kdc annual report 2011 fina en

AnnuAl RepoRt 2011KINH DO CORPORATION141 nguyen Du Street, Ben thanh Ward, District 1, Hochiminh Citytel: (+84) 8 38270838Fax: (+84) 8 38270839email: [email protected]: www.kinhdo.vn

DIVERSIFIED + INTEGRATED = TRANSFORMATION

A STRONGERKINH DO IS EMERGING

Consolidated Financial Statement

Independent Auditor's ReportConsolidated Balance SheetConsolidated Income StatementConsolidated Cash Flow Statement

Message

VisionMissionChairman’s MessageMilestonesHighlights

Management Team

organizational Structurethe Board of Directorsthe Board of Supervisorsthe Management team

Annual Report 2011

Business ReviewStrategies Moving ForwardMarketing and Sales Strategy2012 Goals

4

789

1315

17

19212729

35

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CONTENTS

IT ALL STARTED WITH FOODWHILE FOOD IS THE COMPANY’S FOUNDATION, TODAY KINH DO’S TRANSFORMATION IS WELL UNDERWAY TO DELIGHT CUSTOMERS AND CONSUMERS.

Kinh Do’s 2011 Annual Report features excerpts from conversations with the leadership. their dialogue highlights how we are adapting to new dynamics in the markets; changing our formats, products, services, processes, business models, and capabilities; and shaping the evolution of our leadership team and the company — all the while sustaining our vision, mission, culture, and values.

What they’re saying, and what Kinh Do is doing, is defining success in an industry in transition.

7 8Kinh Do Corporation Annual Report 2011

VISION

FLAVOR YOUR LIFEKinh Do creates life’s flavor through wholesome, healthy, nutritious and convenient foods

Our Consumer MissionIs to identify and produce affordable staple and packaged foods, snacks, bakery products, beverages and juices, confectionaries and condiments, instant foods, processed meats and health supplements which people want. our products are pioneering market-leaders, hygienic, healthy, satisfying and conveniently available to all consumers.

Our Shareholder MissionIs to maximize investment returns over the long-term and to manage risk in order to give certainty and confidence that investments in our business can achieve our shareholder’s goals.

Our Partner MissionIs to create sustainable value for supply chain partners through the creation of innovative food products which address consumer demand trends and satisfy or exceed consumer expectations, and provide equitable returns for all.

Our Staff MissionIs to nurture and develop the skills and abilities of our people to meet the professional demands of their work and satisfy their personal needs. In this way we create a dynamic, creative, innovative and dependable community within the company.

Our Community Mission Is to contribute to the communities in which we operate through sponsorship programs and targeted community development and support activities.

MISSION


An interview with Kinh Do Group's Chairman tran Kim thanh

A Year of Progress and Consolidation Against A Challenging Environment

Chairman’s Message

Kinh Do’s recipe for success is explained in depth by the Chairman Mr. Tran Kim Thanh in this Q&A session.

How do you feel about Kinh Do’s results this year and how do you view the situation in the current market in which the company operates?

I think the Kinh Do team has done exceedingly well in a market where most businesses suffered. We have achieved a lot this year both in terms of operational improvements and growth. It was our first fiscal year we operated as a group and I think the team came together very well to establish the necessary structures and processes which have come to define our operating platform. this platform is important to the future of Kinh Do as this will be the foundation upon which we will use to achieve greater scale, not only in our operations, but also in our profitability and our execution. With 2011 behind us, we have now entered a new stage of development that will see us gain efficiencies in our operations, utilization of our assets; and ultimately scale up these efficiencies to reach higher levels of profitability for shareholders. Going forward in 2012, the operating environment will continue to be challenging and we will continue to have to work hard to grow sales and improve profitability, with the macroeconomic policies still focused on managing the delicate balance between inflation and growth.

What do you see as the most significant achievement of the company to date and how do you plan to surpass that in the future?

For a company with such a long history as ours, it’s hard to pin point one single or significant achievement that surpasses all the rest. What I would highlight as something I’m most proud of is our transformation using the people, products and platform approach. this approach to building Kinh Do has created a solid foundation and a team that has been instrumental in building the company. We have made a good team even better by adding expertise that supports the business at the group level. We have also created a product portfolio which we are immensely proud of, upon which we will continue to grow and develop to include products that are part of the Food & Flavor strategy. this will see product extensions beyond Snack & Confectionary into products that reach into the everyday lives of consumers. Finally we have built a true platform upon which we can accelerate our growth in both scale and profitability. We have seen success stories in other markets where companies enter the cusp of positive change, and I believe we as a company have created an opportunity for that.

our goal to surpass the present achievements is designed around doing what we have already done but better. the path to change is about being prepared: having a goal and a plan. I believe that


our people, product and platform approach allows us to be fully prepared for the challenges to come. For example, our product Strategy of entering the next phase of change (Food & Flavor) gives us a definitive plan to move forward. Our Platform Strategy of achieving a 1) Foundation for Growth, 2) Profitability through Efficiencies and 3) Profitable Growth outlines the metrics upon which we and our shareholders will measure our success. It’s a complex approach to a simple goal of profitable growth but each part plays on the strengths of overall management team. last but not least, as part of our people Strategy, we have assembled a management team with experience, insight, knowledge and most importantly shared vision and passion for growth.

What do you foresee as Kinh Do’s biggest challenges in achieving all of these different goals set forth by your management team and how long do you think it will take it to achieve this?

the process is dynamic and while we have the plan and the right pieces in places, there are a lot of external factors that could affect the progress. It’s impossible to anticipate all the risks, but we have built a versatile and resilient company that should be able to withstand most of these external shocks and overcome most challenges. A great example is how we were able to achieve such scale and maintain profitability during a very difficult year. During this time, we established and tested the operational

With the ambition to become both Vietnam’s and Asia Pacific region’s leading company in the food and beverage category, Kinh Do has undergone a drastic transformation over the last few years through its investment in building a strong foundation for the future. the transformation and the change that have resulted, has defined the company’s present and set the foundation for the future. this platform will accelerate the growth of the company in a differentiated approach. the challenges in 2011 did not slow Kinh Do’s advances, as the company remained profitable and gained new market share in a difficult environment.

processes of the merged entity to great success. of course the integration process had begun much earlier than 2011 but the external challenges not only brought us together to act as a team but also to think like one. this was one of the greatest challenges, as we have distinct sets of cultures within different pockets of the company. We set the basis for how we would deal with adversity and challenges right at the beginning of the process. In a way the market was against us, but it made us a better team. It’s easy to work together when times are good and there are a lot of resources to go around, but during tough times, we learn to economize and work together smartly.

How do you see the industry changing and how will Kinh Do fit into this new world?

I think the manufacturing industry in Vietnam is set for significant changes. like most countries that start by manufacturing products, it’s inevitable that you begin to shift around the value chain as the world around you shifts. It’s particularly true in our industry where we are selling a food product and the tastes of the people begin to change. We’re forced to keep up with the change or even get ahead of it to stay ahead of the competition.

over all, the food & beverage industry in Vietnam has been undergoing drastic change and expansion for the last two decades. We have been lucky to be a part of that and have benefited by gaining manufacturing scale early on and securing a top spot. Going forward our advantage will continue to lie with scale but more on the sales and distribution side. essentially we are shifting our value proposition downstream closer to the customers. this has also become our biggest competitive advantage in a country where there continues to be a lot of inefficiencies and barriers to successfully delivering quality products to consumers.

the investment in the sales and distribution channel will continue to be essential in safeguarding our position in the domestic market. A lot of investors would look at the business year to year, but the benefit of running a business is that you can view it with longer time horizon, which means you need to have a long term plan (which we do) on how to build a defendable position against competition while going out winning markets. there’s no magic formula, but experience and scale helps a lot, both of which we have.

this downstream shift also means that branding and marketing will play a bigger role in Vietnam. As we shift more capital away from manufacturing, we will need to invest in brands to capture consumers’ loyalty which translates into future equity of our business. We have been successful at creating one of the best iconic brands in Vietnam and multiple strong product brands. We will continue to strive to build on this success in a faster and more scaled way, especially now that we have a platform to accelerate that.

You’ve laid out a very clear strategy on how you want to move forward, what needs to be done and what you want to achieve. How is the team planning to achieve all of this at the same time?

the goals we have set forth are challenging but not impossible. As we look back at the history of the company, all the challenges we have faced also appeared to be daunting at the time but in the end we always prevailed. When failure isn’t an option, success is the only acceptable outcome. I believe that the team we have put together is capable, competent and also very professional. their job is not to look at a problem and only see how big it is, but to find multiple options in which they can overcome it and succeed. Fortunately they have a lot of experience at this given the changes in the last few years and we are confident they will continue to succeed.

As to their ability to deliver so many things at once, I also have faith that it’s possible as long as we focus on the small steps and milestones towards the bigger goals. More importantly we need to work, act and distinguish ourselves as a team. We are halfway through a transition and so far we have achieved very good results. As an investor, it’s often not easy to see the bigger picture and the larger goals beyond the annual results, but we believe a lot of our shareholders are long-term investors who have been with us for a long time and have been faithful to the path we have drawn. All we ask is for patience and perseverance as we complete what we set out to do and make a good company a great one.


Beginning from a proud tradition

Our Path of GrowthKinh Do Corporation’s Historic Milestones

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

1993 2011-

Kinh Do founded

launched bun products

launched cracker products and moon cakes

Acquired Walls Ice Cream from unilever. Kido founded

Kinh Do Corp (KDC) Ipo’ed

Business alliance with Ezaki Glico Co. Ltd (Japanese confectionary company)

launched snack products

launched cookie products

launched chocolate candy

launched candy

north Kinh Do (nKD) Ipo’ed

launched cakes.

Acquired majority of Vinabico

KDC, nKD, Kidos merged to form the Kinh Do Group


Operational Highlights

Financial Highlights

In 2011 we made good progress in strengthening the foundation for accelerated growth. Both volumes and market share improved during the year, and the scaled platform of KDC proved to be a significant factor in achieving this success. Our solid financial performance alongside bigger innovations, new partnerships, and better execution will accelerate the growth in the coming years.

