Hoa Binh Construction &
Real Estate Corporation
Interim consolidated financial statements
30 June 2011
Hoa Binh Construction & Real Estate Corporation
CONTENTS
Pages
General information
1-2
Report of management
3
Report on review of interim consolidated financial statements
4
Interim consolidated balance sheet
Interim consolidated income statement
Interim consolidated cash flow statement
Notes to the interim consolidated financial statements
5-6
7
8-9
10 - 43
Hoa Binh Construction & Real Estate Corporation
GENERAL INFORMATION
THE COMPANY
Hoa Binh Construction & Real Estate Corporation (“the Company”) is a shareholding company
incorporated under the Law on Enterprise of Vietnam pursuant to Business Registration Certificate
No. 4103000229 issued by the Department of Planning and Investment of Ho Chi Minh City on 1
December 2000 and the following Amended Business Registration Certificates:
Amended Business Registration Certificates
Date
1st amendment
2nd amendment
3rd amendment
4th amendment
5th amendment
6th amendment
7th amendment
8th amendment
8 August 2002
25 March 2004
2 March 2006
7 July 2006
4 September 2007
28 November 2008
16 September 2010
6 April 2011
The Company was listed on the Ho Chi Minh Stock Exchange in accordance with Decision No.
80/UBCK-GPNY issued by the State Stock Exchange on 22 November 2006.
The Company’s principal activities are to provide industrial and civil construction services; surface
levelling; construction consulting services; manufacture and trade of construction materials; interior
decoration products; house renovation and interior decoration services; and to trade real estate.
The Company’s registered head office is located at 235 Vo Thi Sau Street, Ward 7, District 3, Ho
Chi Minh City, Vietnam.
BOARD OF DIRECTORS
The members of the Board of Directors during the period and at the date of this report are:
Mr Le Viet Hai
Mr Tran Anh Hoang
Mr Phan Ngoc Thanh
Mr Truong Quang Nhat
Mr Le Quoc Duy
Mr Nguyen Le Tan
Mr Ngo Ngoc Quang
Mr Tan Kok Leong
Chairman
Member
Member
Member
Member
Member
Member
Member
BOARD OF SUPERVISION
The members of the Board of Supervision during the period and at the date of this report are:
Mr Nguyen Van Thang
Ms Le Thi Phuong Uyen
Mr vo Dac Khoi
Head of the Board of Supervision
Member
Member
1
Hoa Binh Construction & Real Estate Corporation
GENERAL INFORMATION (continued)
MANAGEMENT
Members of the Management during the period and at the date of this report are:
Mr Le Viet Hai
Mr Le Viet Hung
Mr Nguyen Van Tinh
Mr Truong Quang Nhat
Mr Nguyen Van An
Mr Nguyen Tan Tho
Mr Le Quoc Duy
General Director
Advisor to the Board of Management
Deputy General Director
Deputy General Director
Deputy General Director
Deputy General Director
Deputy General Director
LEGAL REPRESENTATIVE
The legal representative of the Company during the period and at the date of this report is Mr Le
Viet Hai.
AUDITORS
The auditors of the Company is Ernst & Young Vietnam Limited.
2
Hoa Binh Construction & Real Estate Corporation
REPORT OF MANAGEMENT
Management of Hoa Binh Construction & Real Estate Corporation (“the Company”) is pleased to
present its report and the interim consolidated financial statements of the Company and its
subsidiaries (“the Group”) for the six-month period ended 30 June 2011.
MANAGEMENT’S RESPONSIBILITY IN RESPECT OF THE INTERIM CONSOLIDATED
FINANCIAL STATEMENTS
Management is responsible for the interim consolidated financial statements of the Group which give
a true and fair view of the interim consolidated state of affairs of the Group and of the interim
consolidated results of its operations and its interim consolidated cash flows for the period. In
preparing those interim 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 interim consolidated financial statements; and

prepare the interim 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 interim 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 interim consolidated financial statements.
STATEMENT BY MANAGEMENT
Management does hereby state that, in its opinion, the accompanying interim consolidated financial
statements give a true and fair view of the interim consolidated financial position of the Group as at
30 June 2011 and of the interim consolidated results of its operations and its interim consolidated
cash flows for the six-month period then ended in accordance with the Vietnamese Accounting
Standards and System and comply with relevant statutory requirements.
For and on behalf of management:
Le Viet Hai
General Director
29 August 2011
3
Reference: 60933601/15022738
REPORT ON REVIEW OF INTERIM CONSOLIDATED FINANCIAL STATEMENTS
To:
The Shareholders of Hoa Binh Construction & Real Estate Corporation
We have reviewed the interim consolidated financial statements of Hoa Binh Construction & Real
Estate Corporation (“the Company”) and its subsidiaries (“the Group”) as set out on pages 5 to 43
which comprise the interim consolidated balance sheet as at 30 June 2011, the interim consolidated
income statement and the interim consolidated cash flow statement for the six-month period then
ended and the notes thereto.
The preparation and presentation of these interim consolidated financial statements are the
responsibility of management. Our responsibility is to issue a report on these interim consolidated
financial statements based on our review.
The Group’s consolidated financial statements as at 31 December 2010 and for the year then ended
were audited by another auditor whose report dated 7 April 2011 expressed an unqualified opinion
on those statements. The Group’s interim consolidated income statement and the interim
consolidated cash flow statement for the six-month period ended 30 June 2010 presented for
comparative purpose were also reviewed by another auditor whose report dated 25 August 2010
expressed an unqualified opinion on those statements.
We conducted our review in accordance with Vietnamese Standard on Auditing No. 910 –
Engagements to Review Financial Statements. This standard requires that we plan and perform the
review to obtain moderate assurance as to whether the interim consolidated financial statements are
free from material misstatement. A review is limited primarily to inquiries of the Group’s personnel
and analytical procedures applied to financial data and thus provides less assurance than an audit.
We have not performed an audit and, accordingly, we do not express an audit opinion.
Based on our review, nothing has come to our attention that caused us to believe that the
accompanying interim consolidated financial statements do not give a true and fair view of the
interim consolidated financial position of the Group as at 30 June 2011, and of the interim
consolidated results of its operations and its interim consolidated cash flows for the six-month period
then ended in accordance with the Vietnamese Accounting Standards and System and comply with
relevant statutory requirements.
Ernst & Young Vietnam Limited
Narciso T. Torres Jr
Deputy General Director
Certificate No. N.0868/KTV
Ho Chi Minh City, Vietnam
29 August 2011
Le Quang Minh
Auditor
Certificate No. 0426/KTV
Hoa Binh Construction & Real Estate Corporation
B01a-DN/HN
INTERIM CONSOLIDATED BALANCE SHEET
as at 30 June 2011
VND
Code
ASSETS
Notes
30 June 2011
31 December 2010
2,150,421,553,112
1,273,080,987,731
4
585,720,114,055
33,789,087,675
551,931,026,380
258,119,214,731
58,218,393,113
199,900,821,618
5.1
35,777,354,473
1,394,493,283
1,210,312,569,324
336,464,172,445
121,424,979,882
843,542,109,060
320,466,554,955
58,310,717,961
100
A. CURRENT ASSETS
110
111
112
I.
121
II. Short-term investments
130
131
132
134
135
139
III. Current accounts receivable
1. Trade receivables
2. Advances to suppliers
3. Construction contractor
receivables based on agreed
progress billings
4. Other receivables
5. Provision for doubtful debts
8
9
6, 7
721,937,401,210
31,420,140,752
(934,124,965)
457,375,504,727
7,961,723,953
(572,392,536)
141
IV. Inventories
10
273,002,503,638
150,351,557,408
150
151
152
154
11
45,609,011,622
26,500,900,195
9,758,399,672
19,673,613,249
6,390,457,057
4,078,115,785
158
V. Other current assets
1. Short-term prepaid expenses
2. Value-added tax deductible
3. Tax and other receivables
from the State
4. Other current assets
11,536,499
9,338,175,256
206,388,129
8,998,652,278
200
B. NON-CURRENT ASSETS
724,012,957,655
639,878,254,599
220
221
222
223
227
228
229
230
I.
