QUANG NAM MINERAL INDUSTRY CORPORATION. Financial statements. For the year ended 31 December 2010

Transcription

1 QUANG NAM MINERAL INDUSTRY CORPORATION Financial statements For the year ended 31 December 2010

2 INDEX Page Report of Management 1-3 Auditors report 4 Financial statements Balance sheet 5-6 Income statement 7 Statement of cash flows 8 Notes to the financial statements 9-26

3 REPORT OF MANAGEMENT Management of Quang Nam Mineral Industry Corporation has pleasure in submitting this report together with the audited financial statements for the year ended 31 December Overview Quang Nam Mineral Industry Corporation ( the Company ) was established on the basis of equitization of a State-owned enterprise (Central Industry Company) under Decision No. 5078/QĐ-UB dated 9 December 2004 of People s Committee of Quang Nam Province. The Company is an independent accounting entity, operating in accordance with its Certificate of Business Registration and Tax Registration No dated 7 December 2009 by Service of Planning and Investment of Quang Nam Province (this Certificate has amended seven times and replaced the Business Certificate No dated 25 May 2005 by Service of Planning and Investment of Quang Nam Province), Enterprise Law, its Charter and other relevant regulations. The Company was approved to list its common shares on Hanoi Stock Exchange under Certificate No. 29/GCN-TTGDHN dated18/12/2007 of Hanoi Stock Exchange under code name MIC. The official transaction date was 21 December Charter capital: 24,986,520,000 Paid in capital as of 31/12/2010: 24,986,520,000, including the capital portion of State Capital Investment Corporation of 26.87%. Head office Address: Ha Lam Cho Duoc Industrial Cluster, Thang Binh District, Quang Nam Province Tel: (84) Fax: (84) minco@dng.vnn.vn Website: Principal activities Exploration, exploitation, processing and trading of minerals Investment consultancy on mineral operations and mining designs Manufacturing and trading of construction materials, furnitures and fixtures Transportation and other industrial operations Forest plantation. Employees As of 31 December 2010, the Company has 223 employees, including 44 managing officers. The Company s Board of Directors, the Supervisory Board, Management and Chief Accountant during the fiscal year and up to the reporting date are as follows: Page 1

4 REPORT OF MANAGEMENT (Cont d) Board of Directors Mr. Nguyen Quoc Khanh Chairman Appointed on 29/05/2010 Mr. Nguyen Xuan Lu Vice Chairman Re-appointed on 29/05/2010 Mr. Nguyen Thanh Hai Member Appointed on 29/05/2010 Mr. Nguyen Dung Member Appointed on 29/05/2010 Ms. Phan Thi Tuy Van Member Appointed on 29/05/2010 Mr. Doan Ngoc Cuong Member Re-appointed on 29/05/2010 Mr. Pham Van Sa Member Re-appointed on 29/05/2010 Mr. Nguyen Xuan Tuong Chairman Resigned on 29/05/2010 Mr. Huynh Khanh Toan Member Resigned on 29/05/2010 Mr. Vo Ngoc Linh Member Resigned on 29/05/2010 Mr. Dinh Dung Member Resigned on 29/05/2010 Supervisory board Mr. Truong Van Nam Chief Appointed on 29/05/2010 Mr. Pham Xuan Tuyen Member Appointed on 29/05/2010 Ms. Phan Thuy Duong Member Appointed on 29/05/2010 Mr. Truong Ngoc Thanh Chief Resigned on 29/05/2010 Mr. Nguyen Thach Member Resigned on 29/05/2010 Mr. Nguyen Hong Tuan Member Resigned on 29/05/2010 Management and chief accountant Mr. Nguyen Xuan Lu General Director Re-appointed on 29/05/2010 Mr. Pham Van Lam Deputy General Director Re-appointed on 29/05/2010 Mr. Nguyen Dung Deputy General Director Re-appointed on 29/05/2010 Mr. Le Quang Luc Chief Accountant Re-appointed on 29/05/2010 Independent auditor These financial statements have been audited by AAC Auditing and Accounting Co. Ltd (Head office: 217 Nguyen Van Linh Street, Danang City; Phone number: (84) ; Fax: (84) ; Website: Management s statement of responsibility The Company s management is responsible for preparing these financial statements on the basis of: Complying with Vietnamese Accounting Standards, Vietnamese Accounting System and other relevant regulations; Page 2

5 REPORT OF MANAGEMENT (Cont d) Selecting suitable accounting policies and then applying them consistently; Making judgments and estimates that are reasonable and prudent; Preparing the financial statements on the going concern basis. Management hereby confirms that the accompanying financial statements including the balance sheet, the income statement, the statement of cash flows and notes to the financial statements give a true and fair view, in all material respects, the financial position of the Company as of 31 December 2010 and the results of its operations and its cash flows for the year then ended in accordance with the prevailing Vietnamese Accounting Standards and System, and relevant regulations on preparation and presentation of financial statements. On behalf of management Nguyen Xuan Lu Quang Nam Province, 28 February 2011 Page 3