Our Highlights of The YearGroup Revenue*

VND4.247trn+32.6%

Gross Profit Margin*

VND1.673trn+33.8%

eBIt*

VND398bn+14.3%

Operating Profit*

VND345bn+0.7%

Net profit after tax

VND279bn+11.1%**

earnings per share

VND2,312

total cash

VND967bntotal external debt

VND997bntotal equity

VND3.815trn

Debt equity ratio

0.51xnet Free Cash Flow from operations

VND1.056trn

external gearing ratio

0.26x

Category Net Revenue Growth %* Market Share%**

Biscuits 52.3% 33%

Cakes 12.2% 17%

Moon Cake 31.4% 76%

Buns 33.8% 64%

Ice Cream 27.8% 29%

Yogurt 44.6% 8%

Overall 32.6%

large scale = resiliency

8.1% (Operating

profit margin)39.4% (Gross profit

margin)

Strong markets share = profitabilty

*Based on 2010 Proforma (including NKD, KIDO) Consolidated Financial Results**2010 NPAT adjusted for Proforma (including NKD, KIDO) and excludes on time gain of SJC disposal.

*Based on 2010 Proforma (including NKD, KIDO) Consolidated Financial Results**Source: With the exception of Moon Cakes, Ice-cream, and Yogurt categories, all market shares numbers are from AC Nielsen 2011 Retail Audit

Focus = growth

32.6% (Net revenue

growth)


WHO WE ARE

INGREDIENTS FOR GROWTH


WHO WE ARE

Organizational Structure

SB

U H

EA

DS

must have qualification of a leader and Intrapreneurial m

ind.

SB

u's

Cookies

Cracker W

aferS

nackC

akesB

unsC

andies C

hocolateYoghurt

Ice Cream

Growth Team Cost Team Support Team

Sales Marketin R&D Logistic Production Purchasing Finance Accounting HR Admin IT

Group Chairman

Group President / CEO

Group COO

Office of the BOM

Business ApplicationlegalInvestmentStrategypRInternal Audit

Roles: AssessingSupervisingRecommendingMeasuring

Centralized Centralized Centralized






SharedServices Centralized Dedicated

ResourcesShared

ServicesDedicatedResources Centralized Centralized Shared

Services Centralized

SharedServices Centralized Dedicated

ResourcesShared

ServicesDedicatedResources Centralized Centralized Shared

Services Centralized

Growth TeamRole: the core team of the Group, this team develops and executes key business plans and works closely with the SBusCulture: Creative, dynamic, smart with "can do" spirit

Cost Team Role: Controls cost and meets the requirements of the Growth teamCulture: Fast, accurate, cooperative, disciplined and highly analytical

Support TeamRole: the last gate to assess, approve and monitor projects as well as support the Growth team and Cost team in executionCulture: Supporting, service oriented, disciplined, inflexible and analytical

Thanks to this flexible structure, Kinh Do can quickly and efficienly add new SBU's by utilizing available systems and resources

New Growth From Strong Roots

Strengthening Our Platform for Growth

our ambition remains to build Kinh Do into a food and beverage company, clearly differentiated from our more commodity-oriented competitors. to achieve this we have designed a number of operating imperatives that enable us to operate as multiple, versatile small businesses, being both fast and decisive but on a large scale by leveraging strength and centralization; giving the best of both worlds.

Creating Strategic Business Units (SBU’s) by product category

the creation of SBu’s around a product category allows us to meet the dynamics and market conditions of each category differently, for every industry, product and geography we can face different pressures at different times. the purpose of dividing the business into different SBu’s is to create focus and effectiveness in growth, profitability and competition.

Creating functional teams at the group level

Recognizing that while there are differences in the businesses, there are also commonalities. We needed to ensure that total focus did not result in duplication. this lead to the creation of the functional teams that manage areas such as Finance, HR, It, Accounting, logistics, Sales, and Marketing to ensure that while SBu’s focus on the competition, the function teams focus on keeping the SBu’s competitive.

Empowering SBU Heads to manage their business as entrepreneurs

In a large business, often the criticism is that the bureaucracy weighs on efficiency and slows decisions, resulting in lost opportunities. At Kinh Do this is not the case as the structure and the processes are designed to create efficiencies enabling well-informed timely decisions to maximize opportunities.

Leveraging the overall scale of the group to maximize efficiency in Supply Chain Management (SCM)

our greatest value is our ability to market products. In order to do that we have to buy, make and move products which comes down to our supply chain. SCM is a key component of our business and we have wielded it as one of our key competitive advantages. As organizations grow this is usually the first to be strained, but not in our case., Thanks to the combined scale of Kinh Do, the sophistication of the eRp system, and the centralization of the SCM, one dollar saved here translates into several dollars earned downstream; ultimately more profits to our shareholders.

Attracting the best talents by being the best

Who we are is the most critical part of Kinh Do, and it is greater than the sum of the different personalities, diversified cultural backgrounds and the multiple experiences of our people. We are a multilateral corporation and the Kinh Do philosophy is to attract the best talent by being the best.


WHO WE ARE

The People Behind Who We Are

The Board of Directors

A veteran entrepreneur with a lifetime of experience in management and business, he is the right combination of boldness in driving the company and caution in mitigating risk. under his leadership, Kinh Do has grown from a family business to become Vietnam’s number one confectionary company. His acute business sense led to the successful turnaround of Wall’s ice-cream business to become the country’s number one single serve ice cream company. Mr. thanh’s leadership strategy for Kinh Do Corporation is to create the best company, consisting of the best people built around the best processes.

Mr. thanh is currently Chairman of the Board for Kinh Do Corporation. He also sits on various boards of other large Vietnamese corporations and holds multiple key positions in Vietnam’s top companies. He is a Member of the Central Committee of the Vietnam Homeland Front. He has received several awards and accolades from both the Central and local Government of Vietnam for his significant contributions to the socio-economic developments of the country.

Mr. Thanh is the founder of Kinh Do Corporation“A visionary leader who has lead the company through a complex operating environment to create one of Vietnam’s best businesses.”

An experienced entrepreneur with a track record of building large and profitable businesses, Mr. Nguyen has been instrumental in the development of Kinh Do Corporation. under his management, Kinh Do has emerged as one of the most well-known brands in Vietnam with a portfolio of market dominating products that are often considered the best in their category. It was Mr. nguyen that successfully engineered the acquisition of the Wall’s ice cream factory and who spear-headed the development of the business (and category) to the business it is today.

Mr. nguyen also serves as both the Vice-Chairman and Ceo of Kinh Do Corporation. He is an active member of the board of directors for the Vietnam Chamber Commerce and Industry (VCCI) and participates on the board of several prominent companies in Vietnam.

Mr. Nguyen co-founded Kinh Do Corporation“A bold and decisive leader, who has been instrumental in driving the growth of the company to become one of the country’s best known corporations.”


WHO WE ARE

Mr. Tran Le NguyenVice Chairman of the Board of Directors and Ceo of Kinh Do Group

2011 was a difficult operating environment and we continue to be challenged as an organization for delivering results in the face of internal and external changes. our results speak for itself and the team has delivered what I would consider exceptional. In addition, we were able to secure the partnership of a new strategic partner which both confirms our position in the market and also our thesis for growth in the Vietnamese market.

The Board of Directors Interview with the CEO

The financial results achieved by Kinh Do Corporation are impressive, and the combined scale of the merged Kinh Do seems to have been successful. Can you provide us with some details as to what the results consist of and what we can expect from 2012?

total net sales improved by 32.6% compared to 2010, which consisted of one third volume and two third value increases. Despite a challenging year for raw material costs, we were able to pass on all of the increases to our customers. We also managed other costs extremely well and the combination of this allowed us to maintain our gross profit margins to our historical levels.

In terms of specific products, 2011 was a breakthrough year for a number of categories. our success can be broken down into three specific areas: products that dominated the market, products that maintained their strong position and newer products that gained traction. our dominating products continued to grow faster than the market including crackers which grew at 56.3% to maintain its number one spot in the market, cookies which grew by 43%, buns by 33.8%, moon cake by 31.4% and ice cream by 27.8%. our cakes category continued to be a steady winner with 12.2% growth and a market share improvement of 6 percentage points to 26% in 2011. new products that gained traction include our yogurt category which grew by 44.6% to increase its share of the market to 8%.

In additional to the financial and product successes, we also delivered operational improvements that were a direct result of the merger. We saw improvements in the operating structure, distribution systems, and the processes which would set the foundation for accelerating the improvements through 2012 and the years beyond.

For 2012 we expect organic growth to be more tempered, particularly on our existing product portfolio. our Snack & Confectionary product portfolio should grow by 30%, with gross profit margins continued to be at around 38% to 39%. We will also likely see improvements in our operating profit margins (OPM) due to declines in interest expenses and better synergies of our

The year 2011 was the first year of operations for the newly merged Kinh Do Group, Mr. tran le nguyen, Ceo of Kinh Do Group reveals the challenges and opportunities the company faced during the year and also discusses what the focus for 2012 will be.

sales & general administration expenses, and we target opM to improve over time.

In addition to the organic growth, we target to augment additional growth with new products particularly from our Food & Flavor product strategy; we have plans to launch a number of new product categories in order to extend our reach into meal compliments and meal replacements.

We see that Kinh Do has expanded its product offerings beyond those that are home-grown and extended its presence beyond the Vietnamese market. What’s the strategy and approach to this expansion and can you describe to us how this will fit into the current strategy of Kinh Do and fuel its growth in the coming years?

Kinh Do has achieved a fairly dominant market position in Snack & Confectionary over the last two decades. We have created a strong sales and distribution network which we believe will continue to gain efficiency as we increase the number and types of goods being put through it. this improvement in distribution utilization will help to achieve cost savings for the overall company.

In this context, one part of our expansion strategy is to seek partners and products that are innovative and unique which we believe are suitable to Vietnam, and oeM’ed under our brand and distributed through our network, thus improving overall distribution utilization.

Additionally we also leverage our relationships with our partners to increase export sales. one of our key initiatives this year is to extend our presence in export markets. We have had reasonable successes in exports but in 2012 we will begin expanding this part of our business in earnest as a way to increase production utilization.

We expect this inside out and outside in approach to be a significant driver of both growth and profitability in the next few years. We aim to position Kinh Do as a key entry point for partners coming to Vietnam while also exporting Kinh Do products foreign markets.


