficient cash flows. SFC’s top priority is (1) effective capital expenditures to enhance its future growth momentum and profitability, (2) efficient working capital management to generate stable operating cash flow, and (3) financial strategy to maximize shareholder value.
Total Assets (in billions of KRW) FY12 FY11 FY10
1,607.9
1,400.41,284.1
(in billions of KRW) Fy12 % yoy Fy11 Fy10
Current Assets 506.9 -12.4% 578.6 588.7
Non-current Assets 1,101.0 34.0% 821.8 696.4
Total Assets 1,607.9 14.8% 1,400.4 1,284.1
Total Liabilities 454.5 45.8% 311.7 245.1
Total Equity 1,153.4 5.9% 1,088.7 1,042.6
Total Liabilities & Equity 1,607.9 14.8% 1,400.4 1,284.1
3.1. assetsAt the end of 2012, current assets declined 12.4% from a year before to KRW506.9 billion due mainly to a sharp drop in the ending balance of cash and cash equivalents. The company utilized internal cash reserves for large-scale capital expenditures on strategic products. With the steady growth in sales, trade and other receivables and inventories increased 5.3% and 13.3% year
on year, respectively. Propelled by strategic facility investment, tangible assets jumped to KRW677.4 billion, a year-on-year increase of 41.5% or KRW198.8 billion. Non-current assets also rose significantly, as a result of surge in both tangible and intangible assets.
(in billions of KRW) Fy12 % yoy Fy11 Fy10
Total Assets 1,607.9 14.8% 1,400.4 1,284.1
Current Assets 506.9 -12.4% 578.6 587.7
Cash & Cash Equivalents 43.7 -65.9% 128.2 86.1
Short-term Financial Instruments 0 -100.0% 30.9 130.0
Trade and Other Receivables 239.9 5.3% 227.9 186.5
Inventories 211.4 13.3% 186.6 169.5
FinAnciAl Review 51
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Other Current Assets 11.9 138.0% 5.0 15.6
Non-current Assets 1,101.0 34.0% 821.8 696.5
Tangible Assets 677.4 41.5% 478.6 358.6
Intangible Assets 43.3 74.6% 24.8 34.8
Other Non-current Assets 380.3 19.4% 318.4 303.1
(in billions of KRW) Fy12 % yoy Fy11 Fy10
Total Liabilities 454.5 45.8% 311.7 241.5
Current Liabilities 225.3 -1.8% 229.5 177.4
Trade and Other Payables 188.3 7.7% 174.9 132.8
Short-term Borrowings 10.7 -43.7% 19.0 12.1
Other Current Liabilities 26.3 -26.1% 35.6 32.5
Non-current Liabilities 229.2 178.8% 82.2 64.1
Debt Ratio (%) 39.4 10.8%p 28.6 23.2
3.2. LiabilitiesIn 2012, current liabilities decreased 1.8% from the year before as short-term borrowings fell by KRW 8.3 billion to KRW10.7 billion. However, total liabilities reached KRW454.5 billion, a year-on-year increase of 45.8% as non-current liabilities rose sharply to finance facility investment through the issuance of corporate bonds and long-term borrowings.
Since about 84% of current liabilities are non-interest bearing trade and other payables and most of non-current liabilities are corporate bonds and long-term borrowings, cash flows are scheduled in advance. Therefore, although the debt ratio increased to 39.4%, overall financial risk is negligible and under control.
(in billions of KRW) Fy12 % yoy Fy11 Fy10
Total Equity 1,153.4 5.9% 1,088.7 1,042.6
Equity Attributable to Owners of the Parent
1,153.3 5.9% 1,088.7 1,042.6
3.3. EquityAs of the end of 2012, SFC’s total equity stood at KRW1.153.4 billion, an increase of 5.9% from KRW1,088.7 billion in the previous year, mainly attributable to the growth in retained
earnings. Meanwhile, the equity ratio showed a slight drop by 6.0%p to 71.7%.
