Deloitte. REVIEWED INTERIM FINANCIAL STATEMENTS PHARMACEUTICAL JOINT STOCK COMPANY. in Socialist Republic of Vietnam)

Transcription

1 Deloitte. IMEXPHARM COMPANY PHARMACEUTICAL JOINT STOCK (Incorporated in Socialist Republic of Vietnam) REVIEWED INTERIM FINANCIAL STATEMENTS For the 6-month period ended 30 June 2017

2 No.4 Street 30/4, Cao Lanh City Dong Thap Province, Vietnam TABLE OF CONTENTS CONTENTS PAGE(S) STATEMENT OF THE BOARD OF GENERAL DIRECTORS 1 REPORT ON REVIEW OF INTERIM FINANCIAL STATEMENTS 2 INTERIM BALANCE SHEET 3-4 INTERIM INCOME STATEMENT 5 INTERIM CASH FLOW STATEMENT 6 NOTES TO THE INTERIM FINANCIAL STATEMENTS 7-25

3 NO.4 Street 30/4, Cao Lanh City Dong Thap Province, Vietnam STATEMENT OF THE BOARD OF GENERAL DIRECTORS The Board of General Directors of Imexpharm Pharmaceutical Joint Stock Company (the "Company") presents this report together with the Company's interim financial statements for the 6-month period ended 30 June THE BOARDS OF MANAGEMENT AND GENERAL DIRECTORS The members of the Boards of Management and General Directors of the Company who held office during the period and to the date of this report are as follows: Board of Management Mr. Nguyen Quoc Dinh Ms. Tran Thi Dao Mr. Vo Huu Tuan Mr. Huynh Van Nhung Mr. Nguyen Quy Son Mr. Tran Anh Tuan Mr. Ngo Minh Tuan Mr. Truong Viet Vu Chairman Vice Chairman Member Member Member Member Member Member Board of General Directors Ms. Tran Thi Dao Mr. Nguyen Quoc Dinh Mr. Huynh Van Nhung Mr. Ngo Minh Tuan Mr. Le Van Nha Phuong Mr. Tran Hoai Hanh General Director Deputy General Director Deputy General Director Deputy General Director Deputy General Director (appointed on 04 January 2017) Chief Accountant BOARD OF GENERAL DIRECTORS' STATEMENT OF RESPONSIBILITY The Board of General Directors of the Company is responsible for preparing the interim financial statements, which give a true and fair view of the financial position of the Company as at 30 June 2017 and of its results and cash flows for the 6-month ended period in accordance with Vietnamese Accounting Standards, accounting regime for enterprises and legal regulations relating to financial reporting. In preparing these interim financial statements, the Board of General Directors is required to: Select suitable accounting policies and then apply them consistently; Make judgments and estimates that are reasonable and prudent; State whether applicable accounting principles have been followed, subject to any material departures disclosed and explained in the interim financial statements; Prepare the interim financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business; and Design and implement an effective internal control system for the purpose of properly preparing and presenting the interim financial statements so as to minimise errors and frauds. The Board of General Directors is responsible for ensuring that proper accounting records are kept, which disclose, with reasonable accuracy at any time, the financial position of the Company and that the interim financial statements comply with Vietnamese Accounting Standards, accounting regime for enterprises and legal regulations relating to interim financial reporting. The Board of General Directors is also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of frauds and other irregularities. =:=:!:..Board of General Directors confirms that the Company has complied with the above ents in preparing these interim financial statements. be:te Boardof neral Directors, 1

4 Deloitte. No. ))1 /VN1A-HC-8C REPORT ON REVIEW OF INTERIM Deloitte Vietnam Company Ltd. 18 th Floor, Times Square Building, 57-69F Dong Khoi Street, Ben Nghe Ward, District 1, Ho Chi Minh City, Vietnam Tel: Fax: FINANCIAL STATEMENTS To: The Shareholders The Boards of Management and General Directors Imexpharm Pharmaceutical Joint Stock Company We have reviewed the accompanying interim financial statements of Imexpharm Pharmaceutical Joint Stock Company (the "Company") prepared on 11 August 2017 as set out from page 3 to page 25, which comprise the interim sheet as at 30 June 2017, the interim income statement and interim cash flow statement for the 6-month period then ended and a summary of significant accounting policies and other explanatory information. The Board of General Directors' Responsibmty for the Interim Financial Statements The Board of General Directors is responsible for the preparation and fair presentation of these interim financial statements in accordance with Vietnamese Accounting Standards, accounting regime for enterprises and legal regulations relating to interim financial reporting, and for such internal control as the Board of General Directors determines is necessary to enable the preparation of interim financial statements that are free from material misstatement, whether due to fraud or error. Auditors' Responsibility Our responsibility is to express a conclusion on the accompanying interim financial statements based on our review. We conducted our review in accordance with Vietnamese Standard on Review Engagements (VSRE) "Review of Interim Financial Information Performed by the Independent Auditor of the Entity". A review of interim financial statements consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Vietnamese Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. 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 interim financial statements do not present fairly, in all material respects, the interim financial position of the Company as at 30 June 2017, and of its interim financial performance and its cash flows for the 6-month period then ended in accordance with Vietnamese Accounting Standards, accounting regime for enterprises and legal regulations relating to interim raf.:ii ng..251,i N JNI HIE LO TI inh Thao Audit Partner Audit Practising Registration Certificate No BRANCH OF DELOITTE VIETNAM COMPANY LIMITED 11 August 2017 Ho Chi Minh City, S.R. Vietnam Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee ("DTTL"), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as "Deloitte Global") does not provide services to clients. Please see for a more detailed description of DTTL and its member firms. 2

5 FORM BOla-ON NO.4 Street 30/4, Cao Lanh City Issued under Circular No.200/2014/TI-BTC Dong Thap Province, Vietnam dated 22 December 2014 of the Ministry of Finance INTERIM BALANCE SHEET As at 30 June 2017 Unit: ASSETS Codes Notes Opening A. CURRENTASSETS 100 1,088,311,248, ,079,359,147 I. Cash and cash equivalents ,771,905, ,127,453, Cash ,771,905, ,127,453, Cash equivalents ,000,000,000 II. Short-term financial investments ,528,335,260 15,392,915, Trading securities ,235,578,160 6,235,578, Provision for impairment (2,707,242,900) (2,842,662,900) of trading securities 3. Held-to-maturity investments ,000,000,000 12,000,000,000 III. Short-term receivables ,975,565, ,177,121, Short-term trade receivables ,293,663, ,338,284, Short-term advances to suppliers ,425,017, ,056,182, Short-term loan receivables ,550,000, Other short-term receivables ,675,286,141 35,082,573, Provision for short-term doubtful ( 15,968,401,513) ( 15,299,917,969) debts IV. Inventories ,739,619, ,563,410, Inventories ,570,042, ,661,420, Provision for devaluation of 149 (830,423,194) (1,098,009,966) inventories V. Other short-term assets 150 8,295,823,335 3,818,458, Short-term prepayments ,619, ,584, Value added tax deductibles 152 6,551,170,568 2,495,941, Taxes and other receivables ,401,032, ,933,209 from the State budget B. NON-CURRENTASSETS ,278,446, ,765,676,610 HI iy I. Long-term receivables ,244,740 80,244,740 lit 1. Other long-term receivables ,244,740 80,244,740 TI ;111 II. Fixed assets ,394,256, ,023,540,401 -/ 1. Tangible fixed assets ,916,184, ,269,755,019 C :;;; - Cost ,823,718, ,505,024,840 - Accumulated depreciation 223 (297,907,533,542) (285,235,269,821) 2. Intangible assets ,478,071,476 70,753,785,382 - Cost ,476,453,094 88,196,453,094 - Accumulated amortisation 229 (17,998,381,618) (17,442,667,712) III. Long-term assets in progress ,794,732,304 76,033,490, Construction in progress ,794,732,304 76,033,490,844 IV. Long-term financial investments ,333,504,700 60,916,689, Investments in associates ,868,876,700 49,581,576, Equity investments in other entities ,526,668,000 11,526,668, Provision for long-term 254 (262,040,000) (191,555,550) 4. Held-to-maturity investments ,000,000 V. Other long-term assets ,675,708,859 27,711,711, Long-term prepayments ,675,708,859 27,711,711,475 TOTALASSETS (270= ) 270 1,604,589,695,560 1,155,845,035,757 Ol <, The accompanying notes are an integral part of these interim financial statements 3