The Board of Directors and Management

Mrs. Vuong Ngoc XiemCo-founder and Member of the Board of Directors

Mr. Co Gia ThoMember of the Board of Directors

Mrs. Vuong Buu LinhCo-founder and Member of the Board of Directors

Mr. Nguyen Van ThuanMember of the Board of Directors

Mr. Wang Ching HuaCo-founder and Member of the Board of Directors

Mr. Ma Thanh DanhMember of the Board of Directors

Ms. linh co-founded Kinh Do Corporation and has been active in the development and growth of the company since. She is experienced in business and supply chain management for the Group and all it's subsidiaries contributing to singificant improvements in efficiency and cost reduction. Under her guidance, Kinh Do implemented the eRp system by SAp, effectively increasing the company’s capability in making timely and accurate decisions with the right arsenal of information.

Currently, Mrs. linh is both a member of the Board of Directors and a Vice president. She also takes part in key positions as a board member in the company’s subsidiaries.

Ms. Xiem co-founded Kinh Do Corporation and has been actively participating in the management of the company since. She has many years of experience in managing the Retails system. With her experience and hands-on approach, she has been a key part of the management team and also essential to the growth of the company. Ms. Xiem is currently a member of the Board of Directors and a Vice president at Kinh Do.

Mr. nguyen has over 15 years of experience managing various member companies within Kinh Do Group. He has held several key senior management positions within the group including General Manager, Board Member and Vice president. He is currently the General Manager at Kido Ice Cream Company, a member of the Board of Directors at Kinh Do and Vice president of Kinh Do.

Mr. Wang has over twenty years of experience in the food manufacturing and processing industry, he joined Kinh Do from its establishment, taking an active role in the development of its manufacturing operations. He is a co-founder currently a member of the Board of Directors and a Vice president looking after manufacturing operations at the Binh Duong production facility.

Mr. tho is a member of the Board of Directors of the company. He founded thien long Corporation and currently holds the position of Chairman there. He’s an active part of many boards of Vietnamese companies and with his twenty plus years of experience in operations and management, has been an integral contributor to the growth of Kinh Do.

Mr. Danh holds a Bachelor’s of Science (B.Sc) in electrical engineering, Degree in Business Administration from the university of economics and a Masters of Business Administration with a focus in International Business Strategy and Brand Management from Belgium. He has over ten years of experience in financial management, strategic and brand management consultancy and advisory in mergers and acquisitions. He was initially responsible for development of the buns business and the fresh cake business between 1997 and 2001. He held various senior management roles at BSC Cable television Company, a HtVC’s subsidiary and Dona new tower Foods and Beverages Joint Stock Company.

He is a Member of the Board of Directors of Kinh Do Corporation.

He got a Doctorate in economics, Dean of Finance – Banking Department at Ho Chi Minh City open university. He has gained over 28 years teaching in the filed of banking and finance. He is very knowledgeable about financial market and banking industry in Vietnam. Besides his academic works at Ho Chi Minh open University for 20 years , he is also a financial consultant and advisor for many companies and foreign organizations operating in Vietnam.

Mr. Tran Quoc NguyenVice president of Kinh Do Group and General Manager of Kinh Do


The Board of Supervisors

Joining Kinh Do Corporation since its early days, Mr. thuan has deeply bound and understood the operation and development of the corporation, particularly the financial and accounting activities. He is one of the first pioneers who took part in building north Kinh Do Company and played an important role in to the company’s success today, contributing to strong growth of the Kinh Do Corporation.

Mr. thuan graduated MBA valedictorian at Benedictine university - uSA, Bachelor of Accounting - Audit at university of economics and Bachelor of Computer and Mathematics Applications at polytechnic university. Currently, he is the Finance Director of north Kinh Do and Head of the Supervisory Board at Kinh Do Corporation.

Ms. Duyen has been working for Kinh Do since 1993 and has held several key positions, including Accountant, Deputy Manager of the Accounting Department at Kinh Do Construction and Food processing Company ltd. and Chief Accountant at a branch of Kinh Do Construction and Food processing Company ltd. Since 2006 Mrs. Duyen has been the Chief Accountant at Kinh Do Real estate Joint Stock Company. She holds a degree in Finance and Accounting and has spent her career at Kind Do.

Mr. nguyen holds a Bachelor of economics with a specialization in Business Administration. He is a certified Fund Manager with a certificate issued by the State Securities Commission of Vietnam. He was one of first brokers of the OTC market Vietnam and has over 10 years of investment experience.

Mr. Le Cao ThuanHead of the Supervisory Board and Financial Director north Kinh Do

Mrs. Luong My DuyenMember of the Supervisory Board

our management team brings both deep and broad experience together with a collective commitment to maintaining Kinh Do’s position as one of Vietnam’s top food company, all the while building and strengthening Kinh Do’s position as a regional force.

Leading with vision and passion

Mr. Vo Long NguyenMember of the Supervisory Board


WHO WE ARE

Last year,Kinh Do Corporation has made a lot of changes to achieve the growth platform based on the combined merged entities. What are the most significant changes the company has undergone? The most significant change is the administration and operations of the Strategic Business units (SBu). this has been a critical turning point and an essential foundation for the ongoing development of the food business. this will allow us to grow rapidly and in a differentiated manner from our competitors. It is essentially having a company in a company and will allow us to be very focused on the strategic business unit, while having the flexibility to grow as a firm overall. It’s our way of having the best of both worlds; being focused and innovative like a small business while leveraging the scale and expertise of a large one. ultimately it’s about having someone specialized that knows the business and the market which can rapidly create value for a product category. Having experienced so much change already, what is the plan for 2012, and how do you foresee the company changing in the coming year? In 2012, we will continue to further improve the infrastructure. It has always been the goal to grow the scale of the business and also solidify the infrastructure so we can continue to be

How do you determine capital allocation to finance the subsidiaries?

As a group of companies, we allocate our capital based on the best returns we can achieve. the minimum requirement is that each new project or SBu provide a decent return in the near term (i.e. 2 years) and that the business is scalable. Making money quickly cannot be the only criteria but it needs to achieve a meaningful scale in the long term (i.e. 3 to 5 years).

How did high interest rates and inflation affect Kinh Do in 2011?

The high interest rate is a policy reaction to the high inflation, both of which had a large impact on our business. We were vigilant in our approach to managing this situation as high interest rate and high inflation is generally poor for businesses and consumer sentiment. In contrast to the rest of the market, we continued to grow, and were profitable in this environment which is a testament to our management team and the initiatives we took to continue to drive the business.

competitive and also scalable. We aim to have a platform that enables us to add new SBu’s that have great potentials and also complimentary to the overall business. the goal is to leverage the existing shared services and group platform to create new and successful businesses quickly and effectively. In fact, we are so confident that we already have plans to add a couple of new SBus this year and more in the coming years. Creating SBU’s seems like the right approach to growing the business but realistically how are you going to achieve this with both speed and efficiency? Internally, we will continue to fine-tune our internal operations to further achieve speed and efficiency and to better leverage our sales, distribution and marketing capabilities. this means we will continue to seek out strong partners with either strong products that are attractive to the Vietnamese consumers or partners with scaled and low cost manufacturing. We will work with partners to find the lowest cost approach to creating and manufacturing the products; effectively maximizing value for our shareholders and also the total profits of the partnership. The goal is to ensure that partnership interests are truly aligned and benefits maximized for those involved

The Management Team

What is your forecast for interest rates and inflation in 2012?

I believe that the worst is over for inflation and as a result high interest rates. We continue to be cautiously optimistic of the situation as the cycles in Vietnam tend to be very short, with the potential to change very easily. We saw inflation peak last September and along with it borrowing costs. We have seen both inflation and interest track lower this year but on the back of poor liquidity in the VnD market. this tells me that while the situation has improved, it continues to be delicate.

What is your view of the stock market in general and the future share price of KDC?

I think the stock market reached a low point right before tet 2012 and is poised at least for a technical rebound. the fundamentals remain weak in the overall economy but it is steadily improving. For the shares of KDC, I continue to believe that there is value here. primarily because we have reached scale but not yet efficiency. To unlock potential value, we will need to continue to grow this year and also reach better profitability metrics as a merged entity. In addition, I believe the product strategy, growth strategy and finance strategy we have devised will bring KDC to new heights within the next three years.

Mr. Kelly WongGroup CFo

Mr. Kelly Wong joined Kinh Do Group in August 2011. prior to joining Kinh Do, Mr. Wong was a Managing Director with Ho Chi Minh Securities Corporation (HSC), where he helped to establish the Investment Banking & Advisory team in and was awarded the Rising Star Domestic Investment Bank in Vietnam in 2011 by the triple A Country Awards for his achievements. Among the many transactions he was involved in, Mr. Wong lead landmark M&A transactions in the media industry, telecom, consumer retail and retail food & beverage.

Before joining HSC in 2008, Mr. Wong worked for HSBC Vietnam for four years where he was involved in corporate commercial banking and global markets.

Mr. Wong holds a Bachelor of Commerce from the university of British Columbia in Vancouver, Canada and a Diploma in Asia Pacific Management from the McRae Institute of Management at Capilano University.

Mr. Nguyen Khac HuyGroup Coo

Mr. Huy has been with Kinh Do Group since october 2009. With over twenty-two years living and working in uSA, Japan, Hong Kong and Singapore, Mr. Huy has held several top positions such as Ceo at three high-tech companies in uSA, Vice president of Marketing for a Singaporean logistics company, General Counsel and Director of Consulting for a Swiss fund management company in Singapore, CEO of a strategy consulting firm in Vietnam. He has experience in operating including telecom, steel, chemicals, FMCG, and banking sectors. He has consulted many economic development projects sponsored by non-governmental organizations such as World Bank, unCtAD, Wto, eu, and ItC and taught u.S. MBA programs in Vietnam, Singapore and Malaysia.

He completed his doctorate degree in law at Kent College of law (1997) in Chicago, MBA which specializes in Finance at Illinois Institute of technology, BA in economics at California State university long Beach.


Management Team

WHO WE ARE

A conversation with the management team

Moving Up the Value Chain

Having transformed Kinh Do into a stronger business through the merger of the food business, the team has also transformed from a good management team to a great one.

As one of the SBU heads, how do you compare the SBU model that Kinh Do has implemented with other operating models?

I believe that the current model of operations of Kinh Do has several key advantages. First and foremost, the SBu operates as an independent organization which is responsible for its own financial results. This makes us responsible for an entire business and its shareholders which in this case is Kinh Do. the purpose is to create a larger sense of accountability at the operating level. In addition, the SBu structure allows us to be very much focused on the market, as the group provides all the ancillary services and support functions and we worry only on the sales, competition and the product.

How did supply chain management contribute to the Kinh Do’s success last year and what is the direction and strategy outlined for this year?