AnnUAl RePORT 2012 52SAMSUng Fine cheMicAlS
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4. analysis of cash FlowsCash flow is one of the important measures for evaluating a company’s operating performance. Through efficient capital management, SFC aims to generate a sufficient cash flow. In 2012, the company earned KRW34.5 billion of cash inflows from operating activities. Cash outflows from investing activities more than doubled to KRW226.8 billion due to capital expenditures
on property, plant and equipment primarily for Mecellose® and AnyCoat®. In terms of financing activities, while outlaying a total of KRW16.6 billion to pay cash dividend of KRW650 per share, the company generated KRW107.8 billion of cash inflows from the issuance of corporate bonds and long-term borrowings.
5. 2013 Business OutlookLooking at the year ahead, the global economy is expected to stage a gradual recovery on the back of monetary easing policies and growth in emerging markets. However, a strong rebound is unlikely in view of continued deleveraging in Europe and fiscal spending cuts in the U.S. In particular, taking into account Korea’s dependency on exports, Korean economy growth will likely slow down.
To turn crisis into opportunity, SFC will step up its efforts to grow into a World-Leading Chemical Company. SFC will further
reinforce its growth potential and profitability by upgrading production capacity for Mecellose® and AnyCoat®, enhancing cost competitiveness for general chemicals, and accelerating sales growth of electronic chemical materials in 2013. Although facing uncertain external business environments, SFC will put its utmost efforts to develop core competencies and become a World-Leading Chemical Company.
(in billions of KRW) Fy12 % yoy Fy11 Fy10
Cash Flow from Operating Activities 34.5 -75.4% 140.0 95.2
Cash Flow from Investing Activities -226.8 154.5% -89.1 -78.6
Cash Flow from Financing Activities 107.8 N/A -8.7 -16.5
Capital Stock 129.0 0.0% 129.0 129.0
Capital Surplus 331.1 0.0% 331.2 331.4
Other Components of Equity -9.0 -8.2% -9.8 -11.1
Accumulated Other Comprehensive Income
123.7 9.9% 112.6 122.8
Retained Earnings 578.5 10.0% 525.7 470.5
Equity Ratio (%) 71.7 -6.0%p 77.7 81.2
FinAnciAl Review 53
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FinancialReviewFinancial Statements
RepoRt of Independent AudItoRs
to the Shareholders and Board of Directors of
Samsung Fine chemicals co., Ltd.
We have audited the accompanying consolidated statement of financial position of Samsung Fine Chemicals Co., Ltd. and its subsidiaries (the
“Group”) as of December 31, 2012, and the related consolidated statements of comprehensive income, changes in equity and cash flows for
the year then ended, expressed in Korean won. These consolidated financial statements are the responsibility of the Group’s management.
Our responsibility is to express an opinion on these consolidated financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the Republic of Korea. Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements, referred to above, present fairly, in all material respects, the financial position of
Samsung Fine Chemicals Co., Ltd. and its subsidiaries as of December 31, 2012, and 2011, and their financial performance and cash flows
for the year then ended in conformity with International Financial Reporting Standards as adopted by Republic of Korea ("Korean IFRS").
Auditing standards and their application in practice vary among countries. The procedures and practices used in the Republic of Korea to
audit such financial statements may differ from those generally accepted and applied in other countries. Accordingly, this report is for use by
those who are informed about Korean auditing standards and their application in practice.
Seoul, Korea
march 7, 2013
This report is effective as of March 7, 2013, the audit report date. Certain subsequent events or circumstances, which may occur
between the audit report date and the time of reading this report, could have a material impact on the accompanying consolidated
financial statements and notes thereto. Accordingly, the readers of the audit report should understand that there is a possibility that
the above audit report may have to be revised to reflect the impact of such subsequent events or circumstances, if any.
