Hoa Phat Group Joint Stock Company. Separate Financial Statements for the year ended 31 December 2011

Transcription

1 Separate Financial Statements for the year ended 31 December 2011

2 Report of the Board of Directors The Board of Directors of ( the Company ) is pleased to present its report and the separate financial statements of the Company for the year ended 31 December The members of the Board of Management and the Board of Directors during the year and at the date of this report are as follows: Board of Management Mr. Tran Dinh Long Chairman Mr. Tran Tuan Duong Vice Chairman Mr. Nguyen Manh Tuan Vice Chairman Mr. Doan Gia Cuong Vice Chairman Mr. Nguyen Ngoc Quang Member Mr. Ta Tuan Quang Member Mr. Hoang Quang Viet Member Mr. Don Di Lam Member Mr. Lars Kjaer Member Board of Directors Mr. Tran Tuan Duong General Director Mrs. Nguyen Thi Thao Nguyen Deputy General Director Mr. Ta Tien Dung Deputy General Director (from 6 August 2011) Corporate information The Company was originated from Hoa Phat Steel Joint Stock Company incorporated under the Law on Enterprise of Viet Nam pursuant to the initial Business Registration Certificate No, issued by Hung Yen Department of Planning and Investment on 26 October In accordance with the 8 th amendment of the Business Registration Certificate No issued by Hung Yen Department of Planning and Investment on 9 January 2007, the Hoa Phat Steel Joint Stock Company was transformed into. The Company s Business Registration Certificate has been amended several times, the most recent of which is by Business Registration Certificate No dated 24 February The Business Registration Certificate was issued by the Hung Yen Department of Planning and Investment. The registered office of the Company is located in Pho Noi A Industrial Zone, Giai Pham Commune, Yen My District, Hung Yen Province, Vietnam. 1

3 Operating results and dividends The Company s net profit after tax for the year ended 31 December 2011 was 1,231,213 million (2010: 764,716 million). On 21 December 2011, the shareholders of the Company approved the plan for the second distribution of 2010 dividends to the shareholders in the form of shares at the ratio of 10:1. This dividend payment in the form of share issuance was appropriated from the retained profits to all the shareholders who are on the list of the shareholders for dividend payment on the closing date as of 1 February Significant events during the year On 1 January 2011, the Company transferred all the risks and rewards relating to the assets, liabilities and other obligations in the Steel Rolling Factory and Steel Billet Factory to Hoa Phat Steel One Member Limited Liability Company, a 100% owned subsidiary established under the resolution of the Company s Board of Management dated 24 December 2010; On 11 March 2011, the Company increased its shareholding in Hoa Phat Mining Joint Stock Company from 49% to 70%; From 22 March 2011 to 22 June 2011, the Company bought back 4,230,930 of its shares ( HPG shares ) as treasury shares at the Ho Chi Minh Stock Exchange under the ordermatching and put-through methods. The share buyback was approved by the Ho Chi Minh Stock Exchange on 11 March 2011; On 7 April 2011, the Company disposed all of its shareholding (30,000,000 shares) equivalent to 50% share capital of Hoa Phat Cement Joint Stock Company, an associate of the Company; On 11 May 2011, the Company contributed 48 billion equivalent to 60% share capital of Hoa Phat Door Joint Stock Company, a new subsidiary of the Company; On 27 July 2011, Hoa Phat Laos Company Limited, a 100% owned subsidiary was dissolved under the decision of the Company s Board of Management dated 4 July 2011; On 26 August 2011, the Company transferred its ownership of Hoa Phat Binh Dinh One Member Limited Liability Company, which was formerly a 100% owned subsidiary of the Company to Hoa Phat Steel One Member Limited Liability Company under the decision of the Chairman of the Company s Board of Management dated 16 February 2011; On 21 December 2011, the Company s shareholders approved the plan for the second distribution of 2010 dividends to the shareholders in the form of shares at the ratio of 10:1. According to the announcement by Ho Chi Minh Stock Exchange, the closing date for the shareholders right to receive the second dividend payment of 2010 in the form of shares was 1 February Post balance sheet events There are no significant post balance sheet events except for those disclosed in Note 31 to the separate financial statements that need to be adjusted or disclosed in the separate financial statements. Auditors The auditor of the Company is KPMG Limited. 2

4 Statement of the Board of Directors responsibility in respect of the separate financial statements The Board of Directors is responsible for the separate financial statements which give a true and fair view of the Company s state of affairs, results of operations and cash flows for the year ended 31 December In preparing the separate financial statements, the Board of Directors is required to: select suitable accounting policies and then apply them consistently; make judgments and estimates that are reasonable and prudent; confirm that applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements; and prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business. The Board of Directors is also responsible for ensuring that proper accounting records are kept, which disclose, with reasonable accuracy at any time, the financial position of the Company and to ensure that the accounting records comply with the Vietnamese accounting system. The Board of Directors is also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Board of Directors confirms with the Board of Management and shareholders of the Company that they have complied with the above requirements in preparing the separate financial statements. Approval of the separate financial statements We hereby approve the accompanying separate financial statements. These financial statements give a true and fair view of the unconsolidated financial position of the Company as at 31 December 2011 and the unconsolidated results of its operations and its unconsolidated cash flows for the year then ended in accordance with the Vietnamese Accounting Standards, the Vietnamese Accounting System and the relevant statutory requirements. On behalf of the Board of Directors Tran Tuan Duong General Director Hanoi, 15 March