Last year, against the difficult economic situation, we not only managed to grow faster than the market but also maintained our historical gross profit margins. Supply chain management was a key component to that success by ensuring that procurement, transportations and logistics costs were effectively stabilized and

The company’s distribution network can reach far and wide. It can be considered one of the essential assets of Kinh Do and also the key barrier to entry against competition. What factors support this fact and how do you continue to expand its reach?

In 2011, +30% growths in net sales can be considered a turning point for Kinh Do and forms the basis of the future platform for growth. our distribution network covers all 64 provinces in Vietnam reaching over 160,000 points of sale nationwide. Kinh Do is now actively organizing the distribution networks in neighboring countries such as lao and Cambodia in order to capture the potential growth there. In addition, our export markets now reach more than 30 countries, including several highly competitive markets such as the european union, united States, Japan, South Korea and Australia.

our current sales team has a total of 1,600 sales people across the country that reach 160,000 points of sale, 20,000 freezers and 5,000 coolers nation-wide. In addition, we leverage our 19-year-old relationships with our distributors to create one of the most effective and far reaching sales organizations in Vietnam. Given that the market continues to be 80% general trade, these relationships are what drive the success of Kinh Do. the broad reach and deep penetration through our distributors gives Kinh Do a distinct advantage in moving product and creating value, allowing us to move a broad range of products through our distribution channel.

the sales and distribution channel has a distinct advantage of allowing us to effectively add new products and categories quickly by simply plug-and-play.

Mr. Hoang began his career at Kinh Do in 1997 managing distributors in the Central and Northern regions. He has over 12 years of experience in procurement management in the FMCG industry. He was appointed to Director of Supply Chain at Kinh Do Group in 2011.

He currently leads the company’s COST TEAM and plays a significantrole in developing the order management strategy for the entire group. He holds a Bachelor of Economics from the University of Economics and Higher Leadership Skill Certificate from UCLA AndersonUniversity (Los Angeles, USA).

Prior to joining Kinh Do Group, Mr. Thinh worked as a National Commercial Director for PepsiCo Vietnam. He has over fourteen years of experience in building up distribution channels and developing food and beverage business units for multinational corporations.

Mr. Tung has over 10-year experience in manufacturing management and with in-depth knowledge on the SBU operating model. He is currently a SBU Director and Head of the Labor Union for the group. He holds a degree from the University of Economics and UCLA Anderson University (Los Angeles, USA) with a specialization in Business Administration.

Mr. Tran Tien Hoang Supply Chain Director

Kinh Do Group

Mr. Bui Thanh Tung SBu Director

Kinh Do Group

Mr. Le Van ThinhVice president of Sales

Kinh Do Group

We are now in a much better position to accelerate the company’s development from a strong local player to a regional one due to a broader and deeper management team that has faced adversity together and come out on top. Having achieved so much and looking to achieve more, we discuss with the management team their individual approaches to creating one of Vietnam’s best companies.

efficiencies achieved. In particular, we were able to implement cost controls in procuring raw materials in a centralized, scaled manner that allowed us to maximize bulk discounts. We also reviewed all the processes involved in the supply chain so as to be flexible and responsive to our demand requirements thus allowing us to be proactive in managing supply levels.

In 2012, we expect the economy to continue to face difficulties, including both inflation and the volatility in the raw material prices. In the face of such a tough operating environment, we aim to continue to be tightly integrated to the rest of the operations, and maximize our scale in purchasing and procurement. We will maintain stable cost of goods sold, and high standards in our product quality to ensure that we are efficient and effective.


Mr. Le Anh Quan Vice president of Marketing

Kinh Do Group

Management Team

WHO WE ARE

In the past year, how did marketing contribute to the growth of Kinh Do? What are the strategic marketing initiatives in the coming year?

last year, Kinh Do’s marketing team focused on three aspects, namely brand building, efficiency improvements, and product innovations.

During the mid-autumn festival, we created an iconic brand by maximizing the exposure of the KInH Do moon cake brand and further strengthening its bonds with consumers. We also succeeded in increasing market penetration of our AFC and CoSY brands by attracting new users, enhancing the value proposition of many other brands through product upgrades and re-launches with renewed packaging and communication and by doing so, growing the category values.

We improved our operational efficiency by focusing on fewer and bigger, more impactful programs/projects, emphasizing quality over quantity and achieving better speed to market from concept to launch.

Mr. Quan has over eighteen years of experience in business management and brand building in various industries, from media to consumer goods, to e-commerce communication. Before joining Kinh Do Group, he was Commercial Director at HTV2, Business Unit Director at Unilever Vietnam, and Internet Marketing Manager at Walt Disney Company in Los Angeles. He holds a MBA, specializing in Marketing from California University (UCLA Anderson).

product innovation has always been Kinh Do’s life blood, and an important competitive advantage of ours. last year we brought to fruition more than sixty innovations in new products, product extensions and simplifications, including the successful re-launches of AFC crackers and SolIte sponge cakes, buns, and wafers.

In 2012 and beyond, we aim to build a consumer-focused company, moving away from selling what can to make, to making what the market requires us to sell, thus best satisfying the consumers’ needs and wants. this cannot be possible without strengthened market intelligence and consumer insights function that guide our innovations. Simultaneously, we will enhance Kinh Do’s brand portfolio value by restructuring its architecture, essentially consolidating small brands into megabrand franchises that can better attract new consumers and retain their loyalty. the ultimate goal is to turn Kinh Do into the most ubiquitous household brand in Vietnam.

Mr. luan is responsible for many different tasks such as developing export markets, It systems and directing the implement of eRp – SAp for KDC, nKD, BKD, KIDo. He is also appointed to several top positions such as Chairman of the Board of Directors, Ceo, Vice Ceo at Kinh Do's subsidiaries.

Currently, Mr.luan in charge of building Business operation Systems and Decision Making Systems of Kinh Do Group as well as manage the SBu.

Mr. Nguyen Xuan LuanVice president of Systems

Kinh Do Group

Mr. Viet has over 15 years of experience in managing companies in the FMCG industry. As General Director of north Kinh Do, he has led the company to achieve remarkable growth over the last 8 years.

He is also a member of the executive Committee of Vietnam Marketing Association (VMA), Vietnam Food Safety Association (VInAFoSA) and an expert in analyzing and consulting business strategy.

Mr. Viet holds an MBA and now completing his doctoral thesis at the national economics university.

Mr. Tram was among the first of the management team to help lay the foundation of the current group distribution system. He has been with Kinh Do since the early days and has developed a deep understanding of the company, its competitive environment and the Vietnamese market.

He holds an MBA from California Miramar university in the u.S.

Mr. Tran Quoc VietVice president of Kinh Do Group,

General Director of north Kinh Do

Mr. Mai Xuan TramSBu Director Kinh Do Group

General Director of Vinabico

We aim to build a consumer-focused company, moving away from selling what we can make, to making what the consumers need.

the biggest challenge to short-shelf-life products such as fresh cake and yogurt is effective distribution. this means that we need to ensure deliveries are prompt and products are fresh when sold to the end consumers. therefore, the distribution channels must operate in a timely fashion, be flexible in its approach and finally overcome any issues to deliver product effectively.

Mr. Tran Tien Hoang Director of Supply Chain Kinh Do Group


WHERE WE ARE

PRODUCINGONE OF VIETNAM’S MOST ADMIRABLE COMPANIES


WHERE WE ARE

on the back of a small recovery in 2010, the Vietnamese economy continued to be fragile through 2011 and was heavily weighed down by high inflation, negative investor and consumer sentiment, a depreciating Dong, and high cost of borrowing. The primary issue facing most companies in Vietnam through 2011 was inflation which was driven by three key factors including rising and volatile raw material prices, increases in labor, electricity and fuel costs, and high interest rates. the compound effect of these factors choked most local businesses into financial distress.

Against this backdrop, Kinh Do experienced one of its best growth years as a newly merged food group. the merger which had been completed in late 2010 gave us a solid foundation and significant operating scale going into 2011 and helped us to gain momentum early in the year. not only was our business drive consistent, but so was our focus. Conscious of the risks and poor macroeconomic environment, we strived to leverage the scaled platform created through the merger and the business momentum coming in 2011 to deliver solid growth. this alignment and determination to focus on the food business validated the M&A strategy of the different food businesses, and successfully created a strong framework for Kinh Do to operate within a growingly competitive environment.

Factors Affecting Our Results

three key risk factors affecting the results of our business in 2011 include:

1. Inflation2. High interest costs3. Declining equity markets

High inflation

Vietnam faced one of the toughest years in recent history with inflation. After a 2 year increase, year-on-year inflation finally peaked at 23% in September 2011. This is on the back of a rise in commodity prices which had a significant impact on our raw material costs. We were able to pass on all the additional costs increases to our customers particularly given our strong market positions in each of the categories and even grow volumes to a achieve a positive result.

Overview

Vietnam CPI y/y vs. Global Commodity Index y/y

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5.0%

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-60.0%1

20093

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200911

20091

20103

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201011

20101

20113

20115

20117

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201111

2011

-50.0%-40.0%-30.0%-20.0%-10.0%

40.0%30.0%20.0%10.0%0.0%

50.0%

CpI y/y CRB Commodity Index y/y

High borrowing costs

As a counter measure to high inflation, government macroeconomic policy was focused primarily on keeping rates high and Dong liquidity in the market low. Consequently, this negatively impacted borrowing costs for most of the year with average lending rates of the Vietnamese banks rising from 14% at the end of 2010 to 23% in September 2011. even at these rates, liquidity remained low with borrowers having to register in advance for credit limit funding and therefore lending was still heavily restricted. We were able to

13.0%14.0%15.0%16.0%17.0%18.0%19.0%20.0%21.0%22.0%23.0%

'10.1 '10.12 '11.1 '11.12

Average lending rate

Average Lending Rate (2010-2011)

Declining equity markets

As liquidity was squeezed out of the money markets, equity markets declined along with investor sentiment. the negativity has a direct correlation with poor consumer confidence as the equity market continued to be lackluster and borrowing costs high. This left very little opportunity for companies to issue equity to substitute the high cost of borrowing, causing most companies stagnant for most of the year. our own share price also fell with the market but despite this, Kinh Do managed to complete a private placement to ezaki Glico for 10% new equity at a price above the market. the price aside, the successful placement will allow both sides to form a business alliance which will include the distribution of Glico’s products in Vietnam. We expect this alliance to have a positive impact on the overall business late in 2012 and through 2013.