FinAnciAl Review 55
Samsung Fine Chemicals Co., Ltd. and Subsidiaries (In thousands of Korean won)
Description 2012 2011
assets
i. current assets 506,910,553 578,643,293
Cash and Cash Equivalents ₩ 43,681,674 ₩ 128,224,777
Short-term Financial Instruments - 30,885,000
Held-to-maturity Financial Assets 5,735 32,310
Derivative Financial Instruments - 325,550
Trade and Other Receivables 239,854,355 227,919,078
Other Current Assets 11,923,438 4,673,340
Inventories 211,445,351 186,583,238
ii. Non-current assets Held for Sale - 3,341,622
iii. Non-current assets 1,100,965,307 818,467,538
Long-term Financial Instruments 36,903 36,903
Held-to-maturity Financial Assets 449,590 432,440
Available-for-sale Financial Assets 256,336,525 241,628,772
Investments in Joint Ventures 116,762,785 66,910,733
Property, Plant and Equipment 677,365,852 478,578,627
Intangible Assets 43,253,689 24,798,540
Deferred Income Tax Assets 990,555 551,322
Other non-current Assets 5,769,408 5,530,201
total assets ₩ 1,607,875,860 ₩ 1,400,452,453
Liabilities
i. current Liabilities 225,280,078 229,512,610
Trade and Other Payables ₩ 188,318,873 ₩ 174,926,657
Short-term Borrowings 10,716,581 19,008,000
Derivative Financial Instruments 57,792 44,023
Current Income Tax Liabilities 10,380,137 10,935,131
Other Current Liabilities 15,806,695 24,598,799
ConsolIdAted stAtements of fInAnCIAl posItIon
December 31, 2012 and 2011
AnnUAl RePORT 2012 56SAMSUng Fine cheMicAlS
Description 2012 2011
ii. Non-current Liabilities 229,240,702 82,215,011
Long-term Borrowings 32,267,000 -
Debentures 99,615,365 -
Defined Benefit Liability 39,449,381 30,020,436
Deferred Income Tax Liabilities 46,972,981 43,347,563
Other non-current Liabilities 10,935,975 8,847,012
total liabilities 454,520,780 311,727,621
Equity
i. Equity attributable to Owners of the Parent 1,153,347,490 1,088,714,677
Capital Stock 129,000,000 129,000,000
Capital Surplus 331,103,236 331,165,054
Other Components of Equity (8,937,233) (9,770,832)
Accumulated Other Comprehensive Income 123,720,440 112,623,313
Retained Earnings 578,461,047 525,697,142
ii. Non-controlling interest 7,590 10,155
Non-controlling Interest 7,590 10,155
total Equity 1,153,355,080 1,088,724,832
total Liabilities and Equity ₩ 1,607,875,860 ₩ 1,400,452,453
ConsolIdAted stAtements of fInAnCIAl posItIon
FinAnciAl Review 57
(In thousands of Korean won)
Samsung Fine Chemicals Co., Ltd. and Subsidiaries (in thousands of Korean won, except per share amounts)
Description 2012 2011
i. revenue ₩ 1,431,158,801 ₩ 1,333,620,735
ii. cost of Sales (1,266,229,864) (1,174,150,353)
iii. Gross Profit 164,928,937 159,470,382
Selling and Administrative Expenses (80,514,877) (59,633,243)
Distribution Costs (28,838,291) (25,208,957)
iv. Operating Profit 55,575,769 74,628,182
Other Income 36,384,931 37,386,635
Other Expenses (17,595,042) (39,703,247)
Finance Income 3,858,712 5,420,266
Finance Costs (183,450) (793,311)
Share of Profit or Loss of Joint Ventures 8,058,528 10,843,421
v. Profit Before income tax 86,099,448 87,781,946
