bÁo cÁo thfffing nin 2014

Báo cáo thường niên 20142

THÔNG TIN CHUNG 3

1record milestone Million tonnes of construction steel Sales

Revenue over USD Billion

overview of Hoa PHat GrouP 5

Message from the Chairman 8

Introduction of Hoa Phat Group 10

Part ii: rePort of tHe Board of directors 16

Members of the Board of Directors 17

Report of the Board of Directors 19

- Business performance results in 2014 19

- Financial position 20

- Production and business plan in 2015 22

- Subsidiaries’ performance 24

- Investment and implement of major projects 36

- Human resource management 38

Investor Relations (IR) 40

Part iii: Board of manaGement’s assessment 46

Member of the Board of Management 47

Board of Management’s Assessment 52

Risk Management 56

Part iv: rePort of tHe suPervisory Board 58

Member of the Supervisory Board 59

Report of the Supervisory Board 60

Report of the Internal Supervisory Department 61

Part v: sustainaBle develoPment 62

Research and Development (R&D) 63

Social activities 66

Part vi: consolidated financial statements for tHe year ended 31 decemBer 2014 68

Co

nt

ent

s


I

overview

Hoa PHat GrouP Profiletransaction name: Hoa Phat Group Joint Stock Company Business registration certificate no.: 0900189284charter capital: VND4,886,431,750,000address: Pho Noi A Industrial Zone, Giai Pham Commune, Yen My District, Hung Yen ProvinceHead office: 39 Nguyen Dinh Chieu, Le Dai Hanh Ward, Hai Ba Trung District, HanoiPhone: (84) 4 62848666fax: (84) 4 62833456da nang Branch 171 Truong Chinh, An Khe Ward, Thanh Khe District, Da Nang CityPhone: (84) 511 3721232fax: (84) 511 3722833Hcm city Branch: 643 Dien Bien Phu, Ward 25, Binh Thanh District, Ho Chi Minh CityPhone: (84) 8 62985599fax: (84) 8 62987799website: www.hoaphat.com.vn

sHare information

Stock sticker: HPGStock exchange: HOSEInitial offering date: 15 November 2007Shares in circulation: 488,643,175 shares

Business activities

1 Trading, exporting and importing iron and steel, materials and equipments for

refining and rolling steel;

2 Producing rolling steel and roof fabrication;

3 Producing steel pipes and galvanized ones, stainless ones;

4 Producing and trading non-ferrous metal and non-ferrous metal scrap;

5 Refining steel and casting iron;

6 Manufacturing and trading coke coal;

7 Mining for metal ores; trading metals, metal ores and metal scrap;

8 Manufacturing and trading construction and mining equipment;

9 Producing interior furniture for offices, households and schools;

10 Manufacturing, trading, assembling, repairing, and maintaining electric, electronic,

refrigeration, civil electric products and air conditioners;

11 Investing and building infrastructure for industrial zones and urban areas;

12 Real estate business.

7overview


Message froM the ChaIrMan

of the Board of ManageMent

Dear valued shareholders,

In 2014, the Vietnamese economy and the world

economy both saw positive changes even though the

signs of recovery are still unclear. However, for Hoa Phat

Group, 2014 marked a memorable milestone with

striking success, laying a solid foundation for Group

to step forward, continue innovation, and implement

its long-term strategies for the next 10-year

development cycle.

In 2014 Hoa Phat Group achieved revenue of

VND25,852 billion and profit after tax of VND3,250

billion, exceeding its targets by 12% and 48%,

respectively. This is the first time ever that Hoa Phat

has reached the milestone of USD1.2 billion in revenue

and at the same time has also sold more than 1 million

tonnes of construction steel.

The governance of the Group has been increasingly

strengthened and has functioned smoothly. Hoa Phat

is really a ceaselessly operating machine in all of its

business segments, from the core segment of steel

production to other industrial product segments as well

as the real estate segment. Hoa Phat Group is also a big

family for more than 10,000 employees with a culture of

good faith and mutual help.

Integrating its development to the benefit of society,

Hoa Phat has spent tens of billions of Dong on

charitable activities to give assistance to unlucky

people in disadvantaged living conditions in a number

of provinces, especially those in mountainous and

remote areas, including Lao Cai, Yen Bai, Ha Giang. In

2014, Hoa Phat Group’s total contribution to the State

Budget reached VND2,189 billion, an increase of nearly

20% against 2013.

This impressive success represents the fruits harvested

from the prestige of its brand, its financial health,

its experience in production governance and

management, and above all its solidarity and steadfast

determination to overcome challenges throughout the

22-year development history of the Group.

Steel production is still the core business activity in

Hoa Phat’s long-term development strategy. For 2015,

Hoa Phat has set targets of 1.2 million tonnes for its

construction steel production and sales and 30% for its

steel pipe growth. Other industrial product segments

(furniture, refrigeration engineering, equipment &

accessories, and trading) are expected to operate in

stability. The real estate segment continues to set

targets of achieving the highest occupancy rate in

industrial zones and of initiating apartment, office

and commercial complexes.

The year 2015 will include an important turn to

innovation by Hoa Phat: we will initiate a totally new

business activity – feeds trading and production. This

new business activity is not an easy job as competitive

pressure is even higher than that in the steel sector.

However, I believe that with our experience in

large-scale end-to-end production cycles and effort for

“overcoming any challenge and stepping forward over

any obstacle”, Hoa Phat will continue to succeed.

On behalf of the Board of Management, I would like

to express our respectful gratitude for the trust and

support of our valuable shareholders and for the close

cooperation of our customers and business partners.

Especially, I would like to express my sincerest thanks to

all employees of Hoa Phat Group, who have exhibited

great dedication and aspirations for the Hoa Phat Group

today.

Yours sincerely,

Chairman of the Board of

Management

tran dinh long

9overview

Hoa Phat Group is one of the leading private industrial manufacturing groups in Vietnam. Originating as a small construction machine and equipment trading company in August 1992, Hoa Phat has gradually expanded its business to trading and production of Furniture (1995), Steel Pipes (1996), Steel (2000), Refrigeration (2001), and Property Development (2001). In 2007, Hoa Phat was reorganized into a group structure, with Hoa Phat Group Joint Stock Company being the holding company of its subsidiaries and associates. Since 15th November 2007, Hoa Phat has been officially listed on the Ho Chi Minh City Stock Exchange under the stock ticker symbol “HPG.”

Since its reorganization, Hoa Phat Group has made a number of substantial developments, the most notable of which are: (i) the construction and completion of the Hoa Phat Integrated Steel Complex in Hai Duong Province using modern technology to produce steel from iron ore; and (ii) investment in the mining industry to produce inputs for the steel manufacturing industry. Presently,

Hoa Phat Group is recognized as one of the three largest construction steel manufacturers in Vietnam.

To date, Hoa Phat Group has 14 subsidiaries specializing in steel manufacturing, coal coke production, mining, construction machinery and equipment manufacturing, furniture manufacturing, refrigeration manufacturing, real estate, and feeds trading and production, with branches and factories located in Hanoi, Hung Yen, Hai Duong, Lao Cai, Yen Bai, Ha Giang, Da Nang, Ho Chi Minh City, and Binh Duong.

The production of steel and related products, such as coal coke and iron ore, accounts for over 77% of the Group’s total revenue and is regarded as the core business activity of the Group. Hoa Phat Furniture is also a reputable brand in the office furniture segment with the largest market share in Vietnam. In addition, the development of real estate, industrial zones and urban areas are other strongly growing businesses within the Group.

overview1

10 2014 annual rePort

11overview

to become a leading multi-disciplinary industrial manufacturer in

vietnam with steel production as its core business activity

mission statement

GrouP structure

Hoa Phat Feeds Trading and Production One Member Co., Ltd.

12

Hoa Phat Urban Development and Construction JSC

Golden Gain Vietnam JSC

corPorate structure

HOA PHAT GROUP

Hoa Phat Steel JSC Hoa Phat Equipment Accessories Co., Ltd

Hoa Phat Furniture JSC

Hoa Phat Refrigeration Engineering Co., Ltd

Hoa Phat Trading Co., Ltd

Hoa Phat Steel One member Co., Ltd

Hoa Phat Steel Pipe Co., Ltd

Hoa Phat Energy JSC

An Thong Mining Investment JSC

Hoa Phat Mining JSC

Nam Giang Mining One-Member Co.,Ltd

THE GROUP OFFICE AFFILIATESSUBSIDIARIES

1. Hoa Phat Steel JSC2. Hoa Phat Steel One member Co., Ltd3. Hoa Phat Steel Pipe Co., Ltd 4. Hoa Phat Energy JSC 5. An Thong Mining Investment JSC 6. Hoa Phat Mining JSC7. Nam Giang Mining One-Member Co.,Ltd 8. Hoa Phat Equipment Accessories Co., Ltd9. Hoa Phat Furniture JSC 10. Hoa Phat Refrigeration Engineering Co., Ltd 11. Hoa Phat Trading Co., Ltd 12. Hoa Phat Urban Development and Construction JSC

1. Hoa Phat - SSG Mining, JSC

MANAGEMENT BOARD

GENERAL SHAREHOLDERS

PR DEPARTMENT

FINANCIAL DEPARTMENT

ITDEPARTMENT

ADMINISTRATION DEPARTMENT

INTERNAL SUPERvISORy DEPARTMENT

SUPERvISORy BOARD

DIRECTOR BOARD

LEGAL DEPARTMENT

13. Golden Gain Vietnam JSC14. Hoa Phat Feeds Trading and Production One Member Co., Ltd.

2014 annual rePort

some financial indicators:

financialPosition

13overview

Selling expenses

General and administration expenses

Results of other activities

EBIT

Depreciation and amortisation expenses

eBitda

Net financial profit

Profit before tax

Corporate income tax

net profit

Current assets

Long-term assets

total assets

Short and long term debts

Owner’s equity

financial ratios

Gross profit margin

EBITDA margin

EBIT margin

Net profit margin

Net Sales growth rate

Net Profit growth rate

Quick ratio (times)

Debts/ equity

ROE

ROA

EPS (VND/share)

content (unit: vnd) 2012 2013 2014

revenue 17,122,073,926,267 19,200,234,178,082 25,851,816,458,125

16,826,851,892,984 18,934,292,150,531 25,525,348,822,713

14,341,642,566,494 15,650,540,636,204 20,338,346,539,679

2,485,209,326,490 3,283,751,514,327 5,187,002,283,034

274,039,974,293 253,653,065,057 366,087,885,891

586,966,481,317 416,174,707,153 607,214,249,307

14,943,260,928 32,866,936,094 (40,461,712,345)

1,639,146,131,809 2,646,790,678,211 4,173,238,435,491

596,227,337,059 720,195,566,311 1,106,005,660,313

2,235,373,468,868 3,366,986,244,522 5,279,244,095,804

(420,399,492,992) (252,130,284,965) (403,546,451,752)

1,218,205,340,655 2,394,404,194,432 3,769,520,728,432

187,699,911,137 383,968,791,663 519,306,138,228

1,030,505,429,517 2,010,435,402,769 3,250,214,590,204

10,220,788,345,768 12,402,515,338,144 11,745,859,365,753

8,794,975,115,778 10,673,862,524,545 10,343,245,032,050

19,015,763,461,546 23,076,377,862,689 22,089,104,397,803

6,305,957,434,476 7,575,383,424,084 6,747,847,188,960

8,085,135,114,809 9,500,327,254,417 11,795,984,026,356

14.77% 17.34% 20.32%

13.28% 17.78% 20.68%

9.74% 13.98% 16.35%

6.12% 10.62% 12.73%

(5.74%) 12.52% 34.81%

(20.54%) 95.09% 61.67%

0.43 0.37 0.47

77.99% 79.74% 57.20%

12.7% 21.2% 27.6%

5.4% 8.7% 14.7%

2,386 4,663 6,435

Net Sales

Cost of goods sold

Gross profit

suBsidiaries’Performance

14

550

1,000

500

150

30

180

99.91%

99.89%

99.96%

99.8%

100%

99.72%

2,500

600

99.99%

100%

Produce and trade various kinds of

steel pipes.

Produce and trade coal coke

Explore, exploit, prepare and make,

process, purchase and sell, export

and import minerals, primarily iron

ores.

Exploit and collect lignite; exploit iron ore, aluminum ore, and other rare metals; non-ferrous metal and rare metal

Exploit iron ore, rare metal ore, and

other non-iron metalore

Manufacture construction

equipment; trade construction and

mining machinery and equipment of

small and medium size.

39 Nguyen Dinh

Chieu, Le Dai Hanh

Ward, Hai Ba Trung

District, Hanoi,

Vietnam

Hiep Son

Commune, Kinh

Mon District, Hai

Duong Province

415 Tran Phu,

Ha Giang City,

Ha Giang Province,

Vietnam

Pho Noi A

Industrial Zone,

Giai Pham

Commune, Yen My

District, Hung Yen

Province, Vietnam

119 Tran Cao Van,

Vinh Dien Town,

Dien Ban District,

Quang Nam

Province, Vietnam

39 Nguyen Dinh Chieu, Le Dai Hanh Ward, Hai Ba Trung District, Hanoi, Vietnam

Hoa Phat Steel Pipe

Co., Ltd.

Hoa Phat Energy

JSC

An Thong Mining

Investment JSC

Hoa Phat Mining

JSC

Nam Giang Mining

One-Member

Limited Liability

Company

Hoa Phat

Equipments and

Accessories Co.,

Ltd.

3

1

2

4

5

6

7

8

Produce iron, steel, and cast iron;

Produce iron, steel, and cast iron;

Hiep Son

Commune, Kinh

Mon District, Hai

Duong Province

Pho Noi A Industrial Zone, Giai Pham Commune, Yen My District, Hung Yen Province, Vietnam

Hoa Phat Steel JSC

Hoa Phat Steel

One-member

Co.,Ltd.

as of 20 march 2015, Hoa Phat Group has 14 subsidiaries and 1 associate:

no subsidiaries address Principal business activities

contributed charter capital

(vnd billion)

% of equity

owned by HPG

2014 annual rePort

15overview

no subsidiaries address Principal business activities

contributed charter capital

(vnd billion)

% of equity

owned by HPG

400

150

50

300

433

50

14.828

99.60%

99.67%

99.00%

99.67%

84.954%

100%

38%

associates

Produce and trade furniture and

interior products.

Produce and trade Refrigeration

products.

Trade, import and export various

types of steel, construction materials,

interior furniture, air-conditioners,

washing machines and refrigerators.

Civil and industrial construction;

trading of freehold or leasehold real

estate; house and office leasing;

integrated investment and

construction of infrastructure.

Real estate trading

Produce and preserve meat and meat

products; cultivate maize and other

grains, tubers, and oil-bearing trees;

raise cattle, horses, donkeys, mules,

goats, sheep, and pigs; wholesale of

animal feed and feed materials for

livestock, poultry and aqua-products.

Exploit and collect lignite; exploit

non-iron ore; provide supporting

services for mining

Road B4, Area B, Pho Noi A Industrial Zone, Lac Hong Commune, Van Lam District, Hung Yen Province, Vietnam

Pho Noi A Industrial Zone, Giai Pham Commune, Yen My District, Hung Yen Province, Vietnam

39 Nguyen Dinh

Chieu, Le Dai Hanh

Ward, Hai Ba Trung

District, Hanoi,

Vietnam

39 Nguyen Dinh

Chieu, Le Dai Hanh

Ward, Hai Ba Trung

District, Hanoi,

Vietnam

No3 Dong Nam

Tran Duy Hung

Urban Zone, Hoang

Minh Giam Street,

Trung Hoa Ward,

Cau Giay District,

Hanoi, Vietnam

Pho Noi A Industrial

Zone, Giai Pham

Commune, Yen My

District, Hung Yen

Province, Vietnam

55B Phan Dinh

Phung, Quyet

Thang Ward, Kon

Tum City, Kon Tum

Province, Vietnam

Hoa Phat Furniture

JSC

Hoa Phat

Refrigeration

Engineering Co., Ltd.

Hoa Phat Trading

Co., Ltd.

Hoa Phat Urban

Development and

Construction JSC

Golden Gain

Vietnam JSC

Hoa Phat Feeds

Trading and

Production

One Member

Co., Ltd.

Hoa Phat - SSG

Mining JSC

9

10

11

12

13

14

1


II

rePort of the Board of dIreCtors

1

memBers Board of directors1

list of the board of directors members: no name Position Percentage of shares held as

1 mr. tran tuan duong Vice-Chairman cum General Director 2.675

2 ms. nguyen thi thao nguyen Deputy General Director 0.019

3 mr. nguyen viet thang Deputy General Director 0.382

4 ms. ly thi ngan CFO cum Chief Accountant 0.004

17rePort of tHe Board of directors

at 25 february 2015 (%)

mr. tran tuan duongBOM Vice ChairmanGeneral Director of Hoa Phat Group JSC

Bachelor of economics – national economics

university; Bachelor of Journalism - Hanoi General university.

Joining date: 1992

Mr. Duong held management position in subsidiaries such as: Hoa Phat Equipment

& Accessories, Hoa Phat Furniture and Hoa Phat Steel Pipe before he became the

Deputy Chairman of Management Board cum CEO of Hoa Phat Group since January

2007. With his in deep experience, Mr. Duong has contributed greatly to strengthen

the position of Hoa Phat steel and Hoa Phat Group as a whole.

mr. nguyen viet thang BOM Member cum Deputy General Director of Hoa Phat Group JSC

educational qualification: Bachelor of civil engineering

Joining date: 2003

Mr. Nguyen Viet Thang had several years in the management position as the

Deputy Director of Hoa Phat Urban Development and Construction JSC before he

was appointed as the Deputy General Director of Hoa Phat Group Joint Stock

Company on 7th April 2012. In March, 2015, he has been assigned as director of

Hoa Phat Feeds Trading and Production One Member Co., Ltd.

educational qualification: Bachelor of economics – Hanoi university of finance

and accounting

Joining date: 1998

Ms. Nguyen Thi Thao Nguyen was the Chief Accountant of Hoa Phat Steel Pipe Co.,

Ltd. and the Head of Supervisory and Legal Board of Hoa Phat Group Joint Stock

Company before she was appointed as the Deputy General Director of Hoa Phat

Group Joint Stock Company on 1st September 2010.

educational qualification: master of economics

Joining date: august 2007

Ms. Ly Thi Ngan was appointed as CFO & Chief Accountant of Hoa Phat Group Joint

Stock Company on 1 January 2011.

ms. nguyen thi thao nguyenDeputy General Director

ms. ly thi nganCFO & Chief Accountant


In 2014, the domestic economy continued to see positive changes although the recovery rate remained insignificant with an annual GDP growth rate of 5.98%. Difficulties were mitigated in production and business as sales of goods were more stable and input costs, including interest rates and raw material prices, were significantly reduced. For the steel production segment, the warming of the real estate market, especially for medium-priced apartments and houses, has enabled steel production and sales to grow by 12% and 14%, respectively, as compared to the corresponding period of 2013. The Group has adopted a policy of occupying and expanding the domestic market, especially in the Central region and Central Highland area, which has been gradually reflected in its production and operating results.

the highest revenue and profits in the history of Hoa Phat GroupIn 2014, the Group achieved revenue of VND25,852 billion and profit after tax of VND3,250 billion, exceeding the set targets by 12% and 48%, respectively. This year also saw the most dramatic growth in the Group’s history, with rates of 35% and 62% for revenue and profit, respectively, as compared to the prior year. In addition, 2014 marked a milestone in production and sales, which exceeded 1 million tonnes of finished steel products. The steel production and business segment accounted for over 77% of the revenue and 68% of the profits of the whole Group.

2014 Business Performance results

Total revenue 19,200 25,852 23,000 35% 112%

Profit after tax 2,010 3,250 2,200 62% 148%

2014 revenue by segment 2014 Profit by segment

this excellent growth in revenue and profit after tax are due to the following factors:

- The record increase in production and sales of the steel segment: Sales of construction steel reached more than 1,000,000 tonnes, an increase of 43% compared to the prior year; Steel pipes also saw significant growth. - Reduced production costs: The continuous improvements in production management techniques, with a consequent

reduction in the consumption of fuel and raw material during the production process, have contributed to an increase of 58% in gross profit compared to the prior year.- Great contribution from the real estate segment: 2014 saw a significant contribution to profit from the Mandarin Garden Project (nearly VND700 billion).

rePort of tHe Board of directors1

10.4%22.0%

9.6%

12.2%

77.4%68.4%

criteria 2013 2014 2014 plan % growth rate % achieved compared to plan(vnd bn) (vnd bn) (vnd bn)

Steel

Real estate

Other industrial production


Basic financial summary

Note: Dividend payment rate for 2014 is based on the budget

Key financial ratios

2014 2013 2012 % increase

decrease (2014/2013)

no ratlos unit 2012 2013 2014

i liquidity ratios

1 Current ratio Times 1.39 1.11 1.29

2 Quick ratio Times 0.43 0.37 0.47

ii capital structure ratios

1 Liabilities/Total assets Times 0.55 0.58 0.46

2 Liabilities/Owners’ Equity Times 1.22 1.42 0.86

iii operation capacity ratios

1 Inventory turnover Times 2.10 1.95 2.75

2 Total assets turnover Times 0.88 0.82 1.16

iv Profitability ratios

1 Profit after tax/Net revenue % 6.12 10.62 12.73

2 Profit after tax/ Owners’ Equity % 12.75 21.16 27.55

3 Profit after tax/Total assets % 5.42 8.71 14.71

4 Profit from operating activities/Net revenue % 9.65 13.81 16.51

1 Total assets VND billion 19,016 23,076 22,089 (4.3%)

2 Revenue VND billion 17,122 19,200 25,852 34.6%

3 Net revenue VND billion 16,827 18,934 25,525 34.8%

4 Profit from operating activities VND billion 1,204 2,362 3,810 61.3%

5 Profit before tax VND billion 1,218 2,394 3,770 57.4%

6 Profit after tax VND billion 1,031 2,010 3,250 61.7%

7 Dividend payment rate % 20% 30% 60% 100%

financial Position

no indicator unit


Liabilities/Owners’ equity

Bank borrowings/Owners’ equity

debt ratios

2012 20122013 20132014 2014

1.42

0.80

0.37

1.11

0.57 0.47

0.86

1.29

0.74

0.43

1.221.391.40

1.60

1.20

1.00

0.80

0.60

0.40

0.20

-

1.40

1.60

1.20

1.00

0.80

0.60

0.40

0.20

-

Return on Assets (ROA) and Return on Equity (ROE) ratios reached the most impressive ever percentages, of 14.7% and 27.6% respectively, in the Group’s 22-year history of establishment and development.

The ratio of liabilities to owners’ equity and the ratio of bank borrowings to owners’ equity were 0.86 and 0.57, respectively. These ratios are considered to be the safe indicators for a heavy industrial production group.

The Group’s quick liquidity ratio and current liquidity ratio at the end of 2014 were 0.47 and 1.29, respectively. This shows that the Group is in financial health and the ratios are rare ones for the industry.

