Annual Report 2011 Bridging Opportunities Bridging Entrepreneurship Bridging Partnership Bridging Capital Bridging Community Financial Statements

Bridging Opportunities

In 2011, Hoang Anh Gia LAI Group recorded a lot of outstanding achievements, creating a solid foundation for Group’s further development in the world market.

Unity is power

Contents

1Bridging Opportunities 14Bridging Entrepreneurship 24Bridging Partnership

1 Vision - Mission 16-19 BOD, BOM, BOS 26-27 Report of the Vision Mission 2-3 Message from the Chairman of 20-21 Organisational Structure Board of Directors To become the leading multi-business To maintain the constant creativity and strive to the Board of Directors 22-23 Organisation and Personnel 28-33 Report of the group in with sustainable growth continue to produce quality products and provide 4-6 Establishment and Development Board of Management based on the core business of plantation, exceptional services at reasonable costs. To provide 7-13 Products and Services hydropower, mining and real estate. competitive employee benefits, both in terms of monetary remuneration and employee development in order to motivate the employees to create values for shareholders and the general society.

34Bridging Capital 46Bridging Community 58Financial Statements

36-39 Shareholders and 48-54 Sustainable Development 59-128 Consolidated Corporate governance and Care for the community financial statements 40-43 Risk Management 55-57 Outstanding events in 2011 44-45 Investor Relations

Hoang Anh Gia Lai Joint Stock Company 5 Annual Report 2011 Bridging Opportunities Bridging Entrepreneurship Bridging Partnership Bridging Capital Bridging Community Financial Statements

Message from the Chairman of the Board of Directors

PLANTATION: • Rubber: Our target is to plant and cultivate 51,000 TRADITIONAL PRODUCTION OF FURNITURE AND ha of rubber trees in the central highland provinces of GRANITE: These business sectors will maintain their Vietnam, and . supporting role to provide competitive advantages to our real I do confirm estate business. With the strong brand name established • Sugarcane: Our targets are to plant 6,000 ha of in the domestic and international markets for almost 20 that Hoang Anh sugarcanes in the 2011-2012 crop, 4,000 ha of years, Hoang Anh Gia Lai’s furniture products have gained Gia Lai’s business sugarcanes in the 2012-2013 crop, to achieve the total high customer confidence. As a result, production has target of 10,000 ha of sugarcanes in , remained stable and labor jobs have been secured. and investment Laos; and to build a sugar processing factory with capacity of 7,000 tons of sugarcanes per day, an ethanol FOOTBALL: To maintain as the most effective tool to strategies are factory and a thermo power factory with capacity of promote the Group’s brand name. Hoang Anh Gia Lai systematically built 30 MW used bagasse as feedstock. possesses the most modern football facilities in South East Asia. We focus on investing for the future success by Hoang Anh Gia Lai’s competitive advantages are our on our competitive training young players via the cooperation program with large area of low-cost land, highly skilled and experienced Arsenal Football Club. We believe this program will deliver advantages. agro-forestry workers, and robust cost control measures. positive results. These factors result in lower capital expenditure as compared to the industry benchmark and help HAGL’s projects become more competitive than others’ I do confirm that Hoang Anh Gia Lai’s business and in the industry. investment strategies are systematically built on our competitive advantages. We have striven to achieve Hydropower: The long-term target is to build hydropower our strategic objectives at the soonest, with the aim of plants with total capacity of 600 MW in Vietnam and Laos. delivering maximum values to shareholders in particular, Hydropower is capital intensive but it can generate the most and the society in general. Since 2013, when our rubber stable cash flows. After the investment phase, this sector and sugar industries begin to generate profit, we will also will play the role of stabilizing cash flows for the Group. By basically complete our investments; thereby Hoang Anh Dear shareholders and prospective investors, the middle of 2012, there will have been 4 plants under Gia Lai will generate a surplus cash flow. This will release operation with total capacity of 141.5 MW. The remaining the shareholders and investors’ concerns about whether Macroeconomic conditions remained unfavorable for With respect to the business result, Hoang Anh Gia Lai tried projects will be invested with flexible progress to suit the Hoang Anh Gia Lai are too adventurous to allow its total enterprises in 2011. The Vietnamese Government had to to achieve a pre-tax profit of VND 1,702 billion. Although cash flows from the plantation business and the overall outstanding loan balance for investment to increase during face with a myriad of adversities in forms of inflation, state the amount is lower than our target of VND 3,000 billion, liquidity condition of the Group. the past time. budget deficit, trade deficit and foreign currency reserve this can be considered an encouraging result in the context On behalf of Hoang Anh Gia Lai Group, I would like pressure,etc. Thus, the Government decided to implement of gloomy economy. REAL ESTATE: The target is to build 2.5 million square to express my sincere thankfulness to shareholders the closely controlled monetary policies by tightening money meters of residential and commercial properties, of which and investors for your confidence in and supports to supply. Commercial banks in particular and the economy Regarding financial activities, we reached the following residential apartments are dominant. Hoang Anh Gia Lai Hoang Anh Gia Lai. in general faced liquidity issue, decreasing purchasing success in: issuing international bonds of US$ 90 million; enjoys competitive advantages through a sizeable and power, stagnant production due to slow consumption of issuing exchangeable bonds for rubber business to Temasek economical land bank, synergies with subsidiaries in Chairman of the Board of Directors goods and high cost of capital. Vulnerable sectors such as Holdings at VND 1,130 billion; extending the maturity of construction business, and supply of competitively-priced real estate were most easily affected. the convertible bonds, issued to Temasek last year at VND furniture and granite. Our vertically-integrated processes and 1,100 billion, to 2013; successfully arranging long-term businesses allow us to establish low-cost competitiveness Notably, Vietnam’s international credit rating has also been credit facilities for rubber, sugarcane, and hydropower against competitors. This factor has enabled Hoang Anh ranked at a low level. This has affected considerably on projects to well prepare capital resources for investment. Gia Lai’s products to be sold at reasonable price levels the ability of Vietnamese enterprises to mobilize capital At the end of 2011, Hoang Anh Gia Lai had the cash during the recent years while the real estate market has internationally and raised cost of capital. balance of VND 2,896 billion. been in the difficult situation. Doan Nguyen Duc

Thanks to the experience gained from dealing with Thanks to the above success, we are capable of continuously MINING: Despite facing many difficulties and policy risks economic crisis, the management of Hoang Anh Gia Lai investing for prospective sustainable development. Our on mining, Hoang Anh Gia Lai has attempted to complete Group defined the most important target is risk management proposed targets based on the advantages of land and legal procedures and put iron mines into operation. In and investment for long-term sustainable development. natural resources remain affirmative and reinforced, details 2011, we mainly exploited and produced iron ore from the are as follows: mines in Vietnam. The next target is to start exploitation from the mine in Laos in Quarter IV/2012.

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Establishment and Development

2007 • Commenced the construction of the • Signed a strategic cooperation agreement with New Saigon high-class apartments Arsenal (UK), a world famous football club • Commenced the construction of • Opened Hoang Anh Gia Lai Arsenal - JMG Dak Srong 2 and Dak Srong 2A hydropower Football Academy plants in • Commenced the construction of Phu Hoang Anh • Commenced operations of Hoang Anh Gia Lai high-class apartments in Safomec office building in Ho Chi Minh City • Commenced the construction of Hoang Anh • Commenced operations of Hoang Anh Gia Lai Can Tho high-class apartments Hotel Plaza in • Received 5,000 ha of land from the Laos Government for rubber plantation

corporate Milestones 2009 • Commenced the construction of Golden House high-class apartments in Ho Chi Minh City 1993 • Commenced the construction Bau Thac Gian high-class apartments in Da Nang Province • Commenced operations of a wooden furniture processing factory in Gia Lai • Commenced the construction of Ba Thuoc 1 and province Ba Thuoc 2 hydropower plants with total capacity of 140MW in Thanh Hoa Province • Commenced the construction of Dak Srong 3B hydropower plant with total capacity of 19.5 MW in Gia Lai Province • Commenced the construction of Dakpsi 2B hydropower plant with total capacity of 14 MW in • Completed and delivered New Saigon high-class 2002 2008 apartments • Opened the granite processing factory • Signed a US$ 19 million sponsor contract • Completed and handed over the 25th SEA-Games Establishment: Business activities and expanded another wooden furniture with the Laos Government to build the 25th Athletes Village to the Laos Government processing factory in Gia Lai province SEA-Games Athletes Village • Received licenses from the Laos Government for Hoang Anh Sole-Proprietorship Enterprise, • Established Hoang Anh Gia Lai Football • Signed a project development contract the construction of two hydropower plants with • Build apartments for sale and offices for total capacity of 110MW on Nam Kong River the predecessor of Hoang Anh Gia Lai lease Club following its transfer from the People’s and received investment license for the Joint Stock Company, was established Committee of Gia Lai Province development of a 10,000 ha rubber • Received license from the Laos Government for • Plant, harvest and produce rubber and plantation in Attapeu Province, Laos the survey of an iron quarry with total reserve of in 1993. 20 million tons sugarcane products 2004 • Completed and handed over high-class Conversion to a joint stock • Commenced operations of HAGL Resort in apartments on Tran Xuan Soan Street in • Received license from the Cambodian Government • Invest and operate hydropower plants Qui Nhon Ho Chi Minh City and Hoang Van Thu for the survey of an iron quarry with total reserve of 30 million tons company: Street in city • Received a land area of 12,000 ha from the • Exploit and process mining resources • Signed strategic cooperative agreements In 2006, the sole-proprietorship enterprise Cambodian Government for rubber plantation with BIDV and Sacombank was converted to a joint stock company • Produce and distribute furniture and granite • Received a land area of 3,000 ha from the • Commenced the construction of Hoang Anh and renamed as Hoang Anh Gia Lai Joint products 2005 People’s Committee of Dak Lak Province for River View apartments in Ho Chi Minh City rubber plantation Stock Company. • Commenced operations of HAGL resort in • Other supporting activities • Commenced the construction of Hoang Anh • Received license from the People’s Committee of Dak Lak high-class apartments Thanh Hoa Province for the survey of 3 iron mines 2006 • Issued bonus shares to the shareholders at in the Western districts of Thanh Hoa Initially Established as a small wood processing factory a ratio of 100:49.9 • Adjusted the projected annual pre-tax profit from • Commenced operations of HAGL Pleiku • Received 8,000 ha of land from the VND 1,150 billion to VND 1,400 billion and Hotel People’s Committee of Gia Lai Province for further increased it to VND 1,700 billion ...and now A conglomerate with the total assets of VND 25,577 • Completed and handed over Le Van Luong rubber plantation • Issued bonus shares to shareholders at the ratio billion, owners’ equity of VND 9,399 billion. high-class apartments in Ho Chi Minh City of 2:1 • Issued convertible bonds with the total proceeds of VND 1,450 billion

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Establishment and Development Products and Services

The two-year-old rubber plantation The 25th SEA Games Athletes Village 2011 • Issued bonus shares to shareholders at the ratio of 2:1 • Ground-breaking ceremony of Attapeu international airport in Laos, financed by Hoang Anh Gia Lai Group • Official operation of Medical University - Hoang Anh Gia Lai Hospital • Commencement of sugarcane industrial zone in Attapeu - Laos • Victory of Chairman Doan Nguyen Duc in the award “Ernst & Young Entrepreneur of the Year” • Successful experiment of Israel 2010 • Converted bonds to shares with total irrigation system at Hoang Anh Attapeu proceeds of VND 1,450 billion farm - Laos • Completed and handed over Hoang • Issued convertible bonds for Temasek Holdings • Official connection of Dak Srong 2A Anh Riverview high-class apartments in with total proceeds of VND 1,100 billion hydropower plant to the national Ho Chi Minh City electric network • Issued 16,216,250 shares for Deutsche • Inaugurated Dak Srong 2 hydropower plant Bank which are the underlying for • Issued and listed of international bonds • Commenced the construction of Kinh Te GDR issuance and listing on the London on Stock Exchange office building Stock Exchange • Issued convertible bonds for rubber • Commenced the construction of Thanh Binh • Commenced operation of a hospital with business to Temasek Holdings worth Our target is to finish Rubber apartments capacity of 200 beds and facilities in VND 1,130 billion • Commenced the construction of Incomex Attapeu Province, Laos • Handed over Phu Hoang Anh - phase 1 high-class apartments the cultivation and start apartments • Entered into a strategic cooperation contract Our target is to finish the cultivation and start harvesting to establish Medical University - Hoang Anh • Commenced the construction of Phu Hoang Anh rubber latex from 51,000 ha of rubber trees by 2013, apartments - Phase 2 Gia Lai Hospital harvesting rubber latex located in the central highland provinces of Vietnam, Laos from 51,000 ha of rubber and Cambodia. Medical University - Hoang Anh Gia Lai Hospital trees by 2013, located in the Rubber trees have high economic value. Rubber latex is central highland provinces of used in the manufacturing industry like tire production while rubber wood acts as feedstock for furniture business. This Vietnam, Laos and Cambodia. sector is not capital intensive but can generate high and stable earnings and cash flows in the yielding period.

The advantages of Hoang Anh Gia Lai are ownership of low-cost land and skillful and experienced workforce in agriculture and forestry. These are critical factors to succeed in the rubber business.

Employees are practicing tapping rubber trees

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Products and Services Products and Services

Rubber Hydropower

Thanks to modern planting and cultivating technology as Hoang Anh Gia Lai’s target is to invest in hydropower well as new rubber seeds imported from countries with projects in Vietnam, central highland provinces and Thanh advanced rubber industry like Malaysia and , Hoa province, and in Laos with total capacity of 600 MW. Hoang Anh Gia Lai expects to start harvesting latex from the These projects take advantages from the precious natural first generation of rubber trees in mid 2012. Once 51,000 resources, generating power from rivers with waterfalls. ha of rubber trees reach their maturity, Hoang Anh Gia Lai Estimated capital expenditure for these projects is at VND expects to harvest 127,500 tons of dried latex for export 9,600 billion. annually. The world market price of rubber latex has been recently fluctuated between USD 4,000 to USD 6,000 per Hydropower is capital intensive but it can generate the ton while the estimated production cost per ton of latex is most stable earnings and cash flows. After the development Drilling holes for rubber planting in the 2012 crop higher than USD 1,000. phase, this sector will play the role of generating and stabilizing cash inflows for the Group. Furthermore, at the end of the commercial life (about 20 years), 51,000 ha of rubber trees will provide approximately 3 When Hoang Anh Gia Lai completes these hydropower Hoang Anh Gia Lai expects million cubic meters of lumber with total estimated proceeds projects, total electricity output will reach about 2.49 billion to harvest 127,500 tons of USD 750 million. After deducting the exploitation, kWh and generate revenue of VND 1,990 billion per year for transportation and processing cost estimated at USD 320 the Group (based on the current average electricity price of of dried latex for export million, approximate earnings from lumber sales is USD VND 800/kWh). Upside potential of electricity price is likely annually. 430 million. in the future.

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Products and Services Products and Services

HAGL Furniture attended the 2012 International Furniture Fair Mining FURNITURE AND GRANITE Hoang Anh Gia Lai also owns a considerable Iron ore exploitation and processing output source of lumber in the southern provinces Hoang Anh Gia Lai is exploiting and processing iron ore target for the period of 2012-2014 of Laos (near Kon Tum province) PRODUCTION from the mines in Gia Lai, Kon Tum and Thanh Hoa of Vietnam. The Group has been installing machinery to (thousand tons) prepare for the exploitation of iron mines in Laos from 3 This sector is the traditional business where Hoang Anh Gia Lai Quarter IV/2012. 300 550 550 300,000m has competitive edges. Hoang Anh Gia Lai, for instance, possesses granite mines in Gia Lai which provide a low-cost input for the rough lumbers This sector is not capital intensive but can generate high granite processing plant. Especially, Hoang Anh Gia Lai also owns a earning. Global demand for iron ore remains at high considerable source of lumber in the southern provinces of Laos (near level, especially in emerging market like China. Refined Kon Tum province) with approximately 300,000 cubic meters of rough iron ore can be stored at large quantity for a long period lumbers, thereby the Group does not have to import wood like before and be easily sold. This sector also helps to stabilize for furniture production which results in minimizing production cost earning and cash flow streams for the Group. and enhancing profitability going forward. Beside generating profit from export and domestic sale, this business also has an important role in creating competitive edges for the real estate business. Furniture and granite are parts of the vertically- 2012 2013 2014 integrated construction process of Hoang Anh Gia Lai to help construction cost of the Group to maintain at the most competitive level in the market.

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Products and Services

Thanh Binh apartment project Phu Hoang Anh project - Phase 2 Hoang Anh Tan Phu apartment project River View apartment project

Hoang Anh Gia Lai enjoys competitive • New Saigon Apartments - Nha Be Projects under construction: blocks of 40 floors, 114,760 m2 • Apartment project in Hoc Mon Real estate advantages of a low-cost land bank District, HCMC: 1,104 apartments of office space and 6,840 m2 of District, HCMC: 1,308 apartments acquired long time ago, and synergies with gross floor area of 176,685 m2. • Hoang Anh Gold House Apartments retailing space with gross floor area with gross floor area of 137,274 m2. with subsidiaries in construction, - Nha Be District, HCMC: 996 of 165,022 m2. Hoang Anh Gia Lai furniture and granite production. This • Le Van Luong Apartments - District apartments and 18,626 m2 of • Villa and landed house Complex - vertical integration model enables 7, HCMC: 450 apartments with retailing space with gross floor area • Hoang Anh Incomex Apartment - District 9, HCMC with total land 2 2 focuses on investment us to offer apartment products at gross floor area of 63,955 m . of 198,145 m2. District 7, HCMC: 396 apartments bank of 82,000 m . 2 competitive price. and 24,300 m of retailing space in apartments and office • Tran Xuan Soan Apartments - District • HAGL-BIDV Apartments - Dak Lak: with gross floor area of 98,014 m2. • The 2/9 Complex - Binh Hien Ward, 7, HCMC: 463 apartments with 432 apartments with gross floor Danang: 1,000 apartments with Hoang Anh Gia Lai’s profitability up buildings in major cities of gross floor area of 80,526 m2. area of 52,320 m2. • Phu Hoang Anh - Phase 2, Nha Be gross floor area of 140,000 m2. to 2011 has been mainly driven by District, HCMC: 648 apartments property projects in Ho Chi Minh Vietnam, particularly • Hoang Van Thu - Gia Lai • Thac Gian Apartments - Danang with gross floor area of 127,078 m2. • Nguyen Van Linh Office and City. Apartments: 157 apartments and City: 456 apartments and Commercial Building - Danang: in Ho Chi Minh City. 2,470 m2 of retailing space with 7,130 m2 of retailing space with • Thanh Binh Apartments - 4 retailing floors and 33 office floors Completed projects: gross floor area of 24,574 m2. gross floor area of 80,966 m2. District 7, HCMC: 1,000 with gross floor area of 53,040 m2. apartments with gross floor area of • Phu Hoang Anh (Phase 1) - Nha Be • Dam Sinh Thai Apartments - • High-class apartments in Can Tho 127,128 m2. • Dong Nam Residential Project - District, HCMC: 802 apartments Quy Nhon: 560 apartments with City: 216 apartments with gross HCMC: 352,275 m2 of land bank and 4,096 m2 of retailing gross floor area of 84,706 m2. floor area of 29,391 m2. and population size of 9,200 space with gross floor area of Projects to commence in 2012-2015 persons (equivalent to about 2,300 • Thanh Thai Office Building - 134,840 m2. • HAGL - Bangkok High-class apartments and villas). District 10, HCMC with gross floor Apartments - Thailand: 140 • Hoang Anh Tan Phu Apartments 2 • Hoang Anh River View Apartments area of 8,359 m . apartments with gross floor area of - Luy Ban Bich Street, Tan • Tan Phong Riverside - District 7, - District 2, HCMC: 576 apartments 13,928 m2. Phu District, HCMC: 474 HCMC: 1,120 apartments with 2 and 1,459 m2 of retailing space with apartments with gross floor area gross floor area of 196,756 m . • Kinh Te Office and Commercial gross floor area of 122,877 m2. of 65,520 m2. Complex - District 7, HCMC: two

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Sharing insights with other entrepreneurs creates abundant partnership opportunities for Hoang Anh Gia Lai and connects our businesses to global investors.

Doan Nguyen Duc, Chairman of Hoang Anh Gia Lai Group, won the inaugural Ernst & Young Vietnam Entrepreneur of the Year Award. With that, he has the honor to represent Vietnam at the prestigious Ernst & Young Ponte Vecchio Bridge - Monaco Entrepreneur of the Year Award at Monte Carlo, Monaco (France) in June, 2012. 14 Hoang Anh Gia Lai Joint Stock Company Hoang Anh Gia Lai Joint Stock Company 15 Annual Report 2011 Annual Report 2011 Bridging Opportunities Bridging Entrepreneurship Bridging Partnership Bridging Capital Bridging Community Financial Statements

Board of Directors

From left to right, from top to bottom

Mr. Doan Nguyen Duc Mr. Nguyen Van Su Mr. Nguyen Van Minh Mr. Vu Huu Dien Chairman MEMBER MEMBER MEMBER

Mr. Doan Nguyen Thu Mr. Le Hung Ms. Vo Thi Huyen Lan MEMBER MEMBER MEMBER

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Board of Management Board of Supervisors

From left to right, from top to bottom From left to right, from top to bottom

Mr. Nguyen Van Su Mr. Doan Nguyen Thu Mr. Le Van Ro Mr. Nguyen Van Ton CEO DEPUTY ceo DEPUTY ceo HEAD OF BOS

Mr. Tra Van Han Mr. Vo Truong Son Mr. Nguyen Van Minh Mr. Lam Hoang Hai Mr. Nguyen Xuan Thang DEPUTY ceo DEPUTY ceo DEPUTY ceo MEMBER MEMBER

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Organisational Structure hoAng anh gia lai jOINT STOCK COMPANY

95.51% 98.80% 99.98% 90.74%

0.866% HOANG ANH housing CONsTRUCTION HOANG ANH GIA LAI RUBBER JSC HOANG ANH GIA LAI hydropower JSC HoAng Anh Gia Lai MINing JSC and DEVELOPMENT JOINT STOCK COMPANY

99.76% 90% 82.53% 94% Gia Lai INDUSTRIAL FOREST PLANTATION JSC HoAng Anh - Thanh HOa hydropower JSC Gia lai MINing JSC PhU HoAng Anh JSC

100% 98% 60% 89% HoAng Anh Attapeu AGRICULTURal DEVELOPMENT CO. LTD Hoang Anh DAk Bla hydropower JSC HoAng Anh - Thanh HOa MINing CO. LTD HoAng NguyEn HOUSING INVESTMENT CONSTRUCTION JSC

80% 64.66% 95% 100% Minh TuAn TRADING & SERVICES CO. LTD HoAng Anh - Quang Minh RUBBER JSC HoAng Anh TOna hydropower JSC HoanG anh gia Lai - Kon Tum MINing co. ltd

100% HoAng anh - quang minh RUBBER 51% 51% 100% HoAng Anh ME kOng CORPORATION INDUSTRIAL AND AGRICULTURAL CO. LTD HoAng Anh Ban ME JSC HoAng Anh XEKOng MINing CO. LTD 97% Minh ThAnh CO. LTD 86.55% 100% HoAng Anh DAk LAk JSC HoAng Anh Attapeu hydropower JSC 99.58% 85% PhUc BAo Minh TRADING CONSTRUCTION SERVICES CORPORATION DAk LAk TAn DAi ThAng JSC 9.5% 82% 88.60% 51% Ban ME RUBBER JSC 80% hoang anh Gia Lai WOODEN FURNITURE JSC 10.97% HoAng anh gia lai SPORT JSC Hoang Anh Incomex HOUSING CONSTRUCTION and DEVELOPMENT CO. LTD

20% 100% 75% HoAng Anh Rattanakiri CO. LTD 100% 51.85% RAW MATERIAL ONE-MEMBER LIMITED COMPANY CENTRAL HoAng anh gia laI JSC An TiEn CO. LTD 100% 5% CRD CO. LTD 47% 98.36% HoAng Anh Gia Lai BangKok CO. LTD 100% 9.5% Heng Brothers CO. LTD HoAng anh gia lai HOSPITAL JSC

99.9% DOng Nam housing business and investment corporation 100% 80% HoAng Anh Oyadav CO. LTD V&H corporation (LAoS) CO. LTD 99.8% An PhU CONSTRUCTION JSC 55% HoAng anh gia lai SUGARCANE JSC 100% V&H corporation CO. LTD 51% HoAng Anh REAL ESTATE ADMINISTRATIVE SERVICE CO. LTD 100% HoAng Anh An DOng Meas CO. LTD 55.12% HoAng anh gia lai BRIDGE & ROAD JSC 55% 20% HoAng Anh FAR EAST SERVICES CORPORATION 70% HoAng Anh Lum PhAt CO. LTD 100% 100% HoAng anh gia lai CO. LTD HoAng thO ONE-MEMBER LIMITED COMPANY

Note

Rubber Plantation Hydropower Real Estate Mining Furniture Others

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Organisation and Personnel

In the long-run, the Group prefers employing local personnel due to high commitment and qualification. YEAR 2011 9,842 employees

NUMBER OF EMPLOYEES AND Recruitment and training policies HUMAN RESOURCE POLICY • The recruitment of new employees is in accordance with Number of employees the Group’s policy in order to ensure that new employees possess adequate qualifications, skills, experience for their positions and good work ethics and have long- term commitment. In the long-run, the Group prefers Year 2007 2008 2009 2010 2011 employing local personnel due to high commitment and qualification. The Group has a preferential policy for Number of 7,098 7,291 8,745 9,638 9,842 local employees with good qualifications and working employees ethics, who has worked in big cities and would like to work for the Group in Pleiku City. Working conditions The staff of Hoang Anh Housing Construction and Development JSC (HAGL Land) • The Group ensures that all employees receive adequate • The employees of the Group work 5.5 to 6 days per week support and training to gain skills that enable them to optimize their performance. Training of skills and other ORGANIZATIONAL STRUCTURE and 8 hours a day. The working time can be adjusted based on deliverables but should remain within the necessary techniques are conducted both internally and standard working hours in accordance with the Group’s externally, in accordance with the Group’s training plan Hoang Anh Gia Lai operates under the parent-and- policies. Overtime may be required from time to time to prepared at the beginning of each year. subsidiary model with the following organizational meet deadlines. structure: • In order to implement effective training programs, the • Employees are entitled to 1 to 1.5 days off per week. Group and its employees sign agreements to reinforce • The parent company with five branches and one Employees who have worked for 12 months are entitled their commitments to duties and benefits of each party representative office in Ho Chi Minh City. to 12, 14 or 16 days of annual leave per year depending during the training period, and the number of working on working requirement. If an employee has worked years required after the training. • 50 subsidiaries, which Hoang Anh Gia Lai JSC less than 12 months, the annual leave entitlement either has majority holding of more than 50% • Ensuring workplace health and safety is the most will be pro-rated according to the number of working and/or has control over. important policy of the Group. HAGL Group focuses on months. The Group will increase the annual leave working safety training before commencing employment, • Three associates, which Hoang Anh Gia Lai JSC entitlement based on the number of years of service, and provides adequate labor safety equipment such as owns from 20% to 50% of the voting rights. e.g. 1 additional day of annual leave for every 5 years of shirts, hats, shoes, glasses, depending on their working service. In addition, employees are subject to 8 public environment. holidays per year. If these public holidays coincide with A training course on tapping rubber tree using a kind of improved knife by a Thai specialist other ones, employees will be entitled to in lieu leaves in • The Group issues policies on labor safety and the immediate following working day. environmental sanitation, and conducts work safety inspections on a regular basis at construction sites. The Group established the Labor Safety Committee to implement the Labor Safety System.

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The reputation of the Group has grown significantly over years, which helps develop strong belief in our relationship with major domestic and international business partners.