vi. income tax Expense (12,823,467) (14,355,255)
vii. Profit for the year ₩ 73,275,981 ₩ 73,426,691
viii. Other comprehensive income 7,112,376 (11,859,249)
Change in Value of Available-for-sale Financial Assets ₩ 11,148,477 ₩ (10,173,375)
Actuarial Losses (4,003,806) (1,648,755)
Actuarial Losses of Joint Ventures 19,055 (63,648)
Changes in Equity Method (20,093) -
Currency Translation Differences in Foreign Operations (31,257) 26,529
ix. total comprehensive income for the year ₩ 80,388,357 ₩ 61,567,442
Profit attributable to:
Owners of the Parent 73,278,546 73,429,254
Non-controlling Interests (2,565) (2,563)
comprehensive income attributable to:
Owners of the Parent 80,390,922 61,570,005
Non-controlling Interests (2,565) (2,563)
x. Earnings Per Share
Basic Earnings Per Share ₩ 2,878 ₩ 2,889
Diluted Earnings Per Share ₩ 2,877 ₩ 2,885
ConsolIdAted stAtements of CompRehensIve InCome
years Ended December 31, 2012 and 2011
AnnUAl RePORT 2012 58SAMSUng Fine cheMicAlS
Samsung Fine Chemicals Co., Ltd. and Subsidiaries (In thousands of Korean won)
Description
attributable to Equity Holders of the companyNon-controlling
interesttotal Equity
capital Stock capital SurplusOther components
of Equity
accumulated Other comprehensive
incomeretained Earnings total
Balance at January 1, 2011 ₩ 129,000,000 ₩ 331,422,338 ₩ (11,075,552) ₩ 122,770,160 ₩ 470,472,935 ₩1,042,589,881 ₩ 12,718 ₩1,042,602,599
comprehensive income
Profit for the year - - - - 73,429,254 73,429,254 (2,563) 73,426,691
actuarial Losses - - - - (1,648,755) (1,648,755) - (1,648,755)
actuarial Losses of associates - - - - (63,647) (63,647) - (63,647)
change in value of available-for-sale Financial assets
- - - (10,178,200) - (10,178,200) - (10,178,200)
currency translation Differences in Foreign Operations
- - - 31,353 - 31,353 - 31,353
transactions with Equity Holders of the company
Dividends - - - - (16,492,645) (16,492,645) - (16,492,645)
Disposal of treasury Stock - (257,284) 1,625,883 - - 1,368,599 - 1,368,599
Exercise of Stock Options - - (321,163) - - (321,163) - (321,163)
Balance at December 31, 2011 ₩ 129,000,000 ₩ 331,165,054 ₩ (9,770,832) ₩ 112,623,313 ₩ 525,697,142 ₩1,088,714,677 ₩ 10,155 ₩1,088,724,832
Balance at January 1, 2012 ₩ 129,000,000 ₩ 331,165,054 ₩ (9,770,832) ₩ 112,623,313 ₩ 525,697,142 ₩1,088,714,677 ₩ 10,155 ₩1,088,724,832
comprehensive income
Profit for the year - - - - 73,278,546 73,278,546 (2,565) 73,275,981
actuarial Losses - - - - (4,003,806) (4,003,806) - (4,003,806)
actuarial Losses of associates - - - - 19,055 19,055 - 19,055
change in value of available-for-sale Financial assets
- - - 11,148,477 - 11,148,477 - 11,148,477
changes in Equity method - - - (20,093) - (20,093) - (20,093)
currency translation Differences in Foreign Operations
- - - (31,257) - (31,257) - (31,257)
transactions with Equity Holders of the company
Dividends - - - - (16,529,890) (16,529,890) - (16,529,890)
Disposal of treasury Stock - (61,818) 1,079,665 - - 1,017,847 - 1,017,847
Exercise of Stock Options - - (246,066) - - (246,066) - (246,066)