489,554,706,141
452,949,127,417
566,026,927,366
(113,077,799,949)
6,073,465,544
6,846,737,843
(773,272,299)
30,532,113,180
478,888,451,543
325,795,684,238
409,760,064,229
(83,964,379,991)
6,213,449,131
6,810,737,843
(597,288,712)
146,879,318,174
250
252
II.
180,245,783,481
111,494,451,993
5.2
5.3
141,760,901,977
38,484,881,504
73,925,940,489
37,568,511,504
16
29.3
54,212,468,033
50,548,091,152
1,645,422,081
2,018,954,800
42,261,956,063
40,521,909,065
183,092,198
1,556,954,800
-
7,233,395,000
2,874,434,510,767
1,912,959,242,330
Cash and cash equivalents
1. Cash
2. Cash equivalents
6
7
12
Fixed assets
1. Tangible fixed assets
Cost
Accumulated depreciation
2. Intangible fixed assets
Cost
Accumulated amortisation
3. Construction in progress
258
Long-term investments
1. Investments in associates
and joint ventures
2. Other long-term investments
260
261
262
268
III. Other long-term assets
1. Long-term prepaid expenses
2. Deferred tax assets
3. Other long-term assets
269
IV. Goodwill
270
TOTAL ASSETS
13
14
15
5
Hoa Binh Construction & Real Estate Corporation
B01a-DN/HN
INTERIM CONSOLIDATED BALANCE SHEET (continued)
as at 30 June 2011
VND
Code
RESOURCES
Notes
30 June 2011
31 December 2010
300
A. LIABILITIES
2,152,265,113,702
1,219,918,936,033
310
311
I.
2,101,499,133,996
1,179,214,188,438
940,052,821,563
283,189,711,052
644,279,853,424
20,849,031,297
37,891,323,886
62,692,873,533
101,826,392,669
10,717,126,572
531,811,018,166
327,007,811,325
182,969,748,247
44,125,022,062
55,370,608,615
13,917,475,481
8,409,042,556
15,603,461,986
50,765,979,706
9,935,565,926
40,704,747,595
17,744,949,409
6,459,353,415
12,056,630,694
22,314,429,671
363,054,834
737,214,238
21,859,529,114
716,368,370,879
665,393,216,491
716,368,370,879
207,881,660,000
368,383,473,203
(17,947,727,609)
665,393,216,491
167,310,030,000
368,383,473,203
(17,947,727,609)
-
153,861,723
32,354,987,840
11,458,225,129
114,237,752,316
32,066,340,578
11,361,009,041
104,066,229,555
5,801,026,186
27,647,089,806
2,874,434,510,767
1,912,959,242,330
30 June 2011
31 December 2010
768.62
595.84
312
313
314
315
316
319
323
330
334
336
Current liabilities
1. Short-term loans and
borrowings
2. Trade payables
3. Advances from customers
4. Statutory obligations
5. Payables to employees
6. Accrued expenses
7. Other payables
8. Bonus and welfare fund
337
338
II. Non-current liabilities
1. Long-term loans
2. Provision for severance
allowance
3. Long-term provision
4. Unearned revenues
400
B. OWNERS’ EQUITY
410
411
412
414
416
I.
417
418
420
Capital
1. Share capital
2. Share premium
3. Treasury shares
4. Foreign exchange
difference
5. Investment and
development fund
6. Financial reserve fund
7. Undistributed earnings
439
C. MINORITY INTERESTS
440
TOTAL LIABILITIES AND
OWNERS’ EQUITY
17
18
19
20
21
22
23
24
OFF BALANCE SHEET ITEM
ITEM
Foreign currency
United States Dollar (US$)
Nguyen Thi Nguyen Thuy
Chief Accountant
Le Viet Hai
General Director
29 August 2011
6
Hoa Binh Construction & Real Estate Corporation
B02a-DN/HN
INTERIM CONSOLIDATED INCOME STATEMENT
for the six-month period ended 30 June 2011
VND
Notes
For the six-month
period ended
30 June 2011
For the six-month
period ended
30 June 2010
1. Revenue from sale of goods and
rendering of services
26
1,326,057,736,640
746,515,721,415
02
2. Deductions
26
(633,092,437)
-
10
3. Net revenue from sale of goods
and rendering of services
26
1,325,424,644,203
746,515,721,415
(1,148,645,089,624)
(637,631,166,842)
176,779,554,579
108,884,554,573
21,924,955,109
15,489,273,332
(64,137,949,028)
(62,324,089,438)
(20,935,127,942)
(20,549,185,755)
(3,328,613,199)
(364,048,535)
(54,802,810,221)
(31,938,673,949)
76,435,137,240
71,135,977,479
Code ITEMS
01
11
20
4. Cost of goods sold and services
rendered
5. Gross profit from sale of goods
and rendering of services
21
6. Finance income
22
23
7. Finance expenses
In which: Interest expense
24
8. Selling expenses
25
9. General and administrative
expenses
26.2
27
30
10. Operating profit
31
11. Other income
28
2,902,688,663
2,238,783,816
32
12. Other expenses
28
(422,914,061)
(1,306,841,055)
40
13. Other profit
2,479,774,602
931,942,761
45
14. Shares of profit (loss) of
associates and joint venture
10,209,022,437
(1,583,904,701)
50
15. Profit before tax
89,123,934,279
70,484,015,539
51
16. Current corporate income tax
expense
29.1
(21,809,709,721)
(17,678,107,148)
17. Deferred corporate income tax
benefit
29.3
1,462,329,883
13,392,985
68,776,554,441
52,819,301,376
245,749,013
129,902,063
68,530,805,428
52,689,399,313
3,378
3,561
52
60
70
18. Net profit after tax
Attributable to:
18.1 Minority interests
18.2 Equity holders of the
Company
19. Basic earnings per share
25
Nguyen Thi Nguyen Thuy
Chief Accountant
Le Viet Hai
General Director
29 August 2011
7
Hoa Binh Construction & Real Estate Corporation
B03a-DN/HN
INTERIM CONSOLIDATED CASH FLOW STATEMENT
for the six-month period ended 30 June 2011
VND
Code
For the six-month
period ended
30 June 2011
For the six-month
period ended
30 June 2010
89,123,934,279
70,484,015,539
29,187,032,384
11,681,148,885
1,198,416,825
(31,179,888,312)
62,324,089,438
16,548,978,502
(6,823,823,563)
20,549,185,755
162,334,733,499
(360,088,179,754)
(122,650,946,230)
513,779,521,839
100,758,356,233
(314,362,394,908)
19,204,036,461
156,520,337,547
(30,136,625,225)
(55,141,228,286)
(33,622,984,751)
6,315,765,914
(20,321,688,525)
(3,181,108,986)
(5,605,917,332)
(4,073,707,122)
68,868,373,760
(59,140,403,386)
(165,163,218,637)
(41,419,166,009)
(33,523,456,878)
1,030,376,588
70,000,000
(500,000,000)
5,000,000
(916,370,000)
(1,084,230,000)
27,979,200,000
18,275,469,853
1,757,627,392
Net cash flows used in investing
activities
(152,317,999,074)
(41,170,768,617)
III. CASH FLOWS FROM FINANCING
ACTIVITIES
Capital contribution
Capital redemption
Drawdown of borrowings
Repayment of borrowings
1,158,292,813,742
(747,250,970,496)
500,000,000
(17,947,727,609)
327,096,471,538
(316,666,591,228)
411,041,843,246
(7,017,847,299)
ITEMS
Notes
I.