On 31 August, 2011, Hoang Anh Gia Lai Linked a partnership with Singapore - based investment company Temasek Holdings Benjamin Sheares Bridge - Singapore

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Report of the Board of Directors

55.9% of revenue and its gross profit Dong Nam project site; etc. to well electricity to the community. reached VND 840 billion. This is an prepare a project pipeline ready for Due to the low investment costs, encouraging result. Other sectors such sale when the market recovers. the profitability of the Group’s as mining and hydropower began hydropower projects is quite high, contributing a significant proportion Hydropower: The Group managed especially when the interest rate, from to the Group’s revenue and gross Dak Srong 2A project in stable loan financing, gradually decreases. profit. The information about operating operation since June 2011 and Besides, electricity prices in Vietnam results is presented in details in the continued constructing Dak Srong have strong upside potential in the report of the Board of Management. 3B and Ba Thuoc 2 projects. future (in order to encourage further Dak Srong 3B project is expected investment to resolve the issue of SIGNIFICANT CHANGES AND to operate in April 2012 while electricity shortage). Therefore, the PROJECT INVESTMENT Ba Thuoc 2 project will start potential profitability of hydropower operation in Quarter II/2012. projects is promising. PROGRESS Mining: Kbang mine in Gia Lai Mining sector: Iron ore is an important During the year, the Board of Directors Province and the mine in Kon Tum commodity for the infrastructure guided the continued implementation Province are being exploited and construction and economic of the crucial investments to create production is going on smoothly. development. Global iron ore demand a foundation for the Group’s future The Group is preparing for the and price will increase when the world development. At the end of 2011, our exploitation of the mine in Laos in economy recovers. This sector has the investment progress was as follows: Quarter IV/2012. potential to generate attractive returns and an inflow of foreign currency. Plantation: Until the end of 2011, the FUTURE PLAN AND OUTLOOK Group has planted 36,000 ha of rubber Real estate sector: The supply of real trees in Vietnam, Laos and Cambodia. The Board of Directors expects estate projects is currently abundant Mr. Doan Nguyen Duc, Chairman of BOD, delivered a speech at the Vietnam-Laos Investment Cooperation Conference The rubber trees are growing well. The economic difficulties to continue in as compared with demand. However, Group also installed the drip irrigation the short-term, so the Group needs looking into each segment, housing systems to support the rubber trees to to concentrate on risk management, demand in the low and middle a success factor of the Group in the issued Temasek Holdings, to 2013, keep growing continuously even in the OPERATION, INVESTMENT instead of short-termism in profit, income segments are at high levels current economic conditions. issuing the international bonds with dry season. The Group is reclaiming AND FINANCIAL HIGHLIGHTS and manage the steady progress and have growth potential in the value of USD 90 million, and signing land for planting on the remaining of investment projects to lay the future. When macroeconomic factors Regarding investing activities, the long-term credit contracts to finance area of 15,000 ha during 2012 and In 2011, Hoang Anh Gia Lai continued solid foundation of sustainable become favorable, such as lower Group’s projects progressed smoothly investments in rubber, sugarcane, 2013. Moreover, the Group started to maintain favorable operations of the development in the future. The interest rates, increased GDP per and reached positive results. The hydropower, etc. As a result, the Group planting 6,000 ha of sugarcanes since real estate sector, strongly invested sectorial judgments of the Board of capita, the real estate market will Group’s rubber plantations are strongly has a considerable cash balance and November 2011 and it will continue in the rubber and sugarcane sectors, Directors are as follows: rebound strongly. Hoang Anh Gia Lai invested in hydropower and mining growing, Dak Srong 2 and Dak Srong credit facilities for investment and planting additional 4,000 ha of 2A hydropower plants have been management of liquidity risk. believes a low cost strategy aiming at sectors with suitable progress, and sugarcanes in the next crop. The Group Rubber sector: Rubber latex demand steadily operating, and the iron mines the middle income segment will drive successfully raised capital from both has been constructing a sugar industrial and prices in the world market have in Gia Lai and Kon Tum are under the the Group’s continuing success in the domestic and international financial Business performance complex, including a sugar plant with been maintained at high levels exploitation with stable production real estate sector. markets. capacity of 7,000 tons of sugarcane (ranging from US$ 4,000 to US$ output. The Group is managing to According to the 2011 audited per day, a thermo power plant with 6,000 per ton). Hoang Anh Gia Lai’s complete investment projects based In summary, Hoang Anh Gia Lai will Despite the adverse macro-economic financial statements, the profit before the capacity of 30 MW and an ethanol capital expenditure and production on the set schedules and market persevere to pursue the business conditions, Hoang Anh Gia Lai tax was VND 1,702 billion while plant, which is expected to operate in unit cost are relatively low, so the conditions. strategy we have set. The strategy continued to generate cash inflows and the profit before tax approved by the Quarter IV/2012. potential profitability is promising. will lay the solid foundation for revenues from its real estate sector. With 2011 Shareholders’ General Meeting Rubber latex will be primarily In financing activities, the Group sustainable development of the the proceeds from the sold projects, was VND 3,000 billion. Although we Real estate: In 2010, the exported, so this is a significant achieved remarkable successes in Group, generate added value for the Group continued constructing did not reach the target, the amount Group completed and delivered source of foreign currency for the issuing the exchangeable bonds for shareholders in particular, and foundations for new projects, such as of VND 1,702 billion shown the best apartments of the first four blocks of Group in the future. the rubber sector to Temasek Holdings for the society in general. The Phu Hoang Anh - Phase 2, Hoang Anh effort of Hoang Anh Gia Lai in 2011. Phu Hoang Anh - Phase 1; continued Board of Directors, together with Incomex and Thanh Binh to prepare with value at VND 1,130 billion, In the context of unfavorable economic constructing the foundation of Hydropower sector: Vietnam extending the maturity and conversion all employees, will be steadfast in the availability of apartments for sale conditions and low purchasing Phu Hoang Anh - Phase 2, Hoang Anh currently faces electricity shortage. overcoming short-term challenges once the market recovers. The cost- date of the convertible bonds of the power, the real estate sector of Incomex and Thanh Binh projects; Hoang Anh Gia Lai’s hydropower parent company at VND 1,100 billion and achieving the Group’s long-term competitive business strategy has been Hoang Anh Gia Lai still contributed carried out land development at projects will supply additional strategic objectives.

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Report of the Board of Management

HAGL’s management meets investors Financial Status Liquidity Changes in share capital Item 2010 2010 2011

As previously Profitability Total balance of cash and other Thousand VND reported Restated Audited current assets increased considerably, Profitability In 2011, the ratio of Profit after tax over Net leading to the improvement of Share capital as at 31 December 2010 3,115,206,970 these liquidity ratios. Current ratio Profit after tax/Net revenue 49.11% 52.43% 42.07% revenue reached 42.07%. Although it decreased as Bonus share issuance in January 2011 at the ratio of 2:1 1,557,598,930 compared to 2010, this figure showed a positive increased from 1.62 to 1.96 while Profit after tax/Owners’ equity (ROE) 24.26% 25.40% 14.10% result in the current difficult economic environment. quick ratio increased from 1.04 Share capital as at 31 December 2011 4,672,805,900 Profit after tax/Total assets (ROA) 11.84% 10.93% 5.18% The reasons of this decrease were: to 1.31. To deal with inherent difficulties of the volatile economy, Share capital movement (billion VND) Profit before tax/Net revenue 66.68% 69.75% 54.02% 4,673 • The gross profit margin of 2011 was 45.2% vs. Hoang Anh Gia Lai has proactively 5,000 Operating efficiency reserved cash balance for investment that of 2010 at 50.58%. In 2011, the factors in 4,500 activities and avoiding the illiquidity. Net revenue/Total assets 0.24 0.21 0.12 COGS all increased due to inflation. 4,000 3,115 • The interest expenses increased from VND 205 Although the ratios of Total loans 3,500 2,705 3,000 Item 2010 2010 2011 billion in 2010 to VND 465 billion in 2011 as and debts over Total assets and over 2,500 As previously stated in the below section of Operating Results. Owners’ equity increased against 1,798 reported Restated Audited those in 2010, the exchangeable 2,000 The ratio of Net revenue over Total assets of 1,200 Liquidity bonds of VND 1,130 billion and the 1,500 Hoang Anh Gia Lai decreased because the total convertible bonds of VND 1,100 Current ratio: 1,000 assets of the Group have been growing fast while 289 297 Current assets/Current liabilities 2.16 1.62 1.96 billion in Total loans and debts are 500 the majority of the Group’s assets are being expected to be converted into equity - Quick ratio: invested for the future growth, consisting of in the future. Additionally, most of the (Current assets-Inventories)/Current liabilities 1.59 1.04 1.31 01/06/06 31/12/06 31/12/07 31/12/08 31/12/09 31/12/10 31/12/11 projects in rubber, sugarcane, hydropower, mining, incremental loans in 2011 are long Capital structure and land bank of real estate sector. The total assets term, and matched with the timing On 26 January 2011, the Company issued bonus shares to the existing at the end of 2011 went up to VND 25,577 billion Total loans and debts/Total assets 0.31 0.31 0.45 of future cash flows of projects, so shareholders at the ratio of 2:1 (a shareholder owning two existing shares (vs. VND 19,043 billion in 2010). insolvency risks are unlikely and receives one bonus share). 60% of capital sources for bonus shares came Total loans and debts/Owners’ equity 0.64 0.72 1.24 controllable by the Group. from retained earnings, and the remaining 40% from share premium. The bonus issue was carried out in accordance with the AGM’s Resolution No. 1808/10/NQCD-HAGL dated 18 August 2010 (with written approvals from shareholders).

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Report of the Board of Management

Mr. Nguyen Van Su, CEO of the Group, signed an investment cooperation agreement with BIDV

Financial Status (continued)

Total number of shares

Shares authorized to be issued Ordinary shares 467,280,590 Shares issued and fully paid Ordinary shares 467,280,590 Outstanding shares Ordinary shares 467,280,590

Bonds in circulation

Mr. Nguyen Van Su, CEO of the Group, Outstanding Total value Bond Par value number of discussed with investors (Thousand VND) bonds

International bonds (Credit Suisse) 100,000 USD 900 1,811,945,875 Convertible bonds (Temasek Holding) 1 million VND 1,100,000 1,100,000,000 Revenue Breakdown Exchangeable bonds (Temasek Holding) 1 million VND 1,130,000 1,130,000,000 3.20% 4.20% 2010 straight bonds (BIDV) 1 billion VND 530 530,000,000 2011 straight bonds (BIDV) 1 billion VND 500 500,000,000 Straight bonds PHA 2009-Tranche 1 (HD Bank) 1 billion VND 200 200,000,000 10.60% Operating results Straight bonds PHA 2009-Tranche 2 (HD Bank) 1 billion VND 250 250,000,000 Unit: Million VND

Straight bonds PHA 2011-Tranche 1 (VP Bank) 1 billion VND 100 100,000,000 Revenue 2010 2010 2011 Straight bonds PHA 2011-Tranche 2 (VP Bank) 1 billion VND 100 100,000,000 Sector As previously reported Restated Audited 15.30% Real estate sector still played the key Straight bonds PHA 2011-Tranche 3 (VP Bank) 1 billion VND 100 100,000,000 Amount Percentage Amount Percentage Amount Percentage role with a proportion of 55.9%. Real Straight bonds PHA 2011-Tranche 4 (VP Bank) 1 billion VND 50 50,000,000 estate revenue in 2011 was less than Real estate 2,833,440 63% 2,395,485 60.4% 1,760,330 55.9% 10.80% Total 5,871,945,875 that of 2010 by VND 635 billion. The Mining - 0% - 0% 339,659 10.8% 55.90% reason was that in 2010 the Group Detailed information of these outstanding bonds is disclosed in Note 27 to the Audited Production and 888,283 20% 888,283 22.4% 481,715 15.3% completed and recorded all revenue of merchandise Consolidated Financial Statements. Hoang Anh River View project, while Construction 619,145 14% 501,347 12.6% 334,208 10.6% Real Estate Earnings per share in 2011 the Group completed and recorded revenue of only four blocks Services 161,376 4% 161,376 4.1% 132,405 4.2% Mining Basic earnings per share (VND/share) 2,500 of Phu Hoang Anh project - phase Hydropower 22,634 1% 22,634 0.6% 101,935 3.2% Production and merchandise Diluted earnings per share (VND/share) 2,421 1. Block 5 will be completed and its Total revenue 4,524,878 3,969,125 3,150,252 Construction revenue will be recorded in Quarter Detailed information of earnings per share is disclosed in Note 30 to the Audited Consolidated I/2012. Gross margin of real estate Services Financial Statements. Dak Srong 2A operating since June came from the sale of a land bank Hydropower sector in 2011 was 47.74%, which 2011, generated a revenue amount of 15,000 square meters in Da Nang Dividend and profit distribution was quite favorable in the gloomy of VND 102 billion, gross profit of City. Furniture revenue was still stable market condition. VND 68 billion, or gross margin at over the two years. Profit after tax of 2010 was distributed as follows: 66.65%. The mining sector began generating Service revenue was VND 132 billion • Financial reserve fund: 5% revenue with an amount of VND 340 Revenue from production and with gross profit of VND 65 billion. • Bonus fund: 3% billion, accounting for 10.8% of the merchandise reached VND 482 The decrease of VND 29 billion total revenue. Gross profit of mining billion while gross profit was VND • Welfare fund: 2% was mainly attributed to the one- sector was VND 214 billion which 86 billion, or gross margin at 17.8%. off income from the transfer of the • Dividend: to be carried out and expected to take place in April 2012 resulted in gross margin of 62.88%. As compared to 2011, this kind of participation right in a real estate • Remaining balance: in retained earnings account revenue in 2010 was higher by deal in 2010. Hydropower sector, with Dak Srong an amount of VND 407 billion, of 2 plant operating in a full year and which an amount of VND 396 billion

30 Hoang Anh Gia Lai Joint Stock Company Hoang Anh Gia Lai Joint Stock Company 31 Annual Report 2011 Annual Report 2011 Bridging Opportunities Bridging Entrepreneurship Bridging Partnership Bridging Capital Bridging Community Financial Statements

Report of the Board of Management

Interest expenses, recorded in the IMPROVEMENT ACHIEVED income statement, comprised interest on loans financing working capital Further restructuring the Group’s demand, and medium- and long-term subsidiaries loans for projects already coming into operation. The increase of interest Since 2010 Hoang Anh Gia Lai has expenses was mainly due to two started restructuring the Group based hydropower projects, Dak Srong 2 and on operating sector. The Group model Dak Srong 2A, coming into operation, comprises a parent company which meanwhile, the outstanding loans for possesses and directly manages working capital demand in 2011 also five sub-holding entities specializing increased against those in 2010. in real estate, plantation, mining, Electricity generation control after hydropower, and production of connected to the national power grid Income from financial activities furniture and granite. Each sub- holding entity possesses and manages Income from financial activities in its subsidiaries operating in the same 2011 was VND 1,227 billion, which business sector. was a bit lower than that of 2010 - 1,227 billion VND 1,262 billion. Key changes are After restructuring, Hoang Anh as follows: Gia Lai sells a part of its holding in income from financial each of these sub-holding entities to activities in 2011 was • Income from divestments in 2011 strategic partners, implements IPO VND 1,227 billion was VND 767 billion, decreasing by programs and lists their shares on the The 2011 Shareholders’ Annual General Meeting VND 305 billion vs. the previous year. main bourses. In 2010, Hoang Anh Gia Lai sold 11.75% of its holding in the real estate Hoang Anh Gia Lai is also continuing subsidiary - Hoang Anh Construction restructuring subsidiaries in and Housing Development JSC each business sector to achieve Selling expenses increased by VND Financial Status (continued) - to realize a large profit of VND more professional and effective 67 billion mainly attributed to 890 billion. In 2011, Hoang Anh management and control as well as Cost structure the incremental selling expenses Gia Lai continued selling 4.5% of its proactive and smooth implementation of the mining sector amounting Unit: VND Million holding in - Hoang Anh Construction of investment projects. VND 27 billion in 2011 and of and Housing Development JSC - Item 2011 2010 2010 Variance Phu Hoang Anh project - phase 1 As previously Restated with less profit of VND 356 billion, Standardizing management and amounting to VND 44 billion. Selling reported Amount % and also sold the entire holding in control processes and implementing expenses of the furniture sector were the Enterprise Resource Planning almost unchanged. Hoang Phuc Company with a profit Net revenue 3,150,252 4,524,878 3,969,125 (818,873) -21% amount of VND 411 billion. (ERP)

Gross profit 1,423,952 2,292,103 2,007,661 (583,709) -29% G&A expenses increased by 21% • Interest income from bank deposits In 2011, Hoang Anh Gia Lai re-arranged mainly because the Group expanded in 2011 was VND 361 billion, which and standardized its management and Selling expenses 163,986 133,032 97,473 66,513 68% the investment scale and sectors, is much higher than an amount of internal control procedures, invested leading to further recruitment and G&A expenses 230,516 190,206 190,206 40,310 21% VND 165 billion in 2010 because in new IT infrastructure systems, development of management teams. Hoang Anh Gia Lai maintained the purchased the ERP license from SAP, Besides, the Group also rewarded Interest expense 464,849 204,971 204,971 259,878 127% high deposit balance in the whole and signed a consulting contract with higher salaries for the workforce year 2011, while 2010 deposit CSC to implement this system. The based on performance appraisal to balance only increased strongly near implementation of this ERP system is encourage their commitment to the year end. expected to complete within 2012. Group. The average salary was also increased by 10% to compensate the effect of inflation.

32 Hoang Anh Gia Lai Joint Stock Company Hoang Anh Gia Lai Joint Stock Company 33 Annual Report 2011 Annual Report 2011 Bridging Opportunities Bridging Entrepreneurship Bridging Partnership Bridging Capital Bridging Community Financial Statements Bridging capital

We focus on raising large and long-term investment capital, which facilitate our impressive transformation from a company specializing in real estate into a conglomerate.

On 23 March, 2011, Hoang Anh Gia Lai became the first Vietnamese company to list GDR on the London Stock Exchange (UK). Tower Bridge - London

34 Hoang Anh Gia Lai Joint Stock Company Hoang Anh Gia Lai Joint Stock Company 35 Annual Report 2011 Annual Report 2011 Bridging Opportunities Bridging Entrepreneurship Bridging Partnership Bridging Capital Bridging Community Financial Statements

Shareholders and Corporate governance

The Board of Function of the Board of Directors: During Function of the Board of Supervisors: The Directors and the year, the Board of Directors held four Board of Supervisors has evaluated the official meetings to: discuss and decide implementation of the 2011 business plan the Board of the development orientation of the Group, by the Board of Directors and the Board of Supervisors: implement the business plan for 2011, Management. The Board of Supervisors and issue bonus shares to the shareholders, the Internal Audit Department reviewed and The Board of Directors has seven issue exchangeable bonds, discuss the evaluated the key processes of the Group, members, including two non- business and investment plans for 2012, conducted site visits at the factories and executive members. The Board of etc. In addition, the Board of Directors also branches in order to identify inherent risks Supervisors has three members. organized other meetings via teleconference or misstatements, and provided appropriate to discuss and resolve other matters. recommendations to the management. Changes in members of the The Board of Supervisors also conducted Board of Directors: During Function of non-executive members: periodical reviews of the financial the year, there was no change The non-executive members participated in statements to assess the financial status in members of the Board of all meetings of the Board of Directors and of the Group. The Board of Supervisors Directors. monitored the management function of the also coordinated closely with the external Board of Management. auditors, Ernst & Young Vietnam Limited, and reviewed the impact of any material Function of the Board of Directors’ misstatements in the financial statements Sub-committees: Currently, the operational and implemented the recommendations departments of the Group are responsible provided by the independent auditors for providing information and reports in in strengthening the Company’s internal accordance with the requirements of the control system. Mr. Doan Nguyen Duc, Chairman of BOD, guided investors to visit HAGL’s projects in Laos Board of Directors. The secretary of the Board of Directors is the contact point Plan for improvement of management The Board of Supervisors will regularly communicate with the Board of Directors and the Board of between the operational departments and effectiveness: The Board of Directors, Management regarding compliance with the control policy as well as the Group’s charter and rules. the Board of Directors. the Board of Supervisors and the Board of Management will conduct frequent The Board of Directors’ share ownership meetings in order to issue appropriate policies in a timely manner to facilitate the No. Name of Directors Number of shares Ownership Change implementation of the Board of Directors’ resolution and communications with 1 Doan Nguyen Duc 224,844,226 48.12% 1.04% various departments, and internal and external shareholders. 2 Nguyen Van Su 2,135,372 0.46% 0.11% 3 Doan Nguyen Thu 4,543,781 0.97% 0.11% 4 Nguyen Van Minh 2,658,263 0.57% 0.09% 5 Le Hung 521,751 0.11% 0.06% 6 Vu Huu Dien 150,000 0.03% 0.03% Total 234,853,393 50.26% 1.44%

Source: List of shareholders as of 15 March 2012

Members of the Board of Directors have acquired more shares for their long-term investment purposes.

36 Hoang Anh Gia Lai Joint Stock Company Hoang Anh Gia Lai Joint Stock Company 37 Annual Report 2011 Annual Report 2011 Bridging Opportunities Bridging Entrepreneurship Bridging Partnership Bridging Capital Bridging Community Financial Statements

Shareholders and Corporate governance

Statistical data about shareholders ShareholderS and strategic partners

Shareholder structure

Item Number of shares Ownership (%)

Total number of share: 467,280,590 100% • Founding shareholders 235,258,638 50.35% • Major shareholders (holding more than 5% of voting rights) - - • Shareholders holding from 1 to 5% of shares with voting right 119,330,499 25.54% • Shareholders holding less than 1% of shares with voting right 112,691,453 24.12%

Of which: • Foreign shareholders 144,587,633 30.94% - Institutional shareholders 141,265,544 30.23%

- Individual shareholders 3,322,089 0.71% Korea Investment

Source: List of shareholders as of 15 March 2012

RELATED COMPANIES

• Entities holding more than 50% share capital of HAGL: None

• Company having more than 50% of equity/shares held by HAGL: Disclosed in the Note 17.1 to the 2011 consolidated financial statements • Investments in subsidiaries and associates: Disclosed in the Note 17.1 and 17.2 to the 2011 consolidated financial statements

• Details of major shareholders

No. Name ID/Passport/ Address Number of Percentage Business shares license number

1 Doan Nguyen Duc 230046495 147 Tran Phu St., 224,844,226 48.12% Pleiku, Gia Lai

38 Hoang Anh Gia Lai Joint Stock Company Hoang Anh Gia Lai Joint Stock Company 39 Annual Report 2011 Annual Report 2011 Bridging Opportunities Bridging Entrepreneurship Bridging Partnership Bridging Capital Bridging Community Financial Statements

Risk Management

Risk management measures: Risk management measures:

The Group always closely manages The Group’s business comprises the cash flows and builds an both import and export transactions, appropriate capital structure to so exchange rate movements can be meet both the long-term and short- offset against each other to reduce term investments. For the long-term the impact on the Group’s profit projects, the Group has prepared and cash flows. Moreover, future the necessary capital sources via export revenues will provide foreign- long-term loans from banks, bond currency inflows to meet import issuance, and share capital. payment needs.

Furthermore, thanks to the sold The Group has carefully planned Risk management measures: apartment projects, the Group is the timing and payment schedule able to collect customers’ payments for import and export activities The Group has proactively built a to cover daily operation expenses with foreign partners to minimize capital structure appropriate for each and repayment of short-term loans. exchange rate risks. economic cycle and its business operations. Thanks to long-term The nature of real estate sector Interest rate risks with pre-sale contracts including a relationships with major commercial fixed schedule of installments helps banks, the Group can arrange credit Substance: the Group be well-prepared in the facilities at reasonable costs. financial management. The Group’s operations require large Beside loans and straight bonds, the investment capital for projects of Group also raises capital from share Exchange rate risks apartments, rubber plantations, issuance and convertible bonds at Financial risks construction of hydropower plants, low coupon, from both domestic Hoang Anh Gia Lai operates in multiple Substance: etc. A large proportion of the required and overseas investors, and well sectors and different geographical Substance: capital has been raised by borrowing utilizes the deposit payments and In recent years, the exchange rates from banks and issuing corporate installments from apartment buyers. With a diverse portfolio in real estate, areas. Therefore, there are potential risks between Vietnam Dong and foreign bonds at floating interest rate. If Cost of these funds is generally low, mining, rubber and hydropower currencies (especially US Dollar) have interest rate increases, borrowing predetermined and mostly unaffected associated with each sector, geographical sector, the Group demands significant been abnormally volatile and hence, costs become more burdensome by interest rate movements. capital resources for investment and cause adverse effects on enterprises to adversely affect the Group’s area and economic condition. The Group has development. In a certain period, involving in import and export businesses. the mismatch between cash inflows activities. The Group’s operations identified primary risks and implemented the and outflows will cause threat on include foreign currency payments to Moreover, the real estate demand is following risk management approaches: the day-to-day operations, the overseas partners, especially for the very elastic to interest rate fluctuation investment and material purchasing import of equipment and machinery, as buyers are reluctant to borrow at can be stopped, salary and debts, if raw materials, construction materials, high rates. Apartment value is usually not paid when becoming due, will etc. Exchange rate fluctuations will large; so many buyers cannot afford affect the reputation and operation of have impact on both the Group’s with their own equity, but have to rely the Group. financial income and expense. on bank financing.