Balance at December 31, 2012 ₩ 129,000,000 ₩ 331,103,236 ₩ (8,937,233) ₩ 123,720,440 ₩ 578,461,047 ₩1,153,347,490 ₩ 7,590 ₩1,153,355,080
ConsolIdAted stAtements of ChAnges In equIty
Years Ended December 31, 2012 and 2011
FinAnciAl Review 59
ConsolIdAted stAtements of CAsh flows
Years Ended December 31, 2012 and 2011
AnnUAl RePORT 2012 60SAMSUng Fine cheMicAlS
Samsung Fine Chemicals Co., Ltd. and Subsidiaries (In thousands of Korean won)
Description 2012 2011
i. cash Flows from Operating activities ₩ 34,486,209 ₩ 139,972,778
1. Cash Generated from Operations 37,717,208 137,235,892
2. Interest Received 3,499,709 6,266,969
3. Interest Paid (1,137,193) (575,463)
4. Dividend Income 6,777,151 7,370,703
5. Tax Paid (12,370,666) (10,325,323)
ii. cash Flows from investing activities (226,796,757) (89,137,033)
Collection of Short-term Loans - 2,891,735
Increase in Short-term Financial Instruments 30,885,000 99,115,000
Receipt of Other Non-current Assets 441,798 331,129
Receipt of Investments in Joint Ventures 12,205,107 11,257,522
Disposal of Held-to-maturity Financial Assets 32,310 15,935
Disposal of Available-for-sale Financial Assets - 6,961,500
Disposal of Property, Plant and Equipment 2,441,662 486,012
Disposal of Intangible Assets 730,909 30,889
Increase in Government Guarantee Deposits - 171,370
Acquisition of Long-term Financial Assets - (3,000)
Acquisition of Available-for-sale Financial Assets - (2,065,500)
Acquisition of Held-to-maturity Financial Assets (22,885) (122,180)
Acquisition of Joint Ventures (54,000,000) (20,000,831)
Acquisition of Property, Plant and Equipment (218,436,184) (182,649,542)
Acquisition of Intangible Assets (608,776) (3,802,179)
Increase in Other Non-current Assets (465,698) (1,754,893)
iii. cash Flows from Financing activities 107,799,334 (8,731,500)
1. Proceeds from Short-term Borrowings (8,113,409) 6,906,149
2. Proceeds from Long-term Borrowings 32,267,000 -
3. Proceeds from Debentures 99,593,200 -
4. Disposal of Treasury Shares 673,485 862,760
5. Dividends Paid (16,620,942) (16,500,409)
iv. Exchange Gains on cash and cash Equivalents (31,889) 28,269
v. Net increase(decrease) in cash and cash Equivalents (84,543,103) 42,132,514
vi. cash and cash Equivalents at the Beginning of year 128,224,777 86,092,263
vii. cash and cash Equivalents at the end of year ₩ 43,681,674 ₩ 128,224,777
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Samsung Fine Chemicals Co., Ltd. (In thousands of Korean won)
Description 2012 2011
assets
i. current assets 503,426,576 575,810,259
Cash and Cash Equivalents ₩ 42,572,408 ₩ 127,679,396
Short-term Financial Instruments - 30,885,000
Held-to-maturity Financial Assets 5,735 32,310
Derivative Financial Instruments - 325,550
Trade and Other Receivables 239,804,912 227,887,846
Other Current Assets 11,889,053 4,631,880
Inventories 209,154,468 184,368,277
ii. Non-current assets Held for Sale - 3,341,622
iii. Non-current assets 1,109,939,629 820,406,046
Long-term Financial Instruments 33,903 33,903