KDC Share Price vs. VNINDEX

'10.1 '10.12 '11.1 '11.12405060708090

100110120 KDC VnInDeX

It was a significantly difficult year to operate, with increasing costs, poor consumer confidence and overall wealth erosion in the country. Despite this Kinh Do managed to grow to new levels and also maintain reasonable profitability throughout the year with key categories gaining market share.

sustain liquidity in funding our operations given the combined scale of our business and strength of relationships with the banks. While average borrowing costs were high, we focused on short-term funding on the expectation that the rate cycle was peaking and that the rate resets in 2012 would impact the company positively. this strategy worked well as most seasonal funding has since be repaid early in the year, and those amounts outstanding continued to be reset at lower levels.


Performance Review

WHERE WE ARE

Sales

Overall performance was positive with improving sales. Market share saw gains across the categories we compete in. Gross profit margins remained stable or improved slightly across SBu’s as the market absorbed the cost increases and gave some volume improvements. eBIt growth across categories remained robust despite the rising operating costs and larger investments in the group infrastructure and platform.

Revenue growth was approximately 32% with each Strategic Business unit (SBu) averaging double digit growth. the merged operations were able to achieve significant scale for the year and expand market share within each of its categories for an overall improvement in market share across all categories tracked.

0.0%

10.0%

20.0%

30.0%

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60.0%

70.0%

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0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0%

Revenue GrowthMarket Share

Mooncake Buns Biscuits Cakes Ice Cream Snacks Yogurt Candy/Chocolate

Market Share vs. Revenue Growth

The first stage goal of building a single platform for future growth has been achieved through the merger. The operational processes has been established and successfully tested in 2011. this resulted in both positive results in both sales growth and market share.

The sales mix of the business has also shifted significantly with biscuits, cakes, moon cakes, buns, and ice cream making up approximately 88% of total sales. Dependence on the moon cakes sales has declined significantly over the last year primarily due to the merger of the operating entities and growing sales of other categories, which has helped us to mitigate the operating risks. the product portfolio is now much more balanced with a more tempered spread across five major product categories.

Contribution to Revenue 2011Candy/Choco 3%

Snacks 4%Biscuits 28%

Cakes 21%

Yogurt 4%

Ice Cream 11%

Buns 13%

Mooncake 16%

ProfitabilityGross profit margins were stable with cost increases being passed on. EBIT from the all the SBU’s continued to grow at 14.4% despite the increases in labor costs, transportation costs and fuel costs. Regardless of these, combined margins fell, with eBIt margins falling from 10.8% to 9.3% due to higher operating costs and further investments this year in operational infrastructure at the group level. This is also the first year in which the cost of the merger in the form of goodwill was expensed which was an additional VND49.4bn in operating expenses.

the primary compression in eBIt margins are due to the fact that while the goodwill charge was expensed combined with the fact that the expected merger efficiencies have also yet to be attained. The first year focus after the merger was to primarily test the operational process to ensure that the growth platform was operable and the right processes were up and running. While this impacted profitability somewhat and was compounded by a difficult inflationary environment, the effect is temporary and will improve over the course of 2012 as merger synergies and efficiencies are achieved in the coming two years. As a result, net profit after tax declined to VND278bn, equaling a 56.9% decline compared to last year (compared to adjusted pro forma results of combining nKD, Kido and KDC). there was also the lack of any income from real estate and other investments in 2011 (as compared to 2010) as the company shifted its strategy to focus on food only businesses. Adjusting the net profit after tax in 2010 to exclude income from the one time gain from real estate disposal, net profit after tax from core food business actually grew by 11.1%.

Equity

While no significant changes in equity took place during the year, the share price of Kinh Do fell by 48% during 2011 on the back of average daily volumes of 320,000 shares. this represents a low point in the Vietnamese equities market as the VnIndex also fell by 28% with volumes of averaging around 33m shares per day. Kinh Do shares have since recovered faster than the market to make significant gains in terms of price and volume. During this time, we continued return cash to shareholders totaling VND142bn in the form of cash dividends in 2011. As validation of our resiliency and overall strength as Vietnam’s largest confectionary company, we signed a deal to issue 14m shares to ezaki Glico Co. ltd (Japan) as part of a business alliance which will see both parties working jointly in distributing Glico’s products in the Vietnamese market.


Looking Ahead

Strategies Moving ForwardOur financial performance going forward will see significant improvements. This is based on the four stage plan the team developed back in 2009 as part of the process to create a scaled food & beverage platform that would cold be leveraged for accelerated growth. We are glad to report to stakeholders that this process is now halfway done with the first two stages complete.

WHERE WE ARE

the timeline of implementation continues to be on track, with stage 2 having just been completed. While we would have wished to have completed stage 2 against a much more positive macroeconomic backdrop with more positive results, we are satisfied at the outcome and that we were able to return shareholders money through dividends, complete the strategic alliance and complete the creation of the scaled platform against a harsh operating environment. As we look back at the year and our results, our ability to persevere, deliver results and attract the right international partners says a lot about the resiliency of the organization we have built.

Stage 3 and 4 Are Profit Centric Looking forward the challenges and opportunities continue to be prevalent. 2012 will also be a year of significant change as we look towards improving efficiencies in our operations and also look at efficiency of our assets. This will include not only physical assets such as plant and machinery but also financial assets. The past approach of improving results through financial and real estate investments will be reviewed and we will revisit the use of capital and efficiency of assets. The goal will be on creating synergies in the food business and its efficiency in the use of its assets.

The coming year will also be a year of cultural change as we shift slightly from being growth orientated only to both growth and profit orientated. We will focus on the right profitability and on achieving that, scaling it up with efficiency in assets and turnover. The goal will be to be disciplined with costs, while not sacrificing growth.

Profitable Growth● Focus on asset efficiency and overall profit growth● Quantum of results now must equal better quality of results as well● Scale not only in sales but also in profitability

Profitability Through Efficiencies● Establish a profitable growth mindset and culture● Operational efficiencies and cost management equal better financial results● Achieve the right profitability ratios for the scaled business

Foundation● Achieve the economies of scale by leveraging the platform● Reach record growth in sales and reach of distribution● Begin looking at improving processes and create operational efficiencies

Preparation● Preparation for the merger of KDC, NKD, BKD & KIDO● Establishment of the operational framework for the Kinh Do Group● Establish the foundation for unparalleled growth

Sales and Marketing Strategy

our focus continues to be downstream from manufacturing and focused on sales and marketing. We believe that this is both the key component to our growth platform and one of the key barriers to maintaining our market leadership.

What this means for marketing is that we will continue to restructure and focus on creating professional processes that help us execute effectively. this includes creating a marketing strategy and direction early in the year and ensuring that team understands the primary goal for the year. In 2012, we will begin to build the foundation of change by creating a corporate culture that is consumer focused. What this means is that we will take direct business intelligence and use this insight to determine what type of products we sell, how we sell them and to whom we sell them. this is of critical importance as it forms the foundation on which we will build the future of our

236 SS

40 ASM15 RSM

1,600 Salesmen

159,598 Outlet

3 5 ASMRSM manage

5 9 SSASM manage

5 9 SalesmenSS manage

2012 Goal

Sales 1st Choice:For business partnersFor sales productivity & efficiency

200,000 Active service outlets in 2012

#1Distribution for each product category

#1Confectionary and food sales system

Marketing +50product innovations in 2012

3new product category entered in 2012

Finance Minimum 30% net revenue growth in 2012 from current products

Minimum of 38% Gross profit margins in 2012

9.1% Operating profit margins in 2012

7.3% Net profit margins in 2012

firm. As the architect of this change, the marketing function will be a key driver of this transformation. Culturally it is also a significant shift as it will mean manufacturing as a function will no longer be dictating what the company will sell through its ability to produce but we will broaden our product sourcing beyond our factories to the best, lowest cost, and most effective source of products.

At the center of this paradigm shift was our view of brands. We will look to restructure the brand architecture and build a robust and stretchable brand portfolio for all major categories. this will help to build broader and deeper value in each of our market segments. Brand building has always been important at Kinh Do but now we aim to further cement consumer loyalty through brands and heighten brand recognition through a targeted and strategic approach. the goal is to create value within the sub-brands which aggregate to achieve even bigger value and loyalty in the Kinh Do brand.

The sales strategy will be key in ensuring that we deliver financially in terms of profit and also in terms of creating brand value for the future. In 2011 we have achieved significant success in the first year of using the merged platform. As we look forward into 2012, we aim to achieve similar growth rates in sales revenue, and improve our distribution reach from 160,000 to 200,000 points of sales. Mindful that this year is profitability, the sales function will focus on productivity and efficiency of capital spending as we improve the use of the platform.

We will need to implement improvements across the sales and distribution channel including the flow of goods from our warehouse to the distributors and from distributor to the retailers. An important aspect of this change will be the implementation of the DMS (Distribution Management System) which has already been in place across the group. this system will be the primary driver in providing marketing intelligence to the team in creating targeted and effective strategies that change with the dynamics of the market.

Stage

42013

Stage

32012

Stage

22011

Stage

12009 - 2010


Thailand

Laos

Campodia

North

Centre

South

Kido’s Cold storage warehouse in Hanoi

02 Kido’s Cold storage warehouse in nha trang, Da nang

Kinh Do Factory Hung Yen

Kinh Do Factory Binh Duong

Kido’s Cold storage warehouse in Southern (Can tho, Cu Chi ).

Vinabico Ho Chi MinhKido Ice Cream FactoryHo Chi Minh

South


WHAT WE DO

CREATING SUPERIOR VALUE THROUGH BRANDS


WHAT WE DO

Creating Value Through Brands

Brand

At Kinh Do, we are passionate about brands. And it shows in the numerous awards and recognitions we have received throughout the years. But most important to us is the trust consumers generously bestow upon our brand: in a 2011 survey, Kinh Do was selected the #1 confectionery and snack brand and made the top 10 list of best brands in Vietnam1

90% consumers

surveyed know the brand

70% love the brand

69% had bought and consumed the brand before

63% considered buying

the brand in the future

59% recommend to

others

1 Source: Vietnam’s Best Brands 2010 by research company FTA. The biannual study, commissioned by the Vietnam Chamber of Commerce and Industry (VCCI), surveyed over 3000 consumers to select and then rank 500 brands available in Vietnam according to “Brand Strength Index”.

recommend to others

59

consider buying the brand in the

future

63

have bought and consumed the brand before

69

love the brand

70

consumers surveyed know the brand

90


WHAT WE DO

Brand

Most Loved Vietnamese

Brands

Selected amongst

a survey held by the daily Saigon Liberation (Sài Gòn Giải Phóng) in

November 2011

Top 10Vietnam’s Best Brands 2011

HighestBrand Strength Index in the confectionery and

snack category

National Brands

awarded by Trade Promotion Bureau, Ministry

of Industry & Trade

Won

together with the Kinh Do main brand, the company also manages a portfolio of over 20 other popular product brands, including AFC and CoSY (biscuits), trang Vang (premium moon cakes), SolIte (sponge cakes), MeRIno (ice cream), etc., many of those are widely known in both domestic and export markets.