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Risk Management

with relevant authorities, the legal department is also responsible Group has strict control over for reviewing the Group’s business The Group’s project the implementation of its real agreements to mitigate legal risks. estate projects. Moreover, with portfolio spans many projects being undertaken When necessary, the Group can across many provinces simultaneously, the Group’s business seek independent legal advices from plans and capital turnover are not both domestic and international nationwide, thereby dependent on any single project. professional law consulting firms on limiting risk impacts Most of real estate projects in the the complex transactions. from any particular next 5-year business plan have completed the site clearance process Other non-systematic market and are ready to start construction. risks

Legal risks Substance:

Substance: Each industry has one or more non- systematic risks. The real estate sector, Under the status of a listed company, for example, is exposed to risks of fire the Group’s operations are primarily or accidents during construction; the governed by the Enterprise Law, furniture production is very sensitive Securities Law and other regulations to fire risks; the rubber plantation is of the stock exchange. However, law exposed to natural disaster risks; the and under-law regulations are still hydropower sector subject to drought under continuous improvement, so risks, etc. possible legal and policy changes will have certain impact on the Risk management measures: management and operation activities A training course of improving professional of the Group. The Group evaluates the possibility competence for the staff of risk materializing for each Market risks Risk management measures: Project implementation Moreover, the real estate sector sector and the expected loss, and risks is governed by the Land Law, simultaneously identifies the suitable Substance: Before making investment decision for a Construction Law, and Real Estate insurance policies for such risks and real estate project, the Group conducts Substance: Business Law, etc. Changes in these the associated premiums. On that The real estate market is sensitive a detailed market research and only legal requirements may affect the basis, the Group will make decision to the financial market and macro- invests in feasible projects whose Real estate projects usually have a liquidity of the real estate market, to either accept and self-manage the economic conditions. Therefore, customer demands are strong to result in long implementation phase, ranging time spent on administrative risk or transfer the risk by purchasing adverse economic fluctuations can high profitability. With the advantage of from 3 to 5 years, including site procedures and capital mobilization the appropriate insurance policies. lead to decrease the liquidity of the self-supplied materials from subsidiaries clearance, legal procedures, design method of the Group. real estate market and negatively under the vertically-integrated business and construction. Problems arising impact projects’ selling prices. model, Hoang Anh Gia Lai is able to well during any phase can significantly Risk management measures: Additionally, fluctuations in costs manage apartment costs. During the affect the overall implementation of construction material inputs also property market downturns, the Group progress, slow capital turnover, and The Group has a legal department have a significant impact on the can lower apartment selling prices to negatively affect the business plan. comprising qualified and experienced profitability of each project. Overall, more competitive levels, but still ensure lawyers. The department will update the payback period of the Group’s the profitability. The Group’s real estate Risk management measures: legal changes and according impacts property project will be prolonged, project pipeline is geographically diverse on a regular and timely basis, to revenue and profitability may be in many provinces which will mitigate With extensive experience in project advise the Board of Directors and the squeezed. market risk in a particular market. management and close relationships Board of Management. Besides, the

42 Hoang Anh Gia Lai Joint Stock Company Hoang Anh Gia Lai Joint Stock Company 43 Annual Report 2011 Annual Report 2011 Bridging Opportunities Bridging Entrepreneurship Bridging Partnership Bridging Capital Bridging Community Financial Statements

Investor Relations

Hoang Anh Gia Lai is always aware of investor-relation meetings via the the importance of investor relations. introduction of securities companies The Group’s Guideline is: “To disclose are regularly held in Ha Noi, Ho Chi sufficient and accurate information Minh City, and Gia Lai. At those on a timely basis in compliance meetings, the Group’s management with legal requirements; to facilitate provides sufficient information investors to approach and obtain about the Group like insights of information, visit and verify the actual each specific sector which are investment and operation activities of interested in by investors, as well as the Group; and to help investors have frankly answers to investors about a comprehensive view of the Group to all aspects from capital spending, be able to make decisions promptly investment costs, human resources, and properly”. or environmental impact, etc. The investor relation meeting in New York at the “Asean Corporate Day” program The Group’s management always Over the past years, the Group has listens to opinions and comments held many site visits to rubber, of investors and shareholders to hydropower, real estate, and mining make appropriate decisions in each roadshow with the projects in Vietnam, Laos and specific period. Cambodia. Participating visitors participation of over consist of institutional investment In addition to inviting investors to firms such as Jaccar Holdings, visit its ”home stadium”, Hoang Anh Dragon Capital, Vina Capital, SSI, Gia Lai also actively meets with and 500 Asiavantage Global Limited, Temasek introduces the Group to international investors Holdings, Credit Suisse, etc. and investors in London, New York and some individual investors. Chairman other cities in the U.S., Singapore, or individual investor-relation Doan Nguyen Duc and other members and Hong Kong, etc., to enhance the meetings via the introduction of the Board of Management directly appearance of Hoang Anh Gia Lai in of securities companies guide and introduce investors to visit the international financial markets. these projects. “We are very surprised about the rubber plantations of In the daily operations, information Hoang Anh Gia Lai in Laos. These about investment and financial rubber plantations are very thick, activities as well as responses to Mr. Nguyen Van Minh, Deputy General Director of the Group, signed an investment cooperation agreement with Laos Government and interminable. We have visited rumors, or inaccurate analysis a lot of agricultural projects all over of independent organizations the world, such as in Malaysia, India, are updated in a timely, or Brazil, etc., but it is quite hard to sufficient and accurate manner find out fertile, large and adjoining on the Group’s official website Our guideline is: “To disclose sufficient and accurate land banks like the plantations in www.hagl.com.vn which has become Laos. The project is organized and a reliable source for investors with information on a timely basis in compliance with legal implemented very systematically and thousands of visits per day. requirements; to facilitate investors to approach and obtain scientifically. I believe your project will be successful in the near future”, The confidence of investors and information, visit and verify the actual investment and operation said Mr. Lucky Phua, a Singaporean shareholders has encouraged investor in a site visit. determination and qualification of activities of the Group; and to help investors have a comprehensive the management and all staff of view of the Group to be able to make decisions promptly Investor relation activities like the Hoang Anh Gia Lai to overcome roadshow with the participation adverse fluctuations in the financial and properly.” of over 500 investors or individual markets of Vietnam and the world.

44 Hoang Anh Gia Lai Joint Stock Company Hoang Anh Gia Lai Joint Stock Company 45 Annual Report 2011 Annual Report 2011 Bridging Opportunities Bridging Entrepreneurship Bridging Partnership Bridging Capital Bridging Community Financial Statements Bridging community

With the precept of sharing with the community into our business, Hoang Anh Gia Lai has always focused on sustainable development of the society.

Inauguration of Attapeu Hospital - Laos Se Su Bridge - Laos

in Vietnam and Laos, Hoang Anh Gia Lai has made a number of practical contributions such as building schools and hospitals, constructing Mittaphap Bridge - Laos bridges, and building thousands of resettlement homes, etc. to assist those less fortunate and under-privileged people in the society. 46 Hoang Anh Gia Lai Joint Stock Company Hoang Anh Gia Lai Joint Stock Company 47 Annual Report 2011 Annual Report 2011 Bridging Opportunities Bridging Entrepreneurship Bridging Partnership Bridging Capital Bridging Community Financial Statements

Sustainable Development and Care for the community

Economic development

Corporate core CSR Environment Governance activities The doctors and staff of Medical University - Hoang Anh Gia Lai Hospital are always devoted to caring for the health of the community

Contribution to the local economic development Medical University - Hoang Anh Gia Lai Hospital officially started operation. Not only seeking profit and increasing • 2011: With the orientation of shareholders’ value, Hoang Anh selling apartments to the customers Gia Lai also contributes to the with real demand, HAGL Land communities via activities like taking launched the project of Hoang Anh 200 beds part in associations, investing in Gold House Apartments (An Tien) to Society with the modern equipment, infrastructure development, creating the market at the attractive price of the devoted and experienced jobs, supporting healthcare services, VND 14.4 million/m2. education and other necessities. doctors and staff, the Hospital • In Gia Lai Province, Hoang Anh has been contributing and Gia Lai sponsored VND 2 billion to Hoang Anh Housing Construction improving the community hold the 2009 Gong Culture Festival, and Development JSC (HAGL creating an attractive tourism event healthcare quality. Land) is currently a member of With the strategic vision to become a leading conglomerate in and improve the living standard for Ho Chi Minh City Real Estate the community. Vietnam, in which rubber, hydropower, mining and real estate are core Association. In the period of 2008- sectors, Hoang Anh Gia Lai has been well aware of and paid close 2011, while the real estate market • Sponsored VND 2 billion to develop attention corporate social responsibility (CSR). was illiquid, HAGL Land pioneered the direct flight path from Pleiku to to implement sale campaigns at deep Hanoi and vice versa. discount to activate the market and The CSR activities of Hoang Anh Gia Lai mainly focus on four aspects: resolve the housing demand in Ho • Donated VND 1 billion to the cultural Chi Minh City as follows: and infrastructure development (1) To contribute to the economic development, produce high-quality activities at the rubber area of products and services, and create added values for shareholders; (2) To • 2008: Responding to the demand Mang Yang and Chuprong Districts. stimulus package of the Government, mitigate negative influence on the environment; (3) To participate actively • Invested VND 32 billion to improve HAGL Land implemented the the Gia Lai stadium, contributing in community and social activities; and (4) To improve the corporate discount campaign for the two considerably to the sport projects: Phu Hoang Anh Phase 1 governance, build up a favorable working environment, optimize the infrastructure improvement of the (discounted by 40% of the initial usage of the available resources and minimize operating costs. province. price) and Hoang Anh River View (discounted by 35% of the initial • Developed the center for the elderly price). with an area of 3.4 ha.

48 Hoang Anh Gia Lai Joint Stock Company Hoang Anh Gia Lai Joint Stock Company 49 Annual Report 2011 Annual Report 2011 Bridging Opportunities Bridging Entrepreneurship Bridging Partnership Bridging Capital Bridging Community Financial Statements

Sustainable Development and Care for the community

Contribution to the local economic development Mitigation of negative influence on the environment

Simultaneously, Hoang Anh Gia Lai • Building a 200-bed hospital in Investing in rubber, mining, • Building the micro-organism Orientation of also took part in the South East Asia Attapeu. hydropower and real estate projects, fertilizer plants in Gia Lai and investment promotion forums. Hoang Hoang Anh Gia Lai is well aware of Attapeu in order to produce local economic Anh Gia Lai obtains the official • Building a 4-star hotel with 100 the importance of the environment fertilizer which is not only suitable membership of the Association of rooms in Attapeu. protection through each construction to the geology of the rubber work and project implemented by the development is Vietnamese Investors investing in • Building about 2,000 apartments farms in Vietnam and Laos but Group such as buildings with a lot Laos, Cambodia and . for the poor in Attapeu. also minimizes the bad effects always a feature of Especially, with the valuable of green space to save energy, Israel of chemicals on the land, water contributions to Laos, Hoang Anh Gia • Building 4 bridges connecting 2 drip irrigation system implemented environment and the life of people CSR activities of the Lai brand name is well recognized by districts of Phu Vong and SaySetha, in rubber plantations creating high surrounding the farms. the people and communities in Laos. and building some schools in economic value and reducing the Hoang Anh Gia Lai. Some of such activities are: negative influence on the water • Dak Srong 2, Dak Srong 2A, Attapeu. Land refill after exploitation resource and land, hydropower Ba Thuoc 2, etc. hydropower projects have been invested and • Providing USD 40 million non- • Constructing hundreds of kilometers projects implemented friendly to the put into operation by Hoang interest bearing loan to build the of road and electricity line in the environment through the emission Anh Gia Lai Hydropower JSC. Attapeu international airport. rural areas of Attapeu. reduction. The annual electricity outputs of • Building a new administration center these power plants help reduce • Financing USD 19 million • Building the modern drip irrigation of Phu Vong District with modern the emission of nearly hundred (comprising USD 4 million system: The most salient feature architecture. thousand tons of CO per year. non-refundable grant and USD 15 of drip irrigation system is to 2 This helps to save thousands million non-interest bearing loan) save water. The system includes of tons of burning fuel in the to build the 2009 SEA Games water tower, impurity filter or electricity production. Athletes Village. waste processor. It is controlled by computer to automatically • Legal exploitation licenses, open and close water valves when reasonable relocation and the plant roots reach certain compensation, and careful land The Israel drip irrigation system humidity. The irrigation system refill after exploitation are the also helps in fertilizing rubber common characteristics of the trees. Operators mix fertilizer into mining projects implemented by water reservoirs and the fertilizer Hoang Anh Gia Lai Mining JSC will be delivered into each crop (HAGL Mining). The specialized root. Necessary water volume and trucks with auxiliary equipment evenly distribution to all targets and the processing facilities are conducted without erosion or located near the exploitation compaction on cultivated soil. place enable to mitigate negative influence on the environment.

Building 2,000 houses for the poor Young players of HAGL Arsenal JMG Football Academy Sprinkling lime before planting sugarcanes

50 Hoang Anh Gia Lai Joint Stock Company Hoang Anh Gia Lai Joint Stock Company 51 Annual Report 2011 Annual Report 2011 Bridging Opportunities Bridging Entrepreneurship Bridging Partnership Bridging Capital Bridging Community Financial Statements

Sustainable Development and Care for the community In the past 5 years, with hundreds billion VND from the after-tax profit for the social activities, Hoang Anh Gia Lai has proved its culture: business goes with the community and society. It is the lofty responsibilities committed by the Group. Social activities

At the end of 2011, Medical University • In Ho Chi Minh City, the Group Other social and charitable activities - Hoang Anh Gia Lai Hospital officially built the Le Anh Xuan Elementary of the Group comprise: donating VND started operation. The hospital is School in District 7 with the value 500 million to the Fund for the poor of located on an area of 5 hectares and of VND 10 billion to facilitate Binh Dinh province and VND 500 has 14,000 m2 of floor area with 200 more than 2,000 pupils. Besides, million to the Fund “Volunteer Love” of beds. With the modern equipment, the the Group also sponsored VND Dak Lak province, contributing VND 5 devoted and experienced doctors and 2 billion to the charitable activities in billion to build the Tan Dong Secondary staff, the Hospital has been contributing Ho Chi Minh City. School, Go Cong District, Tien Giang to Gia Lai Province in particular and Province; subscribing VND 1 billion the Central Highlands area of Vietnam • In 2011, the Group granted VND to the Fund for the poor of Ba Thuoc as well as the frontier provinces of Laos 1 billion to the victims in Kon Tum district, Thanh Hoa province and VND and Cambodia in general, improving the Province to recover the impact of 100 million to each of the 6 poorest community healthcare quality. the storm No. 9, directly subscribed communes of this district; subscribing 150 tons of rice to three Central VND 1 billion to build the project Medical examination for the poor in In the recent years, Hoang Anh Gia Lai provinces of Quang Binh, Ha Tinh, Ba Thuoc district “Memorial of the martyrs of Phu Quoc has often cooperated with reputable and Nghe An which were affected Prison” in Kien Giang Province; taking organizations or directly provided by the flood and granted the victim part in the program “Dream of Thuy” finance to healthcare and social welfare families VND 3 billion. The Group also held by Tuoi Tre newspaper to help programs such as: actively took part in the supporting the cancer children patients; building activities to take care of the health tens of gratitude houses for the poor in • Financing VND 2 billion to the of people and the hygiene activities Ben Tre, Tien Giang, Gia Lai provinces, etc. program “Truong Son Sentiment” held after the flood. by Sai Gon Giai Phong newspaper. • At the beginning of 2012, with the Besides the above activities, Hoang Anh Through this program, Hoang Anh orientation of bringing the better Gia Lai Football Club has made active Gia Lai supported over 10,000 Tet holiday to the poor, Hoang Anh contributions to the national football patients, cured many blind people Gia Lai held some gratitude programs development through setting up a having cataract and guided tens of professional team, establishing strategic with VND 1.4 billion donated to the serious patients. cooperation relationships with Arsenal funds such as: VND 500 million to the Club, establishing the Hoang Anh Fund for the poor of District 8 (HCMC), • Financing more than VND 2.2 billion Gia Lai - Arsenal Football Academy to Granting gratitious houses in Tien Giang VND 500 million to the Fund for the to the program “Pink Holiday” held by develop the young talents. Most recently, the Ho Chi Minh City Youth Union, poor of Nha Be district (HCMC), VND together with some professional clubs in contributing to the improvement of 100 million to the Fund for the poor of Vietnam, the President of HAGL Club, the people’s health in the remote Bac Lieu province through the Vietnam Mr. Doan Nguyen Duc, has made certain areas of Laos and Cambodia, Television, etc. At the same time, suggestions to innovate the national improving their knowledge of health Hoang Anh Gia Lai also sponsored professional football matches. and general science (guideline of food VND 300 million to the program Hoang Anh Gia Lai FC has brought a richly spiritual hygiene, killing mosquito larva, safe “Spring at the border area” held by life for people in the central highland provinces electricity usage). Sai Gon Giai Phong newspaper for the healthcare service and gifts to the poor at the border area of Vietnam – Laos.

52 Hoang Anh Gia Lai Joint Stock Company Hoang Anh Gia Lai Joint Stock Company 53 Annual Report 2011 Annual Report 2011 Bridging Opportunities Bridging Entrepreneurship Bridging Partnership Bridging Capital Bridging Community Financial Statements

Sustainable Development Outstanding events in 2011 and Care for the community In 2011, Hoang Anh Gia Lai achieved its planned targets, built strategies suitable for the volatile economic conditions and created profound social values through the following significant achievements: Corporate governance

Being aware of the importance of human resources to the sustainable development of the Group, Hoang Anh Gia Lai has applied appropriate and attractive policies on remunerations and other employee benefits to attract talents for the development of the Group.

In 2011, the Board of Management decided to strongly invest in information technology in order to manage and mobilize its resources effectively and to ensure transparency of transactions through choosing ERP solution of SAP with the infrastructure and hardware of IBM, consulted and implemented by CSC (Computer Sciences Corporation). This is a Completing the business blueprint stage of SAP ERP project corporate management and control model based on overall system analysis.

With the mission of continuous creativity, endeavor to produce quality products and the orientation of sustainable development, the management and the staff of Hoang Anh Gia Lai are trying our best to create more added values for our customers, shareholders and the overall society.

Mr Truong Tan Sang, President of Vietnam; Mr. Choummaly Sayasone, President of Laos; Mr. Nguyen Xuan Phuc, Deputy Prime Minister of Vietnam and the top leaders of Vietnam and Laos attended the ground breaking ceremony of the Attapeu International Airport and visited Hoang Anh Attapeu rubber plantation.

Thai Real Estate Association visited HAGL for investment opportunities

54 Hoang Anh Gia Lai Joint Stock Company Hoang Anh Gia Lai Joint Stock Company 55 Annual Report 2011 Annual Report 2011 Bridging Opportunities Bridging Entrepreneurship Bridging Partnership Bridging Capital Bridging Community Financial Statements

Outstanding events in 2011

5. In the morning of 22 November 2011, in Phu Vong District, Attapeu Province, Laos, Hoang Anh Gia Lai held the ground-breaking ceremony of the construction of Hoang Anh Attapeu Sugar Industrial Complex, and the grand-opening ceremony of Hoang Anh Attapeu Four-Star Hotel, etc. The sugar industrial complex has total investment of USD 100 million, including a sugar processing plant with daily processing capacity of 7,000 tons of sugarcane, a thermal power plant with capacity of 30 MW, an ethanol plant with annual capacity of 30,000 tons, and a micro- organism fertilizer plant with annual capacity of 50,000 tons to serve the 12,000-ha sugarcane total investment plantation. The sugar processing plant is expected Mr. Doan Nguyen Duc, Chairman of HAGL Group, was voted as the to complete and start operation in September highest honor of the “Ernst & Young - Entrepreneur of the Year” award and will represent Vietnam to participate in the international award 2012, which will create over 4,000 jobs for ceremony held in June 2012 in Monte Carlo, Monaco, France US$ 100 million local people. The investment in sugarcane of Hoang Anh Gia Lai not only generates sustainable profit, but also plays an important role in the Hoang Anh - Attapeu poverty reduction for local community. The sugar industrial complex sugarcanes can be harvested after 10 to 12 months of cultivation. With the sugar industrial complex of Hoang Anh Gia Lai, people in Attapeu can transform their low-yield farms with the traditional cultivation technique which have 1. On 27 May 2011, Hoang Anh Gia Lai Joint Stock Attapeu plantation in Laos. In case of water shortage generated annual income of USD 300 - 400/ha Company announced the issuance and listing facing by both Vietnam and other countries in the into sugarcane farms, which Hoang Anh Gia Lai of international bonds on the Singapore Stock world, which affects production and civil activities, will underwrite sugarcane output at market price, Exchange with the total amount of USD 90 million Hoang Anh Gia Lai Rubber Joint Stock Company at annual yield of over 100 tons/ha and much at the coupon of 9.875% p.a. The proceeds are continuously attempted to increase the efficiency of higher annual income of USD 5,000 - 6,000/ha. used to finance the development of rubber and water usage in cultivation by investing a large amount Hoang Anh - Attapeu four-star hotel hydropower projects and working capital demand. of money in the Israel drip irrigation system for 6. On 2 January 2012, Medical University - Hoang This is important to reach the Group’s target of 51,000 ha of rubber plantation in Laos, Cambodia Anh Gia Lai Hospital officially started operation strong and sustainable development in the context and central highland provinces of Vietnam. This after three years of construction. With modern of the volatile financial market and the tightened method is globally recommended because of water equipment and the experienced doctors and monetary policy of Vietnam. saving and economic efficiency. nurses, the hospital will considerably improve the healthcare quality in Gia Lai, other central 2. On 1 June 2011, Dak Srong 2A hydropower plant 4. In the evening of 8 October 2011, the “Ernst & highland provinces of Vietnam, and the border (built by Hoang Anh Gia Lai Hydropower Joint Young - Entrepreneur of the Year” award was areas of Laos and Cambodia, and contribute to Stock Company) located at Yang Nam Commune, held in Ha Noi by Ernst & Young Vietnam Ltd. and the improvement of life quality and social welfare. Kong Chro District, Gia Lai Province with the Vietnam Chamber of Commercial and Industry capacity of 18 MW was officially connected and (VCCI). The Chairman of Hoang Anh Gia Lai Group, 7. In the morning of 11 February 2012, at Hat transmitted electricity to the national grid. This is Mr Doan Nguyen Duc, was proud of being voted Xan Village, SaySetha District, Attpeu Province, the second hydropower project of Hoang Anh Gia Lai as the highest honor and will present for Vietnam Laos People’s Democratic Republic, Hoang Anh coming into operation (after Dak Srong 2 hydropower to participate in the international award ceremony Gia Lai held the ground breaking ceremony of the plant). In June 2012, Ba Thuoc 2 hydropower plant held in June 2012 in Monte Carlo, Monaco (France). Attapeu International Airport. Total investment is in Thanh Hoa Province will start operation. “Ernst & Young - Entrepreneur of the Year” award, about USD 40 million sponsored by Hoang Anh Chairman Doan Nguyen Duc handed over the key of the hospital founded in 1986 and being celebrated in over 50 Gia Lai in the form of non-interest bearing loan. and school to the Government of Attapeu, Laos 3. On 25 August 2011, Hoang Anh Gia Lai Rubber countries so far, was celebrated for the first time in This loan amount will be refunded by deducting Joint Stock Company has successfully experimented Vietnam. against the future tax payable arising from the Israel drip irrigation system at Hoang Anh Hoang Anh Gia Lai’s project in Laos. The airport is expected to officially start operation in June 2013.

56 Hoang Anh Gia Lai Joint Stock Company Hoang Anh Gia Lai Joint Stock Company 57 Annual Report 2011 Annual Report 2011 Bridging Opportunities Bridging Entreprenuership Bridging Partnership Bridging Capital Bridging Community Financial Statements

Consolidated General information financial statements COMPANY

Hoang Anh Gia Lai Joint Stock Company (“the Company”) is incorporated under the Law on Enterprise of Vietnam pursuant to Business Registration Certificate No. 3903000083 issued by the Department of Planning and Investment of Gia Lai Province on 1 June 2006 and the following Amended Business Registration Certificates (No. 5900377720):

Amended Business Registration Certificates No. Date

First amendment 5 August 2006 Second amendment 20 December 2006 Third amendment 10 January 2007 Fourth amendment 7 March 2007 Fifth amendment 1 June 2007 Sixth amendment 19 June 2007 Seventh amendment 20 December 2007 Eighth amendment 29 August 2008 Ninth amendment 24 November 2008 Tenth amendment 13 May 2009 Eleventh amendment 11 June 2009 Twelfth amendment 15 September 2009 Thirteenth amendment 18 November 2009 Fourteenth amendment 23 December 2009 Fifteenth amendment 17 May 2010 Sixteenth amendment 17 September 2010 Seventeenth amendment 28 December 2010 Eighteenth amendment 28 January 2011 Nineteenth amendment 26 May 2011 As at 31 December 2011, the Company has 50 subsidiaries and 3 associates as disclosed in Note 17 to the consolidated financial statements (31 December 2010: 49 subsidiaries and 3 associates). At present, the Company and its subsidiaries are principally engaged in developing apartments for sale and lease; construction; planting rubber, sugarcane and other trees; developing and operating hydropower plants; mining; producing and trading furniture and granite products; building and operating hotels and resorts; and sport and entertainment activities.

The Company’s head office is located at No. 15 Truong Chinh Street, Phu Dong Ward, Pleiku City, Gia Lai Province, Vietnam. General information 59 - 60

Report of Management 61 BOARD OF DIRECTORS

Independent Auditor’s report 62 The members of the Board of Directors during the year and at the date of this report are:

Consolidated balance sheet 63 - 65 Name Position

Consolidated income statement 66 - 67 Mr Doan Nguyen Duc Chairman Mr Nguyen Van Su Member Consolidated cash flow statement 68 - 69 Mr Doan Nguyen Thu Member Notes to the consolidated financial statements 70 - 128 Mr Le Hung Member Mr Nguyen Van Minh Member Ms Vo Thi Huyen Lan Member Mr Vu Huu Dien Member

Hoang Anh Gia Lai Joint Stock Company 59 Annual Report 2011 Bridging Opportunities Bridging Entreprenuership Bridging Partnership Bridging Capital Bridging Community Financial Statements

General information (continued) Report of Management

BOARD OF SUPERVISORS Management of Hoang Anh Gia Lai Joint Stock Company (‘the Company”) is pleased to present its report and the consolidated financial statements of the Company and its subsidiaries (collectively referred to as “the Group”) as at 31 December 2011 and Members of the Board of Supervisors during the year and at the date of this report are: for the year then ended.

Name Position MANAGEMENT’S RESPONSIBILITY IN RESPECT OF THE CONSOLIDATED FINANCIAL STATEMENTS Mr Nguyen Van Ton Head Management is responsible for the consolidated financial statements of the Group which give a true and fair view of the Mr Nguyen Xuan Thang Member consolidated state of affairs of the Group and of the consolidated results of its operations and its consolidated cash flows for Mr Lam Hoang Hai Member the year. In preparing those consolidated financial statements, management is required to: • select suitable accounting policies and then apply them consistently;

MANAGEMENT • make judgements and estimates that are reasonable and prudent;

Members of the Management during the year and at the date of this report are: • state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the consolidated financial statements; and Name Position • prepare the consolidated financial statements on the going concern basis unless it is inappropriate to presume that Mr Nguyen Van Su General Director the Group will continue its business. Mr Doan Nguyen Thu Deputy General Director Management is responsible for ensuring that proper accounting records are kept which disclose, with reasonable accuracy at Mr Le Van Ro Deputy General Director any time, the consolidated financial position of the Group and to ensure that the accounting records comply with the registered accounting system. It is also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the Mr Tra Van Han Deputy General Director prevention and detection of fraud and other irregularities. Mr Nguyen Van Minh Deputy General Director Management confirmed that it has complied with the above requirements in preparing the accompanying consolidated financial Mr Vo Truong Son Deputy General Director statements as at 31 December 2011 and for the year then ended.

LEGAL REPRESENTATIVE STATEMENT BY MANAGEMENT

The legal representative of the Company during the year and at the date of this report is Mr Nguyen Van Su. Management does hereby state that, in its opinion, the accompanying consolidated financial statements give a true and fair view of the consolidated financial position of the Group as at 31 December 2011 and of the consolidated results of its operations and its consolidated cash flows for the year then ended in accordance with the Vietnamese Accounting Standards AUDITORS and System and comply with relevant statutory requirements.

