XZ ANNUAL REPORT 2018 SHAPING THE FUTURE SHAPING THE FUTURE SHAPING 2018 ANNUAL REPORT CHAPTER VINGROUP 2018 AND MESSAGE CHAPTER CORPORATE GOVERNANCE CONTENT FROM THE CEO • Vingroup Governance Structure 98 01 • Vision, Mission, Core Values 8 04 • Report of the Board of Directors 100 • 2018 at a Glance 10 • Report of the Supervisory Board 104 • 2018 Achievements 12 • Governance Report 106 • 2018 Awards and Accolades 16 • Internal Auditing Report 108 • Message from the CEO 18 • Risk Management 109 • 2014 – 2018 Financial and Operational Highlights 20 • Share Information and Investor Relations 113 CHAPTER ABOUT VINGROUP CHAPTER SUSTAINABLE DEVELOPMENT • Vingroup Profile 24 • Vingroup’s Vision for Sustainability 124 02 • Corporate Milestones 28 05 • Sustainability by the Numbers 126 • Businesses 30 • 2018 Highlights 128 • Corporate Structure 48 • 2018 Sustainability Report 132 • Board of Directors 50 • Managing Sustainability 148 • Management 52 • Supervisory Board 54 • Development Strategy 55 CHAPTER MANAGEMENT REPORT CHAPTER CONSOLIDATED FINANCIAL STATEMENTS ON 2018 BUSINESS PERFORMANCE AND 2019 PLAN OF ACTION • General Information 154 03 06 • Report of Management 156 • 2018 Economy and 2019 Macroeconomic Outlook 60 • Independent Auditors’ Report 157 • Vingroup Operations and Financial Performance in 2018 68 • Consolidated Balance Sheet 158 • Blueprint for 2019 90 • Consolidated Income Statement 162 • Consolidated Cash Flow Statement 163 • Notes to the Consolidated Financial Statements 165 • Appendix 1 – The Group Structure as at 31 December 2018 227 www.vingroup.net ANNUAL REPORT 2018 VINGROUP 2018 CHAPTER AND MESSAGE FROM THE CEO 8 Vision, Mission, Core Values 01 10 2018 at a Glance 12 2018 Achievements 16 2018 Awards and Accolades 18 Message from the CEO 20 2014 – 2018 Financial and Operational Highlights THE VINGROUP ECOSYSTEM IS LARGE BUT THERE IS STILL A LOT OF WORK TO BE DONE. WE MUST NOT ONLY DO WELL “ INTERNALLY, BUT ALSO CREATE IMPACTS ALIGNING WITH OUR MISSION: "TO CREATE A BETTER LIFE FOR THE VIETNAMESE PEOPLE". VINGROUP WILL BUILD A SUSTAINABLE COMPETITIVE “ ADVANTAGE FOR GREATER GROWTH IN THE DOMESTIC MARKET WHILE PREPARING FOR INTERNATIONAL ACCLAIM! Pham Nhat Vuong Vingroup Chairman 08 VINGROUP JOINT STOCK COMPANY CHAPTER 1 – VINGROUP 2018 AND MESSAGE FROM THE CEO 09 VISION, MISSION, CORE VALUES With the goal of market leadership and sustainable development, Vingroup aims to become Vision one of the most respected companies not only in Vietnam but also in the region. We will achieve this goal by improving production quality and service levels in real estate development, retail operations, and hospitality, by improving the quality of life for the Vietnamese people, and by raising the reputation of the nation in the world. CUSTOMERS SHAREHOLDERS AND Mission BUSINESS PARTNERS Vingroup will provide products and services Vingroup will uphold a spirit of cooperation, that meet international standards while emphasizing mutual development and reflecting the customs and cultural values respect for partners by emphasizing the of Vietnam. Products and services must creation of long-term sustainable value. anticipate changes and lead the trends. EMPLOYEES VIETNAMESE SOCIETY Vingroup will maintain a dynamic, creative, and Vingroup will demonstrate its corporate social respectful work environment that enables responsibility by harmonizing its corporate goals employees to achieve their maximum potential. with the values of the communities in which it does business. 2018 Message Shaping the future Vingroup is proud to set a new standard in all areas of participation, leading the market and actively creating new consumer trends. Vingroup will continue applying its breakthrough and thought leadership to shape the future and ‘create a better life for the Vietnamese people’. Vingroup strives to uphold six core values Core Values “CREDIBILITY, INTEGRITY, CREATIVITY, SPEED, QUALITY, and COMPASSION”. Slogan Logo CREDIBILITY INTEGRITY CREATIVITY Preserving the The Vingroup Logo shows a bird in flight toward the Sun. This image expresses our Vingroup vigorously protects its Credibility As a foundation of our Company, Integrity Vingroup’s management believes that startup mindset determination to strive for new levels of as one would protect one’s honor. The demands that we remain in full compliance creativity is what enables the Group to success. The V-shape of the bird’s wings Group is fully prepared to execute its plans with all applicable laws and ethical standards. deliver on its philosophy, which is expressed As a relatively young company, Vingroup refers to Vietnamese national pride and and spares no effort in meeting its goals. It follows that we must always put the as, “Dare To Think, Dare To Do.” This believes it is important to preserve the to the Group’s place in its competitive interests of customers first. philosophy encourages all employees to entrepreneurial traits that led to our success. marketplace. learn new skills. The startup mindset includes listening to customers, cultivating creativity, supporting The five stars beneath the image of the