THANH CONG TEXTILE GARMENT INVESTMENT TRADING JOINT STOCK COMPANY (Incorporated in the Socialist Republic of Vietnam)

Transcription

1 (Incorporated in the Socialist Republic of Vietnam) REVIEWED SEPARATE FINANCIAL STATEMENTS For the period from 01 January 2015 to 30 June 2015 August 2015

2 36 Tay Thanh Street, Tay Thanh Ward, Tan Phu District Ho Chi Minh City, S.R. Viet Nam TABLE OF CONTENTS CONTENTS PAGE(S) STATEMENT OF THE BOARD OF DIRECTORS 1 REVIEW REPORT ON SEPARATE FINANCIAL STATEMENTS 2 SEPARATE BALANCE SHEET 3-5 SEPARATE INCOME STATEMENT 6 SEPARATE CASH FLOW STATEMENT 7 NOTES TO THE SEPARATE FINANCIAL STATEMENTS 8-40

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5 SEPARATE BALANCE SHEET As at 30 June 2015 FORM B 01a-DN Unit: ASSETS Codes Notes 30/6/ /12/2014 A. CURRENT ASSETS 100 1,050,322,733, ,609,750,273 I. Cash and cash equivalents ,682,183, ,600,437, Cash ,682,183,465 91,600,437, Cash equivalents ,000,000,000 41,000,000,000 II. Short-term receivables ,495,926, ,813,872, Short-term trade receivables ,710,043, ,019,263, Short-term advances to suppliers ,766,016,327 40,176,757, Short-term loan receivables ,850,301,999 1,850,301, Other short-term receivables ,003,959,551 17,445,801, Provision for short-term doubtful debts 137 (6,834,394,466) (6,678,251,966) III. Inventories ,485,269, ,301,474, Inventories ,560,269, ,063,444, Provision for devaluation of inventories 149 (15,074,999,671) (21,761,969,447) IV. Other short-term assets ,659,353,579 33,893,966, Short-term prepayments 151 5,220,904,443 6,145,585, Value added tax deductibles ,438,449,136 27,748,380,950 The notes set out on pages 8 to 40 are an integral part of these separate financial statements 3

6 SEPARATE BALANCE SHEET (Continued) As at 30 June 2015 FORM B 01a-DN Unit: ASSETS Codes Notes 30/6/ /12/2014 B. NON-CURRENT ASSETS 200 1,076,219,351,149 1,044,814,832,207 I. Fixed assets ,109,514, ,717,745, Tangible fixed assets ,735,904, ,077,556,244 - Cost 222 1,255,388,545,470 1,260,686,211,189 - Accumulated depreciation 223 (721,652,641,393) (713,608,654,945) 2. Finance lease assets ,958,702,923 68,858,326,771 - Cost ,365,277,415 71,341,985,333 - Accumulated depreciation 226 (6,406,574,492) (2,483,658,562) 3. Intangible assets ,414,907,233 74,781,862,727 - Cost ,552,133,762 89,552,133,762 - Accumulated amortisation 229 (16,137,226,529) (14,770,271,035) II. Investment property ,388,569, ,479,226,677 - Cost ,556,801, ,280,625,580 - Accumulated depreciation 232 (1,168,231,907) (2,801,398,903) III. Long-term assets in progress ,593,832,751 20,916,163, Long-term construction in progress ,593,832,751 20,916,163,961 IV. Long-term financial investments ,118,479, ,494,386, Investments in subsidiaries ,181,724,876 34,767,513, Investments in joint-ventures, associates ,046,152, ,046,152, Equity investments in other entities 253 5,352,050,000 5,352,050, Provision for impairment of long-term financial investments 254 (9,461,446,915) (10,671,329,097) V. Other long-term assets ,008,954,460 72,207,309, Long-term prepayments ,947,984,244 70,166,610, Deferred tax assets ,060,970,216 2,040,698,587 TOTAL ASSETS (270= ) 270 2,126,542,084,625 2,021,424,582,480 The notes set out on pages 8 to 40 are an integral part of these separate financial statements 4

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10 NOTES TO THE SEPARATE FINANCIAL STATEMENTS 1. GENERAL INFORMATION Structure of ownership Thanh Cong Textile Garment Investment Trading Joint Stock Company (the Company ) was incorporated in Vietnam as a joint stock company under Business Registration Certificate No dated 23 June 2006 issued by the Department of Planning and Investment of Ho Chi Minh City, as amended. According to 13 th amended Business Registration Certificate No dated 02 October 2013 issued by the Department of Planning and Investment of Ho Chi Minh City, the Company's share capital is 491,999,510,000. The Company s main shareholder is E-land Asia Holdings Pte Ltd, incorporated in Singapore. The number of the Company s employees as at 30 June 2015 was 4,822 (31 December 2014: 4,577). Principal activities The principal activities of the Company are manufacture and garment trading, details are as follows: Manufacture and trade cotton, fiber, garment products, footwear, machinery and equipment, spare parts, raw materials, chemicals (excluding strong toxic chemicals), dye, packing for garment and textile industry; Trade cold equipment, air-conditioners, radios and televisions, building materials, and transport vehicles; Provide services of installation and repairs for machinery and equipment; Trade road transport and merchandise transport; Trade real estates, commercial centres; Lease office buildings, factories, freight yard, machinery and equipment; Act as a commercial brokerage; Act as an agent for goods trading and goods consignment; Invest, build, trade, assemble, repair, prepare overall estimates for civil/industrial construction works, infrastructure of industrial parks and tourist area; Short-term accommodation services; Restaurant and foods services; Retails of beverage in the specialised shops; Retails of foods in the specialised shops; Trade of real estate, land use rights owned or leased; and Other retails. Normal production and business cycle The Company s normal production and business cycle is carried out for a time period of 12 months or less. The Company s structure The Company has four subsidiaries: Thanh Cong Medical Center Joint Stock Company Thanh Quang Corporation Thanh Cong - Vinh Long One Member Limited Company TC Tower Company Limited The Company has four associates: Thanh Chi Corporation Thanh Cong Securities Joint Stock Company Thanh Phuc Investment Construction Corporation Vung Tau Golf Tourism Joint Stock Company 8

11 2. ACCOUNTING CONVENTION AND FINANCIAL YEAR Accounting convention The accompanying separate financial statements, expressed in Vietnam Dong ( ), are prepared under the historical cost convention and in accordance with Vietnamese Accounting Standards, accounting regime for enterprises and legal regulations relating to financial reporting. The accompanying separate financial statements are not intended to present the financial position, results of operations and cash flows in accordance with accounting principles and practices generally accepted in countries and jurisdictions other than Vietnam. The separate financial statements were prepared to present the separate financial position of the Company as at 30 June 2015, and the related separate statements of income and cash flows for the period from 01 January 2015 to 30 June Consequently, the Company did not consolidate the investments in subsidiaries and associates in these single financial statements. The accounting policies applied to these investments of the Company are described in details in Note 4 as below. Financial year The Company s financial year begins on 01 January and ends on 31 December. The interim separate financial statements are prepared for the period from 01 January to 30 June. 3. ADOPTION OF NEW ACCOUNTING GUIDANCE New guidance on accounting regime for enterprises On 22 December 2014, the Ministry of Finance issued Circular No. 200/2014/TT-BTC ( Circular 200 ) guiding the accounting regime for enterprises. This Circular is effective for financial years beginning on or after 01 January Circular 200 supersedes the regulations for accounting regime promulgated under Decision No. 15/2006/QD-BTC dated 20 March 2006 issued by the Ministry of Finance and Circular No. 244/2009/TT-BTC dated 31 December 2009 issued by the Ministry of Finance. The Board of Directors has adopted Circular 200 in the preparation and presentation of the financial statements for the period from 01 January 2015 to 30 June Thereof, certain reclassifications have been made to the prior period s figures in accordance with the guidance of Circular 200 to enhance their comparability with the current period s presentation; details have been presented in Note 40 Comparative figures. 4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The significant accounting policies, which have been adopted by the Company in the preparation of these separate financial statements, are as follows: Estimates The preparation of separate financial statements in conformity with Vietnamese Accounting Standards, accounting regime for enterprises and legal regulations relating to financial reporting requires the Board of Directors to make estimates and assumptions that affect the reported amounts of assets, liabilities and disclosures of contingent assets and liabilities at the date of the separate financial statements and the reported amounts of revenues and expenses during the reporting period. Although these accounting estimates are based on the Board of Directors best knowledge, actual results may differ from those estimates. 9