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6 Separate balance sheet at 31 December 2011 ASSETS Code Note Current assets (100 = ) ,437,649,017 2,230,269,492,598 Cash and cash equivalents ,143,844, ,598,819,170 Cash ,743,844,207 57,228,250,429 Cash equivalents ,400,000, ,370,568,741 Short-term investments ,690,000,000 Short-term investments ,690,000,000 Accounts receivable - short-term ,831,236, ,117,940,956 Accounts receivable - trade ,215, ,114,276,177 Prepayments to suppliers ,753,374,075 44,407,988,137 Other receivables ,926,646,499 22,595,676,642 Inventories ,927,886, ,574,314,654 Inventories 141 2,927,886, ,594,600,390 Allowance for inventories (1,020,285,736) Other current assets 150 5,534,682,314 24,288,417,818 Short-term prepayments 151 1,193,897,385 3,119,030,173 Deductible value added tax 152 4,073,757,395 12,569,187,921 Taxes and other receivables from State Treasury ,265,374 - Other current assets ,762,160 8,600,199,724 Long-term assets (200 = ) 200 7,617,104,306,18 6,272,686,792,796 Accounts receivable - long-term ,784,590, ,979,590,000 Other long-term receivables ,784,590, ,979,590,000 Fixed assets ,724,178, ,904,693,128 Tangible fixed assets ,580,033, ,720,795,887 Cost ,581,322, ,078,406,927 Accumulated depreciation 223 (15,001,289,344) (360,357,611,040) Intangible fixed assets ,267,203,074 8,474,972,300 Cost 228 3,839,093,900 10,905,882,663 Accumulated amortisation 229 (571,890,826) (2,430,910,363) Construction in progress ,876,942, ,924,941 Long-term investments ,117,760,237,533 5,309,146,932,986 Investments in subsidiaries 251 6,173,317,237,533 4,533,053,932,986 Investments in associates ,930,000, ,250,000,000 Other long-term investments ,513,000, ,843,000,000 Other long-term assets ,835,300,164 17,655,576,682 Long-term prepayments ,321,858,598 10,675,834,832 Deferred tax assets ,509,441,566 4,314,391,850 Other long-term assets 268 4,000,000 2,665,350,000 TOTAL ASSETS (270 = ) 270 8,034,541,955,198 8,502,956,285,394 The accompanying notes are an integral part of these separate financial statements 5

7 Separate balance sheet at 31 December 2011 Code Note RESOURCES LIABILITIES (300 = ) 300 1,445,246,079,149 2,945,739,546,348 Current liabilities ,069,514,149 1,692,486,093,848 Short-term borrowings ,315,766,843 Accounts payable trade ,717,539, ,973,330,578 Advances from customers ,269,920,548 Taxes payable to State Treasury ,158,537,064 62,395,540,090 Payables to employees ,429,000 5,953,153,019 Accrued expenses ,332,518,680 57,875,354,508 Other payables ,307,914, ,990,148,472 Bonus and welfare funds ,927,576,016 33,712,879,790 Long-term borrowings and liabilities 330 1,249,176,565,000 1,253,253,452,500 Other liabilities ,979,590, ,979,590,000 Long-term borrowings ,000,000, ,000,000,000 Provision for severance allowance ,975,000 4,273,862,500 EQUITY (400 = 410) 400 6,589,295,876,049 5,557,216,739,046 Owners equity 410 6,589,295,876,049 5,557,216,739,046 Share capital ,178,497,600,000 3,178,497,600,000 Capital surplus 412 2,257,862,350,000 2,257,862,350,000 Other capital ,613,480,000 - Treasury shares 414 (150,970,558,021) - Financial reserves ,611,964,000 86,611,964,000 Retained profits ,681,040,070 34,244,825,046 TOTAL RESOURCES (440 = ) 440 8,034,541,955,198 8,502,956,285,394 Prepared by: Approved by: Ly Thi Ngan Chief Accountant Tran Tuan Duong General Director The accompanying notes are an integral part of these separate financial statements 6

8 Seperate statement of income for the year ended 31 December 2011 Code Note Total revenue ,041,827,659,678 8,046,390,146,385 Less sales deductions ,452,613,735 Net sales (10 = 01 02) 10 1,041,827,659,678 7,957,937,532,650 Cost of sales ,077,861,587 7,424,465,318,961 Gross profit (20 = 10 11) 20 46,749,798, ,472,213,689 Financial income ,424,607,190, ,960,228,261 In which: profits transferred from subsidiaries and associates 1,262,922,202, ,130,089,345 Financial expenses ,166,704, ,813,528,908 In which: interest expenses ,379,143, ,643,011,030 Selling expenses ,435,002 45,895,274,102 General and administration expenses 25 31,132,911,259 42,092,118,110 Net operating profit {30 = 20 + (21-22) (24+25)} 30 1,224,940,937, ,631,520,830 Other income ,091,457, ,196,996,662 Other expenses ,254,689, ,762,392,075 Results of other activities (40 = 31 32) ,767,649 1,434,604,587 Profit before tax (50 = ) 50 1,225,777,705, ,066,125,417 Income tax expense current ,759,060,082 62,690,454,710 Income tax benefit deferred (11,195,049,716) (3,340,712,726) Net profit after tax (60 = ) 60 1,231,213,695, ,716,383,433 Prepared by: Approved by: Ly Thi Ngan Chief Accountant Tran Tuan Duong General Director The accompanying notes are an integral part of these separate financial statements 7