01
02
03
04
05
06
08
09
10
11
12
13
14
16
20
21
22
23
24
25
26
27
30
31
32
33
34
40
CASH FLOWS FROM
OPERATING ACTIVITIES
Profit before tax
Adjustments for:
Depreciation and amortisation
Provisions
Unrealised foreign exchange losses
Profits from investing activities
Interest expense
Operating profit before changes in
working capital
Increase in receivables
(Increase) decrease in inventories
Increase in payables
(Increase) decrease in prepaid
expenses
Interest paid
Corporate income tax paid
Other cash outflows from operating
activities
27
29.2
Net cash flows from (used in)
operating activities
II. CASH FLOWS FROM INVESTING
ACTIVITIES
Purchase and construction of
fixed assets
Proceeds from disposals of
fixed assets
Loans to other entities
Collections from borrowers
Payments for investments in
other entities
Proceeds from sale of investments
in other entities
Interest and dividends received
Net cash flows from (used in)
financing activities
8
Hoa Binh Construction & Real Estate Corporation
B03a-DN/HN
INTERIM CONSOLIDATED CASH FLOW STATEMENT (continued)
for the six-month period ended 30 June 2011
VND
Code
50
60
ITEMS
Notes
Net increase (decrease) in cash
and cash equivalents
Cash and cash equivalents at
beginning of period
61
Impact of exchange rate fluctuation
70
Cash and cash equivalents at end
of period
4
4
Nguyen Thi Nguyen Thuy
Chief Accountant
For the six-month
period ended
30 June 2011
For the six-month
period ended
30 June 2010
327,592,217,932
(107,329,019,302)
258,119,214,731
183,773,870,503
8,681,392
47,389,335
585,720,114,055
76,492,240,536
Le Viet Hai
General Director
29 August 2011
9
Hoa Binh Construction & Real Estate Corporation
B09a-DN/HN
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
as at and for the six-month period ended 30 June 2011
1.
CORPORATE INFORMATION
Hoa Binh Construction & Real Estate Corporation (“the Company”) is a shareholding
company incorporated under the Law on Enterprise of Vietnam pursuant to Business
Registration Certificate No. 4103000229 issued by the Department of Planning and
Investment (“DPI”) of Ho Chi Minh City on 1 December 2000 and the following Amended
Business Registration Certificates:
Amended Business Registration Certificates
Date
1st
8 August 2002
25 March 2004
2 March 2006
7 July 2006
4 September 2007
28 November 2008
16 September 2010
6 April 2011
amendment
2nd amendment
3rd amendment
4th amendment
5th amendment
6th amendment
7th amendment
8th amendment
The Company was listed on the Ho Chi Minh Stock Exchange in accordance with Decision
No. 80/UBCK-GPNY issued by the State Stock Exchange on 22 November 2006.
The principal activities of the Company and its subsidiaries (“Group”) are to provide
industrial and civil construction services; surface levelling; construction consulting services;
manufacture and trade of construction materials; interior decoration products; house
renovation and interior decoration services; and to trade real estate.
The Company’s registered head office is located at 235 Vo Thi Sau Street, Ward 7, District
3, Ho Chi Minh City, Vietnam.
The number of the Group’s employees as at 30 June 2011 was 1,838 (31 December
2010: 1,549).
Corporate structure
The Company’s corporate structure includes 11 subsidiaries, in which:
Hoa Binh House Corporation (“HBH”), a shareholding company in which the Company holds
94% of ownership interest, was incorporated under the Law on Enterprise of Vietnam
pursuant to Business Registration Certificate No. 4103007228 issued by the DPI of Ho Chi
Minh City on 7 July 2007, as amended. HBH’s registered office is located at 235/2 Vo Thi
Sau Street, Ward 7, District 3, Ho Chi Minh City Vietnam. HBH’s principal activity is to invest
in real estates.
Hoa Binh Wood Manufacturing and Decorating Joint Stock Company (“MHB”), a
shareholding company in which the Company holds 90% of ownership interest, was
incorporated under the Law on Enterprise of Vietnam pursuant to Business Registration
Certificate No. 4103010322 issued by the DPI of Ho Chi Minh City on 17 May 2008, as
amended. MHB’s registered office is located at 2 Nguyen Oanh Street, Ward 7, Go Vap
District, Ho Chi Minh City, Vietnam. MHB’s principal activity is to manufacture, sell, process
and fit up household wooden and interior decoration products.
Hoa Binh Phu Yen Investment and Development Joint Stock Company (“HBY”), a
shareholding company in which the Company holds 99.22% of ownership interest, was
incorporated under the Law on Enterprise of Vietnam pursuant to Business Registration
Certificate No. 3603000092 issued by the DPI of Phu Yen Province on 8 November 2007,
as amended. HBY’s registered office is located at 169 Le Duan Street, Ward 6, Tuy Hoa
City, Phu Yen Province, Vietnam. HBY’s principal activity is to provide engineering
construction services.
10
Hoa Binh Construction & Real Estate Corporation
B09a-DN/HN
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (continued)
as at and for the six-month period ended 30 June 2011
1.
CORPORATE INFORMATION (continued)
Corporate structure (continued)
Hoa Binh Mechanical Electrical Joint Stock Company (“HBE”), a shareholding company in
which the Company holds 92.57% of ownership interest, was incorporated under the Law
on Enterprise of Vietnam pursuant to Business Registration Certificate No. 4103009338
issued by the DPI of Ho Chi Minh City on 2 February 2008. HBE’s registered office is
located at 235/2 Vo Thi Sau Street, Ward 7, District 3, Ho Chi Minh City, Vietnam. HBE’s
principal activity is to build and fit up construction equipments, electric and water systems,
prevention and fighting fire systems, cold system.
Hoa Binh Paint Co., Ltd. (“HBP”), a one member limited liability company, was incorporated
under the Law on Enterprise of Vietnam pursuant to Business Registration Certificate No.
4104000032 issued by the DPI of Ho Chi Minh City on 24 December 2001, as amended.
HBP’s registered office is located at Lot 37/5A, 5th Quarter, Phan Van Hon Street, Tan Thoi
Nhat Ward, District 12, Ho Chi Minh City, Vietnam. HBP’s principal activities are to
manufacture, sell construction materials and provide interior decoration services.
Anh Huy Co., Ltd. (“AHA”), a limited liability company with two or more members in which
the Company holds 90% of ownership interest, was incorporated in Vietnam pursuant to
Business Registration Certificate No. 0301453003 issued by the DPI of Ho Chi Minh City on
14 August 1993, as amended. AHA’s registered office is located at 1700/3C, Revenue 1A,
An Phu Dong Ward, District 12, Ho Chi Minh City, Vietnam. AHA’s principal activities are to
provide interior decoration services; to manufacture construction materials (aluminium
windows); to provide surface levelling service; and to sell construction materials.
Hoa Binh Hanoi Construction & Read Estate Co., Ltd (“HB Hanoi”), a one member limited
liability company, was incorporated under the Law on Enterprise of Vietnam pursuant to
Business Registration Certificate No. 0104853362 issued by the DPI of Ha Noi City on 8
September 2010, as amended. HB Hanoi’s registered office is located at 8th Floor, San
Nam Office, Dich Vong Hau Ward, Cau Giay District, Ha Noi City, Vietnam. HB Hanoi’s
principal activities are to provide industrial and civil construction services; surface levelling
service; to install sewage system service; house renovation and interior decoration services;
and to trade real estate.
Hoa Binh Hue Development Joint Stock Company (“HBL”), a shareholding company in
which the Company holds 95.49% of ownership interest, was incorporated under the Law
on Enterprise of Vietnam pursuant to Investment Licence No. 312031000012 issued by the
Board of Management of Chan May - Lang Co Economic Zone of Thua Thien Hue Province
on 22 November 2007, as amended. HBL’s registered office is located at Phu Hai 2 village,
Loc Vinh Commune, Phu Loc District, Thua Thien Hue Province, Vietnam. HBL’s principal
activity is to invest in Le Royal An Nam Resort.