12 Financial instruments Initial recognition Financial assets: At the date of initial recognition, financial assets are recognised at cost plus transaction costs that are directly attributable to the acquisition of the financial assets. Financial assets of the Company comprise cash and cash equivalents, trade and other receivables, investments in stocks of public and listed companies and deposits. Financial liabilities: At the date of initial recognition financial liabilities are recognised at cost plus transaction costs that are directly attributable to the issue of the financial liabilities. Financial liabilities of the Company comprise obligations under finance leases, borrowings, trade and other payables and accrued expenses. Subsequent measurement after initial recognition Currently, there are no requirements for the subsequent measurement of the financial instruments after initial recognition. Cash and cash equivalents Cash and cash equivalents comprise cash on hand, demand deposits and short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Financial investments Loan receivables Loan receivables are measured at cost less provision for doubtful debts. Provision for doubtful debts relating to loan receivables is made in accordance with prevailing accounting regulations. Investments in subsidiaries, associates Investment in subsidiaries A subsidiary is an entity over which the Company has control. Control is achieved where the Company has the power to govern the financial and operating policies of an investee enterprise so as to obtain benefits from its activities. Investments in associates An associate is an entity over which the Company has significant influence and that is neither a subsidiary nor an interest in joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but not control or joint control over those policies. Interests in subsidiaries, joint ventures and associates are initially recognised at cost. The Company s share of the net profit of the investee after acquisition is recognised in the income statement. Other distributions received other than such profit share are deducted from the cost of the investments as recoverable amounts. Investments in subsidiaries, joint ventures and associates are carried in the balance sheet at cost less provision for impairment of such investments (if any). Provisions for impairment of investments in subsidiaries, joint ventures and associates are made in accordance with the prevailing accounting regulations. 10

13 Equity investments in other entities Equity investments in other entities represent the Company s investments in ordinary shares of the entities over which the Company has no control, joint control, or significant influence. Equity investments in other entities are carried at cost less provision for impairment. Provision for impairment is made in accordance with the prevailing accounting regulations. Receivables Receivables represent the amounts recoverable from customers or other debtors and are stated at book value less provision for doubtful debts. Provision for doubtful debts is made for receivables that are overdue for six months or more, or when the debtor is in dissolution, in bankruptcy, or is experiencing similar difficulties and so may be unable to repay the debt. Inventories Inventories are stated at the lower of cost and net realisable value. Cost comprises direct materials and where applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and condition. Cost is calculated using the weighted average method. Net realisable value represents the estimated selling price less all estimated costs to completion and costs to be incurred in marketing, selling and distribution. The evaluation of necessary provision for inventory obsolescence follows current prevailing accounting regulations which allow provisions to be made for obsolete, damaged, or sub-standard inventories and for those which have book value higher than net realisable value as at the balance sheet date. Tangible fixed assets and depreciation Tangible fixed assets are stated at cost less accumulated depreciation. The cost of purchased tangible fixed assets comprises its purchase price and any directly attributable costs of bringing the assets to its working condition and location for its intended use. The costs of self-constructed or manufactured assets are the actual construction or manufacturing cost plus installation and test running costs. Tangible fixed assets are depreciated using the straight-line method over their estimated useful lives as follows: Years Buildings and structures Machinery and equipment 7-15 Motor vehicles 10 Office equipment 7-15 Others 7-22 Intangible assets and amortisation Intangible assets represent land use rights, patents and software. Intangible assets are stated at cost less accumulated amortisation and are amortised on the straight-line basis over their estimated useful lives. Definite land use rights are carried at cost and amortised on the straight-line basis over the duration of the right to use the land from years. Indefinite land use rights are carried at cost and not amortised. Patents and software are amortised on the straight-line basis over their estimate useful lives from 4-10 years. Leasing Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases. 11

14 Assets held under finance leases are recognised as assets of the Company at their fair value at the inception of the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included in the balance sheet as a finance lease obligation. Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged to profit or loss, unless they are directly attributable to qualifying assets, in which case they are capitalised in accordance with the Company s general policy on borrowing costs. Leases where substantially all the rewards and risks of ownership of assets remain with the leasing company are accounted for as operating leases. Rentals payable under operating leases are charged to the income statement on a straight-line basis over the term of the relevant lease. Assets held by the Company under finance leases are machinery which depreciated over the period of years. Construction in progress Properties in the course of construction for production, rental or administrative purposes, or for the purposes not yet determined, are carried at cost. Cost includes professional fees, and for qualifying assets, borrowing costs dealt with in accordance with the Company s accounting policy. Depreciation of these assets, on the same basis as other property assets, commences when the assets are ready for their intended use. Investment property Investment properties, which are composed of buildings and structures and land use rights held by the Company to earn rentals or for capital appreciation. Investment properties held to earn rentals are stated at cost less accumulated depreciation while investment properties held for capital appreciation are stated at cost less impairment loss. The cost of purchased investment properties comprises its purchase price and any directly attributable expenditures, such as professional fees for legal services, property transfer taxes and other related transaction costs. The costs of self-constructed investment properties are the finally accounted construction or directly attributable costs of the properties. No depreciation is recorded for investment properties held for capital appreciation. Buildings and structures are depreciated using the straight-line method over their estimated useful lives of 50 years. Definite land use rights are amortised using the straight-line method over number of years in accordance with the terms indicated in each land use right certificate. Land use rights which are granted for an indefinite term are carried at cost and not amortised. Long-term prepayments Long-term prepayments comprise prepaid land rentals at Xuyen A Industrial Zone Long An Province, Nhi Xuan Industrial Zone Hoc Mon District, Ho Chi Minh City and Trang Bang Industrial Zone Tay Ninh Province and other prepayments (allocated within 3 years). Prepaid land rentals are charged to income statement using the straight-line method over the lease term from 45 to 58 years. Revenue recognition Revenue from the sale of goods is recognised when all five (5) following conditions are satisfied: (a) the Company has transferred to the buyer the significant risks and rewards of ownership of the goods; (b) the Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold; (c) the amount of revenue can be measured reliably; (d) it is probable that the economic benefits associated with the transaction will flow to the Company; and (e) the costs incurred or to be incurred in respect of the transaction can be measured reliably. 12