SPEED QUALITY COMPASSION the courage to innovate, and collaborating bird represent Vingroup’s gold standards The Group considers speed of execution The place of quality in Vingroup’s operations The Group respects the interests of all its to succeed. and principles. The two colors of the logo, and efficiency in operations to be critical is expressed as “Best in People, Best in stakeholders. Employees are Vingroup’s from Vietnam’s flag, express the Group’s to our success. Among the practices that Products and Services, Best in Quality of most important resource. The Group will These traits will continue to guide the pride in our Vietnamese identity, spirit, and follow from our emphasis on speed are, Life, Best in Commitment to Society.” continue to promote harmony among the Group’s growth and development. intelligence. “Fast To Decide, Fast To Invest, Fast To interests of all stakeholders by emphasizing Deploy, Fast To Sell, Fast To Change, and fairness, integrity, unity, and strength. Fast To Adapt”. 10 VINGROUP JOINT STOCK COMPANY CHAPTER 1 – VINGROUP 2018 AND MESSAGE FROM THE CEO 11 2018 AT A GLANCE VND VND VND OVER 122 TRILLION 6.2 TRILLION 364 TRILLION 3.4 MILLION 4.9 MILLION 2,080 NET REVENUE PROFIT AFTER TAX MARKET CAPITALIZATION(*) GUEST NIGHTS SOLD VISITS TO VINPEARL LAND RETAIL STORES(*) AT VINPEARL OVER DELIVERED NEARLY NEARLY OVER 65,300 15,400 66 617,000 23,000 6.3 MILLION EMPLOYEES APARTMENTS, VILLAS, RETAIL MALLS PATIENTS SERVED AT VINSCHOOL STUDENTS(*) VINID MEMBERS(*) SHOPHOUSES, AND VINMEC HOSPITALS AND CLINICS BEACH VILLAS DURING 2018 (*) As of February 28, 2019 Vinpearl Discovery 2 Phu Quoc – Kien Giang 12 VINGROUP JOINT STOCK COMPANY CHAPTER 1 – VINGROUP 2018 AND MESSAGE FROM THE CEO 13 2018 ACHIEVEMENTS 02 LISTING OF VINHOMES SHARES AND RAISING TOTAL CAPITAL OF USD 3.2 BILLION FROM INTERNATIONAL MARKET 03 On May 17, 2018, Vinhomes JSC listed nearly VINHOMES LAUNCHED TWO MEGA 2.7 billion shares on the Ho Chi Minh Stock PROJECTS WITH IMPRESSIVE Exchange (“HOSE”) and quickly became PURCHASING POWER one of the largest listed companies on the market, second only to its parent company, Vingroup. In 2018, Vinhomes introduced its first two mega projects – Vinhomes Ocean Park and 04 After the listing date, Vinhomes raised nearly Vinhomes Sportia – in the Eastern and the USD 1.4 billion from the share sale to several Western gateway of Hanoi and launched VINCOM RETAIL SET A RECORD WITH reputable international investors. The sale the VinCity product line, which was renamed 20 RETAIL MALLS OPENING IN was the largest-ever initial equity offering in Vinhomes Sapphire, targeting mid-end A SINGLE YEAR Vietnam. In 2018, Vingroup also succeeded segment. These mega projects will consist in raising capital through multiple channels of three product lines – Vinhomes Sapphire, VinFast had an impressive launch ceremony for car models through its showrooms, from international financial institutions Vinhomes Ruby and Vinhomes Diamond, In 2018, Vincom Retail continued increasing with two models, SUV Lux SA2.0 and Sedan dealers and Adayroi e-commerce channel. and for many of its core subsidiaries, with covering hundreds of hectares and offering its coverage with 20 new retail malls in 38 01 Lux A2.0, in October 2018 at the Paris Motor a total value of USD 2.5 billion. Some of a series of unique and impressive indoor provinces and cities nationwide, bringing Show. This comes just a year after the Group In early December, just over three months the most notable transactions include the and outdoor amenities. the total number of malls to 66, with a total LAUNCH OF VINFAST CARS AND announced its participation in the Industrials from the groundbreaking, the VinSmart USD 400 million preference share issuance GFA of 1.5 million square meters. Thanks ELECTRIC SCOOTERS, AND VSMART segment. VinFast unveiled three car models smartphone factory began operations. to Hanwha Group from Korea, the 10-year With innovative and reasonable financial to its large coverage, diverse tenants and SMARTPHONES – SUV, Sedan and CUV (Fadil) – and the Initially, VinSmart launched four Vsmart facility with a total value of USD 950 million solutions, the Vinhomes Sapphire product quality service, Vincom Retail has become Klara electric scooter in seven major cities smartphone models – Joy 1, Joy 1+, Active 1 to VinFast, guaranteed by Euler Hermes line (formerly VinCity) has been embraced the first choice for many domestic partners and provinces (Hanoi, Ho Chi Minh City, Hai and Active 1+ – targeting mass and mid-end – an export credit agency of the German by the market. During the last two months and international brands wanting to seize Phong, Nha Trang, Da Nang, Can Tho and market segments. This marked Vingroup’s government, and the USD 450 million of 2018, Vinhomes Sapphire’s pre-sale opportunities from the current growth Ha Tinh). The Klara e-scooter is currently for presence in the smart device manufacturing international exchangeable bonds issued by rate reached 82% of the nearly 12,000 of consumer retail and entertainment in sale, and VinFast is already receiving orders sector.