H.B.T Trading Co., Ltd. (“HBT”), a one member limited liability company, was incorporated
under the Law on Enterprise of Vietnam pursuant to Business Registration Certificate No.
4104000080 issued by the DPI of Ho Chi Minh City on 24 December 2003, as amended.
HBT’s registered office is located at 235 Vo Thi Sau Street, Ward 7, District 3, Ho Chi Minh
City, Vietnam. HBT’s principal activities are to sell construction materials, interior decoration
products; provide trading promotion service, agency for goods consignment service,
advertisement service, fitting up and processing interior decoration product services.
Hoa Binh Architecture Co., Ltd. (“HBA”), a one member limited liability company, was
incorporated under the Law on Enterprise of Vietnam pursuant to Business Registration
Certificate No. 4104000035 issued by the DPI of Ho Chi Minh City on 7 May 2002, as
amended. HBA’s registered office is located at 235 Vo Thi Sau Street, Ward 7, District 3, Ho
Chi Minh City, Vietnam. HBA’s principal activities are to provide construction consulting
service; architectural, structural and technological designs services.
11
Hoa Binh Construction & Real Estate Corporation
B09a-DN/HN
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (continued)
as at and for the six-month period ended 30 June 2011
1.
CORPORATE INFORMATION (continued)
Corporate structure (continued)
Matec Construction Machinery Co., Ltd. (“MATEC”), a one member limited liability company,
was incorporated under the Law on Enterprise of Vietnam pursuant to Business Registration
Certificate No. 0310341578 issued by the DPI of Ho Chi Minh City on 27 September 2010.
MATEC’s registered office is located at 37/8 Phan Van Hon Street, Tan Thoi Nhat Ward,
District 12, Ho Chi Minh City, Vietnam. MATEC’s principal activities are to rent electrical
machineries, construction equipments.
2.
BASIS OF PREPARATION
2.1
Accounting standards and system
The interim consolidated financial statements of the Group, expressed in Vietnam dong
(“VND”), are prepared in accordance with the Vietnamese Accounting System and
Vietnamese Accounting Standard (“VAS”) No. 27 - Interim Financial Reporting and other
VAS issued by the Ministry of Finance as per the:

Decision No. 149/2001/QD-BTC dated 31 December 2001 on the Issuance and
Promulgation of Four Vietnamese Standards on Accounting (Series 1);

Decision No. 165/2002/QD-BTC dated 31 December 2002 on the Issuance and
Promulgation of Six Vietnamese Standards on Accounting (Series 2);

Decision No. 234/2003/QD-BTC dated 30 December 2003 on the Issuance and
Promulgation of Six Vietnamese Standards on Accounting (Series 3);

Decision No. 12/2005/QD-BTC dated 15 February 2005 on the Issuance and
Promulgation of Six Vietnamese Standards on Accounting (Series 4); and

Decision No. 100/2005/QD-BTC dated 28 December 2005 on the Issuance and
Promulgation of Four Vietnamese Standards on Accounting (Series 5).
Accordingly, the accompanying interim consolidated balance sheet, interim consolidated
income statement, interim consolidated cash flow statement and related notes, including
their utilisation are not designed for those who are not informed about Vietnam’s accounting
principles, procedures and practices and furthermore are not intended to present the
financial position and results of operations and cash flows of the Group in accordance with
accounting principles and practices generally accepted in countries other than Vietnam.
2.2
Registered accounting documentation system
The registered accounting documentation system is general journal system.
2.3
Fiscal year
The Group’s fiscal year starts on 1 January and ends on 31 December.
2.4
Accounting currency
The Group maintains its accounting records in VND.
2.5
Basis of consolidation
The interim consolidated financial statements comprise the interim financial statements of
the Company and its subsidiaries for the six-month period ended 30 June 2011.
Subsidiaries are fully consolidated from the date of acquisition, being the date on which the
Group obtains control, and continued to be consolidated until the date that such control
ceases.
12
Hoa Binh Construction & Real Estate Corporation
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NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (continued)
as at and for the six-month period ended 30 June 2011
2.
BASIS OF PREPARATION (continued)
2.5
Basis of consolidation (continued)
The interim financial statements of the subsidiaries are prepared for the same reporting
period as the Company, using consistent accounting policies.
All intra-company balances, income and expenses and unrealised gains or losses resulting
from intra-company transactions are eliminated in full.
Minority interests represent the portion of profit or loss and net assets not held by the Group
and are presented separately in the interim consolidated income statement and within equity
in the interim consolidated balance sheet, separately from the Group’s shareholders’ equity.
Acquisition of minority interests is accounted for using the parent entity extension method,
whereby, the difference between the consideration and the fair value of the share of the net
assets acquired is recognised in goodwill.
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
3.1
Change in accounting policies and disclosures
The accounting policies adopted by the Group in preparation of the interim consolidated
financial statements are consistent with those followed in the preparation of the Group’s
annual consolidated financial statements for the year ended 31 December 2010 and the
interim consolidated financial statements for the six-month period ended 30 June 2010
except for the change in the accounting policy in relation to the presentation and disclosure
of financial instruments.
On 6 November 2009, the Ministry of Finance issued Circular No. 210/2009/TT-BTC
providing guidance for the adoption in Vietnam of the International Financial Reporting
Standards on presentation and disclosures of financial instruments (“Circular 210”) with
effectiveness from financial years beginning on or after 1 January 2011.
The adoption of Circular 210 results in new disclosures being added to the interim
consolidated financial statements as shown in Notes 32 and 33.
Circular 210 also requires the Group to evaluate the terms of non-derivative financial
instruments issued by the Group to determine whether it contains both a liability and an
equity component. Such components are classified separately as financial liabilities,
financial assets or equity instruments in the interim consolidated balance sheet. This
requirement has no impact on the financial position or result of operation of the Group as
the Group has not yet issued such non-derivative financial instrument.
3.2
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, cash in banks and short-term, highly
liquid investments with an original maturity of less than three months that are readily
convertible into known amounts of cash and that are subject to an insignificant risk of
change in value.
3.3
Inventories
Inventories are stated at the lower of cost incurred in bringing each product to its present
location and condition, and net realisable value.
Net realisable value represents the estimated selling price in the ordinary course of
business less the estimated costs to complete and the estimated costs necessary to make
the sale.
The perpetual method is used to record inventories, which are valued as follows:
13
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NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (continued)
as at and for the six-month period ended 30 June 2011
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
3.3
Inventories (continued)
Raw materials
-
cost of purchase on a weighted average basis.
Work-in-process
-
cost of direct materials and labour plus
attributable construction overheads.
Merchandise property
-
cost of purchase on a specific identification
basis.
Provision for obsolete inventories
An inventory provision is created for the estimated loss arising due to the impairment of
value (through diminution, damage, obsolescence, etc.) of raw materials, work-in-progress,
and merchandise property owned by the Group, based on appropriate evidence of
impairment available at the balance sheet date.
Increases and decreases to the provision balance are recorded into the cost of goods sold
account in the interim consolidated income statement.
3.4
Receivables
Receivables are presented in the interim consolidated financial statements at the carrying
amounts due from customers and other debtors, along with the provision for doubtful debts.
The provision for doubtful debts represents amounts of outstanding receivables at the
balance sheet date which are doubtful of being recovered. Increases and decreases to the
provision balance are recorded as general and administrative expense in the interim
consolidated income statement.
3.5
Tangible fixed assets
Tangible fixed assets are stated at cost less accumulated depreciation.
The cost of a tangible fixed asset comprises its purchase price and any directly attributable
costs of bringing the tangible fixed asset to working condition for its intended use.