25.000

20.000

15.000

10.000

5.000

0

15%

10%

5%

0%

owner’s equity

Total Assets

roe, roa

roatotal assets

2012 2013

total assets and roa over the yearsowner’s equity, roe and roa over the years

30%

25%

20%

15%

10%

5%

0%

vn

d b

n

5.4%

8.7%

14.7%12.7%

21.2%

19,016

23,076

22,089

27.6%

2012 2013 2014 2014

Current ratio Quick ratio

liquidity ratios

15,000

10,000

5,0005.4%

8.7%

14.7%

ROAOwner’s Equity ROAROE


Production and Business Plan for 2015 During the coming years, steel production and business will still be a core segment of the Group. With sustainable development strategies, Hoa Phat Group aims to exercise prudence and flexibility in its management policies, to give priority to investment in technological reform and incessant enhancement of product quality, to promote sales of goods, to reduce inventories, to carefully review medium- and long-term investment plans maintaining positive cash flows and capital preservation ratios.

On the basis of its domestic and international economic forecasts, as well as a careful review of its business segments, the Group’s management has set the following targets for 2015:

revenue: vnd22,500 billionProfit after tax: vnd2,300 billion

For the steel sector, Hoa Phat has set a target to sell 1.2 million tonnes of construction steel. Besides the promotion of sales in the domestic market, especially in the Central and Southern regions, the Group will further develop the export of goods to Southeast Asia and other countries. For steel pipe products, Hoa Phat’s growth target is to increase sales by 30% compared to 2014.

The growth target for other industrial production is stable revenue, expanding production and development of new products to meet the increasingly high demands of consumers.

For the real estate segment, Hoa Phat aims to reach the highest occupancy rate in those industrial zones where additional investments were made in technical infrastructure during 2014, in Pho Noi A Industrial

Zone and Hoa Mac Industrial Zone. In addition, Hoa Phat will start the construction of the Apartment-Office-Commercial Complex project at No. 493 Truong Dinh Street, Hoang Mai District, Hanoi. This segment is expected to make the most modest contribution in 2015, as the majority of revenue and profit from the Mandarin Garden Project had already been recognized in 2014. The Group is therefore setting lower targets than that of 2014.

Furthermore, within the next three years, Hoa Phat will make significant investment in the large-scale agricultural projects. Therefore, cash flows will be prioritized to this new sector in addition to the main business segments of the Group. The Group expects that this sector will bring high business efficiency in the future.


2014 was the first time that Hoa Phat Group had assessed the record milestone with more than 1 million tonnes of construction steel sold, exceeding the annual target by 11% with an increase of 43% over the sales in 2013. excellent production, optimal capacity

More than 70% of the construction steel output was contributed by the Hoa Phat Integrated Steel Complex Project. This has further affirmed the role of the Complex as a “real steel punch”, as stated by Hoa Phat management in the meetings with investors. The rest steel output was contributed by Hoa Phat steel making factory in Hung Yen province.

Since late November 2014, the Hoa Phat Integrated Steel Complex has reached a total capacity of nearly 1 million tonnes per year. This resulted from the overhaul and upgrading of blast furnace 1, which improved its production capacity from 350,000tonnes per year to a maximum of 450,000tonnes, an increase of more than 20% compared to the prior period.

Hoa Phat Steel Joint Stock Company conducted an

overhaul of blast furnace 1, including improvements to feeding system, cooling water system, hot air generator, dust filtering system and overhaul of the cast iron making furnace, etc. The total cost of the overhaul and upgrading of the blast furnace components amounted to approximately VND200 billion. This improvement enabled the blast furnace to operate with more stability, raising steel production output as well as reducing fuel consumption and better protecting the environment.

In September 2014, Hoa Phat Steel Joint Stock Company initiated Phase 3 of the Hoa Phat Integrated Steel Complex with a capacity of 750,000 tonnes and a lot of critical advantages. Owing to its existing infrastructure and available items, together with its 7 years’ experience in operating blast furnaces, Hoa Phat Group will be able to maximize the savings on investment costs as well as on initiation time. It is expected that, in the first quarter of 2016, Phase 3 of the Project will be completely put into operation. Upon the completion of Phase 3 of the Integrated Steel Complex, Hoa Phat will achieve a capacity of approximately 2 million tonnes of steel per year, which will further strengthen its position as a leading steel producer in Vietnam.

construction steel

steel Production and suPPlementary seGments

the steel production and trading segment continued to be the core business activity of the Hoa Phat Group. By the end of 2014, the steel production and trading segment achieved a total revenue of vnd20,010 billion, an increase of 32% compared to 2013.

a record milestone of 1 million tonnes of construction steel for 2014

suBsidiaries’ Performance


a record milestone in sales

Hoa Phat Steel One-Member Limited Liability Company assumes the main responsibility of selling steel products for the whole Group. 2014 was a really successful year for the Company, which passed the sales milestone of 1 million tonnes, exceeding the annual plan by 11%, an increase of 43% as compared to 2013, and also firmly strengthening its leading position in the construction steel market with a market share of 19.1%. This is a milestone of important historical significance for the Group in the construction steel sector.

Hoa Phat Steel saw excellent growth in all regions. Growth in both the Southern and Central regions was more than 100% over 2013. In particulary sales in the Southern region reached

112,000 tonnes as compared to 53,500 tonnes in 2013; in the Central region, sales rose from 55,000tonnes in 2013 to 109,000 tonnes. Meanwhile, sales in the Northern region reached nearly 780,000tonnes, an increase of 32% over the prior year. These achievements originated from the successful direction set by the Group management at the beginning of the year with regard to its market strategy, expanding the distribution network, especially in the Central region, the Southern region and provinces such as Vinh Phuc, Hoa Binh, etc. in the Northern region. Many investment owners of large-scale projects in transport infrastructure and road and bridge improvement across the country have selected to use Hoa Phat steel for their construction.

sale volume and consumption market share of construction steel

Source: VSA

Quantity and market shares of 5 market leaders of vietnam’s steel industry

2013 2014

sales (tonnes)

market share (%)

25%

20%

15%

10%

5%

0%

13.30%

15.26%

12.8%13.70%

19.1%

201220112010 2013 2014

1,500,000

1,000,000

500,000

Sales Market share

Pomina 1,600 737 729 15.9% 791 793 15.1%

Hoa Phat 1,300 727 699 15.2% 1,008 1,001 19.1%

tisco 600 482 521 11.4% 479 477 9.1%

vinakyoei 400 427 443 9.7% 421 441 8.4%

vns 450 386 374 8.2% 381 395 7.5%

Current designed capacity

(thousand tonnes)

Production capacity

(thousand tonnes)

Consumption(thousand

tonnes)

Market share

(%)

Production capacity

(thousand tonnes)

Consumption (thousand

tonnes)

Market share

(%)


At the end of 2014, Hoa Phat Steel Pipe Company Limited achieved impressive sales figures, an increase of 40% compared to the prior year. Zinc-galvanized steel pipes and material zinc-galvanized sheets contributed 53% of the production output and 60% of the revenue of the whole company. With more than of 20% market share, Hoa Phat Steel Pipe has strengthened its leading position in the national market.

Zinc-galvanized steel pipes are now by far the most commonly consumed, due to their sturdiness, their antioxidation ability and a price that is only approximately 7% higher than that of black welded steel pipes. Therefore, there has been an increasingly rapid shift in market distribution and demand from black steel pipes to zinc-galvanized steel pipes during the recent four years; as a result, the order of galvanized steel pipes now increases 80 against the last four years.

During 2014, Hoa Phat Steel Pipe ceaselessly invested in extending its production in all factories, including: Hoa Phat steel pipe factory, cold-rolling steel factory in Hung Yen; Hoa Phat steel pipe factories in Da Nang and Binh Duong provinces. It is notable that the official operation of the factory in Da Nang in the second quarter of 2014 has contributed to the increase of productivity and sales in the Central region and the Central Highlands.

In addition to diversifying its steel pipe products and creating competitive advantages in supply sources over other producers, Hoa Phat accorded special attention to changes of technologies, product quality enhancement and customer care and after-sales services. Therefore, Hoa Phat steel pipe has been considering as the best product

in the market, both quality and services. The Company has established close and friendly relationships with customers, business partners, in order to analyze market information in a timely and accurate manner to make the right decisions and set the right guidance for its operations.

Also according to the Company’s leaders, another important factor is the policy of supporting delivery to construction sites or agents’ warehouses. This service has had a significant positive effect on purchasing decisions and indicated close cooperation between producers and distributors. Hoa Phat Steel Pipe organized regular sales conferences and was willing to listen to and satisfy every single demand of its customers to the best extent.

Success was achieved not only in the domestic market: Hoa Phat Steel Pipe Company Limited has managed to export to many international markets in North America, ASEAN and South Korea, etc., with an output of more than 9,000 tonnes of steel pipe and galvanized iron sheets of various types, of which the US and Canada markets accounted for 70% of total export value. In 2014, the Company achieved an exporting revenue of USD14 million.

For 2015, the Company has set a growth target of 30% for both production output and sales. It will continue to extend production in factories in Hung Yen and Binh Duong Provinces and will double the production capacity of its factory in Da Nang.

steel PiPe

Hoa Phat steel pipe sales rose by 40% compared with 2013


Coke coal prices in the market continued to fall dramatically in 2014 but Hoa Phat Energy Joint Stock Company still achieved a revenue of over VND3,100 billion, an increase of 26% against the prior year. Coke coal sales significantly increased to 513,000 tonnes, of which 30,000 tonnes were exported to Japan. Moreover, as a result of the more stable production of coke coal, the Company’s electricity generating capacity reached 200 million KWh, satisfying approximately 35% of the power needed for production of the whole Hoa Phat Integrated Steel Complex.

In 2014, the Company took a number of actions, in both production and marketing, in order to best meet its objectives. For coke coal production, diversification of coal material sources has been always a significant concern of the management for the purposes of ensuring production stability, improving product quality and avoiding risks and reducing the reliance on import sources. With this focus, the Company continued to seek sources of supplies and substitute expensive raw materials with those from plentiful sources at reasonable prices but with secured technical specifications and product quality.

Both domestic and export sales of coke coal encountered difficulties due to the general low growth rate of the steel and metallurgy industries and the import of cheap coke coal from China causing more fierce competition in the market. In this context, the Company made efforts to accessing end-users in order to provide counsel and support to customers on the use of Hoa Phat coke coal for higher efficiency, lower waste and higher output and to help them understand the advantages of using Hoa Phat coke coal.

The Company plans to make additional investments in 2015 to further raise coke coal output and generate electricity by waste heat recovery. Some remarkable projects include: Phase 3 of the Waste Heat Recovery Power Plant, with an expected electricity generating capacity of 9MW/h -15MW/h, raising the total electricity generating capacity to up to 52MW/h; construction of an additional material coal warehouse with an area of 35,000m2 and a storage capacity of 140,000 tonnes; the renovation of the electric cable system from the thermo-electricity plant - Phase 2 to the 110KV transformer of the Hoa Phat Steel Joint Stock Company, etc. The total investment capital for these projects is nearly VND300 billion.

enerGy

Profits rose by 32% against prior year


Iron ore mining and processing activities were undertaken by two members of the Group, An Thong Mining Investment Joint Stock Company and Hoa Phat Mining Joint Stock Company, in order to supply input material to the Hoa Phat Integrated Steel Complex in Hai Duong Province. However, in 2014 domestic and global iron ore prices fell dramatically and Hoa Phat therefore planned to reduce the outputs of its mines and gave priority to investment in research for technology improvement and production extension in order to wait for the future rise of international iron ore prices.

Many advances in technology in iron ore refining and processing have been researched and successfully applied by the Company in its production, contributing to increases in outputs and quality and reductions in costs.

For Hoa Phat Mining Joint Stock Company, the Iron Ore Processing Plant construction project in Ha Tinh Province and the expansion project of the Iron Ore Processing Plant in Yen Bai Province were both at the stage of site clearance. These are two key projects of the Company during 2014-2015. The plant project in Ha Tinh is being implemented by Hoa Phat Mitraco Mineral Joint Stock Company with a total investment of more than VND400 billion and a designed dressing capacity of around 1 million tonnes of raw ore per year.

The total investment in the expansion project in Tran Yen District, Yen Bai Province, amounts to VND75 billion. This expanded iron ore processing plant has a designed dressing capacity of around 600,000 tonnes of raw ore per year.

iron ore mininG and ProcessinG

a focus on technology improvement


Hoa PHat eQuiPment and accessories retaining markets and investing in factory grading

otHer traditional industrial Product seGments

Hoa Phat’s other traditional industrial product segments include construction equipment, interior furniture, refrigeration and trading. these segments have managed to overcome difficulties and made a significant contribution to the overall success of the Group, with revenue of vnd3,143billion, an increase of 18% compared with 2013.

Hoa Phat Equipment and Accessories, with its traditional product lines including tower cranes, cage lifts, scaffolds, formwork, and construction and mining machines, managed to retain its domestic and foreign markets. A great number of construction projects nationwide have elected to use the Company’s products. In addition, scaffolds, film-faced plywood concrete formwork and stone crushers were also exported to Myanmar and the Philippines.

This member of the Group also supplies material conveyors and construction and mining machines to serve Hoa Phat’s internal projects, including: the coke coal conveyor from the energy plant to the blast furnace area in the Hoa Phat Integrated Steel Complex; and tower cranes and construction scaffolds for the expansion project of the steel cabinet and safe factory of Hoa Phat Furniture in Pho Noi A Industrial Zone, etc. As for production, the Company invested in a container transmission line in the Hoa Phat Mechanical Engineering Factory (Hung Yen Province), which greatly facilitated the loading and unloading of goods. In addition, the waste paint filtering system of the factory’s electrostatic power coating line was also improved in order to minimize waste paint splashes and collect waste paint for re-use. In particular, Hoa Phat Equipment and Accessories completed and put into operation two robots and two modern rebar sinking machines to serve scaffold welding work and to raise productivity for the scaffold and formwork workshops.


Facing economic recession and increasingly fierce competition, Hoa Phat Furniture Joint Stock Company implemented many breakthrough measures to retain its market share and make a drammatic increase in sales against 2013; among these, the strategy to fully cover the market with all types of products was adopted flexibly and was one of the reasons for the Company’s success in the year. Hoa Phat Furniture continues to affirm its leading position in the Vietnamese interior furniture market.

During 2014, the Company undertook significant measures to stabilize production by assuring sources of input material supplies and by enhancing efficiencies in production arrangements. Hoa Phat Furniture’s factory network constantly operated at full capacity to meet orders from customers, especially in the period close to the year-end. The outputs of some product lines were adjusted in accordance with market demands. The standard product lines (including

iron cabinets, iron safes, polyurethane painted wooden products, rotary chairs, industrial wood products, products made from steel pipes (galvanized and painted products), and school furniture) continued to be the leading products, dominated the market and accounted for a signficant proportion of the Company’s revenue. New products with diversified models also made an impressive remark; these include sofas, mesh chairs, and luxury chairs and desks for executives and for use in meeting halls and public places, which were highly appreciated by consumers. Household product lines were given priority for research and development in the forthcoming period. In order to increase the production capacity to meet the market demand, in 2014, Hoa Phat Furniture Joint Stock Company had completed a plan to renovate its factories in both Northern and Southern regions to create more production space, improve technologies, increase production capacity and outputs.

The key determinant for success of the Company is the strategy for full market coverage and sustainable market domination, which received drastic leadership and timely management by the Company’s leaders; this resulted in significant increase of sales by the distributors. In 2014, the dealer distribution network was sustained steadily and even expanded in some new markets. Steady growth was seen in the Northern, Central and Southern markets. The product marketing agent network in the Middle-East and Southeast Asia operated well to support exports.

Hoa Phat Furniture proactively undertook flexible business policies in alignment with each market in order to boost sales. The objective of the Company for 2015 is to continue strengthening the distribution network and to satisfy the customers’ needs and meet the market demand to a maximum extent.

furniture

overcoming challenges with a strategy for full market coverage


refriGeration enGineerinG

tìnH HìnH Hoạt độnG tronG năm

In 2014, the Company completed freezer production expansion project in Pho Noi A Industrial Zone (Hung Yen Province). All production equipment was imported from well-known European suppliers. The Company also invested in full renewal of the production line for the refrigeration plastic component factory in order to raise production capacity and apply new technology; this new technology project was completed and put into operation during November 2014.

Hoa Phat Refrigeration Engineering was recommended by the Department of Heavy Industry to participate in the technology transfer support program of the Ministry of Industry and Trade, under the Vietnam – South Korea cooperation framework on economics, science and technology. Accordingly, the Company will have a good chance to receive technologies from the South Korea for the cooling system of refrigerators, air-conditioners and freezers.

Regular updates of modern technology, creativeness and ceaseless improvement of product quality are the criteria followed by Hoa Phat Refrigeration Engineering Company Limited. For this reason, its products are being chosen by more and more customers nationwide.

enhanced capacity to satisfy the market


Starting from small-scale the Company has now attained revenue of thousands of billion Vietnamese Dong, making an important contribution to the overall success of the Group’s steel production and trading segment. According to Mr. Tran Dinh Long, Chairman of the Board of Management, although the Company’s headcount is not high and it is the only member of the Group that has no direct production factories, its mission is of significant importance, i.e. it is the focal point for exporting Hoa Phat’s products, especially steel billets and construction steel finished products, to foreign markets. 2014 marked 10 years’ development of Hoa Phat Trading Company Limited (2004-2014); the Company marked this by exporting 60,000tonnes of steel billets to Thailand and the Philippines, and more than 6,300 tonnes of wire rod steel and

deformed bar steel to the Australian and Lao markets. This is an important and impressive achievement to open a new direction in Hoa Phat’s steel distribution plan.

At present, Hoa Phat Trading Company Limited has established a customer base and a network of numerous business partners, both domestic and foreign; the latter come from Japan, Russia, South Korea, Switzerland, the UK, Hong Kong, the USA, China, Taiwan, Thailand, Laos, etc. For 2015, the Company will continue to strengthen and expand its existing domestic and foreign markets, and will especially enhance export of construction steel to the Lao market in a more intensive, extensive and professional approach, striving to achieve a higher revenue than in 2014.

Hoa PHat tradinG

a remark of 10 years’ development


in 2014, Hoa Phat’s real estate business comprises industrial zone infrastructure, housing real estates and urban residential areas, which brought the Group revenue of vnd2,700 billion. in 2015, these activities were further developed with the main goal of expanding industrial zone infrastructure systems and studying highly liquid housing projects for development in future years.

real estates


Hoa Phat Urban Development and Construction Joint Stock Company currently manages and operates two industrial zones for the Group: Pho Noi A Industrial Zone (Hung Yen) and Hoa Mac Industrial Zone (Ha Nam).

The Pho Noi A Industrial Zone has a total area of 600 ha. Since nearly 100% of Phase 1 of the Zone (390 ha) has been leased, the Company management has decided to invest Phase 2 of this industrial zone. Currently Hoa Phat has completed the site clearance and construction of technical infrastructure for approximately 100 ha (out of a total 204 ha) of the expanded project, and is ready to lease land to the interested investors.

At the Hoa Mac Industrial Zone, the Company has completed the infrastructure and green areas and constructed a waste water treatment facility to serve the factories and

enterprises operating in the Zone. Consequently, in 2014 both the Pho Noi A and Hoa Mac Industrial Zones leased land for factories and workshops of numerous domestic and foreign enterprises. The foreign enterprises included companies from South Korea, Japan and The Netherlands, with total registered capital of tens of millions of US dollars. The Pho Noi A Industrial Zone received 6 investors who came to lease approximately 16 ha of land for their factories; the major investors included Palfinger Neddeck Vietnam Co. Ltd., Hapam Vietnam Co., Ltd. (The Netherlands), Fancy Vietnam Industry Co., Ltd., Vietnam Mie Co., Ltd. (Japan), etc. The Hoa Mac Industrial Zoneon the other hand has attracted many South Korean enterprises, such as the luxurious jewelry manufacturer Sebang Chain Vina Co., Ltd., or bridge bearing manufacturer - DK Vietnam Co., Ltd., etc.

expansion and completion of industrial zone infrastructure

industrial zone infrastructure


In the housing real estates segment, 97% of the apartments in the Mandarin Garden Apartment Complex have been handed over to their owners. Accordingly, the majority of the revenue and profit of this project has been recognized in the year 2014, contributing to the sharp increase in profits of the whole Group.

Since August 2014, Hoa Phat has promoted to complete the handover of certificates of land use rights and ownership of houses and other assets attached to land (“red books”) to residents in the apartment complex.

This handover of red books to customers was completed within less than a year of the handover of the first apartment, which demonstrates that the Mandarin Garden Apartment Complex is one of the real estate developers in Hanoi that has performed the earliest handover of red books to residents. At present, all facilities in the Mandarin Garden Apartment Complex (such as the swimming pool, gymnasium, kindergarten, open-door entertainment

area, etc.) are operating efficiently and providing the residents with convenience and comfort.

According to a prestigious real estate website, Hoa Phat’s Mandarin Garden Project is seen as one of the 10 best value for money high class apartment areas in Hanoi, owing to its high quality of construction works, good location, good customer services, and well educated residents, etc. In particular, the residents who are living here say that Mandarin Garden’s apartment has a good and suitable design, ensuring the air movement and natural light. Mandarin Garden has created a new model and level to the high class apartment.

Looking to the future of the housing real estates segment, Hoa Phat will focus on the medium-scale projects that have existing land use rights or high liquidity in convenient locations and will avoid widespread investments. By the end of 2014, Hoa Phat had completed the necessary procedures and started the construction of the apartment-commerce center-services

complex at 493 Truong Dinh Street, Hoang Mai District, Hanoi.

This project, located on an area of 13,728m2, will comprise 640 apartments, with four 26-30-storey building blocks (excluding 2 basements). The project location is convenient, in Tan Mai Street with approximately 50m cross section. The total investment capital of the project is estimated to be VND1,500 billion, mainly financed from the owners’ equity. This Project is expected to be completed within three years.

a focus on highly liquid projects

HousinG real estates


After Phases I and II of the Hoa Phat Integrated Steel Complex were completed and steadily operating, Hoa Phat continued to implement Phase III of the Complex with an expected total investment of VND3,800 billion and a capacity of 750,000 tonnes of steel billets

per year. This is expected to start operating in the first quarter of 2016. Currently, 50% of the construction of the Project has been completed. After Phase 3’s completion, Hoa Phat will have total steel capacity of 2 million tonnes per year.

Hoa PHat inteGrated steel comPlex ProJect – PHase iii

investment in and imPlementation of maJor ProJects


By the end of 2014, 97% of the apartments in Mandarin Garden had been sold and recorded almost of the revenue and profit to the Group during 2014. Since August 2014, Hoa Phat has begun to hand over land use right certificates, certificates for ownership of apartments and other assets attached to land (the red books) to the residents.

By the end of 2014, Hoa Phat had completed the necessary procedures and started the construction of the apartment - commercial center - service complex at 493 Truong Dinh Street, Hoang Mai District, Hanoi. This project, located on an area of 13,728m2, will comprise 640 apartments, with four 26-30-storey building blocks (excluding 2 basements).