The auditor of the Company is Ernst & Young Vietnam Limited. For and on behalf of management:

Nguyen Van Su General Director

23 March 2012

60 Hoang Anh Gia Lai Joint Stock Company Hoang Anh Gia Lai Joint Stock Company 61 Annual Report 2011 Annual Report 2011 Bridging Opportunities Bridging Entreprenuership Bridging Partnership Bridging Capital Bridging Community Financial Statements

Ernst & Young Vietnam Limited Saigon Riverside Office Center 8th floor, 2A-4A Ton Duc Thang Street District 1, Ho Chi Minh City, S.R of Vietnam Tel: +84 8 3824 5252 Fax: +84 8 3824 5250 www.ey.com Consolidated Reference: 60752790/15046618 balance sheet INDEPENDENT AUDITORS’ REPORT B01-DN/HN As at 31 December 2011

To: The Shareholders and the Board of Directors of Hoang Anh Gia Lai Joint Stock Company VND’000 We have audited the accompanying consolidated balance sheet of Hoang Anh Gia Lai Joint Stock Company (“the Company”) and its subsidiaries (collectively referred to as “the Group”) as set out on pages 63 to 128 Code ASSETS Notes 31 December 2011 31 December 2010 which comprise the consolidated balance sheet as at 31 December 2011, the consolidated income (as restated - Note 40) statement and the consolidated cash flow statement for the year then ended and the notes thereto. 100 A. CURRENT ASSETS 13,308,282,830 11,450,600,996 The preparation and presentation of these consolidated financial statements are the responsibility of the 110 I. Cash 5 2,896,456,731 3,588,663,440 management. Our responsibility is to express an opinion on these consolidated financial statements based 111 1. Cash 2,896,456,731 3,588,663,440 on our audit. 120 II. Short-term investments 97,356,499 81,783,240 121 1. Short-term investments 97,356,499 81,783,240 Basis of opinion 130 III. Current accounts receivable 5,516,981,998 3,452,068,403 We conducted our audit in accordance with Vietnamese Standards on Auditing. Those standards require 131 1. Trade receivables 7 2,441,978,920 1,875,907,929 that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial 132 2. Advances to suppliers 8 2,014,657,045 1,249,025,710 statements are free from material misstatement. An audit includes examining, on a test basis, evidence 135 3. Other receivables 9 1,063,293,721 328,293,202 supporting the amounts and disclosures in the consolidated financial statements. An audit also includes 139 4. Provision for doubtful debts (2,947,688) (1,158,438) assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit 140 IV. Inventories 4,448,617,080 4,106,947,894 provides a reasonable basis for our opinion. 141 1. Inventories 10 4,448,670,564 4,107,001,378 149 2. Provision for obsolete inventories (53,484) (53,484) 150 V. Other current assets 348,870,522 221,138,019 Opinion 151 1. Short-term prepaid expenses 20,502,365 47,251,854 In our opinion, the consolidated financial statements give a true and fair view of the consolidated financial 152 2. Value-added tax deductibles 178,703,380 77,671,693 position of the Group as at 31 December 2011 and of the consolidated results of its operations and its 154 3. Tax and other receivables from the State 4,766,375 17,431,326 consolidated cash flows for the year then ended in accordance with the Vietnamese Accounting Standards 158 4. Other current assets 11 144,898,402 78,783,146 and System and comply with the relevant statutory requirements. 200 B. NON-CURRENT ASSETS 12,268,228,916 7,592,520,528 Without qualifying our report, we draw attention to Notes 3.1 and 40 to the consolidated financial statements, 220 I. Fixed assets 7,882,986,728 4,409,784,787 which state that the Company’s Board of Directors has decided to change its revenue recognition policy for 221 1. Tangible fixed assets 12 1,925,771,122 1,401,270,498 pre-completion sales of apartments adopted from 1 January 2011 for the whole group and this change has 222 Cost 2,241,677,921 1,598,371,382 been applied retrospectively. 223 Accumulated depreciation (315,906,799) (197,100,884) 224 2. Finance lease 13 17,304,319 14,284,184 225 Cost 21,273,991 14,896,718 226 Accumulated depreciation (3,969,672) (612,534) 227 3. Intangible fixed assets 14 120,741,616 115,360,179 228 Cost 124,644,161 117,798,151 229 Accumulated amortisation (3,902,545) (2,437,972) 230 4. Construction in progress 15 5,819,169,671 2,878,869,926 Ernst & Young Vietnam Limited 250 II. Long-term investments 3,758,363,401 2,855,492,612 252 1. Investments in associates 17.2 178,361,483 30,931,029 258 2. Other long-term investments 18 3,580,001,918 2,824,561,583 260 III. Other long-term assets 304,759,236 248,323,988 261 1. Long-term prepaid expenses 19 230,850,299 198,108,342 Nguyen Xuan Dai Le Vu Truong 262 2. Deferred tax assets 35.2 69,047,286 45,902,955 Deputy General Director Auditor 268 3. Other long-term assets 4,861,651 4,312,691 Certificate No. 0452/KTV Certificate No. N.1588/KTV 269 IV. Goodwill 4 322,119,551 78,919,141

Ho Chi Minh City, Vietnam 270 TOTAL ASSETS 25,576,511,746 19,043,121,524

23 March 2012

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Consolidated Consolidated balance sheet (continued) balance sheet (continued) As at 31 December 2011 B01-DN/HN B01-DN/HN As at 31 December 2011

VND’000

Code RESOURCES Notes 31 December 2011 31 December 2010 OFF BALANCE SHEET ITEM (as restated - Note 40)

300 A. LIABILITIES 15,493,289,136 10,261,837,834 ITEM 31 December 2011 31 December 2010

310 I. Current liabilities 6,778,370,609 7,051,125,011 1. Foreign currencies 311 1. Short-term loans and borrowings 20 3,201,903,706 3,092,741,335 - United States dollar (US$) 927,213 2,107 312 2. Trade payables 21 742,270,498 667,296,812 - Laos KIP (LAK) 1,226,239,573 1,289,308,956 313 3. Advances from customers 22 1,380,670,851 2,265,885,537 - Thai Baht (THB) 677,182 2,858,188 314 4. Statutory obligations 23 713,158,146 384,763,659 315 5. Payables to employees 47,756,874 22,396,670 316 6. Accrued expenses 24 450,693,971 223,899,400 319 7. Other payables 25 217,991,859 304,797,712 320 8. Short-term provision 23,924,704 21,480,614 323 9. Bonus and welfare fund - 67,863,272

330 II. Non-current liabilities 8,714,918,527 3,210,712,823 333 1. Other long-term liabilities 26 23,236,026 23,718,851 334 2. Long-term loans and debts 27 8,423,895,345 2,782,059,650 Ho Thi Kim Chi Nguyen Van Su 335 3. Deferred tax liabilities 35.2 261,090,475 403,501,499 Chief Accountant General Director 336 4. Provision for severance allowance 6,696,681 1,432,823 23 March 2012 400 B. OWNERS’ EQUITY 28 9,398,582,988 8,192,167,756

410 I. Equity 9,398,582,988 8,192,167,756 411 1. Share capital 4,672,805,900 3,115,206,970 412 2. Share premium 2,880,972,568 3,504,012,140 422 3. Consolidation reserve (389,966,078) (363,632,578) 416 4. Foreign exchange differences 139,176,056 59,665,483 417 5. Investment and development fund 8,622,737 8,622,737 418 6. Financial reserve fund 219,861,914 210,865,390 420 7. Undistributed earnings 1,867,109,891 1,657,427,614 439 C. MINORITY INTEREST 29 684,639,622 589,115,934

440 TOTAL LIABILITIES AND OWNERS’ EQUITY 25,576,511,746 19,043,121,524

64 Hoang Anh Gia Lai Joint Stock Company Hoang Anh Gia Lai Joint Stock Company 65 Annual Report 2011 Annual Report 2011 Bridging Opportunities Bridging Entreprenuership Bridging Partnership Bridging Capital Bridging Community Financial Statements

Consolidated Consolidated income statements income statements (continued) For the year ended 31 December 2011 B02-DN/HN B02-DN/HN For the year ended 31 December 2011

VND’000 VND’000

Code ITEMS Notes 31 December 2011 31 December 2010 Code ITEMS Notes Current year Previous year (as restated - Note 40) (as restated - Note 40)

01 1. Revenues from sale of goods and rendering of 31.1 3,152,105,785 3,970,715,730 51 16. Current corporate income tax expense 35.1 (542,132,693) (519,431,204) services

02 2. Deductions 31.1 (1,853,970) (1,591,144) 52 17. Deferred income tax benefit (expense) 35.2 165,555,355 (168,010,682)

10 3. Net revenues from sale of goods and rendering of 31.1 3,150,251,815 3,969,124,586 60 18. Net profit after tax 1,325,317,772 2,081,085,179 services Attributable to:

11 4. Costs of goods sold and services rendered 32 (1,726,299,628) (1,961,463,536) 61 18.1 Minority interests 157,333,971 271,074,630 62 18.2 Equity holders of the parent 1,167,983,801 1,810,010,549 20 5. Gross profit from sale of goods and rendering of 1,423,952,187 2,007,661,050 services 70 19. Earnings per share 30

21 6. Finance income 31.2 1,226,990,002 1,262,054,448 - Basic (VND) 2,500 4,239 - Diluted (VND) 2,421 4,176 22 7. Finance expense 33 (537,002,813) (216,598,866) 23 In which: Interest expense (464,848,591) (204,970,691)

24 8. Selling expenses (163,985,523) (97,472,873)

25 9. General and administrative expenses (230,515,584) (190,206,122)

30 10. Operating profit 1,719,438,269 2,765,437,637

31 11. Other income 34 44,233,778 21,835,172

Ho Thi Kim Chi Nguyen Van Su 32 12. Other expenses 34 (61,776,937) (21,283,463) Chief Accountant General Director

40 13. Other (loss) income 34 (17,543,159) 551,709 23 March 2012

45 14. Share of profit of associates - 2,537,719

50 15. Profit before tax 1,701,895,110 2,768,527,065

66 Hoang Anh Gia Lai Joint Stock Company Hoang Anh Gia Lai Joint Stock Company 67 Annual Report 2011 Annual Report 2011 Bridging Opportunities Bridging Entreprenuership Bridging Partnership Bridging Capital Bridging Community Financial Statements

Consolidated Consolidated cash flow statement cash flow statement (continued) For the year ended 31 December 2011 B03-DN/HN B03-DN/HN For the year ended 31 December 2011

VND’000 VND’000

Code ITEMS Notes Current year Previous year Code ITEMS Notes Current year Previous year (as restated - Note 40) (as restated - Note 40)

I. CASH FLOWS FROM OPERATING ACTIVITIES III. CASH FLOWS FROM FINANCING ACTIVITIES

01 Profit before tax 1,701,895,110 2,768,527,065 31 Capital contribution from minority interest 29 9,194,738 - Adjustments for: 31 Proceeds from capital contribution and issuance of shares - 1,299,600,000 02 Depreciation and amortisation 135,518,570 77,419,079 31 Refund from (deposit to) escrow account 582,568,781 (582,568,781) 03 Provisions 1,789,250 (864,597) 31 Proceeds from disposal of treasury shares - 40,154,093 04 Unrealised foreign exchange gains (16,492,549) (19,594,467) 33 Borrowings received 10,269,426,024 5,142,574,833 05 Profits from investing activities (1,133,409,080) (1,245,284,124) 34 Borrowings repaid (4,674,380,580) (3,054,595,653) 06 Interest expense 33 464,848,591 204,970,691 36 Dividends paid to equity holders of subsidiaries 29 (3,193,250) -

08 Operating profit before changes in working capital 1,154,149,892 1,785,173,647 36 Dividends paid to equity holders of the parent 28 - (292,008,407) 09 Increase in receivables (457,785,761) (816,591,846) 10 Increase in inventories (466,656,754) (248,199,111) 40 Net cash flows from financing activities 6,183,615,713 2,553,156,085 11 (Decrease)/ increase in payables (776,332,932) 211,651,105 12 Decrease/ (increase) in prepaid expenses 123,546,643 (76,999,412) 50 Net (decrease) increase in cash (109,637,928) 1,061,865,709 13 Interest paid (312,687,688) (192,430,264)

14 Corporate income tax paid 35.1 (186,868,807) (286,345,194) 60 Cash at beginning of the year 3,006,094,659 1,944,228,950 16 Other cash outflows from operating activities (71,132,387) (81,818,284)

70 Cash at end of the year 5 2,896,456,731 3,006,094,659 20 Net cash flows (used in) from operating activities (993,767,794) 294,440,641

II. CASH FLOWS FROM INVESTING ACTIVITIES

21 Purchases and construction of fixed assets (4,812,909,891) (2,302,664,594) 22 Proceeds from disposals of fixed assets 31,246,169 10,163,800 23 Loans to other entities (324,500,000) - 25 Payments for purchase shares in other entities (1,297,079,925) (1,350,429,358) 26 Proceeds from sale of investments in other entities 763,005,652 1,691,966,557 27 Interest and dividends received 340,752,148 165,232,578

Ho Thi Kim Chi Nguyen Van Su 30 Net cash flows used in investing activities (5,299,485,847) (1,785,731,017) Chief Accountant General Director

23 March 2012

68 Hoang Anh Gia Lai Joint Stock Company Hoang Anh Gia Lai Joint Stock Company 69 Annual Report 2011 Annual Report 2011 Bridging Opportunities Bridging Entreprenuership Bridging Partnership Bridging Capital Bridging Community Financial Statements

Notes to the consolidated Notes to the consolidated financial statements financial statements (continued) As at and for the year ended 31 Decemeber 2011 B09-DN/HN B09-DN/HN As at and for the year ended 31 Decemeber 2011

1. CORPORATE INFORMATION 2. BASIS OF PREPARATION (continued) All inter-company balances and transactions, including unrealised profits arising from intra-group transactions, Hoang Anh Gia Lai Joint Stock Company (“the Company”) is incorporated under the Law on Enterprise of Vietnam 2.1. Accounting standards and system (continued) have been eliminated in full. Unrealised losses are pursuant to Business Registration Certificate No. 3903000083 issued by the Department of Planning and Investment eliminated unless costs cannot be recovered. of Gia Lai Province on 01 June 2006 and the following Amended Business Registration Certificates (No. 5900377720): • Decision No. 100/2005/QD-BTC dated 28 December 2005 on the Issuance and Minority interests represent the portion of profit or loss Amended Business Registration Certificates No. Date Promulgation of Four Vietnamese Standards on and net assets not held by the Company’s shareholders First amendment 05 August 2006 Accounting (Series 5). and are presented consolidatedly in the consolidated Second amendment 20 December 2006 income statement and in the consolidated balance sheet. Third amendment 10 January 2007 Accordingly, the accompanying consolidated balance Fourth amendment 07 March 2007 sheet, consolidated income statement, consolidated The subsidiaries are consolidated from the date on Fifth amendment 01 June 2007 cash flow statement and related notes, including which the Group obtains control and cease to be Sixth amendment 19 June 2007 their utilisation are not designed for those who are consolidated from the date on which the Group ceases Seventh amendment 20 December 2007 not informed about Vietnam’s accounting principles, to control. Where there is a loss of control over the subsidiaries, the consolidated financial statements Eighth amendment 29 August 2008 procedures and practices and furthermore are not still include results for the period of the reporting year Ninth amendment 24 November 2008 intended to present the financial position and results during which the Group has control. Tenth amendment 13 May 2009 of operations and cash flows in accordance with Eleventh amendment 11 June 2009 accounting principles and practices generally accepted in countries other than Vietnam. Except for subsidiaries acquired under common control Twelfth amendment 15 September 2009 which are accounted for under the pooling of interests Thirteenth amendment 18 November 2009 2.2 Applied accounting documentation system method (Note 3.13), other subsidiaries have been Fourteenth amendment 23 December 2009 included in the consolidated financial statements using Fifteenth amendment 17 May 2010 the purchase method of accounting that measures the The Group’s applied accounting documentation system Sixteenth amendment 17 September 2010 subsidiaries’ assets and liabilities at their fair value at is the General Journal system. Seventeenth amendment 28 December 2010 the acquisition date. Eighteenth amendment 28 January 2011 2.3 Fiscal year Nineteenth amendment 26 May 2011 3. SUMMary of SIGNIFICANT As at 31 December 2011, the Company has 50 subsidiaries and 3 associates as disclosed in Note 17 to the The Group’s fiscal year starts on 01 January and ends consolidated financial statements (31 December 2010: 49 subsidiaries and 3 associates). At present, the Company on 31 December. ACCOUNTING POLICIES and its subsidiaries are principally engaged in developing apartments for sale and lease; construction; planting rubber, sugarcane and other trees; developing and operating hydropower plants; mining; producing and trading furniture and 2.4 Accounting currency 3.1 Change in accounting policies granite products; building and operating hotels and resorts; and sport and entertainment activities. The Company maintains its accounting records in VND. The accounting policies adopted by the Group for The Company’s head office is located at No. 15 Truong Chinh Street, Phu Dong Ward, Pleiku City, Gia Lai Province, Vietnam. preparation of consolidated financial statements are 2.5 Basis of consolidation consistent with those of previous financial years except for the followings 2. BASIS OF PREPARATION The consolidated financial statements comprise the financial statements of the Company and its The Board of Directors has decided to change its revenue recognition policy for pre-completion sales 2.1 Accounting standards and system subsidiaries as at and for the year ended 31 December 2011. The financial statements of the subsidiaries are of apartments adopted from 01 January 2011 in recognition of the International Financial Reporting The consolidated financial statements of the Group expressed in thousands of Vietnam dong (“VND’000”), are prepared prepared for the same year as the Company, using Standards principles relevant to this matter. in accordance with the Vietnamese Accounting System and Vietnamese Accounting Standards issued by the Ministry accounting policies consistent with the Company’s Accordingly, revenue and associated costs from of Finance as per: accounting policies. Adjustments are made for any pre-completion sales of apartments are now being • Decision No. 149/2001/QD-BTC dated 31 December 2001 on the Issuance and Promulgation of Four Vietnamese differences in accounting policies that may exist to recognised when all of the following criteria are Standards on Accounting (Series 1); ensure consistency between the subsidiaries and the effectively met: • Decision No. 165/2002/QD-BTC dated 31 December 2002 on the Issuance and Promulgation of Six Vietnamese Company Standards on Accounting (Series 2); • Decision No. 234/2003/QD-BTC dated 30 December 2003 on the Issuance and Promulgation of Six Vietnamese Standards on Accounting (Series 3); • Decision No. 12/2005/QD-BTC dated 15 February 2005 on the Issuance and Promulgation of Six Vietnamese Standards on Accounting (Series 4); and

70 Hoang Anh Gia Lai Joint Stock Company Hoang Anh Gia Lai Joint Stock Company 71 Annual Report 2011 Annual Report 2011 Bridging Opportunities Bridging Entreprenuership Bridging Partnership Bridging Capital Bridging Community Financial Statements

Notes to the consolidated Notes to the consolidated financial statements (continued) financial statements (continued) As at and for the year ended 31 Decemeber 2011 B09-DN/HN B09-DN/HN As at and for the year ended 31 Decemeber 2011

3. SUMMary of SIGNIFICANT of outstanding receivables at the balance sheet date 3.5 Provision for obsolete inventories When intangible fixed assets are sold or retired, their which are doubtful of being recovered. Increases and costs and accumulated amortisation are removed ACCOUNTING POLICIES (continued) decreases to the provision balance are recorded as Inventory provision is created for the estimated loss from the consolidated balance sheet and any gain or general and administrative expense in the consolidated arising due to the impairment of value (through loss resulting from their disposal is included in the 3.1 Change in accounting policies (continued) income statement. diminution, damage, obsolescence, etc) of raw consolidated income statement. materials, finished goods, and other inventories • The Group has transferred to the buyer the significant 3.4 Inventories owned by the Group, based on appropriate evidence of Land use rights risks and rewards of ownership of the goods; impairment available at the balance sheet date. Land use rights are recorded as intangible assets when Inventories are stated at the lower of cost incurred the Group has the land use right certificates. The costs • The Group retains neither continuing managerial in bringing each product to its present location and Increases and decreases to the provision balance are of land use rights comprise all directly attributable costs involvement to the degree usually associated with condition, and net realisable value. recorded into the cost of goods sold in the consolidated of bringing the land to the condition available for use. ownership nor effective control over the goods sold; income statement. • The amount of revenue can be measured reliably; Net realisable value represents the estimated selling Computer software price in the ordinary course of business less the 3.6 Tangible fixed assets Computer software which is not an integral part of • It is probable that the economic benefits associated estimated costs to complete and the estimated costs hardware is recorded as intangible asset and amortised with the transaction will flow to the Group; and necessary to make the sale. Tangible fixed assets are stated at cost less accumulated over the estimated term of benefits. depreciation. • The costs incurred or to be incurred in respect of the The perpetual method is used to record inventories, 3.8 Depreciation and amortisation transaction can be measured reliably. which are valued as follows: The cost of a tangible fixed asset comprises its purchase price and any directly attributable costs of Depreciation and amortisation of tangible and This change was considered as a change in accounting bringing the tangible fixed asset to working condition intangible assets are calculated on a straight-line basis policy by the Ministry of Finance in its Official Letter Raw and construction - Actual cost on a weighted for its intended use. over the estimated useful life of each asset as follows: dated 18 February 2011 and has been applied materials tools average basis. retrospectively in accordance with VAS No. 29 - and supplies and Expenditures for additions, improvements and renewals Changes in Accounting Policies, Accounting Estimates merchandise goods Buildings and structures 10 - 50 years are added to the carrying amount of the assets and and Errors. The impact of the retrospective application to Machinery and equipment 5 - 20 years Finished goods and - Cost of direct materials expenditures for maintenance and repairs are charged the previously reported prior year numbers is disclosed work-in-process and labour plus to the consolidated income statement as incurred. Motor vehicles 8 - 20 years on Note 40 to the consolidated financial statements. attributable overheads Office equipment 3 - 10 years based on the normal level When tangible fixed assets are sold or retired, their In addition, on 06 November 2009, the Ministry Land use rights 45 years of activities. costs and accumulated depreciation are removed of Finance issued Circular No. 210/2009/TT-BTC Computer software 5 years from the consolidated balance sheet and any gain or providing guidance for the adoption in Vietnam of loss resulting from their disposal is included in the Other assets 8 - 15 years the International Financial Reporting Standards on Apartments for sale under construction are carried at consolidated income statement. presentation and disclosures of financial instruments the lower of cost and net realisable value. Costs include Land use right with indefinite useful life will not be (“Circular 210”) which is effective from financial years all expenditures including borrowing costs, directly amortised. beginning on or after 01 January 2011. The adoption attributable to the development and construction 3.7 Intangible fixed assets of Circular 210 results in new disclosures being added of the apartments. Net realisable value represents 3.9 Construction in progress to the consolidated financial statements as shown in current selling price less estimated cost to complete Intangible fixed assets are stated at cost less accumulated amortisation. Notes 38 and 39. and estimated selling and marketing expenses. Construction in progress represents costs incurred The cost of an intangible fixed asset comprises its to date attributable directly to the construction and 3.2 Cash Land held for development which is presented as part development of the Group’s buildings, offices for of “Other long-term investments” is carried at the purchase price and any directly attributable costs of preparing the intangible fixed asset for its intended use. lease, plantations, hydro power, mining and software Cash comprises cash on hand and cash at banks. lower of cost and net realisable value. Costs include implementation which have not yet been fully all expenditures directly related to the acquisition, Expenditures for additions, improvements are added completed as at the balance sheet date. 3.3 Receivables site clearance, and land compensation. Net realisable value represents estimated current selling price less to the carrying amount of the assets and other anticipated cost of disposal. expenditures are charged to the consolidated income Receivables are presented in the consolidated financial statement as incurred. statements at the carrying amounts due from customers and other debtors, after provision for doubtful debts. The provision for doubtful debts represents amounts

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Notes to the consolidated Notes to the consolidated financial statements (continued) financial statements (continued) As at and for the year ended 31 Decemeber 2011 B09-DN/HN B09-DN/HN As at and for the year ended 31 Decemeber 2011

3. SUMMARY OF SIGNIFICANT 3.11 Borrowing costs Goodwill acquired in a business combination is 3.14 Investments in associates initially measured at cost being the excess of the cost ACCOUNTING POLICIES (continued) Borrowing costs consist of interest and other costs that an the business combination over the Group’s interest The Group’s investment in associates is accounted for entity incurs in connection with the borrowing of funds. in the net fair value of the acquiree’s identifiable using the equity method of accounting. An associate is 3.9 Construction in progress (continued) assets, liabilities and contingent liabilities. If the an entity in which the Group has significant influence Borrowing costs are recorded as expense during the year cost of a business combination is less than the fair that are neither subsidiaries nor joint ventures. The Plantation costs in which they are incurred, except to the extent that they value of the net assets of the subsidiary acquired, the Group generally deems they have significant influence Costs include attributable costs related directly to are capitalised as explained in the following paragraph. difference is recognised directly in the consolidated if they have over 20% of the voting rights. the rubber or sugarcane plantations such as survey, income statement. After initial recognition, goodwill is land compensation, land clearance, rubber seeds, Borrowing costs that are directly attributable to the measured at cost less any accumulated amortisation. Under the equity method, the investment is carried fertilizer, transportation of rubber seeds and other acquisition, construction or production of a particular asset Goodwill is amortised over 10 year period on a in the consolidated balance sheet at cost plus post materials, workers’ wages, building roads and fences, are capitalised as part of the cost of that asset. Capitalisation straight-line basis. acquisition changes in the Group’s share of net assets fire prevention and security guards, anti-botanic drugs of borrowing costs is suspended during the period in which of the associates. Goodwill arising on acquisition of and other related costs. active development of the asset is interrupted unless When the Company acquires the minority interests the associate is included in the carrying amount of the such interruption is considered necessary. Capitalisation of a subsidiary, the difference between the cost of investment and is amortized over 10-year period. The Hydro power costs of borrowing costs is ceased when substantially all the acquisition and the carrying amount of the minority consolidated income statement reflects the share of the Costs include attributable costs related directly to the activities necessary to prepare the qualifying asset for its interest is reflected as goodwill in the consolidated post-acquisition results of operation of the associate. hydro power project such as land compensation, land intended use or sale are complete. balance sheet. clearance, dam construction, transmission line and The share of post-acquisition profit/(loss) of the other related cost. 3.12 Prepaid expenses Where the acquisition of subsidiary which is not a associates is presented on face of the consolidated business, instead of an asset acquisition, the individual income statement and its share of post-acquisition Mining costs Prepaid expenses are reported as short-term or long- identifiable assets acquired and liabilities assumed are movements in reserves is recognized in reserves. The Costs include attributable costs related directly to the term prepaid expenses on the consolidated balance identified and recognised. The cost of the acquisition cumulative post-acquisition movements are adjusted minerals such as land compensation, land clearance sheet which mainly include costs of bond issuance, shall be allocated to the individual identifiable assets against the carrying amount of the investment. to exploit the mine. prepaid rentals and cost of tools and supplies. They and liabilities on the basis of their relative fair values at Dividends receivable from associates reduce the are amortised over the period for which the amounts the date of purchase. Such a transaction or event does carrying amount of the investment. Software implementation are paid or the period in which economic benefits are not give rise to goodwill. Costs include attributable costs related directly to the generated in relation to these expenses. The financial statements of the associates are software implementation such as software license, Where the business combinations involving entities prepared for the same reporting year as the Group. installation and training • Costs of bond issuance are amortised to the or businesses under common control, the pooling of Where necessary, adjustments are made to bring the consolidated income statement over the periods of interest method is applied as follows: accounting policies in line with those of the Group. 3.10 Leased assets bonds; and • The assets and liabilities of the combining entities 3.15 Investments in securities and other investments The determination of whether an arrangement is, or • Pre-operating expenses/start-up and preparation are reflected at their carrying amounts; contains a lease is based on the substance of the costs (including expenditures on training, advertising Investments in securities and other investments are arrangement and requires an assessment of whether and promotional activities incurred during this • No new goodwill is recognised as a result of the stated at their acquisition cost. Provision is made for the fulfilment of the arrangement is dependent on the year) and tools and supplies are amortised to the combination; any diminution in value of the marketable investments use of a specific asset and the arrangement conveys a consolidated income statement over 3 to 5 years. at the balance sheet date representing the excess of right to use the asset. • The consolidated income statement reflects the results of the combining entities for the full year, irrespective of the acquisition cost over the market value at that date. when the combination took place; and Leases are classified as finance leases whenever the 3.13 Business combinations and goodwill Increases and decreases to the provision balance terms of the lease transfer substantially all the risks • Comparatives are presented as if the entities had are recorded as finance expense in the consolidated and rewards of ownership of the asset to the lessee. All Business combinations are accounted for using the always been combined. income statement. other leases are classified as operating leases. purchase method. The cost of a business combination is measured as the fair value of assets given, equity Rentals under operating leases are charged to the instruments issued and liabilities incurred or assumed consolidated income statement on a straight-line basis at the date of exchange plus any costs directly over the term of the lease. attributable to the business combination. Identifiable assets and liabilities and contingent liabilities assumed in a business combination are measured initially at fair values at the date of business combination.

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Notes to the consolidated Notes to the consolidated financial statements (continued) financial statements (continued) As at and for the year ended 31 Decemeber 2011 B09-DN/HN B09-DN/HN As at and for the year ended 31 Decemeber 2011

3.19 Treasury shares 3. SUMMARY OF SIGNIFICANT Transaction VAS 10 Accounting treatment under Circular 201 ACCOUNTING POLICIES (continued) Own equity instruments which are reacquired Translation All unrealised foreign All unrealised foreign exchange differences are taken to the (treasury shares) are recognised at cost and deducted of short-term exchange differences are “Foreign exchange differences reserve” account in the equity 3.16 Payable and accruals from equity. No gain or loss is recognised in profit or monetary assets taken to the consolidated section of the consolidated balance sheet and will be reversed on loss upon purchase, sale, issue or cancellation of the and liabilities income statement. the following year. Payable and accruals are recognised for amounts to Group’s own equity instruments. denominated in be paid in the future for goods and services received, foreign currencies whether or not billed to the Group. 3.20 Foreign currency transactions at year end.

