THANH CONG TEXTILE GARMENT INVESTMENT TRADING JOINT STOCK COMPANY

Transcription

1 CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2011

2 CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2011 TABLE OF CONTENTS PAGE Corporate information 1 Statement by the General Director 2 Auditor s review report 3 Consolidated Balance sheet (Form B 01a DN/HN) 4 Consolidated Income statement (Form B 02a DN/HN) 7 Consolidated Cash flow statement (Form B 03a DN/HN) 8 Notes to the consolidated interim financial statements () 9

3 CORPORATE INFORMATION Business Registration Certificate No was issued by the Department of Planning and Investment of Ho Chi Minh City on 23 June 2006 and 9 th amendment No on 9 April Board of Directors Ms. Phan Thi Hue Chairman (appointed on 29 April 2011) Mr. Kim Soung Gyu Vice Chairman (appointed on 29 April 2011) Mr. Vu Dinh Do Member (appointed on 29 April 2011) Mr. Kim Jung Heon Member Mr. Lee Eun Hong Member Mr. Tran Nhu Tung Member (appointed on 29 April 2011) Ms. Nguyen Minh Hao Member Management Mr. Lee Eun Hong General Director Mr. Kim Jung Heon Deputy General Director Board of Supervisors Mr. Nguyen Tu Luc Chief Supervisor Mr. Nguyen Huu Tuan Member (appointed on 29 April 2011) Ms. Dinh Thi Thu Hang Member Legal representative Mr. Lee Eun Hong General Director Registered head office 36 Tay Thanh Street, Tay Thanh Ward, Tan Phu District, Ho Chi Minh City Auditor PricewaterhouseCoopers (Vietnam) Limited 1

4 STATEMENT OF THE RESPONSIBILITY OF THE GENERAL DIRECTOR OF THE COMPANY IN RESPECT OF THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS The General Director of the Company is responsible for consolidated interim financial statements which give a true and fair view of the financial position of Thanh Cong Textile Garment Investment Trading Joint Stock Company ( the Company ) and its subsidiaries (together the Group ) as at 30 June 2011 and the consolidated results of its operations and cash flows for the six-month period ended 30 June In preparing these consolidated interim financial statements, the General Director is required to: select suitable accounting policies and then apply them consistently; make judgments and estimates that are reasonable and prudent; and prepare the financial statements on a going concern basis unless it is inappropriate to presume that the Group will continue in business. The General Director of the Company is responsible for ensuring that proper accounting records are kept which disclose, with reasonable accuracy at any time, the financial position of the Group and which enable the consolidated interim financial statements to be prepared which comply with the basis of accounting set out in Note 2 to the consolidated interim financial statements. The General Director of the Company is also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. APPROVAL OF THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS I hereby approve the accompanying consolidated interim financial statements as set out on pages 4 to 36 which give a true and fair view of the financial position of the Group as at 30 June 2011 and of the consolidated results of its operations and cash flows for the six-month period then ended in accordance with Vietnamese Accounting Standards, the Vietnamese Accounting System and applicable regulations in Vietnam. Ho Chi Minh City, SR Vietnam 29 August

5 PricewaterhouseCoopers (Vietnam) Ltd. 4th Floor, Saigon Tower 29 Le Duan Street, District 1 Ho Chi Minh City Vietnam Telephone: (84-8) Facsimile: (84-8) INDEPENDENT AUDITOR S REVIEW REPORT TO THE SHAREHOLDERS OF We have reviewed the accompanying consolidated interim financial statements of Thanh Cong Textile Garment Investment Trading Joint Stock Company ( the Company ) and its subsidiaries (together the Group ) which were approved by the General Director of the Company on 29 August These consolidated interim financial statements include: the consolidated balance sheet as at 30 June 2011, the consolidated income statement and consolidated cash flow statement for the six-month period then ended, and notes to the consolidated interim financial statements including significant accounting policies, as set out on pages 4 to 36. The General Director is responsible for the preparation and presentation of these consolidated interim financial statements in accordance with Vietnamese Accounting Standard, the Vietnamese Accounting System and applicable regulations in S.R Vietnam. Our responsibility is to express a conclusion on these consolidated interim financial statements based on our review. Scope of Review We conducted our review in accordance with Vietnamese Auditing Standard No Engagement to Review Financial Statements. This standard requires that we plan and perform the review to obtain moderate assurance as to whether the interim financial statements are free of material misstatements. A review is limited primarily to inquiries of Group s personnel and analytical procedures applied to financial data and thus provides less assurance than an audit. We have not performed an audit and, accordingly, we do not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believe that the accompanying consolidated interim financial statements are not presented fairly, in all material respects, in accordance with the Vietnamese Accounting Standards, the Vietnamese Accounting System and applicable regulations in SR Vietnam. Quach Thanh Chau AC No. N.0875/KTV Deputy General Director Authorised signatory Le Van Hoa AC No. 0248/KTV PricewaterhouseCoopers (Vietnam) Limited Ho Chi Minh City, SR Vietnam Review report number HCM August 2011 As indicated in Note 2.1 to the consolidated interim financial statements, the accompanying consolidated interim financial statements is not intended to present the financial position and results of operations and cash flows in accordance with accounting principles generally accepted in jurisdictions other than SR Vietnam. 3