6 A U D I T I N G A N D A C C O U N T I N G C O M P A N Y A M E M B E R O F P O L A R I S I N T E R N A T I O N A L Headquarters Branch in Ho Chi Minh City 217 Nguyen Van Linh St., Thanh Khe Dist., Danang City Hoang Sa Street (5th floor, Hoang Dan Building) Tel: ; Fax: District 1, Ho Chi Minh City aac@dng.vnn.vn Tel: ; Fax: Website: aac.hcm@aac.com.vn No.: 404/BCKT-AAC Danang City, 21 March 2011 AUDITORS REPORT To: Board of Directors, Management and Shareholders Quang Nam Mineral Industry Corporation We have audited the 2010 financial statements including the Balance Sheet as of 31 December 2010, Income Statement, Statement of Cash flows and Notes to the financial statements for the year then ended of Quang Nam Mineral Industry Corporation ( the Company ), prepared on 28 February 2011 as set out on pages 5 to 26. These financial statements were prepared in accordance with the Vietnamese Accounting System. Respective responsibilities of Management and auditors These financial statements are the responsibility of the Company s management. Our responsibility is to express an independent opinion on these financial statements based on our audit. Basis of opinion We conducted our audit in accordance with Vietnamese Auditing Standards. Accordingly, we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examination, on a test basis, of evidences supporting the amounts and disclosure in the financial statements. The audit also includes assessing the compliance with the prevailing Vietnamese Accounting Standards and System, the accounting principles used and significant estimates made by the Company s management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. Opinion In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of 31 December 2010 and the results of its operations and its cash flows for the year then ended, in accordance with the prevailing Vietnamese Accounting Standards and System, and other relevant regulations on preparation and presentation of financial statements. Le Khac Minh General Director CPA Certificate No. D.0103/KTV Tran Thi No Auditor CPA Certificate No.1135/KTV This report should be read in conjunction with the accompanying financial statements Page 4

7 BALANCE SHEET As of 31 December 2010 Form B 01 - DN Issued under Decision No. 15/2006/QĐ BTC dated 20/3/2006 and other relevant regulations of the Finance Ministry ASSETS Code Note 31/12/ /12/2009 A. CURRENT ASSETS ,756,915,939 30,820,770,649 I. Cash and cash equivalents 110 3,466,285,484 8,253,121, Cash ,466,285,484 8,253,121, Cash equivalents II. Short-term investments III. Short-term receivables ,323,360,169 16,805,482, Trade receivables ,207,440,898 13,934,379, Prepayments to suppliers 132 1,344,377,476 3,071,991, Other receivables ,144,703,507 65,655, Provision for bad debts 139 (373,161,712) (266,544,080) IV. Inventories 140 8,231,909,283 4,386,500, Inventories ,231,909,283 4,386,500, Provision for obsolete inventories V. Other current assets 150 4,735,361,003 1,375,666, Prepaid expenses ,712, ,068, VAT deductible ,325, Taxes and amounts recoverable ,862, Other current assets ,290,322,439 1,203,735,326 B. LONG-TERM ASSETS ,386,080,563 59,150,395,415 I. Long-term receivables II. Fixed assets ,509,280,024 56,286,857, Tangible fixed assets ,246,520,339 38,685,809,424 - Cost ,746,163,462 68,391,254,651 - Accumulated depreciation 223 (31,499,643,123) (29,705,445,227) 2. Intangible fixed assets ,382,856,827 3,326,786,099 - Cost 228 3,770,683,250 3,686,468,694 - Accumulated depreciation 229 (387,826,423) (359,682,595) 3. Construction in progress ,879,902,858 14,274,261,563 III. Investment properties IV. Long term investments ,914, ,914, Investments in in associates, joint ventures ,363,600,000 2,363,600, Provision for long-term investments 259 (1,849,685,565) (1,849,685,565) V. Other long-term assets 260 3,362,886,104 2,349,623, Long-term prepaid expenses ,394,289,688 1,989,623, Other long-term assets ,596, ,000,000 TOTAL ASSETS ,142,996,502 89,971,166,064 The notes on pages 9 to 26 are an integral part of these financial statements Page 5

8 BALANCE SHEET (Cont d) As of 31 December 2010 RESOURCES Code Note 31/12/ /12/2009 A. LIABILITIES ,969,339,860 39,873,117,669 I. Current liabilities ,334,972,324 32,578,862, Short-term borrowings ,016,265,535 15,532,590, Trade payables 312 8,758,457,920 10,891,804, Advances from customers ,188, ,736, Taxes and other obligations to State Budget ,276,482,191 3,607,265, Payables to employees 315 1,550,290, ,129, Accrued expenses ,196,548 40,000, Other payables ,049,562 1,191,829, Reward and welfare fund ,041, ,507,003 II. Long-term liabilities 330 6,634,367,536 7,294,255, Other long-term payables ,990, ,990, Long-term borrowings ,407,262,694 7,064,540, Provision for severance allowance ,114,842 43,725,296 B. OWNERS EQUITY ,173,656,642 50,098,048,395 I. Equity ,173,656,642 50,098,048, Paid in capital ,986,520,000 24,986,520, Share premium ,520,791,800 13,520,791, Treasury shares 414 (1,250,700) (1,250,700) 4. Foreign exchange differences 416 (184,999,247) (40,499,052) 5. Development investment fund ,964,308,759 3,964,308, Financial reserve fund ,717, ,717, Other equity funds ,117, Undistributed profit ,408,289,364 5,589,298, Construction investment fund ,219,162,500 1,219,162,500 II. Other resources, funds TOTAL RESOURCES ,142,996,502 89,971,166,064 OFF BALANCE SHEET ACCOUNTS ITEMS Foreign currencies - USD 162, , LAK 70, , EUR Nguyen Xuan Lu Le Quang Luc Le The Thang General Director Chief Accountant Preparer Quang Nam Province, 28 February 2011 The notes on pages 9 to 26 are an integral part of these financial statements Page 6