3.17 Provision for severance allowance The Group follows the guidance under VAS 10 “The Translation All unrealised foreign • All unrealised foreign exchange gains are taken to the Effects of Changes in Exchange Rates” (the “VAS 10”) of long-term exchange differences are The severance pay to employee is accrued at the end in relation to foreign currency transactions as applied consolidated income statement. monetary taken to the consolidated of each reporting year for all employees who have consistently in prior years. more than 12 months in service up to 31 December liabilities income statement. • All foreign exchange losses will be charged to the denominated in consolidated income statement. However, if the charging 2008 at the rate of one-half of the average monthly Transactions in currencies other than the Group’s foreign currencies salary for each year of service up to 31 December reporting currency of VND are recorded at the inter-bank of all foreign exchange losses results in net loss before tax at year end. 2008 in accordance with the Labour Code, the Law on exchange rates ruling at the date of the transaction. At for the Group, part of the exchange losses can be deferred Social Insurance and related implementing guidance. year-end, monetary assets and liabilities denominated and allocated to the consolidated income statement within Commencing 1 January 2009, the average monthly in foreign currencies are revalued at exchange rates the subsequent five years. In any case, the total foreign salary used in this calculation will be revised at the end ruling at the balance sheet date. All realised and exchange loss to be charged to current year’s income must of each reporting year following the average monthly unrealised foreign exchange differences are taken to be at least equivalent to the foreign exchange losses arising from salary of the 6-month period up to the reporting date. the consolidated income statement. Realised and the translation of the current portion of the long-term liabilities, Any changes to the accrued amount will be taken to unrealised foreign exchange differences arising during the consolidated income statement. while the remaining portion of the foreign exchange losses the pre-operating periods are recorded in the equity can be deferred in the consolidated balance sheet and section of the consolidated balance sheet. 3.18 Earnings per share allocated to the consolidated income statement within the subsequent five years. The above guidance related to unrealized foreign Basic earnings per share amount is computed by exchange differences provided by VAS 10 is different dividing net profit for the year attributable to ordinary from those stipulated in the Circular No. 201/2009/ The impact to the consolidated financial statements should the Group adopt the Circular 201 for the years beginning 1 equity holders of the Company before any appropriation TT-BTC issued on 15 October 2009 by the Ministry of January 2009 is not material to the consolidated financial statements taken as a whole. of bonus and welfare fund by the weighted average Finance providing guidance for the treatment of foreign number of ordinary shares outstanding during the year. exchange differences (the “Circular 201”) as follows: The assets and liabilities of foreign entities are translated into VND at the rate of exchange ruling at the balance sheet date and their revenue, income and expense items are translated at the average exchange rate for the year. Diluted earnings per share amounts are calculated by The exchange differences arising on the translation are taken directly to “Foreign exchange differences”, a separate dividing the net profit after tax attributable to ordinary component of equity upon the disposal of the investment. equity holders of the Company (after adjusting for interest on the convertible bonds) by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.

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Notes to the consolidated Notes to the consolidated financial statements (continued) financial statements (continued) As at and for the year ended 31 Decemeber 2011 B09-DN/HN B09-DN/HN As at and for the year ended 31 Decemeber 2011

3. SUMMary of SIGNIFICANT Sale of goods Interest Current income tax assets and liabilities are offset when there is a legally enforceable right for the Group to set ACCOUNTING POLICIES (continued) Revenue is recognised when the significant risks and Revenue is recognised as the interest accrues (taking off current tax assets against current tax liabilities and rewards of ownership of the goods have passed to the into account the effective yield on the asset) unless when the Group intends to settle its current tax assets 3.21 Appropriation of net profit buyer. collectability is in doubt. and liabilities on a net basis.

Net profit after tax is available for appropriation to For pre-completion sale of apartments, revenue is Rental income Deferred tax shareholders after approval by the shareholders recognized when all of the following criteria have been at the Annual General Meeting, and after making effectively met: Rental income arising from operating leases is Deferred tax is provided using the liability method appropriation to reserve funds in accordance with accounted for on a straight line basis over the lease on temporary differences at the balance sheet date the Group’s Charter and Vietnamese regulatory • The Group has transferred to the buyer the significant terms on ongoing leases. between the tax base of assets and liabilities and their requirements. risks and rewards of ownership of the units; carrying amount for financial reporting purposes. Dividend income Financial reserve fund • The Group retains neither continuing managerial Deferred tax liabilities are recognised for all taxable involvement to the degree usually associated with Income is recognised when the Group’s entitlement as temporary differences, except: Financial reserve fund is appropriated from the Group’s ownership nor effective control over the units sold; an investor to receive the dividend is established. net profit as proposed by the Board of Management • Where the deferred tax liability arises from the initial • The amount of revenue can be measured reliably; and subject to shareholders’ approval at the Annual Sale of electricity recognition of an asset or liability in a transaction General Meeting. This fund is set aside to protect which at the time of the related transaction affects the Group’s normal operations from business risks or • It is probable that the economic benefits associated with the transaction will flow to the entity; and Revenue is recognised based on the actual electricity neither the accounting profit nor taxable profit or losses, or to prepare for unforeseen losses or damages sold and transferred to the grid at the pre-agreed tariff. loss; and and force majeure, such as fire, economic and financial • The costs incurred or to be incurred in respect of the turmoil of the country or elsewhere. transaction can be measured reliably. Income from disposal of investments • In respect of taxable temporarily differences associated with investments in subsidiaries and Investment and development fund associates, and interests in joint ventures where Construction contracts Income from disposal of investments is recognised when the investments transfer procedures are timing of the reversal of the temporary difference can Investment and development fund is appropriated be controlled and it is probable that the temporary Where the outcome of a construction contract can be completed and the involving parties have fulfilled their from the Group’s net profit as proposed by the Board of difference will not reverse in the foreseeable future. estimated reliably and certified by customers, revenue respective contractual obligations. Management and subject to approval by shareholders and costs are recognised by reference to the amount of at the Annual General Meeting. This fund is set aside Deferred tax assets are recognised for all deductible work completed at the balance sheet date. Variations 3.23 Taxation for use in the Group’s expansion of its operation or in- temporary differences, carried forward unused tax in contract work, claims and incentive payments are credit and unused tax losses, to the extent that it is depth investments. Current income tax included to the extent that they have been agreed with probable that taxable profit will be available against the customer. which deductible temporary differences, carried Bonus and welfare fund Current income tax assets and liabilities for the current forward unused tax credit and unused tax losses can Where the outcome of a construction contract cannot and prior years are measured at the amount expected Bonus and welfare fund is appropriated from the Group’s be utilised, except: be estimated reliably, contract revenue is recognised to to be recovered from or paid to the taxation authorities. net profit as proposed by the Board of Management the extent of contract costs incurred that it is probable The tax rates and tax laws used to compute the and subject to shareholders’ approval at the Annual • Where the deferred tax asset in respect of deductible will be recoverable. Contract costs are recognised as amount are those that are enacted as at the balance General Meeting. This fund is set aside for the purpose temporary difference which arises from the initial expenses in the year in which they are incurred. sheet date. of pecuniary rewarding and encouragement, common recognition of an asset or liability which at the time of the related transaction, affects neither the benefits and improvement of the employees’ material Current income tax is charged or credited to the Rendering of services accounting profit nor taxable profit or loss; and and spiritual benefits and social activities. consolidated income statement, except when it relates Revenue from rendering of services is recognized to items recognised directly to equity, in which case 3.22 Revenue recognition when the services are rendered and is stated net of the current income tax is also dealt with in equity. discounts, allowances and non refundable taxes. Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable, excluding trade discount, rebate and sales return. The following specific recognition criteria must also be met before revenue is recognised:

78 Hoang Anh Gia Lai Joint Stock Company Hoang Anh Gia Lai Joint Stock Company 79 Annual Report 2011 Annual Report 2011 Bridging Opportunities Bridging Entreprenuership Bridging Partnership Bridging Capital Bridging Community Financial Statements

Notes to the consolidated Notes to the consolidated financial statements (continued) financial statements (continued) As at and for the year ended 31 Decemeber 2011 B09-DN/HN B09-DN/HN As at and for the year ended 31 Decemeber 2011

3. SUMMary of SIGNIFICANT future year in which significant amounts of deferred Offsetting of financial instruments 4.3 Additional acquisition of interest in Gia Lai tax liabilities or assets are expected to be settled or Mineral Joint Stock Company ACCOUNTING POLICIES (continued) recovered. Financial assets and financial liabilities are offset and the net amount reported in the consolidated balance The Company’s subsidiary, Hoang Anh Gia Lai Mineral 3.23 Taxation (continued) 3.24 Financial instruments sheet if, and only if, there is a currently enforceable JSC, acquired additional 2.57% equity interest in legal right to offset the recognised amounts and there its subsidiary, Gia Lai Mineral Joint Stock Company Deferred tax (continued) Initial recognition and presentation is an intention to settle on a net basis, or to realise the (“GLM”), from the non-controlling shareholders of GLM assets and settle the liabilities simultaneously. for total purchase consideration of VND’000 9,000,000 • In respect of deductible temporarily differences Financial assets and recognised a goodwill of VND’000 5,068,401. associated with investments in subsidiaries, associates, and interests in joint ventures, deferred Financial assets within the scope of Circular 210 tax assets are recognised only to the extent that it is 4. BUSINESS COMBINATIONS 4.4 Additional acquisition of interest in Hoang Anh are classified, for disclosures in the notes to the probable that the temporary differences will reverse Thanh Hoa Hydropower Joint Stock Company consolidated financial statements, as financial assets in the foreseeable future and taxable profit will be 4.1 Additional acquisition of interest in Minh Tuan at fair value through profit or loss, held-to-maturity available against which the temporary differences Trading and Services Co., Ltd. The Company’s subsidiary, Hoang Anh Gia Lai investments, loans and receivables or available- can be utilised. Hydropower JSC, acquired additional 0.29% equity for-sale financial assets as appropriate. The Group The Company’s subsidiary, Hoang Anh Construction interest in its subsidiary, Hoang Anh Thanh Hoa The carrying amount of deferred income tax assets determines the classification of its financial assets at and Housing Development Joint Stock Company, Hydropower Joint Stock Company (“THH”), from the is reviewed at each balance sheet date and reduced initial recognition. acquired additional 5% equity interest in Minh Tuan non-controlling shareholders of THH for total purchase to the extent that it is no longer probable that Trading and Services Co., Ltd. (“MTC”) from MTC’s consideration of VND’000 2,000,000 and recognised sufficient taxable profit will be available to allow all All financial assets are recognised initially at cost plus non-controlling shareholders for a total consideration a goodwill of VND’000 1,202,504. or part of the deferred income tax asset to be utilised. directly attributable transaction costs. of VND’000 11,000,000. Previously unrecognised deferred income tax assets 4.5 Additional acquisition of interest in Hoang Anh are re assessed at each balance sheet date and are The Group’s financial assets include cash and short- Management has assessed that the acquisition of Gia Lai Mineral Joint Stock Company recognised to the extent that it has become probable term deposits, trade and other receivables, loan MTC is an acquisition of a group of assets, rather that future taxable profit will allow the deferred tax receivables, and unquoted financial instruments. than a business acquisition. As a result, the excess The Company acquired additional 16.28% equity interest in assets to be recovered. amounting to VND’000 5,517,500 of the purchase its subsidiary, Hoang Anh Gia Lai Mineral JSC (“HAGLM”), Financial liabilities consideration over the share in net assets of MTC from the non-controlling shareholders of HAGLM for total Deferred income tax assets and liabilities are measured on acquisition date which comprised mainly of land purchase consideration of VND’000 407,225,000 and at the tax rates that are expected to apply in the year Financial liabilities within the scope of Circular at the acquisition date has been recognised in the recognised a goodwill of VND’000 245,328,259. when the asset is realised or the liability is settled 210 are classified, for disclosures in the notes to consolidated balance sheet as part of the value of based on tax rates and tax laws that have been enacted the consolidated financial statements, as financial MTC’s land held for development (Note 18). The movement in the goodwill balance during the year at the balance sheet date. liabilities at fair value through profit or loss or financial represents these additional goodwill and the allocation liabilities measured at amortised cost as appropriate. 4.2 Additional acquisition of interest in Hoang Anh to expenses of VND’000 8,398,754. Deferred tax is charged or credited to the consolidated The Group determines the classification of its financial liabilities at initial recognition. Dak Lak Joint Stock Company income statement, except when it relates to items 4.6 Additional acquisition of interest in Hoang Anh recognised directly to equity, in which case the The Company’s subsidiary, Hoang Anh Gia Lai Rubber Construction and Housing Development Joint Stock deferred tax is also dealt with in the equity account. All financial liabilities are recognised initially at cost plus directly attributable transaction costs. JSC, acquired additional 4.5% equity interest in Company and deemed disposal of partial interest in Hoang Anh Dak Lak Joint Stock Company (“HADL”), Hoang Anh Gia Lai Rubber Joint Stock Company Deferred tax assets and liabilities are offset when there an existing subsidiary, from the non-controlling is a legally enforceable right for the Group to set off The Group’s financial liabilities include trade and other shareholders of HADL for a total consideration of The Company’s subsidiary, Hoang Anh Gia Lai Rubber current tax assets against current tax liabilities and payables, loans, borrowings and derivative financial VND’000 21,471,450. Joint Stock Company (“HAGR”) issued 14,067,000 when they relate to income taxes levied by the same instruments. new shares or approximately 3.52% of it’s equity to taxation authority on either the same taxable entity Management has assessed that the acquisition of the minority shareholders of Hoang Anh Construction or when the Group intends either settle current tax Subsequent re-measurement additional interest in HADL is primarily to increase and Housing Development Joint Stock Company liabilities and assets on a net basis or to realise the control stake in the land for rubber plantation owned (“HAH”) in exchange for 14,067,000 existing shares assets and settle the liabilities simultaneously, in each No subsequent re-measurement of financial instruments is currently required. by HADL, rather than a business acquisition. As a or approximately 7.03% of equity in HAH held by result, the excess amounting to VND’000 16,108,950 these minority shareholders. of the purchase consideration over the net assets of HADL on acquisition date was attributed to the land On 29 December 2011, the Company purchased the for rubber plantation, and has been recognised in the said 14,067,000 shares or approximately 7.03% consolidated balance sheet as part of the value of equity in HAH from HAGR at cost. HADL’s construction in progress.

80 Hoang Anh Gia Lai Joint Stock Company Hoang Anh Gia Lai Joint Stock Company 81 Annual Report 2011 Annual Report 2011 Bridging Opportunities Bridging Entreprenuership Bridging Partnership Bridging Capital Bridging Community Financial Statements

Notes to the consolidated Notes to the consolidated financial statements (continued) financial statements (continued) As at and for the year ended 31 Decemeber 2011 B09-DN/HN B09-DN/HN As at and for the year ended 31 Decemeber 2011

4. BUSINESS COMBINATIONS (continued) 7. TRADE RECEIVABLES VND’000 4.6 Additional acquisition of interest in Hoang Anh Construction and Housing Development Joint Stock Company and deemed disposal of partial interest in Hoang Anh Gia Lai Rubber Joint Stock Company (continued) 31 December 2011 31 December 2010 (as restated - Note 40) Accordingly, the Group gave up approximately 3.52% equity in HAGR to the minority interest and gained further control of 7.03% in HAH. The resulting difference on a book value basis of the exchange amounting to VND’000 26,900,500 Receivables from sale of apartments 1,522,044,202 1,191,503,396 has been charged directly against consolidation reserve. Construction receivables 575,145,413 415,568,763 Trade and service receivables 344,789,305 268,835,770 TOTAL 2,441,978,920 1,875,907,929 5. CASH VND’000 Included in construction receivables was a receivable of VND’000 535,057,747 receivable for the construction of the 31 December 2011 31 December 2010 Giai Viet apartments project (31 December 2010: VND’000 349,126,308).

Cash in banks 2,888,351,683 3,580,756,252 Included in trade and service receivables were amounts due from related companies aggregating to VND’000 209,979,563 at 31 December 2011 (Note 36). Cash on hand 8,105,048 7,904,079 Cash in transit - 3,109 8. ADVANCES TO SUPPLIERS TOTAL 2,896,456,731 3,588,663,440 VND’000

The Group has also pledged its cash in banks of VND’000 480,000,000 as security for the bank loans (Note 20). 31 December 2011 31 December 2010

For the purposes of the consolidated cash flow statement, cash and cash equivalents comprised the following items: Advances to contractors for construction of the Group‘s apartments and purchase of machinery and equipment 892,583,884 936,526,527 VND’000 Advances for acquisition of land and real estate projects 751,488,862 154,538,556 Advances to suppliers of goods and services 370,584,299 119,760,627 31 December 2011 31 December 2010 Advances for investments - 38,200,000 Cash 2,896,456,731 3,588,663,440 TOTAL 2,014,657,045 1,249,025,710 Less deposit in an escrow account - (582,568,781) Included in advances to contractors were amounts due from related companies aggregating to VND’000 371,484,551 TOTAL 2,896,456,731 3,006,094,659 at 31 December 2011 (Note 36).

Included in cash in banks as at 31 December 2010 was a deposit of VND’000 582,568,781 in an escrow account which was subsequently made available for use after completion of the listing of the outstanding Global Depositary 9. OTHER RECEIVABLES Receipts of the Company in the London Stock Exchange’s Professional Securities Market. VND’000

31 December 2011 31 December 2010 6. SHORT-TERM INVESTMENTS Loans to other companies (i) 582,734,898 56,343,034 Short-term investments as at 31 December 2011 represent the net carrying value of VND’000 81,783,240 of Da Lat Receivables from disposal of investments (ii) 135,500,000 7,000,000 resort which has been approved for disposal to a third party, pending completion of the legal procedures and the Receivables from employees (iii) 98,448,219 91,368,218 carrying value of investment in Binh Dinh Constrexim Joint Stock Company amounting to VND’000 15,573,259 Accrued interest on bank deposits 54,939,275 34,485,835 awaiting disposal. Short-term loans to employees (iv) 40,719,122 52,552,255 Others 150,952,207 86,543,860 TOTAL 1,063,293,721 328,293,202

(i) This mainly represents the loans to Hoang Phuc Investment Construction and Housing Development JSC which are unsecured and bear interest rate of 20.4% per annum.

82 Hoang Anh Gia Lai Joint Stock Company Hoang Anh Gia Lai Joint Stock Company 83 Annual Report 2011 Annual Report 2011 84 As atandfortheyearended31Decemeber2011 financial statements Notes totheconsolidated 11. 10. INVENTORIES 9. Annual Report 2011 Annual Report Hoang Anh Gia LaiJointStockCompany outstanding borrowings All the apartments for sale includingthe under constructionassociatedland have been mortgaged to secure the Group’s TOTAL Tools andsupplies Construction materials Raw materials TOTAL Short-term deposits Shortage ofassetsawaitingresolution OTHER CURRENTASSETS OTHER RECEIVABLES (continued) Business advancestoemployees Of whichfrom: Work inprocess Goods inconsignment Goods intransit Merchandise goods Finished goods Apartments forsaleunderconstruction (ii) (iv) (iii) Rendered services Construction contract Manufacturing 17.1 and31.2) and HousingDevelopmentJSC(Notes the Company’stotalequityinterestinHoangConstruction Phuc Investment Company and of and HousingDevelopmentJointStock part oftheCompany’sequityinHoangAnhConstruction as interest from thedisposalofaminority the proceeds partly represent Receivables fromdisposalofinvestments and bearinterestrateswhicharebasedonthemarketrateadjustedeverysixmonths. These loans are unsecured, have term of repayments ranging from threetotwelve monthsfrom the drawdown date This representsadvancestoemployeesforbusinesspurpose. . . (continued) 31 December2011 31 December2011 4,448,670,564 3,654,416,566 286,768,359 228,643,339 290,885,342 127,920,513 144,898,402 140,416,001 39,193,400 59,977,920 41,315,077 7,894,868 2,264,083 1,704,272 2,778,129 270,595 5,844 31 December2010 31 December2010 (as restated-Note40) 4,107,001,378 3,552,565,913 B09-DN/HN 183,479,811 186,770,256 129,504,120 12,334,340 87,096,145 99,674,111 33,855,388 78,783,146 78,621,252 8,121,856 369,694 VND’000 VND’000 161,894 - - -

Notes to the consolidated financial statements (continued) As at and for the year ended 31 Decemeber 2011 B09-DN/HN Bridging Opportunities Bridging Opportunities

12. TANGIBLE FIXED ASSETS VND’000

Buildings and Machinery and Motor Office Perennial structures equipment vehicles equipment trees Other assets Total Bridging Entreprenuership

Cost Beginning balance 876,149,876 518,342,871 179,231,647 9,532,510 6,698,345 8,416,133 1,598,371,382 Increase 244,478,338 313,908,760 103,908,968 2,902,947 - 8,608,940 673,807,953 Newly purchase 6,663,410 130,808,185 102,520,749 2,876,150 - 8,608,940 251,477,434 Transfer from construction in progress 237,796,547 183,100,575 - - - - 420,897,122 Bridging Partnership Foreign exchange difference 18,381 - 1,388,219 26,797 - - 1,433,397 Decrease (1,557,550) (9,696,532) (15,532,130) (710,848) - (3,004,354) (30,501,414) Disposal (1,557,550) (9,696,532) (14,572,369) (368,833) - (3,004,354) (29,199,638) Disposal of subsidiaries - - (959,761) (342,015) - - (1,301,776) Ending balance 1,119,070,664 822,555,099 267,608,485 11,724,609 6,698,345 14,020,719 2,241,677,921 Bridging Capital Bridging Capital Accumulated depreciation Beginning balance (53,526,663) (101,573,920) (34,187,872) (3,981,074) (941,956) (2,889,399) (197,100,884) Increase (32,615,513) (68,125,801) (27,171,837) (1,856,461) (143,039) (1,634,470) (131,547,121) Charges for the year (32,325,104) (68,125,801) (26,671,687) (1,848,186) (143,039) (1,578,384) (130,692,201) Foreign exchange difference (290,409) - (500,150) (8,275) - (56,086) (854,920) Decrease 2,707,919 6,232,923 3,297,388 448,782 - 54,194 12,741,206 Bridging Community Disposal 2,707,919 5,706,866 2,952,915 203,077 - 54,194 11,624,971 Hoang Anh Gia LaiJointStockCompany Foreign exchange difference - 526,057 - - - - 526,057 Disposal of subsidiaries - - 344,473 245,705 - - 590,178 Ending balance (83,434,257) (163,466,798) (58,062,321) (5,388,753) (1,084,995) (4,469,675) (315,906,799) Annual Report 2011 Annual Report

Net carrying amount Financial Statements Beginning balance 822,623,213 416,768,951 145,043,775 5,551,436 5,756,389 5,526,734 1,401,270,498 Ending balance 1,035,636,407 659,088,301 209,546,164 6,335,856 5,613,350 9,551,044 1,925,771,122 In which: Pledged/mortgaged as loan security 85 (Notes 20 and 27) 1,035,636,407 659,088,301 - - - - 1,694,724,708 Bridging Opportunities Bridging Entreprenuership Bridging Partnership Bridging Capital Bridging Community Financial Statements

Notes to the consolidated Notes to the consolidated financial statements (continued) financial statements (continued) As at and for the year ended 31 Decemeber 2011 B09-DN/HN B09-DN/HN As at and for the year ended 31 Decemeber 2011

13. FINANCE LEASES 15. CONSTRUCTION IN PROGRESS VND’000 VND’000

Machinery and 31 December 2011 31 December 2010 equipment Motor vehicles Total Rubber plantations 2,681,137,143 1,174,766,048 Cost Hydro-power plants 1,804,623,794 710,217,143 Beginning balance 3,270,000 11,626,718 14,896,718 Offices for lease 749,048,049 706,604,709 Additions 2,700,000 3,677,273 6,377,273 Mining facilities 212,474,190 104,797,176 Ending balance 5,970,000 15,303,991 21,273,991 Buildings, plants and factories 159,418,062 150,942,011 Sugarcane plantations 82,371,926 - Accumulated depreciation Computer hardware and SAP software under development 61,431,326 - Beginning balance (45,417) (567,117) (612,534) Other construction works 68,665,181 31,542,839 Charges for the year (904,998) (2,452,140) (3,357,138) TOTAL 5,819,169,671 2,878,869,926 Ending balance (950,415) (3,019,257) (3,969,672)

Net carrying amount 16. CAPITALISED BORROWING COSTS Beginning balance 3,224,583 11,059,601 14,284,184 During the year, the Group has capitalised borrowing costs amounting to VND’000 705,594,844 (year ended 31 Ending balance 5,019,585 12,284,734 17,304,319 December 2010: VND’000 375,372,141). These are costs incurred on the bank loans and bonds used to finance the construction and development of fixed assets, mining facilities, hydro power plants, plantations and apartment projects.