The project location is relatively convenient, in Tan Mai Street. The total investment capital of the project is estimated to be VND1,500 billion, mainly financed from the owners’ equity. This Project is expected to be completed within about three years.

real estate ProJects


number of employees of the Group

academic leveltotal

Gender

1 Hoa Phat Group JSC 85 2 47 7 29 44 41

Human resource manaGement

Group1: steel 7,148 11 2,195 1,058 3,884 6,298 850

1 Hoa Phat Steel JSC 3,268 1 1,002 418 1,847 2,915 353

2 Hoa Phat Steel One member Co., Ltd 948 1 235 200 512 810 138

3 Hoa Phat Steel Pipe Co., Ltd 1,467 5 502 237 723 1,336 131

4 Hoa Phat Energy JSC 584 225 88 271 473 111

5 An Thong Mining Investment JSC 676 2 173 98 403 596 80

6 Hoa Phat Mining JSC 201 2 54 17 128 165 36

7 Cty TNHH MTV KS Nam Giang 4 4 3 1

Group2: other industrial production 2,999 6 607 390 1,996 2,336 663

1 Hoa Phat Equipment Accessories Co., Ltd 326 1 82 50 193 274 52

2 Hoa Phat Furniture JSC 2,315 3 391 238 1,683 1,794 521

3 Hoa Phat Refrigeration Engineering Co., Ltd 343 124 101 118 260 83

4 Hoa Phat Trading Co., Ltd 15 2 10 1 2 8 7

Group 3: real estate 319 118 18 183 244 75

121 35 4 82 84 37

2 Golden Gain Vietnam JSC 198 83 14 101 160 38

total 10,551 19 2,967 1,473 6,092 8,922 1,629

no company name

1 Hoa Phat Urban Development and Construction JSC

Post Vocational Graduate Graduate school Other Male Female


employee policies

1 Hoa Phat Group JSC 85 2 47 7 29 44 41

Streamlining the Group’s organisational structure and application of the human resources management software, based on the new human grade across all departments of each subsidiary were the most important initiatives in Hoa Phat’s management and development of human resources in 2014. These allowed the Group to arrange personnel in a more effective and efficient manner, thereby getting the most out of each and every employee’s ability and managing the business more efficiently.

Hoa Phat allocated a significant budget towards preserving and ensuring employees’ rights and benefits such as full participation in social insurance, local trade unions, organization of sightseeing and holiday tours, visiting and presenting gifts to employees and families facing difficult circumstances, and providing gifts to female employees on the occasion of International Women’s Day, 8 March.

In addition to ensuring the living conditions, jobs and incomes for employees, the Group organized and conducted many activities to enhance

the quality of human resources and to contribute to their cultural and spiritual wellbeing. Such activities which helped strengthen the Group’s bond with its employees and create an efficient working environment, included the following: Study visits to developed countries; periodical health check-ups for employees; technical training; and cultural and sport tournaments: in particular the art performance which celebrated Hoa Phat Group’s 22nd anniversary created an atmosphere of joy and solidarity within the Group.

In addition, Hoa Phat’s human resources strategy for 2015 is to optimize the application of the human resources management software, human resources planning policy, and continuously provide training and re-training to enhance the professional skills of employees. This strategy also aims to motivate, encourage and assist employees in a timely manner so as to create a close and logical link between the human resources strategy and other strategies, in order to support the Group’s sustainable development.

Group1: steel 7,148 11 2,195 1,058 3,884 6,298 850

1 Hoa Phat Steel JSC 3,268 1 1,002 418 1,847 2,915 353

2 Hoa Phat Steel One member Co., Ltd 948 1 235 200 512 810 138

3 Hoa Phat Steel Pipe Co., Ltd 1,467 5 502 237 723 1,336 131

4 Hoa Phat Energy JSC 584 225 88 271 473 111

5 An Thong Mining Investment JSC 676 2 173 98 403 596 80

6 Hoa Phat Mining JSC 201 2 54 17 128 165 36

7 Cty TNHH MTV KS Nam Giang 4 4 3 1

Group2: other industrial production 2,999 6 607 390 1,996 2,336 663

1 Hoa Phat Equipment Accessories Co., Ltd 326 1 82 50 193 274 52

2 Hoa Phat Furniture JSC 2,315 3 391 238 1,683 1,794 521

3 Hoa Phat Refrigeration Engineering Co., Ltd 343 124 101 118 260 83

4 Hoa Phat Trading Co., Ltd 15 2 10 1 2 8 7

Group 3: real estate 319 118 18 183 244 75

121 35 4 82 84 37

2 Golden Gain Vietnam JSC 198 83 14 101 160 38

total 10,551 19 2,967 1,473 6,092 8,922 1,629


shares:Share name: Share of Hoa Phat Group Joint Stock CompanyShare type: Ordinary shareStock sticker: HPGPar value: VND10,000 per shareTotal shares in circulation: 488,643,175 sharesNo. of free transacting shares: 488,643,175 sharesNo. of limited transacting shares: 6,735,000 shares

changes of owner’s investing capital in the yearOn 04/6/2014, the Hochiminh Stock Exchange approved

to list additionally 62,855,642 shares according to the dividends in 2013 by 15% in shares.- Charter capital before issuing additional shares to pay dividends in 2013: VND4,190,525,330,000.- Charter capital after issuing additional shares to pay dividends in 2013: VND4,819,081,750,000.- On 25/02/2015, the Company was approved by the Hochiminh Stock Exchange to list additionally 6,735,000 shares according to the employee share option Plan - Current charter capital: VND4,886,431,750,000Treasury share transaction in 2014: None

shareholding structure

34%42%

9% 8%7%

investor relations1

shareholding structure as at 26/02/2015

investor relations

no content share volume Percentage % 1 state shareholders 0 0% 2 internal shareholders 240,312,068 49.18% BOM, Supervisory Board, Board of Directors, Chief Accountant 166,628,021 34.10%

Related people 40,861,833 8.36% Employees 32,822,214 6.72% 3 other shareholders 248,331,107 50.82% Local shareholders 41,571,490 8.51% Individual 30,278,194 6.20% Institutional 11,293,296 2.31% Foreign shareholders 206,759,617 42.31% Individual 2,106,410 0.43% Institutional 204,653,207 41.88% total 488,643,175 100.00%

BOM, Supervisory Board, Board of Directors, Chief Accountant

Employees

Local shareholders

Foreign shareholders

Related people


no content share volume Percentage %

1 281,883,558 57.69

267,710,262 54.79

14,173,296 2.90

2 206,759,617 42.31

2,106,410 0.43

204,653,207 41.88

488,643,175 100.00

demographic shareholding structure as at 26/02/2015

shareholder structure by level of ownership as at 26/02/2015

largest shareholders as at 26/02/2015

no full name Address share volume Percentage %

1 tran dinh long 119 Bui Thi Xuan str, Hai Ba Trung dist, Ha Noi 116,218,080 23.78

2 vu thi Hien 119 Bui Thi Xuan str, Hai Ba Trung dist, Ha Noi 35,594,974 7.28

3 dragon capital 1901 Me Linh Point Tower, 2 Ngo Duc Ke,

Dist 1, HCMC, Viet Nam 43,105,102 8.82

4 vof Suite 1703, Sun Wah Tower,

115 Nguyen Hue, Dist 1, HCM city 31,711,182 6.49

5 deutsche Bank Winchester House, 1 Great Winchester

and deutsche asset Street, London EC2N 2DB 29,969,749 6.13

total 256,599,087 52.50

demographic shareholding structure

58%

42%

Vietnam Foreign

no content share volume Percentage %

1 Shareholders with ownership over 5% 256,599,087 52.51

2 Shareholders with ownership from 1% to 5% 98,991,320 20.26

3 Shareholders with ownership below 1% 133,052,768 27.23

total 488,643,175 100.00

vietnam

Individual

Institutional

Foreign

Individual

Institutional

total


10 largest institutional shareholders as at 26/02/2015

no name of institutions address share

1 Dragon capital 1901 Me Linh Point Tower, 2 Ngo Duc Ke,

Dist 1, HCMC, Viet Nam 43,105,102 8.82

2 VOF Suite 1703, Sun Wah Tower, 115 Nguyen Hue Bldv,

Dist.1, HCMC 31,711,182 6.49

3 Deutsche Bank + Deutsche Asset Winchester House, 1 Great Winchester Street,

London EC2N 2DB 29,969,749 6.13

4 PRIVATE EQUITY NEW MARKETS II K/S TRANEGARDSVEJ 20 2900 HELLERUP DENMARK 14,570,483 2.98

5 HARDING LOEVNER FUNDS INC-FRONTIER 50 South Lasalle Street Chicago, Illinois 60603

EMERGING MARKETS PORTFOLIO USA 7,950,000 1.63

6 FRANKLIN TEMPLETON INVESTMENT FUNDS 26,BOULEVARD ROYAL L-2449 LUXEMBOURG

-TEMPLETON FRONTIER MARKETS FUND GRAND DUCHY OF LUXEMBOURG 7,743,088 1.58

7 WASATCH FRONTIER EMERGING SMALL 505 Wakara Way 3rd Floor Salt Lake City, 7,015,297 1.44

COUNTRIES FUND UT 84108

8 LIONGLOBAL VIETNAM FUND 21 Collyer Quay #14-01 HSBC

Building Singapore 049320. 4,797,572 0.98

9 MACQUARIE BANK LIMITED NO 1 MARTIN PLACE, SYDNEY 2000, NSW,

AUSTRALIA 4,468,225 0.91

10 VIETNAM HOLDING LIMITED Unit 1202 Floor 12, Fideco Tower,

81-85 Ham Nghi, District, HCMC, Vietnam 4,007,340 0.82

total 155,338,038 31.79

volumePercentage

%


2012-2015 changes of HPG stock price

changing process of charter capital of Hoa Phat Group 2007-2015 (vnd Billion)

HPG’s rates of dividend payment

50%

9/1/2007 8/5/2008 2/12/2010 22/11/2012 4/3/2015

1,100

1,964

3,178

4,191

4,886

60% 60%

30% 30%

20% 20%

30%

vnd Billion

date

201315% by cash and

15% by share

201410% by cash and

50% by share (estimated)

200710% by cash,

40% by shares

2008 30% by cash

201120% by shares

2009 10% by cash and

50% by shares

201020% by cash and

10% by shares

201210% by cash


Hoa Phat’s investor relations policy is to provide sufficient, timely, transparent and impartial information to investors. Hoa Phat was voted as one of the top 26 listed companies in 2014 in terms of Investor Relations (IR) according to a survey by Vietstock.vn. In addition to strictlycomplying with information disclosure requirements, Hoa Phat has further enhanced its investor relations activities to help investors better understand Hoa Phat and obtain updates on HPG’s business operations and performance.

Besides the regular meetings with shareholders and investors which are scheduled by securities companies and investment funds, Hoa Phat also holds other meetings between investors and the Board of Directors on a quarterly basis in order to discuss and exchange information on business operations, operating results and the Group’s business plans. Hoa Phat also takes investors to visit various factories and projects including the Hoa Phat Integrated Steel Complex Project in Hai Duong province. Our quarterly meetings have been highly appreciated by both local and foreign investors, which can be evidended by the fact that each meeting being attended by around 50-60 investors who are mostly

representatives of securities companies and fund management companies.

The management regularly provides investor updates regarding the Group’s business operations, financial statements and other important developments, documents on its website www.hoaphat.com.vn.

Key investor relations activities during the year included:

- On 28 March 2014, the Company held the General Shareholders’ Meeting to discuss the results achieved in 2013, approve the objectives and plans for 2014 and to consider other important matters.- Meetings with investors were held every quarter to announce quarterly operating results and to take the investors to visit the Group’s factories.- Participated in workshops held by securities companies. Such workshops included the workshop conducted by Bao Viet Securities Company on 25 June 2014 and the Gateway to Vietnam conference held by Saigon Securities Inc. (SSI) on 11-12 September 2014.

investor relations



III

Board of Management’s assessment

1

operation of the Board of management

during its meetings in 2014, the Board of management approved the following matters:

- A detailed plan for the distribution of 2013 dividend at the rate of 15% in cash and another 15% in the form of shares;- Increased capital contribution in Hoa Phat Steel Pipe Co. Ltd.; - Implementation of Phase 3 of Hoa Phat Integrated Steel Complex;- Regulations governing the issuance of shares under the Employee Stock Option Plan for the years 2014 -2015; - Transfer of shares in Yen Phu Mining and Investment Joint Stock Company.- Other important decisions.

memBersBoard of manaGement1

47Board of manaGement’s assessment

no name Position

1 tran dinh long Chairman 23.78

2 tran tuan duong Vice Chairman 2.68

3 nguyen manh tuan Vice Chairman 2.63

4 doan Gia cuong Vice Chairman 1.98

5 nguyen ngoc Quang Member 1.98

6 ta tuan Quang Member 0.16

7 Hoang Quang viet Member 0.49

8 nguyen viet thang Member 0.38

9 Ho an t Member -

10 Hans christian Member -

total 34.07

Percentage of shares held as at

26 February 2015 (%)

Mr. Tran Dinh LongBOM Chairman of Hoa Phat Group

Bachelor of economics - national economics university Joining date: 1992

As founding shareholder and holding Chairman position of member companies, Mr. Long was the first person setting up the foundation for Hoa Phat Equipment & Accessories, the earliest member in the Group. Mr. Long employed a lot of experts who had consensus ambition and responsibilities.

During the establishment and development of Hoa Phat, Mr. Long was the person who oriented business strategy for each susidiary.


mr. tran tuan duongBOM Vice ChairmanGeneral Director of Hoa Phat Group JSC

Bachelor of economics – national economics university; Bachelor of Journalism - Hanoi General university.

Joining date: 1992

Mr. Duong held management position in subsidiaries such as: Hoa Phat Equipment & Accessories, Hoa Phat Furniture and Hoa Phat Steel Pipe before he became the Deputy Chairman of Management Board cum CEO of Hoa Phat Group since January 2007. With his in deep experience, Mr. Duong has contributed greatly to strengthen the position of Hoa Phat steel and Hoa Phat Group as a whole.

Bachelor of economics – national economics university

Joining date: 1996

In 1996, Mr. Tuan was a Vice Director of Hoa Phat Steel Pipe cum Head of trading department. Since 10/2004, being Director of Hoa Phat Steel Pipe Company, Mr. Tuan has helped the Hoa Phat steel pipe become a top steel pipe maker.

mBa, national economics university

Joining date: 1999

Mr. Cuong was appointed first in the position of Vice Director before promoting as a Director of Hoa Phat Furniture JSC. From 01/2007, he additionally held the Deputy Chairman position of Hoa Phat Group JSC. With his straight forward orientation in achieving realistic goals, Mr. Cuong has helped Hoa Phat Furniture becoming familiar to every Vietnamese consumer.

mr. nguyen manh tuan BOM Vice Chairman cum Director of Hoa Phat Steel Pipe Co., Ltd

mr. doan Gia cuongBOM Vice Chairman cum Director of Hoa Phat Furniture JSC


Bachelor of economics national economics university

Joining date: since 1995

Mr. Quang was among founders of Hoa Phat Furniture, he was Director of Hoa Phat Furniture for 11 years. Since December 2006, he has been Director of Hoa Phat Refrigeration Engineering where he has contributed significantly to its success and brand name of Funiki position.

vocational training


Mr. Nguyen Ngoc Quang had been Director of Hoa Phat Equipment & Accessories in Ho Chi Minh subsidiary for 4 years (1992-1996). He has been Director of the Company since 1997. As one of the top construction equipments producer in Vietnam, products of Hoa Phat Equipment & Accessories under his management have been successfully persuading customers in domestic and foreign country on their qualities, prices and after sales services.

mr. nguyen ngoc Quang BOM Member cum Director of Hoa Phat Equipment & Accessories Co., Ltd

mr. ta tuan QuangBOM Member cum Director of Hoa Phat Refrigeration Engineering Co., Ltd

Graduated from People’s security university


Joining the Group since 2001, Mr. Viet has been elected as a Director of Hoa Phat Urban Development and Construction. He was successful in real estate, especially for industrial infrastructure such as Pho Noi A industrial park where big international and domestic firms located. Mr. Viet and Board of Directors are now going to deploy other housing and urban areas after the success of Pho Noi A.

mr. Hoang Quang vietBOM Member cum Director of Hoa Phat Urban Development & Construction


mr. nguyen viet thang BOM Member cum Deputy General Director of Hoa Phat Group JSC

educational qualification: Bachelor of civil engineering

Joining date: 2003

Mr. Nguyen Viet Thang had several years in the management position as the Deputy Director of Hoa Phat Urban Development and Construction JSC before he was appointed as the Deputy General Director of Hoa Phat Group Joint Stock Company on 7th April 2012. In March, 2015, he has been

assigned as Director of Hoa Phat Feeds Trading and Production

One Member Co., Ltd.

mr. Ho an tBOM Member

mr. Hans christianBOM Member

master of Business administration

Joining date: 2012

Before appointed as a member of the Board of Management, Mr. Andy Ho has held the position of investment director for Dell Computer Corp. (2000 - 2004); Investment director for Prudential Fund Management Company (2004 - 2007); Managing Director of VinaCapital (from 4/2007-now). Mr Andy Ho is also Chairman of the Management Board of Vinawealth Fund Management Company, Khang Dien Business and Investment JSC; Management Board’s Member of Phu Nhuan Jewelry Joint Stock Company.

master of Business, denmark

Joining date: 2012

Being appointed as a member of the Management Board in 2012, Mr. HANS CHRISTIAN has held many important responsibilities of the Industrialization Fund for Developing Countries (IFU), Denmark (1983-1989); Regional Director, Investment Fund for the Europe Central and East, Denmark (1989 - 1991); CEO of array of agriculture, the European Bank for construction and development (EBRD), London (1991-2006); CEO of PENM I, PENM II Fund, BankInvest (2006 - present)....


During 2014, the global economy recovered more slowly than forecast. The domestic marco-economy was generally stable and inflation was kept under control. Vietnam’s economic growth recovered slightly, however, the business environment and the capacity, efficiency and competitiveness of the economy remained low while the requirement for international integration became increasingly high. The rate of consumer price increase slowed sharply, interest rates decreased by around 2% from the end of 2013, and credit growth rose. Foreign exchange rates and the foreign exchange market were generally stable and Vietnam’ foreign currency reserves rose to a record high level bringing with it increased confidence in the Vietnamese currency.

In such a context, the Board of Management gave directions and instructions for the Board of Directors to formulate solutions to overcome challenges, maintain and enhance the competitiveness of the Group’s products, and increase production and business growth.

During 2014, the Hoa Phat Group sold more than one million tonnes of its main product, construction steel. This represents a 43% increase from 2013, which ensured that the Group maintained its number one position as a supplier of construction steel with a market share of nearly 20%.Hoa Phat Group’s steel production achieved a balanced and rapid growth in all regions. Production growth in the Southern and Central regions exceeded 100% from 2013

levels. Sales capacity in the South increased from 53,500 tonnes in 2013 to 112,000 tonnes in 2014. In the Central region, this figure increased from 55,000 tonnes in 2013 to more than 109,000 tonnes in 2014. The sales capacity for the Northern region was nearly 780,000 tonnes, an increase of 32% compared to the prior year. The Group also made progress exploring export markets. The Group exported 60,000 tonnes of steel billets to the Philippines and Thailand and more than 6,300 tonnes of wire rod steel and deformed bar steel to Australia and Laos.

Hoa Phat Group’s steel pipe production and business segment contributed to the impressive business and production results achieved in 2014. This segment reached a sales capacity of 300,000

assessmentBoard of manaGement’s1Board of manaGement’s assessment of tHe GrouP’s oPerations


tonnes of steel pipes and 63,400 tonnes of various types of raw material. During 2014, the Hoa Phat Steel Pipe Company implemented several large projects including the acquisition of the Chanh Nguyen – Da Nang Steel Pipe Factory and invested two strip cladding lines at the steel factory in Hung Yen province and many other important projects. Exports from the Hoa Phat Steel Pipe Company, to large markets including Canada, United States of America, Myanmar, Laos etc. reached USD13 million in 2014.

Other industrial production segments, including interior furniture, equipment and accessories, refrigeration engineering, continued to overcome their specific challenges and they contributed significantly to the overall success of the Group. With the leading market

position in the furniture segment in Vietnam, Hoa Phat Furniture continued to contribute to the overall success of the Group with impressive growth in term of market shares and revenue. In 2014, with the advantages of product diversity and rapid supply capability due to its nationwide distribution system, Hoa Phat Furniture’s products and brand names expanded it access to the consumers in mountainous and remote areas. Exports markets in the Middle-East and Southeast Asia showed significant growth and overcame despite the effects of the economic recession.

The Company ceaselessly improved and launched new products to the market in order to satisfy the domestic consumption demand and restrict imports of office and household furniture products. The Company also

continued to extend and invest in technologies and know-how to offer higher quality and more diversified products of high usage value.

The real estate segment achieved impressive results in 2014, which were spearheaded by VND700 billion of profit achieved from the Mandarin Garden Complex project. The Group is currently undertaking the housing project in Truong Dinh Street, Hoang Mai District, Hanoi and, also accelerating the expansion and completion of infrastructure at the industrial zones.In 2014, the Hoa Phat Group exceeded its plans and forecasts, by achieving revenue of VND25,852 billion net profit after tax of VND3,250 billion, which representing year on year increases of 35% and 62%, respectively.


Board of Management highly appreciates the Board of Directors’ outstanding efforts to fulfill the assigned plan. The Board of Directors managed the business effectively across all business sectors and segments to drive impressive financial results despite a challenging economic environment large and diverse operations, widespread investment locations and rapid investment growth. The financial performance is highlighted by growth in revenue and profit of 35% and 62% respectively, from 2013.

Members of the Board of Directors’ have all received extensive training

throughout their careers and they have been instrumental to the development of the Group. This group of individuals possesses strong managerial experience and they are devoted to their work and Hoa Phat Group’s success.

Hoa Phat Group has trained and developed a second generation of leaders who are young, capable and devoted to their work. This group of leaders represents the foundations for the Group’s current and future development.

In 2014, the General Shareholders’ Meeting and the Board of Management approved a plan to issue bonus shares to key personnel, who are members of the Boards of Directors of subsidiaries, managers, assistant managers and equivalent. This clearly demonstrates that the Group recognises and values the contributions made by the Board

of Directors and key Group personnel over previous years. This action helped reinforce the attachment between the Group and its employees.

During 2014, the corporate governance of the Group continued to be strengthened through a number of key areas. These included i) continued refinement of the personnel rating scheme, standardization of the roles and responsibilities of personnel and setting of compensation and remuneration packages in order to appropriately reward and incentivize staff, ii) continued to refine andimplement the internal regulations system which serves as a legal and administrative corridor for the operations of various functions and departments within the Group. These activities have together contributed to the effort to control risks across all departments and subsidiaries.

Board of manaGement’s assessment of tHe Board of directors’ Performance


The Board of Management considers that in 2015, Vietnam’s GDP growth will continue to increase and the period of macroeconomic stability will continue. Accordingly, they predict a stronger Vietnamese economy in 2015 as compared to 2014.

Hoa Phat Group’s steel business will continue to face a number of challenges in 2015, including supply outweighing demand, large inventory balances and significant changes in the price of raw materials. In addition, Vietnam’s extensive integration into the global economy and participation in the common market of ASEAN countries will also create both opportunities and challenges to Vietnam’s export and import of goods.

However, there are many optimistic signs and recent market developments, which will impact the year ahead. The Government’s policies to support the real estate sector are expected to boost construction activities in 2015. The construction of the blast furnace No. 3 will increase the total steel production capacity of the Hoa Phat Integrated Steel Complex to 1.7 million tonnes per year, and increased the steel production capacity of the entire Group to 2 million tonnes per year. This increased capacity will ensure that the Group can compete successfully in the domestic market and look to expand further into export markets.