9 Separate statement of changes in equity for the year ended 31 December 2011 Share capital Capital surplus Other capital Treasury shares Foreign exchange differences Financial reserves Retained profits Total VNĐ Bakance at 1 January ,963,639,980,000 1,620,900,010, (6,736,706,546) 69,297,752, ,152,133,613 4,564,253,169,067 Share capital issued by payment of dividends in form of shares 981,819,960, (981,819,960,000) - Interim dividends of (635,699,520,000) (635,699,520,000) Share capital issued from bonds conversion 233,037,660, ,962,340, ,000,000,000 Transfer to statement of income ,736,706, ,736,706,546 Net profit for the year ,716,383, ,716,383,433 Appropriation to funds ,314,212,000 (27,314,212,000) (10,000,000,000) Allowance to members of Supervising Board and Board of Management (2,790,000,000) (2,790,000,000) Balance at 1 January ,178,497,600,000 2,257,862,350, ,611,964,000 34,244,825,046 5,557,216,739,046 Share buyback (150,970,558,021) (150,970,558,021) Net profit for year ,231,213,695,024 1,231,213,695,024 Appropriation to funds (42,300,000,000) (42,300,000,000) Dividends (Note 27) ,613,480, (313,613,480,000) - Allowance to members of Board of Management (5,864,000,000) (5,864,000,000) Balance at 31 December ,178,497,600,000 2,257,862,350, ,613,480,000 (150,970,558,021) - 86,611,964, ,681,040,070 6,589,295,876,049 Prepared by: Approved by: Ly Thi Ngan Tran Tuan Duong Chief Accountant General Director The accompanying notes are an integral part of these separate financial statements 8

10 Separate statement of cash flows for the year ended 31 December 2011 Code Note CASH FLOWS FROM OPERATING ACTIVITIES Profit before tax 01 1,225,777,705, ,066,125,417 Adjustments for Depreciation and amortisation 02 5,500,985,465 75,969,195,339 Allowances and provisions 03 58,275, ,104,709 Unrealised foreign exchange losses 04 30,700,019 14,726,683,500 Profits from investing activities 05 (1,382,811,465,065) (535,855,380,728) Interest expense ,379,143, ,643,011,030 Operating profit before changes in working capital 08 8,935,344, ,027,739,267 Change in receivables and other current assets 09 (86,053,601,229) (456,445,658,205) Change in inventories ,219,525,807 (208,507,011,345) Change in payables and other liabilities 11 (31,010,645,815) 517,505,609,275 Change in prepayments 12 (181,231,385) (8,858,259,531) 307,909,391, ,722,419,461 Interest paid 13 (151,309,288,297) (49,494,186,458) Corporate income tax paid 14 (53,872,767,654) (63,722,992,685) Other receipts from operating activities ,096,956,502 Other payments for operating activities 16 (25,034,303,774) (25,694,282,291) Net cash generated from operating activities 20 77,693,032, ,907,914,529 CASH FLOWS FROM INVESTING ACTIVITIES Payments for additions to fixed assets and other long-term assets 21 (11,016,395,320) (29,123,383,350) Proceeds from disposals of fixed assets and other long-term assets ,000, ,967,515,939 Payments for purchase of debt instruments of other entities 23 - (403,933,000,000) Proceeds from sales of debt instruments of other entities ,020,000,000 - Payments for investments in other entities 25 (837,734,174,276) (1,037,247,834,135) Collections on investments in other entities ,004,568,190 - Receipts of interests and profits from subsidiaries ,196,697, ,341,983,247 Net cash generated from/(used in) investing activities ,670,695,898 (775,994,718,299) The accompanying notes are an integral part of these separate financial statements 9

11 Separate statement of cash flows for the year ended 31 December 2011 Code Note CASH FLOWS FROM FINANCING ACTIVITIES Payments for shares repurchases 32 (150,970,558,021) - Proceeds from short-term borrowings and long-term borrowings ,424,372,080 3,188,391,636,256 Payments to settle debts 34 (1,356,740,138,923) (2,505,850,151,151) Payments of dividends to minority interest shareholders 36 (525,500,000) (635,377,400,000) Net cash (used in)/generated from financing activities 40 (779,811,824,864) 47,164,085,105 Net cash flows during the year (50 = ) Cash and cash equivalents at the beginning of the year Effect of exchange rate fluctuations on cash and cash equivalents Cash and cash equivalents at the end of the year (70 = ) 50 (97,448,096,966) (433,922,718,665) ,598,819, ,802,179, (6,877,997) 3,719,358, ,143,844, ,598,819,170 The accompanying notes are an integral part of these separate financial statements 10

12 Separate statement of cash flows for the year ended 31 December 2011 NON-CASH INVESTING AND FINANCING ACTIVITIES Transfer of the following assets and liabilities to a subsidiary as share capital contribution: Accounts receivable - short-term 721,428,142,628 - Inventories (net of allowances for inventories) 466,426,902,846 - Other current assets 3,064,787,546 - Tangible fixed assets net book value 179,771,942,552 - Intangible fixed assets net book value 5,050,988,327 - Construction in progress 708,924,941 - Long-term prepayments 3,606,919,341 - Current liabilities (820,689,619,957) - Provision for severance allowance (4,135,162,500) 555,233,825,724 - Payments of dividends in the form of shares 313,618,830, ,819,960,000 Conversion of bonds into shares - 870,000,000,000 Conversion of loans given to subsidiaries into other long-term investments in these subsidiaries 315,000,000,000 50,362,000,000 Conversion of a deposit at a subsidiary into long-term investment in this subsidiary - 43,731,118,200 Entrusted investment fund received from an associate - 448,979,590,000 Conversion of other receivables from subsidiaries into investments in these subsidiaries 140,000,000,000 - Conversion of other long-term investment in a subsidiary into long-term investment in this subsidiary 48,000,000,000 - Conversion of other receivables from a subsidiary into a short-term loan to this subsidiary 200,000,000,000 - Net-off between other receivables from subsidiaries and other payables to these subsidiaries 72,900,000,000 - Transfer of investment in a subsidiary to another subsidiary 20,000,000,000 - Conversion of short-term investment into other receivables 4,000,000,000 - Prepared by: Approved by: Ly Thi Ngan Chief Accountant Tran Tuan Duong General Director The accompanying notes are an integral part of these separate financial statements 11