14. INTANGIBLE FIXED ASSETS VND’000 17. INVESTMENTS IN SUBSIDIARIES AND ASSOCIATES

Land use rights Computer software Total 17.1 Investments in subsidiaries

Cost The Company disposed part of its equity interest in Hoang Anh Construction and Housing Development Joint Stock Company of 4.50% to Van Phuc Hung One Member Co., Ltd for VND’000 450,000,000 and recognised a gain of Beginning balance 109,401,888 8,396,263 117,798,151 VND’000 356,013,443 (Note 31.2). This resulted in reduction of the Company’s equity interest in HAH from 88.21% Additions 6,148,927 732,903 6,881,830 to 83.71%. Total cash received during the year for this transaction was VND’000 430,000,000. On 29 December Decreases - (35,820) (35,820) 2011, the Company purchased from Hoang Anh Gia Lai Rubber JSC, its subsidiary, 14,067,000 shares of Hoang Anh Ending balance 115,550,815 9,093,346 124,644,161 Construction and Housing Development JSC in accordance with the share purchase agreement No.29/12/HDMCP/ Accumulated amortisation HAGR-HAGL. This resulted in increase of the Company’s equity interest in HAH from 83.71% to 90.74% as at 31 December 2011 (Note 4.6). Beginning balance (1,230,342) (1,207,630) (2,437,972) Charges for the year (647,650) (821,581) (1,469,231) The Company’s subsidiary, Hoang Anh Construction and Housing Development Joint Stock Company, fully disposed Decreases - 4,658 4,658 interest in Hoang Phuc Investment Construction and Housing Development JSC (“HP”) to HP’s existing shareholders for Ending balance (1,877,992) (2,024,553) (3,902,545) a total proceeds of VND’000 450,000,000 and recognised a gain of VND’000 410,898,462 (Note 31.2). Total cash received during the year was VND’000 333,005,652. Net carrying amount Beginning balance 108,171,546 7,188,633 115,360,179 The Company’s subsidiary, Gia Lai Mineral Joint Stock Company, fully disposed interest in Hoang Anh Quang Ngai Ending balance 113,672,823 7,068,793 120,741,616 Mineral Joint Stock Company (“QN”) to QN’s existing shareholders and others for a total proceed of VND’000 300,000 and recognised a loss of VND’000 1,766,665 (Note 33). In which: Pledged/mortgaged as loan security (Notes 20 and 27) 12,693,029 - 12,693,029

86 Hoang Anh Gia Lai Joint Stock Company Hoang Anh Gia Lai Joint Stock Company 87 Annual Report 2011 Annual Report 2011 Bridging Opportunities Bridging Entreprenuership Bridging Partnership Bridging Capital Bridging Community Financial Statements

Notes to the consolidated Notes to the consolidated financial statements (continued) financial statements (continued) As at and for the year ended 31 Decemeber 2011 B09-DN/HN B09-DN/HN As at and for the year ended 31 Decemeber 2011

17. INVESTMENTS IN SUBSIDIARIES AND ASSOCIATES (continued) Date of Status of establishment or 17.1 Investments in subsidiaries (continued) Name of subsidiaries Location operation acquisition % holding

Following the Group’s restructuring process, the Group’s subsidiary, Hoang Anh Dak Lak JSC merged its subsidiary, Dai Lam Construction and Trading JSC in January 2011 in accordance with the contract No. 01/HDSN dated 28 December Energy 2010 at cost. In addition, the Group’s subsidiary, Gia Lai Mineral Joint Stock Company merged its subsidiary, K’Bang Mineral Processing 1 Member Co., Ltd in August 2011 in accordance with the meeting minute of the Board of Directors (16) Hoang Anh Gia Lai Hydropower JSC Gia Lai, Vietnam Operating 05/06/2007 99.40 of Hoang Anh Gia Lai Mineral Joint Stock Company No. 02/BB-KSGL dated 20 August 2011 at cost as well. (17) Hoang Anh - Thanh Hoa Hydroelectric Thanh Hoa, Pre-operating 18/10/2007 89.46 JSC Vietnam Details of the Company’s subsidiaries as at 31 December 2011 are as follows: (18) Hoang Anh Dak Bla Hydropower JSC Kontum, Vietnam Pre-operating 30/05/2007 97.40 Date of (19) Hoang Anh Tona Hydropower JSC Gia Lai, Vietnam Pre-operating 20/06/2010 94.43 Status of establishment or (20) Hoang Anh Ban Me JSC Dak Lak,Vietnam Pre-operating 06/2009 50.70 Name of subsidiaries Location operation acquisition % holding (21) Hoang Anh Attapeu Power Co., Ltd. Attapeu, Laos Pre-operating 18/07/2011 99.40 Real estate Rubber plantation (1) Hoang Anh Construction and Housing HCMC, Vietnam Operating 04/06/2007 90.74 Development JSC (22) Hoang Anh Gia Lai Rubber JSC Gia Lai, Vietnam Pre-operating 26/05/2010 95.51 (2) Phu Hoang Anh JSC HCMC, Vietnam Operating 15/01/2007 85.30 (23) Gia Lai Industrial Forest Plantation JSC Gia Lai, Vietnam Pre-operating 09/09/2008 95.28 (24) Hoang Anh Attapeu Agriculture Attapeu, Laos Pre-operating 22/05/2008 95.51 Hoang Nguyen Investment HCMC, Vietnam Operating 29/03/2007 80.76 (3) Development Co., Ltd. Construction and Housing Development JSC (25) Hoang Anh - Quang Minh Rubber JSC Gia Lai, Vietnam Operating 01/02/2007 61.76 (4) Minh Tuan Trading and Services Co., Ltd. HCMC, Vietnam Pre-operating 22/06/2007 64.61 (26) Hoang Anh Dak Lak JSC Dak Lak, Operating 12/09/2007 82.66 Vietnam Hoang Anh Me Kong Corporation HCMC, Vietnam Operating 24/10/2007 (i) 46.28 (5) (27) Hoang Anh Andong Meas One Member Rattanakiri, Pre-operating 17/02/2011 95.51 (6) Phuc Bao Minh Trading Construction HCMC, Vietnam Pre-operating 04/10/2008 90.36 Co., Ltd. Cambodia Services Corporation (28) Hoang Anh - Quang Minh Rubber Attapeu, Laos Operating 12/01/2007 61.76 (7) Minh Thanh Co., Ltd. HCMC, Vietnam Pre-operating 28/11/2008 (i) 44.89 Industrial and Agricultural JSC (29) Hoang Anh Oyadav Co., Ltd. Rattanakiri, Pre-operating 16/07/2010 95.51 Hoang Anh Incomex Construction and HCMC, Vietnam Pre-operating 2007 72.59 (8) Cambodia Housing Development Co., Ltd. (30) Heng Brothers Co., Ltd. Phnom Penh, Pre-operating 25/01/2010 95.51 (9) An Tien Co., Ltd. HCMC, Vietnam Operating 10/01/2008 79.62 Cambodia (10) Hoang Tho Investment Construction HCMC, Vietnam Operating 20/12/2010 90.74 (31) CRD Co., Ltd. Phnom Penh, Pre-operating 15/12/2010 95.51 and Housing JSC Cambodia (11) Hoang Anh Gia Lai (Bangkok) Co., Ltd. Bangkok, Pre-operating 2009 (i) 42.65 (32) Dak Lak Tan Dai Thang JSC Dak Lak, Pre-operating 27/11/2010 70.26 Thailand Vietnam (12) Dong Nam Housing Business and HCMC, Vietnam Pre-operating 02/04/2010 90.65 (33) Ban Me Rubber JSC Dak Lak, Pre-operating 15/01/2010 67.78 Investment Corporation Vietnam (13) An Phu Construction JSC Gia Lai, Vietnam Operating 9/2010 90.66 (34) Hoang Anh Gia Lai Sugar Cane Gia Lai, Vietnam Pre-operating 26/01/2011 52.53 Joint Stock Company Hoang Anh Real Estate Administrative HCMC, Vietnam Operating 30/05/2007 (i) 46.28 (14) (35) Hoang Anh Rattanakiri Co., Ltd. Rattanakiri, Pre-operating 18/11/2009 95.51 Services Corporation Cambodia (15) Hoang Anh Far East Service Corporation HCMC, Vietnam Operating 03/10/2009 66.06 (36) Hoang Anh Lum Phat Co., Ltd Rattanakiri, Pre-operating 24/08/2011 66.86 Cambodia

88 Hoang Anh Gia Lai Joint Stock Company Hoang Anh Gia Lai Joint Stock Company 89 Annual Report 2011 Annual Report 2011 Bridging Opportunities Bridging Entreprenuership Bridging Partnership Bridging Capital Bridging Community Financial Statements

Notes to the consolidated Notes to the consolidated financial statements (continued) financial statements (continued) As at and for the year ended 31 Decemeber 2011 B09-DN/HN B09-DN/HN As at and for the year ended 31 Decemeber 2011

17. INVESTMENTS IN SUBSIDIARIES AND ASSOCIATES (continued) 17.2 Investments in associates

17.1 Investments in subsidiaries (continued) Name of associates Business activities 31 December 2011 31 December 2010

Details of the Company’s subsidiaries as at 31 December 2011 are as follows (continued): Carrying amount Carrying amount % holding VND’000 % holding VND’000 Date of Status of establishment or Bidiphar Rubber JSC Rubber plantation 32.68 163,003,713 - - Name of subsidiaries Location operation acquisition % holding A Dong Investment and Electric design and 25.00 7,882,160 25.00 7,882,160 Construction Consultant JSC consultancy Mining Hoang Anh Gia Dinh JSC Real estate 25.00 7,475,610 25.00 7,475,610

(37) HAGL Mineral JSC Gia Lai, Vietnam Operating 08/12/2007 99.98 Binh Dinh Constrexim JSC Construction of - - 42.04 15,573,259 (38) Gia Lai Mineral JSC Gia Lai, Vietnam Operating 12/04/2007 82.51 hypro - power plant (39) Hoang Anh - Thanh Hoa Mineral Co., Ltd. Thanh Hoa, Operating 15/03/2010 59.99 TOTAL 178,361,483 30,931,029 Vietnam (40) Hoang Anh GL - Kontum Mineral Limited Gia Lai, Vietnam Operating 09/02/2010 99.98 The Company’s share in the results of the associates during the year has been assessed by management to be insignificant Company to the consolidated financial statements taken as a whole and accordingly, not recognised in the consolidated financial (41) Hoang Anh Xekong Mineral Co., Ltd. Attapeu, Laos Pre-operating 15/10/2009 99.98 statements.

Manufacturing 18. OTHER LONG-TERM INVESTMENTS (42) Hoang Anh Gia Lai Wooden Furniture JSC Gia Lai, Vietnam Operating 28/09/2009 94.29 VND’000 (43) Raw Materials 1 Member Co., Ltd. Gia Lai, Vietnam Operating 15/03/2010 94.29 31 December 2011 31 December 2010 Construction, trading and services Land held for development (i) 2,058,578,090 1,975,214,497 (44) Hoang Anh Gia Lai Sport JSC Gia Lai, Vietnam Operating 12/01/2009 69.84 Investments in Business Cooperation Contract (“BCC”) for development 1,199,857,250 539,857,250 (45) Central HAGL JSC Da Nang,Vietnam Operating 06/07/2007 51.85 of real estate projects (ii) (46) Hoang Anh Gia Lai Hospital JSC Gia Lai, Vietnam Operating 07/05/2008 98.36 Loan to Laos Government (iii) 292,746,425 280,819,684 (47) V&H Corporation (Lao) Co., Ltd. Vientiane, Laos Pre-operating 06/01/2009 80.00 Investments in other companies 25,326,903 25,326,902 (48) V&H Corporation Co., Ltd. Vientiane, Laos Pre-operating 27/03/2009 100.00 Investments in Government bonds 20,000 20,000 (49) Hoang Anh Gia Lai Bridge & Road JSC Gia Lai, Vietnam Operating 22/12/2009 55.12 Others 3,473,250 3,323,250 (50) Hoang Anh Gia Lai Vientiane Co., Ltd. Vientiane, Laos Pre-operating 06/05/2010 100.00 TOTAL 3,580,001,918 2,824,561,583

(i) The Group has more than 50% control interest of this company. (i) The movement of land held for development during the current year follows:

Pre-operating status means the subsidiary is still under investment stage and has not yet started its commercial VND’000 operations as at 31 December 2011. Beginning balance 1,975,214,497 Increase from: Compensation costs and other expenses 61,543,779 Interest capitalisation 16,302,314 Acquisition of additional interest in the subsidiaries (Note 4.1) 5,517,500 Ending balance 2,058,578,090

90 Hoang Anh Gia Lai Joint Stock Company Hoang Anh Gia Lai Joint Stock Company 91 Annual Report 2011 Annual Report 2011 Bridging Opportunities Bridging Entreprenuership Bridging Partnership Bridging Capital Bridging Community Financial Statements

Notes to the consolidated Notes to the consolidated financial statements (continued) financial statements (continued) As at and for the year ended 31 Decemeber 2011 B09-DN/HN B09-DN/HN As at and for the year ended 31 Decemeber 2011

18. OTHER LONG-TERM INVESTMENTS (continued) 19. LONG-TERM PREPAID EXPENSES VND’000 (ii) This movement of the investments in BBC represents the detail as follows: 31 December 2011 31 December 2010 Beginning balance 539,857,250 (as restated - Note 40) Additional contribution to BCC with Dai Loc Hung Thinh One Member Co., Ltd. and Tan Hai Travel Trading Services and Real Estate Trading and Investment Joint Stock Company 360,000,000 Costs of bond issuance 136,743,831 19,843,214 BCC in Van Phuc Real Estate Investment Joint Stock Company 300,000,000 Tools and supplies 36,970,801 24,068,930 Ending balance 1,199,857,250 Selling expenses for apartments under construction 8,754,358 102,183,898 Model house costs 7,274,051 - The ending balance of investment in BCC comprised of: Office rental fee 2,140,369 23,954,897 Others 38,966,889 28,057,403 • BCC between Hoang Anh Construction and Housing Development JSC, a subsidiary, Dai Loc Hung Thinh One Member TOTAL 230,850,299 198,108,342 Co Ltd and Tan Hai Travel Trading Services and Real Estate Trading and Investment Joint Stock Company to develop a residential area of 147,941 square meters at Phong Phu Village, Binh Chanh District, Ho Chi Minh City. Under the BCC, the Group has 30% interest in the project. During the year, the Group contributed an additional amount of VND’000 360,000,000 and the total contribution as at 31 December 2011 amounted to VND’000 710,000,000. 20. SHORT-TERM LOANS AND BORROWINGS • BCC between Hoang Anh Construction and Housing Development JSC, a subsidiary, and Tan Thuan Investment and VND’000 Construction Co Ltd to develop an apartment building on an area of 28,127 square meters in District 7, Ho Chi Minh City. Under the BCC, the Group has 45% interest in the project and has already contributed VND’000 189,857,250 31 December 2011 31 December 2010 to the BCC. Convertible bonds (Note 27.2) - 1,100,000,000 • BCC between Hoang Anh Construction and Housing Development JSC, the subsidiary, and Van Phuc Real Estate Investment Joint Stock Company is to develop an apartment building on an area of 339,301 square meters in Short-term loans Hiep Binh Phuoc, Thu Duc, Ho Chi Minh City. Under the BCC, the Group has 40% interest in the project and the Loans payable to banks 2,262,714,604 1,320,027,984 contribution during the year amounted to VND’000 300,000,000. Loans payable to other entities and individuals 29,600,000 - (iii) Loan to Laos Government represents the interest-free loan in accordance with the Memorandum of Understanding 2,292,314,604 2,420,027,984 signed with Laos Government on 4 April 2008. The loan will be settled in kind in the form of wood or wood Current portion of long-term bank loans and bonds (Note 27) 909,589,102 672,713,351 quota. TOTAL 3,201,903,706 3,092,741,335 US$

31 December 2011 31 December 2010

Beginning balance 14,833,070 14,833,070 Wood received during the year (777,644) -

Ending balance 14,055,426 14,833,070 Ending balance (VND’000) 292,746,425 280,819,684

92 Hoang Anh Gia Lai Joint Stock Company Hoang Anh Gia Lai Joint Stock Company 93 Annual Report 2011 Annual Report 2011 Bridging Opportunities Bridging Entreprenuership Bridging Partnership Bridging Capital Bridging Community Financial Statements

Notes to the consolidated Notes to the consolidated financial statements (continued) financial statements (continued) As at and for the year ended 31 Decemeber 2011 B09-DN/HN B09-DN/HN As at and for the year ended 31 Decemeber 2011

20. SHORT-TERM LOANS AND BORROWINGS (continued) 31 December2011 Term and Collateral Name of banks VND’000 maturity date Interest rate (Notes 5, 10, 12 and 14) Short-term loans from banks comprise: VND’000 Vietcombank, Quy Nhon branch 31 December 2011 31 December 2010 Loan contract No. 502/ 2,000,000 7 months from the 19.3 % per Factory, machinery and HĐTD, 03/8/2010 drawdown date annum equipment Joint Stock Commercial Bank for Foreign Trade of Vietnam Loan contract No. 446/ 12,115,381 7 months from the 17.7% per Factory, machinery and (Vietcombank) 758,015,249 553,139,155 NHTD, 14/9/2011 drawdown date annum equipment Saigon Thuong Tin Commercial Bank (Sacombank) 568,888,867 276,826,128 Loan contract No. 420/ 4,202,640 6 months from the 19.3 % per Unsecured Bank for Investment and Development of Vietnam (BIDV) 410,682,160 362,226,380 HĐTD, 30/8/2011 drawdown date annum Bank for Investment and Development of Cambodia PLC (BIDC) 197,657,720 68,290,092 Loan contract No. 475/ 9,959,744 6 months from the 16.8% per Unsecured NHTD, 28/9/2011 drawdown date annum Vietnam Thuong Tin Commercial Bank (Vietbank) 150,000,000 - Loan contract No. 526/ 4,987,243 6 months from the 16.8% per Unsecured Lao - Viet Bank 126,833,982 - NHTD, 31/10/2011 drawdown date annum Agriculture and Rural Development Bank of Vietnam (Agribank) 25,567,390 25,567,390 Loan contract No. 536/ 9,999,402 6 months from the 16.8%per Unsecured Industrial and Commercial Bank of Vietnam (VietinBank) 20,069,236 4,496,511 HĐTD, 03/11/2011 drawdown date annum Saigon-Hanoi Commercial Joint Stock Bank (SHB) 5,000,000 - Loan contract No. 550/ 1,621,668 6 months from the 7.6% per Unsecured Military Commercial Joint Stock Bank (MB) - 1,780,758 HĐTD, 14/12/2011 drawdown date annum Vietnam International Commercial Bank (VIB) - 27,701,570 Vietcombank, Saigon branch TOTAL 2,262,714,604 1,320,027,984 Loan contract No. 64/11/ 107,543,390 6 months from the Floating rate Unsecured The terms and conditions of loans payable to banks are as follows: NHNT, 14/3/2011 drawdown date Total Vietcombank 758,015,249 31 December 2011 Term and Collateral Name of banks VND’000 maturity date Interest rate (Notes 5, 10, 12 and 14) Sacombank, Da Nang branch Loan contract No. LD 335,094,544 9 months from the Floating rate Land use right and Vietcombank, Gia Lai Branch 1105400039, 23/2/2011 drawdown date attached assets at Hai Chau District, Da Nang City Loan contract No. 223/10/ 103,075,911 6 months from the Floating rate Building, machinery and NHNT, 24/11/2010 drawdown date equipment Sacombank, HCMC Loan contract No. 244/11/ 23,053,457 6 months from the Floating rate Building, machinery and Loan contract No. 233,794,323 6 months from the Floating rate Land use right of Hoang HDTD, 1/12/2011 drawdown date equipment 1113800024, 18/5/2011 drawdown date Anh Housing Loan contract No. 185/11/ 180,226,305 6 months from the Floating rate Property, plant and Total Sacombank 568,888,867 NHNT, 29/9/ 2011 drawdown date equipment Loan contract No. 151/10/ 169,384,482 6 months from the Floating rate Property, plant and BIDV, Gia Dinh branch NHNT, 03/8/ 2010 drawdown date equipment Loan contract No. 170/11/ 44,999,992 8 months from the Floating rate Unsecured Loan contract No. 52,270,978 12 months from 16% per Land use right and NHNT, 17/8/ 2011 drawdown date 348/2011/HD, 28/12/2011 the drawdown annum attached assets Loan contract No. 65/11/ 37,158,090 12 months from Floating rate Unsecured date NHNN,07/3/ 2011 the drawdown date Loan contract No. 40,000,000 6 months from the Floating rate Unsecured Loan contract No. 88/10/ 31,554,904 6 months from the From 17.9% Land use right and 350/2011/HD 29/12/2011 drawdown date NHNT, 31/8/ 2010 drawdown date to 19.5% per attached assets Machinery annum and equipment Loan contract No. 220/11/ 16,132,640 6 months from the From 17% to Land use right and NHNT, 19/ 10/ 2011 drawdown date 17.5% per attached assets annum Machinery and equipment

94 Hoang Anh Gia Lai Joint Stock Company Hoang Anh Gia Lai Joint Stock Company 95 Annual Report 2011 Annual Report 2011 Bridging Opportunities Bridging Entreprenuership Bridging Partnership Bridging Capital Bridging Community Financial Statements

Notes to the consolidated Notes to the consolidated financial statements (continued) financial statements (continued) As at and for the year ended 31 Decemeber 2011 B09-DN/HN B09-DN/HN As at and for the year ended 31 Decemeber 2011

20. SHORT-TERM LOANS AND BORROWINGS (continued) 31 December 2011 Term and Collateral Name of banks VND’000 maturity date Interest rate (Notes 5, 10, 12 and 14) 31 December 2011 Term and Collateral Name of banks VND’000 maturity date Interest rate (Notes 5, 10, 12 and 14) Vietinbank, Gia Lai branch (continued)

BIDV, Gia Lai branch Loan contract No. 442/ 3,200,000 9 months from the Floating rate Land use right and HDTD, 9/11/2011 drawdown date attached assets at Loan contract No. 04/2010/ 41,231,035 9 months from the Floating rate HAGL Office building & La Bang, Chu Prong HDTC, 31/7/2010 drawdown date HAGL Hotel Pleiku District, Gia Lai Province Loan contract No. 01/2011/ 60,508,147 9 months from the Floating rate Unsecured HD, 12/7/2011 drawdown date Total Vietinbank 20,069,236

BIDV, Binh Dinh branch SHB, Gia Lai branch

Loan contract No. 01/2011/ 166,672,000 12 months from Floating rate Term deposit of Loan contract No. 68/2011/ 5,000,000 6 months from the 18.5% per Unsecured HDTD/3912857,06/9/2011 the drawdown VND’000 200,000,000 HDHM, 23/9/2011 drawdown date annum date Loan contract dated 50,000,000 31 days from the 14%/ per Term deposit of 12/12/2011 drawdown date annum VND’000 50,000,000 21. TRADE PAYABLES VND’000 Total BIDV 410,682,160 31 December 2011 31 December 2010 BIDC, Phnompenh branch Payable for purchase of land use rights 320,517,144 320,000,000 Loan contract No. 10/2011/ 197,657,720 12 months from 10% per Term deposit of Payable for purchase of goods and services 228,503,986 96,989,111 HA.R-BIDC, 16/3/2011 the drawdown date annum VND’000 230,000,000 Payable to construction contractors 74,423,792 211,020,680 Vietbank Payable for purchase of machinery and equipment 55,301,948 20,778,705 Loan contract No. 150,000,000 6 months from the Floating rate A part of Giai Viet project Others 63,523,628 18,508,316 HG.DN.01071211, drawdown date - owned by Giai Viet TOTAL 742,270,498 667,296,812 07/12/2011 Company Included in trade payables were amounts due to related companies amounting to VND’000 30,972,096 at 31 December Lao - Viet Bank 2011 (Note 36). Loan contract No. 126,833,982 12 months from 8.50% per Unsecured Payable for purchase of land use rights mainly represents payable to Thanh Binh Construction Investment and Consultant 133/2011, 06/9/2011 the drawdown date annum Limited Company of VND’000 320,000,000 for the acquisition of the Thanh Binh-Kenh Te apartment project with total purchase consideration of VND’000 640,000,000. Agribank, branch 4, HCMC Loan contract No. 1902- 25,567,390 12 months from 1.00% per House at 303, Phan Đinh LAV-200700577, the drawdown month Phung, Ward 15, Phu 22. ADVANCES FROM CUSTOMERS 12/7/2007 date Nhuan District, HCMC VND’000 31 December 2011 31 December 2010 Vietinbank, Gia Lai branch (as restated - Note 40) Loan contract No. 188/ 12,376,734 6 months from the Floating rate Rubber plantation 30.5 ha HDTD, 14/6/2011 drawdown date and other assets in Advances from customers for purchase of apartments 1,365,245,892 2,262,366,379 Ham Rong, Iabang, Gia Lai Advances from trade customers 13,589,911 3,519,158 Loan contract No. 404/ 4,492,502 9 months from the Floating rate Land use right and at- Others 1,835,048 - HDTD, 6/9/2011 drawdown date tached assets at Nguyen TOTAL 1,380,670,851 2,265,885,537 Nghiem Ward, Quang Ngai Included in advances from customers were amounts to related companies amounting to VND’000 2,636,157 at 31 December 2011 (Note 36).

96 Hoang Anh Gia Lai Joint Stock Company Hoang Anh Gia Lai Joint Stock Company 97 Annual Report 2011 Annual Report 2011 Bridging Opportunities Bridging Entreprenuership Bridging Partnership Bridging Capital Bridging Community Financial Statements

Notes to the consolidated Notes to the consolidated financial statements (continued) financial statements (continued) As at and for the year ended 31 Decemeber 2011 B09-DN/HN B09-DN/HN As at and for the year ended 31 Decemeber 2011

23. STATUTORY OBLIGATIONS 26. OTHER LONG-TERM LIABILITIES VND’000 VND’000

31 December 2011 31 December 2010 31 December 2011 31 December 2010 (as restated - Note 40) Deposits received from selling Certified Emissions Reduction (CER) 19,757,878 19,757,878 Corporate income tax (Note 35) 583,261,927 259,682,893 Deposits received from tenants for office lease 3,419,648 3,902,473 Value-added tax payable 115,532,164 122,294,798 Others 58,500 58,500 Personal income tax 4,554,712 1,553,371 TOTAL 23,236,026 23,718,851 Import duty 47,366 - Others 9,761,977 1,232,597 TOTAL 713,158,146 384,763,659 27. LONG-TERM LOANS AND DEBTS VND’000

24. ACCRUED EXPENSES 31 December 2011 31 December 2010 VND’000 Long-term bank loans (Note 27.1) 3,434,542,285 2,107,620,384 31 December 2011 31 December 2010 Convertible bonds (Note 27.2) 2,230,000,000 - (as restated - Note 40) Straight bonds (Note 27.3) 1,830,000,000 1,330,000,000 Interest expense 252,990,207 100,829,304 International bonds (Note 27.4) 1,811,945,875 - Accrued construction costs for apartments 123,164,415 26,142,805 Finance lease 14,863,829 11,567,600 Operating costs 35,662,427 33,953,807 Other loans 12,132,458 5,585,017 Warranty and maintenance expenses 28,994,252 29,518,932 TOTAL 9,333,484,447 3,454,773,001 Sub-contractor costs 5,546,178 10,796,118 Others 4,336,492 22,658,434 In which TOTAL 450,693,971 223,899,400 • Current portion of bank loans and bonds (Note 20) 909,589,102 672,713,351 • Non-current portion 8,423,895,345 2,782,059,650

25. OTHER PAYABLES 27.1 Long-term bank loans VND’000 Details of the long-term bank loans are as follows: VND’000 31 December 2011 31 December 2010 31 December 2011 31 December 2010 Payables to employees 41,917,858 104,406,649 Payable for acquisition of Bidiphar Rubber JSC 30,342,591 - Bank for Investment and Development of Vietnam (BIDV) 2,230,503,461 1,134,037,451 Payable to other companies 29,304,498 50,114,167 Joint Stock Commercial Bank for Foreign Trade of Vietnam 563,140,682 488,690,560 Payable for land acquisition 18,259,456 18,259,456 (Vietcombank) Payable for apartments maintenance 17,327,132 140,401 Saigon Thuong Tin Commercial Bank (Sacombank) 484,907,142 336,752,373 Payable for transaction costs in connection - 68,400,000 Agriculture and Rural Development Bank of Vietnam (Agribank) 60,000,000 98,000,000 with Global Depository Receipts issued Asia Commercial Bank (ACB) 73,491,000 20,640,000 Remunerations payable to BOD members - 1,217,760 Industrial and Commercial Bank of Vietnam (VietinBank) 22,500,000 29,500,000 Others 80,840,324 62,259,279 TOTAL 3,434,542,285 2,107,620,384 TOTAL 217,991,859 304,797,712

Included in payables were amounts due to related companies amounting to VND’000 6,867,400 at 31 December 2011 (Note 36).