In 2012, KDC will overhaul its brand architecture, establishing a common platform to leverage Kinh Do’s iconic brand equity to endorse other brands. the vision is to build a multi-trillion-dong mega brand while optimizing brand building investment.


VND 652bil

Sales

up 31% from 2010

2,100 tons

Volume

of moon cakes,

Brand

76%Market share:

Kinh Do Moon Cakes

Despite the negative impact of the overall economics and consumer sentiment, Kinh Do’s sales of moon cakes still grew by over 31%, gaining to 76% market share, thanks to the brand’s strong following and dominant competitive position.

Kinh Do’s Mid-Autumn Festival campaign, now in its 3rd year running, was embraced by consumers, transforming Kinh Do from the best known brand to the most loved one during the mid-autumn season. Its message “Sincerity is the best gift of all” was well liked by 71% of the consumers.

not resting on its laurels, Kinh Do will continue to improve overall product quality and take the premium brand trang Vang further up market with new packaging and shop designs, new communication and more intensive media weight.

VND 331bil

Kinh Do Tet Cookies

growing at 40% per year

27%Market share

Kinh Do TET Cookies

Kinh Do’s cookies brands including Good Choice, Korento, and Story (tet gifts), accounting for 27% market share within the category. the Korento premium brand received a facelift with new packaging, improved quality, and multiple marketing activities in both modern trade and general trade channels. early readings showed encouraging results of the brand’s gaining traction in the upper market segment.

WHAT WE DO


Brand

VND 472bil

Cosy sales

increasing 75% year on year

VND 1,550bil

Sweet biscuits market size

growing at 40% per year

30.4%Market share

COSY Sweet Biscuits

In 2011, CoSY grew by 75%, twice as fast as the category growth. the promotion “Share a CoSY & win big” helped the brand achieve its market penetration goal, with sales increasing 80% over the normal running rate. Brand awareness went from 40% up to 60%. CoSY still has a lot of room for growth as currently only 50% of the distribution network carry the brand. this represents a unique opportunity to continue to grow the CoSY brand organically within our own network and bring bigger and broader sales reach for the product.

VND 309bil

Sales

up 42% from 2010

56%Market share:

AFC Savory Biscuits

AFC consolidated its market leadership in the savory biscuits category. In 2011, KDC introduced a new AFC with 5 flavors, all fortified with 4 healthy nutrients. The campaign “AFC fun snack, real health benefits” (www.afc-anchoikhoethiet.com) attracted over 10 million page views online. through multiple activities, the brand’s top of mind awareness increased from 55% to 73% with 100% category users knowing AFC. of that 58% confirmed they would definitely buy AFC after exposed to the new tVC.

WHAT WE DO


Brand

MERINO and CELANO Ice-cream

MeRIno and CelAno are Kido's own brand of single serve ice cream. these two brands were developed upon the establishment of the Kido's business. this is one of Kinh Do's key success stories of creating a market dominant product brand and entering an entirely new product category. Combined these two brands now are 29% of the total market growing at 27.8%.

27.8%Growth

compared to 2010

44.6%Growth

compared to 2010

8%Market share

VND 169 Billion

Sales

Yogurt - WEL YO

According to market research, dairy products in Vietnam have great growth potentials. the average person in Vietnam consumes an average of 14 liters of milk & other dairy products per year, much below that of the thais, who consume up to 41 liters per year. the category has been growing at 10% per annum and Kinh Do has a running rate of 3x that. our strategy to enter the milk & dairy products category is part of our Food& Flavor strategy and leveraging our sales, marketing and distribution platform we have gone from new entrant to over 8% market share in a very short time.

29%Market share VND 441

Billion

Sales

WHAT WE DO


64%Market share

VND 630bil

Sales

34% increase from 2010

ALOHA Sandwich & SCOTTI Super Soft Buns

Kinh Do’s brands Aloha and Scotti maintained market leadership in the packaged bread category thanks to good quality products, extensive distribution network, and efficient logistics. the market still holds much growth potentials as product penetration is still low: only 35% of consumers ever tried packaged bread as a breakfast / snacking alternative. We are continuing to extend our reach and improve penetration of this product and the two brands.

SOLITE and SOPHIE Sponge Cakes

SolIte and SopHIe are Kinh Do’s sponge cakes brands. In 2011, SolIte was repositioned to enter the premium cake market, a segment that has showed strong growth in past few years but has been monopolized by only a few imported brands such as Custas (orion) and Custard (european Cake). the new SolIte was launched in 9 key cities with totally new product and packaging, accompanied by extensive sampling and activation activities. the reach has so far been impressive with a strong 6 point gain in 2011 and momentum to gain further in 2012.

the fresh cakes segment (7 day shelf life) is typically occupied by either bakeries or artisan products and is a very fragmented market due to the challenges of national distribution in such a short time frame. Kinh Do best in market sales and distribution allows us to overcome this challenge and with the brand SopHIe we are the dominant market leader with over 90% market share.

VND 848bil

Sales

14% increase from 2010 26%

Market Share

gaining 6 percentage points from 2010

WHAT WE DO


OUR PERFECTLY BUILTSOLUTION

WHAT WE AIM FOR


Kinh Do’s Main Ingredient

Building a Portfolio for Growth

GROWTH STRATEGIES

our product portfolio consisting of confectionary products have been the foundation of the company. We have expanded Kinh Do from a single product, single brand company to one that includes one primary Kinh Do brand and multiple product brands. the name Kinh Do is now synonymous with snack and confectionary.

In order to accelerate the growth of Kinh Do, we are reaching beyond our traditional products to expand into products that extend our reach to the next stage of development which includes “Food & Flavor”. the Food & Flavor strategy is designed to extend our product portfolio beyond impulse purchase and seasonal gifting. It aims to entrench Kinh Do products into the meal time, and add a presence for our products during meal times.

In addition to the Food & Flavor strategy, we have not forgotten what has brought us success over the last 18 years, and that it comes down to our existing customers and our existing Snack & Confectionary products. It’s sometimes difficult to embrace change when doing what we’ve done has brought so much success. But being acutely aware that resting on our laurels is not an option, and over the last two decades are customers have aged, and developed different tastes, we as a company have strived to stay ahead of the trend by providing better quality products with different elements that are fit for our changing customer base.

Snack and Confectionary

Improving Value proposition for Consumers Through Better Product Innovation and Quality

Improving Choices for Consumer through new types of products and Brands

Food and Flavor

Impulse purchase and occasion Driven

Meal Compliments and Replacements

Case Study

Re-Energized the Old Crackers: AFC Re-launch Campaign 2011

IssuesSeveral consumer researches revealed AFC crackers packaging and communication did not appeal to consumers. Instead of aiding consumer choices, the product lineups confused them with convoluted flavor-nutrient combinations. Consequently, the brand positioning of nutrition was not clearly understood by consumers.

What was donethe team chose to re-launch the brand, introducing the new AFC crackers with all 4 nutrients combined (4 in 1). packaging was redesigned to become clean and clutter-free, clearly communicating the benefits of the 4 nutrients. Communication was based on simple insight that good, tasty foods often are not healthy (and vice versa, healthy foods do not taste good). the new AFC is the only one product that offers consumers both HeAltH & tASte

- Communication idea: tAStY & HeAltHY• TASTY: savory biscuit with variety of flavors• HEALTHY: 4 nutrients

- execution: 360-degree campaign: tVC, print, pR, online, Sampling, poSM, outdoors, Display

Results - Brand awareness: 100%- top of mind awareness: 53% ->73%- Brand attributes improved significantly

• A healthy brand• Worth every penny • Premium, modern brand

- Improvements in sales


Expanding Our Horizons

Accelerating through acquisitions & partnerships

GROWTH STRATEGIES

platform

product

people

Accelerating Through Acquisitions & PartnershipsCooperation has been a fundamental principal upon which Kinh Do has found its success in the local market. understanding that the value of partnerships and alliances helps to develop the market overall, Kinh Do has been actively involved in forming and leveraging local partnerships and alliances particularly amongst the food and beverage companies. over the course of Kinh Do’s history we have engaged in many investments, acquisitions and partnerships all with specific purpose, and intent. Whether it is knowledge, sharing of resources, or development of a category, we have been actively and constructively working with partners for a common good.

the development of our business, the extension of our portfolio strategy demands that we look beyond Vietnam to international partnerships that will help us to leverage our platform growth beyond the Vietnamese market. our strategy in partnerships and acquisitions requires that we take a two pronged approach that encompasses either a product extension or a capability extension.

this was when we decided to take on a strategic partnership which ended with the alliance with ezaki Glico Co. ltd, which we believe provides with both extension of our product portfolio and ultimately extend our capabilities.

For Kinh Do’s own acquisition strategy, we will continue to be opportunistic, looking at companies and businesses which complement our Snack & Confectionary strategy or Food & Flavor initiative. In addition, we will look at alliances which bring us beyond the borders of Vietnam which we believe will be our next phase of development.

Case Study

the primary case study for M&A for Kinh Do has been the merger of nKD, BKD, and Kido under KDC. the goal of the merger to create Vietnam’s number one confectionary company and a primary growth vehicle that will enable us to leverage 3 phases of development, including:

1) Foundation which includes achieving scale and reach by establishing the platform.

2) Profitability Through Efficiencies to increase operational efficiencies and achieve the right type of profitability.

3) Profitable Growth which will focus on asset efficiency and overall profit growth.

Outside of the financial strategy, and the product strategy, the actual resources and value of Kinh Do resides in the following:

With this we can effectively “plug-n-play” multiple businesses, products and partners into Kinh Do to take advantage of opportunities that arise. This is all guided of course by both our adherence to the product strategy, and extreme focus on the financial strategy for profitability.