Held-to-maturity Financial Assets 402,040 384,890
Available-for-sale Financial Assets 255,148,665 240,440,913
Investments in Subsidiaries 19,756,980 16,756,980
Investments in Joint Ventures 118,030,395 64,030,395
Property, Plant and Equipment 671,129,664 472,047,753
Intangible Assets 39,762,216 21,302,382
Other Non-current Assets 5,675,766 5,408,830
total assets ₩ 1,613,366,205 ₩ 1,399,557,927
Liabilities
i. current Liabilities 224,692,821 230,455,347
Trade and Other Payables ₩ 187,976,285 ₩ 175,300,988
Short-term Borrowings 10,716,581 18,258,000
Derivative Financial Instruments 57,792 44,023
Current Income Tax Liabilities 10,364,748 12,395,050
Other Current Liabilities 15,577,415 24,457,286
sepARAte stAtements of fInAnCIAl posItIon
December 31, 2012 and 2011
FinAnciAl Review 61
Description 2012 2011
ii. Non-current Liabilities 230,317,234 83,483,693
Long-term Borrowings 32,267,000 -
Debentures 99,615,365 -
Defined Benefit Liability 39,275,579 29,914,702
Deferred Income Tax Liabilities 48,263,716 44,721,979
Other Non-current Liabilities 10,895,574 8,847,012
total Liabilities 455,010,055 313,939,040
Equity attributable to Owners of the Parent
I. Capital Stock 129,000,000 129,000,000
II. Capital Surplus 331,103,236 331,165,054
III. Other Components of Equity (8,937,233) (9,770,832)
IV. Accumulated Other Comprehensive Income 123,740,437 112,591,960
V. Retained Earnings 583,449,710 522,632,705
total Equity 1,158,356,150 1,085,618,887
total Liabilities and Equity ₩ 1,613,366,205 ₩ 1,399,557,927
sepARAte stAtements of fInAnCIAl posItIon
AnnUAl RePORT 2012 62SAMSUng Fine cheMicAlS
(In thousands of Korean won)
Samsung Fine Chemicals Co., Ltd. (In thousands of Korean won)
Description 2012 2011
i. revenue ₩ 1,430,857,079 ₩ 1,333,619,886
ii. cost of Sales (1,264,486,800) (1,172,356,817)
iii. Gross Profit 166,370,279 161,263,069
Selling and Administrative Expenses (79,274,986) (58,633,770)
Distribution Costs (28,840,153) (25,199,778)
iv. Operating Profit 58,255,140 77,429,521
Other Income 48,565,361 48,602,224
Other Expenses (17,589,303) (39,607,917)
Finance Income 3,852,682 5,356,226
Finance Costs (99,654) (777,166)
v. Profit Before income tax 92,984,226 91,002,888
vi. income tax Expense (11,680,663) (17,204,364)
vii. Profit for the year ₩ 81,303,563 ₩ 73,798,524
viii. Other comprehensive income 7,191,808 (11,822,131)
Change in Value of Available-for-sale Financial Assets 11,148,477 (10,173,375)
Actuarial Losses (3,956,668) (1,648,756)
ix. total comprehensive income for the year ₩ 88,495,371 ₩ 61,976,393
x. Earnings Per Share
Basic Earnings Per Share ₩ 3,193 ₩ 2,903
Diluted Earnings Per Share ₩ 3,192 ₩ 2,900
sepARAte stAtements of CompRehensIve InCome
Years Ended December 31, 2012 and 2011
FinAnciAl Review 63
Samsung Fine Chemicals Co., Ltd. (In thousands of Korean won)
Description capital Stock capital SurplusOther components of
Equityaccumulated Other
comprehensive incomeretained Earnings total Equity
Balance at January 1, 2011 ₩ 129,000,000 ₩ 331,422,338 ₩ (11,075,552) ₩ 122,765,336 ₩ 466,975,582 ₩ 1,039,087,704