13 These notes form an integral part of and should be read in conjunction with the accompanying separate financial statements, 1. Reporting entity ( the Company ) is incorporated as a joint stock company in Vietnam, The principal activities of the Company are to: Export, import and trade steel, materials and equipment used for metallurgy and steellaminating; Manufacture steel rolls, straining steels, corrugated irons; Manufacture unplated and plated steel pipe, inox pipe; and Financial investment. As at 31 December 2011, the Company had 46 employees (: 947 employees). 2. Summary of significant accounting policies The following significant accounting policies have been adopted by the Company in the preparation of these separate financial statements Basis of financial statements preparation The separate financial statements, expressed in Vietnam Dong ( ) have been prepared in accordance with Vietnamese Accounting Standards, the Vietnamese Accounting System and the relevant statutory requirements. The separate financial statements, except for the separate statement of cash flows, are prepared on the accrual basis using the historical cost concept. The separate statement of cash flows is prepared using the indirect method Annual accounting period The annual accounting period of the Company is from 1 January to 31 December Adoption of Circular No. 210/2009/TT-BTC of the Ministry of Finance on presentation and disclosures of financial instruments Effective from 1 January 2011, the Company adopted the requirements of Circular No. 210/2009/TT-BTC of the Ministry of Finance on presentation and disclosures of financial instruments ( Circular 210 ) prospectively. The adoption of Circular 210 did not have a material effect on the measurement or presentation of financial instruments in the Company s financial statements. The financial statements disclosures specified in Circular 210 are not required for corresponding figures due to the prospective application. 12

14 2.4. Foreign currency transactions Monetary assets and liabilities denominated in currencies other than are translated into at rates of exchange ruling at the balance sheet date. Transactions in currencies other than during the year have been translated into at rates ruling at the transaction dates. All foreign exchange differences are recorded in the separate statement of income in accordance with Vietnamese Accounting Standard No. 10 The effects of changes in foreign exchange rates Cash and cash equivalents Cash comprises cash balances and call deposits. Cash equivalents are short-term highly liquid investments that are readily convertible to known amounts of cash, are subject to an insignificant risk of changes in value, and are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes Investments Investments are stated at cost. An allowance is made for reductions in investment values if market value of the investment falls below cost or if the investee has suffered a loss. The allowance is reversed if the subsequent increase in recoverable amount can be related objectively to an event occurring after the allowance was recognised. An allowance is reversed only to the extent that the investment s carrying amount does not exceed the carrying amount that has been determined if no allowance had been recognised Accounts receivable Trade and other receivables are stated at cost less allowance for doubtful debts. Allowance for doubtful debts is established for amount of outstanding receivables at the balance sheet date which are overdue more than 6 months or are doubtful of recovery. Increases and decreases to the allowance for doubtful debts balance are recorded as general and administration expense account in the separate statement of income Inventories Inventories are stated at the lower of cost and net realisable value. Cost is determined on a weighted average basis and includes all costs incurred in bringing the inventories to their present location and condition. Cost in the case of finished goods and work in progress includes raw materials, direct labour and attributable manufacturing overheads. Net realisable value is the estimated selling price of inventory items, less the estimated costs of completion and selling expenses. The Company applies the perpetual method of accounting for inventory. Allowance for inventories is established for the estimated losses arising due to the impairment of value (through diminution, damage, obsolescence, etc,) of inventories owned by the Company, based on appropriate evidences of impairment available at the balance sheet date. Increases and decreases to the allowances for inventories balance are recorded as cost of goods sold account in the separate statement of income. 13

15 2.9. Tangible fixed assets (a) (b) Cost Tangible fixed assets are stated at cost less accumulated depreciation. The initial cost of a tangible fixed asset comprises its purchase price and any directly attributable costs of bringing the asset to its working condition for its intended use. Expenditure incurred after tangible fixed assets have been put into operation, such as repairs and maintenance and overhaul cost, is charged to the separate statement of income in the year in which the cost is incurred. In situations where it can be clearly demonstrated that the expenditure has resulted in an increase in the future economic benefits expected to be obtained from the use of tangible fixed assets beyond their originally assessed standard of performance, the expenditure is capitalised as an additional cost of tangible fixed assets. Depreciation Depreciation is computed on a straight-line basis over the estimated useful lives of tangible fixed assets, The estimated useful lives are as follows: buildings 5 12 years office equipment 3 7 years machinery and equipment 3 10 years motor vehicles 6 10 years Intangible fixed assets (a) (b) Land use rights Land use rights are stated at cost less accumulated amortisation. The initial cost of land use rights comprises the value of the rights as stated in the its purchase price and any directly attributable costs incurred in conjunction with securing the land use rights. Software The cost of acquiring new software, which is not an integral part of the related hardware, is capitalised and treated as an intangible asset. Software costs are amortised on a straight-line basis over 2 to 6 years Long-term prepayments Long-term prepayments comprise of tools and supplies, offices renovation expenses and bond issuance fee which are recorded at cost and are amortised on a straight-line basis over 2 to 3 years Trade and other payables Trade and other payables are stated at their cost. 14