9 INCOME STATEMENT For the year ended 31 December 2010 Form B 02 - DN Issued under Decision No. 15/2006/QĐ BTC dated 20/3/2006 and other relevant regulations of the Finance Ministry ITEMS Code Note Revenue from sales and service provision ,659,695,768 86,999,074, Less deductions ,751,185,994 7,590,933, Net revenue from sales and service provision ,908,509,774 79,408,140, Cost of goods sold ,783,046,328 41,698,805, Gross profit from sales and service provision 20 40,125,463,446 37,709,335, Financial income ,767,986,125 1,924,420, Financial expenses ,824,851,514 2,647,796,546 Including: Interest expenses 23 2,809,802,596 2,221,667, Selling expenses 24 22,951,574,702 20,861,844, Administrative expenses 25 7,022,767,405 5,487,260, Operating profit 30 9,094,255,950 10,636,854, Other income ,834,534,809 2,813,305, Other expenses ,395,187,094 2,071,028, Other profit 40 2,439,347, ,276, Accounting profit before tax ,533,603,665 11,379,131, Current corporate income tax expense ,511,260,952 1,403,150, Deferred corporate income tax expense Profit after tax ,022,342,713 9,975,980, Earnings per share ,211 5,016 Nguyen Xuan Lu Le Quang Luc Le The Thang General Director Chief Accountant Preparer Quang Nam Province, 28 February 2011 The notes on pages 9 to 26 are an integral part of these financial statements Page 7

10 STATEMENT OF CASH FLOWS For the year ended 31 December 2010 Form B 03 - DN Issued under Decision No. 15/2006/QĐ BTC dated 20/3/2006 and other relevant regulations of the Finance Ministry ITEMS Code I. Cash flows from operating activities 1. Cash receipts from sales, service provision 01 96,345,751,400 83,188,108, Cash paid to suppliers 02 (68,103,499,670) (45,649,818,971) 3. Cash paid to employees 03 (10,151,265,838) (9,829,736,063) 4. Cash paid for borrowing interest 04 (2,727,314,671) (2,217,490,234) 5. Cash paid for corporate income tax 05 (1,599,754,197) - 6. Other cash receipts from operating activities 06 4,058,105,332 4,485,353, Other payments for operating activities 07 (14,487,372,172) (17,647,101,038) Net cash provided by operating activities 20 3,334,650,184 12,329,315,517 II. Cash flows from investing activities 1. Purchases of fixed assets and other long-term assets 21 (12,735,914,394) (18,871,194,928) 2. Proceeds from disposals of fixed assets ,500,000 1,515,909, Dividends and interest received 27 43,741,937 67,304,918 Net cash used in investing activities 30 (12,004,672,457) (17,287,980,760) III. Cash flows from financing activities 1. Proceeds from share issuance, contributed capital 31-14,309,632, Repayments of contributed capital, recall of issued shares 32 - (1,250,700) 3. Proceeds from borrowings 33 38,260,593,532 35,720,946, Repayments of loan principal 34 (34,474,547,479) (35,086,399,501) 3. Cash paid for finance leases Dividends, profit paid 36 - (2,940,580,800) Net cash used in financing activities 40 3,786,046,053 12,002,348,558 Net cash flows for the period 50 (4,883,976,220) 7,043,683,315 Cash and cash equivalents at beginning of period 60 8,253,121,586 1,180,463,104 Impacts of exchange rate fluctuations 61 97,140,118 28,975,167 Cash and cash equivalents at end of period 70 3,466,285,484 8,253,121,586 Nguyen Xuan Lu Le Quang Luc Le The Thang General Director Chief Accountant Preparer Quang Nam Province, 28 February 2011 The notes on pages 9 to 26 are an integral part of these financial statements Page 8