98 Hoang Anh Gia Lai Joint Stock Company Hoang Anh Gia Lai Joint Stock Company 99 Annual Report 2011 Annual Report 2011 Bridging Opportunities Bridging Entreprenuership Bridging Partnership Bridging Capital Bridging Community Financial Statements

Notes to the consolidated Notes to the consolidated financial statements (continued) financial statements (continued) As at and for the year ended 31 Decemeber 2011 B09-DN/HN B09-DN/HN As at and for the year ended 31 Decemeber 2011

27. LONG-TERM LOANS AND DEBTS (continued) Name of banks 31 December 2011 Term and Interest rate Collateral VND’000 maturity date (Notes 10, 12 and 14) 27.1 Long-term bank loans (continued) BIDV, Gia Lai branch (continued) The Group obtained these loans mainly to finance the construction and development of hydropower projects, rubber Loan Agreement No. plantation, apartment projects, hotels and resorts and purchases of machinery and equipment. 38,124,176 11 years from the 10.50% per annum 4,800 ha rubber at 01/2009/HDTD-DH, first drawdown date Chu Se and Ia Pa, Gia Lai 27/11/09 Details of the long-term bank loans are as follows (continued): Loan Agreement No. 571,067,853 10.8 years from the Reference rate plus Contributed capital in 01/2010/HD-TD, first drawdown date 4.70% per annum Hoang Anh Attapeu; Name of banks 31 December 2011 Term and Interest rate Collateral 01/04/2010 (TK Assets owned by VND’000 maturity date (Notes 10, 12 and 14) 62082370002035) Company; HAGL shares held by the Chairman; BIDV, Dak Lak branch and other assets

Loan Agreement No. 71,781,000 60 months from the 12-month deposit rate Land use rights at 33 BIDV, Binh Dinh branch 01/2008/HDTD, first drawdown date plus 3% per annum Nguyen Cong Tru, 12/08/2008 Buon Me Thuoc City, Loan Agreement 8,381,751 60 months from the Floating rate Land use rights, Dak Lak Province 01/2005/HD, first drawdown date materials and 14/07/2005 equipment to build the Loan Agreement No. 10,043,814 120 months from 12-month saving All assets from apartment in Quy Nhon 01/2009/HDTD, the first drawdown deposit interest rate Dak Psi 2B 06/08/2009 (TK date plus 4% per annum BIDV, Thanh Hoa branch 63182000158703) Loan Agreement No. 2,596,212 60 months from the 12-month deposit rate All assets of concrete Loan Agreement 788,648,437 144 months from Fixed-term deposit 12 All assets of Ba Thuoc 01/2007/HDTD, first drawdown date plus 4% per annum factory - period I No. 01/2010/BT2- the first drawdown months + 3.5%/year II hydro-power project 08/08/2007 (TK HDTD, 10/1/2010 63182000093530) BIDV, Ho Chi Minh branch Loan Agreement No 3,435,000 60 months from the 12-month term deposit Station for processing 01/2009/HDTD, first drawdown date interest rate plus 4.50% concrete products Loan Agreement 435,783,753 36 months from the 12-month deposit rate An Tien Co., Ltd ‘s 20/01/2009 (TK per annum 03/2011/0001168, first drawdown date plus 4.0% per annum right and benefit from 63182000136338) 04/10/2011 payments of customers in accordance with BIDV, Gia Lai branch contract No. 01/ HDMB/2010,Land use Loan Agreement 10,680,573 108 months from 12-month deposit rate All assets at Hoang right of An Tien Project No. 01/2004/HD, the first drawdown, plus 2.4% per annum, Anh Gia Lai Hotel 25/08/2004 comprising a adjustment twice BIDV, Gia Dinh branch 24-month grace per year on the 1st period and February and August Loan Agreement No. 214,855,000 72 months from the Fixed-term deposit + Land use right and all a 84-month 135/2007/0000294, first drawdown 4.0%/year assets of New Saigon repayment period 09/04/2007 Loan Agreement 16,470,501 60 months from Basic rate multiple by HAGL head office Total BIDV 2,230,503,461 No. 01/2008/HD, the first drawdown 150%, adjustment building in Gia Lai 05/09/2008 date, comprising each month on 26th Province a 18-month grace period and a 42-month repayment period Loan Agreement No. 58,635,391 12 years from the 10.5% per annum 2,200 ha rubber at 01/2009/HDTD-DH, first drawdown date Mang Yang, Gia Lai 28/10/09

100 Hoang Anh Gia Lai Joint Stock Company Hoang Anh Gia Lai Joint Stock Company 101 Annual Report 2011 Annual Report 2011 Bridging Opportunities Bridging Entreprenuership Bridging Partnership Bridging Capital Bridging Community Financial Statements

Notes to the consolidated Notes to the consolidated financial statements (continued) financial statements (continued) As at and for the year ended 31 Decemeber 2011 B09-DN/HN B09-DN/HN As at and for the year ended 31 Decemeber 2011

27. LONG-TERM LOANS AND DEBTS (continued) Name of banks 31 December 2011 Term and Interest rate Collateral VND’000 maturity date (Notes 10, 12 and 14) 27.1 Long-term bank loans (continued) Vietcombank, Phu Tai branch (continued) Details of the long-term bank loans are as follows (continued): Loan Agreement 2,844,992 60 months from the 10.50% per annum Assets formed from Name of banks 31 December 2011 Term and Interest rate Collateral No. 141/NHTD, first drawdown date, the loans VND’000 maturity date (Notes 10, 12 and 14) 20/3/2009 comprising a 5-month grace period and a Vietcombank, Gia Lai branch 55-month repayment period Loan Agreement 55,397,812 120 months from Floating rate Land use rights and Loan Agreement 454,465 60 months from the 12.00% per annum Assets formed from No. 140/05A/NHNT from the first all assets of Da Nang No. 374/NHTD, first drawdown date the loans 27/6/2006 drawdown Plaza project 29/6/2009 Loan Agreement 4,800,000 60 months from the 14.5 % per annum Assets, machinery Loan Agreement 2,140,116 Payment within 66 14.50% per annum Assets formed from 125/10/NHNT, first drawdown date and adjusted as and equipment No. 366/NHTD, months from the first the loans 25/2/2010 declaration by 21/4/2010 drawdown date Vietcombank Total Vietcombank 563,140,682 Loan agreement No. 221,760,000 120 months from the Reference rate + 3% All assets from 01/2009/HAGLH- first drawdown date, per annum project Dak Srong 2 HĐTD, 20/3/2009 26 March 2009 with Sacombank, Da Nang branch grace period of 2 years Loan Agreement No. 192,327,727 Repayment within 0.875% per month Land in Binh Hien, Loan Agreement No. 183,212,142 120 months from the Reference rate + All assets from 10270, 28/5/2009 72 months from the for the first six Hai Chau, Da Nang; 02/2009/HAGLH- first drawdown date, 3.40%/year project Dak Srong 2A drawdown date months; and will be Land in Bau Thac HDTD, 5/8/2009 20 August 2009 with determined at the Gian, Thac Gian, Da grace period of 2 years 13 month deposit Nang; land in Hao Loan Agreement 3,600,000 36 months from the Interest rate 18.9% Machinery and rate plus 0.36% Hai, Ngu Hanh Son, 207/11/NHNT, first drawdown date per annum vehicles per month for the Da Nang 10/10/2011 following months, adjusted twice per Loan Agreement 46,811,051 84 months from the Floating rate Assets on land, annum 183/11/NHNT, first drawdown date materials for the 9/9/2011 Hospital project and Loan Agreement No. 32,343,750 120 months, 1.1% per month Land in Nguyen Van equipment 7683, 6/8/2007 repayable in 32 for the first six Linh, Hai Chau, quarterly instalments month; and will be Da Nang Loan Agreement 40,000,000 36 months from the Floating rate Machinery, equipment, starting in December determined at the 13 116/11/NHNT, first drawdown date, transportation and 2009 month saving deposit 14/11/2011 comprising a 6-month others assets of mining rate plus 0.45% per grace period and a project at Morai District, month, adjusted twice 30-month repayment Sa Thay, Kontum per annum period Loan Agreement No. 45,000,000 108 months from the 1.53% per month Land in Phan Lang, Vietcombank, Phu Tai branch LD 0931400065, drawdown date An Khe, Thanh Khe, 10/11/2009 Da Nang Loan Agreement 420,000 60 months from the 10.50% per annum Land use rights No. 192/NHNT, first drawdown date for Lots B3, B8a, 23/6/2008 B8b, B9, A26 at Quy Nhon furniture factory, Phu Tai industrial zone Loan Agreement 1,700,104 50 months from the 10.50% per annum Assets formed from No. 283/NHNT, first drawdown date the loans 16/9/2008

102 Hoang Anh Gia Lai Joint Stock Company Hoang Anh Gia Lai Joint Stock Company 103 Annual Report 2011 Annual Report 2011 Bridging Opportunities Bridging Entreprenuership Bridging Partnership Bridging Capital Bridging Community Financial Statements

Notes to the consolidated Notes to the consolidated financial statements (continued) financial statements (continued) As at and for the year ended 31 Decemeber 2011 B09-DN/HN B09-DN/HN As at and for the year ended 31 Decemeber 2011

27. LONG-TERM LOANS AND DEBTS (continued) Name of banks 31 December 2011 Term and Interest rate Collateral VND’000 maturity date (Notes 10, 12 and 14) 27.1 Long-term bank loans (continued) Vietinbank, Gia Lai branch Details of the long-term bank loans are as follows (continued): Loan Contract 22,500,000 96 months, repayable in the 12- month deposit All assets at Hoang Anh Name of banks 31 December 2011 Term and Interest rate Collateral No. 99/HDTD, 32 quarterly instalments rate plus 3.00% per Da Lat resort which VND’000 maturity date (Notes 10, 12 and 14) 25/8/2006 starting on 25 March annum, and adjusted were formed from and 2007 twice per annum on 1 financed by the loan Sacombank, Gia Lai branch February and 1 August

Loan Agreement 6,002,423 36 months, repayable 1.65% per month All cars financed by 27.2 Convertible bonds No. 6100002968, starting on 27 the loan 08/6/2009; September 2009 On 19 August 2010, the Board of Directors approved a detailed plan to execute the issuance of the convertible bonds 6100002992, amounting to VND 1,100 billion to Northbrooks Investments (Mauritius) Pte Ltd, an affiliate of Temasek Holdings Pte 11/6/2009; Ltd of Singapore in accordance with the terms and conditions stipulated in the shareholders’ resolution dated 18 August 610000 3016, 2010. On 31 August 2010, the Company issued VND 1,100 billion convertible bonds at par value of VND 1 million 17/6/2009; per unit. The bonds have a term of one year and will be converted into equity at the bond holder’s option upon maturity. 6100003040, Interest is waived if conversion option is exercised at a conversion price of VND 67,375 per share which is subject to 25/6/2009; for dilutive events adjustments. Otherwise, interest is charged from the purchase date at the average 12-month saving 6100003115, deposit rate applicable to individuals of four local banks (Asia Commercial Bank, Sai Gon Thuong Tin Commercial Joint 30/6/2009 Stock Bank, Vietnam Technological and Commercial Joint Stock Bank, and Vietnam Export Import Commercial Joint Loan Agreement No. 1,633,350 36 months from the 1.30% per month Machineries Stock Bank) plus (+) 3% per annum determined at the issuance date (interest payable at maturity). LD1026300132, drawdown date 20/9/2010 On 1 July 2011, the Company and Northbrooks Investments (Mauritius) Pte Ltd signed an amendment to the bond Loan Agreement No. 207,599,892 103 months from 30 1.30% per month Project Dak Srong 3B subscription agreement. Accordingly, the Terms and Conditions of the Convertible Bonds issued on 31 August 2010 LD1024200255, August 2010 to 9 April for the first month, were adjusted as follows: 30/8/2010 2019 afterward interest rate depends on each • Maturity: The original maturity date of 31 August 2011 was extended to 31 August 2013 with the bondholder’s drawdown date options to extend by 1 or 2 years with the same terms and conditions. Total Sacombank 484,907,142 • Conversion Price: VND 44,917 per share (adjusted down from the original conversion price of VND 67,375 per share on the issuance of bonus share at the rate of 2:1 on 21 January 2011) and subject to adjustment. Agribank, Branch 9, HCMC • Interest Rate: Deposit Rate plus 3% per annum; payable annually. “Deposit Rate” means the average of 1-year savings Loan Contract No. 60,000,000 60 months from the 1,46% per month All assets of Phuoc deposit rates for individuals quoted by Asia Commercial Bank, Sai Gon Thuong Tin Commercial Joint Stock Bank, 01307033/HĐTD, first drawdown date Long B project Vietnam Technological and Commercial Joint Stock Bank, and Vietnam Export Import Commercial Joint Stock Bank 18/10/2007 on 19 August 2010, and will be adjusted annually.

ACB, Gia Lai branch

Contract No. 73,491,000 120 months from the 13-month saving 4,383 ha rubber GILDN05281010, first drawdown date deposit interest rate project at EaH’leo 28/10/2010 of ACB plus 3.80% District and Ja Loi plus additional Ward, Easuop District, margin if the State Dak Lak Bank of Vietnam changes the required reserve ratio

104 Hoang Anh Gia Lai Joint Stock Company Hoang Anh Gia Lai Joint Stock Company 105 Annual Report 2011 Annual Report 2011 Bridging Opportunities Bridging Entreprenuership Bridging Partnership Bridging Capital Bridging Community Financial Statements

Notes to the consolidated Notes to the consolidated financial statements (continued) financial statements (continued) As at and for the year ended 31 Decemeber 2011 B09-DN/HN B09-DN/HN As at and for the year ended 31 Decemeber 2011

27. LONG-TERM LOANS AND DEBTS (continued) 27.3 Straight bonds

27.2 Convertible bonds (continued) Outstanding bonds comprised of bonds amounting to VND 530 billion and VND 500 billion issued by the Company and VND 800 billion issued by its subsidiary. • Conversion and Anti-Dilution: The Convertible Bonds can be converted in whole or in part into the issued shares of the Company from 1 March 2013 until the Maturity Date. The conversion price may be adjusted to a lower price on (i) On 8 October 2010, the Company issued VND 530 billion straight bonds at par value of VND 1 billion per unit the occurrence of any of the following: (i) issuance of bonus shares, (ii) share split, (iii) consolidation of shares, (iv) which will be redeemable at par value by 8 October 2013. The bonds bear interest rate of 15.2% per annum in reclassification of shares, (v) declaration of any dividend, (vi) issue of new shares below the current market price per the first interest payment period and an average 12-month saving deposit rate applicable to individuals of four local share and (vii) any other dilutive event. banks plus (+) a margin of 4.2% per annum in the following periods. The proceeds are used to finance the working capital requirements and the ongoing real estate, hydropower and rubber plantation projects of the Company. The On 15 July 2011, the Group issued Exchangeable Bonds amounting to VND’000 1,130,000,000 to Northbrooks bonds are secured by 45 million HAG shares of the Chairman. Investments (Mauritius) Pte Ltd, as follows: (ii) On 28 December 2011, the Company issued bonds aggregating to VND 500 billion (par value at 1 billion each • Par value per bond: 1,000,000 VND. unit). The bonds are payable after three (3) years from 28 December 2011 with interest rate of 18% for the first year and the interest rate for the subsequent years is average rate of 12-month saving interest rate paid in arrears • Number of bonds: 1,130,000. quoted from four (4) commercial banks including Vietnam Bank for Agriculture and Rural Development - Gia Lai Province Branch, Vietnam Joint Stock Commercial Bank for Industry and Trade - Gia Lai Province Branch, Bank for • Maturity: 4 years from the Closing Date with the bondholder’s rights to extend by two years in certain events. Investment and Development of Vietnam - Gia Lai Province Branch, and Bank for Foreign Trade of Vietnam - Gia Lai Province Branch, plus a margin of 4% per annum. These bonds were issued to finance the working capital of the • Coupon: Coupon is payable annually based on the interest rate determined as follows: Company and finance its investments in projects including planting and cultivating the 10,000 ha rubber plantation Interest rate = 5% x (1 + Changing in Exchange Rates) in Rattanakiri province in Cambodia, planting and cultivating the 9,950 ha rubber plantation in Attapeu province in Laos, construction of sugar factory with capacity of 7,000 tons of sugarcane per day, thermo-electric station with capacity of 30 MW and ethanol and microbial fertilizer production factory and construction of hydro power factory “Change in Exchange Rates” means the change in exchange rate of USD against VND quoted by HSBC on the Nam Kong 2 with capacity of 66MW. The bonds are secured by land used right and 10,000 ha of rubber plantation Closing Date and on the date falling two Business Days prior to the Interest Payment Date. If the calculation of of Hoang Anh Attapue Agriculture Development Co., Ltd. in Attapeu province of Laos. interest rate as defined above is not permitted under the applicable regulations, the interest rate shall be calculated in accordance with the following formula: (iii) Phu Hoang Anh Joint Stock Company (“PHA”), a subsidiary, issued VND straight bonds aggregating to VND 450 billion in 2009. The bonds are secured by 37,624 square meters of land use rights at Lot 9, Nguyen Huu Tho Interest = 5% x (1+y)n. Street, Phuoc Kien Ward, Nha Be District, Ho Chi Minh City and assets to be formed on this land. The proceeds were used to finance the ongoing real estate projects of a subsidiary. Details of these bonds are as follows: Where “y” means (i) a rate to be agreed upon by the Investor and the Group at least five (5) Business Days prior to the first day of the Interest Payment Period, or (ii) in the event the Investor and the Group are unable to reach • VND 200 billion straight bonds at par value of VND 1 billion per unit which are redeemable at par value by an agreement, ten percent (10%). “n” means the number of Interest Payment Periods which have elapsed from 22 May 2012. The bond bears interest rate of 11% p.a. in the first interest payment period and a floating the Closing Date up to and including such Interest Payment Period. rate equivalent to the average twelve-month term deposits plus (+) a margin of 3.5% p.a. of HDBank in the subsequent periods. The interest is payable on semi-annual basis.

• Exchange: The Bondholder has the right to exchange the Bonds in whole or in part into a number of Shares of Hoang • VND 250 billion straight bonds at par value of VND 1 billion per unit which are redeemable at par value by Anh Gia Lai Rubber Joint Stock Company held by the Company at any time commencing on (i) the date of Listing of 31 December 2012 or at the time of repurchase by PHA. PHA has the right to repurchase these bonds before these Shares or (ii) the third anniversary of the Closing Date, whichever is later, and expiring on (i) the Maturity Date maturity after 2 years from the issuance date. The bond bears interest rate of 12% p.a. in the first interest or (ii) the date immediately preceding the sixth anniversary of the Closing Date in the event the maturity of the Bonds payment period and a floating rate equivalent to the average twelve-month term deposits plus (+) a margin of is extended. 3.5% per annum of HDBank and Vietnam International Bank but not lower than 12% p.a in the subsequent periods. The interest is payable on semi-annual basis. • Purpose: to finance the Group’s investment projects and its working capital requirements of Hoang Anh Gia Lai Rubber Joint Stock Company. These bonds were reclassified as current portion and presented in financial statements as short-term loan (Note 20).

106 Hoang Anh Gia Lai Joint Stock Company Hoang Anh Gia Lai Joint Stock Company 107 Annual Report 2011 Annual Report 2011 108 27.4 27.3 27. As atandfortheyearended31Decemeber2011 financial statements Notes totheconsolidated Annual Report 2011 Annual Report Hoang Anh Gia LaiJointStockCompany LONG-TERM LOANS ANDDEBTS years, thislimitationwillnothaveamaterialimpacttotheGroup’soperations. management believesthat based on the Group’s businessplanand budgeted cash flow for the immediately succeedding borrowing capacityinthe subsequent periodsuptoa certain thresholdas provided forinthe indenture. However, the Group’s bonds. Thiswilleffectivelylimit of theseinternational covering theissuance the indenture under required In 2011, the Group’s fixed charge coverage ratio (EBITDA/Interest)fell below the required level of at least 3.5 times as HAGL JSC. JSC andCentral Hoang AnhGiaLaiMineralJSC,RubberWoodenFurniture and HousingDevelopmentJSC, Hoang AnhGiaLaiHydropowerJSC,Construction including subsidiaries by theCompany’sownershipin of theGroup.Thebondsaresecured and theoperations and rubberplantationprojects is payablesemi-annuallyon20MayandNovember.The proceeds arebeingusedtofinancetheongoinghydropower and 20May2016,respectively.Thesebondsof96.181%bearcouponrate9.875%p.a. discounted Couponinterest redeemable atparvaluebyUS$18million,millionandtheremainingamounton20May2014,2015 On 20May 2011, the CompanyissuedUS$90millionbondswhichhave par valueof US$ 100,000perunitandare International bonds the assetsonland. Nha Ho Be District,ChiMinh City, allassetsonthelandandbenefitsincomearisingfromuserights secured by30,567.4squaremetersof land userightsonlots402and404,NguyenHuuTho Street, PhuocKienWard, 10.50% perannum,respectively. The proceeds have been usedtofinancePHAapartmentproject.The bonds are of Vietnam Prosperity Joint- Stock CommercialBank(“VPBank”) plus (+) a margin of 5.00%, 5.00%, 7.00% and rate (payableat maturity) adjustedmonthlytoa12-monthsavingdepositinterest period andwillbesubsequently payment bear interestrateof21.00%,22.00%and24.00%perannum,respectively,inthefirst July 2014,respectively.The2011,14March2011and11 bonds issuedon7January2011,10February billion perunitwhichwillberedeemableatparvalueby7January2014,10February14March2014and11 bonds withthesameamountofVND100billionandastraightbond50eachatparvalue1 On 7January2011, 10 February2011,14March2011and11July PHA, issued threetranchesof straight Straight bonds(continued) (continued) (continued) B09-DN/HN

Notes to the consolidated financial statements (continued) As at and for the year ended 31 Decemeber 2011 B09-DN/HN Bridging Opportunities Bridging Opportunities

28. OWNERS’ EQUITY

28.1 Increase and decrease in owners’ equity VND’000 Bridging Entreprenuership Share capital Share premium Consolidation Treasury Foreign Investment and Financial Undistributed Total reserve shares exchange development reserve fund earnings (as restated differences fund - Note 40)

Beginning balance as 2,704,654,580 1,223,971,061 (399,237,919) (30,091,699) 20,463,787 8,622,737 82,528,069 401,025,609 4,011,936,225 at 1 January 2010 Issuance of new shares for 220,552,390 1,214,447,610 ------1,435,000,000 conversion of bonds Bridging Partnership Issuance of new shares for 190,000,000 1,109,600,000 ------1,299,600,000 cash Net profit for the year ------1,810,010,549 1,810,010,549 Remuneration of the Board ------(9,940,743) (9,940,743) of Directors and Supervisors Dividends paid ------(292,008,407) (292,008,407)

Sale of treasury shares - 10,062,394 - 30,091,699 - - - - 40,154,093 Bridging Capital Reversal of previously - (54,068,925) 54,068,925 ------recognised share premium from pre-acquisition profits of a subsidiary Foreign exchange differences - - - - 39,201,696 - - - 39,201,696 Appropriation to financial ------128,337,321 (128,337,321) - Bridging Community reserve fund Appropriation to bonus and ------(123,322,073) (123,322,073) Hoang Anh Gia LaiJointStockCompany welfare fund Consolidation reserve - - (18,463,584) - - - - - (18,463,584)

Ending balance as at 31 December 2010 3,115,206,970 3,504,012,140 (363,632,578) - 59,665,483 8,622,737 210,865,390 1,657,427,614 8,192,167,756 Annual Report 2011 Annual Report Financial Statements 109 Bridging Opportunities Bridging Entreprenuership Bridging Partnership Bridging Capital Bridging Community Financial Statements - -

has Notes to the consolidated Total 567,000 VND’000 (continued) 90,953,186 (9,496,398) financial statements (16,691,857) (26,900,500) Company 1,167,983,801 8,192,167,756 9,398,582,988

B09-DN/HN B09-DN/HN As at and for the year ended 31 Decemeber 2011 the

- - earnings 11,442,613 (9,496,398) (8,996,524) Undistributed (16,691,857) Accordingly, (934,559,358) 1,167,983,801 1,657,427,614 1,867,109,891 28. OWNERS’ EQUITY (continued) (as restated - Note 40) (continued) 28.2 Shares ------

31 December 2011 31 December 2010 Financial shareholders).

8,996,524 Shares Shares reserve fund the 210,865,390 219,861,914 ------Shares authorised to be issued 467,280,590 311,520,697 from fund Shares issued and fully paid 467,280,590 311,520,697 Ordinary shares 467,280,590 311,520,697 8,622,737 8,622,737 development Investment and

collected Outstanding shares 467,280,590 311,520,697 ------Ordinary shares 467,280,590 311,520,697 Foreign opinions exchange difference 79,510,573 59,665,483

139,176,056 29. MINORITY INTERESTS - - - - - VND’000 written Beginning balance (as restated - Note 40) 589,115,934 reserve (the

567,000 Share of profit during the year 157,333,971 Consolidation

(26,900,500) Disposal of interest in subsidiaries (10,753,315) 2010 (363,632,578) (389,966,078) Sale of part of shares in subsidiaries 93,419,557 ------Purchase of part of shares in subsidiaries (177,378,513) August New capital contributions 9,194,738 18 Dividends paid (3,193,250) Share swap (Note 4.6) 26,900,500 dated Share premium (623,039,572) 3,504,012,140 2,880,972,568 Ending balance 684,639,622 ------

30. EARNINGS PER SHARE

Share capital The following table shows the income and share data used in the basic earnings per share calculations: 1,557,598,930 3,115,206,970 4,672,805,900

Current year Previous year

1808/10/NQCĐ-HAGL (as restated -Note 40) (continued) No. Net profit attributable to ordinary equity holders 1,167,983,801 1,810,010,549 of the parent (VND’000) Net interest after tax on convertible bonds charged to the 22,508,250 7,198,000

resolution consolidated income statement (VND’000)

(Note 4.6) Net profit attributable to ordinary equity holders of the parent 1,190,492,051 1,817,208,549 adjusted for the effect of dilution (VND’000) Weighted average number of ordinary shares during the year for 311,520,697 284,691,818 basic earnings per share Beginning balance as at 1 January 2011 Issuance of bonus shares Increase and decrease in owners’ equity (continued) which 60% On 26 January 2011, the Company issued bonus shares to existing shareholders at 2:1 ratio (one new share for every two held), of issuance was made based on the was funded from undistributed the year 2009 and 40% taken outstanding share premium fund. This earnings of shareholders’ Net profit for the year OWNERS’ EQUITY Remuneration of the Board Directors and Supervisors Foreign exchange differences recorded the additional share capital of VND’000 1,557,598,930 and the reduction recorded the additional share capital of in premium and undistributed VND’000 623,039,572 earnings of and VND’000 934,559,358, respectively. On 28 January 2011, the Company received amended Business Registration Certificate (eighteenth amendment) 4,672,805,900. VND’000 capital to share Company’s the increase in the approved Province which Lai Gia Investment Department of Planning and the issued by Appropriation to financial reserves fund Appropriation to bonus and welfare fund Share swap Disposal of partial interest in HAH Ending balance as at 31 December 2011 Weighted average number of bonus shares 155,759,893 142,345,909

Notes to the consolidated financial statements As at and for the year ended 31 Decemeber 2011 28. 28.1 Adjusted weighted average number of ordinary shares for basic 467,280,590 427,037,727 earnings per share

110 Hoang Anh Gia Lai Joint Stock Company Hoang Anh Gia Lai Joint Stock Company 111 Annual Report 2011 Annual Report 2011 Bridging Opportunities Bridging Entreprenuership Bridging Partnership Bridging Capital Bridging Community Financial Statements

Notes to the consolidated Notes to the consolidated financial statements (continued) financial statements (continued) As at and for the year ended 31 Decemeber 2011 B09-DN/HN B09-DN/HN As at and for the year ended 31 Decemeber 2011

30. EARNINGS PER SHARE (continued) 31.2 Finance income VND’000 Current year Previous year Current year Previous year (as restated - Note 40) Gain on disposal of equity and other investments 766,911,905 1,071,825,831 Adjusted weighted average number of potential shares from 24,489,614 8,118,535 Interest income from deposits with banks 361,242,074 164,840,271 convertible bonds Interest income from loans 53,389,868 2,045,489 Weighted average number of ordinary shares adjusted for the effect 491,770,204 435,156,262 Foreign exchange gains 42,753,257 19,594,467 of dilution Dividend income 696,682 884,537 Earnings per share Gain on disposal of investment in associate - 2,294,412 Basic earnings per share (VND) 2,500 4,239 Others 1,996,216 569,441 Diluted earnings per share (VND) 2,421 4,176 TOTAL 1,226,990,002 1,262,054,448 The weighted average number of ordinary shares in the previous year has been retrospectively adjusted for the bonus shares issued in January 2011. Gain on disposal of equity and other investments pertains to the following disposals: VND’000 31. REVENUES Disposal of the Company’s partial equity interest in Hoang Anh Construction and Housing 356,013,443 Development JSC, a subsidiary (Note 17.1) 31.1 Revenues from sale of goods and rendering of services Disposal of the investment in Hoang Phuc Investment and Housing Development JSC, 410,898,462 VND’000 a subsidiary (Note 17.1) Current year Previous year TOTAL 766,911,905 (as restated - Note 40)