6 Form B 01a DN/HN CONSOLIDATED BALANCE SHEET Code ASSETS Note 100 CURRENT ASSETS 963,941,118, ,288,217, Cash and cash equivalents 3 77,385,942, ,338,192, Cash 75,085,942, ,338,192, Cash equivalents 2,300,000,000 1,000,000, Short-term investments 4(a) 500,000,000 1,068,750, Short-term investments 2,500,000,000 4,076,000, Provision for diminution in value of short-term investments (2,000,000,000) (3,007,250,000) 130 Accounts receivable 159,223,826, ,992,233, Trade accounts receivable 5 108,637,999, ,532,114, Prepayments to suppliers 38,825,810,672 47,520,998, Other receivables 6 12,957,962,271 7,962,392, Provision for doubtful debts (1,197,945,718) (1,023,271,207) 140 Inventories 7 647,212,048, ,017,829, Inventories 660,155,916, ,004,420, Provision for decline in value of inventories (12,943,868,317) (1,986,590,220) 150 Other current assets 79,619,301,984 81,871,211, Short-term prepayments 73,786, ,713, Value Added Tax to be reclaimed 74,517,416,132 78,220,684, Other current assets 8 5,028,099,676 3,549,814,251 The notes on pages 9 to 36 are an integral part of these consolidated interim financial statements. 4

7 CONSOLIDATED BALANCE SHEET (continued) Form B 01a DN/HN Code ASSETS (continued) Note 200 LONG-TERM ASSETS 1,056,969,750, ,558,506, Fixed assets 817,474,696, ,470,853, Tangible fixed assets 9(a) 629,628,714, ,732,275, Cost 1,273,719,900,373 1,272,713,567, Accumulated depreciation (644,091,185,700) (629,981,291,831) 224 Finance lease assets 9(b) 4,634,803,613 4,892,292, Cost 7,722,198,841 7,722,198, Accumulated depreciation (3,087,395,228) (2,829,906,140) 227 Intangible fixed assets 9(c) 80,258,578,188 80,558,049, Cost 84,532,732,554 84,427,732, Accumulated amortisation (4,274,154,366) (3,869,682,829) 230 Construction in progress 9(d) 102,952,600,341 19,288,235, Investment properties 10 29,027,985,146 30,400,880, Cost 31,034,443,158 32,329,743, Accumulated amortisation (2,006,458,012) (1,928,862,740) 250 Long-term investments 4(b) 113,164,211, ,482,219, Investments in associates 111,527,312, ,418,719, Other long-term investments 4,468,600,000 2,820,500, Provision for diminution in value of long-term investments (2,831,700,500) (1,757,000,000) 260 Other long-term assets 97,302,856, ,204,553, Long-term prepayments 11 83,816,886,801 85,127,047, Deferred income tax assets 20 2,625,761,662 4,504,259, Other long-term assets ,974, ,577, Goodwill 13 10,377,233,803 10,850,669, TOTAL ASSETS 2,020,910,868,970 1,913,846,724,581 The notes on pages 9 to 36 are an integral part of these consolidated interim financial statements. 5

8 CONSOLIDATED BALANCE SHEET (continued) Form B 01a DN/HN Code RESOURCES Note 300 LIABILITIES 1,277,845,960,137 1,230,483,419, Current liabilities 948,788,290, ,351,562, Short-term borrowings 14(a) 630,653,090, ,672,823, Trade accounts payable ,323,598, ,479,364, Advances from customers 73,358,173, ,009,868, Taxes and other payables to the State Budget 16 5,465,563,693 25,104,914, Payable to employees 19,082,070,515 24,141,747, Accrued expenses 17 2,095,214,153 3,890,169, Other payables 18 36,785,975,988 16,231,843, Bonus and welfare funds 6,024,602,986 1,820,830, Long-term liabilities 329,057,669, ,131,856, Other long-term payables 19 17,876,000,000 37,502,000, Long-term borrowings 14(b) 291,936,345, ,062,394, Provision for severance allowances 19,245,324,083 15,549,462, Unrealised provisions - 18,000, OWNERS EQUITY 743,064,908, ,363,304, Capital and reserves 738,807,165, ,957,666, Share capital 21,22 447,374,860, ,382,430, Share premium 22 45,032,400,000 45,032,400, Treasury shares 22 (5,939,990,000) (5,939,990,000) 417 Investment and development funds 22 7,611,529,549 (5,663,667,865) 418 Financial reserve funds 22 30,898,924,401 17,623,726, Other funds 22 9,482,283, Undistributed earnings ,347,157, ,522,767, Minority interest 4,257,743,544 4,405,638, TOTAL RESOURCES 2,020,910,868,970 1,913,846,724,581 OFF BALANCE SHEET ITEMS Included in cash and cash equivalents are balances held in foreign currencies of US$2,908,898 (2010: US$6,552,328) and YEN1,231,382 (2010: YEN1,626,259). Pham Thi Thanh Thuy Nguyen Minh Hao Preparer Chief Accountant 29 August 2011 The notes on pages 9 to 36 are an integral part of these consolidated interim financial statements. 6