Corporate Social Responsibilty

The Foundation of Kinh Do

Nurturing Talent Maximising Potentialpeople are the foundation of our business and form the core of what we do. As both a manufacturer and fast moving consumer goods company, we have people from a range of background and levels of experience. our ability to keep them all engaged and motivated is not a job, or a career but culturally part of who we are.

to enable us to broaden the foundation for future growth, we continuously strive to develop talent internally to be the best in market. this achieves two goals:

1) we ensure a consistent team of results oriented people that deliver on the goals we outline, and

2) by being the best we attract the best talent available.

this cycle of training and investment in our people ensures that the scalability of the platform at the fundamental level is maintained while organic and inorganic growth will not sacrifice excellence.

Beyond Vietnam

Broadening Our OfferVietnam continues to be our home market and key to our future strategy as we believe there cannot be a growth strategy without Vietnam. At the same time we also believe that the future must include more than Vietnam which is why the third dimension of our product strategy of “Improving Value” and “Improving Choice” will also include “Improving Reach”. Reach will not be defined by geographical boundaries but by Kinh Do’s ability to sell its product to consumers in other markets, geographies and localities through the establishment of additional channels for distribution.

Improving Reach of products to Reach Customer through exports, partnerships and overseas expansion

Improving Value proposition for Consumers through Better product Innovation and Quality

Improving Choices for Consumer through new types of products and Brands


Corporate Social Responsibility

Our Responsibility to the Community As a leading corporation in Vietnam market, Kinh Do is always aware of its social responsibility to the community. Commitments to corporate responsibility are not only projects or initiatives but are part of who we are and what we do. In aspects both big and small we as a company and individuals ensure that every aspect of our business processes are responsible to the com-munity and we are accountable for the results.

It Starts with Managing Quality

our products reach a broad number of people every day and we need to ensure that product quality is maintained. All Kinh Do Corporation’s products are manufactured at its two main plants in Binh Duong and Hung Yen. We start by carefully selecting the machinery to ensure that it produces at the highest quality and efficiency. Our vendors are primarily European and produce some of the world’s most advance machines in our industry, including high output low power consumption and energy efficient. To ensure products coming off the lines are of consistent quality, we ensure that the adopted quality management standards, such as Quality Management Standard ISO 9001:2008 certified by Bureau Veritas Certification, Food Safety Management System ISO 22.000:2005 and Total Quality Management (TQM) are fully adhered to. We aim to meet the most stringent quality standards and produce our products using the most efficient process possible, decreasing wastage, increasing energy efficiency and also using environmentally friendly materials where possible.

It Ends with the Customer

We select the best inputs materials and ensure that the product’s origins are traceable and clear. We focus on quality of product and ensure that the process of manufacturing is tightly controlled and that the output is consistent and of a high quality. our goods reach a large number of people and any compromise in quality can have a huge social impact. As a producer of food products we have a strong sense of responsibility on the impact that our products can have in the larger community; therefore we strive to ensure that customer satisfaction is high with our products.

It’s Based on the Community

With our broad reach in terms of sales and distribution we get to see a very diverse part of the country including the rural areas. In order to create a positive impact in all the communities we tough through our sales team and our products, we have initiatives to support community development. Kinh Do actively creates and contributes to programs aimed towards improving the lives of communities and societies as a whole.

In particular, Kinh Do Corporation always focuses on providing support to students through many meaningful programs, such as sponsoring a scholarship fund named " Contribute to Students”, organizing plant visits to increase awareness within the future generation of our company and our products, and also mentor students to share our experience and knowledge with them.

For many years, Kinh Do Corporation has also been involved in actively supporting the meaningful social programs of the Ho Chi Minh City Vietnam Fatherland Front and sponsoring the Association for poor patients. We also provide donations and gifts of food during the holiday season to ensure that we share our success with the communities within which they are based from.


FINANCIAL STATEMENT

MEASURING OUR SUCCESS


COMPANY

Kinh Do Corporation (“the Company”) is a shareholding company incorporated under the law on enterprise of Vietnam pursuant to the Business Registration Certificate (“BRC”) No. 4103001184 issued by the Ho Chi Minh City Department of Planning and Investment on 6 September 2002 and the following Amended BRC:

Amended BRC: Date:No. 4103001184

The first amendment 26 november 2002

the second amendment 22 September 2003

the third amendment 11 December 2003

the fourth amendment 3 August 2004

The fifth amendment 7 october 2004

the sixth amendment 11 May 2005

the seventh amendment 18 May 2006

the eighth amendment 6 July 2006

the ninth amendment 6 november 2007

the tenth amendment 10 october 2008

No. 0302705302

the eleventh amendment 21 January 2010

the twelfth amendment 1 november 2010

the thirteenth amendment 26 March 2011

the Company was listed on the Ho Chi Minh Stock exchange in accordance with the license no. 39/uBCK-GpnY issued by the State Securities Commission on 18 november 2005.

The principal activities of the Company are to process agricultural products and foods; produce confectionery, purified water, and fruit juice; and sell and purchase agricultural products and foods, industrial products, and fabric.

The registered head office of the Company is located at 141 Nguyen Du, Ben Thanh Ward, District 1, Ho Chi Minh City, Vietnam.

BOARD OF DIRECTORS

Members of the Board of Directors during the year and at the date of this report are:

Mr tran Kim thanh Chairman

Mr tran le nguyen Vice Chairman

Mr Wang Ching Hua Member

Ms Vuong Buu linh Member

Mr Co Gia tho Member

Ms Vuong ngoc Xiem Member appointed on 23 April 2011

Mr Tran Quoc Nguyen Member appointed on 23 April 2011

Mr Ma thanh Danh Member appointed on 23 April 2011

Mr nguyen Van thuan Member appointed on 23 April 2011

BOARD OF SUPERVISION

Members of the Board of Supervision during the year and at the date of this report are:

Mr le Cao thuan Head of the Board of Supervision appointed on 23 April 2011

Mr Vo long nguyen Member

Ms luong My Duyen Member

MANAGEMENT

Members of the management during the year and at the date of this report are

Mr tran le nguyen General Director

Ms Vuong Buu linh Deputy General Director

Ms Vuong ngoc Xiem Deputy General Director

Mr Wang Ching Hua Deputy General Director

Mr nguyen Khac Huy Deputy General Director

Mr Foo Woh Seng Deputy General Director

Mr nguyen Xuan luan Deputy General Director

Mr Mai Xuan tram Deputy General Director

Mr Bui thanh tung Deputy General Director

Mr Le Anh Quan Deputy General Director

Mr Tran Quoc Nguyen Deputy General Director

Mr Tran Quoc Viet Deputy General Director

Mr le Van thinh Deputy General Director

Mr Nguyen Quoc Nam Deputy General Director

Mr tran tien Hoang Deputy General Director appointed on 5 January 2011

Mr Gariel Magno torres Deputy General Director appointed on 31 March 2011

Mr Kelly Yin Hon Wong Deputy General Director appointed on 16 August 2011

Mr Luong Quang Hien Deputy General Director resigned on 15 September 2011

LEGAL REPRESENTATIVE

the legal representative of the Company during the year and at the date of this report is Mr. tran le nguyen.

AUDITORS

the auditors of the Company are ernst & Young Vietnam limited.

General information General information (Continued)


Management of Kinh Do Corporation (“the Company”) is pleased to present its report and the consolidated financial statements of the Company and its subsidiaries (“the Group”) as at and for the year ended 31 December 2011.

MANAGEMENT’S RESPONSIBILITY IN RESPECT OF THE SUMMARISED CONSOLIDATED FINANCIAL STATEMENTS

Management is responsible for the consolidated financial statements of each financial year which give a true and fair view of the consolidated state of affairs of the Group and of the Group’s consolidated results and consolidated cash flows for the year. In preparing those consolidated financial statements, management is required to:

� select suitable accounting policies and then apply them consistently;

� make judgements and estimates that are reasonable and prudent;

� state whether 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.

Management is responsible for ensuring that proper accounting records are kept which disclose, with reasonable accuracy at any time, the consolidated financial position of the Group and to ensure that the accounting records comply with the registered accounting system. It is also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Management confirmed that it has complied with the above requirements in preparing the accompanying consolidated financial statements.

STATEMENT BY MANAGEMENT

Management does hereby state that, in its opinion, the accompanying consolidated financial statements give a true and fair view of the consolidated financial position of the Group as at 31 December 2011 and of the consolidated results of its operations and its consolidated cash flows for the year then ended in accordance with the Vietnamese Accounting Standards and System and comply with relevant statutory requirements.

For and on behalf of management:

tran le nguyenGeneral Director

25 March 2012

Reference: 60752643/15053333

INDEPENDENT AUDITORS’ REPORT

To: The Shareholders of Kinh Do Corporation

We have audited the consolidated financial statements of Kinh Do Corporation and its subsidiaries (“the Group”) as at and for the year then ended 31 December 2011, from which the summarised consolidated financial statements as set out on pages 5 to 9 were derived, in accordance with the Vietnamese Standards on Auditing. In our report dated 25 March 2012, we expressed a qualified opinion on those consolidated financial statements. Our opinion was qualified with respect to the overstatement of share capital and intangible fixed assets relating to the brand name “Kinh Do” by VnD 50,000,000,000 and VnD 27,083,333,352, respectively, as at 31 December 2011 and the overstatement of the related amortisation charge by VND 2,500,000,000 for the year then ended. Except for the effects of this matter, the consolidated financial statements gave a true and fair view of the consolidated financial position of the Group as at 31 December 2011, the consolidated results of its operations and its consolidated cash flows for the year then ended in accordance with the Vietnamese Accounting Standards and System and comply with the relevant statutory requirements.

In our opinion, the accompanying summarised consolidated financial statements are consistent, in all material respects, with the consolidated financial statements from which they were derived and on which we expressed a qualified opinion.