15 Revenue of a transaction involving the rendering of services is recognised when the outcome of such transactions can be measured reliably. Where a transaction involving the rendering of services is attributable to several periods, revenue is recognised in each period by reference to the percentage of completion of the transaction at the balance sheet date of that period. The outcome of a transaction can be measured reliably when all four (4) following conditions are satisfied: (a) the amount of revenue can be measured reliably; (b) it is probable that the economic benefits associated with the transaction will flow to the Company; (c) the percentage of completion of the transaction at the balance sheet date can be measured reliably; and (d) the costs incurred for the transaction and the costs to complete the transaction can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the applicable interest rate. Dividend income from investments is recognised when the Company s right to receive payment has been established. Foreign currencies The Company applies the method of recording foreign exchange differences in accordance with Vietnamese Accounting Standard No. 10 (VAS 10) Effects of changes in foreign exchange rates. Accordingly, transactions arising in foreign currencies are translated at exchange rates ruling at the transaction date. The balances of monetary items denominated in foreign currencies as at the balance sheet date are retranslated at the exchange rates on the same date. Exchange differences arising from the translation of these accounts are recognised in the income statement. Unrealised exchange gains as at the balance sheet date are not treated as part of distributable profit to shareholders. Borrowing costs Borrowing costs are recognised in the income statement in the year when incurred unless they are capitalised in accordance with Vietnamese Accounting Standard Borrowing costs. Accordingly, borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the cost of those assets. For specific borrowings for the purpose of construction of fixed assets and investment properties, borrowing costs are capitalised even when the construction period is under 12 months. All other borrowing costs are recognised in the income statement when incurred. Payable provisions Payable provisions are recognised when the Company has a present obligation as a result of a past event, and it is probable that the Company will be required to settle that obligation. Provisions are measured at the Board of Directors best estimate of the expenditure required to settle the obligation as at the balance sheet date. Severance allowance payable The severance allowance for employees is accrued at the end of each reporting period for all employees having worked at the Company for more than 12 months as of 31 December 2008 with the allowance made for each year of service up to 31 December 2008 equalling to a half of an average monthly salary under the Vietnamese Labour Code, Social Insurance Code and relevant guiding documents. The average monthly salary used for calculation of severance allowance shall be adjusted to be the average of the 6 consecutive months nearest to the date of the financial statements at the end of each reporting period. The increase or decrease in the accrued amount shall be recorded in the income statement. 13

16 Tax Income tax expense represents the sum of the tax currently payable and deferred tax. The tax currently payable is based on taxable profit for the period. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other periods and it further excludes items that are never taxable or deductible. Deferred tax is recognised on significant differences between carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit and is accounted for using balance sheet liability method. Deferred tax liabilities are generally recognised for all temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which deductible temporary differences can be utilised. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset realised. Deferred tax is charged or credited to profit or loss, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis. The determination of the current tax payable and deferred tax is based on the current interpretation of tax regulations. However, these regulations are subject to periodic variation and their ultimate determination depends on the results of the tax authorities examinations. Other taxes are paid in accordance with the prevailing tax laws in Vietnam. Appropriation of funds and dividend distribution Dividend distribution to the Company s shareholders is recognised as a liability in the Company s separate financial statements in the year in which the dividends are approved by the Company s shareholders. Net profit after tax is available for appropriation to shareholders after approval by the shareholders at the Annual General Shareholders Meeting, and after making appropriation to funds in accordance with the Company's Charter and Vietnamese regulatory requirements. Treasury shares Treasury shares are shares issued and bought-back by the Company, but they are not cancelled and shall be re-issued in the period which complies with law on securities. Treasury shares are hold by the Company will have no dividend, no right for election or join to share assets when the Company is dissolved. When distributing dividend for shares, treasury shares hold by the Company shall be considered as not yet sold. Value of treasury shares is reflected as prices actually bought-back including buying-back prices and expenses directly related to buying-back of shares, such as expenses of transaction, information. 14

17 5. CASH AND CASH EQUIVALENTS 30/6/ /12/2014 Cash on hand 812,601, ,586,845 Demand deposits 60,869,582,220 91,189,850,417 Cash equivalents 30,000,000,000 41,000,000,000 91,682,183, ,600,437,262 Cash equivalents represent short-term bank deposit with an original maturity of three months. These fixed term deposits earn average interest rate from 5.15% to 5.2% per annum (for the period from 01 January 2014 to 30 June 2014: 6% per annum). 6. SHORT-TERM TRADE RECEIVABLES 30/6/ /12/2014 a. Short-term trade receivables - Sanmar corporation 18,546,858,317 22,694,998,290 - Eddie Bauer LLC 17,456,835,964 2,959,855 - Others 84,054,939,559 78,268,136,719 b. Receivables from related parties - Thanh Cong Medical Center JSC 60,758,311 69,629,232 - Thanh Cong - Vinh Long Co., Ltd. 567,372, Eland Fashion (Shanghai) Co., Ltd 3,542,449,700 3,165,231,813 - Eland Fashion Hong Kong Limited 539,750,653 2,385,261,588 - Eland World Limited 27,556,182,976 22,961,175,289 - Eland International Fashion (Shanghai) Co., Ltd 21,447,353,843 1,713,623,088 - Eland Retail Limited - 1,823,045,028 - Eland Vietnam Co., Ltd. 40,083, ,936,635 - Wish Trading (Shanghai) Co., Ltd 3,897,457, ,265, ,710,043, ,019,263, SHORT-TERM LOAN RECEIVABLES Short-term loan receivables represent a loan to third party in The investment has been fully provided provision as at 30 June 2015 in according to the Company s accounting policy. 8. OTHER SHORT-TERM RECEIVABLES 30/6/ /12/2014 Receivable from employees 5,798,793,174 3,682,749,364 Deposits and mortgages 281,183, ,180,000 Receivable for dividends 2,602,375,000 2,602,375,000 Thanh Cong-Vinh Long One Member Company Limited (*) 52,896,708,060 - Other receivables 11,424,899,614 10,759,497, ,003,959,551 17,445,801,397 (*) Other short-term receivables from Thanh Cong - Vinh Long One Member Company Limited represent the amount that the Company paid on behalf of Thanh Cong - Vinh Long relating to the cost for construction of Thanh Cong - Vinh Long s factory, land rental and other expenses.

18 9. INVENTORIES 30/6/ /12/2014 Cost Provision Cost Provision Goods in transit 82,884,666,126-66,541,684,138 - Raw materials 138,909,977, ,589,780,336 - Tools and supplies 2,424,184,652-7,723,197 - Work in progress 160,064,106, ,716,300,483 - Finished goods 251,575,854,672 15,074,999, ,498,821,239 21,761,969,447 Merchandise 3,119,346,799-2,307,789,225 - Goods on consignment 1,582,133,028-4,401,345, ,560,269,292 15,074,999, ,063,444,357 21,761,969,447 Movement of provision for devaluation of inventories during the period/year as follow: As at 01 January 21,761,969,447 13,304,597,502 Provision for the period/year - 14,264,840,890 Reversal in the period/year (6,686,969,776) (5,807,468,945) As at 30 June/ 31 December 15,074,999,671 21,761,969,447 16

19 10. TANGIBLE FIXED ASSETS Buildings Machinery Motor Office and structures and equipment vehicles equipment Others Total COST As at 01/01/ ,713,225, ,158,071,855 16,558,166,196 10,432,434, ,824,313,870 1,260,686,211,189 - Additions - 1,720,574,091 1,550,869, ,135,779-3,884,579,088 - Transferred from construction - 21,304,353, ,601, ,013,332 22,222,968,037 in progress - Transferred from investment property 3,723,823, ,723,823,929 - Capital contribution to Thanh Cong - Vinh Long Co., Ltd. - (15,013,193,280) (15,013,193,280) - Disposals - (16,603,980,265) (320,114,000) (141,296,467) (3,050,452,761) (20,115,843,493) As at 30/6/ ,437,049, ,565,825,626 17,788,921,414 11,083,874, ,512,874,441 1,255,388,545,470 ACCUMULATED DEPRECIATION As at 01/01/ ,439,026, ,999,388,831 8,927,446,425 6,839,201,060 87,403,591, ,608,654,945 - Charge for the period 2,735,225,615 19,144,806, ,890, ,099,154 3,177,117,935 26,186,138,981 - Transferred from investment property 1,744,315, ,744,315,204 - Disposals - (16,513,753,743) (320,114,000) (141,296,467) (2,911,303,527) (19,886,467,737) As at 30/6/ ,918,567, ,630,441,272 9,375,222,518 7,059,003,747 87,669,406, ,652,641,393 NET BOOK VALUE As at 30/6/ ,518,481, ,935,384,354 8,413,698,896 4,024,871,080 28,843,468, ,735,904,077 As at 31/12/ ,274,198, ,158,683,024 7,630,719,771 3,593,232,975 31,420,722, ,077,556,244 As noted further in Note 21 and 23, the Company has pledged its buildings and machinery, equipment, which has a carrying value of approximately billion as at 30 June 2015 (31 December 2014: billion), to secure banking facilities granted to the Company. The cost of the Company s tangible fixed assets includes 367 billion which have been fully depreciated but which are still in use (31 December 2014: 380 billion). 17