9 CONSOLIDATED INCOME STATEMENT Form B 02a DN/HN Code Note For the six months ended Sales 1,207,469,315, ,511,882, Less deductions (595,523,211) (2,260,273,030) 10 Net sales 25(a) 1,206,873,792, ,251,609, Cost of sales 26 (926,644,375,308) (697,660,351,683) 20 Gross profit 280,229,417, ,591,258, Financial income 25(b) 17,877,187,086 11,852,310, Financial expenses 27 (83,714,923,130) (68,353,290,363) 24 Selling expenses 28 (25,821,238,557) (21,633,119,842) 25 General and administration expenses 29 (43,569,039,951) (30,475,474,257) 30 Operating profit 145,001,402,872 55,981,683, Net other income 30 1,816,477, ,740, Share of profit from joint venture and associates 1,757,742,610 1,210,893, Net accounting profit before tax 148,575,622,998 58,031,317, Business income tax - current 31 (18,919,008,372) (7,462,977,946) 52 Business income tax - deferred 20 (1,878,497,755) - 60 Accounting profit after tax 127,778,116,871 50,568,339, Minority interest (16,974,836) 721,419, Net profit after tax 127,761,142,035 51,289,759, Basic earnings per share 24 2,862 1,183 Pham Thi Thanh Thuy Nguyen Minh Hao Preparer Chief Accountant 29 August 2011 The notes on pages 9 to 36 are an integral part of these consolidated interim financial statements. 7

10 CONSOLIDATED CASH FLOW STATEMENT (Indirect method) Form B 03a DN/HN Code Note For the six months ended CASH FLOWS FROM OPERATING ACTIVITIES 01 Net profit before tax 148,575,622,998 58,031,317,834 Adjustments for: 02 Depreciation and amortisation 9 26,978,050,975 26,885,386, Provisions 11,199,403, Unrealised foreign exchange losses 25, 27 26,133,465,723 9,694,139, Gains from investing activities (12,216,574,913) (3,679,758,206) 06 Interest expense 27 31,995,583,067 34,599,881, Operating profit before changes in working capital 232,665,550, ,530,967, Decrease/(increase) in receivables 17,251,892,255 (51,363,933,485) 10 Increase in inventories (132,151,496,518) (137,960,087,872) 11 (Decrease)/increase in payables (142,140,803,716) 37,336,378, Decrease/(increase) in prepaid expenses 1,337,088,173 (546,192,603) 13 Interest paid (32,451,522,455) (34,599,881,958) 14 Business income tax paid (38,345,376,969) (7,374,792,594) 15 Other receipts from operating activities 239,603, ,786, Other payments on operating activities (9,042,953,594) (2,171,669,748) 20 Net cash outflows from operating activities (102,638,018,257) (71,028,425,436) CASH FLOWS FROM INVESTING ACTIVITIES 21 Purchases of fixed assets and other long-term assets (97,341,394,207) (6,567,020,533) 22 Proceeds from disposals of assets 11,647,559, ,363, Loans granted to other entities (72,100,000) - 26 Proceeds from disposal of investment in other entities - 3,712,591, Dividends and interest received 543,667, ,291, Net cash outflows from investing activities (85,222,266,803) (1,445,773,537) CASH FLOWS FROM FINANCING ACTIVITIES 33 Proceeds from borrowings 635,738,453, ,095,209, Repayments of borrowings (473,447,718,251) (478,587,824,454) 35 Finance lease principal payments (847,058,785) (873,156,004) 36 Dividends paid (35,682,933,600) (18,656,811,500) 40 Net cash inflows/(outflows) from financing activities 125,760,742,502 (12,022,582,439) 50 Net decrease in cash and cash equivalents (62,099,542,558) (84,496,781,412) 60 Cash and cash equivalents at beginning of period 3 139,338,192, ,544,355, Effect of foreign exchange differences 147,292, ,608, Cash and cash equivalents at end of period 3 77,385,942,336 51,693,182,772 Pham Thi Thanh Thuy Nguyen Minh Hao Preparer Chief Accountant 29 August 2011 The notes on pages 9 to 36 are an integral part of these consolidated interim financial statements. 8

11 NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX-MONTH PERIOD ENDED 30 JUNE GENERAL INFORMATION Thanh Cong Textile Garment Investment Trading Joint Stock Company ( the Company ) was established in SR Vietnam pursuant to Business Registration Certificate No , dated 23 June 2006 issued by Department of Planning and Investment of Ho Chi Minh City. On 9 April 2011, the Company obtained the 9 th amended Business Registration Certificate No The principal activities of the Group are to: - manufacture and trade cotton, fibre, 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. 30 June 2011, the Company had the following subsidiaries and associates: No. Company name Address Nature of business Subsidiaries: 1 Thanh Cong Medical Center Joint Stock Company ( Thanh Cong Medical Center ) 2 Thanh Quang Corporation ( Thanh Quang ) Tan Phu District, Ho Chi Minh City Tan Phu District, Ho Chi Minh City Medical servicing and trading drugs and medical equipments Infrastructures; manufacturing and trading fabric The Charter Company s capital as at shareholding percentage million 15, % 22, % Associates: 3 Thanh Chi Joint Stock Company ( Thanh Chi ) 4 Thanh Cong Securities Joint Stock Company ( TCSC ) 5 Thanh Phuc Investment Construction Corporation ( Thanh Phuc ) 6 Vung Tau Golf Tourism Joint Stock Company ( Golf Vung Tau ) Vung Tau City District 3, Ho Chi Minh City Tan Phu District, Ho Chi Minh City Ba Ria, Vung Tau City Trading and exploiting sand and stone Brokerage, self -trading securities, securities guaranty and securities investment consultancy Constructing and managing projects Providing tourism and entertainment services 43, % 360, % 7, % 29, % 30 June 2011, the Group had 4,250 employees (as at 31 December 2010: 4,312 employees). 9