For a better understanding of the Group’s consolidated financial position and the consolidated results of its operations for the year and of the scope of our audit, the summarised consolidated financial statements should be read in conjunction with the consolidated financial statements from which the summarised consolidated financial statements were derived and our audit report thereon.

ernst & Young Vietnam limited

Mai Viet Hung tran Bui Xuan VinhDeputy General Director AuditorCertificate No. D.0048/KTV Certificate No. 0842/KTV

Ho Chi Minh City, Vietnam

25 March 2012

Report Of Management


VND

Code ASSETS Ending balance Beginning balance (As restated)

100 A. CURRENT ASSETS 2,558,532,922,412 2,328,287,599,110 110 I. Cash and cash equipvalents 967,330,130,617 672,316,189,794 111 1. Cash 185,816,130,617 142,316,189,794

112 2. Cash equivalents 781,514,000,000 530,000,000,000

120 II. Short-term investments 373,770,318,479 160,410,864,700 121 1. Short-term investments 434,804,094,447 208,473,029,447

129 2. provision for short-term investments (61,033,775,968) (48,062,164,747)

130 III. Accounts receivable 724,910,919,717 1,018,355,262,592 131 1. trade receivables 202,402,215,815 165,221,725,147

132 2. Advances to suppliers 88,277,731,306 77,996,492,241

135 3. other receivables 436,692,571,164 777,468,509,891

139 4. provision for doubtful debts (2,461,598,568) (2,331,464,687)

140 IV. Inventories 398,032,090,636 434,328,356,064 141 1. Inventories 399,655,331,306 434,929,611,012

149 2. provision for obsolete inventories (1,623,240,670) (601,254,948)

150 V. Other current assets 94,489,462,963 42,876,925,960 151 1. Short-term prepaid expenses 27,523,140,386 18,366,201,256

152 2. Value-added tax deductible 3,495,249,715 2,997,336,086

154 3. tax and other receivables from the State 9,261,522,658 26,113,381

158 4. other current assets 54,209,550,204 21,487,275,237

200 B. NON-CURRENT ASSETS 3,250,888,458,201 2,703,632,096,551 218 I. Other long-term receivables 345,000,000 611,868,000 220 II. Fixed assets 1,431,032,627,594 1,279,052,782,572 221 1. Tangible fixed assets 830,120,570,346 774,281,348,537

222 Cost 1,466,067,600,094 1,284,750,762,016

223 Accumulated depreciation (635,947,029,748) (510,469,413,479)

224 2. Finance leases - 1,395,763,417

225 Cost - 23,795,629,857

226 Accumulated amortisation - (22,399,866,440)

227 3. Intangible fixed assets 454,552,831,520 461,113,298,581

228 Cost 527,050,756,383 501,184,139,393

229 Accumulated amortisation (72,497,924,863) (40,070,840,812)

230 4. Construction in progress 146,359,225,728 42,262,372,037

240 III. Investment property 26,591,686,628 29,165,075,656 241 1. Cost 34,524,970,816 34,524,970,816

242 2. Accumulated depreciation (7,933,284,188) (5,359,895,160)

250 IV. Long-term investments 1,255,715,348,986 1,163,078,794,488 252 1. Investments in associates and jointly controlled

entity 1,207,972,190,946 997,278,628,828

258 2. other long-term investments 91,823,744,124 259,972,213,291

259 3. provision for long-term investments (44,080,586,084) (94,172,047,631)

260 V. Other long-term assets 143,691,728,058 104,719,903,672 261 1. long-term prepaid expenses 94,489,225,035 72,548,806,717

262 2. Deferred tax assets 48,652,720,023 31,888,182,455

268 3. other long-term assets 549,783,000 282,914,500

269 VI. Goodwill 393,512,066,935 127,003,672,163270 TOTAL ASSETS 5,809,421,380,613 5,031,919,695,661

VND

Code RESOURCES Ending balance Beginning balance (As restated )

300 A. LIABILITIES 1,959,475,083,174 1,176,456,816,317310 I. Current liabilities 1,783,559,913,116 1,045,048,288,708311 1. Short-term loans and borrowings 882,654,433,040 380,554,458,699

312 2. trade payables 274,134,221,072 271,379,023,953

313 3. Advances from customers 36,056,645,617 35,154,328,758

314 4. Statutory obligations 58,171,397,947 39,637,621,073

315 5. payables to employees 65,677,580,413 22,499,912,401

316 6. Accrued expenses 221,099,438,573 142,672,413,121

319 7. other payables 203,176,971,073 123,442,819,920

323 8. Bonus and welfare fund 42,589,225,381 29,707,710,783

330 II. Non-current liabilities 175,915,170,058 131,408,527,609333 1. other long-term liabilities 17,039,941,861 6,804,898,383

334 2. long-term loans and debts 114,079,573,944 93,788,208,227

336 3. provision for severance allowance 44,795,654,253 30,815,420,999

400 B. OWNERS’ EQUITY 3,814,673,283,799 3,739,264,944,505410 I. Capital 3,814,673,283,799 3,739,264,944,505411 1. Issued share capital 1,195,178,810,000 1,195,178,810,000

412 2. Share premium 1,950,665,093,455 1,950,665,093,455

414 3. treasury shares (153,869,778,400) (138,650,412,400)

416 4. Foreign exchange differences reserve (891,411,434) 1,122,511,871

417 5. Investment and development fund 25,370,280,515 25,370,280,515

418 6. Financial reserve fund 25,792,635,752 25,792,635,752

419 7. other funds belonging to owners’ equity 15,909,752,661 16,135,952,510

420 8. undistributed earnings 756,517,901,250 663,650,072,802

439 C. MINORITY INTERESTS 35,273,013,640 116,197,934,839440 TOTAL LIABILITIES AND OWNERS’ EQUITY 5,809,421,380,613 5,031,919,695,661

OFF BALANCE SHEET ITEM

ITEM Ending balance Beginning balanceForeign currencies:

– united States dollar (uS$) 1,562,941 1,268,691

– euro (euR) 102 1,410

– Yuan (CnY) 173,300 -

nguyen thi oanh tran le nguyenChief Accountant General Director

25 March 2012

Summarised Consolidated Balance Sheet (Continued)as at 31 December 2011

Summarised Consolidated Balance Sheet as at 31 December 2011 B01-DN/HNB01-DN/HN


Summarised Consolidated Cash Flow Statementfor the year ended 31 December 2011

VND

Code ITEMS Current year Previous year (As restated)

01 1. Revenue from sale of goods and rendering of services 4,278,051,638,403 1,942,808,210,05902 2. Deductions (31,166,008,599) (9,173,917,964)10 3. Net revenue 4,246,885,629,804 1,933,634,292,09511 4. Cost of goods sold and services rendered (2,573,745,939,917) (1,248,243,869,518)20 5. Gross profit 1,673,139,689,887 685,390,422,57721 6. Financial income 127,492,814,648 663,953,281,28722 7. Financial expenses (180,679,651,253) (242,452,529,798)23 In which: Interest expense (117,213,229,417) (42,458,074,975)

24 8. Selling expenses (943,673,596,925) (347,589,483,929)25 9. General and administration expenses (331,706,403,979) (141,634,937,498)30 10. Operating profit 344,572,852,378 617,666,752,63931 11. Other income 18,467,397,145 36,463,816,73632 12. Other expenses (20,752,611,249) (12,799,790,999)40 13. Other (loss) profit (2,285,214,104) 23,664,025,73745 14. Shares of profit in associates 6,893,562,118 34,961,809,05850 15. Profit before tax 349,181,200,392 676,292,587,43451 16. Current corporate income tax expense (87,310,301,074) (110,883,359,058)52 17. Deferred income tax benefit 16,764,537,568 15,502,430,09560 18. Net profit after tax 278,635,436,886 580,911,658,471

Attributable to:

61 18.1 Minority interests 5,083,224,574 56,040,276,111

62 18.2 The Company’s shareholders 273,552,212,312 524,871,382,360

80 19. Basic earnings per share 2,312 5,211


25 March 2012

VND

Code ITEMS Current year Previous year (As restated)

I. CASH FLOWS FROM OPERATING ACTIVITIES01 Profit before tax 349,181,200,392 676,292,587,434

Adjustments for:

02 Depreciation and amortisation 201,421,618,766 86,996,450,123

03 provisions 37,875,188,972 86,227,023,956

04 unrealised foreign exchange gain (1,542,696,225) -

05 Profits from investing activities (116,676,647,656) (700,049,569,830)

06 Interest expense 117,213,229,417 42,542,135,420

08 Operating income before changes in working capital 587,471,893,666 192,008,627,103

09 Decrease in receivables 368,476,239,477 40,724,734,956

10 Decrease (increase) in inventories 35,274,279,706 (54,295,266,985)

11 Increase (decrease) in payables 137,986,606,744 (788,888,268,100)

12 (Increase) decrease in prepaid expenses (31,097,357,448) 6,161,542,965

13 Interest paid (114,190,654,109) (41,829,766,890)

14 Corporate income tax paid (81,711,661,306) (165,742,128,330)

15 Other cash inflows from operating activities 95,628,083,095 -

16 Other cash outflows from operating activities (64,725,870,817) (8,654,486,938)

20 Net cash flows from (used in) operating activities 933,111,559,008 (820,515,012,219)II. CASH FLOWS FROM INVESTING ACTIVITIES

21 Purchase and construction of fixed assets (326,069,078,042) (62,314,631,856)

22 Proceeds from disposals of fixed assets 5,422,364,340 2,945,120,000

23 loans to other entities (1,133,598,500,000) (574,979,609,869)

24 Collections from borrowers 856,510,211,400 1,001,623,000,000

25 payments for investments in other entities (594,741,569,279) (603,500,000,000)

26 proceeds from sale of investments in other entities 162,925,087,803 853,000,000,000

27 Dividends and interest received 24,296,773,701 84,109,242,789

28 Cash proceeds from business combinations - 77,595,357,035

30 Net cash flows (used in) from investing activities (1,005,254,710,077) 778,478,478,099III. CASH FLOWS FROM FINANCING ACTIVITIES

31 Capital contribution - 33,649,000,000

32 Capital redemption (15,219,366,000) -

33 Borrowings received 1,914,616,265,909 883,576,745,987

34 Borrowings repaid (1,390,497,638,485) (1,065,451,930,589)

36 Dividends paid (143,195,195,714) (122,784,149,976)

40 Net cash flows from (used in) financing activities 365,704,065,710 (271,010,334,578)50 Net increase (decrease) in cash 293,560,914,641 (313,046,868,698)60 Cash and cash equivalents at beginning of year 672,316,189,794 984,610,642,09861 Impact of exchange rate fluctuation 1,453,026,182 752,416,39470 Cash and cash equivalents at end of year 967,330,130,617 672,316,189,794


25 March 2012

Summarised Consolidated Income Statement for the year ended 31 December 2011 B02-DN/HN B03-DN/HN

kdc annual report 2011 fina en

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