20 11. FINANCE LEASE ASSETS Machinery, equipment COST As at 01/01/ ,341,985,333 Transfer from construction in progress 25,023,292,082 As at 30/6/ ,365,277,415 ACCUMULATED DEPRECIATION As at 01/01/2015 2,483,658,562 Charge for the period 3,922,915,930 As at 30/6/2015 6,406,574,492 NET BOOK VALUE As at 30/6/ ,958,702,923 As at 31/12/ ,858,326, INTANGIBLE ASSETS Land use rights Patents Software Total COST As at 01/01/2015 and 30/6/ ,334,416,604 3,942,895,847 11,274,821,311 89,552,133,762 ACCUMULATED AMORTISATION As at 01/01/2015 9,334,369,070 2,558,012,227 2,877,889,738 14,770,271,035 Charge for the period 312,070, ,617, ,267,678 1,366,955,494 As at 30/6/2015 9,646,439,576 2,943,629,537 3,547,157,416 16,137,226,529 NET BOOK VALUE As at 30/6/ ,687,977, ,266,310 7,727,663,895 73,414,907,233 As at 31/12/ ,000,047,534 1,384,883,620 8,396,931,573 74,781,862,727 As noted further in Note 21 and 23, the Company has pledged land use rights with a carrying value of approximately 9.6 billion as at 30 June 2015 (31 December 2014: 9.7 billion) to secure banking facilities granted to the Company. 18

21 13. INVESTMENT PROPERTY Buildings for lease Land use rights Total COST As at 01/01/ ,620,896, ,659,728, ,280,625,580 Transfer to tangible fixed assets (3,723,823,929) - (3,723,823,929) As at 30/6/2015 7,897,072, ,659,728, ,556,801,651 ACCUMULATED DEPRECIATION As at 01/01/2015 2,801,398,903-2,801,398,903 Charge for the period 111,148, ,148,208 Transfer to tangible fixed assets (1,744,315,204) - (1,744,315,204) As at 30/6/2015 1,168,231,907-1,168,231,907 NET BOOK VALUE As at 30/6/2015 6,728,840, ,659,728, ,388,569,744 As at 31/12/2014 8,819,497, ,659,728, ,479,226,677 As noted further in Note 21 and 23, the Company has pledged investment property with a carrying value of approximately 6.7 billion as at 30 June 2015 (31 December 2014: 110 billion) to secure banking facilities granted to the Company. As at 30 June 2015, the Company s Board of Directors has not determined fair value of the investment property due to the intention of holding for a long-term and there is no basis for determination. 14. CONSTRUCTION IN PROGRESS 30/6/ /12/2014 As at 1 January 20,916,163,961 11,633,469,068 Additions 66,391,792,652 87,933,559,412 Transfer to tangible fixed assets (22,222,968,037) (6,213,902,270) Transfer to finance lease assets (25,023,292,082) (71,341,985,333) Other transfers (19,467,863,743) (1,094,976,916) As at 30 June/ 31 December 20,593,832,751 20,916,163,961 The total interest expense which had been capitalised into the cost of construction in progress during the period was 721,251,101 (for the period from 01 January 2014 to 30 June 2014: 662,932,563). As at the balance sheet date, constructions in progress comprise the following major projects: 30/6/ /12/2014 Thanh Cong Tower 1 13,121,728,421 12,400,477,320 Others 7,472,104,330 8,515,686,641 20,593,832,751 20,916,163,961 19

22 15. LONG-TERM FINANCIAL INVESTMENTS Proportion of ownership interest and voting power 30/6/ /12/ /6/ /12/2014 Investments in subsidiaries 61,181,724,876 34,767,513,900 Thanh Cong Medical Center JSC 70.94% 70.94% 14,055,000,000 14,055,000,000 Thanh Quang Corporation (*) 97.50% 97.50% 20,712,513,900 20,712,513,900 Thanh Cong - Vinh Long One Member Company Limited (**) 100% 100% 26,414,210,976 - TC Tower Company Limited (***) 85.33% 85.33% - - Investments in associates 113,046,152, ,046,152,000 Thanh Chi Corporation 47.43% 47.43% 20,709,040,000 20,709,040,000 Thanh Phuc Investment Construction 23.79% 23.79% 1,665,000,000 1,665,000,000 Corporation Vung Tau Goft Tourism JSC 30% 30% 8,700,000,000 8,700,000,000 Thanh Cong Securities JSC 24.75% 24.75% 81,972,112,000 81,972,112,000 Other long-term investments 5,352,050,000 5,352,050,000 Viet Thang Textile Joint Stock Company 125,000, ,000,000 Thang Loi Textile and Garment Company 1,576,000,000 1,576,000,000 Hue Textile Garment Company 318,000, ,000,000 SY Vina Joint Stock Company 883,450, ,450,000 Vietcombank 2,449,600,000 2,449,600, ,579,926, ,165,715,900 Provision for long-term investments (9,461,446,915) (10,671,329,097) Net long-term investments 170,118,479, ,494,386,803 (*) Thanh Quang Corporation ( Thanh Quang ) was established on 25 May 2007 in accordance with Business Registration Certificate No issued by the Department of Planning and Investment of Long An Province. As at the date of this report, Thanh Quang has not started its business activities. (**) Thanh Cong - Vinh Long One Member Company Limited ( Thanh Cong - Vinh Long ) was established in Vietnam under Business Registration Certificate No dated 06 May 2014 issued by the Department of Planning and Investment of Vinh Long Province. The subsidiary s registered charter capital is 129,000,000,000. As at the date of this report, Thanh Cong Textile Garment Investment Trading Joint Stock Company has contributed an assets, machinery and equipment to Thanh Cong Vinh Long with an amount of 26,414,210,976. (***) TC Tower Company Limited ( TC Tower ) was established in Vietnam under Investment Certificate No dated 31 October 2014 issued by People's Committee of Ho Chi Minh City. The subsidiary s registered charter capital is 159,150,000,000. As at the date of this report, Thanh Cong Textile Garment Investment Trading Joint Stock Company has not contributed capital to TC Tower yet. Movement of provision for long-term investment during the period/year as follow: As at 01 January 10,671,329,097 11,497,152,110 Provision for the period/year - 449,887,495 Reversal in the period/year (1,209,882,182) (1,275,710,508) As at 30 June/ 31 December 9,461,446,915 10,671,329,097 20

23 16. LONG-TERM PREPAYMENTS As at 01 January 70,166,610,437 77,418,823,053 Additions during the period/year 3,185,847,846 - Allocated to expenses during the period/year (3,404,474,039) (7,252,212,616) As at 30 June/ 31 December 69,947,984,244 70,166,610,437 Details of long-term prepayments are as follow: 30/6/ /12/2014 Land rental expenses 67,419,150,374 68,548,112,642 Others 2,528,833,870 1,618,497,795 69,947,984,244 70,166,610, DEFERRED TAX The followings are the major deferred tax liabilities and assets recognised by the Company, and the movements thereon, during the current and prior periods: Foreign Provisions and accruals exchange difference Total As at 01 January ,740,925,581 1,848,378 1,742,773,959 Charge/(credit) to profit for the year 298,817,410 (892,782) 297,924,628 As at 31 December ,039,742, ,596 2,040,698,587 Charge/(credit) to profit for the period 21,227,225 (955,596) 20,271,629 As at 30 June ,060,970,216-2,060,970,216 Deferred tax liabilities and assets have been offset in accordance with the Company's accounting policy for financial reporting purposes as follows: 30/6/ /12/2014 Deferred tax liabilities (13,458,823) (11,388,456) Deferred tax assets 2,074,429,039 2,052,087,043 2,060,970,216 2,040,698,587 21