12 2 ACCOUNTING SYSTEM AND ACCOUNTING POLICIES 2.1 Basis of preparation of the consolidated interim financial statements The consolidated interim financial statements have been prepared in accordance with Vietnamese Accounting Standards, the Vietnamese Accounting System and applicable regulations in SR Vietnam. The financial statements have been prepared under the historical cost convention. The accompanying consolidated interim financial statements are not intended to present the financial position and results of operations and cash flows in accordance with accounting principles and practices generally accepted in countries and jurisdictions other than SR Vietnam. The accounting principles and practices utilised in SR Vietnam may differ from those generally accepted in countries and jurisdictions other than SR Vietnam. The applied accounting policies upon the preparation of the consolidated interim financial statements of the Group are consistent with those of the previous year. 2.2 Consolidation Subsidiaries Subsidiaries are all entities over which the Group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases. The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the fair value of the Group s share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the consolidated income statement over 10 years. With respect to business combinations involving entities under common control, the assets acquired, liabilities or contingent liabilities assumed are measured at fair value at the date of exchange irrespective of the extent of any minority interests. Differences between the amount paid for acquisition and the summary book value of assets and liabilities of the acquiree are recognised as a diminution in share premium. No goodwill is generated from business combination of entities under common control. Inter-company transactions, balances and unrealised gains and losses on transactions between group companies are eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group. The results of operations of a subsidiary disposed of are included in the consolidated income statement until the date of disposal which is the date on which the parent ceases to have control of the subsidiary. 10

13 2.2 Consolidation (continued) Transactions and minority interests The Group applies a policy of treating transactions with minority interests as transactions with parties external to the Group. Disposals to minority interests result in gains and losses for the Group that are recorded in the income statement. Purchases from minority interests result in goodwill, being the difference between any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary. Joint ventures and associates Joint ventures are contractual arrangements whereby two or more parties undertake an economic activity which is subject to joint control. Associates are all entities over which the Group has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investments in joint ventures and associates are accounted for using the equity method of accounting and are initially recognised at cost. The Group s investment in joint ventures and associates includes goodwill identified on acquisition, net of any accumulated impairment loss. The Group s share of its joint ventures and associates post-acquisition profits or losses is recognised in the consolidated income statement, and its share of post-acquisition movements in reserves is recognised in consolidated reserves. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment. When the Group s share of losses in a joint venture or associate equals or exceeds its interest in the joint venture or associate, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the joint venture or associate. Unrealised gains and losses on transactions between the Group and its joint ventures and associates are eliminated to the extent of the Group s interest in the joint ventures and associates. Accounting policies of joint ventures and associates have been changed where necessary to ensure consistency with the policies adopted by the Group. 2.3 Fiscal year The Group s fiscal year is from 1 January to 31 December. These consolidated interim financial statements are prepared for the period from 1 January 2011 to 30 June Currency The financial statements are measured and presented in Vietnamese Dong. Transactions arising in foreign currencies are translated at exchange rates ruling at the transaction dates. Foreign exchange differences arising from these transactions are recognised in the income statement. Transactions arising in foreign currencies are translated at exchange rates ruling at the transaction dates. Foreign exchange differences arising from these transactions are recognised in the income statement. Monetary assets denominated in currencies other than Vietnamese Dong at the balance sheet date are translated at the rate of exchange ruling at the balance sheet date. Foreign exchange gains and losses are recognised in the income statement. 11

14 2.5 Cash and cash equivalents Cash and cash equivalents comprise cash on hand, cash at bank, cash in transit, demand deposits and other short-term investments with an original maturity of three months or less. 2.6 Trade receivables Trade receivables are carried at original invoice amount less an estimate made for doubtful receivables based on a review by management of all outstanding amounts at the year end. Bad debts are written off when identified. 2.7 Inventories Inventories are stated at the lower of cost and net realisable value. Cost is determined by the weighted average method and includes all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. In the case of manufactured products, cost includes all direct expenditure and production overheads based on normal levels of operating activity. Net realisable value is the estimated selling price in the normal course of business, less the estimated costs of completion and selling expenses. Provision is made, where necessary, for obsolete, slow-moving and defective inventory items. 2.8 Investments (a) Short-term investments Short-term investments are investments with maturities less than 12 months from the balance sheet date and investments that are held with the intention to dispose within 12 months of the balance sheet date. Short-term investments are initially accounted for at cost. Provision for diminution is recognised for short term equity securities where the cost exceeds the fair value of such securities. (b) Investments in joint ventures and associates Investments in joint ventures and associates are accounted for using equity method in the consolidated financial statements. (c) Long-term investments Long-term investments comprise shareholding of less than 20% in listed and unlisted entities which are held with no intention to dispose with 12 months from the balance sheet date. These investments are initially stated at cost of acquisition. Provision is made where there is a diminution in value of these investments. 12