16 2.13. Provisions A provision is recognised if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability Taxation Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognised in the separate statement of income except to the extent that it relates to items recognised directly to equity, in which case it is recognised in equity. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years. Deferred tax is provided using the balance sheet method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities using tax rates enacted or substantively enacted at the balance sheet date. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised Revenue (a) (b) Goods sold Revenue from the sale of goods is recognised in the separate statement of income when the significant risks and rewards of ownership have been transferred to the buyer. No revenue is recognised if there are significant uncertainties regarding recovery of the consideration due or the possible return of goods. Rental income Rental income from leased property is recognised in the separate statement of income on a straightline basis over the term of the lease. Lease incentives granted are recognised as an integral part of the total rental income Dividend income Dividend income is recognised when the right to receive payment is established. 15

17 2.17. Operating lease payments Payments made under operating leases are recognised in the separate statement of income on a straight-line basis over the term of the lease. Lease incentives received are recognised in the separate statement of income as an integral part of the total lease expenses Borrowing costs Borrowing costs are recognised as an expense in the year in which they are incurred, except where the borrowing costs relate to borrowings in respect of the construction of qualifying assets, in which case the borrowing costs incurred during the year of construction are capitalised as part of the cost of the assets concerned Related parties Related parties include the shareholders and the Company s subsidiaries and associates Off balance sheet items Amounts which are defined as off balance sheet items under the Vietnamese Accounting System are disclosed in the relevant notes to these separate financial statements. 3. Significant transactions On 1 January 2011, the Company transferred all the risks and rewards relating to the assets, liabilities and other obligations in the Steel Rolling Factory and Steel Billet Factory to Hoa Phat Steel One Member Liability Limited Company, a 100% owned subsidiary established under the resolution of the Company s Board of Management dated 24 December Net assets of the factories transferred on 1 January 2011 were as follows: Cash and cash equivalents 44,734,174,276 Account receivables short-term 721,428,142,628 Inventories (net of allowance for inventories) 466,426,902,846 Other current assets 3,064,787,546 Tangible fixed assets net book value 179,771,942,552 Intangible fixed assets net book value 5,050,988,327 Construction in progress 708,924,941 Other long-term assets 3,606,919,341 Current liabilities (820,689,619,957) Provision for severance allowance (4,135,162,500) 599,968,000,000 16

18 4. Cash and cash equivalents Cash on hand 377,899, ,565,592 Cash in banks 38,365,944,703 56,593,684,837 Cash equivalents 129,400,000, ,370,568,741 Cash and cash equivalents in the separate statement of cash flows 168,143,844, ,598,819,170 Cash and cash equivalents at 31 December 2011 included amounts denominated in currencies other than amounting to 185 million (: 1,528 million). 5. Accounts receivable - short-term and long-term Accounts receivables - short-term and long-term included the following amounts due from related companies: Amounts due from related companies Trade 17,931,824 40,559,837,213 Non-trade 49,948,332, ,530,597,353 The trade amounts due from related companies are subject to the payment terms similar to those applicable to trade amounts due from third parties. The short-term non-trade receivables from the related companies are unsecured, interest free and receivable on demand. The long-term non-trade receivables from the related companies are unsecured, interest free and receivable in accordance with the contractual terms. Other short-term receivables comprised: Loans given to subsidiaries and associates - 980,000,000 Deposits - 1,462,015,800 Interest receivables 40,164,301,521 15,682,520,723 Profits receivable from an associate 8,516,420,203 - Others 245,924,775 4,471,140,119 48,926,646,499 22,595,676,642 17

19 Other long-term receivables comprised: Loans given to subsidiaries (*) 1,805,000, ,000,000,000 Entrusted investment (**) 448,979,590, ,979,590, ,784,590, ,979,590,000 (*) These loans were unsecured, interest free and comprised of the followings: Due from Start date Due date Hoa Phat Mining JSC 21/4/ /4/2013 1,805,000,000 (**) The entrusted investment represents the amount the Company invested in Vinaconex-Viettel Urban Development JSC based on the entrustment agreement with Hoa Phat A Chau Real Estate JSC, an associate of the Company. All responsibilities, risks and losses as well as benefits of the investment belong to Hoa Phat A Chau Real Estate JSC. This amount is corresponding to the amount of entrusted investment being recorded in other long-term liabilities (see Note 16). The carrying amount of receivables represents the maximum credit risk pertaining to receivables. Based on historic default rates, the Company believes that no allowance for doubtful debts is necessary in respect of the outstanding receivables as of 31 December The ageing analysis of the receivables is as follows: Status Carrying amount Trade receivables Not past due 151,215,921 Other receivables short-term Not past due 48,926,646,499 Other receivables long-term (excluding the entrusted investment) Not past due 1,805,000,000 18

20 As at 31 December 2011, the fair value of account receivables - long-term estimated based on present value of future cash flows discounted at the market rate of interest at 31 December 2011 are as follows: Carrying amount Fair value Other receivables long-term (excluding the entrusted investment) 1,805,000,000 1,805,000, Inventories Goods in transit - 296,263,077,962 Raw materials - 228,548,297,572 Tools and supplies 39,198,064 67,399,261,395 Finished goods - 293,979,856,704 Merchandises 2,888,687, ,106,757 2,927,886, ,594,600,390 Allowance for inventories - (1,020,285,736) 2,927,886, ,574,314,654 At 31 December 2011 there were no inventories (: 283,980 million) pledged with banks as security for loans granted to the Company. Movements in the allowance for inventories during the year were as follows: Opening balance 1,020,285, ,594,027 Increase in allowance during the year - 3,664,450,856 Written back - (3,514,759,147) Transfer to a subsidiary as capital contribution (1,020,285,736) - Closing balance - 1,020,285,736 19