6 FORM B Ola-DN NO.4 Street 30/4, Cao Lanh City Issued under Circular NO.200/2014/TI-BTC Dong Thap Province, Vietnam dated 22 December 2014 of the Ministry of Finance INTERIM BALANCE SHEET (Continued) As at 30 June 2017 Unit: RESOURCES Codes Notes Opening C. LIABILITIES ,152,577, ,928,625,146 I. Current liabilities ,687,205, ,130,931, Short-term trade payables ,957,941,235 88,702,890, Short-term advances from customers ,545, ,447, Taxes and amounts payable to the ,645,511,230 14,452,346,308 State budget 4. Payables to employees 314 3,460,491,866 18,858,730, Short-term accrued expenses ,869,448,987 68,530,614, Short-term unearned revenue ,237,037, Other short-term payables ,565,760,566 2,478,972, Short-term loans and obligations ,000,000,000 under finance leases 9. Bonus and welfare funds ,469,190 4,437,929,814 II. Long-term liabilities ,465,371,694 21,797,693, Other long-term payables ,000,000 77,000, Scientific and technological ,415,371,694 21,720,693,918 development fund D. EQUITY 400 1,359,437,118, ,916,410,611 I. Owners' equity ,359,437,118, ,916,410, Owners' contributed capital ,781,510, ,426,460,000 - Ordinary shares carrying voting 411a 429,781,510, ,426,460,000 rights 2. Share premium ,241,079, ,713,719, Other owners' capital 414 2,420,789,142 2,420,789, Treasury shares 415 ( 123,600,000) (123,600,000) 5. Investment and development fund ,916,890, ,924,234, Retained earnings ,200,449,241 91,554,807,500 - Retained earnings accumulated 421a 400,481, ,462,853 to the prior year end - Retained earnings of the current 421b 59,799,967,388 91,159,344,647 period/year TOTAL RESOURCES (440 = ) 440 1,604,589,695,560 1,155,845,035, Duong Hoang Vu Preparer Tran Hoai Hanh Chief Accountant guyen Quoc Dinh Deputy General Director 11 August 2017 The accompanying notes are an integral part of these interim financial statements 4

7 FORM B 02a-DN NO.4 Street 30/4, Cao Lanh City Issued under Circular No.200/2014/TI-BTC Dong Thap Province, Vietnam dated 22 December 2014 of the Ministry of Finance INTERIM INCOME STATEMENT For the 6-month period ended 30 June 2017 Unit: ITEMS Codes Notes Current period 1. Gross revenue from goods sold and services rendered ,728,440, ,615,734, Deductions 02 21,582,085,278 22,509,972, Net revenue from goods sold and ,146,355, ,105,762,110 services rendered (10=01-02) 4. Cost of sales ,759,915, ,491,148, Gross profit (20=10-11) ,386,439, ,614,613, Financial income ,893,280,968 6,135,309, Financial expenses ,450,238,461 5,444,468,184 - In which,' Interest expense ,336,250 55,154, Selling expenses ,368,203,328 89,476,903, General and administration expenses ,784,597,278 25,406,427, Operating profit 30 75,676,681,811 51,422,124,190 (30= 20+ (21-22 )-(25+ 26» 11. Other income ,807, ,797, Other expenses 32 1,369,904,800 1,286,892, Loss from other activities 40 ( 1,052,096,990) (818,095,157) (40=31-32) 14. Accounting profit before tax 50 74,624,584,821 50,604,029, Current corporate income tax expense ,824,617,433 9,984,849, Net profit after corporate income tax 60 59,799,967,388 40,619,179,226 (60=50-51) 17. Basic earnings per share ,466 1,085,Lf/- Duong Hoang Vu Preparer Tran Hoai Hanh Chief Accountant The accompanying notes are an integral part of these interim financial statements 5

8 FORM B 03a-DN No.4 Street 30/4, Cao Lanh City Issued under Circular No.200/2014/TT-BTC Dong Thap Province, Vietnam dated 22 December 2014 of the Ministry of Finance INTERIM CASH FLOW STATEMENT For the 6-month period ended 30 June 2017 Unit: ITEMS Codes Current period I. CASH FLOWS FROM OPERATING ACTIVITIES 1. Profit before tax 01 74,624,584,821 50,604,029, Adjustments for: Depreciation and amortisation of fixed assets 02 16,043,038,831 19,966,147,604 Provisions ,961, ,996,851 Foreign exchange loss/(gain) 04 (439,487,099) 229,500,547 Gain from investing activities 05 (8,704,366,610) (5,069,744,722) Interest expense ,336,250 55,154, Operating profit before movements in working capital 08 82,119,067,415 66,086,083,752 Decrease in receivables ,084,231,022 58,213,665,640 (Increase)/Decrease in inventories 10 (67,908,622,882) 11,893,277,389 Decrease in accounts payable 11 ( 11,397,628,628) (26,415,064,809) Increase in prepaid expenses 12 (2,858,032,992) (3,382,535,128) Decrease in trading securities ,907,520 Interest paid 14 (259,336,250) (55,154,439) Corporate income tax paid 15 (16,084,125,575) (11,936,813,276) Other cash outflows 17 (7,212,570,872) ( 10,654,285,156) Net cash generated by operating activities 20 88,482,981,238 84,133,081,493 II. CASH FLOWS FROM INVESTING ACTIVITIES 1. Acquisition of fixed assets and investment in construction in progress 21 (253,204,654,180) (69,309,932,042) 2. Proceeds from sale, disposal of fixed assets 22 61,136, ,000, Cash outflow for lending, saving in bank 23 (270,200,000,000) ( 1,000,000,000) 4. Cash recovered from lending ,000,000,000 x'<s 5. Investments in associates 25 (4,287,300,000) /I 6. Interest earned, dividends and profits 27 2,853,198,023 4,508,231,330 Net cash used in investing activities 30 (524,777,619,793) 34,499,299,288 RAe 0 III. CASH FLOWS FROM FINANCING ACTIVITIES 1. Proceeds from owners' contributed capital ,195,685, Proceeds from borrowings 34 20,000,000, Dividends and profits paid 36 (31,249,711,200) (57,885,292,000) Net cash generated/(used in) by financing activities ,945,973,800 (57,885,292,000) Net decrease in cash during the period (50= ) Cash and cash equivalents at the beginning of the period 50 (42,348,664,755 ) 60,747,088, ,127,453,686 87,841,659,460 Effects of changes in foreign exchange rates 61 (6,883,928) (43,082,682) v, Cash and cash equivalents the period (70= ) at the end of 70 57,771,905, ,545,665, Preparer Tran Hoai Hanh Chief Accountant =:=;::;:guyen Quoc Dinh Deputy General Director 11 August 2017 The accompanying notes are an integral part of these interim financial statements 6