15 2.9 Fixed assets Tangible and intangible fixed assets Fixed assets are stated at historical cost less accumulated depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the fixed assets. Depreciation Fixed assets are depreciated using the straight-line method so as to write off the cost of the assets over their estimated useful lives according to Circular No. 203/2010/TT-BTC dated 20 October 2010 issued by Ministry of Finance. The principal annual rates used are: Estimated useful lives Buildings Machinery and equipment Means of transportation Office equipment Licences and software Others years 7-15 years 10 years 7-15 years 4-10 years 7-22 years Prepaid land rentals with land use rights certificates 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. Disposals Gains and losses on disposals are determined by comparing net disposal proceeds with the carrying amount and are recognised as income or expense in the income statement Leased assets Leases of property, plant and equipment where the Company has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalized at the inception of the lease at the lower of the fair value of leased property or the present value of the minimum lease payments. Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate on the finance balance outstanding. The corresponding rental obligations, net of finance charge, are included in long-term borrowings. The interest element of the finance cost is charged to the income statement over the lease period. The property, plant and equipment acquired under finance leasing contracts are depreciated over the shorter of the estimated useful life of the assets or the lease term. However, if there is reasonable certainty that the lessee will obtain ownership by the end of the lease term, depreciation is calculated over the estimated useful life of the assets. Leases where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to the income statement on a straight-line basis over the period of the lease Investment properties Depreciation Investment properties are depreciated on the straight-line method to write off the cost of the assets over their estimated useful lives. The principal annual rates used for buildings for lease are 2%. 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. 13

16 2.11 Investment properties (continued) Disposals Gains or losses on disposals are determined by comparing net disposal proceeds with the net book value and are recognised as revenue or cost of sales in the income statement Goodwill Goodwill represents the excess of the cost of an acquisition over the fair value of the Group s share of the net identifiable assets of the acquired subsidiary at the date of acquisitions of subsidiaries. Goodwill is amortised on the straight-line basis to the consolidated income statement over a period of 10 years Borrowing costs Borrowing costs that are directly attributable to the construction or production of any qualifying assets are capitalised during the period of time that is required to complete and prepare the asset for its intended use. Other borrowing costs are recognised in the consolidated income statement when incurred Revenue recognition (a) Sales of goods Revenue from the sale of goods is recognised in the consolidated income statement 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. (b) Processing services Revenue from processing services is recognised in the consolidated income statement when the goods have been processed and accepted. No revenue is recognised if there are significant uncertainties regarding recovery of the consideration due. (c) Sales of services Revenue from the sales of services is recognised in the consolidated income statement when the services are rendered, by reference to completion of the specific transaction assessed on the basis of the actual service provided as a proportion of the total services to be provided. (d) Interest income Interest income is recognised on an earned basis. 14

17 2.15 Deferred income tax Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of occurrence affects neither the accounting nor the taxable profit or loss. Deferred income tax is determined at the tax rates that are expected to apply to the financial year when the asset is realised or the liability is settled, based on tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised Dividend distribution Dividend distribution to the Company s shareholders is recognised as a liability in the Company s financial statements in the period in which the dividends are approved by the Company s shareholders Appropriation of net profit Net profit after tax is available for appropriation to shareholders after approval by the shareholders at the Annual General Meeting, and after making appropriation to reserve funds in accordance with the Company's Charter and Vietnamese regulatory requirements. (a) Financial reserve fund Financial reserve fund is appropriated from the Company's net profit as proposed by the Board of Directors and subject to shareholders' approval at the Annual General Meeting. This fund is set aside to protect the Company's normal operations from business risks or losses, or to prepare for unforeseen losses or damages and force majeure, such as fire, economic and financial turmoil of the country or elsewhere. (b) Investment and development fund Investment and development fund is appropriated from the Company's net profit as proposed by the Board of Directors and subject to approval by shareholders at the Annual General Meeting. This fund is set aside for use in the Company's expansion of its operation or in-depth investments. (c) Bonus and welfare fund Bonus and welfare fund is appropriated from the Company's net profit as proposed by the Board of Directors and subject to shareholders' approval at the Annual General Meeting. This fund is set aside for the purpose of pecuniary rewarding and encouragement, common benefits and improvement of the employees' material and spiritual benefits. (d) Other fund Other fund is appropriated from the Company's net profit as proposed by the Board of Directors and subject to approval by shareholders at the Annual General Meeting. The fund is reserved for increasing share capital in the future. 15