Expenditures for additions, improvements and renewals are added to the carrying amount of
the assets and expenditures for maintenance and repairs are charged to the interim
consolidated income statement as incurred.
When tangible fixed assets are sold or retired, their costs and accumulated depreciation are
removed from the interim consolidated balance sheet and any gain or loss resulting from
their disposal is included in the interim consolidated income statement.
3.6
Intangible fixed assets
Intangible fixed assets are stated at cost less accumulated amortisation.
The cost of an intangible fixed asset comprises its purchase price and any directly
attributable costs of preparing the intangible fixed asset for its intended use. When
intangible fixed assets are sold or retired, their costs and accumulated amortisation are
removed from the interim consolidated balance sheet and any gain or loss resulting from
their disposal is included in the interim consolidated income statement.
Land use rights
Land use right is recorded as an intangible asset on the balance sheet when the Group
obtained the land use right certificates. The costs of land use right comprise all directly
attributable costs of bringing the land to the condition available for intended use and is not
amortised due to having indefinite useful life.
14
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NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (continued)
as at and for the six-month period ended 30 June 2011
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
3.7
Depreciation and amortisation
Depreciation and amortisation of tangible and intangible fixed assets are calculated on a
straight-line basis over the estimated useful life of each asset as follows:
Machinery & equipment
Building & structure
Motor vehicles
Office equipment
Computer software
Other intangible fixed assets
5 - 12 years
44 - 50 years
8 - 10 years
5 - 6 years
5- 16 years
5 - 10 years
The useful life of the fixed assets and depreciation rates are reviewed periodically to ensure
that the method and the period of the depreciation and amortisation are consistent with the
expected pattern of economic benefits that will be derived from the use of fixed assets.
3.8
Borrowing costs
Borrowing costs consist of interest and other costs that an entity incurs in connection with
the borrowing of funds and are recorded as expenses when incurred.
3.9
Prepaid expenses
Prepaid expenses are reported as short-term or long-term prepaid expenses on the interim
consolidated balance sheet and amortised over the period for which the amounts are paid
or the period in which economic benefits are generated in relation to these expenses.
Tools and supplies used for construction are amortised to the interim consolidated income
statement over the period of 2 – 3 years on the straight-line basis.
3.10
Business combinations and goodwill
Business combinations are accounted for using the purchase method. The cost of a
business combination is measured as the fair value of assets given, equity instruments
issued and liabilities incurred or assumed at the date of exchange plus any costs directly
attributable to the business combination. Identifiable assets and liabilities and contingent
liabilities assumed in a business combination are measured initially at fair values at the date
of business combination.
Goodwill acquired in a business combination is initially measured at cost being the excess
of the cost the business combination over the Group’s interest in the net fair value of the
acquiree’s identifiable assets, liabilities and contingent liabilities. If the cost of a business
combination is less than the fair value of the net assets of the subsidiary acquired, the
difference is recognized directly in the interim consolidated income statement. After initial
recognition, goodwill is measured at cost less any accumulated amortization. Goodwill is
amortized over 10 year period on a straight-line basis.
3.11
Investment in associates
The Group’s investment in its associates is accounted for using the equity method of
accounting. An associate is an entity in which the Group has significant influence that is
neither subsidiaries nor joint ventures. The Group generally deems they have significant
influence if they have over 20% of the voting rights.
Under the equity method, the investment is carried in the interim consolidated balance sheet
at cost plus post acquisition changes in the Group’s share of net assets of the associates.
Goodwill arising on acquisition of the associates is included in the carrying amount of the
investment and is amortized over a period of ten (10) years.
15
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NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (continued)
as at and for the six-month period ended 30 June 2011
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
3.11
Investment in associates (continued)
The share of post-acquisition profit (loss) of the associates is presented on the face of the
interim consolidated income statement. Where there has been a change recognised directly
in the equity of the associate, the Group recognises its share of the change and discloses
this, where applicable, in the equity section of the interim consolidated balance sheet. The
cumulative post-acquisition movements are adjusted against the carrying amount of the
investment. Dividends receivable from associates reduce the carrying amount of the
investment.
The interim financial statements of the associates are prepared for the same reporting
period as the Group. Where necessary, adjustments are made to bring the accounting
policies in line with those of the Group.
3.12
Investment in securities and other investments
Investments in securities and other investments are stated at their acquisition costs.
Provision is made for any diminution in value of the marketable investments at the balance
sheet date representing the excess of the acquisition cost over the market value at that date
in accordance with the guidance under Circular No. 228/2009/TT-BTC issued by the
Ministry of Finance on 7 December 2009. Increases and decreases to the provision balance
are recorded as finance expense in the interim consolidated income statement.
3.13
Payables and accruals
Payables and accruals are recognised for amounts to be paid in the future for goods and
services received, whether or not billed to the Group.
3.14
Provision for severance allowance
The severance allowance to employees is provided at the end of each reporting period for
all employees who have more than 12 months in service at the rate of one-half of the
average monthly salary of the latest six months up to the balance sheet date for each year
of service up to 31 December 2008 in accordance with the Labour Code and related
implementing guidance. Commencing 1 January 2009, the average monthly salary used in
this calculation will be revised at the end of each reporting period following the average
monthly salary of the 6-month period up to the balance sheet date. Any changes to the
accrued amount will be taken to the interim consolidated income statement. From 1 January
2009, the Group pays unemployment insurance in accordance with Decree No.
127/2008/ND-CP dated 12 December 2008.
3.15
Provisions
Provisions are recognized when the Group has a present obligation (legal or constructive)
as a result of a past event, it is probable that an outflow of resources embodying economic
benefits will be required to settle the obligation and a reliable estimate can be made of the
amount of the obligation.
3.16
Foreign currency transactions
The Group adopted the Circular No. 201/2009/TT-BTC issued by the Ministry of Finance on
15 October 2009 providing guidance for the treatments of foreign exchange differences (the
“Circular 201”) in relation to foreign currency transactions from the year 2009.
Transactions in currencies other than the Group’s reporting currency of VND are recorded at
the exchange rates ruling at the date of the transaction. At the end of the period, monetary
assets and liabilities denominated in foreign currencies are translated at inter-bank
exchange rates ruling at the balance sheet date. All realised and unrealised foreign
exchange differences are taken to the interim consolidated income statement except to the
extent that they are deferred as explained in the following paragraphs.
16
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B09a-DN/HN
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (continued)
as at and for the six-month period ended 30 June 2011
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
3.16
Foreign currency transactions (continued)
All unrealised foreign exchange differences arising from the translation of short-term
monetary assets and liabilities denominated in foreign currencies as at the balance sheet
date are taken to the “Foreign exchange differences reserve” account in the equity section
of the interim consolidated balance sheet and reversed in the following period.
All unrealised foreign exchange losses arising from the translation of long-term monetary
liabilities denominated in foreign currencies as at balances sheet date are charged to the
interim consolidated income statement. However, if the charging of all foreign exchange
losses results in the net loss before tax for the Group, such exchange losses exceeding the
foreign exchange losses arising from the translation of the current portion of the long-term
liabilities is deferred in the “Foreign exchange differences reserve” account in the equity
section of the interim consolidated balance sheet and allocated to interim consolidated
income statement within the subsequent five years.
The above guidance related to unrealized foreign exchange differences provided by the
Circular 201 is different from those stipulated Vietnamese Accounting Standard No. 10,
Effects of Changes in Foreign Exchange Rates (the “VAS 10”) relating to the recognition of
unrealised foreign exchange differences as follows:
Transaction
VAS 10
Circular 201
Translation of short-term
monetary assets and
liabilities denominated in
foreign currencies.
All unrealised foreign
exchange differences
are taken to the
interim consolidated
income statement.
All unrealised foreign exchange
differences are taken to the “Foreign
exchange differences reserve” account
in the equity section of the interim
consolidated balance sheet and will be
reversed on the following period.