9 IMEXPHARM PHARMACEUTICALJOINT STOCKCOMPANY FORM B 03a-DN NO.4 Street 30/4, Cao Lanh City Issued under Circular No.200/2014/TI-BTC Dong Thap Province, Vietnam dated 22 December 2014 of the Ministry of Finance NOTES TO THE INTERIM FINANCIAL STATEMENTS These notes are an integral part of and should be read in conjunction with the accompanying interim financial statements 1. GENERALINFORMATION Structure of ownership Imexpharm Pharmaceutical Joint Stock Company (the "Company"), formerly known as Dong Thap Pharmaceautical Union incorporated under Decision No. 284/TCCQ dated 28 September 1983 issued by the Health Department of Dong Thap Province, was transformed from a state enterprise into a joint stock company under Business Registration Certificate No dated 01 August 2001 first issued by the Department of Planning and Investment of Dong Thap Province and subsequent amendments certificates thereafter with the latest amendment (the twenty-sixth amendment) dated 15 June The Company's stocks are listed in Ho Chi Minh Stock Exchange under Decision No. 76/UBCK-GPNY dated 04 December 2006 with code IMP. The number of employees of the Company as at 30 June 2017 was 1,022 (as at 31 December 2016: 1,020). Principal activities The principal activities of the Company are manufacturing pharmaceutical products, processing pharmaceutical materials, trading, importing and exporting pharmaceutical products, medical equipment and supplies, chemicals, materials for medicine manufacturing and packaging, chemicals used for sterilization or disinfection in humans (except for those listed under Point A, Part II, Appendix No. 04 accompanying Decision No. 10/2007/QD-BTM dated 21 May 2007 issued by Ministry of Trade, currently known as Ministry of Industry and Trade); other activities include trading cosmetics; growing traditional medicines; trading foods, functional foods, beverages, alcoholic drinks, fizzy drinks; manufacturing milks; financial activities; producing functional foods, nutritional food; providing storage system services for medicine, pharmaceutical materials; retailing medicines, medical equipment, cosmetics and hygiene products in specialized stores. 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 Company has 24 branches and 4 associates as at 30 June Details of associates are disclosed in Note = '2500 NHJ NG' /lelll on r N Disclosure of information comparability in the financial statements The comparative figures of the sheet are the figures of the Company's audited financial statements for the year ended 31 December The comparative figures of the income statement and cash flow statements are the figures of the reviewed interim financial statements for the 6-month period ended 30 June ACCOUNTING CONVENTION AND FINANCIAL YEAR Accounting convention The accompanying interim 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 interim financial reporting. The accompanying interim 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. Financial year The Company's financial year begins on 1 January and ends on 31 December. The interim interim financial statements are prepared for the period from 1 January to 30 June annually. 7

10 NOTES TO THE INTERIM FINANCIAL STATEMENTS (Continued) FORM B 09a-DN 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The significant accounting policies, which have been adopted by the Company in the preparation of these financial statements, are as follows: Estimates The preparation of financial statements in conformity with Vietnamese Accounting Standards, accounting regime for enterprises and legal regulations relating to interim financial reporting requires the Board of General 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 financial statements and the reported amounts of revenues and expenses during the period. Although these accounting estimates are based on the Board of General Directors' best knowledge, actual results may differ from those estimates. Financial instruments Initial recognition Financial assets: At the date of initial recognition, financial assets are recognized 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, short-term and long-term financial investments. Financial liabilities: At the date of initial recognition, financial liabilities are recognized at cost plus transaction costs that are directly attributable to the issue of the financial liabilities. Financial liabilities of the Company comprise trade, other payables, accrued expenses and borrowing. 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 Trading securities Trading securities are those the Company holds for trading purpose. Trading securities are recognized from the date the Company obtains the ownership of those securities and initially measured at the fair value of payments made at the transaction date plus directly attributable transaction costs. In subsequent periods, investments in trading securities are measured at cost less provision for impairment of such investments. Provision for impairment of investments in trading securities is made in accordance with prevailing accounting regulations. Held-to-maturity investments Held-to-maturity investments comprise investments that the Company has the positive intent or ability to hold to maturity, including term deposits with the terms over 3 months. Post-acquisition interest income from held-to-maturity investments is recognized in the income statement on accrual basis. 8

11 NOTES TO THE INTERIM FINANCIAL STATEMENTS (Continued) FORM B 09a-DN 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 associates are initially recognized at cost including acquisition price and direct transaction cost (if any). The Company's share of the net profit of the investee after acquisition is recognized in the income statement. Other distributions received other than such profit share are deducted from the cost of the investments as recoverable amounts. Equity investments in other entities Equity investments in other entities represent the Company's investments to the entities which the Company has no control, joint control or significant influence. Investments are carried at cost less provision for impairment. Provisions for impairment of investments are made in accordance with Circular No. 228/2009/TT-BTC dated 7 December 2009 issued by the Ministry of Finance on "Guiding the appropriation and use of provisions for devaluation of inventories, loss of financial investments, bad debts and warranty for products, goods and construction works at enterprises", Circular No. 89/2013/TT-BTC dated 28 June 2013 by the Ministry of Finance amending and supplementing Circular No. 228/2009/TT-BTC and 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 cweiqhted 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 substandard inventories and for those which have costs higher than net realisable values as at the interim sheet date. Tangible fixed assets and depreciation Tangible fixed assets are stated at cost less accumulated depreciation. The costs of purchased tangible fixed assets comprise their purchase prices and any directly attributable costs of bringing the assets to their working condition and location for their intended use. Tangible fixed assets are depreciated using the straight-line method over the following estimated useful lives: Buildings and structures Machinery and equipment Motor vehicles Office equipment Loss or gain resulting from sales and disposals of tangible fixed assets is the difference between profit from sales or disposals of assets and their residual values and is recognised in the interim income statement. 9