18 2.18 Related parties Enterprises and individuals that directly, or indirectly through one or more intermediaries, control, or are controlled by, or are under common control with, the Company, including holding companies, subsidiaries and fellow subsidiaries are related parties of the Company. Associates and individuals owning, directly or indirectly, an interest in the voting power of the Company that gives them significant influence over the enterprise, key management personnel, including directors and officers of the Company and close members of the family of these individuals and companies associated with these individuals also constitute related parties. In considering each possible related party relationship, attention is directed to the substance of the relationship, and not merely the legal form Provisions Provisions are recognised when: the Group has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Provisions are not recognised for future operating losses. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small. Provisions are measured at the expenditures expected to be required to settle the obligation. If the time value of money is material, provisions will be measured at their present value using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as interest expenses Provision for severance allowances In accordance with Vietnamese labour laws, employees of the Group are entitled to a severance allowance based on their years of service. This will be paid as a lump sum when the employee leaves the Group. A provision for severance allowance is made for the estimated liability for employment termination as a result of services rendered by employees. Pursuant to Law on Social Insurance, effective from 1 January 2009, the Group is required to contribute to an unemployment insurance fund managed by the Vietnam Social Insurance Agency. With the implementation of the unemployment scheme, the Group is no longer required to provide for the service period after 1 January The provision for severance allowance as of 30 June 2011 is determined based on the employees number of years of service up to 31 December 2008 and their average salary for the six-month period prior to the balance sheet date. 3 CASH AND CASH EQUIVALENTS Cash on hand 1,497,844, ,624,270 Cash at bank 73,588,097, ,401,568,285 Cash equivalents 2,300,000,000 1,000,000,000 77,385,942, ,338,192,555 16

19 4 INVESTMENTS (a) Short-term investments Short-term investment in equity securities - 1,576,000,000 Term deposits with maturity less than 1 year 500,000, ,000,000 Loan to a third party 2,000,000,000 2,000,000,000 2,500,000,000 4,076,000,000 Provision for diminution in value of shortterm investments (2,000,000,000) (3,007,250,000) 500,000,000 1,068,750,000 (b) Long-term investments Investment in associates (i) 111,527,312, ,418,719,100 Other long-term investments (ii) 4,468,600,000 2,820,500,000 Provision for diminution in value of long-term investments (iii) (2,831,700,500) (1,757,000,000) 113,164,211, ,482,219,100 (i) Investment in associates: Company name Cost recognised Cost recognised in the Company s in the Company s financial financial statements statements Number of shares Number of shares Thanh Chi 30,047,395,589 2,081,900 30,023,948,150 2,081,900 TCSC 71,114,916,608 8,911,700 70,029,770,950 8,866,700 Golf Vung Tau 8,700,000, ,000 8,700,000, ,000 Thanh Phuc 1,665,000, ,500 1,665,000, , ,527,312, ,418,719,100 17

20 4 INVESTMENTS (continued) (b) Long-term investments (continued) (ii) Other long-term investments: Vietcombank 2,449,600,000 2,377,500,000 Vicotex 125,000, ,000,000 Hutexco 318,000, ,000,000 Det May Thang Loi (Vigatexco) (*) 1,576,000,000-4,468,600,000 2,820,500,000 (*) Long-term investment in equity securities represents the investment in 32,500 shares of a joint stock company. (iii) Movement of provisions for diminution in value of long-term investments as follows: For six month period ended For the year ended Beginning of the period/year 1,757,000,000 1,497,000,000 Reclassification from other ST investment 1,007,250,000 - Provisions for the period/year 131,812, ,000,000 Reversal (64,362,000) - End of the period/year 5 TRADE ACCOUNTS RECEIVABLE 2,831,700,500 1,757,000,000 Third parties 108,637,999, ,532,114,279 6 OTHER RECEIVABLES Third party an individual (*) 9,792,000,000 - Third parties - others 1,084,062,271 5,880,492,283 Related parties (Note 33(b)(i)) 2,081,900,000 2,081,900,000 12,957,962,271 7,962,392,283 (*) This amount is an interest free loan, secured by 1.2 million shares of a securities company owned by that individual. The loan is repayable within 6 months. 18

21 7 INVENTORIES Goods in transit 100,744,103, ,750,607,772 Raw materials 203,907,471,189 98,967,207,479 Tools 39,978,722 87,085,514 Work in progress 120,155,068, ,239,015,301 Finished goods 226,897,204, ,765,288,939 Merchandise goods 5,718,296,837 6,795,884,852 Goods on consignment 2,693,793,770 5,399,330, ,155,916, ,004,420,061 Provision for decline in value of inventories (12,943,868,317) (1,986,590,220) 8 OTHER CURRENT ASSETS 647,212,048, ,017,829,841 Advances 1,056,969,895 1,827,273,771 Short-term deposits 3,971,129,781 1,722,540,480 5,028,099,676 3,549,814,251 19

22 9 FIXED ASSETS (a) Tangible fixed assets Buildings and Plant and Motor Office structure machinery vehicles equipment Others Total Historical cost At 1 January ,127,186, ,827,370,097 14,070,496,250 12,209,441, ,479,072,579 1,272,713,567,054 New purchases 49,090, ,438,722 1,868,542, ,598,419 1,121,276,787 4,021,947,337 Transfer from construction in progress - 9,550,082, ,550,082,292 Disposals - (11,494,249,685) (391,005,500) (47,146,128) (633,294,997) (12,565,696,310) At 30 June ,176,277, ,681,641,426 15,548,033,250 12,346,893, ,967,054,369 1,273,719,900,373 Accumulated depreciation At 1 January ,568,375, ,569,384,917 5,694,086,970 8,005,374,686 94,144,070, ,981,291,831 Charges for the period 2,726,226,137 19,053,245, ,651, ,355,911 3,261,641,314 26,201,120,018 Disposals - (11,206,949,545) (391,005,500) (47,146,127) (446,124,977) (12,091,226,149) At 30 June ,294,601, ,415,680,735 5,878,732,763 8,542,584,470 96,959,586, ,091,185,700 Net book value At 1 January ,558,811, ,257,985,180 8,376,409,280 4,204,066,865 52,335,022, ,732,275,223 At 30 June ,881,676, ,265,960,691 9,669,300,487 3,804,309,372 50,007,467, ,628,714, June 2011 fixed assets with a carrying value of 484 billion (31 December 2010: 549 billion) have been pledged with banks as security for borrowings granted to the Company (refer to Note 14). Cost of fully depreciated fixed assets but still in use as at 30 June 2011 was 407 billion (31 December 2010: 402 billion). 20