The Board of Management expects that the Group will continue its growth momentum in its core business of steel production and trading in 2015.During 2015, in addition to building on the results achieved in 2014, the Board of Management has set the following directions:• Continue to closely lead the Board of Directors to streamline the organization, control risks, enhance the competitiveness of products’, monitor market developments, provide instructions for production and business activities in order to fulfill the revenue and profit plan set by the General Shareholders’ Meeting.• Provide general instructions and concentrate resources into completion of the Phase 3 of Hoa Phat Integrated Steel Complex to promptly put it into commercial operation. • Continue to provide instructions on the development of incentive policies for employees in order to attract and retain those with high skills and expertise,

enhance the internal compliance, risk management in production and business activities and strengthen the operational transparency. • Implement new projects to take advantage of the human resources, experience and strong financial position of the Group. Key market sectors for potential development are animal food production and livestock sectors. Expansion into new business sectors comes with many challenges to overcome; however, it can also create many opportunities and value. The Board of Management will closely supervise the Project Management Unit in its implementation of activities, thereby enhancing the Group’s future production and business capabilities.• Continue to closely monitor both domestic and global market developments, based on which realistic predictions can be made leading the Board of Directors to govern the production and business activities with the primary targets of safety and efficiency.

Board of manaGement’s Plans and strateGic direction


risKmanaGement 1

- General context: Hoa Phat Group

has 14 subsidiaries operating in

diversified business areas including

construction steel, steel pipe, furniture

and real estate. These entities have

to follow current policies and laws

which are frequently changed or

amended by the Government and

relevant ministries, causing certain

impacts on the Group.

- Hoa Phat’s solution: The Legal

Department of Hoa Phat as well as

its subsidiaries frequently obtained

updates on relevant policies in order

to be proactive and flexible in their

governance. Focused on intensive

investment in sectors of strength,

while minimizing the effects of

macro policies.

- results: Hoa Phat was proactive in

all of its business aspects and in

creasingly played an important role

in the sectors that the Group was

engaged in. All of the main

businesses of steel production, other

industrial production and real estate

have experienced stable growth and

are considered leading brands in the

sector.

- General context: During 2014,

there were many positive changes

in the macro economy; inflation was

kept at a low level, foreign exchange

rates were relatively stable and bank

interest rates were reduced and

maintained at a relatively low level.

However, the economic recovery

still remained slow, and demand

was weak. For the steel business, the

domestic demand was still low and

exposed to competition from low

price contraband goods.

- Hoa Phat’s solution: Bring into full

play of the ‘internal force’ and apply

the

governance policies both flexibly and

closely for each product category

to achieve the given objectives, and

enhance the competitiveness of

products.

- results: Hoa Phat’s products were

always highly competitive. In particu-

lar, construction steel sales reached

1 million tonnes for the first time

in 2014. During the past year, the

Group’s total revenue reached more

than USD1 billion for the first time.

Net profit after tax hit a new record of

VND3,250 billion, which represented an

increase of more than 62% compared

to 2013.

macro-economic risks

regulatory risks

in the process of production and business activities, Hoa Phat or any enterprise has to face the certain risks by many factors such as macroeconomic policies, human resources, markets, exchange rate fluctuations, technology, ... therefore, anticipating these risks in order to minimize their negative impact on the business operation is the thing that Hoa Phat primarily concerns about.


- General context: The Group has more than 10,000 employees located across the country, with the majority of them being considered young. Therefore, changes in human resources are always an issue of great concern. Despite the widespread operating locations, recruitment of new staff is not always an easy task.

- Hoa Phat’s solution: Hoa Phat Group has always placed great importance on training and improving the skills of its employees. Employee policies which were designed to accommodate the specific characteristics of each business sector and to

encourage creativeness havebeen implemented effectively. In addition, HPG has standardized the human resources management system across the entire Group.

- results: The Group has maintained effective control over its human resources, resulting in no instances of personnel shortage or surplus. The quality of the Group’s personnel from direct employees to managers has continually improved over past years, which has supported the Group’s long term development and strategic direction.

- General context: Industrial

production, especially heavy

industries, are inherently exposed

to risks associated with impacting

the natural environment.

- Hoa Phat has always been

committed to complying with

environmental policies and

regulations, to adopt modern

technologies, and to continuously

improve production processes in

order to minimize environmental

impacts.

- results: Environmental impact

assessment reports have been

prepared for each of the Group’s

factories. A significant number of

technologies used by Hoa Phat are

considered clean and environmentally

friendly technologies which

effectively save energy.

- General context: Technology has always been regarded as the top priority in effectively and efficiently managing heavy industry production, particularly within the Group’s steel business. Application of technologies in production is intended to reduce costs and enhance the competitiveness of the Group’s products. However, as most of the new technologies need to be imported from abroad, updating and/or replacing machinery and components is dependent on sourcing the items from foreign countries which may lead to additional costs and complication.

- Hoa Phat’s solution: Thoroughly consider and assess new technologies and associated factors before

investing in new projects in order to minimize the dependence on imported equipment and technology. Prioritize the application of world-class advanced technologies to its activities, as early as practicable. Also encourage research activities, to proactively improve and apply current technologies within the operations of the Group.

- results: All of Hoa Phat’s factories have applied the most advanced technologies available. The Group’s relentless improvement of technological lines has helped Hoa Phat avoid an over-dependence on imported equipment, reduce production costs and enhance its competitiveness in the market.

Human resources risk

environmental risks

technology risks


IVreport of the

supervisory Board

ownership rate of members of the supervisory Board

memBersuPervisory Board1

59rePort of tHe suPervisory Board

Ms. Dang Pham Minh Loan

Member of Supervisory Board

Bachelor of accountant, acca

holder – uK, cPa vietnam

working starting time: since 2007

Ms. Loan held a number of senior positions in the large financial organizations such as, Auditor, Assistant Manager of auditing department KPMG (2000 - 2005); member of Supervisory Board, Specialist and Head of investing department in the Vinacapital Investment Management Ltd’s Representative Office. Since July 2010, she has been a Vice Executive Director of Vinacapital Company.


degree in economics


Before becoming a member of Supervisory Board, Ms. Thuy held a number of positions in: Staff member in accounting department of Hoa Phat Steel JSC (2005 - 2006), Staff member in Finance department of Hoa Phat Group (2006 – present).


mBa


Ms Truong Nu Minh Ngoc has experienced many positions in large financial institutions such as: Senior Auditor in PricewaterhouseCoopers (9/2000 – 2/2005), financial analyst in Vina Capital (2/2005 – 7/2005), Investment Manager in Bank Invest (2012 - now).

Head of Supervisory Board

Ba,accounting, academy of finance, Hanoi

working starting time: 2007

Before appointed as Head of Supervisory Board , Ms Nguyen Thi Thanh Van was a Chief Accountant of Hoa Phat Group JSC from 2007 to 2010. Since 2011, she is also Chief Accountant of Hoa Phat Steel One member Co. Ltd.


economic Bachelor; accounting Practice certificate (viet nam)

working starting time: since 2006Before appointed as member of the Supervisory Board, Mr.Le Tuan Anh worked in the accounting department of Hoa Phat Steel Pipe Co., Ltd. (2006 - 2007), specialist of the Supervisory Board (2007 - 2011) and currently he is manager of Internal Supervisory Department of Hoa Phat Group JSC.

ms. nguyen thi thanh van mr. le tuan anh ms. vu thanh thuy ms. truong nu minh ngoc

1 Nguyen Thi Thanh Van Head of Supervisory Board 0.005 2 Dang Pham Minh Loan Member of Supervisory Board - 3 Truong Nu Minh Ngoc Member of Supervisory Board - 4 Le Tuan Anh Member of Supervisory Board 0.003 5 Vu Thanh Thuy Member of Supervisory Board - total 0.008

Percentage of shares held as at

26/02/2015 (%)no name title

In accordance with the functions and duties assigned by the General Shareholders’ Meeting, the Supervisory Board has completed the following tasks during the year:

- Obtained updated information regarding the implementation and progress of the 2014 production and business plan for subsidiaries within the Group;- Regularly obtained information and reviewed the progress of important projects including the steel project – phase 3; the project on contruction of a master steel warehouse in Binh Duong province;- Reviewed information regarding key factors affecting production and business activities including inventories, accounts receivables, sales policy and cash collection;- Obtained and reviewed the working schedule of internal controllers, and internal control reports prepared for each subsidiary within the Group.Conducted fieldwork at all the subsidiaries within the Group in collaboration with the Internal Supervisory Department;- Reviewed quarterly and annual consolidated financial statements before submission to the Ho Chi Minh City Stock Exchange; a more detailed

review was conducted in respect of six-monthly financial statements and the audited annual financial statements;- Reviewed the financial plans and their implementation at the subsidiary level as well as at the Group level;- Reviewed the implementation of the resolutions by the General Shareholders’ Meetings, the Board of Management, the Company’s Charter and other official documents issued by the Board of Directors; reviewed the management reports prepared by the Board of Directors;- Controlled the issuance of shares under the Employee Stock Option Plan in 2014;- Attended all the meetings of the Board of Management; provided recommendations to improve the Group’s operational efficiency, financial planning, budgets, business strategies, brand recognition, marketing activities, human resources management and development of business plans for the Group.

The Supervisory Board held two meetings in 2014 which were attended by all of the board members. During the meetings, the members discussed important issues in respect of recent developments as well as the direction of the Group in

general and in respect of each individual business segment.

The Supervisory Board greatly appreciates the results achieved by the Group’s businesses in 2014. The Board is of the view that the Group management has been implementing the business strategies on the right direction, and has managed the business in an efficient manner, maintained the Group’s financial position and performance at a healthy and transparent status.

Members of the Supervisory Board had regular communications and discussions with members of the Board of Management, the Board of Directors, and heads of subsidiaries, functional departments in order to obtain updates on issues arising from the Group’s operations. The Supervisory Board provided timely recommendations on executive decisions in order to improve the efficiency of the Group’s business operations.

In 2014, there was no change in the members of the Supervisory Board.

Compensation for members of the Supervisory Board: VND20 million per member per year.

Ta Tuan Quang Member of BOM 912,621 0.19 662,621 0.14 Selling

Vietnam Company related to ChangeInfastructure Mr. Andy Ho according to Holding Limited Member of BOM 1,806,533 0.43 3,333,565 0.80 Buying reports from 21/01/2014 to 24/07/2014

VOF Company related to As reports Investment Mr. Andy Ho of VOF from Limited Member of BOM 19,760,746 4.72 25,769,459 5.50 Buying 21/01/2014 to 24/07/2014

Private Equity Company related to As reports fromNew Markets Mr. Hans Christian 26/06/2014 to II K/S Jacobsen 20,291,040 4.84 14,570,483 3.02 Selling 10/12/2014 Member of BOM

shares transaction of the internal and related shareholders in 2014

name of transactionno

1

2

3

4

relationship with internal

shareholder No. of shares No. of sharesRate % Rate %

notereason

of change

owner’s shares as at 01/01/2014

owner’s shares as at 31/12/2014

suPervisoryBoard’s rePort1


THÔNG TIN CHUNG 61

Since its restructuring to a Group model, the managerial ability and professional skills of Hoa Phat Group’s employees have been continuously enhanced, which has greatly reduced the occurrence of professional mistakes. Recognizing this, during 2014 the Internal Supervisory Department focused on taking action in the following areas which they considered the greatest potential for errors and risk of fraud:

- To minimize fraudulent activities during the personnel recruitment process, the Internal Supervisory Department focused on improving controls over the recruitment process, and supervised the implementation of human resources policies with an aim to ensure that the Group’s human resources activities have complied with relevant regulations of the Labor laws as well as other applicable regulations of the Group.

- Controlled the procurement of materials, especially the purchase price of miscellaneous and specialized materials. They issued instructions to subsidiaries to maximize the adoption of non-cash payment methods. - Regularly reviewed the status of the accounts receivables in the context of economic difficulties and proposed action to minimize bad debts.- Reviewed the tax incentive schemes of the subsidiaries within the Group.

In addition, the Internal Control Department coordinated with the subsidiaries and other departments to implement a number of initiatives designed to improve the effectiveness of controls within the Group’s entities:- Coordinated with other departments in finalising the internal regulations and processes for the application in 2015.

- Coordinated with the subsidiaries to evaluate their major suppliers and checked the eligibility of invoices and other supporting documents during the procurement of materials.

According to the assessment by the Internal Control Department, in general, during 2014 all the subsidiaries have made significant achievements in their operations: accounts receivable were well controlled, no bad debts incurred, large cash payments were minimized, the inspections by local relevant authorities all resulted in positive outcomes, not many cases of wrong doings were noted, and the regular supplies of raw and other materials was stabilized, bought with good price.

internalsuPervisory dePartment’s rePort1

61rePort of tHe suPervisory Board


V

sustainable development

ensurinG sustainaBle GrowtH Hoa Phat made many important achievements in research and development (r&d) in 2014, contributing to cost reduction, improvement of production capacity and product quality of all the three strategic business segments. most achievements related to the steel production segment.

renovation and upgrading of the blast furnace no. 1 of Hoa Phat integrated steel complexThe overhaul and upgrade at the blast furnace No. 1 of Hoa Phat Integrated Steel Complex was completed in the third quarter of 2014 following three months of work. The capacity of the furnace was increased by over 20% from 350,000 tonnes to a maximum of 450,000 tonnes per year. Mr. Ho Duc Tho – Deputy Director of Hoa Phat Steel Joint Stock Company said that the overhaul of the blast furnace No. 1 included renovation of the feeding system, cooling water system, hot air generator, dust filtering system, and overhaul of the cast iron furnace hearth. The total expense for this overhaul and upgrade was is approximately VND200 billion.

Hoa Phat completed the works 30 days ahead of initial schedule as a result of taking various measures to efficiently coordinate with contractors and optimize the use of human resources and materials. This helped speed up production to meet the increasingly high demands for construction steel at the year-end. According to management of Hoa Phat Steel Joint Stock Company, after the overhaul, the blast furnace No. 1 operated more stably, steel production increased, energy consumption decreased and the environmental impact was reduced. This is a result of a series of improvement initiatives for the above auxiliary system.

improvement of the iron ore preparation line

Binh Vang Iron Ore Pelletizing Factory (Vi Xuyen District, Ha Giang province) has implemented many break-through improvements. After one year of operation, the factory has gradually stabilized production, adopted technological improvements to increase capacity and product quality and to reduce production costs.

The Minh Son Fine Iron Ore Processing Factory, experienced great fluctuations in iron ore characteristics compared to previous years, lower ore concentration, and it was more difficult to pulverize ore. Accordingly, the factory had to make many improvements to operate at or over the plan. These activities included i) renovated the technological transmission line that helped ensure the required capacity and quality of fine ore and ii) installed a circulating water pumping system and iii) installed an ore concentration tank before pulverizing, and increased the sludge concentration to increase the pulverizing efficiency.

researcH and develoPment (r&d)1

63sustainaBle develoPment

Hoa Phat steel Pipe co., ltd.’s large investment in production expansionHoa Phat Steel Pipe Co., Ltd. has implemented a series of R&D projects in order to increase capacity of its factories and reinforce its leading status in the steel pipe business in Vietnam. Amongst them, the investment in the construction of a steel pipe factory and the inauguration of Hoa Phat Da Nang Steel Pipe Co., Ltd. in the second quarter of 2014 was a new turning point in its strategy to acquire the market share of Middle Central Highlands.

At present, this factory has a capacity of 36,000 tonnes per year with the main products being black welded steel pipes and pre-galvanized steel pipes. It is expected that in 2015-2016, the company will continue to implement Phase II and commence the production of galvanized steel sheet in coil with capacity of 60,000 tonnes per year, and increase the steel pipe production capacity in Da Nang to around 60,000 tonnes per year.

For the steel pipe factory in Hung Yen, the Company made further investment to install 6 additional steel pipe curling lines to raise the factory’s output to 250,000 tons per year. Besides, the Company has invested in pickling line No. 3 for Hung Yen Steel Rolling Factory to raise the total capacity of the factory to 250,000 tons from April 2015. At the same time, in Binh Duong, Hoa Phat Steel Pipe invested in 4 additional steel pipe curling lines for production expansion. According to the Company management, after the completion of such investments, Hoa Phat Steel Pipe will reach a total capacity of approximately 400,000 tons of different product types.

Hoa Phat Steel Pipe has not only invested in production expansion but also conducted researches for technological improvement including the updating and application of new production technologies in order to improve efficiency, reduce fuel consumption in the production processes. Such improvements included i) the renovation of the annealing furnace of the strip cladding line to change the heating method from gas to electric, thereby reducing fuel costs for the annealing process by nearly 30%; ii) changing fuel from DO to coal gas for the pipe galvanizing tank, leading to approximately 20% in fuel savings; and iii) upgrading all of the sharp pipe sawing machines in all steel pipe factories of Hoa Phat.

Production developments in parallel with environmental protection

After years of operation, the Steel Billet Factory of Hoa Phat Steel One Member Co., Ltd. in Hung Yen province has been fully depreciated and it was difficult for its production line to meet the current development requirements. Therefore, the company invested approximately VND200 billion in expansion of VND4,300 m2 of workshops, to replacing the steel making furnaces using more cost-efficient technologies and increased the steel production capacity by 40%.

Also in this factory, Hoa Phat purchased and installed hydraulic scrap cutting machines, overhead cranes for the processing, classification and preparation of scrap metal for steel making furnaces. The renovation and installation of a third molding line, increased the molding machine capacity by more 30%. In addition, Hoa Phat Steel One Member Co., Ltd. renovated and installed another system for dust collection and filtration with a capacity of 300,000m3/h to ensure a cleaner production environment in compliance with relevant regulations prescribed by the Law on Environment Protection, which was recently issued by the Government.

The medium frequency steel billet making furnace which incorporates new technology is much more cost-effective than the arc furnace (production cost has been reduced by around VND500,000 - 700,000 per ton of finished billets). It has lower scrap consumption, much lower noise and dust concentration, and a higher recovery rate of finished products. In particular, this technology does not employ coal and lime in producing steel, which reduces the output of slag and other industrial waste. On the other hand, all dust and waste gases are collected in filtration bags, without causing dust or smoke pollution to the surrounding environment.


On the factory which was built in 2011, Hoa Phat Refrigeration Engineering Co., Ltd. invested VND200 billion to expand workshops, increase capacity to 300,000 freezers per year at the end of March 2014, upgrade technological lines and install new modern equipment. All of the manufacturing equipment was imported from well-known European suppliers so as to ensure that first-class quality products are supplied to consumers.

In particular, thanks to its strategic investments, Hoa Phat Refrigeration Engineering Co., Ltd. is the only firm in Vietnam that was sponsored by the World Bank in the program for elimination of HCFC’s to minimize damage caused to the ozone layer and protect the environment and users. HCFC is a chemical normally used in the freezing technology.

Following the directions by the Ministry of Industry and Trade regarding energy-saving labeling, Hoa Phat Refrigeration Engineering Co., Ltd. conducted reviews based on the Ministry’s regulations. The majority of the company’s products such as air-conditioners and refrigerators have been granted certificates certifying

the conformance to relevant standards earning 3 to 5 star efficiency label ratings. Such ratings represent those with the lowest electricity consumption while still ensuring best performance. Such certificates aim to provide consumers with information on the energy efficiency of the equipment to allow comparisons with other products in the market, thereby enabling consumers to choose more energysaving equipment.

Hoa Phat refrigeration’s investment in upgrading freezer manufacturing technology


sPrinG of love

This is one of the annual activities carried out immediately before the Lunar New Year (Tet) starts, so as to bring a truly warm Tet to the beneficiaries. During 2014, 800 gift packages including rice, salt, cooking oil and confectionary were presented to poor households in the provinces including Ha Giang, Yen Bai, Lao Cai, Hai Duong and Ha Tinh...

At the same time, Hoa Phat also presented Tet gifts for nearly 700 poor and disadvantaged pupils in two provinces of Ha Giang and Lao Cai. Each gift package contained warm coats, boots, confectionary, books and notebooks. Although the gifts were low in monetary value, Hoa Phat Group hopes that they brought great spiritual encouragement, and helped motivate the pupils to make great progresses in their studies and become productive citizens for the society.

with the aim to create a harmonious linkage between business and social activities, during 2014, Hoa Phat Group undertook many charity and community focused activities. such activities reflect the Group’s recognition of its corporate social responsibilities, commitment to upholding the tradition of “solidarity and mutual help” of the vietnamese nation in general and Hoa Phat Group in particular.

social and cHarity activities


alonG witH sPorts

In parallel with the above charitable and social activities, during the past year, Hoa Phat also actively participated in sponsoring and supporting the Hoa Phat Hung Yen female volleyball team. Thanks to the sound and systematic investment and support, the Hoa Phat Hung Yen female volleyball team won the Tier A National Volleyball Tournament 2014. They won all the games in the final round to win the tournament in an very impressive manner and become an opponent that will be feared at the National Volleyball Championship next year.

In 2014, Hoa Phat carried out many social activities to benefit the community.

One of the activities that Hoa Phat focuses on is the free meal program for poor patients at the Central Oncology Hospital (K Hospital). Under this program, 150 meal portions per day are provided to support poor patients and support their medical treatment. This is just one of the activities which demonstrates the tradition of “The good leaves protect the worn-out leaves” that have been carried out since 2010 and which will be maintained during the coming years.

Meanwhile, the funding activity of Hoa Phat for the poor district of Hoang Su Phi, Ha Giang province which under the 30A Program of Vietnam Government has been still implemented on an annual basis, step by step investment. Hoa Phat considers that economic development should go hand in hand with stability for the border residents. The funds provided by Hoa Phat have been spent for investment in infrastructure, welfare facilities, financing equipment and facilities for schools and healthcare establishments. Such investment improves the living quality of residents and enables them to concentrate on their occupations, economic development, gradual poverty reduction and hunger eradication.

Besides the investment in economic development in Hoang Su Phi, Hoa Phat has also placed emphasis on the construction of welfare facilities in the areas where its factories are located. In 2013, Hoa Phat built a standard kindergarten in Kinh Mon, Hai Duong province (where Hoa Phat Integrated Steel Complex is located) and in 2014, Hoa Phat continued with the construction of the lounge for Kinh Mon General Hospital, with a total investment of VND800 million. This facility has now been put into operation to serve the people going to hospital.

Join Hands for tHe community


Báo cáo tài chính hợp nhất năm 2013 và báo cáo tài chính công ty mẹ năm 2013 được đăng tải

trên Website của công ty theo địa chỉ: www.hoaphat.com.vn

consolidated financial statements for

tHe year ended as at 31 decemBer 2014

HOA PHAT GROUP JOINT STOCK COMPANY AND ITS SUBSIDIARIES

2014 consolidated and separate financial statements were reported on the

Website: www.hoaphat.com.vn


report of the Board of directors 70

independent auditor’s report 73

consolidated balance sheet 75

consolidated income statement 78

consolidated cash flow statement 79

consolidated financial statements 81

Contents

69audited consolidated financial statements

Hoa Phat Group Joint Stock CompanyReport of the Board of Directors

The Board of Directors of Hoa Phat Group Joint Stock Company (“the Company”) is pleased to present its report and the consolidated financial statements of the Company and its subsidiaries (together referred to as “the Group”) for the year ended 31 December 2014.