12 NOTES TO THE INTERIM FINANCIAL STATEMENTS (Continued) FORM B 09a-DN Leasing 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. Intangible assets and amortization Intangible assets represent land use rights, copyright and computer software that are stated at cost less accumulated amortization. Indefinite land use rights are not amortized in accordance with prevailing regulations. Definite land use rights are amortized using the straight-line method over the duration specified in the land use right certificate. Copyright and computer software are amortized using the straight-line method within 3 years. Construction in progress Properties in the course of construction or production for administrative purposes are carried at cost. Cost includes professional fees, and for qualifying assets and other costs dealt with in accordance with the Company's accounting policy. Depreciation of these assets, on the same basis as other assets, commences when the assets are ready for their intended use. Prepayments Prepayments are expenses which have already been paid but relate to results of operations of multiple accounting periods, including land rentals, store rental and other types of prepayments. Prepaid land rentals are charged to the income statement using the straight-line over the lease term. method Other types of long-term prepayments comprising store rental are allocated to the interim income statement using the straight-line method over the lease term. Payable provisions Payable provisions are recognized 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 General Directors' best estimate of the expenditure required to settle the obligation as at the sheet date. Unearned revenue.'il ;ON NH/j LO T -- TP.I Unearned revenue is the revenue corresponding to the value of goods and services to be provided free of charge or subject to sales discount under the traditional customer program. The Company recognizes unearned revenue in accordance with the portion of its liabilities that might be incurred in the future. Revenue recognition Revenue from the sale of goods is recognized 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. 10

13 NOTES TO THE INTERIM FINANCIAL STATEMENTS (Continued) FORM B 09a-ON Revenue of a transaction involving the rendering of services is recognized 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 recognized in each period by reference to the percentage of completion of the transaction at the 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 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 payment has been established. is recognized when the Company's right to receive Revenue arising from the traditional customer program is recognized as the total amount receivable or collected minus the fair value of the goods or services to be provided free of charge or subject to sales discount. The value of the goods or services to be provided free of charge or subject to sales discount is recognized as unearned revenue. Upon the program end, if the customers fail to meet the prescribed conditions and are not entitled to free goods or services of charge or sales discount, the unearned revenue shall be transferred to the revenue from goods sold and services rendered in the year. When a customer meets the prescribed conditions under the program and in case the Company directly provides goods or services free of charge or at a discount to the customer: the unearned revenue corresponding to the fair value of the goods or services to be provided free of charge or a discount to the customer is recognized as revenue from goods sold and services rendered when the customer has received the goods or services free of charge or at a discount as prescribed. When a customer meets the prescribed conditions under the program and in case the third party is obliged to provide goods or services free of charge or at a discount to the customer: if there is no agency agreement between the Company and the third party, when the third party provides goods or services free of charge or at a discount to the customer, the unearned revenue is transferred to the revenue goods sold and services rendered. If if there isan agency agreement between the Company and the third party, only the difference between the relevant unearned revenue recorded and the amount payable to the third party is recognized as revenue. The amount payable to the third party is treated as a payable. Foreign currencies Transactions arising in foreign currencies are translated at exchange rates ruling at the transaction date. The s of monetary items denominated in foreign currencies as at the sheet date are retranslated at the exchange rates on the same date. Exchange differences arising from the translation of these accounts are recognized in the interim income statement. Scientific and technological development fund Scientific and technological development fund is appropriated to generate fund for scientific and technological development activities of the Company. The fund is set up on the basis of maximum 10% of taxable income before corporate income tax calculation and recognized in operation cost during the period. Taxation 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 profit before tax as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other periods (including loss carried forward, if any) and it further excludes items that are never taxable or deductible. 11

14 NOTES TO THE INTERIM FINANCIAL STATEMENTS (Continued) FORM B 09a-DN Deferred tax is recognized 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 sheet liability method. Deferred tax liabilities are generally recognized for all temporary differences and deferred tax assets are recognized to the extent that it is probable that taxable profit will be available against which deductible temporary differences can be utilized. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset realized. 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 tax authority and the Company intends to settle its current tax assets and liabilities on a net basis. The determination of the tax currently payable 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. Funds approriation Investment and development fund Investment and development fund is appropriated from the profit after tax of the Company as proposed by the Board of Management and approved by shareholders at the General Meeting of Shareholders. This fund is approriated for expansion or investment activities of the Company. Bonus and welfare funds Bonus and welfare funds are appropriated from the profit after tax of the Company as proposed by the Board of Management and approved by shareholders at the General Meeting of Shareholders. This fund is approriated for reward and incentives, benefits and raising general welfare for the Company's management and public employees. 4. CASH AND CASH EQJ)IVALENTS Opening Cash on hand Demand deposit Cash equivalent 2,036,027,984 35,735,877,019 2,879,967,666 97,247,486,020 57,771,905, ,127,453,686 Cash equivalent at 30 June 2017 comprise term deposits with the terms 3 months at An Binh Bank - Dong Thap Branch, of which interest rate is 5.5% annually. 5. TRADING SECURITIES Cost Fair Value 'llill 'llill Provision 'llill Opening Cost Fair Value 'llill 'llill Provision 'llill 2,0,0,0 _:-::-:::--:-=---::-:::-::--::-::--=- Mekophar Chemical Pharmaceutical Joint-Stock Company Bach Tuyet Cotton Corporation DHGPharma Corporation OPCPharmaceutial Joint Stock Company--=16=,,"6, 965,,:,260 -=--=,166.:".:96,=!5.260=-==-==-=-=- ----=--=166.:!::96!'::'5.260=_='166.96'=!5. 260::-::-,=-::-=-=-=-=- 6..::,23::.:5",. 5::.,:7""8 1""60"--3"'.""39""'2"'.9""1""5 2""60"--,2"".8",4:;.,:2",,,,. 6""6.:;.c2.,,,9 0= HELD-TO-MATURITY INVESTMENTS Short-term and long-term held-to-maturity investments at 30 June 2017 comprise term deposits with the terms 6-18 months at commercial banks, of which interest rate is 6,2-7% annually (as 31 December 2016: 6.9% annually). 12

15 NOTES TO THE INTERIM FINANCIAL STATEMENTS (Continued) FORM B 09a-DN 7. SHORT-TERM TRADE RECEIVABLES Opening Agimexpharm Pharmaceutical Joint Stock Compa S.Pharm Pharmaceutical Joint Stock Company Receivables from other customers 8,498,768,175 1,041,069, ,753,825, ,293,663,001 11,485,487,108 1,925,733, ,927,063, ,338,284,023 Provision for doubtful debts are made in accordance with Circular 228/2009/TT -BTC and are presented in Note SHORT-TERM ADVANCES TO SUPPLIERS Opening Hoa Viet Mechanical Refrigeration Electrical Co, Ltd. Rieckermann Gmbh Joy-Maitreya Int'l Ltd. Others 55,597,471,500 4,036,734,800 48,232,591,368 46,738,971,785 34,448,116,725 21,356,168,625 67,146,838,2 70 _--,4=8.L:.' 9:...=2,--,4:...<.:,3=..;0=-.:6::...< 2=7: ,425,017, ,056,182, SHORT-TERM LOAN RECEIVABLES Short-term loan receivables at 30 June 2017 comprise lending to employees of the Company with the terms 12 months, of which interest rate is 7.5% annually. 10. OTHER SHORT-TERM RECEIVABLES Opening Advances to employees Receivables from employees Accrued interest income Others 12,064,815,493 12,672,021,229 9,437,195,800 12,935,584,223 5,939,427,223 36,225,000 7,2 33,847,62 5 -=9...L.,4-,-,3=-.:8::...<.,.:...74-,-,2=,=8-=..9.= ,675,286,141 35,082,573, PROVISION FOR SHORT-TERM DOUBTFUL DEBTS Cost Provision Recoverable amount ll..tid. ll..tid. ll..tid. Opening Cost Provision Recoverable amount ll..tid. ll..tid. ll..tid. Thuan Hoa Store Ministry of Health DTNPharma Co., Ltd. Thien Kim II Store Store No. 64 Khanh Son Health Center (Khanh Hoa) Others 924,204, ,560, ,042, ,917,996 1,167,648, ,204, ,560, ,829, ,297, ,234, ,212, ,620, ,413,882 1,765,007,419 1,765,007,419 27, , ,148 16, ,437 33,148,308,334 15,968,401,513 17,179,906, ,204, ,560, ,042, ,917,996 1,167,648, ,430, ,560, ,021, ,458, ,353,955 1,915,188,437 1,522,383,709 26,828,200,525 10, ,602 33,758,244,732 15,299,917, ,773, ,021, ,458, ,294, ,804,728 16,138,490,923 18,458,326, INVENTORIES Cost Provision Jl.N.!2 Opening Cost Provision Goods in transit Raw materials Work in progress Finished goods Merchandises Spare parts 37,883,315, ,004,309,997 (830,423,194) 21,350,341, ,213,428,096 6,334,564,635 2,784,082, ,570,042,918 (830,423,194) 23,200,408, ,381,978,623 (1,098,009,966) 19,133,768,116 70,599,456,513 10,090,513,617 2,255,294, ,661,420,036 (1,098,009,966) 13