Translation of long-term
monetary
liabilities
denominated in foreign
currencies at period end.
All unrealised foreign
exchange differences
are taken to the
interim consolidated
income statement.
- All unrealized foreign exchange
gains are taken to the interim
consolidated income statement.
- All foreign exchange losses will be
charged to the interim consolidated
income statement. However, if the
charging of all foreign exchange
losses results in net loss before tax
for the Group, part of the exchange
losses can be deferred and allocated
to the interim consolidated income
statement within the subsequent
years. In any case, the total foreign
exchange loss to be charged to
current year’s income must be at
least equivalent to the foreign
exchange losses arising from the
translation of the current portion of
the long-term liabilities, while the
remaining portion of the foreign
exchange losses can be deferred in
the interim consolidated balance
sheet and allocated to the interim
consolidated
income
statement
within the subsequent five years.
The impact to the interim consolidated financial statements had the Group adopted VAS 10
for the six-month period ended 30 June 2011 is not material as a whole.
17
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B09a-DN/HN
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (continued)
as at and for the six-month period ended 30 June 2011
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
3.17
Treasury shares
Own equity instruments which are reacquired (treasury shares) are recognised at cost and
deducted from equity. No gain or loss is recognised in profit or loss upon purchase, sale,
issue or cancellation of the Group’s own equity instruments.
3.18
Earnings per share
Basic earnings per share amount is computed by dividing net profit for the period
attributable to ordinary shareholders, before appropriation for bonus and welfare fund, by
the weighted average number of ordinary shares outstanding during the period, where
applicable.
Diluted earnings per share amounts are calculated by dividing the net profit after tax
attributable to ordinary equity holders of the Group (after adjusting for interest on the
convertible preference shares) by the weighted average number of ordinary shares
outstanding during the period plus the weighted average number of ordinary shares that
would be issued on conversion of all the dilutive potential ordinary shares into ordinary
shares.
3.19
Appropriation of net profit
Net profit after tax is available for appropriation to shareholders after approval in the annual
general meeting, and after making appropriation to reserve funds in accordance with the
Company’s Charter and Vietnam’s regulatory requirements.
The Group maintains the following reserve funds which are appropriated from the Group’s
net profit as proposed by the Board of Directors and subject to approval by shareholders at
the annual general meeting:

Financial reserve fund
This fund is set aside to protect the Group's normal operations from business risks or
losses, or to prepare for unforeseen losses or damages for objective reasons and force
majeure, such as fire, economic and financial turmoil of the country or elsewhere.

Investment and development fund
This fund is set aside for use in the Group’s expansion of its operation or in-depth
investments.

Bonus and welfare fund
This fund is set aside for the purpose of pecuniary rewarding and encouraging, common
benefits and improvement of the employees’ material and spiritual benefits and it is
recognised as a liability.
3.20
Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to
the Group and the revenue can be reliably measured. Revenue is measured at the fair value
of the consideration received or receivable, excluding trade discount, rebate and sales
return. The following specific recognition criteria must also be met before revenue is
recognised:
Construction contracts
Where the outcome of a construction contract can be estimated reliably, revenue and costs
are recognised by reference to the stage of completion of the contract activity at the interim
balance sheet date, as measured as the proportion of contract costs incurred for work
performed to date bear to the estimated total contract costs, except where this would not be
representative of the stage of completion. Variations in contract work, claims and incentive
payments are included to the extent that they have been agreed with the customer.
Difference between the cumulative revenue of a construction contract recognised to date
and the cumulative amount of progress billings of that contract is presented as construction
contractor receivable based on agreed progress billings in the interim consolidated balance
sheet.
18
Hoa Binh Construction & Real Estate Corporation
B09a-DN/HN
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (continued)
as at and for the six-month period ended 30 June 2011
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
3.20
Revenue recognition (continued)
Rental income
Rental income arising from operating leases is accounted for on a straight line basis over
the terms of the lease.
Rendering of services
Revenue is recognised when services have been rendered.
Interest
Revenue is recognised as the interest accrues (taking into account the effective yield on the
asset) unless collectability is in doubt.
Dividends
Revenue is recognised when the Group is entitled to receive dividends.
3.21
Taxation
Current income tax
Current income tax assets and liabilities for the current and prior periods are measured at
the amount expected to be recovered from or paid to the taxation authorities. The tax rates
and tax laws used to compute the amount are those that are enacted as at the balance
sheet date.
Current income tax is charged or credited to the interim consolidated income statement,
except when it relates to items recognised directly to equity, in which case the deferred
current income tax is also dealt with in equity.
Current income tax assets and liabilities are offset when there is a legally enforceable right
for the Group to set off current tax assets against current tax liabilities and when the Group
intends to settle its current tax assets and liabilities on a net basis.
Deferred tax
Deferred tax is provided using the balance sheet liability method on temporary differences at
the balance sheet date between the tax base of assets and liabilities and their carrying
amount for financial reporting purposes.
Deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax
assets are recognised for all deductible temporary differences, carried forward unused tax
credit and unused tax losses, to the extent that it is probable that taxable profit will be
available against which deductible temporary differences, carried forward unused tax credit
and unused tax losses can be utilised.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to
apply in the period when the asset is realised or the liability is settled based on tax rates and
tax laws that have been enacted at the balance sheet date.
Deferred tax is charged or credited to the interim consolidated income statement, except
when it relates to items recognised directly to equity, in which case the deferred tax is also
dealt with in the equity account.
Deferred tax assets and liabilities are offset when there is a legally enforceable right for the
Group to set off current tax assets against current tax liabilities and when they relate to
income taxes levied on the same taxable entity by the same taxation authority.
The carrying amount of deferred income tax assets is reviewed at each balance sheet date
and reduced to the extent that it is no longer probable that sufficient taxable profit will be
available to allow all or part of the deferred income tax asset to be utilised. Previously
unrecognised deferred income tax assets are re-assessed at each balance sheet date and
are recognised to the extent that it has become probable that future taxable profit will allow
the deferred tax assets to be recovered.
19
Hoa Binh Construction & Real Estate Corporation
B09a-DN/HN
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (continued)
as at and for the six-month period ended 30 June 2011
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
3.22
Financial instruments
Financial instruments – initial recognition and presentation
Financial assets
Financial assets within the scope of Circular 210 are classified, for disclosures in the notes
to the interim consolidated financial statements, as financial assets at fair value through
profit or loss, held-to-maturity investments, loans and receivables or available-for-sale
financial assets as appropriate. The Group determines the classification of its financial
assets at initial recognition.
All financial assets are recognised initially at cost plus directly attributable transaction costs.
The Group’s financial assets include cash and short-term deposits, trade and other
receivables, and loan receivables.
Financial liabilities
Financial liabilities within the scope of Circular 210 are classified, for disclosures in the
notes to the interim consolidated financial statements, as financial liabilities at fair value
through profit or loss or financial liabilities measured at amortised cost as appropriate. The
Group determines the classification of its financial liabilities at initial recognition.
All financial liabilities are recognised initially at cost plus directly attributable transaction
costs.
The Group’s financial liabilities include trade and other payables, loans and borrowings.
Financial instruments – subsequent measurement
No subsequent measure of financial instruments is currently required.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount reported in the interim
separate balance sheet if, and only if, there is a currently enforceable legal right to offset the
consolidated amounts and there is an intention to settle on a net basis, or to realise the
assets and settle the liabilities simultaneously.
4.
CASH AND CASH EQUIVALENTS
VND
30 June 2011 31 December 2010
Cash in banks
Cash on hand
Cash equivalents
29,884,460,396
3,904,627,279
551,931,026,380
54,937,349,706
3,281,043,407
199,900,821,618
TOTAL
585,720,114,055
258,119,214,731
Cash equivalents represent two-week deposit, one-month term deposits and two-month
term deposit and earn interest at the applicable rates.