24 18. SHORT-TERM TRADE PAYABLES 30/6/ /12/2014 Amount Amount able to be paid off Amount Amount able to be paid off a. Short-term trade payables - Other suppliers 173,259,902, ,259,902, ,031,994, ,031,994,733 b. Trade payables to related parties - Eland International Fashion 54,442,673,156 54,442,673,156 8,139,709,455 8,139,709,455 (Shanghai) Co., Ltd - Eland World Limited 3,232,969,740 3,232,969,740 4,128,022,920 4,128,022,920 - Eland Vietnam Co., Ltd. 2,228,535,360 2,228,535, Thanh Cong Medical Center JSC 9,937,030 9,937, ,760, ,760, ,174,017, ,174,017, ,689,487, ,689,487, TAXES AND AMOUNTS PAYABLE TO THE STATE BUDGET 30/6/ /12/2014 Corporate income tax 4,720,802,999 2,685,189,298 Personal income tax 1,459,885, ,282,503 Other taxes 6,643,930-6,187,332,026 3,352,471, OTHER CURRENT PAYABLES 30/6/ /12/2014 Union fee 1,223,569,875 1,058,912,264 Dividends payable 118,884,570 29,566,537,650 Others 4,036,101,255 1,368,652,561 5,378,555,700 31,994,102,475 22

25 21. SHORT-TERM LOANS AND OBLIGATIONS UNDER FINANCE LEASES 30/6/2015 In the period 31/12/2014 Amount able to be Amount able to be Amount paid off Increases Decreases Amount paid off Short-term loans 593,785,687, ,785,687, ,589,948, ,671,939, ,867,679, ,867,679,182 38,390,324,262 38,390,324,262 60,031,583,587 40,757,435,326 19,116,176,001 19,116,176,001 - Far East National Bank Ho Chi Minh City Branch - Vietcombank Ho Chi Minh City Branch 232,235,320, ,235,320, ,127,541, ,919,037, ,026,816, ,026,816,090 - Standard Charterd Bank 29,028,891,310 29,028,891,310 82,192,822,137 79,426,998,570 26,263,067,743 26,263,067,743 - BIDV - Ho Chi Minh City Branch 107,144,700, ,144,700, ,579,780, ,545,333,981 82,110,253,254 82,110,253,254 - HSBC Bank (Vietnam) Ltd 42,270,437,883 42,270,437, ,519,835, ,096,622,073 58,847,224,637 58,847,224,637 - Vietinbank - Ho Chi Minh City Branch 132,858,515, ,858,515, ,267,701, ,256,926, ,847,740, ,847,740,574 - Vietnam International Bank - Ho Chi Minh City Branch 11,857,498,381 11,857,498,381 18,870,683,419 21,669,585,921 14,656,400,883 14,656,400,883 Current portion 75,333,213,425 75,333,213,425 50,138,602,597 45,840,550,888 71,035,161,716 71,035,161,716 - Current portion of long-term loans 49,398,030,843 49,398,030,843 31,886,354,243 34,771,875,400 52,283,552,000 52,283,552,000 - Current portion of long-term obligations under finance leases 25,935,182,582 25,935,182,582 18,252,248,354 11,068,675,488 18,751,609,716 18,751,609, ,118,901, ,118,901, ,728,551, ,512,490, ,902,840, ,902,840,898 23

26 The Company has short-term credit facilities from local banks to finance its working capital requirements, details are as follow: Lenders Credit limit Credit term Secured by Far East National Bank - Ho Chi Minh City Branch Vietcombank- Ho Chi Minh City Branch USD 3,000,000 1 year Inventories 450,000,000,000 1 years Fixed assets Standard Chartered Bank USD 10,000,000 5 years Letter of Credit from E- land World Ltd BIDV - Ho Chi Minh City Branch 280,000,000,000 1 year Inventories HSBC Bank (Vietnam) Ltd USD 5,000,000 1 year Inventories Vietinbank - Ho Chi Minh City Branch Vietnam International Bank - Ho Chi Minh City Branch 200,000,000,000 Less than 1 year Inventories 50,000,000,000 1 year Inventories 22. OTHER LONG-TERM PAYABLES Other long-term payables represent the amount payable to State Treasury for the increase in value of a number of land lots which were granted to the Company or leased when it was equitised in In accordance with the asset revaluation report dated 28 September 2005, among other land lots, there were 5 land lots with the total areas of 36,716 sqm were revalued. The amount will be paid once the Company completes the transfer of title of the land use rights to the Company s name. 24

27 23. LONG-TERM LOANS AND OBLIGATIONS UNDER FINANCE LEASES 30/6/2015 In the period 31/12/2014 Amount able to be Amount able to be Amount paid off Increases Decreases Amount paid off Long-term loans 173,940,931, ,940,931,000 12,798,955,000 31,480,966, ,622,942, ,622,942,843 - Vietcombank - Ho Chi Minh City Branch 12,424,776,000 12,424,776, ,160,000 2,961,504,000 15,048,120,000 15,048,120,000 - E-Land Asia Holdings Pte Ltd 152,880,000, ,880,000,000 3,360,000, ,520,000, ,520,000,000 - Bank for Investment and Development of 8,636,155,000 8,636,155,000 8,636,155, Vietnam - Ho Chi Minh City Branch - Vietnam Development Bank - Ho Chi Minh City Branch ,342, ,342, ,342,843 - Shinhan Bank Vietnam Limited ,640,000 27,847,120,000 27,382,480,000 27,382,480,000 Long-term obligations under finance leases 32,006,561,496 32,006,561,496 20,773,132,600 17,969,866,770 29,203,295,666 29,203,295,666 - Vietcombank Leasing Co., Ltd. 32,006,561,496 32,006,561,496 20,773,132,600 17,969,866,770 29,203,295,666 29,203,295, ,947,492, ,947,492,496 33,572,087,600 49,450,833, ,826,238, ,826,238,509 25

28 The long-term loans are from local banks and shareholders obtained by the Company, details are as follows: Lenders Contract No. Credit limits Credit term E-land Asia Holdings Pte Ltd 04/2010 USD 1,000,000 3 years E-land Asia Holdings Pte Ltd 01/2011 USD 6,000,000 3 years Vietcombank - Ho Chi Minh City Branch 0016/DTDA/13CD 23,830,000,000 5 years Vietcombank - Ho Chi Minh City Branch 0026/DTDA/13CD USD 927,359 5 years Vietnam Development Bank - Ho Chi Minh City Branch 46/HĐTD TW 22,000,000, years Shinhan Bank Vietnam Limited ,200,000,000 3 years Vietcombank Leasing Co., Ltd /CTTC USD 615,200 3 years /CTTC USD 324,960 3 years /CTTC USD 386,400 3 years /CTTC USD 555,555 3 years /CTTC USD 535,200 3 years /CTTC USD 216, years /CTTC USD 232,800 3 years /CTTC USD 394,400 3 years /CTTC USD 81,600 3 years /CTTC USD 213, years These loans are secured by fixed assets financed by the loans. Long-term loans are repayable as follows: 30/6/ /12/2014 On demand or within one year 49,398,030,843 52,283,552,000 In the second year 5,923,008,000 33,847,654,843 In the third to fifth year inclusive 168,017,923, ,775,288, ,338,961, ,906,494,843 Less: Amount due for settlement within 12 months (shown under current liabilities) 49,398,030,843 52,283,552,000 Amount due for settlement after 12 months 173,940,931, ,622,942,843 Long-term obligations under finance leases represent machinery finance leases from Vietcombank Leasing Co., Ltd. 26