11 NOTES TO THE 1. Nature of operations Quang Nam Mineral Industry Corporation ( the Company ) was established on the basis of equitization of a State-owned enterprise (Central Industry Company) under Decision No. 5078/QĐ-UB dated 9 December 2004 of People s Committee of Quang Nam Province. The Company is an independent accounting entity, operating in accordance with its Certificate of Business Registration and Tax Registration No dated 7 December 2009 by Service of Planning and Investment of Quang Nam Province (t his Certificate has amended seven times and replaced the Business Certificate No dated 25 May 2005 by Service of Planning and Investment of Quang Nam Province), Enterprise Law, its Charter and other relevant regulations. Principal activities Exploration, exploitation, processing and trading of minerals Investment consultancy on mineral operations and mining designs Manufacturing and trading of construction materials, furnitures and fixtures Transportation and other industrial operations Forest plantation 2. Accounting year and functional currency The Company s accounting year starts on 1 January and ends on 31 December. Financial statements and accounting transactions are expressed in Vietnam Dong (). 2. Accounting standards and system The Company adopted the Vietnamese Accounting System issued under Decision No.15/2006/QD- BTC dated 20 March 2006 and Vietnamese Accounting Standards promulgated by the Ministry of Finance. Form of accounting records: General Journal. 3. Significant accounting policies 4.1 Cash and cash equivalents Cash comprises cash on hand, cash at bank and cash in transit. Cash equivalents are short-term investments which are collectible or mature within 3 months at the date of purchase, readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. 4.2 Foreign currency transactions Transactions arising in foreign currencies are translated into Vietnamese Dong using the inter-bank exchange rates publicized by the State Bank of Vietnam at the transaction dates. Accounts with foreign currency balances are translated into Vietnamese Dong at the inter-bank exchange rates ruling at the balance sheet date. Page 9

12 NOTES TO THE (Cont d) Foreign exchange differences are recognized in accordance with Circular No. 201/2009/TT-BTC dated 15 October Accordingly, foreign exchange differences arising during the period and exchange rate differences resulting from revaluating the closing balances of long-term liabilities denominated in foreign currencies are recorded as financial incomes or financial expenses in the fiscal year. Foreign exchange differences arising from year-end revaluation of balances of cash, cash at bank, cash in transit and short-term debts are recorded as a balance in the financial statements and will be reversed at the beginning of next year. 4.3 Receivables Receivables are presented in the financial statements at the carrying amounts due from customers and other debtors. The provision for doubtful debts represents the estimated loss due to non-payment arising on receivables that were outstanding at the balance sheet date. The provision for doubtful debts is made in conformity with guidelines of Circular No. 228/2009/TT-BTC dated 7 December 2009 by the Ministry of Finance. 4.4 Inventories Inventories are stated at the lower of cost and net realizable value. Cost comprises costs of purchase, costs of conversion and any directly attributable costs of bringing the inventories to their present location and condition. Net realizable value is the estimated selling price less the estimated costs of completing the products and the estimated costs needed for their consumption. Cost is calculated using the weighted everage method and accounted for using the perpetual inventory system. Provision for decline in value of inventories is made when the net realizable value of inventories is less than cost. The provision is made in accordance with Circular No. 228/2009/TT-BTC dated 7 December 2009 by the Ministry of Finance. 4.5 Financial investments Investments in subsidiaries, associates, joint ventures and other financial statements are recognized at cost. Provision for decline in value of investments is made at the end of the period and in accordane with the guidelines under Circular No. 228/2009/TT-BTC dated 7/12/2009 of the Finance Ministry. 4.6 Tangible fixed assets Tangible fixed assets are stated at cost less accumulated depreciation. The cost of tangible assets comprises their purchase price and all the costs incurred by the Company to acquire those assets as of the time of putting such assets into the ready-for-use state. The costs incurred after the initial recognition of tangible fixed asset shall be recorded as increase in their historical cost if these costs are certain to augment future economic benefits obtained from the use of these assets. Those incurred costs which fail to meet this requirement must be recognized as production and business expenses in the period. Page 10

13 NOTES TO THE (Cont d) Depreciation Depreciation is computed at the straight-line basic over their estimated useful time in conformity with Decision No. 203/2009/QD-BTC dated 20 October 2009 of the Ministry of Finance.. Kind of asset Useful life (year) Buildings, architectures Machinery, equipment Motor vehicles Office equipment In 2010, depreciation time of fixed assets belonging to the Silica Powder Processing Line was adjusted, in order to assure a more appropriately estimated useful life for the assets (also see Note 10). 4.7 Intangible fixed assets Land use rights Land use rights are recognized as intangible fixed assets as from receipt of land assignment from the State on which land use fee is charged or land use rights (except for land rental) and being granted with the certificate of land use rights. Cost of intangible fixed assets being land use rights include all costs attributable to the attainment of land use rights, site clearance, compensation and registration fee. Land use rights of indefinite term are not amortised.. Other intangible fixed assets Other intangible fixed assets are stated at cost less accumulated amortization. Amortization of intangible fixed assets is calculated on a straight-line basis over their estimated useful lives in conformity with Decision No. 203/2009/QD-BTC dated 20 October 2009 issued by the Ministry of Finance. Kind of asset Useful life (year) Mining rights Long-term prepaid expenses Prepaid expenses reflect the expenditures that have been incurred but related to the operations of many accounting time periods. Long-term prepaid expenses are amortized over the period in which economic benefits are expected to be received. Page 11