23 9 FIXED ASSETS (continued) (b) Finance lease assets Plant and Machineries Historical cost At 1 January 2011 and 30 June ,722,198,841 Accumulated depreciation At 1 January ,829,906,140 Charge for the period 257,489, June ,087,395,228 Net book value At 1 January ,892,292, June ,634,803,613 (c) Intangible fixed assets Land use rights Software Patents Total Historical cost At 1 January ,847,723, ,150,200 1,658,858,567 84,427,732,554 New purchases - 30,000,000-30,000,000 Transferred from Construction in progress 75,000,000 75,000,000 At 30 June ,847,723,787 1,026,150,200 1,658,858,567 84,532,732,554 Accumulated amortisation At 1 January ,311,540, ,748, ,394,120 3,869,682,829 Charge for the period 161,295,400 93,007, ,168, ,471,537 At 30 June ,472,835, ,755, ,563,093 4,274,154,366 Net book value At 1 January ,536,183, ,401,869 1,301,464,447 80,558,049,725 At 30 June ,374,888, ,394,705 1,151,295,474 80,258,578,188 21

24 9 FIXED ASSETS (continued) (c) Intangible fixed assets (continued) 30 June 2011, intangible fixed assets with a carrying value of 38 billion have been pledged with banks as security for long-term borrowings granted to the Company (Note 14). (d) Construction in progress For six month period ended For the year ended Beginning of the period/year 19,288,235,763 70,820,997,038 Additions 93,293,100,487 43,469,139,651 Transfers to tangible fixed assets (9,625,082,292) (32,540,665,628) Derecognition of a subsidiary s construction in progress - (61,437,356,336) Other transfers (3,653,617) (1,023,878,962) End of the period/year Details of the major projects are as follows: 102,952,600,341 19,288,235,763 Nhi Xuan Industrial Zone Project 234,000, ,000,000 Thanh Cong Tower 1 Project 101,012,056,498 10,978,327, INVESTMENT PROPERTIES Land use rights Buildings for lease Total Historical cost At 1 January ,945,036,986 11,384,706,172 32,329,743,158 Disposal (1,295,300,000) - (1,295,300,000) At 30 June ,649,736,986 11,384,706,172 31,034,443,158 Accumulated amortisation At 1 January ,828,330 1,876,034,410 1,928,862,740 Charge for the period 1,168, ,801, ,970,332 Disposal (37,375,060) - (37,375,060) At 30 June ,621,638 1,989,836,374 2,006,458,012 Net book value At 1 January ,892,208,656 9,508,671,762 30,400,880,418 At 30 June ,633,115,348 9,394,869,798 29,027,985,146 22

25 11 LONG-TERM PREPAYMENTS For six month period ended For the year ended Beginning of the period/year 85,127,047,468 5,761,258,589 Additions 24,878, ,763,206 Reclassification from intangible fixed assets - 85,954,939,930 Derecognition of a subsidiary s long-term prepayments - (3,878,828,545) Charged to the income statement (1,335,038,830) (3,038,085,712) End of the period/year 83,816,886,801 85,127,047, OTHER LONG-TERM ASSETS For six month period ended For the year ended Beginning of the period/year 722,577,762 2,393,900,929 Derecognition of a subsidiary s long-term assets - (1,224,067,678) Charged to the income statement (239,603,609) (447,255,489) End of the period/year 482,974, ,577, GOODWILL For six month period ended For the year ended Beginning of period/year 10,850,669,173 13,424,538,828 Addition 94,587,085 11,313,155,553 Charged to the income statement (568,022,455) (1,964,087,720) Derecognition of goodwill on disposal of a subsidiary - (11,922,937,488) End of period/year 10,377,233,803 10,850,669,173 23

26 14 BORROWINGS (a) Short-term borrowings Short-term loans (i) 546,077,158, ,666,597,687 Current portion of long-term loans 83,856,623,114 96,353,770,630 Finance lease liabilities 719,308,207 1,652,455, ,653,090, ,672,823,893 (b) Long-term borrowings Long-term loans (ii) 375,792,968, ,416,165,577 Less: Amount due within one year (83,856,623,114) (96,353,770,630) 291,936,345, ,062,394,947 (c) Finance lease liability Total Interest Principal Total Interest Principal Within 1 year 727,604,228 8,296, ,308,207 1,700,101,378 47,645,802 1,652,455,576 24