The members of the Board of Management and the Board of Directors during the year and at the date of this report are as follows:

Board of Management Mr. Tran Dinh Long ChairmanMr. Tran Tuan Duong Vice Chairman Mr. Nguyen Manh Tuan Vice Chairman Mr. Doan Gia Cuong Vice Chairman Mr. Nguyen Ngoc Quang MemberMr. Ta Tuan Quang MemberMr. Hoang Quang Viet MemberMr. Nguyen Viet Thang MemberMr. Andy Ho MemberMr. Hans Christian Jacobsen Member

Board of Directors Mr. Tran Tuan Duong General DirectorMrs. Nguyen Thi Thao Nguyen Deputy General DirectorMr. Nguyen Viet Thang Deputy General Director

Corporate information

The Company was originated from Hoa Phat Steel Joint Stock Company incorporated under the Law on Enterprise of Viet Nam pursuant to the initial Business Registration Certificate No. 0503000008 issued by Hung Yen Department of Planning and Investment on 26 October 2001. In accordance with the 8th amendment of the Business Registration Certificate No. 0503000008 issued by the Hung Yen Department of Planning and Investment on 9 January 2007, Hoa Phat Steel Joint Stock Company was transformed into Hoa Phat Group Joint Stock Company.

The Company’s Business Registration Certificate has been amended several times, the most recent of which is by Enterprise Registration Certificate No. 0900189284 dated 4 March 2015. The Enterprise Registration Certificate was issued by the Hung Yen Department of Planning and Investment.

The registered office of the Company is located in Pho Noi A Industrial Zone, Giai Pham Commune, Yen My District, Hung Yen Province, Vietnam.

The subsidiaries and associates of the Group are disclosed in Note 1 to the consolidated financial statements.

1


Hoa Phat Group Joint Stock CompanyStatement of the Board of Directors (continued)

Operating results and dividends

The consolidated net profit attributable to the equity holders of the Company for the year ended 31 December 2014 was VND3,144,253 million (2013: VND1,954,188 million).

On 2 April 2014, the Company’s Board of Management passed a detailed resolution on thedistribution of 2013 dividend to shareholders by cash at the rate of 15% of the par value amounting to VND628,579 million, and 15% in the form of shares amounting to VND628,556 million. These dividend payment schemes were approved by the General Meeting of Shareholders on 28 March 2014 and already paid during the year.

Post balance sheet events

Except for the event disclosed in Note 41, there are no significant post balance sheet events that need to be adjusted or disclosed in the consolidated financial statements.

Auditors

The auditor of the Company is KPMG Limited.

2


Hoa Phat Group Joint Stock CompanyStatement of the Board of Directors (continued)

Statement of the Board of Directors’ responsibility in respect of the consolidated financial statements

The Board of Directors is responsible for the consolidated financial statements which give a true and fair view of the Group’s consolidated financial position as at 31 December 2014, results of operations and cash flows for the year then ended. In preparing the consolidated financial statements, the Board of Directors is required to:

• select suitable accounting policies and then apply them consistently;

• make judgments and estimates that are reasonable and prudent;

• confirm that applicable accounting standards have been followed, subject to any material departures disclosed and explained in the consolidated financial statements; and

• prepare the consolidated financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue in business.

The Board of Directors is also responsible for ensuring that proper accounting records are kept which disclose, with reasonable accuracy at any time, the financial position of the Group and to ensure that the accounting records comply with Vietnamese Accounting Standards, the Vietnamese Accounting System for Enterprises and the relevant statutory requirements applicable to financial reporting. The Board of Directors is also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Board of Directors confirms with the Company’s Board of Management and shareholders that they have complied with the above requirements in preparing the consolidated financial statements.

Approval of the consolidated financial statements

We hereby approve the accompanying consolidated financial statements for the year ended 31December 2014. These consolidated financial statements give a true and fair view of the consolidated financial position of the Group as at 31 December 2014 and of its consolidated results of operations and its consolidated cash flows for the year then ended in accordance with the Vietnamese Accounting Standards, the Vietnamese Accounting System for Enterprises and the relevant statutory requirements applicable to financial reporting.

For and on behalf of the Board of Directors

Tran Tuan DuongGeneral Director

Hanoi, 9 March 2015

3


INDEPENDENT AUDITORS’ REPORT

To the Shareholders and Board of ManagementHoa Phat Group Joint Stock Company

We have audited the accompanying consolidated financial statements of Hoa Phat Group Joint Stock Company (“the Company”), which comprise the consolidated balance sheet as at 31December 2014, the consolidated statements of income and cash flows for the year then ended and the explanatory notes thereto which were authorised for issue by the Company’s Board of Directors on 9 March 2015, as set out on pages 6 to 62.

Management’s Responsibility

The Company’s Board of Directors is responsible for the preparation and fair presentation of these financial statements in accordance with Vietnamese Accounting Standards, the Vietnamese Accounting System for Enterprises and the relevant statutory requirements applicable to financial reporting, and for such internal control as the Board of Directors determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with Vietnamese Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by Board of Directors, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

4


Auditor’s Opinion

In our opinion, the consolidated financial statements give a true and fair view, in all material respects, of the consolidated financial position of Hoa Phat Group Joint Stock Company as at 31 December 2014 and of its consolidated results of operations and its consolidated cash flows for the year then ended in accordance with Vietnamese Accounting Standards, the Vietnamese Accounting System for Enterprises and the relevant statutory requirements applicable to financial reporting.

KPMG LimitedVietnamInvestment Certificate No.: 011043000345Audit Report No.: 13-02-034-2014-a

___________________________________ _______________________________Dam Xuan Lam Nguyen Tam AnhPracticing Auditor Registration Practicing Auditor RegistrationCertificate No.: 0861-2013-007-1 Certificate No.: 0651-2013-007-1Deputy General Director

Hanoi, 9 March 2015

5


Hoa Phat Group Joint Stock CompanyConsolidated balance sheet as at 31 December 2014

Form B 01 – DN/HN

Code Note 31/12/2014VND

31/12/2013VND

ASSETS

Current assets (100 = 110 + 120 + 130 + 140 + 150) 100 11,745,859,365,753 12,402,515,338,144

Cash and cash equivalents 110 6 2,026,280,467,705 2,125,322,390,697Cash 111 491,949,294,021 282,763,115,669Cash equivalents 112 1,534,331,173,684 1,842,559,275,028

Short-term investments 120 14 506,641,791,271 387,793,671,402

Accounts receivable – short-term 130 7 1,719,569,645,827 1,629,428,547,084Accounts receivable – trade 131 1,247,341,501,375 1,258,518,278,675Prepayments to suppliers 132 457,068,881,547 350,774,484,077Other receivables 135 55,961,139,232 34,778,986,769Allowance for doubtful debts 139 (40,801,876,327) (14,643,202,437)

Inventories 140 8 7,386,389,048,165 8,029,575,289,191Inventories 141 7,601,110,304,518 8,064,854,889,451Allowance for inventories 149 (214,721,256,353) (35,279,600,260)

Other current assets 150 106,978,412,785 230,395,439,770Short-term prepayments 151 10,020,994,351 42,122,793,350Deductible value added tax 152 80,592,280,678 127,795,589,569Taxes and other receivables from State Treasury 154 9 12,902,824,268 34,144,629,790Other current assets 158 3,462,313,488 26,332,427,061

The accompanying notes are an integral part of these consolidated financial statements6


Hoa Phat Group Joint Stock CompanyConsolidated balance sheet as at 31 December 2014 (continued)

Form B 01 – DN/HN


31/12/2013VND

Long-term assets (200 = 210 + 220 + 240 + 250 + 260 + 269) 200 10,343,245,032,050 10,673,862,524,545

Accounts receivable – long-term 210 7 - 449,759,238,679Other receivables 218 - 449,759,238,679

Fixed assets 220 9,158,124,616,833 9,187,130,524,312Tangible fixed assets 221 10 8,548,486,917,773 8,864,496,339,790

Cost 222 12,431,106,424,851 11,747,912,985,324Accumulated depreciation 223 (3,882,619,507,078) (2,883,416,645,534)

Intangible fixed assets 227 11 180,165,542,072 189,063,615,103Cost 228 210,636,148,429 215,917,099,640Accumulated amortisation 229 (30,470,606,357) (26,853,484,537)

Construction in progress 230 12 429,472,156,988 133,570,569,419

Investment property 240 13 197,343,763,931 62,002,294,764Cost 241 232,446,624,627 88,066,912,353Accumulated depreciation 242 (35,102,860,696) (26,064,617,589)

Long-term investments 250 14 61,184,828,523 21,255,298,806Investments in associates 252 3,997,137,449 5,553,170,441Other long-term investments 258 57,187,691,074 15,702,128,365

Other long-term assets 260 544,509,740,276 380,858,246,946Long-term prepayments 261 15 483,218,729,903 326,428,533,088Deferred tax assets 262 16 52,065,448,874 54,344,805,858Other long-term assets 268 9,225,561,499 84,908,000

Goodwill 269 17 382,082,082,487 572,856,921,038

TOTAL ASSETS (270 = 100 + 200) 270 22,089,104,397,803 23,076,377,862,689

RESOURCES



Hoa Phat Group Joint Stock CompanyConsolidated balance sheet as at 31 December 2014 (continued)

Form B 01 – DN/HN


31/12/2013VND

LIABILITIES (300 = 310 + 330) 300 10,123,764,654,194 13,489,417,843,130

Current liabilities 310 9,016,779,622,246 11,142,521,402,951Short-term borrowings 311 18 5,736,983,436,809 5,743,559,817,748Accounts payable – trade 312 1,927,830,990,815 2,313,957,097,164Advances from customers 313 158,911,796,301 79,676,433,981Taxes payable to State Treasury 314 19 463,700,814,724 387,853,096,459Payables to employees 315 158,701,054,509 122,128,725,001Accrued expenses 316 20 204,745,212,904 345,447,630,212Other payables 319 21 134,165,173,120 2,045,822,283,922Provisions for warranties 320 22 17,171,173,699 13,212,673,156Bonus and welfare funds 323 23 214,569,969,365 90,863,645,308

Long-term liabilities 330 1,106,985,031,948 2,346,896,440,179Other long-term liabilities 333 21 96,068,705,964 514,930,691,650Long-term borrowings 334 24 1,010,863,752,151 1,831,823,606,336Deferred tax liabilities 335 52,573,833 142,142,193

EQUITY (400 = 410) 400 11,795,984,026,356 9,500,327,254,417

Owners’ equity 410 25 11,795,984,026,356 9,500,327,254,417Share capital 411 26 4,819,081,750,000 4,190,525,330,000Capital surplus 412 26 2,207,350,817,068 2,207,350,817,068Financial reserve 418 25, 28 674,783,632,921 459,080,197,478Retained profits 420 25 4,094,767,826,367 2,643,370,909,871

MINORITY INTEREST 439 169,355,717,253 86,632,765,142

TOTAL RESOURCES (440 = 300 + 400 +439) 440 22,089,104,397,803 23,076,377,862,689

OFF BALANCE SHEET ITEMS31/12/2014 31/12/2013

Foreign currency (USD) 10,003,226 1,309,800Entrusted fund received (VND) 448,979,590,000 -Entrusted investment conducted (VND) 448,979,590,000 -

9 March 2015

Prepared by: Approved by:

Hoang Thi Thanh Huong Ly Thi Ngan Tran Tuan DuongGeneral Accountant Chief Accountant General Director



Hoa Phat Group Joint Stock CompanyConsolidated statement of income for the year ended 31 December 2014

Form B 02 – DN/HN

Code Note 2014VND

2013VND

Total revenue 01 29 25,851,816,458,125 19,200,234,178,082

Less revenue deductions 02 29 326,467,635,412 265,942,027,551

Net revenue (10 = 01 - 02) 10 29 25,525,348,822,713 18,934,292,150,531

Cost of sales 11 30 20,338,346,539,679 15,650,540,636,204

Gross profit (20 = 10 - 11) 20 5,187,002,283,034 3,283,751,514,327Financial income 21 31 160,287,779,327 276,278,618,993Financial expenses 22 32 563,834,231,079 528,408,903,958

In which: Interest expense 23 350,628,944,467 370,947,849,826Selling expenses 24 366,087,885,891 253,653,065,057General and administration expenses 25 607,214,249,307 416,174,707,153

Net operating profit {30 = 20 + (21 - 22) - (24 + 25)} 30 3,810,153,696,084 2,361,793,457,152

Other income 31 33 275,600,324,411 199,104,247,497Other expenses 32 34 316,062,036,756 166,237,311,403

Results of other activities (40 = 31 - 32) 40 (40,461,712,345) 32,866,936,094

Share of loss in associates 45 14 (171,255,307) (256,198,814)

Profit before tax (50 = 30 + 40 + 45) 50 3,769,520,728,432 2,394,404,194,432

Income tax expense – current 51 35 517,116,335,811 390,183,260,599

Income tax expense/(benefit) – deferred 52 35 2,189,802,417 (6,214,468,936)

Net profit after tax (60 = 50 - 51 - 52) 60 3,250,214,590,204 2,010,435,402,769

Attributable to:Minority interest 61 105,961,744,233 56,247,864,906Equity holders of the Company 62 3,144,252,845,971 1,954,187,537,863

RestatedBasic earnings per share 70 36 6,435 3,999

9 March 2015





Hoa Phat Group Joint Stock CompanyConsolidated statement of cash flows for the year ended 31 December 2014(Indirect method)

Form B 03 – DN/HN

Code Note2014VND

2013VND

CASH FLOWS FROM OPERATING ACTIVITIES

Profit before tax 01 3,769,520,728,432 2,394,404,194,432Adjustments for

Depreciation and amortisation 02 1,106,005,660,313 720,195,566,311Goodwill amortisation 02 244,886,781,601 275,023,878,726Allowances and provisions 03 209,663,586,663 (147,647,242,587)Unrealised foreign exchange losses 04 82,549,401,774 9,755,308,690Profits from investing activities 05 (23,625,391,281) (239,922,767,209)Interest expense 06 350,628,944,467 370,947,849,826

Operating profit before changes in working capital 08 5,739,629,711,969 3,382,756,788,189

Change in receivables and other receivables 09 (39,335,171,949) 184,894,312,063Change in inventories 10 235,303,034,097 (1,216,858,380,400)Change in payables and other liabilities 11 (2,199,063,441,613) 1,674,080,391,405Change in prepayments 12 (105,592,294,575) 43,029,826,617Interest paid 13 (325,690,062,547) (558,923,619,216)Income tax paid 14 (575,207,645,980) (200,847,280,440)Other receipts from operating activities 15 33,084,042,052 21,180,037,819Other payments for operating activities 16 (81,054,853,105) (95,479,361,817)

Net cash flows from operating activities 20 2,682,073,318,349 3,233,832,714,220

CASH FLOWS FROM INVESTING ACTIVITIES

Payments for additions to fixed assets and other long-term assets 21 (1,084,828,194,450) (2,921,311,668,380)Proceeds from disposals of fixed assets and other long-term assets 22 21,687,699,513 11,605,368,430Payments for lending loans to other entities 23 (158,593,682,578) (163,135,157,802)Collections on investments in other entities 26 1,500,000,000 116,266,905,518Receipts of interest on bank deposits 27 107,306,447,497 100,056,500,126Acquisition of additional share capitals of subsidiaries from minority interest shareholders 29 - (395,947,200,000)Acquisition of a subsidiary, net of cash acquired 5 (56,955,592,861) -

Net cash flows from investing activities 30 (1,169,883,322,879) (3,252,465,252,108)



Hoa Phat Group Joint Stock CompanyConsolidated statement of cash flows for the year ended 31 December 2014(Indirect method - continued)

Form B 03 – DN/HN

Code Note2014VND

2013VND

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from capital contribution by minority shareholders 31 475,000,000 620,000,000Proceeds from short-term and long-term borrowings 33 21,167,443,398,643 18,941,877,013,166Payments to settle loan principals 34 (22,097,815,712,253) (17,672,451,806,682)Payments of dividends 36 (681,451,419,825) (420,496,176,570)

Net cash flows from financing activities 40 (1,611,348,733,435) 849,549,029,914

Net cash flows during the year(50 = 20 + 30 + 40) 50 (99,158,737,965) 830,916,492,026

Cash and cash equivalents at the beginning of the year 60 2,125,322,390,697 1,294,493,700,487

Effect of exchange rate fluctuations on cash and cash equivalents 61 116,814,973 (87,801,816)

Cash and cash equivalents at the end of the year (70 = 50 + 60 + 61) 70 6 2,026,280,467,705 2,125,322,390,697

9 March 2015





Hoa Phat Group Joint Stock CompanyNotes to the consolidated financial statements for the year ended 31 December 2014

Form B 09 – DN/HN

These notes form an integral part of and should be read in conjunction with the accompanying consolidated financial statements.

1. Reporting entityHoa Phat Group Joint Stock Company (“the Company”) is incorporated as a joint stock company in Vietnam. The consolidated financial statements of the Company for the year ended 31 December 2014 comprise the Company and its subsidiaries (together referred to as the “Group”) and the Group’s interest in associates. The principal activities of the Company and its subsidiaries are as follows:

• Office leasing;• Financial investments;• Integrated investment and construction of infrastructures, industrial zones and urban zones;• Manufacturing of furniture for offices, households and schools;• Timber production and processing;• Manufacturing of mechanical products (mainly construction machinery, office desks, chairs and

cabinets);• Leasing machines, equipment and motor vehicles;• Dealing in automobiles, motorbikes, equipment, parts for transport and mining sectors, transport

vehicles;• Production and trading of construction and mining machineries;• Dealing in electrical, electronic appliances, optical and medical equipment;• Production, trading, assembly, installation, repair and maintenance of electrical, electronic,

electrical refrigeration and civil electrical appliances and air-conditioners;• Production and trading of raw materials and plastic products;• Advertisement;• Civil and industrial construction;• Exploitation of sand, stones and gravel;• Production, trading and assembly of furniture products and construction equipment;• Real estate trading (excluding land price consultancy);• Domestic and foreign investment advisory (excluding law advisory);• Production and trading of non-ferrous metal and non-ferrous metal scraps;• Trading and export and import of steel and supplies for steel making and rolling;• Production of rolled steel products and roofing sheets;• Exploitation of metal ores;• Trading metals, metal ores, iron and steel scraps;• Making cast iron and steel, and casting cast iron, iron and steel; • Production of plated and non-plated steel tubes and inox tubes;

• Rendering sports and gymnastics services (training, competition organisation, athlete transfer);

• Building and renting sports practice ground and competition ground; and• Entrusted export-import activities.


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s; p

rodu

cing

, tra

ding

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e co

al.

99.9

9%99

.99%

8A

n Th

ong

Min

eral

Inve

stm

ent J

SCEx

plor

ing,

exp

loiti

ng, p

roce

ssin

g, im

porti

ng a

nd e

xpor

ting

min

eral

s (m

ainl

y iro

n or

es).

99.9

6%99

.96%

9G

olde

n G

ain

Vie

tnam

JSC

Rea

l est

ate

tradi

ng.

84.9

5%84

.95%

10H

oa P

hat E

nerg

y JS

CPr

oduc

ing

and

who

lesa

ling

coke

coa

l, ex

ploi

ting

and

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ctin

g co

al;

prod

ucin

g re

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pet

role

um p

rodu

cts;

who

lesa

ling

met

als a

nd m

etal

ore

s; a

nd

tradi

ng v

ario

us k

inds

of c

oal.

99.8

9%99

.89%

11H

oa P

hat S

teel

One

Mem

ber C

o., L

td.

Prod

ucin

g st

eel,

iron,

who

lesa

ling

met

als a

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etal

ore

s.10

0%10

0%12

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Pha

t Min

ing

JSC

Expl

oitin

g an

d co

llect

ing

ligni

te; e

xplo

iting

ore

s of i

ron,

alu

min

ium

, oth

er ra

re

ores

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loiti

ng st

one,

sand

, gra

vel,

clay

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duci

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oke

coal

, gyp

sum

, lim

e,

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erro

us m

etal

s and

rare

met

als;

cas

ting

iron

and

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erro

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etal

s.

99.8

0%99

.80%

13N

am G

iang

Min

ing

One

Mem

ber C

o., L

td.(

*)Su

ppor

ting

serv

ices

to m

iner

al a

nd o

ther

ore

s exp

loita

tion.

100%

-

13


Hoa

Pha

t Gro

up J

oint

Sto

ck C

ompa

nyN

otes

to th

e co

nsol

idat

ed fi

nanc

ial s

tate

men

ts fo

r th

e ye

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ded

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ecem

ber

2014

(con

tinue

d)Fo

rm B

09

–D

N/H

N

Ow

ners

hip

and

votin

g ri

ghts

of t

he G

roup

No.

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r 2

-sub

sidi

arie

sPr

inci

pal a

ctiv

ities

31/1

2/20

1431

/12/

2013

Subs

idia

ries

of H

oa P

hat E

quip

men

t & A

cces

sori

es C

o. L

td1

Hoa

Pha

t Min

ing

& C

onst

ruct

ion

Mac

hine

ry

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ufac

turin

g C

o., L

tdPr

oduc

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and

tradi

ng c

onst

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ion

and

min

ing

mac

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s; p

rodu

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en

gine

s and

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.10

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2H

oa P

hat M

echa

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l Man

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and

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0%

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oa P

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teel

Pip

e Co

., Lt

d3

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Pha

t Col

d R

olle

d St

eel C

o., L

tdPr

oduc

ing

of c

old

rolle

d st

eel p

rodu

cts.

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oa P

hat B

inh

Duo

ng S

teel

Pip

e O

ne

Mem

ber C

o., L

tdPr

oduc

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and

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ng v

ario

us k

inds

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teel

pip

es.

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hanh

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yen

Trad

ing

and

Prod

uctio

n C

ompa

ny L

imite

d(*

*)Pr

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and

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ng v

ario

us k

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of s

teel

.99

.86%

-

6H

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a N

ang

Stee

l Pip

e C

o., L

td.(

***)

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d tra

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kin

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f ste

el p

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2%-

Subs

idia

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of H

oa P

hat U

rban

Dev

elop

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t & C

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JSC

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o N

oi A

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pera

tion

Com

pany

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d in

dust

rial c

onst

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free

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or l

ease

hold

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est

ate

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ksho

p an

d of

fice

leas

ing,

inte

grat

ed in

vest

men

t and

con

stru

ctio

n of

in

fras

truct

ure,

cle

an w

ater

trad

ing,

was

te c

olle

ctio

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itatio

n, tr

eatm

ent

and

supp

ly o

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tion

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s.

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oa M

ac In

dust

rial Z

one

Man

agem

ent a

nd

Ope

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n C

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td.

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il an

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rial c

onst

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free

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or l

ease

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est

ate

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ng,

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p an

d of

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ing,

inte

grat

ed in

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t and

con

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ctio

n of

in

fras

truct

ure,

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ater

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ing,

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olle

ctio

n, e

xplo

itatio

n, tr

eatm

ent

and

supp

ly o

f wat

er.

100%

100%

14


Hoa

Pha

t Gro

up J

oint

Sto

ck C

ompa

nyN

otes

to th

e co

nsol

idat

ed fi

nanc

ial s

tate

men

ts fo

r th

e ye

aren

ded

31D

ecem

ber

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(con

tinue

d)Fo

rm B

09

–D

N/H

N

Ow

ners

hip

and

votin

g ri

ghts

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he G

roup

No.