14 NOTES TO THE (Cont d) 4.9 Payables and accruals Payables and accrued expenses are recognized for amount to be paid in the future for goods and services received, whether or not billed to the Company Unemployment fund Unemployment fund is used to pay for severance and unemployment allowances for the period the employees working for the company up to 31 December The rate of extraction for this fund is from 1% to 3% of the salary fund which is used as the basis of social insurance payment and is included into the Company s expenses during the period. In case that the unemployment fund is not enough for subsidizing resigned employees, the insufficient difference is charged to expenses. Unemployment fund is appropriated for in accordance with Circular No. 82/2003/TT-BTC dated 14 August 2003 of the Ministry of Finance Borrowing costs Borrowing costs directly attributable to the construction of a certain asset are capitalized as part of the cost of the asset. When the construction investment is completed, borrowing costs are recognized in the income statements. Other borrowing costs are added to financial expenses of the incurred period Distribution of net profit Net profit after tax, after appropriation for funds is distributed to shareholders as approved by shareholders meeting and as stipulated in the Company s Charter Revenue recognition Revenue from sales and service provision is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognized: Revenue from the sale of goods is recognized in the income statement when the significant risks and rewards of ownership have been transferred to the buyer and there are no significant uncertainties regarding recovery of the consideration due or the likely return of goods. Revenue from service provision is recognized when the services have been rendered. In case that the services are to be provided in many accounting periods, the determination of revenue in each period is done on the basis of the service completion rate as of the balance sheet date. Revenue from financing activities is recognized when revenue is determined with relative certainty and it is possible to obtain economic benefits from the transactions. Interests are recognized on the basis of the actual term and interest rates. Page 12

15 NOTES TO THE (Cont d) Dividends and profits shared are recognized when the Company has the rights to receive dividends or profit from the capital contribution Corporate income tax Corporate income tax during the period includes current income tax and deferred income tax. Current income tax is the tax amount computed based on the taxable income during the period at the tax rates applied as of the balance sheet date. Taxable income is different from accounting profit due to the adjustments of temporary differences between tax and accounting figures as well as those of non-taxable or non-deductible income and expenses. Deferred income tax is determined for temporary differences at the balance sheet date between the tax base of assets and liability and their carrying amount for financial reporting purpose. Deferred income tax liabilities are recognized for all the temporary taxable differences. Deferred income tax assets are recorded only when there is an assurance on the availability of taxable income in the future against which the temporarily deductible differences can be used. Deferred income tax is measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled based on tax rates that have been enacted at the balance sheet date. Book value of deferred corporate income tax assets are considered at the balance sheet dates and will be reduced to the rates that ensure enough taxable income against which the benefits from a part of or all of the deferred income tax assets can be used Tax policies Value added tax: Applicable rate is 10% for sand products (if exported, the products are not subject to VAT); Applicable rate is 10% for gold, feldspar, silica powder. Export duties: Applicable rate is 17% for processed sand, white sand. Royalties: Gold exploitation: At 9%, from 1/7/2010: 15% Sand exploitation: At 7%, from 1/7/2010: 11% Feldspar exploitation: At 12%, from 1/7/2010: 15% Underground water: At 2%, from 1/7/2010: 6% Corporate income tax: Applicable rate is 25%. Other taxes and charges are fulfilled in accordance with the prevailing regulations. Page 13

16 NOTES TO THE (Cont d) 4. Cash Foreign 31/12/2010 Foreign 31/12/2009 currencies currencies - Cash on hand 99,809, ,870,724 - Cash in bank 3,366,475,591 7,651,250, ,969,836 5,145,734,552 + USD 162, # 3,078,584, , # 2,505,304,310 + EUR # 2,732, LAK 70,000 # 189, , # 212,000 Total 3,466,285,484 8,253,121, Other recveivables Personal income tax 11,591,935 8,528,204 Materials used exceeding regulated norms 44,511,565 27,619,811 Receivables from employees 666,068,304 - Share issuance cost of 2011 (pending finalization) 119,451,699 - Other income from surveying, exploring mines in Lao 1,279,184,240 - Other receivables 23,895,764 29,507,972 Total 2,144,703,507 65,655, Inventories Materials 863,842, ,004,177 Tools, instruments 732,792, ,076,252 Work in process - 1,700,000,000 Finished goods 6,443,848,191 1,801,712,989 Merchandises 191,425, ,706,881 Total 8,231,909,283 4,386,500,299 Page 14