16 NOTES TO THE INTERIM FINANCIAL STATEMENTS (Continued) FORM B 09a-DN 13. PREPAYMENTS a. Short-term prepayments Advertising expense Others b. Long-term prepayments Land rental Office interior Branch 2 - Ho Chi Minh City renovation expense Insurance premium for fight, explosion and risks PMU3 Project Binh Duong Factory Tools and suppliers Renovation expense of Non workshop's cooling system Vinh Loc High-tech Factory Maintenance fee of Xuong Non Betalactam Consulting fee for setting up the payroll system Binh Duong High-Tech Factory Project Fees for monitoring and speeding up documentation verification Renovation & repairing expense of Vinh Loc Branch Others Opening 110,000, ,619, ::-4-',-4'::"9'-'::, 5::::,84:...L,=-19:=...c1 343,619, ;.4..;.9;:;"'1,.;;5;.;;8;.;4., 19;;,;1 12,513,360,973 5,174,024, ,921, ,039,675 2,648,179,120 2,634,429, ,604,221 1,080,000, ,422, ,111,110 2,260,000, ,404,041 12,689,559,591 5,034,373, ,426, ,947,957 2,648,179, ,564, ,223,555 1,080,000, ,443, ,444,444 2,220,000, ,161, ,698,232 1,945,514, '7...;:8:..::2'-'"', 3::...;8::...;7...,=-10::...;7,- 30,675,708,859 27,711,711, TAXES AND OTHER RECEIVABLES FROM/PAYABLES TO THE STATE BUDGET Payable Paid Opening during the year during the year a. Receivables Personal income tax 872,933,209 2,709,663,869 3,237,763,628 1,401,032,968 for employee 872,933,209 2,709,663,869 3,237,763,628 1,401,032,968 b. Payables "\),\25 ::.-- Value added tax 4,109,686,001 9,400,472,519 13,431,772,852 78,385,668 CHI II Corporate income tax 9,605,720,489 14,824,617,433 16,084,125,575 8,346,212,347 CONj Personal income tax 706,579,780 3,810,055,886 3,311,894,925 1,204,740,741 HNHfE for customers, EtO, shareholders Import-export tax 4,232,203,832 4,216,031,358 16,172,474 ITI Others 30,360,038 1,390,777,860 1,421,137,898 '--- rp.. 14,452,346,308 33,658,127,530 38,464,962,608 9,645,511,230 :=; 15. INCREASE, DECREASE TANGIBLE FIXED ASSETS Buildings and Machinery and Motor structures equipment vehicles 'll.jiid. 'll.jiid. 'll.jiid. Office equipment 'll.jiid. Total 'll.jiid. COST Opening 181,062,010, ,609,129,497 71,996,951,039 16,836,933, ,505,024,840 Purchases 5,884,099,231 1,581,118,500 2,867,154,545 2,079,492,763 12,411,865,039 Transfer from CIP 2,673,954,550 95,222, ,045,818 3,765,222,868 Disposals (2,858,394,538) (2,858,394,538) 189,620,064, ,427,075,959 75,860, ,916,426, ,823,718,209 ACCUMULATED DEPRECIATION Opening 86,282,552, ,542,846,791 43,918,069,615 7,491,800, ,235,269,821 Charge for the period 4,281,131,655 6,505,882,394 3,340,573,613 1,403,070,597 15,530,658,259 Disposals (2,858,394,538) (2,858,394,538) 90,563,684, ,334,647 47,258,643,228 8,894, ,907,533,542 NET BOOK VALUE 99,056,379,793 62,236,741,312 28,601,508,174 10,021,555, ,916,184,667 Opening 94,779,457,667 67,066,282,706 28,078,881,424 9,345,133, ,269,755,019 The cost of the Company's tangible fixed assets as at 30 June 2017 includes 192,513,276,194 (as at 31 December 2016: 111,260,219,611) of assets that have been fully depreciated but are still in use. 14

17 NOTES TO THE INTERIM FINANCIAL STATEMENTS (Continued) FORM B 09a-DN 16. INCREASES, DECREASES INTANGIBLE ASSETS Land use rights Copyright Computer software Other Total COST Opening Purchases 74,049,435, ,712,823 13,402,305,076 88,196,453,094 1,500,000,000!...:780,000,000 2,280,000,000 75,549,435, ,712,823 13,402,305, ,000,000 90,476,453,094 ACCUMULATED AMORTISATION Opening 4,492,530, ,712,823 12,205,424,424 17,442,667,712 Charge for the period 264,266, ,114,072 43,333, ,713,906 4,756,796, ,712,823 _12c.,453,,,,,538,4=96 -=43,,-,,333,33=4 17,998,381,618 NET BOOK VALUE Closing 70,792,638,230 _ 948,766, ,666,666 72,478,071,476 Opening 69,556,904,730 _ 1,196,880,652-70,753,785, LONG-TERM CONSTRUCTION IN PROGRESS Closing 'lli':ill Opening 'lli':ill Can Tho branch's office Purchase of fixed assets Binh Duong high-tech pharmaceutical factory Others 1,563,795,454 1,563,795,454 84,751,758,279 41,190,469,937 59,960,820,122 33,096,709,090 1,518,358,449 =-:182=.,.,=!.5=.:16, ,794,732,304 76,033,490, INVESTMENTS IN ASSOCIATES Cost Provision Opening Cost Provision Gia Dai Pharmaceutical Company Limited Agimexpharm Pharmaceutical Joint Stock Company Spharm Pharmaceutical Joint Stock Company Dong Thap Muoi Conservation Research and Development of Medicinal 182,000,000 (182,000,000) 182,000,000 (182,000,000) 36,044,396,700 15,302,480,000 36,044,396,700 11,015,180,000 2,340,000,000 2,340,000,000 53,868,876,700 (182,000,000) 49,581,576,700 (182,000,000) Name of associates Gia Dai Pharmaceutical Company limited Agimexpharm Pharmaceutical Joint Stock Com pany Spharm Pharmaceutical Joint Stock Company Dong Thap Muoi Research Conservation and Development Pharmaceutical Joint Stock Company Place of Proportion of incorporation ownership Proportion of voting and operation interest power held Principal activity Ho Chi Minh 26.00% 26.00% Manufacturing and trading pharmaceutical products An Giang 33.99% 33.99% Manufacturing and trading pharmaceutical products Soc Trang 27.47% 27.47% Manufacturing and trading pharmaceutical products Dong Thap 20.00% 20.00% Researching, conserving and developing traditional medicine 19. EQUITY INVESTMENTS IN OTHER ENTITIES Closing Opening Central Pharmaceutical Joint Stock Company - No.25 TV.Pharm Pharmaceutical Joint Stock Company Vidipha Central Pharmaceutical Joint Stock Company Saigon Thuong Tin Commercial Joint Stock Bank Danang Pharmaceutical Medical Equipment Joint Stock Com pany 114,550, ,428, ,000, ,690,000 10,200,000, ,550, ,428, ,000, ,690,000 10,200,000,000 11,526,668,000 11,526,668,000 As at 30 June 2017, according to Circular 228/2009/TT-BTC, Company make provision of 80,040,000 for the investment in Central Pharmaceutical Joint Stock Company - No.25 (as at 31 December 2016: ) 15