20
Hoa Binh Construction & Real Estate Corporation
B09a-DN/HN
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (continued)
as at and for the six-month period ended 30 June 2011
5.
INVESTMENTS
5.1
Short-term investments
VND
30 June 2011 31 December 2010
Short-term loans to related parties (Note 30)
Short-term deposits
23,180,714,473
12,596,640,000
1,394,493,283
-
NET
35,777,354,473
1,394,493,283
Short-term loans to related parties represent loans with maturity of one year and earn
interest at rates ranging from 14% to 20% per annum.
Short-term deposits represent term deposits at banks and earn interest at rate of 14% per
annum.
5.2
Investments in associates and joint venture
Details of investments in associates and joint venture are as follows:
30 June 2011
% of
interest
31 December 2010
Cost
% of
VND interest
Cost
VND
Investments in associates
Hoa Binh Infrastructure Construction
Investment Joint Stock Company
Hoa Binh Phuoc Loc Tho Corporation
Golden Lotus Securities Corporation
46.69
47.94
21.95
57,625,939,051
50,485,170,000
29,635,000,000
Investments in joint venture
Nhan Hung Construction Corporation
54.00
648,000,000
47.94 50,485,170,000
21.95 29,635,000,000
54.00
138,394,109,051
TOTAL
Cost of investment in associates and joint
venture
Accumulated amortization of goodwill
Accumulated share in post-acquisition profit
(losses) of the associates and joint venture
NET
648,000,000
80,768,170,000
For the six-month
period ended 30
June 2011
VND
For the six-month
period ended 30
June 2010
138,394,109,051
(110,023,477)
80,768,170,000
-
3,476,816,403
(6,842,229,511)
141,760,901,977
73,925,940,489
Hoa Binh Infrastructure Construction Investment Joint Stock Company (“HBI”), a
shareholding company, was incorporated under the Law on Enterprise of Vietnam pursuant
to Business Registration Certificate No. 5003000324 issued by the DPI of Long An Province
on 19 March 2008, as amended. HBI’s registered office is located at Village 7, Nhi Thanh
Commune, Thu Thua District, Long An Province, Vietnam. HBI’s principal activity is to
construct and develop industrial zones.
On 20 April 2011, the Group disposed 3,886,000 shares of investment in HBI. Accordingly,
the Group lost of control in HBI and decreased the Group’s ownership interest in HBI from
80.78% to 46.69%.
21
Hoa Binh Construction & Real Estate Corporation
B09a-DN/HN
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (continued)
as at and for the six-month period ended 30 June 2011
5.
INVESTMENTS (continued)
5.2
Investments in associates and joint venture (continued)
Hoa Binh Phuoc Loc Tho Corporation (“HB Phuoc Loc Tho”), a shareholding company, was
incorporated in accordance with Business Registration Certificate No. 0309478144 issued
by the DPI of Ho Chi Minh City on 1 October 2009. HB Phuoc Loc Tho’s registered office is
located at 235 Vo Thi Sau Street, Ward 7, District 3, Ho Chi Minh City, Vietnam. HB Phuoc
Loc Tho’s principal activity is to provide construction services.
Golden Lotus Securities Corporation (“Golden Lotus”), a shareholding company, was
incorporated in accordance with Establishment License No 74/UBCKOGPHDDKD issued by
the State Stock Exchange on 21 December 2007. Golden Lotus’s registered office is
located at 27 Nguyen Dinh Chieu Street, Da Kao Ward, District 3, Ho Chi Minh City,
Vietnam. Golden Lotus’s principal activities are to trade securities and to provide services
on brokerage and investment advisory.
Nhan Hung Construction Corporation ("Nhan Hung"), a shareholding company, was
incorporated in accordance with Investment License No. 411032000067 issued by the
People’s Committee of Ho Chi Minh City on 30 March 2009. Nhan Hung’s registered office
is located at 210/25/2/5 Nguyen Thuong Hien Street, Ward 1, Go Vap District, Ho Chi Minh
City, Vietnam. Nhan Hung’s principal activities are to construct civilian and industrial
constructions, bridges and roads, traffic structures, underground constructions.
5.3
Other long-term investments
VND
30 June 2011 31 December 2010
Binh An Plaza project (i)
Binh Chieu Tower project (ii)
Phuoc Kien Apartment project (iii)
23,666,260,000
10,686,800,000
4,131,821,504
22,749,890,000
10,686,800,000
4,131,821,504
NET
38,484,881,504
37,568,511,504
(i)
This represents the Group’s investment to develop Binh An Plaza apartment project at
Ward 7, District 8, Ho Chi Minh City in accordance with the Business Corporation
Contract dated 19 December 2007.
(ii)
This represents the Group’s investment to develop Thu Duc House – Binh Chieu
Building project at Binh Chieu New City, Binh Chieu Ward, Thu Duc District, Ho Chi
Minh City in accordance with agreement dated 20 November 2007.
(iii)
This represents the Group’s investment to develop Phuoc Kien apartment and
complex trade centre project at Lot 516, Phuoc Kien Commune, Nha Be District, Ho
Chi Minh City in accordance with agreement dated 11 March 2008.
22
Hoa Binh Construction & Real Estate Corporation
B09a-DN/HN
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (continued)
as at and for the six-month period ended 30 June 2011
6.
TRADE RECEIVABLES
VND
30 June 2011 31 December 2010
Amounts due from third parties
Amounts due from related parties (Note 30)
Provision for doubtful debts
NET
336,415,887,670
48,284,775
320,403,324,562
63,230,393
336,464,172,445
320,466,554,955
(409,124,965)
(47,392,536)
336,055,047,480
320,419,162,419
Included in trade receivables is VND 286,659,497,904 which was pledged as collateral for
loans obtained from commercial banks (Notes 17 and 22).
7.
ADVANCE TO SUPPLIERS
VND
30 June 2011 31 December 2010
Advance to third parties
Advance to related parties
Provision for doubtful debts
NET
8.
121,424,979,882
-
57,992,200,993
318,516,968
121,424,979,882
58,310,717,961
(525,000,000)
(525,000,000)
120,899,979,882
57,785,717,961
CONSTRUCTION CONTRACTOR RECEIVABLES BASED ON AGREED PROGRESS
BILLINGS
VND
30 June 2011 31 December 2010
9.
Amounts due from third parties
Amounts due from related parties (Note 30)
691,080,108,603
30,857,292,607
445,095,434,306
12,280,070,421
TOTAL
721,937,401,210
457,375,504,727
OTHER RECEIVABLES
VND
30 June 2011 31 December 2010
Receivable from disposal of investment in a
subsidiary
Interest receivable
Amounts due from related parties (Note 30)
Others
18,652,800,000
3,558,221,048
5,292,491,053
3,916,628,651
534,065,045
4,573,282,050
2,854,376,858
TOTAL
31,420,140,752
7,961,723,953
23
Hoa Binh Construction & Real Estate Corporation
B09a-DN/HN
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (continued)
as at and for the six-month period ended 30 June 2011
10.
INVENTORIES
VND
30 June 2011 31 December 2010
Real estate
Raw materials
Property for sale
Work in process
Merchandise goods
Goods in transit
Tools and supplies
Finished goods
105,334,532,110
79,464,121,105
67,253,805,254
17,255,121,911
2,745,331,917
558,367,444
220,719,716
170,504,181
20,773,600,000
53,374,888,531
67,231,077,981
5,594,569,949
2,948,343,701
32,126,020
261,444,241
135,506,985
TOTAL
273,002,503,638
150,351,557,408
Included in inventories is VND 12,169,435,304 which was pledged as collateral for the shortterm loans obtained from commercial banks (Note 17).
11.
SHORT-TERM PREPAID EXPENSES
VND
30 June 2011 31 December 2010
12.