17 NOTES TO THE (Cont d) 7. Taxes and other amounts recoverable PIT paid in surplus - 1,477,529 Land rent paid in surplus - 54,385,000 Total - 55,862, Other current assets Advances 4,290,322,439 1,203,735,326 Total 4,290,322,439 1,203,735, Tangible fixed assets Buildings, Machinery Motor Office Total architectures equipment vehicles equipment Cost Opening balance 30,341,363,369 30,972,002,580 5,373,772,252 1,704,116,450 68,391,254,651 New acquisition - 795,439,462 49,090, ,530,370 Self construction 3,615,114, ,615,114,056 Other increase Disposal - 1,954,735, ,000,000-2,104,735,615 Closing balance 33,956,477,425 29,812,706,427 5,272,863,160 1,704,116,450 70,746,163,462 Depreciation Opening balance 7,585,512,886 19,300,506,271 2,165,697, ,728,352 29,705,445,227 Charge for the year 1,514,601,590 1,715,551, ,533, ,444,250 3,839,130,187 Disposal - 1,894,932, ,000,000-2,044,932,291 Closing balance 9,100,114,476 19,121,125,203 2,468,230, ,172,602 31,499,643,123 Net book value Opening balance 22,755,850,483 11,671,496,309 3,208,074,534 1,050,388,098 38,685,809,424 Closing balance 24,856,362,949 10,691,581,224 2,804,632, ,943,848 39,246,520,339 As presented at No. 4.6 on accounting policies for tangible fixed assets, depreciation time of Silica Powder Processing Line was adjusted to increase from 8 years to 20 years. The adjustment derives a decrease of 737,464,302 in depreciation expenses charged for the period. Page 15

18 NOTES TO THE (Cont d) Net book value of assets utilized as mortgages, collaterals for loans as of 31 December 2010 is 27,553,505,810. Cost of fixed assets fully depreciated but still in active use as of 31 December 2010 is 7,444,214, Intangible fixed assets Land use Exploitation Total rights (*) rights Cost Opening balance 3,034,040, ,427,974 3,686,468,694 Increase (*1) 84,214,556-84,214,556 Disposal Closing balance 3,118,255, ,427,974 3,770,683,250 Depreciation Opening balance - 359,682, ,682,595 Charge for the year - 28,143,828 28,143,828 Disposal - Closing balance - 387,826, ,826,423 Net book value Opening balance 3,034,040, ,745,379 3,326,786,099 Closing balance 3,118,255, ,601,551 3,382,856,827 (*) This is the use rights of the land at 539 Nguyen Huu Tho Street (Lots 32B2-3; B33-3), Danang City and the Company has located its head office in this land. (*1) This is the amount of registration fee additionally paid for the surplus of utilized area over the registered area on the land use right certificate. 11. Construction in progress Garage, Canteen - 58,210,870 Dai Nghia ground (for fenspat plant) 1,122,589,419 4,200,000 Sand drying kiln - 491,175,463 Fibreglass Cable Project 14,092,838,797 7,987,539,204 Gold exploring project in Lao 7,570,427,237 2,974,976,963 Sodium Silicate Project 15,933,105 6,333,105 Construction of Fenspat plant - 665,981,810 Processing and washing house of fibreglass plant 71,974,300 - Rep office in Danang - 1,996,824,148 Chains of vehicles: D65EX and T130-82,880,000 Other construction works 6,140,000 6,140,000 Total 22,879,902,858 14,274,261,563 Page 16

19 NOTES TO THE (Cont d) 12. Investments in associates, joint ventures 12/31/ /31/2009 Mien Trung Construction Joint Venture Company 795,000, ,000,000 Bong Mieu Gold Joint Venture Company 1,568,600,000 1,568,600,000 Total 2,363,600,000 2,363,600, Long-term prepaid expenses Financial support for the localities 1,161,110, ,780,750 Costs of removing mine cover in Dai Loc 633,851, ,471,729 Repair of Binh Phuc Binh Giang Road 225,501, ,251,917 Other costs 336,444, ,119,498 LAN Network of Office in Danang 37,380,656 - Total 2,394,289,688 1,989,623, Other long-term assets Deposit for environmental restoration 968,596, ,000,000 Total 968,596, ,000,000 Page 17

20 NOTES TO THE (Cont d) 15. Short-term borrowings, debts USD USD Short-term borrowings 15,980,592,735 14,745,626,152 - BIDV - Quang Nam Branch 15,980,592,735 9,757,352,002 - DongA Bank - Quang Nam Branch - 4,988,274,150 Current portion of long-term debts 4,035,672, ,964,024 - BIDV - Quang Nam Branch 800,000, DongA Bank - Quang Nam Branch 3,235,672, ,964,024 + USD 50,400 # 954,172,800 43,864 # 786,964, ,281,500,000 - Total 20,016,265,535 15,532,590, Taxes and other obligations payable Value added tax - 83,800,268 Import, export duties 1,296,176,636 1,703,476,764 Corporate income tax 3,294,841,432 1,383,334,677 Royalites 443,144, ,718,556 Personal income tax 11,263,270 8,528,204 Other taxes 1,247 - Other fees, charges 231,055, ,407,028 Total 5,276,482,191 3,607,265,497 The Company s tax retuns are subject to appraisal by tax authorities. The tax amounts presented in these financial statements may therefore be changed in accordance with decision of tax authorities. Page 18

21 NOTES TO THE (Cont d) 17. Accrued expenses Contribution for premises in Dai Loc 72,576,950 - Environmental restoration costs 24,954,673 - Accrued interest expenses 86,664,925 - Audit fee 30,000,000 40,000,000 Total 214,196,548 40,000, Other short-term payables Trade union fee 109,200, ,271,272 Statutory insurances 105,122,363 97,624,465 Trade union - 673,000,000 Daeju. Co, Ltd 66,729,796 70,518,895 Others 90,996, ,414,448 + Accrued interest expenses - 4,177,000 + Other payables 90,996, ,237,448 Total 372,049,562 1,191,829, Other long-term payables 12/31/ /31/2009 Deferred payment sales of shares to employees 185,990, ,990,000 Total 185,990, ,990,000 Page 19