comprehensive income
Profit for the year - - - - 73,798,524 73,798,524
actuarial Losses - - - - (1,648,756) (1,648,756)
change in value of available-for-sale Financial assets
- - - (10,173,376) - (10,173,376)
transactions with Equity Holders of the company
Dividends - - - - (16,492,645) (16,492,645)
Disposal of treasury Stock - (257,284) 1,625,882 - - 1,368,598
Exercise of Stock Options - - (321,162) - - (321,162)
Balance at December 31, 2011 ₩ 129,000,000 ₩ 331,165,054 ₩ (9,770,832) ₩ 112,591,960 ₩ 522,632,705 ₩ 1,085,618,887
Balance at January 1, 2012 ₩ 129,000,000 ₩ 331,165,054 ₩ (9,770,832) ₩ 112,591,960 ₩ 522,632,705 ₩ 1,085,618,887
comprehensive income
Profit for the year - - - - 81,303,563 81,303,563
actuarial Losses - - - - (3,956,668) (3,956,668)
change in value of available-for-sale Financial assets
- - - 11,148,477 - 11,148,477
transactions with Equity Holders of the company
Dividends - - - - (16,529,890) (16,529,890)
Disposal of treasury Stock - (61,818) 1,079,665 - - 1,017,847
Exercise of Stock Options - - (246,066) - - (246,066)
Balance at December 31, 2012 ₩ 129,000,000 ₩ 331,103,236 ₩ (8,937,233) ₩ 123,740,437 ₩ 583,449,710 ₩ 1,158,356,150
sepARAte stAtements of ChAnges In equIty
Years Ended December 31, 2012 and 2011
AnnUAl RePORT 2012 64SAMSUng Fine cheMicAlS
sepARAte stAtements of CAsh flows
Years Ended December 31, 2012 and 2011
FinAnciAl Review 65
Samsung Fine Chemicals Co., Ltd. (In thousands of Korean won)
Description 2012 2011
i. cash Flows from Operating activities ₩ 48,056,317 ₩ 155,839,603
1. Cash Generated from Operations 39,059,798 141,886,296
2. Interest Received 3,496,597 6,204,295
3. Interest Paid (1,115,337) (567,148)
4. Dividend Income 18,982,257 18,628,224
5. Tax Paid (12,366,998) (10,312,064)
ii. cash Flows from investing activities (241,712,640) (104,137,961)
Disposal of Short-term Financial Instruments 30,885,000 99,115,000
Receipt of Held-to-maturity Financial Assets 32,310 15,935
Collection of Short-term Loans - 2,891,735
Disposal of Property, Plant and Equipment 2,441,662 468,367
Receipt of Government Grant - 171,370
Receipt of Guarantee 414,818 331,129
Disposal of Membership 730,909 30,889
Disposal of Available-for-sale Financial Assets - 6,961,500
Acquisition of Available-for-sale Financial Assets - (2,065,500)
Acquisition of Held-to-maturity Financial Assets (22,885) (74,630)
Increase in Long-term Loans to Employees - (210,000)
Acquisition of Subsidiaries (3,000,000) (14,500,000)
Acquisition of Joint Ventures (54,000,000) (20,000,831)
Acquisition of Memberships (607,082) (343,253)
Increase in Construction in Progress (218,124,984) (175,493,337)
Increase in Guarantees (462,388) (1,436,335)
iii. cash Flows from Financing activities 108,549,334 (9,481,500)
1. Proceeds from Short-term Borrowings (7,363,409) 6,156,149
2. Proceeds from Long-term Borrowings 32,267,000 -
3. Proceeds from Debentures 99,593,200 -
4. Disposal of Treasury Shares 673,485 862,760
5. Dividends Paid (16,620,942) (16,500,409)