21 7. Tangible fixed assets Cost Office Machinery and Motor Buildings equipment equipment vehicles Total Opening balance 88,475,369,541 7,610,330, ,998,639,581 34,994,067, ,078,406,927 Additions - 2,562,244,724 1,082,595, ,331,273 4,364,171,452 Transfer from construction in progress 827,949, ,949,482 Disposals - (289,333,725) - (534,383,091) (823,716,816) Reclassifications 150,668,828 (150,668,828) Transfer to a subsidiary as capital contribution (88,626,038,369) (1,056,348,232) (426,998,639,581) (13,184,462,464) (529,865,488,646) Closing balance - 9,504,173,688 1,082,595,455 21,994,553,256 32,581,322,399 Accumulated depreciation Opening balance 48,147,530,100 2,256,753, ,909,926,432 17,043,401, ,357,611,040 Charge for the year - 2,126,443,119-3,195,761,447 5,322,204,566 Disposals - (226,748,273) - (358,231,895) (584,980,168) Reclassifications 95,528,225 (95,528,225) Transfer to a subsidiary as capital contribution (48,243,058,325) (871,774,393) (292,909,926,432) (8,068,786,944) (350,093,546,094) Closing balance - 3,189,145,618-11,812,143,726 15,001,289,344 Net book value Opening balance 40,327,839,441 5,353,576, ,088,713,149 17,950,666, ,720,795,887 Closing balance - 6,315,028,070 1,082,595,455 10,182,409,530 17,580,033,055 Included in the cost of tangible fixed assets were assets costing 1,045 million which were fully depreciated as of 31 December 2011 (: 8,008 million), but which are still in active use. 20

22 8. Intangible fixed assets Cost Land use rights Software Total Opening balance 9,844,197,263 1,061,685,400 10,905,882,663 Additions - 22,000,000 22,000,000 Transfer to a subsidiary as capital contribution (7,088,788,763) - (7,088,788,763) Closing balance 2,755,408,500 1,083,685,400 3,839,093,900 Accumulated amortisation Opening balance 2,037,800, ,109,927 2,430,910,363 Charge for the year - 178,780, ,780,899 Transfer to a subsidiary as capital contribution (2,037,800,436) - (2,037,800,436) Closing balance - 571,890, ,890,826 Net book value Opening balance 7,806,396, ,575,473 8,474,972,300 Closing balance 2,755,408, ,794,574 3,267,203,074 Included in the cost of intangible fixed assets were assets costing 22 million which were fully amortised as of 31 December 2011 (: 22 million) but which are still in active use. 9. Construction in progress Opening balance 708,924,941 5,475,837,588 Additions 7,704,891,837 15,769,079,687 Transferred to tangible fixed assets (827,949,482) (20,535,992,334) Transfer to a subsidiary as capital contribution (708,924,941) - Closing balance 6,876,942, ,924,941 21

23 Notes to the separate financial statements for the year ended 31 December Long-term investments % of equity owned % of % of % of voting Invested amount equity voting right owned right Invested amount Long-term equity investments in: Subsidiaries Hoa Phat Equipment & Accessories Co., Ltd % 99.72% 179,500,000, % 99.64% 139,500,000,000 Hoa Phat Furniture JSC 99.60% 99.60% 249,000,000, % 99.50% 199,000,000,000 Hoa Phat Steel Pipe Co., Ltd % 99.86% 349,500,000, % 99.82% 279,500,000,000 Hoa Phat Refrigeration Engineering Co., Ltd % 99.67% 149,500,000, % 99.67% 149,500,000,000 Hoa Phat Urban Development & Construction JSC 99.67% 99.67% 299,000,000, % 99.67% 299,000,000,000 Hoa Phat Trading Co., Ltd % 99.00% 49,500,000, % 99.00% 49,500,000,000 Hoa Phat Steel JSC 85.00% 85.00% 1,700,000,000, % 85.00% 1,275,000,000,000 Hoa Phat Laos Co., Ltd % 100% 13,004,695,453 An Thong Mineral and Investment JSC 99.95% 99.95% 648,830,800, % 99.90% 545,030,800,000 Hoa Phat Binh Dinh One Member Co., Ltd % 100% 20,000,000,000 Golden Gain Vietnam JSC 60% 60% 525,636,437,533 60% 60% 525,636,437,533 Hoa Phat Energy JSC 99.86% 99.86% 1,238,350,000, % 99.86% 1,038,350,000,000 Hoa Phat Steel One Member Co., Ltd. 100% 100% 600,000,000, % 100% 32,000,000 Hoa Phat Mining JSC (*) 70% 70% 136,500,000, Hoa Phat Door JSC 60% 60% 48,000,000, ,173,317,237,533 4,533,053,932,986 22

24 Notes to the separate financial statements for the year ended 31 December 2010 % of equity owned % of % of % of voting Invested amount equity voting right owned right Invested amount Associates Hoa Phat Mining JSC (*) % 49% 73,500,000,000 Hoa Phat Cement JSC % 50% 300,000,000,000 Hoa Phat A Chau Real Estate JSC 30% 30% 152,200,000,000 30% 30% 151,000,000,000 Hoa Phat SSG Mining JSC 38% 38% 5,730,000,000 38% 38% 4,750,000,000 Yen Phu Mineral Exploiting and Investment JSC - 40% ,930,000, ,250,000,000 Other long-term investments (**) 786,513,000, ,843,000,000 Total 7,117,760,237,533 5,309,146,932,986 (*) During the year, the Company acquired to increase its share capital in Hoa Phat Mining JSC from 49% to 70%. 23