29 Details of obligations under finance lease are as follows: Present value of minimum lease Minimum lease payments payments 30/6/ /12/ /6/ /12/2014 Amounts payable under finance leases: 60,813,169,075 51,767,456,611 60,716,485,128 51,562,391,617 Within one year 27,861,592,935 21,080,595,994 27,822,577,980 21,012,358,580 In the second to fifth year inclusive 32,951,576,140 30,686,860,617 32,893,907,148 30,550,033,037 Less: Future finance charges 2,871,424,997 3,812,551,229 2,774,741,050 3,607,486,235 Present value of lease obligations 57,941,744,078 47,954,905,382 57,941,744,078 47,954,905,382 Less: Amount due for settlement within 12 months (shown under current liabilities) 25,935,182,582 18,751,609,716 Amount due for settlement after 12 months 32,006,561,496 29,203,295, LONG-TERM PROVISIONS Long-term provisions represent for the severance allowance accrued in accordance with the Company s policies. 25. OWNERS EQUITY The list of main shareholders who are holding 5% of share or more and other shareholders have been fixed as at 04 June 2015 and 22 December 2014 Ho Chi Minh Stock Exchange ( HOSE ) as follows: As at 04/6/2015 As at 22/12/2014 Shares % Shares % E-Land Asia Holdings Pte Ltd 21,270, ,707,990,000 21,270, ,707,990,000 Vinatex (*) 9-90, ,000 irect Securities Corporation , ,000 Others 27,828, ,286,690,000 27,828, ,286,780,000 Treasury shares 100, ,004,500, , ,004,500,000 49,199, ,999,510,000 49,199, ,999,510,000 (*) Vinatex is the State shareholder. Shares 30/6/ /12/2014 Number of shares issued to public 49,199,951 49,199,951 Number of treasury shares 100, ,450 Number of outstanding shares in circulation 49,099,501 49,099,501 The Company has one class of ordinary share which carry no right to receive any fixed dividend with the par value of 10,000/share. The shareholders of ordinary shares are entitles to receive dividends as declared from time to time and are entitled to have one vote per share at the Company s shareholders meetings. 27

30 Movement in owners equity: Owners' Investment and Financial contributed capital Share premium Treasury shares development fund reserve fund Other funds Retained earnings Total As at 01/01/ ,999,510,000 22,720,075,000 (5,939,990,000) 2,110,908,440 40,080,890,995 15,086,185, ,532,742, ,590,322,509 Profit for the year ,191,096, ,191,096,711 Fund appropriation ,351,817,949 12,351,817,949 12,351,817,949 (55,583,180,770) (18,527,726,923) Dividend declared (78,559,201,600) (78,559,201,600) As at 01/01/ ,999,510,000 22,720,075,000 (5,939,990,000) 14,462,726,389 52,432,708,944 27,438,003, ,581,457, ,694,490,697 Transfer equity according to Circular ,432,708,944 (52,432,708,944) Profit for the period ,243,897,774 90,243,897,774 Fund appropriation ,520,123, (92,620,227,197) (42,100,103,271) Dividend declared (29,459,700,600) (29,459,700,600) As at 30/6/ ,999,510,000 22,720,075,000 (5,939,990,000) 117,415,559,259-27,438,003, ,745,427, ,378,584,600 According to the 2015 Annual General Shareholders Meeting minute No. 01/2015/BB-DHCD dated on 04 April 2015, the Company s shareholders approved the plan of appropriation for the investment and development fund, financial reserve fund and bonus and welfare funds at the ratio of 15%, 15% and 25% of consolidated profit after tax of the year 2014, respectively. According to General Shareholders Resolution No. 01/2015/NQ-DHCD dated 4 April 2015, the Company s shareholders approved to pay dividend at the ratio of 12% of share s par value. 28

31 26. OFF BALANCE SHEET ITEM Foreign currencies: 30/6/ /12/ United States Dollar ("USD") 2,525,157 3,938,287 - Japanese Yen ("JPY") 100, ,791 - Euro ("EUR") SEGMENT REPORTING The Company selected geographical segments as reportable segment because the risk and economic benefits of the Company differ in each geographical segment. The business segment report includes items directly attributable to a segment as well as for segments on reasonable basis. Unallocated items include financial income, financial expenses, selling expenses, general and administration expenses, profit from other activities, and corporate income tax. The income statement of business segment report during the period is as follows: Geographical segments As stated the segment information about geographical segments, segment revenue depends on geographic location of clients in Vietnam ( Domestic ) or in countries other than Vietnam ( Export ). The Company does not prepare the segment report for items on the balance sheet due to insufficient basis for separation. From 01/01/2015 to 30/6/2015 From 01/01/2014 to 30/6/2014 Domestic Revenue 128,926,086, ,468,383,489 Cost of goods sold 108,215,591, ,053,411,021 Gross profit 20,710,495,386 18,414,972,468 Export Revenue 1,198,086,265,624 1,168,092,475,203 Cost of goods sold 1,005,627,464, ,651,749,076 Gross profit 192,458,801, ,440,726,127 Business segments The separate financial statements have not presented business segments because the Company s all operations are focused on manufacturing, trading of garment and textile products. 29

32 28. NET REVENUE FROM GOODS SOLD AND SERVICES RENDERED From 01/01/2015 to 30/6/2015 From 01/01/2014 to 30/6/2014 Sales of merchandise and services Garment and textile products 1,274,023,355,003 1,264,382,459,112 Processing fees 46,980,390,647 26,758,926,237 Others 7,083,726,586 9,354,649,397 1,328,087,472,236 1,300,496,034,746 Deductions Sales returns and discounts (1,075,119,974) (6,935,176,054) 1,327,012,352,262 1,293,560,858, COST OF GOODS SOLD AND SERVICES RENDERED From 01/01/2015 to 30/6/2015 From 01/01/2014 to 30/6/2014 Raw materials 669,926,735, ,137,606,463 Labour costs 215,663,582, ,622,737,066 Depreciation and amortisation 28,228,849,449 25,479,286,055 Overheads 189,612,718, ,658,946,374 Others 10,411,170,522 5,806,584,139 1,113,843,055,680 1,103,705,160, PRODUCTION COST BY NATURE From 01/01/2015 to 30/6/2015 From 01/01/2014 to 30/6/2014 Raw materials 645,832,058, ,107,726,464 Labour cost 235,418,126, ,350,486,274 Depreciation and amortisation 31,587,158,613 27,903,575,671 Out-sourced services 274,999,401, ,888,659,975 Others 53,814,199,530 43,634,929,721 1,241,650,944,461 1,181,885,378, FINANCIAL INCOME From 01/01/2015 to 30/6/2015 From 01/01/2014 to 30/6/2014 Bank and loan interest 958,376, ,132,868 Dividend income 176,250, ,250,000 Realised foreign exchange gain 6,378,034,838 3,208,207,690 7,512,661,148 4,325,590,558 30

33 32. FINANCIAL EXPENSES From 01/01/2015 to 30/6/2015 From 01/01/2014 to 30/6/2014 Interest expense 11,131,209,712 14,643,382,095 (Reversal)/made provision for financial investments (1,209,882,182) 500,878,462 Realised foreign exchange loss 11,141,995,584 2,606,238,603 Unrealised foreign exchange loss 11,113,328,156 7,625,830,193 Others - 6,440,000 32,176,651,270 25,382,769, OTHER INCOME From 01/01/2015 to 30/6/2015 From 01/01/2014 to 30/6/2014 Proceeds from disposals of fixed assets 1,011,713, ,557,807 Proceeds from sales of material, supplies 398,288,524 1,272,727 Others 815,640,877 1,406,818,586 2,225,642,933 1,634,649, OTHER EXPENSES From 01/01/2015 to 30/6/2015 From 01/01/2014 to 30/6/2014 Expense for sales of material, supplies 45,670,979 - Others 957,873, ,123,892 1,003,544, ,123,892 31