iv. Net increase(Decrease) in cash and cash Equivalents (85,106,988) 42,220,142
v. cash and cash Equivalents at the Beginning of year 127,679,396 85,459,254
vi. cash and cash Equivalents at the End of year ₩ 42,572,408 ₩ 127,679,396
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cORPORATeinFORMATiOn
Date of Establishment
Paid-in capital
independent Public accountants
Number of Shares issued
Listed on Korea Stock Exchange
Homepage
August 27, 1964
KRW129 billion
Samil Pricewaterhouse Coopers
25,800,000
April 15, 1976
www.sfc.samsung.co.kr
NumBEr OF EmPLOyEES
SHarEHOLDEr OwNErSHiP
Seoul Office 127 (11.3%)
Ulsan Office 709 (63.2%)
Advanced Materials Research Institute 247 (22.0%)
Incheon Office 32 (2.9%)
Others 7 (0.6%)
Number of Employees 1,122 (100.0%)
Samsung Affiliates 32.0%
Institutional Investors 26.4%
Foreign Investors 6.5%
Individual Investors 33.8%
Treasury Stock 1.3%
Shareholder Ownership 100.0%
Europe Office_ Frankfurt
AnnUAl RePORT 2012 66SAMSUng Fine cheMicAlS
(As of the end of 2012)
(As of the end of 2012)
Samsung Fine chemicals trading(Shanghai) cO., Ltd.Rm1515, Shanghai Int’l Trading Center No 2201,
Yan An Road(W), Shanghai, P.R.China. 200336
Europe OfficeAm Kronberger Hang 6 65824 Schwalbach TS,
Germany
tokyo OfficeSinagawa Grand Central Tower 9F, 2-16-4,
Konan, Minato-ku, Tokyo, Japan
HeadquartersYeochonro No.217-gil (190 Yeochon-dong), Nam-gu,
Ulsan, South Korea
Seoul Office25th Fl., Samsung Electronics Bldg., Seochodaero No.74-gil 11
(1320-10, Seocho-2-dong), Seocho-gu, Seoul, South Korea
advanced materials research institute441, Exporo, Yuseong-gu (103-1 Moonji-dong), Daejeon, South Korea
incheon Office129B/4L, Namdong Industrial Complex, Namdongdaero No.29-gil
(696-3 Gojan-dong), Namdong-gu, Incheon, South Korea
Busan Office10th Fl., Samsung Fire & Marine Insurance Bldg.,
184 Jungangdaeo-ro (1205-22 Choryang-1 dong), Dong-gu, Busan,
South Korea
Overseas Domestic
tokyo Office
ulsan Office
Busan Office
incheon Office Seoul Office
advanced materialsresearch institute
Samsung Fine chemicalstrading(Shanghai) co., Ltd.
cORPORATe inFORMATiOn 67
25th Fl., Samsung Electronics Bldg.,Seochodaero No.74-gil 11 (1320-10, Seocho-2-dong),Seocho-gu, Seoul, South Korea(135-857)
tel. + 82.2.2255.0700Fax. + 82.2.2255.0710
www.sfc.samsung.co.kr
Fine Creation For the Future
ANNUAL REPORT 2012
25th Fl., Samsung Electronics Bldg.,Seochodaero No.74-gil 11 (1320-10, Seocho-2-dong),Seocho-gu, Seoul, South Korea(135-857)
Tel. + 82.2.2255.0700Fax. + 82.2.2255.0710
www.sfc.samsung.co.kr
04 PaSSioN oN MatErialS
06 SPEcial SEctioN
11 2012 SFc SNaPShot
13 ViSioN & StratEgy
14 FiNaNcial highlightS
15 cEo MESSagE
17 Board oF dirEctorS
BUSINESS REVIEW_Ever-Fine
21 gENEral chEMicalS
23 FiNE chEMicalS
25 ElEctroNic chEMical MatErialS
27 Eco-FriENdly rENEwaBlE ENErgy MatErialS
SUSTAINABILITY REVIEW_Ever-Trusty
31 rESEarch & dEVEloPMENt
33 iNNoVatioN
35 Quality MaNagEMENt
37 ENViroNMENt & SaFEty
43 huMaN rESourcES
45 Social coNtriButioNS
FINANCIAL REVIEW
48 Md&a
58 FiNaNcial StatEMENtS
69 corPoratE iNForMatioN
AN
NU
AL R
EPORT 2012