18 NOTES TO THE INTERIM FINANCIAL STATEMENTS (Continued) FORM B 09a-DN 20. SHORT-TERM TRADE PAYABLES Opening a) Short-term trade payables: Novartis (Singapore) PTE Alcapharm B. V Hoa Viet Mechanics & Electronics Other suppliers Co. Ltd 18,272,264,224 35,326,280,975 13,061,650,000 51,498,613, ,158,808,419 37,446,394,833 14,344,682,400 18,150,000 36,603,025,233 88,412,252,466 b) Trade payables to related parties Agimexpharm Pharmaceutical Joint Stock Company S.pharm Pharmaceutical Joint Stock Company 5,799,132,816 5,799,132, ,638, ,638, ,957,941,235 88,702,890,996 All short-term trade payable s were able to be paid off as at 30 June 2017 and 31 December SHORT-TERM ACCRUED EXPENSES Closing VNP Opening Royalty fee Accrued selling expenses Others 13,721,513,967 24,507,528,503 6,640,406,517 44,869,448, ,918,613,998 43,794,265,351 9,817,735,023 68,530,614, SHORT-TERM UNEARNED REVENUE Short-term unearned revenue is the revenue corresponding to the value of goods and services subjected to discounts for customers in the traditional customer programs that the Company has not carried out at the end of the period. 23. OTHER SHORT-TERM PAYABLES Closing 'ind. Opening 'ind. Payables to the State budget Short-term deposits received Others 536,881, ,000,000 1,878,878,660 2,565,760, ,381, ,000,000 1,522,590,927 2,478,972, SHORT-TERM LOANS AND OBLIGATIONS UNDER FINANCE LEASES Short-term loan as at 30 June 2017 represent unsecured loan from Saigon Hanoi Bank - Dong Thap Branch bearing the interest rate 6.8% annually, with the term 21 days from 16 June 2017 to 06 July SCIENTIFIC AND TECHNOLOGICAL DEVELOPMENT FUND Current period Y'.N.P Opening Additions Utilisation 21,720,693,918 (1,305,322,224) 20,415,371,694 29,317,700,576 14,000,000,000 (21,597,006,658) 21,720,693,918 16

19 NOTES TO THE INTERIM FINANCIAL STATEMENTS (Continued) FORM B 09a-DN 26. OWNER'S EQUITY Details of the Company's par value and shares are as folows: CIosinq baiance O-"p-,=e,,-!n.:.:i n.:..:q,,----,=,b-,=,a-,-,i a:..:.n-,-,c=e Number of authorized shares Number of issued and fully paid shares Number of outstanding shares in circulation Treasury shares Parvalue () 42,978,151 28,942,646 42,978,151 28,942,646 42,967,851 28,932,346 10,300 10,300 =--=10,000===========10,000 The Company has one class of ordinary share which carries no right to fixed income with par value of 10,000/share. The shareholders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at the Company's shareholders' meetings. All shares rank equally with regard to the Company's residual assets. According to Resolution No. 20/DHQT-IMEX dated 26 April 2016 by Annual General Shareholder's meeting of Imexpharm Pharmaceutical Joint Stock Company, the General shareholders approved the issuance of 10,129,793 shares with the par value is 10,000 / share to increase the capital contribution of the owner. In which, a) 1,447,000 shares were issued under the Employee Stock Option Program ("ESOP") and the Company has been approved by the State Securities Commission of Vietnam in the Official Letter No. 946/UBCK-QLPH on 23 February The Company has completed the issuance of 1,447,000 shares in accordance with the Official Letter No. 71/IMEX on the Report of share issuance to the company's employees on 15 March b) 8,882,793 shares were issued in the form of shares to existing shareholders at a ratio of 10:3 and the Company has been approved by the State Securities Commission of Vietnam in the Official Letter No. 79/GCN-UBCK on 01 December The Company has completed the issuance of 8,662,793 shares in accordance with the Official Letter No. 44/IMEX on the Report of share issuance to increase share capital on 28 February According to Resolution No. 26/NQ-IMEX approved on 15 April 2017 at the General Shareholder's Meeting of Imexpharm Pharmaceutical Joint Stock Company, Company approved the 2016 profit after tax distribution in which dividends under bonus issue is 3,905,712 shares at at ratio of 10:1 As at 30 June 2017, Company completed the additional issuance of 14,035,505 shares above. Actual charter capital contributed by the shareholders as at 30 June 2017 and 31 December 2016 was as follows: Share % Capital Opening Share % Capital Vietnam Pharmaceutial Corporation 9,830, % 98,304,590,000 6,874, % 68,744,470,000 Balestrand Umited 2,522, % 25,225,600,000 1,764, % 17,640,290,000 Franklin Templeton Investment - 3,513, % 35,132,520,000 2,456, % 24,568,200,000 Templeton Frontier Markets Fund Kwe Beteiligungen AG 4,345, % 43,453,720,000 2,382, % 23,821,300,000 Pha No Pharmaceutical Joint Stock 2,894, % 28,946,580,000 2,631, % 26,311,600,000 Company Others 19,871, % 198,718,500,000 12,834, % 128,340,600,000 42,978, /0 429,781,510,000 28,942, /0 289,426,460,000 17