34 35. CURRENT CORPORATE INCOME TAX EXPENSE From 01/01/2015 to 30/6/2015 From 01/01/2014 to 30/6/2014 Profit before tax 98,049,345,321 90,613,251,079 Adjust for 863,363,098 4,752,983,258 - Increase taxable income 7,968,456,761 10,918,685,136 - Decrease taxable income (7,105,093,663) (6,165,701,878) Assesable income 98,912,708,419 95,366,234,337 Of which: + Income from activities which entitled incentive tax 98,912,708,419 95,366,234,337 + Income from office rental service Other income - - Applicable tax rate + For income from activities which entitled 15% 15% + For income from office rental service 20% 20% + For other income 22% 22% Corporate income tax 14,836,906,263 14,304,935,151 Tax reduction (7,418,453,131) (7,152,467,576) Adjustment for prior period 407,266,044 (596,159,254) Current corporate income tax expense 7,825,719,176 6,556,308,321 The Company is obliged to pay corporate income tax ( CIT ) at the rate of 15% in 12 years from 2006 to 2017 for its principal activities manufactured in an industrial park. The Company is entitled CIT exemption for 3 years from the first profit making year and the 50% reduction for the following subsequent 7 years. This is under the Article 36, Decree 187/2004/ND-CP dated 16 November 2004, Decree 164/2003/ND-BTC dated 22 December 2003, Circular 128/2003/TT-BTC dated 22 December 2003 and Circular 88/2004/TT-BTC dated 01 September The year 2006 was the first year the Company had taxable profit. The year 2009 was the first year the Company entitled to the 50% CIT reduction. For the activity relating to office rental service in an industrial park, the Company is obliged to pay CIT at the rate of 20% in 10 years from 2006 to The Company is entitled CIT exemption for 2 years from the first profit making year and the 50% reduction for the following subsequent 6 years basing on the Circular 88/2004/TT-BTC dated 01 September 2004 issued by Ministry of Finance to modify, supplement Circular 128/2003/TT-BTC dated 22 December The year 2006 was the first year the Company had taxable profit. The year 2008 was the first year the Company entitled to the 50% CIT reduction. This year 2015, the Company applies the rate of 20% for the taxable income from this activity. For the other activities, the Company is obliged to pay CIT at the rate of 22%. 36. OPERATING LEASE COMMITMENTS From 01/01/2015 to 30/6/2015 From 01/01/2014 to 30/6/2014 Minimum lease payments under operating leases recognised in income statement for the period 4,135,451,633 1,894,746,662 32

35 At the balance sheet date, the Company had outstanding commitments under non-cancelable operating leases, which fall due as follows: 30/6/ /12/2014 Within one year 8,140,971,599 8,290,121,879 In the second to fifth years inclusive 30,555,213,062 30,586,787,517 After five years 65,133,015,655 66,209,576, ,829,200, ,086,486,156 Operating lease payments represent total rentals payable by the Company for land leases at Tan Phu District - Ho Chi Minh City and management fee at Tan Binh Industrial Zone Ho Chi Minh City and Trang Bang Industrial Zone Tay Ninh Province. The contract terms and rental charges are determined per each specific contract. 37. FINANCIAL INSTRUMENTS Capital risk management The Company manages its capital to ensure that the Company will be able to continue as a going concern while maximising the return to shareholders through the optimisation of the debt and equity balance. The capital structure of the Company consists of net debt (borrowings as disclosed in Note 21 and 23, offset by cash and cash equivalents) and equity attributable to shareholders (comprising contributed capital, share premium, treasury shares, funds and retained earnings). Gearing ratio The gearing ratio of the Company as at the balance sheet date was as follows: 30/6/ /12/2014 Borrowings 875,066,393, ,729,079,407 Less: Cash and cash equivalents 91,682,183, ,600,437,262 Net debt 783,384,210, ,128,642,145 Equity 795,378,584, ,694,490,697 Net debt to equity ratio Significant accounting policies Details of the significant accounting policies and methods adopted (including the criteria for recognition, the bases of measurement, and the bases for recognition of income and expenses) for each class of financial assets and financial liabilities are disclosed in Note 4. 33

36 Categories of financial instruments Carrying amounts 30/6/ /12/2014 Financial assets Cash and cash equivalents 91,682,183, ,600,437,262 Trade and other receivables 239,649,933, ,553,185,453 Investments 2,767,600,000 2,767,600,000 Deposits 281,183, ,180, ,380,900, ,322,402,715 Financial liabilities Obligations under finance leases 57,941,744,078 47,954,905,382 Borrowings 817,124,649, ,774,174,025 Trade and other payables 238,552,573, ,683,589,583 Accrued expenses 9,958,870,182 10,766,268,840 1,123,577,837,137 1,039,178,937,830 The Company has not assessed fair value of its financial assets and liabilities as at the balance sheet date since there are no comprehensive guidance under Circular 210/2009/TT-BTC issued by the Ministry of Finance on 06 November 2009 ( Circular 210 ) and other relevant prevailing regulations to determine fair value of these financial assets and liabilities. While Circular 210 refers to the application of International Financial Reporting Standards ( IFRS ) on presentation and disclosures of financial instruments, it did not adopt the equivalent guidance for the recognition and measurement of financial instruments, including application of fair value, in accordance with IFRS. Financial risk management objectives The Company has set up risk management system to identify and assess the risks exposed by the Company and designed control policies and procedures to manage those risks at an acceptable level. Risk management system is reviewed on a regular basis to reflect changes in market conditions and the Company s operations. Financial risks include market risk (including foreign currency risk, interest rate risk, share price risk and commodity price risk), credit risk and liquidity risk. Market risk Foreign currency risk management The Company undertakes certain transactions denominated in foreign currencies; consequently, exposures to exchange rate fluctuations arise. The carrying amounts of the Company s foreign currency denominated monetary assets and monetary liabilities at the end of the period/year are as follows: Asset Liabilities 30/6/ /12/ /6/ /12/2014 United States Dollar (USD) 231,634,472, ,620,592, ,674,116, ,918,377,056 Euro (EUR) 5,485,867 6,006, ,626, ,861,065 Japanese Yen (JPY) 17,778,549 17,931, ,657,736, ,644,530, ,462,743, ,159,238,121 34

37 Foreign currency sensitivity analysis The Company is mainly exposed to United States Dollar and Euro. The following table details the Company's sensitivity to a 5% increase and decrease in Vietnam Dong against the relevant foreign currencies. 5% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management's assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 5% change in foreign currency rates. For a 5% increase/decrease in the following foreign currencies against Vietnam Dong, the profit before tax for the period would decrease/increase by the same amount as follow: From 01/01/2015 From 01/01/2014 to 30/6/2015 to 30/6/2014 USD (36,201,982,230) (37,705,251,710) EUR (39,157,052) (62,869,149) (36,241,139,282) (37,768,120,859) Applying the same anlysis to Japanese Yen, the increase/decrease in Japanese Yen would not have material effect to the profit before tax of the Company during the period. Interest rate risk management The Company has significant interest rate risks arising from interest bearing loans which are arranged. The risk is managed by the Company by maintaining an appropriate level of borrowings and analyzing market competition to enjoy favorable interest rates from appropriate lenders. Interest rate sensitivity The loan s sensitivity to interest rate changes which may arise at an appropriate level. Assuming all other variables were held constant, if interest rates applicable to floating interest bearing loans had been 200 basis points higher/lower, the Company s profit before tax for the period from 01 January 2015 to 30 June 2015 would have decreased/increased by 8,171,246,497 (for the period from 01 January 2014 to 30 June 2014: 8,905,923,123). Share price risk management Shares held by the Company are affected by market risks arising from the uncertainty about future prices of such shares. The Company manages this risk exposure by setting up investment limits. The Company s Board of Management also assesses and approves decisions on share investments such as operating industry, investees, etc. The Company assesses the share price risk to be immaterial. The Company is also exposed to equity price risks arising from investments in subsidiaries and associates. The Company s Board of Management assesses and approves decisions on investments in subsidiaries and associates such as operating industry, investees, etc. Investments in subsidiaries and associates are held for long-term strategic investments rather than trading purposes. The Company does not have intention to trade these investments in the foreseeable future. Commodity price risk management The Company purchases materials, commodities from local and foreign suppliers for business purpose. Therefore, the Company is exposed to the risk of changes in selling prices of materials, commodities. 35