22 NOTES TO THE (Cont d) 20. Long-term borrowings, debts USD USD Long-term borrowings 6,407,262,694 7,064,540,000 - BIDV - Quang Nam Branch 2,157,248, DongA Bank - Quang Nam Branch 4,250,014,400 6,077,540, ,400,000 6,077,540,000 + USD 179,200 # 3,392,614, Borrowings from employees - 987,000,000 Long-term debts - - Total 6,407,262,694 7,064,540,000 Loans from DongA Bank Quang Nam Branch and BIDV Quang Nam Branch under the following loan agreements: Loan agreements Principal Duration DongA Bank QN Branch: In Interest rate/ month Mortgaged assets J0001/ month Time rate Premises on land at Thang Binh J0004/ month Time rate Sand Processing Line J0002/ month Time rate 92K- 8230; specialized vehicles 92XA-0233 J0003/ month Time rate Excavtor 92LA0133 J0006/ month Time rate On credit Time rate J0007/ month In USD under Loan month Time rate Agreement No. H0092/12 BIDV QN Branch HĐ 01/ month Floating Cars with registration numbers: 92K- 9532; 9561;9562; 9563;9564 Use rights of land at Nguyen Huu Tho Street All assets of fiberglass cable project Page 20

23 NOTES TO THE (Cont d) 21. Owners equity a. Statement of changes in owners equity Development Financial Other equity Undistributed Construction Paid in capital Share premium investmwent fund reserved fund funds profit investment fund Balance at 01/01/09 14,892,400,000 8,234,912,500 2,229,039, ,917,986-2,865,931,663 2,264,820,350 Increase 10,094,120,000 10,260,000,000 1,735,269, ,799,044-9,975,980,876 Decrease - 4,974,120,700-7,252,614,481 1,045,657,850 Balance at 31/12/09 24,986,520,000 13,520,791,800 3,964,308, ,717,030-5,589,298,058 1,219,162,500 Balance at 01/01/10 24,986,520,000 13,520,791,800 3,964,308, ,717,030-5,589,298,058 1,219,162,500 Increase ,117,136 8,022,342,713 - Decrease ,203,351,407 - Balance at 31/12/10 24,986,520,000 13,520,791,800 3,964,308, ,717, ,117,136 12,408,289,364 1,219,162,500 b. Detail of paid in capital State Capital Investment Corporation 6,715,140,000 6,715,140,000 Other shareholders 18,270,130,000 18,270,130,000 Treasury shares 1,250,000 1,250,000 Total 24,986,520,000 24,986,520,000 c. Shares Share Share Issued shares 2,498,652 2,498,652 - Common shares 2,498,652 2,498,652 - Preferred shares - - Redeemed shares Common shares Preferred shares - - Outstanding shares 2,498,527 2,498,527 - Common shares 2,498,527 2,498,527 - Preferred shares Page 21

24 NOTES TO THE (Cont d) d. Undistributed profit Profit brought forward 5,589,298,058 2,865,931,663 Profit after tax 8,022,342,713 9,975,980,876 Appropriations for 1,203,351,407 7,252,614,481 - Development investment fund - 1,735,269,349 - Financial reserved fund - 498,799,044 - Reward and welfare fund 802,234, ,598,088 - Charter capital reserve fund 401,117, Dividends paid - 4,020,948,000 Undistributed profit 12,408,289,364 5,589,298,058 The Company has temporarily made appropriation for reward and welfare fund and charter capital reserve fund from 2010 profit after tax according to its charter. 22. Revenue from sales and service provision Total revenue 94,659,695,768 86,999,074,237 Revenue from sales of sifted white sand 59,126,114,568 54,467,563,368 + Export sales of sifted sand 50,201,667,775 44,847,090,286 + Local sales of sifted sand 8,924,446,793 9,602,857,562 + Sales of yellow sand - 17,615,520 Revenue from sales of dried white sand 4,919,312,767 1,594,731,430 + Export sales of dried white sand 4,118,448, ,385,116 + Local sales of dried white sand 800,864, ,346,314 Sales of stream gold 14,992,141,818 17,505,454,544 Sales of potashfeldspar powder 8,737,433,328 7,730,176,888 Sales of silica quartz powder 6,136,206,797 5,576,744,775 Sales of glass cloth 195,354,546 - Revevnue from transportation activities 553,131, ,403,232 Less: deductions 8,751,185,994 7,590,933,422 Export duties 8,640,764,431 7,450,070,707 + Export duties on sifted white sand 7,962,568,662 7,291,328,096 + Export duties on dried white sand 678,195, ,742,611 Sales rebates 110,421, ,862,715 + Silica quartz powder 384, Sales rebates on local sales of sifted white sand 110,037, ,862,715 Net revenue from sales and service provision 85,908,509,774 79,408,140,815 Page 22