Tier

2 -

subs

idia

ries

Prin

cipa

l act

iviti

es31

/12/

2014

31/1

2/20

13

Subs

idia

ries

of G

olde

n G

ain

Viet

nam

JSC

9H

anoi

Inve

stm

ent a

nd S

ervi

ces J

SCSp

orts

, en

terta

inm

ent

activ

ities

, in

clud

ing

tenn

is,

badm

into

n, b

illia

rds,

swim

min

g, b

ody-

build

ing,

gam

es a

nd re

al e

stat

e tra

ding

.94

.96%

94.9

6%

10H

anoi

Tra

nspo

rtatio

n an

d Tr

adin

g Se

rvic

esJS

CG

oods

tran

spor

t by

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mob

iles,

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r-pro

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ial p

asse

nger

tran

spor

t by

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mob

iles,

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hine

ry a

nd e

quip

men

t rep

air,

dom

estic

trav

el, p

etro

l and

oi

l tra

ding

age

ncy,

tran

spor

t age

ncy

serv

ices

and

aut

omob

iles k

eepi

ng

serv

ices

, off

ice,

war

ehou

se a

nd st

orag

e ya

rd se

rvic

es a

nd re

al e

stat

e tra

ding

.

99.5

7%99

.57%

Subs

idia

ries

of H

oa P

hat S

teel

One

Mem

ber C

o., L

td.

11H

oa P

hat -

Bin

h D

inh

One

Mem

ber L

imite

d Li

abili

ty C

ompa

nyPr

oduc

ing

stee

l, iro

n, w

hole

salin

g m

etal

s and

met

al o

res.

100%

100%

Subs

idia

ries

of H

oa P

hat M

inin

g JS

C12

Hoa

Yen

Min

ing

JSC

Expl

oitin

g an

d pr

oduc

tion

of i

ron,

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xite

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er r

are

ores

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ding

m

etal

and

met

al o

res a

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adin

g m

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7%99

.77%

13D

uc L

ong

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ing

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Expl

orin

g an

d pr

oduc

tion

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ron,

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xite

and

oth

er r

are

ores

; tra

ding

m

etal

and

met

al o

res.

99.9

8%99

.98%

14H

oa P

hat M

itrac

o M

inin

g JS

CEx

plor

ing

and

prod

uctio

n of

iro

n, b

auxi

te a

nd o

ther

rar

e or

es;

tradi

ng

met

al a

nd m

etal

ore

s.98

.42%

63.5

0%

15


Hoa

Pha

t Gro

up J

oint

Sto

ck C

ompa

nyN

otes

to th

e co

nsol

idat

ed fi

nanc

ial s

tate

men

ts fo

r th

e ye

aren

ded

31D

ecem

ber

2014

(con

tinue

d)Fo

rm B

09

–D

N/H

N

Ow

ners

hip

and

votin

g ri

ghts

of t

heG

roup

No.

Ass

ocia

tes

Prin

cipa

l act

iviti

es31

/12/

2014

31/1

2/20

13

1H

oa P

hat –

SSG

Min

ing

JSC

Expl

oitin

g an

d co

llect

ing

ligni

te;

expl

oitin

g no

nfer

rous

ore

s; r

ende

ring

min

ing

supp

ort s

ervi

ces a

nd p

rodu

cing

cok

e, li

me,

gyp

sum

.38

%38

%

2Y

en P

hu In

vest

men

t and

Min

eral

JSC

(***

*)M

inin

g an

d or

es o

f iro

n ex

ploi

ting;

prod

ucin

g co

ke; p

rodu

cing

iron

,ste

el,

expl

oitin

g an

d co

llect

ing

ligni

te, p

eat a

nd b

auxi

te.

-50

%

(*)

This

is a

subs

idia

ry th

at w

as e

stab

lishe

d du

ring

the

year

.(*

*)

This

is a

tier

2 su

bsid

iary

that

was

acq

uire

d du

ring

the

year

.(*

**)

This

is a

tier 2

subs

idia

ryth

at w

as e

stab

lishe

d du

ring

the

year

.(*

***)

This

inve

stm

ent i

n as

soci

ate

was

tran

sfer

red

to a

third

par

ty d

urin

g th

e ye

ar.

As a

t 31

Dec

embe

r 201

4, th

e G

roup

had

10,

565

empl

oyee

s (31

/12/

2013

: 9,7

01 e

mpl

oyee

s).

16


Hoa Phat Group Joint Stock CompanyNotes to the consolidated financial statements for the year ended 31 December 2014(continued)

Form B 09 – DN/HN

2. Basis of preparation

2.1 Statement of complianceThe consolidated financial statements have been prepared in accordance with Vietnamese Accounting Standards, the Vietnamese Accounting System for Enterprises and the relevant statutory requirements applicable to financial reporting.

2.2 Basis of measurementThe consolidated financial statements, except for the consolidated statement of cash flows, are prepared on the accrual basis using the historical cost concept. The consolidated statement of cash flows is prepared using the indirect method.

2.3 Annual accounting periodThe annual accounting period of the Group is from 1 January to 31 December.

2.4 Accounting currencyThe financial statements are prepared and presented in Viet Nam Dong (“VND”).

3. Summary of significant accounting policiesThe following significant accounting policies have been adopted by the Group in the preparation of these consolidated financial statements.

3.1 Basis of consolidation

(a) Business combinationsBusiness combinations are accounted for using the acquisition method as at the acquisition date, which is the date on which control is transferred to the Group. Control exists when the Group has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that presently are exercisable are taken into account.

Under the purchase method, the assets and liabilities of the acquired entity are consolidated using their fair values. Cost of acquisition consists of the aggregate fair value, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Group. Goodwill represents the excess of the cost of acquisition over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of the acquired entity. When the excess is negative, it is recognised immediately in profit or loss. Where fair value is not available, the Group uses net book value based on historical cost concept to account for the net assets and liabilities of the acquired entity based on the Ministry of Finance official guidance letter to the Group.

Transaction costs that the Group incurred in connection with business combinations included any costs directly attributable to the combination, such as professional fees paid to accountants, legal advisers, valuers and other consultants to effect the combination. Transaction costs are capitalised into the cost of business combination. General administrative costs and other costs that cannot be directly attributed to the particular combination being accounted for are not included in the cost of the combination; they are recognized as an expense when incurred.



Form B 09 – DN/HN(b) Subsidiaries

Subsidiaries are entities controlled by the Group. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.

(c) AssociatesAssociates are those entities in which the Group has significant influence, but not control, over the financial and operating policies. Associates are accounted for using the equity method. The consolidated financial statements include the Group’s share of the income and expenses of associates, after adjustments to align the accounting policies with those of the Group, from the date that significant influence until the date that significant influence ceases. When the Group’s share of losses exceeds its interest in an associates, the carrying amount of that interest (including any long-term investments) is reduced to nil and the recognition of further losses is discontinued except to the extent that the Group has an obligation or has made payments on behalf of the associates.

(d) Transactions eliminated on consolidationIntra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. Unrealised gains and losses arising from transactions with associates are eliminated against the investment to the extent of the Group’s interest in the associates

3.2 Foreign currency transactionsMonetary assets and liabilities denominated in currencies other than VND are translated into VND at rates of exchange ruling at the balance sheet date. Transactions in currencies other than VND during the year have been translated into VND at rates of exchange ruling at the transaction dates.

All foreign exchange differences are recorded in the consolidated statement of income, except when they relate to the construction of tangible fixed assets or the translation of foreign currency monetary items during the pre-operating stage of a number of subsidiaries of the Company, in which case they are recorded in the foreign exchange difference account in equity until the subsidiaries commence operations and the tangible fixed assets are put into use. Once the subsidiaries commence operations and the fixed assets are put into use, the related net foreign exchange gains or losses are transferred to the unearned revenue account or the long-term prepayments account. The gains and losses are then amortised on a straight line basis over five years.

Foreign exchange differences are accounted for in accordance with Vietnamese Accounting Standard No. 10 – The effects of changes in foreign exchange rates and Circular 179/2012/TT-BTC dated 24 October 2012 issued by the Ministry of Finance providing regulation on recognition, measurement and treatment of foreign exchange differences by enterprises.

3.3. Cash and cash equivalentsCash comprises cash balances and call deposits. Cash equivalents are short-term highly liquid investments that are readily convertible to known amounts of cash, are subject to an insignificant risk of changes in value, and are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes.

18 87audited consolidated financial statements


Form B 09 – DN/HN3.4 Investments

Investments are stated at cost. An allowance is made for reductions in investment values if market value of the investment falls below cost or if the investee has suffered a loss. The allowance is reversed if the subsequent increase in recoverable amount can be related objectively to an event occurring after the allowance was recognised. An allowance is reversed only to the extent that the investment’s carrying amount does not exceed the carrying amount that has been determined if no allowance had been recognised.

3.5 Accounts receivableTrade and other receivables are stated at cost less allowance for doubtful debts.

Allowance for doubtful debts is established for amount of outstanding receivables at the balance sheet date which are overdue more than 6 months or are doubtful of recovery. Increases and decreases to the allowance for doubtful debts balance are recorded as general and administration expense account in the consolidated statement of income.

3.6 InventoriesInventories are stated at the lower of cost and net realisable value.

Net realisable value is the estimated selling price of inventory items, less the estimated costs of completion and selling expenses.

Allowance for inventories is established for the estimated losses arising due to the impairment of value (through diminution, damage or obsolescence) of inventories owned by the Group, based on appropriate evidences of impairment available at the balance sheet date. Increases and decreases to the allowances for inventories balance are recorded as cost of goods sold account in the consolidated statement of income.

Cost is determined on a weighted average basis and includes all costs incurred in bringing theinventories to their present location and condition.

Manufacturing, trading and production of goods

Cost in the case of finished goods and manufactured work in progress includes raw materials, direct labour and attributable production overheads.

The Group applies the perpetual method of accounting for inventories.

Real estate development for future sales

Cost is determined on a specific identification basis and includes land costs and other related development and infrastructure costs, and other directly attributable costs.



Form B 09 – DN/HN3.7 Tangible fixed assets

(a) CostTangible fixed assets are stated at cost less accumulated depreciation. The initial cost of a tangible fixed asset comprises its purchase price, including import duties and any directly attributable costs of bringing the asset to its working condition for its intended use. Expenditure incurred after tangible fixed assets have been put into operation, such as repair and maintenance, except for overhaul and major maintenance being recorded in long-term prepayments (Note 3.11(c)), is charged to the consolidated statement of income in the year in which the cost is incurred. In situations where it can be clearly demonstrated that the expenditure has resulted in an increase in the future economic benefits expected to be obtained from the use of tangible fixed assets beyond their originally assessed standard of performance, the expenditure is capitalised as an additional cost of tangible fixed assets.

(b) DepreciationDepreciation is computed on a straight-line basis over the estimated useful lives of tangible fixed assets. The estimated useful lives are as follows:

buildings 5 – 50 years office equipment 3 – 12 years machinery and equipment 2 – 25 years motor vehicles 6 – 10 years others 3 – 10 years

3.8 Intangible fixed assets

(a) Land use rightsLand use rights comprise:

those granted by the State for which land use payments are collected;

those acquired in a legitimate transfer; and

rights to use leased land obtained before the effective date of Land Law (2003) for which payments have been made in advance for more than 5 years and supported by land use rightscertificate issued by competent authority.

Land use rights are stated at cost less accumulated amortisation. The initial cost of land use rights comprise the value of the rights as stated in the purchase price and any directly attributable costs incurred in conjunction with securing the land use rights. For land use rights with definite useful lives, amortisation is computed on a straight-line basis over 15 to 46 years. No amortisation is provided for land use rights with indefinite useful lives.

(b) SoftwareCost of acquiring new software, which is not an integral part of the related hardware, is capitalised and treated as an intangible asset. Software cost is amortised on a straight-line basis over 2 to 6 years.



Form B 09 – DN/HN3.9 Investment property

(a) CostInvestment property is stated at cost less accumulated depreciation. The initial cost of an investment property comprises its purchase price, construction cost and any directly attributable expenditures of bringing the property to the condition necessary for it to be capable of operating in the manner intended by management. Expenditure incurred after the investment property has been put into operation, such as repairs and maintenance, is charged to the consolidated statement of income in the year in which the expenditure is incurred. In situations where it can be clearly demonstrated that the expenditure has resulted in future economic benefits in excess of the originally assessed standard of performance of the existing investment property, the expenditure is capitalised as an additional cost of the investment property.

(b) DepreciationDepreciation is computed on a straight-line basis over the estimated useful lives of investment property. The estimated useful lives are as follows:

buildings 5 – 49 years

3.10 Construction in progressConstruction in progress represents the costs of construction and machineries which have not been fully completed or installed. No depreciation is provided for construction in progress during the year of construction and installation.

3.11 Long-term prepayments

(a) Pre-operating expensesPre-operating expenses are recorded in the consolidated statement of income, except for establishment costs and expenditures on training, advertising and promotional activities incurred from the incorporation date to the commercial operation date. These expenses are recognised as long-term prepayments, initially stated at cost, and are amortised on a straight-line basis over 3 years starting from the date of commercial operation.

(b) Tools and suppliesTools and instruments include assets held for use by the Group in the normal course of business whose costs of individual items are less than VND30 million and therefore not qualified for recognition as fixed assets under Circular No. 45/2013/TT-BTC dated 25 April 2013 of the Ministry of Finance which provides guidance on management, use and depreciation of fixed assets (“Circular 45”). Cost of tools and instruments are amortised on a straight-line basis over a period ranging from 2 to 3 years.

(c) Overhaul and major maintenance expensesThese comprise major overhaul and maintenance expenses incurred on a periodical basis during the use of assets. These expenses are initially stated at cost and are amortised to the consolidated statement of income on a straight line basis over 2 to 4 years.



Form B 09 – DN/HN(d) Foreign exchange differences

Realised and unrealised foreign exchange differences in the pre-operating period of some of the Company’s subsidiaries were recorded in the foreign exchange differences account in equity until these subsidiaries commence operations. Then, the foreign exchange losses in the pre-operating period will be transferred to the long-term prepayment account and amortised on a straight-line basis over 5years.

(e) Exploration and evaluation costsExploration and evaluation activity involves the search for mineral resources, the determination of technical feasibility and the assessment of commercial viability of an identified resource.

Exploration and evaluation costs are capitalised as long as the Group’s right of tenure to the area of interest is current and active and significant exploration activities in the area of interest are continuingand there are indicators that future economic benefits will flow to the Group. Exploration and evaluation costs that do not satisfy the above criteria are written off in the year in which they are incurred, except as follows:

At such time as exploration and evaluation procedures have sufficiently progressed to permit the determination of the existence of economically recoverable reserves:

Exploration and evaluation costs that are expected to be recouped by successful development and exploitation of the area are capitalised until commencement of commercial operations and thereafter amortised in the statement of income over the expected commercial duration of the project.

Exploration and evaluation costs in respect of which exploration and evaluation procedures determine that economically recoverable reserves do not exist are written off.

Qualified exploration costs are recognised in the long-term prepayment account at cost. These costs are amortised from the commercial operation date on a straight line basis over the estimated useful lives of respective mines.

(f) Prepaid land costsPrepaid land costs comprise prepaid land lease rentals and other costs incurred in conjunction with securing the use of the leased land. These costs are recognised in the consolidated statement of income on a straight-line basis over the term of the leases.

(g) Site clearance costsSite clearance costs comprise compensation and clearance fee paid by the Group. These expenses are initially stated at cost and amortised on a straight-line basis over the useful lives of land lease period.

(h) Mines road construction and upgrading costsThese comprise the costs for construction and upgrading mine roads which are initially stated at cost and amortised on a straight-line basis over a period of no more than five years.

(i) Revision of estimated useful livesDuring the year, the Group revised the estimated useful lives of several long-term prepayments from a period ranging from 5 to 29 years to a period ranging from 5 to 10 years to more accurately reflect the useful lives of these assets. The effect of the change in the estimated useful lives is to decrease the Group’s consolidated profit by VND117,288 million. The Board of Directors treated this additional costs as a temporary difference for tax purposes to illustrate its caution in calculation and payment of income tax for the year 2014.



Form B 09 – DN/HN3.12 Goodwill

Goodwill arises on the acquisition of subsidiaries and associates. Goodwill is measured at cost less accumulated amortisation. Cost of goodwill represents the excess of the cost of the acquisition over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of the acquirees. If the Group’s interest in the net fair value of the net assets of the acquiree exceeds the purchase price, the surplus will be directly recognised in the consolidated statement of income during the year. Goodwill is amortised on a straight-line basis over a period of no more than 10 years. Inrespect of equity accounted investees, the carrying amount of goodwill is included in the carrying amount of the investment.

During the year, the Board of Directors revalued the benefits that may be brought by the previous investments in subdiaries and associates, and decided to reduce the period for amortisation of goodwill from 10 years to a maximum of 5 years. The effect of this change on the consolidated financial statements for 2014 was to decrease the Group’s consolidated profit by VND40 billion.

3.13 Trade and other payablesTrade and other payables are stated at their cost.

3.14 ProvisionsA provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability.

3.15 Classification of financial instrumentsSolely for the purpose of providing disclosures about the significance of financial instruments to the Group’s financial position and results of operations and the nature and extent of risk arising from financial instruments, the Group classifies its financial instruments as follow:

(a) Financial assets

Financial assets at fair value through profit or loss

A financial asset at fair value through profit or loss is a financial asset that meets either of the following conditions:

It is considered by management as held for trading. A financial asset is considered as held for trading if:

- it is acquired principally for the purpose of selling it in the near term;- there is evidence of a recent pattern of short-term profit-taking; or- a derivative (except for a derivative that is financial guarantee contract or a designated and

effective hedging instrument).

Upon initial recognition, it is designated by the Group as at fair value through profit or loss.



Form B 09 – DN/HNHeld-to-maturity investments

Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and a fixed maturity that the Group has the positive intention and ability to hold to maturity, other than:

those that the Group upon initial recognition designates as at fair value through profit or loss; those that the Group designates as available-for-sale; and those that meet the definition of loans and receivables.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market, other than those:

that the Group intends to sell immediately or in the near term, which are classified as held for trading, and those that the Group on initial recognition designates as at fair value through profit or loss;

that the Group upon initial recognition designates as available-for-sale; or for which the Group may not recover substantially all of its initial investment, other than because

of credit deterioration, which are classified as available-for-sale.

Available-for-sale financial assets

Available-for-sale financial assets are non-derivative financial assets that are designated as available for sale or that are not classified as:

financial assets at fair value through profit or loss; held-to-maturity investments; or loans and receivables.

(b) Financial liabilities

Financial liabilities at fair value through profit or loss

A financial liability at fair value through profit or loss is a financial liability that meets either of the following conditions:

It is considered by management as held for trading. A financial liability is considered as held for trading if:

- it is incurred principally for the purpose of repurchasing it in the near term;- there is evidence of a recent pattern of short-term profit-taking; or- a derivative (except for a derivative that is financial guarantee contract or a designated and

effective hedging instrument).

Upon initial recognition, it is designated by the Group as at fair value through profit or loss.



Form B 09 – DN/HNFinancial liabilities carried at amortised cost

Financial liabilities which are not classified as financial liabilities at fair value through profit or loss are classified as financial liabilities carried at amortised cost.

The above described classification of financial instruments is solely for presentation and disclosure purpose and is not intended to be a description of how the instruments are measured. Accounting policies for measurement of financial instruments are disclosed in other relevant notes.

3.16 Income taxIncome tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognised in the consolidated statement of income except to the extent that it relates to items recognised directly to equity, in which case it is recognised in equity.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.

Deferred tax is provided using the balance sheet method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amounts of assets and liabilities using the tax rates enacted or substantively enacted at the balance sheet date.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

3.17 Revenue and other income

(a) Goods soldRevenue from the sale of goods is recognised in the consolidated statement of income when the significant risks and rewards of ownership have been transferred to the buyer. No revenue is recognised if there are significant uncertainties regarding recovery of the consideration due or the possible return of goods.

(b) Services renderedRevenue from services rendered is recognised in the consolidated statement of income in proportion to the stage of completion of the service at the balance sheet date. The stage of completion is assessed by reference to surveys of work performed. No revenue is recognised if there are significant uncertainties regarding recovery of the consideration due.



Form B 09 – DN/HN(c) Rental income

Rental income from leased property is recognised in the consolidated statement of income on a straight-line basis over the term of the lease. Lease incentives granted are recognised as an integral part of the total rental income.

(d) Sales of apartmentsRevenue from the sale of apartments is recognised in the consolidated statement of income when the significant risks and rewards of ownership have been transferred to the buyer. No revenue is recognised if there are significant uncertainties regarding recovery of the consideration due. The transfer of significant risks and rewards is determined to be at the time of sale or completion and handover of the apartments, whichever is later.

(e) Interest incomeInterest income is recognized on a time proportion basis with reference to the principal outstanding and the applicable interest rate.

(f) Dividend incomeDividend income is recognized when the right to receive dividend is established.

3.18 Operating lease paymentsPayments made under operating leases are recognised in the consolidated statement of income on a straight-line basis over the term of the lease. Lease incentives received are recognised in the consolidated statement of income as an integral part of the total lease expense.

3.19 Borrowing costsBorrowing costs are recognised as an expense in the year in which they are incurred, except where the borrowing costs relate to borrowings in respect of the construction of qualifying assets, in which case the borrowing costs incurred during the year of construction are capitalised as part of the cost of the assets concerned.

3.20 Basic earnings per shareThe Group presents basic earnings per share for its ordinary shares. Basic earning per share is calculated by dividing the profit or loss attributable to the ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the year.

3.21 Related partiesRelated parties include individuals, directly or indirectly, having voting rights that give them significant influence over the Group, the Group’s key management personnel, their close family members, their subsidiaries and associates and the Group’s associates.



Form B 09 – DN/HN4. Segment reporting

A segment is a distinguishable component of the Group that is engaged either in providing related products or services (business segment) or in providing products or services within a particular economic environment (geographical segment), which is subject to risks and rewards that are different from those of other segments. The Group’s primary format for segment reporting is based on business segments. The Group comprises the following main business segments:

• Production and trading of various kinds of steel: refining steel; casting steel, iron; trading and import-export of steel, steel-producing machinery and equipment; production of industrial steel including steel sheet, hot rolled steel, cold rolled steel, steel pipe, steel scrap; production and trading of steel pipes; production of steel string machinery;

• Trading of construction machinery; production and trading of construction equipment and exploitation of medium and small sized metals;

• Manufacturing of furniture and refrigeration products: producing and trading various kinds of interior furniture and refrigerant products;

• Construction and development of real estate: civil construction, industrial construction, trading of real estate under its ownership or lease from others; leasing houses, offices and investing in construction of infrastructure;

• Energy and exploring and exploiting minerals: Exploring, exploiting, refining, processing, import-export of minerals, mainly iron ores; production and wholesales of coke coal, exploiting and collecting fossil coal; producing refined oil products; production, transmission, distribution of electricity; wholesales of metals and metal ores and trading of various kinds of coals; and

• Financial investment (parent entity): Long-term investment in subsidiaries and associates.

The Group did not present geographical segment because the Board of Directors determines that, the Group currently operates in a sole geographical segment which is Vietnam’s territory.


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19,7

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31



Form B 09 – DN/HN

5. Business combinationOn 31 March 2014, Hoa Phat Steel Pipe Co., Ltd., a subsidiary of the Group, received the transfer of 99.86% of the share capital and corresponding voting rights of Chanh Nguyen Trading and Production Company Limited, a company incorporated in Vietnam.