20 IMEXPHARM PHARMACEUTICAL JOINT StOCK COMPANY NOTES TO THE FINANCIAL STATEMENTS (Continued) FORM B 09a-DN Movement in owners equity: Owner's Other owner's I nvestment and contributed capital Share premium capital Treasury shares development fund Retained earnings Total Y:JiQ 'iiiq Y:JiQ Y:JiQ For the 6-month period ended 30 June 2016 As at 01/01/ ,426,460, ,733,719,049 2,420,789, ,200,344,467 85,049,695, ,831,008,216 Profit for the period 40,619,179,226 40,619,179,226 Dividends declared (57,885,292,000) (57,885,292,000) Fund appropriation 22,723,890,453 (25,842,398,378) (3,118,507,925) Remuneration to the (926,542,327) (926,542,327) As at 30/6/ ,426,460, ,733,719,049 2,420,789, ,924,234,920 41,014,642, ,519,845,190 For the 6-month period ended 30 June 2017 As at 01/01/ ,426,460, ,713,719,049 2,420,789,142 (123,600,000) 254,924,234,920 91,554,807, ,916,410,611 Share issuance 101,297,930, ,891,755, ,195,685,000 Profit for the period 59,799,967,388 59,799,967,388 Dividends by cash (31,249,711,200) (31,249,711,200) Dividends by share 39,057,120,000 (39,057,120,000) Fund appropriation 17,696,779,643 (19,835,901,001) (2,139,121,358) Bad debts written off (6,704,123,874 ) (6,704,123,874 ) Remuneration to the (1,011,593,446) (1,011,593,446) Other (370,394,695) (370,394,695) As at 30/6/ ,781,510, ,241,079,354 2,420,789,142 (123,600,000) 265,916,890,689 60,200,449,241 1,359,437,118,426 According to Resolution No. 26/NQ-IMEX approved on 15 April 2017 at the General Shareholder's Meeting of Imexpharm Pharmaceutical Joint Stock Company, the 2016 profit after tax distribution has been approved as follows: a) Distribution to the Bonus and Welfare fund with the amount of 12,139,121,358 (including the temporary distribution of 10,000,000,000 in 2016 and the additional distribution of 2,139,121,358 in 2017 as officially approved); b) Distribution to the Investment and Development Fund with the amount of 17,696,779,643; c) Remuneration of the Boards of Management and Supervisory due to the achievement of profit target according to Article 11 Clause 25 of the Company Charter with the amount of 1,011,593,446; d) Declaration of cash and share issue (at a ratio of 10: 1) dividends with the amount of 31,249,711,200 and 39,057,120,000 respectively which has been fully paid to shareholders in the period. According to Resolution No. 32/NQ-HDQT-IMEX on 27 July 2017, Board of Management approved to write-off irrecoverable debt of Mr. Phan Van Liet - Director at Ca Mau Branch with the amount of 6,704,123,874 by Investment and development fund. Company continue to manage such debt in off- sheet and record as other income when outstanding is collected. 18

21 NOTES TO THE FINANCIAL STATEMENTS (Continued) FORM B 09a-DN 27. OFF BALANCE SHEET ITEMS Foreign currency: United States Dollar (USD) Euro (EUR) Bad debts written off: 66,593 Opening 71, Opening Bad debts written off 14 A2 6,289,314...;.7.,7;..;2;;.;2;.1".;;.16;;;5;"j,..; BUSINESS AND GEOGRAPHICAL SEGMENTS Business segments The Company's principal activities are to manufacture and purchase materials used for processing pharmaceutical products and other products by the Company. Other business activities make up minor ratio in total revenue and operating result of Company in this period as well as the previous ones. Hence, the financial information presented in sheet as at 31 December 2017 and 31 December 2016 as well as revenues, expenses presented in the income statement for the period from 1 January 2017 to 30 June 2017 and previous periods are relevant to principal activities. Consequently, the Company did not prepare the report by business segment. Geographical segments The Company's revenue are generated by consumption the finished goods in domestic whereas the revenue generated by exporting makes up minor ratio in total revenue and operating result of Company for the period from 01 Jannuary 2017 to 30 June 2017 and the previous periods. Consequently, the Company did not prepare the report by geographical segment. 29. NET REVENUE Sales of goods Sales of exported goods Sales of manufactured goods Sales of franchised qoods Other revenues Deductions Sales return Sales discount Sales rebates Current period.oo OG 'IHANI 'G TV 2,198,558,439 7,664,503,009 EMHUl 441,485,177, ,351,188,881 JITT' 56,388,125,186 39,594,571,689 NAN 21,656,579,176 16,005,470, ,728,440, ,615,734,485 (10,755,955,770) (6,379A23,125) (10,704A11,773) (16,130,549,250) (121,717,735) (21,582,085,278) (22,509,972,375) 500,146,355, ,105,762, COST OF SALES Current period "inj2 Cost of exported goods Cost of manufactured goods Cost of franchised goods Cost of promotion goods Cost of other sales 1,815,702,163 3,758,018, ,497,318, ,611,392,412 35,390,929,201 29,325,654,389 32,937,710,377 31A54,033,707 17,118,254,711 13,342,049, ,759,915, ,491,148,532 19

22 NOTES TO THE FINANCIAL STATEMENTS (Continued) FORM B 09a-DN 31. OPERATING COST BY NATURE Current period Raw materials Labour Depreciation Out-sourced services Other expenses and consumables and amortization 219,200,638,403 81,406,285, ,807,426,818 71,012,601,589 16,086,372,165 19,966,147,604 31,543,723,939 27,701,738,498 79,675,695,798 56,821,498, ,912,716, ,309,412, FINANCIAL INCOME Current period JLIiQ Bank interest Foreign exchange gain Dividend income Others 6,190,245,946 2,326,293,058 1,136,880,722 1,175,608,199 2,452,984,300 2,423,889, ,170, ,518,780 9,893,280, 968 _---:6;,!;,,;;;,1.:.3.:.5r.::,30;.::9;.c.,0;:.;3;:.;7: FINANCIAL EXPENSES Current period JLIiQ Interest expense Foreign exchange loss Reversal of provision for impairment of financial investments Payment discount Others 259,336,250 55,154,439 1,192,696, ,712,860 (64,935,550) (122,577,520) 5,028,141,387 5,105,083,405 35,000,000 51,095,000 6,450, 238,461 _--=5:,!,'..:,44..:.4,46;.:8;.c.' 1:.;84.=. 34. SELLING EXPENSES AND GENERAL AND ADMINISTRATION EXPENSES Current period JLIiQ a) General and administration expenses Management staff expense Depreciation expenses Outsourced service expenses Scientific and technological fund distribution Travelling, entertainment and training expenses Others 9,102,840,810 2,669,780,538 12,190,927,064 9,865,745,066 1,955,303,800 35,784,597,278 7,740,650,162 2,572,548,365 5,695,779,461 7,537,966,712 1,859,482,504 25,406,427,204 b) Selling expenses Staff expense Outsourced expenses Market research and development Others expenses 32,105,418,685 30,191,718,898 7,491,301,248 6,428,187,980 57,848,893,850 44,947,569,087 7,922,589, 545 _----::-7L:., 90,-=,9:L,4:,-!2=-<7, ",-07,::-,2=- 105,368,203,328 89,476,903,037 20