25 Notes to the separate financial statements for the year ended 31 December 2010 (**) Other long term investment comprised: Hoa Phat Steel JSC - 144,530,000,000 Thach Khe Iron Ore JSC (***) 69,813,000,000 69,813,000,000 Bac Ha Noi Urban Development JSC (***) 700,000,000 - Golden Gain Vietnam JSC (****) 600,000,000,000 12,500,000,000 Hoa Phat Mining JSC (****) 5,000,000,000 20,000,000,000 Hoa Phat Energy JSC(****) 111,000,000, ,513,000, ,843,000,000 (***) These were long-term equity investments with the percentage of equity owned less than 20%. (****) These represent unsecured loans. These loans bore interests ranging from 9% to 17.5% (2010: 14.5%) per annum during the year. These other long-term investments are considered as debt instruments held to maturity. The carrying amounts of the debt instruments represent the maximum credit exposure. The Company held no collateral from the issuers of the debt instruments. The Company s Board of Directors believes that it is not necessary to provide allowance for diminution in value of investments for the above debt instruments. As at 31 December 2011, the fair value of the investments based on present value of future cash flows discounted at the market rate of interest at 31 December 2011 are as follows: Carrying amount Fair value Equity instruments other than investments in subsidiaries and associates 70,513,000,000 70,513,000,000 Debt instruments held to maturity 716,000,000, ,274,264, ,513,000, ,787,264,262 As at 31 December 2011, 600,000 million of the debt instruments held by the Company was floating interest rate debt instruments. No policy was in place for mitigating any potential volatility of the interest rate. A change of 1% per annum in interest rates would have increased or decreased the net profit of the Company by approximately 6 billion. This analysis assumes that all other variables remain constant. 24

26 11. Long-term prepayments Office renovation Tools and Bond issuance expenses supplies fee Total Opening balance 5,121,900, ,407,296 4,815,527,084 10,675,834,832 Additions 219,080,719 1,244,643,800-1,463,724,519 Reclassifications (3,482,184,777) 3,482,184, Transfer to a subsidiary as capital contribution - (3,606,919,341) - (3,606,919,341) Amortisations for the year (636,376,666) (710,329,746) (1,864,075,000) (3,210,781,412) Closing balance 1,222,419,728 1,147,986,786 2,951,452,084 5,321,858, Recognised deferred tax assets Deferred tax assets were recognised on the following items: Provision for severance allowance - 512,380,634 Unrealised profits arising from intra-company sales of inventories - 79,251,123 Unrealised foreign exchange losses - 3,722,760,093 Tax value of loss carry-forwards 15,509,441,566-15,509,441,566 4,314,391, Accounts payable - trade Accounts payable - trade include the following amounts due to related companies: Amounts due to related companies 349,335, ,566,041,016 The trade amounts due to related companies are unsecured, interest free and are payable on demand. 25

27 14. Taxes payable to State Treasury Value added tax - 6,346,294,237 Import-export tax - 210,403,141 Corporate income tax 5,690,543,822 53,804,251,394 Personal income tax 58,572,590 2,034,591,318 Other taxes 2,409,420,652-8,158,537,064 62,395,540, Accrued expenses Interest expenses on short-term borrowings - 989,809,903 Interest expense on long-term bonds 62,904,109,589 52,844,444,445 Flight service expenses 130,909,091 1,626,661,212 Transportation expenses - 1,620,000,000 Others 297,500, ,438,948 63,332,518,680 57,875,354, Other payables Other short-term payables comprised: Payable to Golden Gain Enterprises JSC 8,108,114, ,030,319,333 Free-interest loan from Hoa Phat Steel JSC 59,700,000,000 - Payable to RHI Retractories Asia-Pacific PTE Co., Ltd. - 16,639,923,312 Sales discounts - 5,841,062,240 Dividends 584,800,000 1,110,300,000 Trade union fee and social insurance - 8,572,459 Others 1,915,000, ,971,128 70,307,914, ,990,148,472 26

28 Other long-term liabilities comprised: Entrusted investment received 448,979,590, ,979,590,000 The entrusted investment received represents the amount the Company received from Hoa Phat A Chau Real Estate JSC, an associate, to invest in Vinaconex-Viettel Urban Development JSC (see Note 5). 17. Long term borrowings At 31 December 2011, long-term borrowings included 800 unsecured floating-rate bonds ( the Bonds ) amounted to 800 billion with details as follows: Issue date Quantity Par value Interest rate (per annum) Maturity (year) 21/7/ ,000,000,000 (*) 3 (*) The Bonds will bear interest at the rate equal to 14.5% per annum for the first year commencing from 21 July 2010 and the sum of the reference interest rate (an average derived from four quotations for 12-month saving deposit rate payable in arrears provided by Transactions Centres in Hanoi of four major banks (namely, Joint Stock Bank for Investment and Development of Vietnam, Joint Stock Commercial Bank for Foreign Trade of Vietnam, Vietnam Joint Stock Bank for Industry and Trade and Vietnam Bank for Agriculture and Rural Development) as at the Interest Fixing Date annually plus 3.5% per annum for all subsequent years. In case there is no quotation for 12-month saving deposit rate payable in arrears, other saving rates with similar tenor will be used, interest on the bonds will be paid annually in arrears on 21 July in each year with the first payment made on 21 July As at 31 December 2011, the Bonds had the following contractual maturities including the estimated interest payments: Carrying Contractual amount cash flows Within 1 year 1 2 years billion billion billion billion The Bonds 800 1,