38 Credit risk Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Company. The Company has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. The Company does not have any significant credit risk exposure to any counterparty because receivables consist of a large number of customers, spread across diverse industries and geographical areas. Liquidity risk management The purpose of liquidity risk management is to ensure the availability of funds to meet present and future financial obligations. Liquidity is also managed by ensuring that the excess of maturing liabilities over maturing assets in any period is kept to manageable levels relative to the amount of funds that the Company believes can generate within that period. The Company policy is to regularly monitor current and expected liquidity requirements to ensure that the Company maintains sufficient reserves of cash, borrowings and adequate committed funding from its shareholders to meet its liquidity requirements in the short and longer term. The following table details the Company s remaining contractual maturity for its non-derivative financial assets and financial liabilities with agreed repayment periods. The tables have been drawn up based on the undiscounted cash flows of financial assets and undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay. The inclusion of information on non-derivative financial assets is necessary in order to understand the Company s liquidity risk management as the liquidity is managed on a net asset and liability basis. 30/6/2015 Less than 1 year Over 1 year Total Cash and cash equivalents 91,682,183,465-91,682,183,465 Trade and other receivables 239,649,933, ,649,933,607 Investments - 2,767,600,000 2,767,600,000 Deposits 281,183, ,183, ,613,300,775 2,767,600, ,380,900,775 Obligations under finance leases 25,935,182,582 32,006,561,496 57,941,744,078 Borrowings 643,183,718, ,940,931, ,124,649,684 Trade and other payables 238,552,573, ,552,573,193 Accrued expenses 9,958,870,182-9,958,870, ,630,344, ,947,492,496 1,123,577,837,137 Net liquidity gap (586,017,043,866) (203,179,892,496) (789,196,936,362) 36

39 31/12/2014 Less than 1 year Over 1 year Total Cash and cash equivalents 132,600,437, ,600,437,262 Trade and other receivables 142,553,185, ,553,185,453 Investments - 2,767,600,000 2,767,600,000 Deposits 401,180, ,180, ,554,802,715 2,767,600, ,322,402,715 Obligations under finance leases 18,751,609,716 29,203,295,666 47,954,905,382 Borrowings 628,151,231, ,622,942, ,774,174,025 Trade and other payables 159,683,589, ,683,589,583 Accrued expenses 10,766,268,840-10,766,268, ,352,699, ,826,238,509 1,039,178,937,830 Net liquidity gap (541,797,896,606) (219,058,638,509) (760,856,535,115) Regardless of the existing net liquidity gap, the Board of Directors believes that the Company will be able to generate sufficient funds to meet its financial obligations as and when they fall due from internally generated cash flows and maintains minimum credit lines available. Undrawn facilities are disclosed in Note 21 and RELATED PARTY TRANSACTIONS AND BALANCES List of related parties: Name Eland Asia Holdings Pte Ltd Thanh Cong Medical Center JSC Thanh Cong Vinh Long One Member Limited Company Thanh Chi Corporation Eland World Limited Eland International Fashion (Shanghai) Co., Ltd Eland Fashion (Shanghai) Co., Ltd Wish Trading (Shanghai) Co., Ltd Eland Fashion Hong Kong Limited Eland Retail Limited Eland Viet Nam Co., Ltd S.Y ViNa Joint Stock Company Savimex Joint Stock Company Relationship Main shareholder Subsidiary Subsidiary Associate Company in Eland Group Company in Eland Group Company in Eland Group Company in Eland Group Company in Eland Group Company in Eland Group Company in Eland Group Company in Eland Group Company in Eland Group 37

40 During the period, the Company entered into the following significant transactions with its related parties: From 01/01/2015 to 30/6/2015 From 01/01/2014 to 30/6/2014 Sales Eland World Limited 218,402,201, ,743,994,354 Eland International Fashion (Shanghai) Co., Ltd 91,160,196,543 49,348,785,655 Eland Fashion (Shanghai) Co., Ltd 49,896,830,992 25,802,430,553 Wish Trading (Shanghai) Co., Ltd 15,318,908,511 6,425,626,340 Eland Fashion Hong Kong Limited 9,461,762,175 1,789,915,544 Eland Retail Limited 779,483,161 4,818,051,452 Eland Vietnam Co., Ltd. 434,332,787 1,049,640,157 S.Y ViNa Joint Stock Company - 11,744,727 Thanh Cong - Vinh Long One Member Limited Company 515,793,600 - Thanh Cong Medical Center JSC 318,460, ,204,932 From 01/01/2015 to 30/6/2015 From 01/01/2014 to 30/6/2014 Purchases Eland World Limited 21,877,403,024 24,755,982,453 Eland International Fashion (Shanghai) Co., Ltd 72,814,476,861 26,378,911,746 Eland Vietnam Co., Ltd. 2,025,941,236 72,391,200 Wish Trading (Shanghai) Co., Ltd 762,626, ,062,729 S.Y ViNa Joint Stock Company 30,058,000 - Savimex Joint Stock Company 1,575,603, ,063,995 Thanh Cong Medical Center JSC 72,267,789 - Loan interest E-land Asia Holdings Pte Ltd 721,251, ,932,563 Dividends declared to E-land Asia Holdings Pte Ltd 25,524,958,800 21,270,799,000 Capital contribution Thanh Cong - Vinh Long One Member Limited Company 26,414,210,976 - Remuneration paid to the Company s Board of Directors during the period was as follows: From 01/01/2015 to 30/6/2015 From 01/01/2014 to 30/6/2014 Salaries and benefits in kind 4,434,130,322 5,974,634,701 38

41 Significant related party balances as at the balance sheet date were as follows: 30/6/ /12/2014 Trade receivables Eland Fashion (Shanghai) Co., Ltd 3,542,449,700 3,165,231,813 Eland Fashion Hong Kong Limited 539,750,653 2,385,261,588 Eland World Limited 27,556,182,976 22,961,175,289 Eland International Fashion (Shanghai) Co., Ltd 21,447,353,843 1,713,623,088 Eland Retail Limited - 1,823,045,028 Eland Vietnam Co., Ltd. 40,083, ,936,635 Wish Trading (Shanghai) Co., Ltd 3,897,457, ,265,850 Thanh Cong - Vinh Long One Member Limited Company 567,372,960 - Thanh Cong Medical Center JSC 60,758,311 69,629,232 Other receivables Thanh Cong - Vinh Long One Member Limited Company 52,896,708,060 - Thanh Chi Corporation 2,602,375,000 2,602,375,000 Trade payables Eland International Fashion (Shanghai) Co., Ltd 54,442,673,156 8,139,709,455 Eland World Limited 3,232,969,740 4,128,022,920 Eland Vietnam Co., Ltd. 2,228,535,360 - Thanh Cong Medical Center JSC 9,937, ,760,000 Loan payable E-land Asia Holdings Pte Ltd 152,880,000, ,520,000,000 Loan interest payable E-land Asia Holdings Pte Ltd 5,398,868,530 4,677,617, SUPPLEMENTAL NON-CASH DISCLOSURES ARE STATED ON SEPARATE CASH FLOW STATEMENT Dividends paid during the period excluded an amount of 118,884,570, representing dividends declared that have not yet been paid (for the period from 01 January 2014 to 30 June 2014: 109,310,550). Consequently, changes in accounts payable have been adjusted by the same amount. 39

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