The acquisition had the following effects on the Group’s assets and liabilities on acquisition date:

Recognised value on acquisition of

Chanh Nguyen Trading and Production

Company LimitedVND

Cash 2,434,911,465Short-term investments 1,740,000,000Inventories 20,655,867,164Other current assets 29,839,078,758Fixed assets 13,147,768,106Other long-term assets 148,545,941Short-term liabilities (62,680,209,812)

Net identifiable assets and liabilities 5,285,961,622

The Group’s share in carrying value of net assets of subsidiary at the date of acquisition 5,278,561,276

Goodwill on acquisition 54,111,943,050

Considerations paid 59,390,504,326

Cash acquired (2,434,911,465)

Net cash outflow 56,955,592,861

Based on the official guidance letter from the Ministry of Finance to the Company, when the Company was not able to determine the net fair value of the identifiable assets, liabilities and contingent liabilities of the acquiree, the Company had used the net carrying amounts of the assets and liabilities of the acquiree to determine the goodwill arising from acquisition.

For the period from the acquisition date to 31 December 2014, acquired business contributed revenue of VND45,946 million and profit of VND9,378 million to the Group’s consolidated statement of income.



Form B 09 – DN/HN

6. Cash and cash equivalents31/12/2014

VND31/12/2013

VND

Cash on hand 5,253,004,793 4,268,531,258Cash in banks 477,066,928,012 278,483,558,353Cash in transit 9,629,361,216 11,026,058Cash equivalents 1,534,331,173,684 1,842,559,275,028

2,026,280,467,705 2,125,322,390,697

7. Accounts receivable - short-term and long-termOther short-term receivable comprises:

31/12/2014VND

31/12/2013VND

Lost goods awaiting compensation 23,560,742,480 -Advance for land clearance - 8,433,878,502Interest receivables 14,123,482,004 11,299,623,837Materials issued for outside processing 629,364,400 1,110,597,665Other receivables 17,647,550,348 13,934,886,765

55,961,139,232 34,778,986,769

Other long-term receivables comprised:

31/12/2014VND

31/12/2013VND

Entrusted investment received (*) - 448,979,590,000Other receivables - 779,648,679

- 449,759,238,679

(*) As at 31 December 2013, the entrusted investment represents the amount the Group invested in Vinaconex-Viettel Urban Development Joint Stock Company based on the entrustment agreement with Hoa Phat A Chau Real Estate Joint Stock Company. This amount is corresponding to the amount of entrusted investment being recorded in other long-term liabilities as at 31 December 2013 (Note 21). The Group reassessed that this investment was not an asset of the Group. Allresponsibilities, risks, damages as well as profitability rates associated with this investment were not attributable to the Group. Therefore, it was presented as an off-balance sheet account.



Form B 09 – DN/HN

8. Inventories31/12/2014

VND31/12/2013

VND

Goods in transit 585,168,710,926 886,720,639,117Raw materials 3,314,175,008,838 2,383,614,274,577Tools and supplies 554,482,318,301 250,397,310,728Work in progress 382,083,095,714 2,724,837,093,296Finished goods 2,590,754,929,766 1,760,046,969,711Merchandise inventories 46,774,019,099 55,818,315,348Goods on consignment 127,672,221,874 3,420,286,674

7,601,110,304,518 8,064,854,889,451

Allowance for inventories (214,721,256,353) (35,279,600,260)

7,386,389,048,165 8,029,575,289,191

Movements in the allowance for inventories during the year were as follows:

2014VND

2013VND

Opening balance 35,279,600,260 25,919,270,311Increase in allowance during the year 197,092,924,400 34,122,029,819Written back (17,651,268,307) (24,761,699,870)

Closing balance 214,721,256,353 35,279,600,260

At 31 December 2014, inventories with a carrying value of VND2,629,128 million (31/12/2013:VND3,151,854 million) were pledged with banks as security for loans granted to the Group.

Included in inventories at 31 December 2014 was VND1,671,335 million (31/12/2013: VND137,251 million) of inventories carried at net realisable value

9. Taxes and other receivables from State Treasury31/12/2014

VND31/12/2013

VND

Corporate income tax overpaid 11,702,554,613 14,086,226,322Corporate income tax prepaid to the State Treasury for the advances from the customers buying apartments - 19,975,680,534Other receivables from State Treasury 1,200,269,655 82,722,934

12,902,824,268 34,144,629,790


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Form B 09 – DN/HN

11. Intangible fixed assetsLand use rights Software Others Total

VND VND VND VNDCostOpening balance 211,552,776,453 2,996,746,855 1,367,576,332 215,917,099,640Additions - 181,000,000 - 181,000,000Acquisition of a tier 2 subsidiary (Note 5) 472,860,000 - - 472,860,000Disposals and written off (2,872,860,000) - - (2,872,860,000)Transfer to long-term prepayments (*) (2,986,951,211) - - (2,986,951,211)Other movements - (75,000,000) - (75,000,000)

Closing balance 206,165,825,242 3,102,746,855 1,367,576,332 210,636,148,429

Accumulated amortisation

Opening balance 23,905,640,318 1,871,197,193 1,076,647,026 26,853,484,537Charge for the year 4,165,708,793 697,851,765 151,471,596 5,015,032,154Disposals and written off (320,148,116) - - (320,148,116)Transfer to long-term prepayments (*) (1,002,762,218) - - (1,002,762,218)Other movements - (75,000,000) - (75,000,000)

Closing balance 26,748,438,777 2,494,048,958 1,228,118,622 30,470,606,357

Net book valueOpening balance 187,647,136,135 1,125,549,662 290,929,306 189,063,615,103Closing balance 179,417,386,465 608,697,897 139,457,710 180,165,542,072

(*) The reclassification represents net book value of land use rights from long term land lease contracts obtained after 1 July 2004 (the effective date of Land Law 2003) for which the payments were made in full in accordance with Circular 45. These land use rights are reclassified to Long-term Prepayments (Note 15).

Included in intangible fixed assets were assets costing VND881 million which were fully amortised as at 31 December 2014 (31/12/2013: VND365 million), but which are still in use.

At 31 December 2014, intangible fixed assets with a carrying value of VND80,004 million (31/12/2013: VND96,265 million) were pledged with banks as security for loans granted to the Group.



Form B 09 – DN/HN

12. Construction in progress2014VND

2013VND

Opening balance 133,570,569,419 2,545,104,717,735Additions 936,923,818,108 2,948,310,857,967Disposal of a tier 2 subsidiary - (104,523,432,005)Acquisition of a tier 2 subsidiary (Note 5) 1,688,679,995 -Transfer to tangible fixed assets (614,905,972,027) (5,207,190,776,690)Transfer to intangible fixed assets - (1,267,660,800)Transfer to investment property (5,427,290,909) -Transfer to long-term prepayments (14,828,352,470) (30,392,219,720)Transfer to short-term prepayments (1,044,634,617) (8,824,912,067)Transfer to inventories - (5,282,408,650)Disposals (8,288,758,922) -Others 1,784,098,411 (2,363,596,351)

Closing balance 429,472,156,988 133,570,569,419

Major constructions in progress were as follows:

31/12/2014VND

31/12/2013VND

Steel billet factory No. 1 expansion project 75,052,000 44,999,800,849Mould factory and swivel chair plant expansion project - 44,753,315,330Steel billet factory No. 2 38,223,102,752 -Iron refining factory 83,551,944,552 -Ore sintering plant 16,978,885,135 -Additional site clearance costs 73,368,519,432 -Miscellaneous construction in progress materials and uninstalled equipment and machineries

79,559,496,782 -

Cladding plant project 27,041,919,136 -Refrigerator factory 15,861,489,223 -Strip cladding line 49,191,251,977Other projects 45,620,495,999 43,817,453,240

429,472,156,988 133,570,569,419

During the year, borrowing costs capitalised into construction in progress amounting to VND2,484million (2013: VND152,512 million).



Form B 09 – DN/HN

13. Investment propertyBuildings Land use rights Total

VND VND VND

CostOpening balance 88,066,912,353 - 88,066,912,353Additions 1,967,660,365 - 1,967,660,365Transfer from work in progress 121,203,766,400 15,780,994,600 136,984,761,000Transfer from construction in progress 5,427,290,909 - 5,427,290,909

Closing balance 216,665,630,027 15,780,994,600 232,446,624,627

Accumulated depreciation

Opening balance 26,064,617,589 - 26,064,617,589Charge for the year 9,038,243,107 - 9,038,243,107

Closing balance 35,102,860,696 - 35,102,860,696

Net book value

Opening balance 62,002,294,764 - 62,002,294,764Closing balance 181,562,769,331 15,780,994,600 197,343,763,931

Investment property represents the Group’s buildings including the workshops and factories for rent in Pho Noi A Industrial Park, Giai Pham Commune, Yen My District, Hung Yen Province, Vietnam,certain floors for rent of the buildings at 257 Giai Phong Street, Hai Ba Trung District, Hanoi, Vietnamand in the Mandarin Garden Project in Hoang Minh Giam Street, Cau Giay District, Hanoi, Vietnam.

Investment property represents land use rights related to the Mandarin Garden Project. As the land use rights had an indefinite term, the Group did not provide depreciation charges.

At the reporting date, the fair value of the Group’s investment property has not been determined as there is no active market for such property.

14. Financial investments

14.1. Short-term investmentsShort-term investments comprised term deposits with terms ranging from 6 months to 1 year placed at financial institutions, and with interest rates ranging from 4.2% to 8.2% (2013: 6.5% to 8%) per annum.



Form B 09 – DN/HN

14.2. Long term investments

31/12/2014 31/12/2013VND VND

Investments in associates (*) 3,997,137,449 5,553,170,441Other long-term investments (**) 57,187,691,074 15,702,128,365

61,184,828,523 21,255,298,806

(*) Details of long-term investments in associates are as follows:

31/12/2014 31/12/2013VND VND

Yen Phu Investment and Mineral JSC - 1,470,784,883Hoa Phat - SSG Mining JSC 3,997,137,449 4,082,385,558

3,997,137,449 5,553,170,441

Details of movements of long-term investments in associates as follows:

31/12/2014 31/12/2013VND VND

Opening balance 5,553,170,441 5,809,369,255Share of losses in associates (171,255,307) (256,198,814)Disposal of an associate (1,384,777,685) -

3,997,137,449 5,553,170,441

(**) Details of other long-term investments are as follows:

31/12/2014 31/12/2013VND VND

Viet Ha Brewery JSC (***) 15,000,000,000 15,000,000,000Bac Ha Noi Urban Development JSC (***) 700,000,000 700,000,000Term deposits (****) 41,485,562,709 -Others 2,128,365 2,128,365

57,187,691,074 15,702,128,365

(***) These represent long-term equity investments with the percentage of equity owned less than 20%.

(****) These represent term deposits with a term of 13 months placed at financial institutions, and with interest rates ranging from 6.2% to 7.7% per annum.


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enan

ceex

pens

es

Fore

ign

exch

ange

di

ffere

nces

Expl

orat

ion

and

eval

uatio

n co

stsPr

epai

d la

nd co

stsSi

te cl

eara

nce

costs

Min

es ro

ad

cons

truc

tion

and

upgr

adin

g co

stsO

ther

sTo

tal

VND

VND

VND

VND

VND

VND

VND

VND

VND

VND

Ope

ning

bal

ance

816,

486,

919

69,8

62,6

38,0

623,

935,

359,

153

14,9

72,0

21,7

4644

,480

,267

,038

55,9

82,5

09,7

4441

,852

,214

,494

72,8

50,8

73,1

4021

,676

,162

,792

326,

428,

533,

088

Addi

tions

-54

,500

,048

,979

249,

814,

918,

467

--

80,2

00,0

00,0

00-

18,8

95,2

70,3

1740

3,41

0,23

7,76

3Tr

ansf

er fr

om ta

ngib

le fix

ed

asse

ts-

--

--

--

1,09

0,38

1,22

0-

1,09

0,38

1,22

0Tr

ansf

er fr

om in

tang

ible

fixed

asse

ts(*

)-

--

--

1,98

4,18

8,99

3-

--

1,98

4,18

8,99

3Tr

ansf

er fr

om co

nstru

ctio

n in

pr

ogre

ss-

3,60

6,53

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7-

--

--

9,14

6,29

4,00

72,

075,

527,

976

14,8

28,3

52,4

70Ac

quisi

tion

of a

tier 2

su

bsid

iary

(Not

e5)

-14

8,54

5,94

1-

--

--

--

148,

545,

941

Recl

assif

icat

ions

1,91

9,19

3,62

9(1

5,92

4,22

7,82

3)23

,380

,770

,141

--

-(8

,476

,266

,129

)-

(899

,469

,818

)-

Tran

sfer

to lo

ng-te

rm se

curit

y de

posit

s-

--

--

--

-(3

,529

,667

,622

)(3

,529

,667

,622

)Am

ortis

atio

n fo

r the

yea

r(2

,735

,680

,548

)(5

2,92

4,25

5,24

0)(3

8,66

1,89

7,58

1)(9

,702

,717

,558

)(4

4,48

0,26

7,03

8)(3

,512

,772

,357

)(8

,148

,851

,662

)(8

3,08

7,54

8,36

7)(1

7,78

9,16

4,43

3)(2

61,0

43,1

54,7

84)

Disp

osal

s and

writ

ten

off

-(9

8,68

7,16

6)-

--

--

--

(98,

687,

166)

Clos

ing

bala

nce

-59

,170

,593

,240

238,

469,

150,

180

5,26

9,30

4,18

8-

134,

653,

926,

380

25,2

27,0

96,7

03-

20,4

28,6

59,2

1248

3,21

8,72

9,90

3

(*)

Recl

assif

icat

ion

from

inta

ngib

le fi

xed

asse

tsre

pres

ents

the

net b

ook

valu

e of

land

use

righ

ts fro

m lo

ng te

rm la

nd le

ase

cont

ract

s ob

tain

ed a

fter 1

Jul

y 20

04 in

ac

cord

ance

with

Circ

ular

45.

The

se as

sets

wer

e rec

lass

ified

from

inta

ngib

le fi

xed

asse

ts du

ring

the y

ear (

Not

e 11)

.

At 3

1 D

ecem

ber 2

014,

long

-term

pre

paym

ents

with

a ca

rryin

g va

lue

of V

ND

37,6

61m

illio

n (3

1/12

/201

3: V

ND

38,9

55m

illio

n) w

ere

pled

ged

with

ban

ks a

s sec

urity

for

loan

s gra

nted

to th

e Gro

up.

40



Form B 09 – DN/HN

16. Recognised deferred tax assetsDeferred tax assets were recognised in respect of the following items:

31/12/2014 31/12/2013VND VND

Accrued expenses 10,705,727,819 11,110,638,686Unrealised profits arising on the intra-group sales of inventories and fixed assets 38,299,108,599 43,114,983,133Unrealised foreign exchange losses 3,060,612,456 119,184,039

52,065,448,874 54,344,805,858


Hoa

Pha

t Gro

up J

oint

Sto

ck C

ompa

nyN

otes

to th

e con

solid

ated

fina

ncia

l sta

tem

ents

for t

he y

eare

nded

31

Dec

embe

r 201

4(c

ontin

ued)

Form

B 0

9–

DN

/HN

17.

Goo

dwill

An

Thon

g M

iner

al

Inve

stm

ent J

SCH

oa P

hat

Ener

gy J

SCG

olde

n G

ain

Vie

tnam

JSC

Hoa

Pha

t M

inin

g JS

C

Han

oi

Inve

stm

ent

and

Serv

ice

JSC

Han

oiTr

ansp

orta

tion

and

trad

ing

serv

ices

JSC

V

iet P

acki

ng

Co.

, Ltd

. D

uc L

ong

Min

ing

JSC

H

oa Y

en

Min

ing

JSC

Cha

nh N

guye

n Tr

adin

g an

d Pr

oduc

tion

Com

pany

Li

mite

dTo

tal

VN

DV

ND

VN

DV

ND

VN

DV

ND

VN

DV

ND

VN

DV

ND

VN

DC

ost

Ope

ning

bal

ance

350,

232,

527,

609

206,

244,

396,

684

355,

059,

967,

828

34,0

14,6

18,2

0374

,526

,572

,949

89,4

96,1

14,2

9629

,824

,917

,043

88,3

14,0

41,2

922,

783,

778,

959

-1,

230,

496,

934,

863

Good

will

from

bus

ines

s co

mbi

natio

n-

--

--

--

--

54,1

11,9

43,0

50

54,1

11,9

43,0

50

Clos

ing

bala

nce

350,

232,

527,

609

206,

244,

396,

684

355,

059,

967,

828

34,0

14,6

18,2

0374

,526

,572

,949

89,4

96,1

14,2

9629

,824

,917

,043

88,3

14,0

41,2

922,

783,

778,

959

54,1

11,9

43,0

50

1,28

4,60

8,87

7,91

3

Acc

umul

ated

am

ortis

atio

n

Ope

ning

bal

ance

160,

523,

241,

021

73,9

04,2

42,1

4427

8,45

8,17

7,53

18,

895,

222,

935

37,1

11,4

49,5

7532

,349

,301

,436

24,3

57,0

15,5

9341

,322

,220

,692

719,

142,

898

-65

7,64

0,01

3,82

5Am

ortis

atio

n fo

r the

yea

r35

,023

,253

,560

20

,624

,439

,668

76

,601

,790

,297

3,

401,

461,

820

12

,471

,707

,791

19

,048

,937

,620

5,

467,

901,

450

46

,991

,820

,600

2,

064,

636,

061

23

,190

,832

,734

24

4,88

6,78

1,60

1

Clos

ing

bala

nce

195,

546,

494,

581

94

,528

,681

,812

35

5,05

9,96

7,82

8

12,2

96,6

84,7

55

49,5

83,1

57,3

66

51,3

98,2

39,0

56

29,8

24,9

17,0

43

88,3

14,0

41,2

92

2,78

3,77

8,95

9

23,1

90,8

32,7

34

902,

526,

795,

426

Net

boo

k va

lue

Ope

ning

bal

ance

189,

709,

286,

588

132,

340,

154,

540

76,6

01,7

90,2

9725

,119

,395

,268

37,4

15,1

23,3

7457

,146

,812

,860

5,46

7,90

1,45

046

,991

,820

,600

2,06

4,63

6,06

1-

572,

856,

921,

038

Clos

ing

bala

nce

154,

686,

033,

028

11

1,71

5,71

4,87

2

-21

,717

,933

,448

24

,943

,415

,583

38

,097

,875

,240

-

--

30,9

21,1

10,3

16

382,

082,

082,

487

42



Form B 09 – DN/HN

18. Short-term borrowings31/12/2014

VND31/12/2013

VND

Short-term borrowings 5,515,438,574,744 5,523,878,392,658Current portion of long-term borrowings (Note 24) 221,544,862,065 219,681,425,090

5,736,983,436,809 5,743,559,817,748

At 31 December 2014, short-term borrowings include borrowings in VND and USD with carrying amounts of VND1,173,324 million and VND4,342,115 million (31/12/2013: VND4,812,292 million and VND711,587 million), respectively.

At 31 December 2014, the short-term borrowings in VND and USD with the carrying amounts of VND1,003,014 million and VND3,554,204 million (31/12/2013: VND4,486,590 million and VND399,663 million), respectively, are secured by certain inventories, trade receivables and fixed assets of the Group and a number of Hoa Phat Group Joint Stock Company (“HPG”) shares owned by a number of the members of the Board of Management of the Company.

The remaining short-term borrowings were unsecured.

The borrowings denominated in VND and USD bore interest at rates ranging from 3.5% to 6.5%(2013: 4% to 9.5%) per annum and 1.4% to 4% (2013: 1.6% to 6%) per annum, respectively during the year.

19. Taxes payable to State Treasury31/12/2014

VND31/12/2013

VND

Value added tax 62,522,514,742 31,168,739,243Special consumption tax 2,619,285,971 2,150,007,216Import-export tax - 41,473,189Corporate income tax 231,205,884,141 315,239,777,566Corporate income tax temporarily calculated on the progress payments from customers 186,503,400 3,769,734,413Personal income tax 1,084,181,596 821,584,289Natural resource taxes 5,504,672,313 8,667,249,873Land rental 136,419,167,478 11,313,731,067Traffic charges 21,139,062,856 9,687,145,256Other taxes 3,019,542,227 4,993,654,347

463,700,814,724 387,853,096,459



Form B 09 – DN/HN

20. Accrued expenses31/12/2014

VND31/12/2013

VND

Payables to contractors 14,337,625,015 240,573,720,111Interest expense 51,571,875,622 24,902,187,906Hoa Mac Industrial Zone construction expense 12,860,214,326 18,252,745,742Pho Noi A Industrial Zone construction expense 37,587,324,593 22,383,303,206Electricity expense 12,727,993,710 9,180,712,054Service fees 175,997,075 1,363,626,166Promotion expense 15,807,317,000 17,090,615,414Guarantee expenses 1,732,775,389 1,903,451,185Salaries and bonuses 1,920,099,724 2,117,875,473Transportation cost 5,068,626,033 3,065,411,255Geological exploration information fee 7,664,921,510 -Mineral mining right fees 28,472,068,231 -Environmental restoration expense 4,417,769,085 -Others 10,400,605,591 4,613,981,700

204,745,212,904 345,447,630,212

21. Other payablesOther short-term payables comprised:

31/12/2014VND

31/12/2013VND

Unearned revenue 31,661,469,226 74,709,180Temporarily received goods - 24,923,444,550Payable to RHI Retractories Asia-Pacific PTE 12,433,066,383 11,983,252,776Payable to Golden Gain Enterprises JSC 3,756,425,917 3,756,425,917Dividends payable 942,334,000 29,507,020,000Short-term deposits and collaterals received 24,350,261,964 24,861,007,010Sales discounts 39,760,742,486 26,375,446,235Trade union fee, social and health insurance 5,364,206,004 2,819,340,463Interest expense 18,844,445 1,749,650,241Progress payments from customers - 1,881,758,028,828Borrowed goods 1,452,873,856 2,007,405,782Surplus of assets awaiting resolution 821,177,009 344,718,671 Others 13,603,771,830 35,661,834,269

134,165,173,120 2,045,822,283,922



Form B 09 – DN/HN

Other long-term liabilities comprised:

31/12/2014VND

31/12/2013VND

Entrusted investment received (**) - 448,979,590,000Apartment maintenance fund 80,112,371,674 39,803,572,545Other payables 15,956,334,290 26,147,529,105

96,068,705,964 514,930,691,650

(**) As at 31 December 2013, the entrusted investment represents the amount the Group received the entrusted investment from Hoa Phat A Chau Real Estate Joint Stock Company to invest in Vinaconex-Viettel Urban Development Joint Stock Company. The Group reassessed that this investment was not an asset of the Group. All responsibilities, risks, damages as well as profitability rates associated with this investment were not attributable to the Group. Therefore, it was presented as an off-balance sheet account (Note 7).

22. Provision for warranties2014VND

Opening balance 13,212,673,156Provision made during the year 6,593,879,615Provision used during the year (104,756,137)Provision reversed during the year (2,530,622,935)

Closing balance 17,171,173,699

The provision for warranties relates mainly to goods sold and services rendered during the years ended 31 December 2014 and 31 December 2013. The provision is based on estimates derived from historical warranty data associated with similar products and services.