27 Form B 09 DN/HN 14 BORROWINGS (continued) (i) The Group has short-term credit facilities from local banks to finance its working capital requirements, details are as follows: Loan agreement from Credit limit Interest rates Outstanding balances as at Outstanding balances as at Secured assets HSBC US$2.5 million floating rate 14,550,053,324 20,906,149,635 Unsecured Vietcombank 250 billion floating rate 172,248,908, ,062,066,719 Fixed assets Vietinbank 100 billion 6-month deposit rate+2.5% p.a 44,402,053,071 67,965,800,859 Fixed assets E-Land Asia Holding Pte Ltd (a related party) US$7 million From 0.78% to 0.99% p.a 144,326,000,000 18,932,000,000 Unsecured Far East National Bank US$4 million SIBOR + 1.7% p.a 46,431,440,750 19,892,346,994 Unsecured VIB 60 billion floating rate 47,204,313,697 5,112,233,480 Inventories Sacombank 57 billion floating rate 55,522,495,491 56,796,000,000 Unsecured BIDV 80 billion floating rate 21,391,893,950 - Fixed assets 546,077,158, ,666,597,687 25

28 14 BORROWINGS (continued) (ii) The loans are from local banks obtained by the Group, details are as follows: Outstanding Outstanding Aggregated Credit balances as at balances as at Loan agreement from bankers credit limit term Interest rates Vietnam Development Bank ( VDB ) 12 billion 6 years 3% p.a 9,960,342,843 10,992,342,843 Vietinbank 320 billion 5-8 years 12-month saving accounts plus 253,711,519, ,460,057, % - 4.8% p.a Vietcombank 49,076 million 5-10 years 6-month SIBOR plus1.85% p.a 10,325,412,095 12,310,020,545 Vietcombank US$432,875 5 years 6-month SIBOR plus1.85% p.a 1,486,245,231 3,413,004,164 Vietcombank CHF1,056,000 5 years floating rate 19,227,000,000 20,363,904,000 VIB US$4,669,000 5 years 6-month SIBOR plus 1.90%/2.0% p.a 46,439,596,406 51,285,145,460 BIDV US$1,290, years 6-month SIBOR plus 2.2%/ 2.8% p.a 1,910,194,609 3,475,024,260 Far East National Bank US$5 million 6 years 6-month SIBOR plus 2.0% p.a 32,552,658,580 35,868,867,273 Techcombank 406 miilion 3 years floating rate 180,000, ,800, ,792,968, ,416,165,577 26

29 15 TRADE ACCOUNTS PAYABLE Third parties 175,323,598, ,479,364, TAXES AND OTHER PAYABLES TO THE STATE BUDGET Business income tax 4,934,456,282 24,537,133,881 Import, export duties - 28,038,617 Personal income tax 529,081, ,742,302 Other taxes 2,025, ACCRUED EXPENSES 5,465,563,693 25,104,914,800 Professional fees 627,000, ,446,000 Sales commissions 371,586,066 1,762,861,202 Interest expenses 923,160,614 1,379,100,002 Others 173,467, ,762, OTHER PAYABLES 2,095,214,153 3,890,169,907 Social and health insurance 2,029,144, ,367,799 Dividend payable (Note 23) 31,329,681,400 13,049,491,000 Others 3,427,150,222 2,968,984,247 36,785,975,988 16,231,843,046 27

30 19 OTHER LONG-TERM PAYABLES For the six month period ended For the year ended Beginning of the period/year 37,502,000,000 37,502,000,000 Payment during the period (19,626,000,000) - Ending of the period/year 17,876,000,000 37,502,000,000 This amount represents the increase in value of a number of land lots which were granted to the Company or leased by the Company upon the revaluation of the Company s assets 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. During the period, the Company paid to the State Budget an amount of 19.6 billion to obtain the land use rights for one land lot. 20 DEFERRED INCOME TAX Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes relate to the same taxation authority. The offset amounts are as follows: Deferred tax assets: Deferred tax asset to be recovered after more than 12 months 2,381,433,885 1,943,682,757 Deferred tax asset to be recovered within 12 months 244,404,696 3,006,397,388 2,625,838,581 4,950,080,145 Deferred tax liabilities: Deferred tax liability to be recovered within 12 months (76,919) (445,820,728) 2,625,761,662 4,504,259,417 28

31 20 DEFERRED INCOME TAX (continued) The movement of deferred taxes during the period is as follows: For the six months ended Beginning of period 4,504,259,417 - Income statement charge (1,878,497,755) - Ending of period 2,625,761,662 - Deferred tax assets arise from provisions, accrued expenses and unrealised foreign exchange losses. Deferred tax liabilities arise from unearned revenue. 21 SHARE CAPITAL Number of shares: Ordinary shares Ordinary shares Number of shares registered and issued 44,737,486 43,438,243 Treasury shares (100,450) (100,450) Number of existing shares in issue 44,637,036 43,337,793 During the period, the Company issued 1,299,243 shares as dividend settlement for the year List of major shareholders holding shares of the Company as at 30 June 2011 consists of: Shareholders Number of shares Value % E-Land Asia Holdings Pte Ltd 19,387, ,871,190, Vinatex (*) 4,300,160 43,001,600, Others 20,949, ,497,570, Treasury shares 100,450 1,004,500, ,737, ,374,860, (*) Vinatex is the State shareholder. 29