29 As at 31 December 2011, the fair value of the Bonds based on present value of future principal and interest cash flows, discounted at the market rate of interest at 31 December 2011 are as follows: Carrying amount Fair value The Bonds 800,000,000, ,490,760,986 The Company does not maintain any policies pertaining to the mitigation of any potential volatility of the Bond s interest. A change of 1% per annum in interest rates would have increased or decreased the net profit of the Company by approximately 8 billion. This analysis assumes that all other variables remain constant. 18. Share capital The Company s authorised and issued share capital is: Number of Number of shares shares Authorised share capital 317,849,760 3,178,497,600, ,849,760 3,178,497,600,000 Issued share capital Ordinary shares 317,849,760 3,178,497,600, ,849,760 3,178,497,600,000 Treasury shares (4,230,930) (42,309,300,000) - - Shares currently in circulation Ordinary shares 313,618,830 3,136,188,300, ,849,760 3,178,497,600,000 All ordinary shares have a par value of 10,000. Each share is entitled to one vote at meetings of the Company. Shareholders are entitled to receive dividend as declared from time to time. All ordinary shares are ranked equally with regard to the Company s residual assets. In respect of shares bought back by the Company, all rights are suspended until those shares are reissued. The total charter capital amount of the Company was 3,178,497,600,000. On 21 December 2011, the shareholders of the Company passed a resolution to increase the total charter capital of the Company to 3,492,111,080,000 by the way of dividend payment in the form of shares (see Notes 19 and Note 27). The Company has reported to State Securities Committee for this additional issuance of shares. 28

30 Movement in share capital during the year was as follows: Number of shares Number of shares Balance at the beginning of the year 317,849,760 3,178,497,600, ,363,998 1,963,639,980,000 Share capital issued from dividend payment in the form of shares ,181, ,819,960,000 Share capital issued from conversion of bonds ,303, ,037,660,000 Treasury shares purchased during the year (4,230,930) (42,309,300,000) - - Balance at the end of the year 313,618,830 3,136,188,300, ,849,760 3,178,497,600, Other capital Other capital represents retained profits that have been appropriated to this account for issuance of shares in the form of dividend as disclosed in Note 18 and Note 27. After the Company receives the amended Business Registration Certificate, i.e. on 24 February 2012 (see Note 31), that reflects the increased authorised charter capital, the Company will transfer the other capital into the share capital account. 20. Total revenue Total revenue represents the gross value of goods sold exclusive of value added tax: Net sales comprised: Total revenue 1,041,827,659,678 8,046,390,146,385 Less sales deductions Sales discounts - 72,492,878,825 Sales returns - 15,959,734,910 Net sales 1,041,827,659,678 7,957,937,532,650 29

31 21. Cost of sales Total cost of sales Finished goods sold - 4,887,430,778,947 Merchandise goods sold 995,077,861,587 2,536,884,848,305 Allowance for inventories - 149,691, ,077,861,587 7,424,465,318, Financial income Interest incomes from deposits and loans 147,928,126, ,190,353,908 Profits transferred from subsidiaries and associates 1,262,922,202, ,130,089,345 Realised foreign exchange gains 13,733,770,788 2,639,785,008 Unrealised foreign exchange gains 23,090,294-1,424,607,190, ,960,228, Financial expenses Interest expenses 160,379,143, ,643,011,030 Losses from disposal of investment in an associate and closure of a subsidiary 28,000,127,263 - Realised foreign exchange losses 26,733,643,033 43,667,136,462 Unrealised foreign exchange losses 53,790,313 14,726,683,500 Others - 776,697, ,166,704, ,813,528,908 30

32 24. Other income Proceeds from disposals of fixed assets 200,000, ,967,515,939 Compensation received from other parties 2,697,559,416 1,169,290,059 Income from car rental 1,530,540,000 - Others 663,357,757 1,060,190,664 5,091,457, ,196,996, Other expenses Book value of disposed fixed assets 238,736, ,432,578,464 Car rental expense 1,337,038,804 - Others 2,678,914, ,813,611 4,254,689, ,762,392, Current income tax Recognised in the separate statement of income Current tax expense Current year - 65,847,522,050 Under/(over) provision in prior years 5,759,060,082 (3,157,067,340) Deferred tax benefit 5,759,060,082 62,690,454,710 Origination and reversal of temporary differences 4,314,391,850 (3,340,712,726) Benefit of tax losses recognised (15,509,441,566) - (11,195,049,716) (3,340,712,726) Income tax (benefit)/expense (5,435,989,634) 59,349,741,984 31

33 26.2. Current income tax Profit before tax 1,225,777,705, ,066,125,417 Adjustments to increase/(decrease) accounting profit Reversal of unrealised profits arising from prior year intra-company sales of goods (512,421,590) (6,766,281,331) Unrealised foreign exchange losses current year 6,877,997 24,070,607,090 Reversal of unrealised foreign exchange losses prior year (24,070,607,090) - Reversal of other temporary differences (3,312,948,625) - Non-deductible expenses 2,995,830,055 1,097,034,380 Profits from subsidiaries and associates (1,262,922,202,399) (419,130,089,345) Current taxable (losses)/profit (62,037,766,262) 423,337,396,211 Tax at the Company s tax rate - 105,834,349,053 Tax incentives - (44,282,387,639) Effect of different tax rate applied to other income - 4,295,560,636 Current income tax expense - 65,847,522,050 Income tax payable at the beginning of the year 53,804,251,394 54,836,789,369 Under/(over) accrual of income tax in prior years 5,759,060,082 (3,157,067,340) Income tax paid during the year (53,872,767,654) (63,722,992,685) Income tax payable at the end of the year 5,690,543,822 53,804,251, Applicable tax rates The Company have obligations to pay the government income tax at rate of 25% of taxable profits. 27. Dividends On 21 December 2011, the shareholders of the Company approved the plan for the second distribution of 2010 dividends to the shareholders in the form of shares at the ratio of 10:1. The closing date for the shareholders right to receive the second dividend payment of 2010 in the form of shares was 1 February The Company received its revised Business Registration Certificate on 24 February 2012 that reflected these additional shares. 32