Gross revenues 3,152,105,785 3,970,715,730 Of which: 32. COSTS OF GOODS SOLD AND SERVICES RENDERED VND’000 Sale of apartments 1,761,325,972 2,395,484,552 Current year Previous year Sale of goods 482,288,011 889,537,818 (as restated - Note 40) Sale of minerals 339,659,089 - Construction contracts 334,208,008 501,347,414 Cost of apartments sold 920,014,078 1,267,569,835 Rendering of services 132,689,731 161,711,563 Cost of goods sold 395,947,877 502,143,604 Sale of electricity 101,934,974 22,634,383 Cost of construction contracts 182,981,537 86,717,661 Less (1,853,970) (1,591,144) Cost of minerals 126,068,383 - Sales returns (572,949) (1,255,299) Cost of services rendered 67,294,518 98,435,779 Special consumption tax (284,661) (335,845) Cost of electricity 33,993,235 6,596,657 Sales discount (996,360) - TOTAL 1,726,299,628 1,961,463,536 Net revenues 3,150,251,815 3,969,124,586 Of which: Sale of apartments 1,760,329,612 2,395,484,552 Sale of goods 481,715,062 888,282,519 Sale of minerals 339,659,089 - Construction contracts 334,208,008 501,347,414 Rendering of services 132,405,070 161,375,718 Sale of electricity 101,934,974 22,634,383

112 Hoang Anh Gia Lai Joint Stock Company Hoang Anh Gia Lai Joint Stock Company 113 Annual Report 2011 Annual Report 2011 Bridging Opportunities Bridging Entreprenuership Bridging Partnership Bridging Capital Bridging Community Financial Statements

Notes to the consolidated Notes to the consolidated financial statements (continued) financial statements (continued) As at and for the year ended 31 Decemeber 2011 B09-DN/HN B09-DN/HN As at and for the year ended 31 Decemeber 2011

33. FINANCE EXPENSE VND’000 VND’000 Current year Previous year (as restated - Note 40) Current year Previous year Current tax expense 542,132,693 519,431,204 Interest expense on bank loans and bonds 464,848,591 204,970,691 Deferred tax (benefit) expense (165,555,355) 168,010,682 Bond issuance expenses 45,716,144 - Foreign exchange loss 15,513,242 - TOTAL 376,577,338 687,441,886 Loss from divestment (Note 17.1) 1,766,665 - Others 9,158,171 11,628,175 35.1 Current tax VND’000 TOTAL 537,002,813 216,598,866 Current year Previous year (as restated - Note 40)

34. OTHER INCOME AND EXPENSES Profit before tax 1,701,895,110 2,768,527,065 VND’000 Adjustments to increase (decrease) accounting profit Current year Previous year Adjustments to increase Revenue from sale of apartments recognised in prior years and 1,186,486,441 716,109,238 Other income 44,233,778 21,835,172 billed this year Proceeds from disposal of fixed assets 31,246,169 10,163,800 Cost of sale of apartments recognised in the current year but was - 1,283,728,182 Compensation received 1,281,230 884,121 not yet taxable Sales of scrap materials - 6,854,947 Intra-group unrealised profit 180,025,606 8,629,775 Others 11,706,379 3,932,304 Cost of electricity generated and sold which is tax exempt 86,604,288 6,596,657 Other expenses (61,776,937) (21,283,463) Loss from subsidiaries 81,237,050 78,920,516 Net carrying amounts of disposed assets (27,090,301) (10,720,783) Accrual expenses 39,295,592 41,538,506 Penalty expenses (9,952,156) - Expenses without adequate supporting documents 10,673,234 - Depreciation of idle assets (8,693,497) - Other expenses 54,564,214 26,070,536 Others (16,040,983) (10,562,680) Adjustments to decrease Revenue from sale of apartments recognized in the current year - (2,342,921,059) Other (loss) income (17,543,159) 551,709 but was not yet taxable Cost of sale of apartments recognised in prior years and billed this year (655,557,987) (472,647,052) 35. CORPORATE INCOME TAX Deductible interest expenses (345,323,897) - Revenue from sale of electricity which is tax exempt (101,934,974) (22,634,383) The Group has the obligation to pay corporate income tax (“CIT”) at the rate of 25% of taxable profits. Last year accrued expenses paid in the current year (78,539,084) (112,693,601) Reversal of shared profit from disposal of an associate - (2,294,412) The Group’s tax returns are subject to examination by the tax authorities. Because the application of tax laws and Share of profit in associates - (2,537,719) regulations to many types of transactions is susceptible to varying interpretations, the amounts reported in the consolidated financial statements could be changed at a later date upon final determination by the tax authorities. Dividend income (696,682) (884,537) Adjusted net profit before loss carry forward 2,158,728,911 1,973,507,712 The current tax payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the Tax loss carried forward (25,705,557) (93,971,703) consolidated income statement because it excludes items of income or expense that are taxable or deductible in other Estimated current taxable profit 2,133,023,354 1,879,536,009 years and it further excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated using applicable tax rates that have been enacted by the balance sheet date. CIT at flat rate of 25% 533,255,839 469,884,004 Under provision of CIT in previous year 8,876,854 - The CIT expense for the year comprised of: Advance CIT payable on progress payments from buyers - 51,492,396 CIT reduction - (1,945,196) Estimated current CIT for the year 542,132,693 519,431,204

114 Hoang Anh Gia Lai Joint Stock Company Hoang Anh Gia Lai Joint Stock Company 115 Annual Report 2011 Annual Report 2011 Bridging Opportunities Bridging Entreprenuership Bridging Partnership Bridging Capital Bridging Community Financial Statements

Notes to the consolidated Notes to the consolidated financial statements (continued) financial statements (continued) As at and for the year ended 31 Decemeber 2011 B09-DN/HN B09-DN/HN As at and for the year ended 31 Decemeber 2011

35. CORPORATE INCOME TAX (continued) 36. TRANSACTIONS WITH RELATED PARTIES

35.1 Current tax (continued) Significant transactions with related parties during the year ended 31 December 2011 were as follows: VND’000 VND’000 Current year Previous year Related parties Relationship Transactions Amounts (as restated - Note 40) Truc Thinh Trading and Services Related company Sales of goods and subcontract 36,527,961 Provision for CIT payable on progress payments from buyers (2%) - (106,434,485) Company Limited work provided by the Group CIT payable at beginning of year 259,682,893 133,031,368 Construction of apartments for 66,908,588 Excess value-added tax input allowed to offset against CIT payable in (15,012,486) - the Group accordance with tax notice of the local tax authority Offsetting against 2% CIT payment in advance (16,672,366) - A Dong Investment and Construction Associate Technical design fee 28,962,705 Consultant JSC CIT paid during the year (186,868,807) (286,345,194)

CIT payable at end of year (Note 23) 583,261,927 259,682,893 Huynh De Construction Corporation Related company Purchase of goods and 151,982,018 construction services Sale of goods and services 48,427,937 Warehouse rental 1,300,000 35.2 Deferred tax Amounts due from related parties at 31 December 2011 were as follows: The following comprise the Group’s deferred tax assets and liabilities recognized by the Group and the movements VND’000 thereon during the year. VND’000 Related parties Relationship Transactions Amounts Consolidated balance sheet (Credit) charge to consolidated income statement Trade receivables Truc Thinh Trading and Services Company Related company Sales of goods and subcontract 163,192,780 31 December 2011 31 December 2010 Current year Previous year Limited work provided by the Group (as restated - Note 40) (as restated - Note 40) Huynh De Construction Corporation Related company Sales of goods and subcontract 46,786,783 Deferred tax assets work provided by the Group Tax losses carried forward of 9,241,640 4,800,809 (4,440,831) (14,650,104) TOTAL 209,979,563 subsidiaries Unrealised intra-group profit 53,337,334 8,330,932 (45,006,402) 4,420,332 Other receivables Accrued expenses 6,468,312 32,771,214 26,302,902 (13,104,812) Hoang Anh Gia Dinh JSC Associate Borrowing 2,500,000 Others Related parties Others 4,243,605 TOTAL 69,047,286 45,902,955 TOTAL 6,743,605 Deferred tax liabilities Negative goodwill credited 61,439,435 61,439,435 - - Advances to suppliers to the consolidated income Huynh De Construction Corporation Related company Advances for construction works 300,761,972 statement Truc Thinh Trading and Services Company Related company Advances for construction works 64,204,579 Profit from apartment sale 200,761,464 342,062,064 (141,300,600) 191,345,266 Limited recognised but not yet issued invoice A Dong Investment and Construction Associate Advances for consulting and 6,518,000 Consultant JSC designing works Others (1,110,424) - (1,110,424) - TOTAL 261,090,475 403,501,499 TOTAL 371,484,551 Net deferred income tax (benefit) expense (165,555,355) 168,010,682

116 Hoang Anh Gia Lai Joint Stock Company Hoang Anh Gia Lai Joint Stock Company 117 Annual Report 2011 Annual Report 2011 Bridging Opportunities Bridging Entreprenuership Bridging Partnership Bridging Capital Bridging Community Financial Statements

Notes to the consolidated Notes to the consolidated financial statements (continued) financial statements (continued) As at and for the year ended 31 Decemeber 2011 B09-DN/HN B09-DN/HN As at and for the year ended 31 Decemeber 2011

36. TRANSACTIONS WITH RELATED PARTIES (continued) VND’000 Contracted amount Recognised amount Remaining commitment Amounts due to and due from related parties at 31 December 2011 were as follows (continued): VND’000 Apartments Related parties Relationship Transactions Amounts Golden House 29,835,204 19,634,159 10,201,045 Phu Hoang Anh 1,233,153,806 383,084,999 850,068,807 Trade payables Tay Nguyen Plaza 29,440,331 20,913,176 8,527,155 Truc Thinh Trading and Service Company Related company Construction of apartments (26,243,666) Limited Hydropower plants ` Huynh De Construction Corporation Related company Construction of apartments (4,728,430) Dak Srong 3A 8,000,000 1,530,000 6,470,000 TOTAL (30,972,096) Dak Srong 3B 172,601,421 127,695,442 44,905,979 Advances from customers Ba Thuoc 1 66,089,981 6,589,020 59,500,961 Truc Thinh Trading and Service Company Related company Advances for sale of goods (2,636,157) Ba Thuoc 2 756,966,471 533,639,740 223,326,731 Limited and services TOTAL 2,296,087,214 1,093,086,536 1,203,000,678 Other payables Huynh De Construction Corporation Related company Others (5,500,000) Others Related parties Others (1,367,400) 38. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES TOTAL (6,867,400) The Group’s principal financial liabilities comprise bonds, loans and borrowings and trade and other payables. The main purpose of these financial liabilities is to finance the Group’s operations. The Group has loan and other receivables, trade and other receivables, and cash and short-term deposits that arise directly from its operations. The Group also 37. COMMITMENTS hold available-for-sale investments. In addition, the Group issued convertible bonds to finance its investment activities.

Operating lease commitments The Group may be exposed to market risk, credit risk and liquidity risk.

The Group leases parcels of land in Vietnam to build factories, football facilities, hotels and for rubber plantations. The Risk management is integral to the whole business of the Group. The Group has a system of controls in place to future minimum lease commitments under the operating lease agreements are as follows: create an acceptable balance between the cost of risks occurring and the cost of managing the risks. The management VND’000 continually monitors the Group’s risk management process to ensure that an appropriate balance between risk and 31 December 2011 control is achieved.

Less than one year 4,415,175 Management reviews and agrees policies for managing each of these risks which are summarized below. From one to five years 17,660,700 Market risk More than five years 128,649,264 TOTAL 150,725,139 Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market prices include interest rate risk, currency risk, real estate price risk and other price risk, such as equity price risk. Financial instruments affected by market risk include bonds, loans and borrowings and deposits Capital commitments and available-for-sale investments. At 31 December 2011, the Group has contractual commitments for the construction work for its apartment and The sensitivity analyses in the following sections relate to the position as at 31 December 2011 and 31 December 2010. hydropower plant projects as follows: The sensitivity analyses have been prepared on the basis that the amount of net debt, the ratio of fixed to floating interest rates of the debt and the proportion of financial instruments in foreign currencies are all constant.

118 Hoang Anh Gia Lai Joint Stock Company Hoang Anh Gia Lai Joint Stock Company 119 Annual Report 2011 Annual Report 2011 Bridging Opportunities Bridging Entreprenuership Bridging Partnership Bridging Capital Bridging Community Financial Statements

Notes to the consolidated Notes to the consolidated financial statements (continued) financial statements (continued) As at and for the year ended 31 Decemeber 2011 B09-DN/HN B09-DN/HN As at and for the year ended 31 Decemeber 2011

38. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued) Equity price risk The Group’s equity securities are susceptible to market price risk arising from uncertainty about future values of the Interest rate risk investment securities. The Group manages equity price risk by placing a limit on equity investments. The Group’s Board Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of of Directors reviews and approves all equity investment decisions. The exposure to equity price risk is assessed as low. changes in market interest rates. The Group’s exposure to market risk for changes in interest rate relates primarily to the Group’s cash and short-term deposits, loans and bonds. Real estate price risk The Group manages interest rate risk by looking at the competitive structure of the market to obtain rates which are The Group has identified the following risks associated with the real estate portfolio: (i) the cost of the development favourable for its purposes within its risk management limits. schemes may increase if there are delays in the planning process. The Group uses advisers who are experts in the specific planning requirements in the scheme’s location in order to reduce the risks that may arise in the planning Interest rate sensitivity process; (ii) the exposure of the fair values of the portfolio to market and occupier fundamentals. The following table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion of loans Credit risk and borrowings. Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, With all other variables held constant, the Group’s profit before tax is affected through the impact on floating rate leading to a financial loss. The Group is exposed to credit risk from its operating activities (primarily for trade receivables) borrowings as follows: and from its financing activities, including deposits with banks and loan to a related party. Increase/decrease Effect on profit before tax basis point (VND’000) Trade receivables

For the year ended 31 December 2011 Outstanding customer receivables are regularly monitored. The requirement for impairment is analyzed at each reporting date on an individual basis for major clients. The Group seeks to maintain strict control over its outstanding receivables VND +300 (5,825,702) and has a credit control personnel to minimize credit risk. In view of the aforementioned and the fact that the Group’s VND -300 5,825,702 trade receivables relate to a large number of diversified customers, there is no significant concentration of credit risk. For the year ended 31 December 2010 Bank deposits VND +300 50,816,198 The Group’s bank balances are mainly maintained with well-known banks in Vietnam. Credit risk from balances with banks VND -300 (50,816,198) is managed by the Group’s treasury department in accordance with the Group’s policy. The Group’s maximum exposure to The assumed movement in percentages for interest rate sensitivity analysis is based on the currently observable market credit risk for the components of the balance sheet at each reporting dates are the carrying amounts as illustrated in Note environment. 5. The Group’s management evaluates the concentration of credit risk in respect to bank deposit as low.

Foreign currency risk Loan Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because The Group mainly loans to Laos Government and Hoang Phuc Investment Construction and Housing Development JSC. of changes in foreign exchange rates. The Group’s exposure to the risk of changes in foreign exchange rates relates The Group’s management evaluates the risk in respect to these loans is as low. primarily to the Group’s operating activities. Liquidity risk Foreign currency sensitivity The liquidity risk is the risk that the Group will encounter difficulty in meeting financial obligation due to shortage of funds. The following table demonstrates the sensitivity to a reasonably possible change in the US dollar exchange rate, with all other The Group’s exposure to liquidity risk arises primarily from mismatches of maturities of financial assets and liabilities. variables held constant, of the Group’s profit before tax (due to changes in the fair value of monetary assets and liabilities). The Group monitors its liquidity risk by maintain a level of cash and cash equivalents and bank loans deemed adequate Change in US$ rate Effect on profit before Effect on profit before by management to finance the Group’s operations and to mitigate the effects of fluctuations in cash flows. (%) tax (US$) tax (VND’000)

For the year ended 31 December 2011 +2 (858,812) (17,887,328) -2 858,812 17,887,328

For the year ended 31 December 2010 +2 18,413 348,595 -2 (18,413) (348,595)

120 Hoang Anh Gia Lai Joint Stock Company Hoang Anh Gia Lai Joint Stock Company 121 Annual Report 2011 Annual Report 2011 122 38. As atandfortheyearended31Decemeber2011 financial statements Notes totheconsolidated Annual Report 2011 Annual Report Hoang Anh Gia LaiJointStockCompany FINANCIAL RISKMANAGEMENTOBJECTIVESANDPOLICIES payments: The table below summarizes the maturity profile of the Group’s financial liabilitiesbased on contractual undiscounted Liquidity risk Trade payables Convertible bonds Loans andborrowings 31 December2011 Other payablesandaccruedexpenses Trade payables Convertible bonds Loans andborrowings 31 December2010 Other payablesandaccruedexpenses The Groupdidnotholdcollateralat31December2011and 31December2010. collateral requirementsfortheobtainedloansandbonds(Notes2027). The Group has pledged cash,machinery,landuserightanditsinvestmenttofulfilthe inventory, building,structure, Collateral sources offundingissufficientlyavailable. The of Group assessedtheconcentrationriskwithrespecttorefinancingitsdebtandconcludeditbelow. Access to (continued) Less thanoneyear 4,636,784,738 4,707,567,781 3,201,903,706 1,100,000,000 1,992,741,335 (continued) 742,270,498 692,610,534 667,296,812 947,529,634 - From onetofiveyears 8,423,895,345 2,782,059,650 2,230,000,000 6,193,895,345 2,782,059,650

(continued) - - - - - 13,060,680,083 7,489,627,431 2,230,000,000 9,395,799,051 1,100,000,000 4,774,800,985 B09-DN/HN 742,270,498 692,610,534 667,296,812 947,529,634 VND’000 Total

Notes to the consolidated financial statements (continued) As at and for the year ended 31 Decemeber 2011 B09-DN/HN Bridging Opportunities Bridging Opportunities

39. FINANCIAL ASSETS AND FINANCIAL LIABILITIES VND’000 Carrying amount Fair value Bridging Entreprenuership 31 December 2011 31 December 2010 31 December 2011 31 December 2010

Financial assets Loans to others 292,746,425 280,819,684 292,746,425 280,819,684 Government bonds 20,000 20,000 20,000 20,000 Trade receivable 2,441,978,920 1,875,907,929 2,441,978,920 1,875,907,929

Other receivable 813,893,295 236,924,984 813,893,295 236,924,984 Bridging Partnership Short-term investment 97,356,499 81,783,240 97,356,499 81,783,240 Lands (lands held for development) 2,058,578,090 1,975,214,497 2,058,578,090 1,975,214,497 Investment in other companies 28,650,153 25,326,903 28,650,153 25,326,903 Cash and cash equivalents 2,896,456,731 3,588,663,440 2,896,456,731 3,588,663,440 Others 150,000 3,323,250 150,000 3,323,250 Bridging Capital Bridging Capital TOTAL 8,629,830,113 8,067,983,927 8,629,830,113 8,067,983,927

Financial liabilities Loans and borrowings 11,625,799,051 5,874,800,985 11,625,799,051 5,874,800,985 Payables to related parties 37,839,496 - 37,839,496 - Bridging Community Trade payable 711,298,402 667,296,812 711,298,402 667,296,812

Hoang Anh Gia LaiJointStockCompany Other current liabilities 685,743,134 947,529,634 685,743,134 947,529,634 TOTAL 13,060,680,083 7,489,627,431 13,060,680,083 7,489,627,431

The fair value of the financial assets and liabilities had not been formally assessed and determined as at 31 December 2011 and 31 December 2010. However,

Annual Report 2011 Annual Report it is management’s assessment that the fair values of these financial assets and liabilities are not materially different from their carrying amounts as at balance Financial Statements sheet date. 123 Bridging Opportunities Bridging Entreprenuership Bridging Partnership Bridging Capital Bridging Community Financial Statements

Notes to the consolidated Notes to the consolidated financial statements (continued) financial statements (continued) As at and for the year ended 31 Decemeber 2011 B09-DN/HN B09-DN/HN As at and for the year ended 31 Decemeber 2011

40. RESTATEMENT OF PRIOR YEAR’S CONSOLIDATED FINANCIAL STATEMENTS DUE TO VND’000 CHANGES IN ACCOUNTING POLICIES ITEMS As previously stated Restatement Restated Amounts

The Group’s Board of Directors has decided to change its revenue recognition policy for pre-completion sales of Consolidated cash flow statement apartments adopted from 1 January 2011 in recognition of the International Financial Reporting Standards principles Profit before tax 3,017,409,637 (248,882,572) 2,768,527,065 relevant to this matter. Accordingly, revenue and associated costs from pre-completion sales of apartments are now Increase in account receivables (1,372,344,876) 555,753,030 (816,591,846) recognised when all of the criteria enumerated on Note 3.1 are effectively met. Increase in inventories 23,112,270 (271,311,381) (248,199,111) Previously, the revenue and associated costs for pre-completion sales of apartments were recognised as the related Increase in prepaid expenses (41,440,335) (35,559,077) (76,999,412) obligations had been fulfilled. This change is considered as a change in accounting policy by the Ministry of Finance in its Official Letter dated 18 February 2011 and has been applied retrospectively in accordance with VAS No. 29 - Changes in Accounting Policies, Accounting Estimates and Errors, with the effects on the 2010 balances as follows: 41. SEGMENT INFORMATION

VND’000 For management purposes, the Group is organised into business units based on their products and services, and has ITEMS As previously stated Restatement Restated Amounts seven reportable operating segments as follows: • Real estate: developing apartments for sale and lease; Consolidated balance sheet Trade receivables 2,785,902,169 (909,994,240) 1,875,907,929 • Production: producing and trading furniture and granite products; Inventories 2,994,816,631 1,112,184,747 4,107,001,378 • Trading and services: managing properties and trading of goods; Tax and other receivables from the State 737,960 16,693,366 17,431,326 • Construction: building apartments; Long-term prepaid expenses 153,570,220 44,538,122 198,108,342 Deferred income tax assets 37,920,152 7,982,803 45,902,955 • Power: developing and operating hydropower plants; Total assets 18,771,716,726 271,404,798 19,043,121,524 • Mining: exploiting and selling iron ore; and Advance from customers 3,519,158 2,262,366,379 2,265,885,537 • Plantation: planting rubber trees and sugarcane, and processing and trading of rubber latex and rubber wood. Statutory obligation 491,200,946 (106,437,287) 384,763,659 Accrued expenses 524,740,496 (300,841,096) 223,899,400 Management monitors the operating results of its business units separately for the purposes of making decisions about resources allocation and performance assessment. Segment performance is evaluated based on operating profit or loss Deferred income tax liability 743,794,382 (340,292,883) 403,501,499 which in certain aspects, as explained in the table below, is measured differently from operating profit or loss in the Total liabilities 8,747,042,721 1,514,795,113 10,261,837,834 consolidated financial statements. Group financing, including finance costs and finance revenue, and income taxes are Undistributed earnings 2,623,974,821 (966,547,207) 1,657,427,614 managed on a Group basis and are not allocated to operating segments. Minority interest 865,959,042 (276,843,108) 589,115,934 The segment information of the hospitality industry has been combined into the trading and services industry during the Total liabilites and owners’ equity 18,771,716,726 271,404,798 19,043,121,524 year as the hospitality industry is currently not the Group’s core business. Consolidated income statement Revenues from sales of goods and 4,526,468,760 (555,753,030) 3,970,715,730 rendering of services Cost of goods sold and services rendered (2,232,774,917) 271,311,381 (1,961,463,536) Selling expenses (133,031,950) 35,559,077 (97,472,873) Profit before tax 3,017,409,637 (248,882,572) 2,768,527,065 Deferred tax expenses (275,901,587) 107,890,905 (168,010,682) Basic EPS (VND) 4,903 (664) 4,239 Diluted EPS (VND) 4,828 (652) 4,176

124 Hoang Anh Gia Lai Joint Stock Company Hoang Anh Gia Lai Joint Stock Company 125 Annual Report 2011 Annual Report 2011 126 Annual Report 2011 Annual Report Hoang Anh Gia LaiJointStockCompany Notes to the consolidated financial statements (continued) As at and for the year ended 31 Decemeber 2011 B09-DN/HN

41. SEGMENT INFORMATION (continued) VND’000 Real estate Production Trading and Construction Plantation Power Mining Eliminations Total services

For the year ended 31 December 2010 Revenue External customers 2,395,484,552 888,282,519 161,375,718 501,347,414 - 22,634,383 - - 3,969,124,586 Inter-segment elimination - 542,806,796 40,515,223 381,257,274 - - - (964,579,293) - TOTAL 2,395,484,552 1,431,089,315 201,890,941 882,604,688 - 22,634,383 - (964,579,293) 3,969,124,586

Results Segment results 1,127,914,717 386,138,915 62,939,939 414,629,753 - 16,037,726 - - 2,007,661,050 Unallocated expenses (287,127,286) Profit before income tax, 1,720,533,764 financial income and financial expense Financial income 1,262,054,448 Share in profit of associates 2,537,719 Financial expense (216,598,866) Profit before tax 2,768,527,065 Income tax expense (687,441,886) Net profit for the year 2,081,085,179

As at 31 December 2010 Assets and liabilities Segment assets 8,386,605,388 512,487,789 381,048,321 1,058,631,409 1,511,053,016 1,648,922,755 563,758,813 - 14,062,507,491 Cash of the Group 3,588,663,440 Investments in associates 30,931,029 Unallocated assets 1,361,019,564 Total assets 19,043,121,524 Segment liabilities (5,342,179,781) (254,844,475) (126,089,286) (633,895,767) (565,474,970) (978,774,316) (90,950,466) - (7,992,209,061) Unallocated liabilities (2,269,628,773) Total liabilities (10,261,837,834)

Notes to the consolidated financial statements (continued) As at and for the year ended 31 Decemeber 2011 B09-DN/HN Bridging Opportunities Bridging Opportunities

41. SEGMENT INFORMATION (continued) VND’000 Real estate Production Trading and Construction Plantation Power Mining Eliminations Total

services Bridging Entreprenuership

For the year ended 31 December 2011 Revenue External customers 1,760,329,612 481,715,062 132,405,070 334,208,008 - 101,934,974 339,659,089 - 3,150,251,815 Inter-segment elimination - 494,887,238 100,781,310 88,972,561 31,007,892 - 58,887,565 (774,536,566) -

Total 1,760,329,612 976,602,300 233,186,380 423,180,569 31,007,892 101,934,974 398,546,654 (774,536,566) 3,150,251,815 Bridging Partnership

Results Segment results 840,315,534 85,767,185 65,110,552 151,226,471 - 67,941,739 213,590,706 - 1,423,952,187 Unallocated expenses (412,044,266) Profit before income tax, 1,011,907,921 financial income and financial

expense Bridging Capital Financial income 1,226,990,002 Financial expense (537,002,813) Profit before tax 1,701,895,110 Income tax expense (376,577,338) Net profit for the year 1,325,317,772 Bridging Community

As at 31 December 2011 Hoang Anh Gia LaiJointStockCompany Assets and liabilities Segment assets 9,272,410,265 1,095,127,883 506,706,688 1,384,852,529 4,727,434,422 2,908,620,502 586,136,668 - 20,481,288,957 Cash of the Group 2,896,456,731 Investments in associates 178,361,483

Annual Report 2011 Annual Report Unallocated assets 2,020,404,575 Financial Statements Total assets 25,576,511,746 Segment liabilities (3,967,533,346) (454,137,706) (56,376,350) (950,031,234) (1,266,902,114) (1,698,666,396) (151,924,593) - (8,545,571,739) Unallocated liabilities (6,947,717,397)

127 Total liabilities (15,493,289,136) Notes to the consolidated financial statements (continued) As at and for the year ended 31 Decemeber 2011 B09-DN/HN

42. CORRESPONDING FIGURES

Certain accounts in the prior year’s consolidated financial statements have been reclassified to conform with the current year’s presentation.

43. EVENTS AFTER THE BALANCE SHEET DATE

There has been no significant event occurring after the balance sheet date which would require adjustments or disclosures to be made in the consolidated financial statements.

Mrs Ho Thi Kim Chi Mr Nguyen Van Su Chief Accountant General Director

23 March 2012

Hoang Anh Gia Lai Joint Stock Company Annual Report 2011 Headquaters: 15 Truong Chinh Street, Pleiku City, Gia Lai Province, Vietnam Tel: +84 59 222 2249 Fax: +84 59 222 2247 www.hagl.com.vn Designed & Produced by Aquarius