Form B 09 – DN/HN

23. Bonus and welfare fund This fund is established by appropriating from retained profits as approved by the General Meeting of Shareholders. This fund is used to pay bonus and welfare to the Company’s and its subsidiaries’ Board of Management, Board of Directors and employees in accordance with the Group’s bonus and welfare policies. Movements of bonus and welfare fund during the year were as follows:

2014VND

2013VND

Opening balance 90,863,645,308 48,353,389,704Appropriation 219,220,272,122 114,372,976,377Utilisation (95,513,948,065) (71,862,720,773)

Closing balance 214,569,969,365 90,863,645,308

24. Long-term borrowings31/12/2014

VND31/12/2013

VND

Long-term borrowings 1,232,408,614,216 2,051,505,031,426Repayable within twelve months (Note 18) (221,544,862,065) (219,681,425,090)

Repayable after twelve months 1,010,863,752,151 1,831,823,606,336



Form B 09 – DN/HN

Terms and conditions of outstanding long-term borrowings were as follows:

CurrencyAnnual interest

rate (%)Year of

maturity31/12/2014

VND31/12/2013

VND

BIDV (a) VND 10.5 - 11.5 2020 577,072,326,185 714,021,685,457VDB (a) VND 9.6 2026 - 255,561,278,592Techcombank (a) USD 4.25 - 4.5 2014 - 16,447,082,225Vietcombank (a) VND 10.5 - 11.5 2015 - 10,000,000,000Indovina Bank (a) VND/

USD9.7 - 10.5/4.7 - 5.5

2014 - 56,505,291,803

ANZ (a) VND 10.95 - 11.25 2016 - 156,205,872,508ANZ (a) USD 4.5 - 4.73 2016 14,431,078,231 25,468,958,213Vietinbank (a) VND 10 - 11.5 2017 40,905,209,800 367,294,862,628Borrowings from individuals (b)

VND 9.6 - 12 2015 600,000,000,000 450,000,000,000

1,232,408,614,216 2,051,505,031,426

(a) The long-term bank borrowings are secured by certain inventories, fixed assets and long-term prepayments of the Group. In addition, some of these long-term borrowings are also secured bysome HPG shares, land use rights and assets of a subsidiary to be formed in the future, a real estate of a member of the Board of Management of the Company and the mining rights of a subsidiary and all machineries, equipment and plants to be formed in the future at these mines.

(b) The borrowings from individuals are unsecured.


Hoa

Pha

t Gro

up J

oint

Sto

ck C

ompa

nyN

otes

to th

e co

nsol

idat

ed fi

nanc

ial s

tate

men

ts fo

r the

yea

ren

ded

31D

ecem

ber 2

014

(con

tinue

d)Fo

rm B

09

–D

N/H

N

25.

Cha

nges

in o

wne

rs’ e

quity

Shar

e ca

pita

lV

ND

Cap

ital s

urpl

usV

ND

Fore

ign

exc

hang

e di

ffere

nces

VN

D

Fina

ncia

lre

serv

eV

ND

Ret

aine

d pr

ofits

V

ND

Tota

l V

ND

Bala

nce

at 1

Jan

uary

201

3 4,

190,

525,

330,

000

2,20

7,35

0,81

7,06

84,

421,

231,

105

290,

114,

305,

696

1,39

2,72

3,43

0,94

08,

085,

135,

114,

809

Net

pro

fit fo

r the

yea

r -

--

-1,

954,

187,

537,

863

1,95

4,18

7,53

7,86

3D

ivid

ends

--

--

(419

,052

,533

,000

)(4

19,0

52,5

33,0

00)

App

ropr

iatio

n to

fina

ncia

l res

erve

--

-16

9,21

5,67

4,10

5(1

69,2

15,6

74,1

05)

-A

ppro

pria

tion

to b

onus

and

wel

fare

fund

s-

--

-(1

14,3

72,9

76,3

77)

(114

,372

,976

,377

)Re

mun

erat

ion

for M

embe

rs o

f Sup

ervi

sory

Boar

d an

d Bo

ard

of M

anag

emen

t -

--

-(2

,556

,000

,000

)(2

,556

,000

,000

)O

ther

mov

emen

ts-

-(4

,421

,231

,105

)(2

49,7

82,3

23)

1,65

7,12

4,55

0(3

,013

,888

,878

)

Bala

nce

at 1

Jan

uary

201

4 4,

190,

525,

330,

000

2,20

7,35

0,81

7,06

8-

459,

080,

197,

478

2,64

3,37

0,90

9,87

19,

500,

327,

254,

417

Net

pro

fit fo

r the

yea

r -

--

-3,

144,

252,

845,

971

3,

144,

252,

845,

971

Pa

ymen

t of d

ivid

end

in th

e fo

rm o

f sha

res

(Not

e 27

)62

8,55

6,42

0,00

0

--

-(6

28,5

56,4

20,0

00)

-

Div

iden

ds (N

ote

27)

--

--

(628

,578

,799

,500

) (6

28,5

78,7

99,5

00)

App

ropr

iatio

n to

fina

ncia

l res

erve

--

-21

5,70

3,43

5,44

3

(215

,703

,435

,443

) -

App

ropr

iatio

n to

bon

us a

ndw

elfa

re fu

nds

--

--

(219

,220

,272

,122

) (2

19,2

20,2

72,1

22)

Rem

uner

atio

n fo

r Mem

bers

of S

uper

viso

ryBo

ard

--

--

(50,

000,

000)

(50,

000,

000)

Oth

er m

ovem

ents

--

--

(747

,002

,410

) (7

47,0

02,4

10)

Bala

nce

at 3

1 D

ecem

ber

2014

4,81

9,08

1,75

0,00

0

2,20

7,35

0,81

7,06

8-

674,

783,

632,

921

4,

094,

767,

826,

367

11

,795

,984

,026

,356

48



Form B 09 – DN/HN

26. Share capitalThe Company’s authorised and issued share capitals are:

31/12/2014 31/12/2013Number of

shares VNDNumber of

shares VND

Authorised share capital 481,908,175 4,819,081,750,000 419,052,533 4,190,525,330,000

Issued share capitalOrdinary shares 481,908,175 4,819,081,750,000 419,052,533 4,190,525,330,000

Shares in circulationOrdinary shares 481,908,175 4,819,081,750,000 419,052,533 4,190,525,330,000

All ordinary shares have a par value of VND10,000 per share. Each share is entitled to one vote at meetings of the Company. Shareholders are entitled to receive dividend as declared from time to time. All ordinary shares are ranked equally with regard to the Company’s residual assets.

Movements in shares in circulation during the year were as follows:

2014 2013Number of

sharesPar value

VNDNumber of

sharesPar value

VND

Balance at the beginning of the year 419,052,533 4,190,525,330,000 419,052,533 4,190,525,330,000

Payment of dividend in the form of shares 62,855,642 628,556,420,000 - -

Balance at the end of the year 481,908,175 4,819,081,750,000 419,052,533 4,190,525,330,000

27. DividendsOn 2 April 2014, the Company’s Board of Management passed the detailed resolution on the distribution of the 2013 dividends to the shareholders by cash at the rate of 15% of the par value amounting to VND628,579 million and 15% in the form of shares amounting to VND628,556 million. These dividend payment schemes were approved by the General Meeting of Shareholders on 28 March 2014 and already paid during the year.

28. Financial reserveEvery year, Hoa Phat Group Joint Stock Company and its subsidiaries appropriated their net profit after tax with rate not exceeding 5% of net profit after tax and the total must not exceed 10% of share capital of each company.



Form B 09 – DN/HN29. Total revenue

Total revenue represents the gross value of goods sold and services rendered exclusive of value added tax. Net sales comprised:

2014VND

2013VND

Total revenue Sales of finished goods 22,949,841,382,826 17,564,294,359,178 Services rendered 217,137,284,050 264,267,154,127 Land rental 116,571,864,216 72,593,851,920 Investment property rental 2,332,487,033 - Sales of real estate 2,565,933,440,000 1,299,078,812,857

25,851,816,458,125 19,200,234,178,082

Less sales deductions Sales discounts 281,303,344,443 200,412,506,403 Sales allowances 236,911,347 767,780,830 Sales returns 18,234,547,660 38,932,293,233 Special sales taxes 23,952,427,729 18,646,201,132 Export duties 2,740,404,233 7,183,245,953

326,467,635,412 265,942,027,551

Net sales 25,525,348,822,713 18,934,292,150,531

30. Cost of sales2014VND

2013VND

Finished goods sold 8,651,521,438,051 8,473,421,172,978Merchandise goods sold 9,670,359,040,859 5,924,836,990,217Services provided 150,960,358,144 188,878,344,199Land rental 79,036,864,214 35,183,000,651Investment property rental 2,293,920,373 -Sales of real estate 1,604,733,261,945 1,018,860,798,210Allowance for inventories 179,441,656,093 9,360,329,949

20,338,346,539,679 15,650,540,636,204



Form B 09 – DN/HN31. Doanh thu hoạt động tài chính

2014VND

2013VND

Interest income from deposits and loans 110,130,305,664 104,575,514,366Realised foreign exchange gains 49,742,769,102 28,502,845,950Unrealised foreign exchange gains 239,451,691 297,821,748Gain from disposal of a tier 2 subsidiary - 142,728,081,604Gain from disposal of an associate 115,222,315 -Other financial income 60,030,555 174,355,325

160,287,779,327 276,278,618,993

32. Financial expenses2014VND

2013VND

Interest expense 350,628,944,467 370,947,849,826Payment discounts 13,132,259,311 10,991,021,005Realised foreign exchange losses 112,552,603,047 83,009,497,041Unrealised foreign exchange losses 82,788,853,465 10,053,130,438Commission fee paid to a third party relating to the disposal of a tier 2 subsidiary - 42,247,074,304Others 4,731,570,789 11,160,331,344

563,834,231,079 528,408,903,958

33. Other income2014VND

2013VND

Proceeds from disposals of fixed assets 21,687,699,513 11,605,368,430Income from sales of electricity, water and rendering services 200,134,101,488 137,657,560,272Compensation received from other parties 10,943,678,423 1,337,297,969Negative goodwill on additional purchase ofshares of a subsidiary - 36,550,392,151Receipt of financial support from World Bank 16,162,580,000 -Others 26,672,264,987 11,953,628,675

275,600,324,411 199,104,247,497



Form B 09 – DN/HN34. Other expenses

2014VND

2013VND

Net book value of disposed and written off fixed assets 108,136,580,904 13,289,515,039Costs of electricity, water sold and services rendered 197,570,300,053 135,129,274,388Compensation paid and payables to others 5,845,257,706 4,354,203,398Other expenses 4,509,898,093 13,464,318,578

316,062,036,756 166,237,311,403

35. Income tax

35.1 Recognised in the consolidated statement of income2014VND

2013VND

Current tax expenseCurrent year 509,079,694,809 387,541,030,040Under provision in prior years 8,036,641,002 2,642,230,559

517,116,335,811 390,183,260,599

Deferred tax expense/(benefit)

Origination and reversal of temporary differences 2,189,802,417 (6,214,468,936)

Income tax expense 519,306,138,228 383,968,791,663



Form B 09 – DN/HN

35.2 Current income tax2014VND

2013VND

Profit before tax 3,769,520,728,432 2,394,404,194,432

Adjustment to increase/(decrease) accounting profitGoodwill amortisation 244,886,781,601 275,023,878,726Allowance for inventories 175,566,755,545 -Accelerated amortisation of long-term prepayments 117,288,588,054 -Current year unrealised foreign exchange differences 65,023,529,722 (3,747,075,572)Origination and reversal of temporary differences 36,854,407,529 19,631,380,813Non-deductible expenses 55,219,326,127 51,873,936,263Share of losses from associates (171,255,307) (256,198,814)Tax exempt income (92,012,366,858) -

4,372,176,494,845 2,736,930,115,848

Tax losses brought forward (39,156,762,217) (11,144,642,716)

Current year taxable profit 4,333,019,732,628 2,725,785,473,132

Current year income tax expense at the Company’s taxrate

953,264,341,178 681,446,368,283

Tax incentives in subsidiaries (294,115,875,285) (281,104,928,159)Effect of different tax rates in subsidiaries (153,782,530,478) (24,934,988,654)Deferred tax assets unrecognised on taxlosses of subsidiaries 3,713,759,394 12,134,578,570Under provision in prior years 8,036,641,002 2,642,230,559Deferred tax expense/(benefit) 2,189,802,417 (6,214,468,936)

Income tax expense 519,306,138,228 383,968,791,663



Form B 09 – DN/HN

35.3 Applicable tax ratesFor the year ended 31 December 2014, the Company has obligations to pay the State Treasury income tax at the usual rate of 22% of taxable profits (2013: 25%). This tax rate will be reduced to 20% from 2016.

The Group’s subsidiaries have obligations to pay the State Treasury income tax at the rate as defined in the enacted tax regulations.

36. Basic earnings per shareThe calculation of basic earnings per share was based on the consolidated net profit attributable to ordinary shareholders of the Company and the weighted average number of ordinary shares outstanding during the year, calculated as follows:

36.1. Weighted average number of ordinary shares2014

(Number of shares)2013

(Number of shares)Restated

Issued ordinary shares at the beginning of the year 419,052,533 488,643,175Effect of dividends paid in the form of shares(Note 27) 62,855,642 -Effect of issuance of bonus shares from capital surplus under the employee share-based payment plan(Note 41) 6,735,000 -

Weighted average number of ordinary shares outstanding during the year 488,643,175 488,643,175

36.2. Basic earnings per share

2014VND

2013VND

Restated

Net profit attributable to ordinary shareholders 3,144,252,845,971 1,954,187,537,863Weighted average number of ordinary shares outstanding during the year 488,643,175 488,643,175

6,435 3,999



Form B 09 – DN/HN36.3. Restatement for the weighted average number of ordinary shares and basic earnings per

share for the year ended 31 December 2013The weighted average number of ordinary shares and basic earnings per share for the year ended 31December 2013 were restated for the effect of the payment of dividend in the form of shares (Note 27)and the effect of the issuance of bonus shares from capital surplus under the employee share-based payment plan (Note 41) as follows:

Weighted average number of

ordinary shares

Basic earnings per share

VND

As previously reported 419,052,533 4,663Adjustment for the effect of dividends paid in the form of shares during the year 62,855,642 (608)Restatement for the effect of the issuance of bonus shares from capital surplus under the employee share-based payment plan 6,735,000 (56)

As restated 488,643,175 3,999

37. Financial instruments

37.1 Financial risk management

(a) OverviewThe Group has exposure to the following risks from its use of financial instruments:

credit risk; liquidity risk; and market risk.

This note presents information about the Group’s exposure to each of the above risks, the Group’s objectives, policies and processes for measuring and managing risk.

The Company’s Board of Management oversees how management monitors compliance with the Group’s risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Group.



Form B 09 – DN/HN(b) Risk management framework

The Company’s and its subsidiaries’ Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management framework. The Company’s and its subsidiaries’ Boardof Directors are responsible for developing and monitoring the Group’s risk management policies.

The Group’s risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group’s activities. The Group, through its training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations.

37.2 Credit risk Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Group’s receivables from customers and cash placed at financial institutions.

Exposure to credit riskThe total of carrying amounts of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was as follows:

Note 31/12/2014VND Million

31/12/2013VND million

Cash at banks and cash equivalents (i) 2,021,027 2,121,054Short-term and long-term investments (ii) 548,127 387,794Trade and other receivables (iii) 1,262,501 1,279,434

3,831,655 3,788,282

(i) Cash at banks and cash equivalentsThe cash and cash equivalents at banks of the Group is mainly held with well-known financial institutions. The Board of Directors does not foresee any significant credit risks from these deposits and does not expect that these financial institutions may default and cause losses to the Group.

(ii) Long-term and short-term investmentsShort-term and long-term investments of the Group represent time deposits with the well-known financial institutions. The Board of Directors does not foresee any significant credit risks from these deposits and does not expect that these financial institutions may default and cause losses to the Group.



Form B 09 – DN/HN(iii) Trade and other receivables

The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. In response to the risk, the Board of Directors of the Company and its subsidiaries have established a credit policy under which each new customer is analysed individually for creditworthiness before the Group’s standard payment and delivery terms and conditions are offered. Credit purchase limit is established for each customer, which represents the maximum open amount without requiring approval from the Board of Directors. The limit is reviewed annually. No collateral is collected from the customers.

Based on historic default rates, the Group management believes that apart from the amount provided for as per below, no further allowance for doubtful debts is necessary in respect of the outstanding trade and other receivables at the reporting date.

The aging of trade and other receivables at the year end that have not been impared is as follows:

31/12/2014 31/12/2013VND million VND million

Not past due 1,033,395 1,153,575Past due 0 – 30 days 174,379 74,676Past due 31 – 180 days 35,519 42,692Past due more than 180 days 19,208 8,491

1,262,501 1,279,434

Movements in the allowance for doubtful debts during the year were as follows:

31/12/2014 31/12/2013VND VND

Opening balance 14,643,202,437 178,589,724,256Increase in allowance during the year 26,656,483,570 3,678,712,679Allowance utilised during the year - (2,544,872,408)Written back (497,809,680) (165,080,362,090)

Allowance for doubtful debts 40,801,876,327 14,643,202,437

37.3 Liquidity riskLiquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation.



Form B 09 – DN/HNAt the reporting date, the financial liabilities with fixed or determinable payments have the following contractual maturities including the estimated interest payments:

Carrying amount

Contractual cash flows

Within 1 year

1 – 2years

2 – 5years

More than5 years

VNDmillion

VNDmillion

VNDmillion

VNDmillion

VNDmillion

VNDmillion

31 December 2014Trade and other payables 2,220,501 2,220,501 2,220,501 - - -Borrowings 6,747,847 7,027,052 5,813,585 712,312 489,277 11,878

8,968,348 9,247,553 8,034,086 712,312 489,277 11,878

31 December 2013Trade and other payables 2,828,249 2,828,249 2,828,249 - - -Borrowings 7,575,383 8,377,416 6,350,171 747,177 967,419 312,649

10,403,632 11,205,665 9,178,420 747,177 967,419 312,649

The Group manages its ability to meet the expected operational expenses and servicing its debts by investing its cash surpluses in term deposits and maintaining several bank facilities from some domestic banks.

37.4 Market riskMarket risk is the risk that changes in market prices, such as foreign exchange rates and interest rateswill affect the Group’s results of operations or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

(a) Currency riskThe Group is exposed to currency risk on sales, purchases and borrowings that are denominated in a currency other than VND, the accounting currency of the Group. The currency in which these transactions primarily are denominated is USD.

The Group’s exposure to currency risk is managed by keeping the exposure to an acceptable level by buying or selling foreign currencies at spot rates when necessary to address short-term over-exposures.



Form B 09 – DN/HNExposure to currency risk

At the reporting date, the Group had the following net monetary liability position exposed to currency risk:

31/12/2014 31/12/2013USD USD

Cash and cash equivalents 10,003,226 1,309,800Accounts receivable – trade 664,195 1,084,011Other monetary assets 8,627 181,024Accounts payable – trade (52,223,166) (62,413,466)Short-term borrowings (200,495,055) (34,447,456)Long-term borrowings (665,855) (2,224,876)

(242,708,028) (96,510,963)

The followings is the significant exchange rate applied by the Group:

Exchange rate as at31/12/2014 31/12/2013

USD/VND 21,673 21,125

(b) Interest rate riskAt the reporting date, the interest rate profile of the Group’s interest-bearing financial instruments was:

Carrying amount31/12/2014 31/12/2013

VND million VND million

Fixed rate instrumentsFinancial assets 2,082,459 2,230,353Financial liabilities (6,115,438) (6,229,440)

(4,032,979) (3,999,087)

Variable rate instrumentsFinancial liabilities (632,409) (1,345,944)

A change of 1% per annum in interest rate would have increased or decreased the consolidated profit before tax of the Group by VND6,324 million (2013: VND13,459 million). This analysis assumes that all other variables, in particular foreign currency rates, remain constant.



Form B 09 – DN/HN37.5 Fair values

(a) Fair values versus carrying amountsThe fair values of financial assets and liabilities, together with the carrying amounts shown in the balance sheet, are as follows:

31/12/2014 31/12/2013Carrying amount Fair value

Carrying amount Fair value

VNDmillion

VNDmillion

VNDmillion

VNDmillion

Categorised as loans and receivables:- Cash and cash equivalents 2,026,280 2,026,280 2,125,322 2,125,322- Trade and other receivables 1,262,501 1,262,501 1,279,434 1,279,434- Other financial assets 548,127 548,127 387,794 387,794

Categorised as liabilities at amortised cost:- Trade and other payables (2,220,501) (2,220,501) (2,828,249) (2,828,249)- Borrowings (6,747,847) (6,699,359) (7,575,383) (7,678,237)

(5,131,440) (5,082,952) (6,611,082) (6,713,936)

(b) Basis for determining fair values

Cash and cash equivalents, trade and other receivables and short-term non-derivative financial assets and liabilities

The fair value of cash and cash equivalents, trade and other receivables and short-term non-derivative financial assets and liabilities approximates the carrying value due to the short-term nature of these financial instruments. The fair value of the instruments is determined for disclosure purpose only.

The long-term non-derivative financial liabilities

The fair value of the long-term non-derivative financial liabilities, which is determined for disclosure purposes only, is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the balance sheet date.

38. Non-cash investing and financing activities

2014VND

2013VND

Payments of dividends in the form of shares 628,556,420,000 -



Form B 09 – DN/HN39. Significant transactions with related parties

In addition to related party balances disclosed in other notes to the consolidated financial statements, the Group had the following significant transactions with related parties during the year:

2014VND

2013VND

Members of Supervisory Board, Board of Directorand Board of ManagementSalary and bonus 6,570,442,100 5,607,141,669Allowances 1,602,000,000 2,556,000,000

40. Commitments

40.1 Capital contribution commitmentAt the reporting date, the Group had the following capital contribution commitments:

31/12/2014VND

31/12/2013VND

Hoa Phat - SSG Mining JSC 5,670,000,000 5,670,000,000Yen Phu Investment and Mineral JSC - 13,500,000,000

5,670,000,000 19,170,000,000

40.2 Capital expenditure commitmentAt the reporting date, the Group had the following outstanding capital expenditure commitments approved but not provided for in the consolidated balance sheet:

31/12/2014VND

31/12/2013VND

Approved but not contracted 1,526,992,678,044 -Approved and contracted 2,281,122,723,574 511,029,000,000

3,808,115,401,618 511,029,000,000



Form B 09 – DN/HN40.3 Leases commitment

At the reporting date, the future minimum lease payments under non-cancellable operating leases were:

31/12/2014VND

31/12/2013VND

Within one year 4,958,113,156 7,361,064,432Within two to five years 6,404,998,224 7,775,643,474More than five years 25,006,665,196 97,005,325,952

36,369,776,576 112,142,033,858

41. Post balance sheet eventSubsequent to the financial year end, the Company issued bonus shares from the capital surplus under the employee share-based payment plan in accordance with the Resolution No. 02/NQ - DHDCD.2014 dated 28 August 2014 by the General Meeting of Shareholders, amounting to VND67,350 million at par value, equivalent to 6,735,000 shares. These bonus shares have been approved to be listed in the Ho Chi Minh City Stock Exchange from 25 February 2015. According to the Company’s policy, the value of shares issued to employees from the capital surplus is not recorded as an expense in the statement of income.

42. Production and business costs by element2014VND

2013VND

Raw material costs included in production costs 13,922,768,267,128 13,937,102,306,181Labour costs and staff costs 816,687,651,607 592,780,194,503Depreciation and amortisation 1,106,005,660,313 720,195,566,311Outside services 1,499,439,974,894 1,085,670,258,288Other expenses 2,569,908,722,359 1,201,478,463,530

9 March 2015




bÁo cÁo thfffing nin 2014

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