23 NOTES TO THE FINANCIAL STATEMENTS (Continued) 35. CURRENT CORPORATE INCOME TAX EXPENSE Current period FORM B 09a-ON Current corporate income tax expenses Corporate income tax based on taxable income in the current period 14,824,617,433 9,984,849,807 14,824,617,433 9,984,849,807 The current corporate income tax expense for the period was computed as follows: Accounting profit before tax Add back: non-deductible expenses Less: non-taxable profit Taxable profit Tax rate Current period 74,624,584,821 1,951,486,642 (2,452,984,300) 74,123,087,163 20% Current corporate income tax expense 14,824,617,433 50,604,029,033 1,744,109,000 (2,423,889,000) 49,924,249,033 20% 9,984,849,807 The Company is obliged to pay corporate income tax at the rate of 20% of its assessable income (Year 2016: 20%). No deferred tax assets and liabilities are recognized as there are no significant temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax base used in the computation of taxable profit. Corporate income tax expenses for the period from 1 January 2017 to 30 June 2017 are the temporary figures. Corporate income tax expense for the financial year ending as at 31 December 2017 will be calculated at the end of the financial year. 36. BASIC EARNINGS PER SHARE The calculation of the basic and diluted earnings per share attributable equity holders of the Company is based on the following data: Current period to the ordinary Profits attributable to the Company's shareholders Deductions from Bonus and welfare fund Earnings for the purposes of basic earnings per Weighted average number of ordinary shares Basic earnings per share 59,799,967,388 (7,175,996,087) 52,623,971,301 35,891,774 1,466 40,619,179,226 (6,069,560,679) 34,549,618,547 31,836,911 1,085 Basic earnings per share for the period ended 30 June 2017 are calculated based on the profit attributable to the Company's shareholder for the above period and estimated figures of bonus and welfare fund will be deducted from profit after tax with the same rate with year 2016 at the rate 12%. The purpose of this calculation is for the comparability between figures of two periods because the Company has not had any plan for bonus and welfare fund appropriation from profit after tax of During the period, the Company has also distributed dividends by issuing 3,905,712 shares for the shareholders from retained earnings of year 2016 in accordance with the Resolution No. 26/NQ-IMEX of Annual General Shareholders' Meeting dated 15 April This event led to a retrospective adjustment to the weighted average number of ordinary shares and earnings per share for the period ended 30 June 2016 as follows: Weighted average number of ordinary shares Earnings per share (after restated) 31,836,911 1,085 (before restated) 28,942,646 1,235 21

24 NOTES TO THE FINANCIAL STATEMENTS (Continued) 37. OPERATING LEASE COMMITMENTS Current period "L!'iQ FORM B 09a-ON Minimum lease payments under operating leases recognized in the interim income statement for the period 224,240, ,745,898 under non- At the interim sheet date, the Company had outstanding commitments cancelable operating leases, which fall due as follows: On demand or within one year In the second to fifth year inclusive Current period "L!'iQ 5,0,0 --'6::..:5<..1..,-"'-0 232,703,000 65,000,000 0",-,0"-,,-,<-0-,,,-0 o 282, 703,000 =1,:;.3,;;,0b'0;.;;0;.;0.,0;;;.0;;;.0;;;. Operating lease payments represent the total rentals payable by the Company for renting premises to organize drug stores of some branches in the country. 38. 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 the owner through the optimization of the debt and equity. The capital structure of the Company consists of net debts and equity of shareholders (comprising owner's contributed captital, share premium, other owner's capital, investment and development fund and retained earnings). 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 asset and financial liability are disclosed in Note 3. Categories of financial instruments Financial assets Cash and cash equivalents Short-term financial investments Trade and other receivables Long-term financial investments Financial liabilities Trade and other payables Borrowings Accrued expenses Carrying amount Opening 57,771,905, ,127,453, ,528,335,260 15,392,915, ,912,609, ,529,162,916 65,333,504,700 60,916,689, ,546,354, ,966,221, ,036,819,895 91,181,863,177 20,000,000,000 44,869,448,987 68,530,614, ,906,268, ,712,477,549 The Company has not assessed fair value of its financial assets and liabilities as at the sheet date since there are no comprehensive guidance under Circular No. 210/2009/TT-BTC issued by the Ministry of Finance on 6 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 measurement and recognition of financial instruments, including application of fair value, in accordance with IFRS. 22

25 NOTES TO THE FINANCIAL STATEMENTS (Continued) FORM B 09a-DN 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 and price risk), credit risk and liquidity risk. Market risk The Company's activities expose it primarily to the financial risks of changes in foreign currency exchange rates and prices. The Company does not hedge these risk exposures because the Board of General Directors assessed that the costs to be incurred to hedge these risks may exceed the inherent cost due to the fluctuation of the foreign exchange rates and interest rates of these financial instruments. 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 and monetary liabilities at the end of the period/year are as follows: monetary assets United States Dollar (USD) Euro (EUR) Assets Opening 2,593,574,639 2,543,314, _ Liabilities Opening Closing 60,462,317, ,054,062, , Foreign currency sensitivity analysis The Company is mainly exposed to the United States Dollar. The following analysis details the Company's sensitivity to a 3% (2016: 3%) increase and decrease in Vietnam Dong against United States Dollar. As rate 3% (2016: 3%) is the sensitivity rate used when reporting foreign currency risk internally to the Board of General Directors and represents the Board of General Directors' 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 3% (2016: 3%) change in foreign currency rates. For a 3% (2016: 3%) increase/decrease in United States Dollar against Vietnam Dong, the profit before tax during the period would decrease/increase by 1,995,322,417 (2016: 1,736,062,278). Commodity price risk management 500, --...;: NHA IGT' ;I/HU JITl NA. 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. 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. 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. 23

26 NOTES TO THE FINANCIAL STATEMENTS (Continued) FORM B 09a-DN 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's 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 tables detail the Company's remaining contractual maturity for its nonderivative 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. Less than 1 year More than 1 year Total 'i.n.q Financial assets Cash and cash equivalents 57,771,905,003 57,771,905,003 Short-term financial investments 285,528,335, ,528,335,260 Trade and other receivables 421,832,364,331 80,244, ,912,609,071 Long-term financial investments 65,333,504,700 65,333,504, ,132,604,594 65,413,749, ,546,354,034 Less than 1 year More than 1 year Total Financial liabilities Trade and other payables 125,986,819,895 50,000, ,036,819,895 Borrowings 20,000,000,000 20,000,000,000 Accrued expenses 44,869,448,987 44,869,448, ,856,268,882 50,000, ,906,268,882 Net liquidity gap 574,276,335,712 65,363,749, ,640,085,152 Opening Less than 1 year More than 1 year Total ::::: 1 Financial assets Cash and cash eq uivalents 100,127,453, ,127,453,686 ; Short-term financial investments 15,392,915,260 15,392,915,260 Trade and other receivables 233,448,918,176 80,244, ,529,162,916 Long-term financial investments 60,916,689,150 60,916,689,150 HI 348,969,287,122 60,996,933, ,966,221,012 / Opening Less than 1 year More than 1 year Total. VNP Financial liabilities Trade and other payables 91,104,863,177 77,000,000 91,181,863,177 Accrued expenses 68,530,614,372 68,530,614, ,635,477,549 77,000, ,712,477,549 Net liquidity gap 189,333,809,573 60,919,933, ,253,743,463 The Board of General Directors assessed the liquidity risk at low level. The Board of General Directors believes that the Company will be able to generate sufficient funds to meet its financial obligations as and when they fall due. 39. RELATED PARTY TRANSACTIONS AND BALANCES List of related parties Related parties Relationship Gia Dai Pharmaceutical Company Limited Agimexpharm Pharmaceutical Joint Stock Company S.pharm Pharmaceutical Joint Stock Company Dong Thap Muoi Research Conservation and Development Pharmaceutical Joint Stock Company Associate Associate Associate Associate 24