25 NOTES TO THE (Cont d) 23. Cost of goods sold Cost of sifted white sand 20,773,225,174 16,380,329,211 + Cost of sifted white sand exported 16,972,776,335 12,081,304,820 + Cost of sifted white sand sold locally 3,800,448,839 4,294,181,391 + Cost of yellow sand - 4,843,000 Cost of dried white sand 2,387,147, ,538,291 + Cost of dried white sand exported 1,988,376, ,936,964 + Cost of dried white sand sold locally 398,771, ,601,327 Cost of stream gold 8,619,429,982 10,866,771,466 Cost of potashfeldspar powder 7,264,902,569 7,069,701,233 Cost of silica quartz powder 6,047,698,913 6,443,657,767 Cost of glass cloth 178,004,146 - Cost of transportation services 512,637, ,807,516 Total 45,783,046,328 41,698,805, Financial income Interest income 43,741,937 67,304,918 Realized gain on exchange difference 1,724,244,188 1,391,593,248 Supported interest income 465,522,665 Total 1,767,986,125 1,924,420, Financial expenses Interest expenses 2,767,098,327 2,221,667,234 Realized loss on exchange differences 17,401, ,799,107 Other financial expenses 80,330,205 Unrealized loss on exchange differences 40,352,000 - Total 2,824,851,514 2,647,796,546 Page 23

26 NOTES TO THE (Cont d) 26. Other income Income from sales of materials 882,082, ,138,485 Inome from disposal of assets 1,184,179,086 1,515,909,250 Bonus for fast release of vessel 18,821, ,208,151 Other income 470,267, ,049,298 Other income from exploring mines in Lao 1,279,184,240 - Total 3,834,534,809 2,813,305, Other expenses Residual value of disposed assets 59,803,324 Cost of sold materials 882,082,189 1,255,398,282 Tax fine 350,591,151 - Expenditures to support localities 66,172, ,506,312 Other 36,538,083 66,123,868 Total 1,395,187,094 2,071,028,462 Page 24

27 NOTES TO THE (Cont d) 28. Current income tax expense and profit after tax Accounting profit before tax 11,533,603,665 11,379,131,566 Adjustments to taxable income 2,226,928,713 1,174,548,592 Increase 2,226,928,713 1,174,548,592 - Tax fines 350,591,151 87,439,433 - Unqualified expenses 1,876,337,562 1,087,109,159 Total taxable income 13,760,532,378 12,553,680,158 Corporate income tax (25%) 3,440,133,095 3,138,420,040 Reduced corporate income tax - 1,735,269,349-50% reduction according to investment incentives - 1,133,919,053 - Reduced according to Circular 03/2009/TT-BTC - 601,350,296 Current income tax expenses 3,511,260,952 1,403,150,690 - Current income tax expense 3,440,133,095 1,403,150,690 - Adjusting prior year income tax expense into current year income tax expense 71,127,857 + Adjusted in accordance with Official Letter 7250/BTC-TCT ( (224,653,304) - + Adjusted in accordance with tax inspection minutes 286,677,928 + Adjusted in accordance with state audit in ,103,233 - Profit after tax 8,022,342,713 9,975,980,876 (*) This is the amount adjusted for current tax expense of prior year in accordance with Official Letter No. 7250/BTC-TCT dated 07/6/2010 of the Finance Ministry on guidelines for 2009 tax finalization. 29. Earnings per shares Accounting profit after tax 8,022,342,713 9,975,980,876 Increase/decrease - - Profit attributable to common shareholders 8,022,342,713 9,975,980,876 Amount of outstanding common shares 2,498,527 1,988,925 Earnings per shares 3,211 5, Dividends According to the Resolution of the Company s General Shareholders Meeting on 29 May 2010, the dividend rate of 2009 is 25% of charter capital. 8% of which was temporarily paid to shareholders according to the final list on 17 July 2009 (payment was made on 7 August 2009). The remaining (17%) was paid in share. The company already announced the time to finalize the list of shareholders entitled to share dividends and first time cash dividend (15%) of 2010 on 12 January Page 25

28 NOTES TO THE (Cont d) 31. Other information According to Gold Exploitation Permit No. 98/QĐ-UBND dated 8/1/2008 of Quang Nam People s Committee, the permit for exploiting gold at Pu Nep, Tu Commune, Dong Giang District, Quang Nam Province will expire on 31 December The Company has stopped exploitation for environmental regeneration and closing the mine. 32. Subsequent events There has been no significant event occurring after the balance sheet date that may need adjustments or disclosure in the financial statements. 33. Corresponding figures Corresponding figures are taken from the financial statements for the year ended 31 December 2009 that were audited by AAC. A number of corresponding figures have been reclassified to conform to guidelines under Circular No. 244/2009/TT-BTC dated 31/12/2009 of the Finance Ministry. Nguyen Xuan Lu Le Quang Luc Le The Thang General Director Chief Accountant Preparer Quang Nam Province, 28 February 2011 Page 26