Tools and supplies
Guarantee fees
Others
24,122,527,266
1,452,647,766
925,725,163
5,160,579,695
680,303,245
549,574,117
TOTAL
26,500,900,195
6,390,457,057
OTHER CURRENT ASSETS
VND
30 June 2011 31 December 2010
Advances to employees
Deposits for construction contracts
Others
7,032,476,129
2,135,099,127
170,600,000
6,588,038,725
2,410,613,553
-
TOTAL
9,338,175,256
8,998,652,278
24
Hoa Binh Construction & Real Estate Corporation
B09a-DN/HN
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
as at and for the six-month period ended 30 June 2011
13.
TANGIBLE FIXED ASSETS
Machinery & equipment
Building & structure
Motor vehicles
Office equipment
VND
Total
As at 31 December 2010
Newly purchased
Transferred from construction in
progress
Increase due to disposal of
investments in subsidiary
392,453,051,961
152,405,879,868
1,951,288,862
-
9,723,995,937
1,363,194,091
5,631,727,469
1,043,362,719
409,760,064,229
154,812,436,678
332,138,000
-
-
1,631,304,359
1,963,442,359
-
-
(498,565,900)
(10,450,000)
(509,015,900)
As at 30 June 2011
545,191,069,829
1,951,288,862
10,588,624,128
8,295,944,547
566,026,927,366
In which:
Fully depreciated
469,955,845
-
-
254,350,047
724,305,892
(78,643,464,644)
(27,773,616,916)
(718,937,250)
(142,914,362)
(2,799,068,380)
(567,187,930)
(1,802,909,717)
(845,113,510)
(83,964,379,991)
(29,328,832,718)
-
-
213,671,092
1,741,668
215,412,760
(106,417,081,560)
(861,851,612)
(3,152,585,218)
(2,646,281,559)
(113,077,799,949)
As at 31 December 2010
313,809,587,317
1,232,351,612
6,924,927,557
3,828,817,752
325,795,684,238
As at 30 June 2011
438,773,988,269
1,089,437,250
7,436,038,910
5,649,662,988
452,949,127,417
77,060,576,024
407,117,130
-
77,908,594,263
Cost:
Accumulated depreciation:
As at 31 December 2010
Depreciation for the period
Increase due to disposal of investments
in subsidiary
As at 30 June 2011
Net carrying amount:
In which:
Pledged as loan security (Notes 17
and 22)
25
440,901,109
Hoa Binh Construction & Real Estate Corporation
B09a-DN/HN
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
as at and for the six-month period ended 30 June 2011
14.
INTANGIBLE FIXED ASSETS
Land use rights
Computer software
Others
VND
Total
As at 31 December 2010
Newly purchased
4,950,924,600
-
1,536,160,385
36,000,000
323,652,858
-
6,810,737,843
36,000,000
As at 30 June 2011
4,950,924,600
1,572,160,385
323,652,858
6,846,737,843
As at 31 December 2010
Amortisation for the period
-
(463,158,951)
(153,129,543)
(134,129,761)
(22,854,044)
(597,288,712)
(175,983,587)
As at 30 June 2011
-
(616,288,494)
(156,983,805)
(773,272,299)
As at 31 December 2010
4,950,924,600
1,073,001,434
189,523,097
6,213,449,131
As at 30 June 2011
4,950,924,600
955,871,891
166,669,053
6,073,465,544
In which:
Pledged as loan security (Note 17)
4,500,924,600
-
-
4,500,924,600
Cost:
Accumulated amortisation:
Net carrying amount:
26
Hoa Binh Construction & Real Estate Corporation
B09a-DN/HN
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
as at and for the six-month period ended 30 June 2011
15.
16.
17.
CONSTRUCTION IN PROGRESS
30 June 2011
VND
31 December 2010
An Hai bridge project
Le Royal An Nam resort project
Equipment under installation and EPR
software
Nhi Thanh industry park and resettlement
area and workers’ house projects
Others
20,379,925,891
5,107,719,605
14,724,316,256
4,884,738,389
4,397,346,620
3,708,452,357
647,121,064
123,475,174,684
86,636,488
TOTAL
30,532,113,180
146,879,318,174
30 June 2011
VND
31 December 2010
Tools and equipment used for construction
works
Guarantee fees
Others
46,506,060,793
3,394,291,719
647,738,640
33,844,546,173
6,677,362,892
TOTAL
50,548,091,152
40,521,909,065
30 June 2011
VND
31 December 2010
Loans from banks
Loans from individuals
Current portion of long-term loans (Note 22)
914,766,746,279
7,425,463,145
17,860,612,139
508,445,707,361
6,017,177,226
17,348,133,579
TOTAL
940,052,821,563
531,811,018,166
LONG-TERM PREPAID EXPENSES
SHORT-TERM LOANS AND BORROWINGS
Short-term loans from banks comprised:
Name of bank
30 June 2011
Term and
maturity date
VND
Interest
rate
Description of
collateral
(Notes 6, 10,
13 and 14)
(%/pa)
Standard Chartered
Bank- Hanoi branch
311,158,818,813
From 1 July
2011 to 18
October 2011
16.67 18.48
Trade receivables
Bank for Investment
and Development of
Vietnam - Ho Chi
Minh branch
251,063,765,694
From 7 July
2011 to 20
December
2011
16.50 20.00
Land use rights;
building & structure;
cash in banks and
cash equivalents;
trade receivables and
guaranteed by
individuals
27
Hoa Binh Construction & Real Estate Corporation
B09a-DN/HN
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
as at and for the six-month period ended 30 June 2011
17.
SHORT-TERM LOANS AND BORROWINGS (continued)
Short-term loans from banks comprised: (continued)
Name of bank
30 June 2011
Term and
maturity date
VND
Interest
rate
Description of
collateral
(Notes 6, 10,
13 and 14)
(%/pa)
Vietnam Joint Stock 240,538,242,280
6 months and
Commercial Bank for
from 6 July
Industry and Trade 2011 to 24
District 1 branch
December 2011
HSBC bank (Vietnam) 38,571,919,763
4 months and
Ltd. – Ho Chi Minh
from 28 July
branch
2011 to 3
October 2011
Lien Viet Joint Stock 17,793,159,933
From 14
Commercial Bank September
Hanoi branch
2011 to 27
January 2012
Bank for Investment 15,090,491,126
3 months and
and Development of
from 25 July
Vietnam - Hoan Kiem
2011 to 27
branch
September
2011
Bank for Investment 13,230,498,999
6 months and
and Development of
from 6 July
Vietnam – Ho Chi
2011 to 21
Minh branch
December 2011
16.50 19.37
Unsecured
17.00
Trade receivables
20.00 22.50
Unsecured
19.00 20.50
An Binh Commercial
Joint Stock Bank – Ho
Chi Minh branch
6 months and
from 17
September
2011 to 29
December 2011
8,539,512,250
6 months and
from 24
December 2011
to 30 December
2011
20.50 –
22.00
Cash in banks and
cash equivalents;
trade receivables
and guaranteed by
individuals
Machinery &
equipment; motor
vehicles; inventories;
cash in banks and
cash equivalents;
trade receivables
Cash in banks and
cash equivalents;
inventories; trade
receivables
19.50
Trade receivables
2,938,346,481
19.00 20.00
Cash in banks and
cash equivalents
6.50 7.00
Cash in banks and
cash equivalents
Sai Gon Thuong Tin
Commercial
Joint
Stock Bank – Vo Thi
Sau branch
Bank for Investment
and Development of
Vietnam – Ho Chi
Minh branch
In which
VND
US$
8,627,184,843
4 months and
from 3 October
2011 to 31
October 2011
2,852,517,632
4 months and
from 15 August
2011 to 24
October 2011
28
16.50 20.00
Hoa Binh Construction & Real Estate Corporation
B09a-DN/HN
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
as at and for the six-month period ended 30 June 2011
17.
SHORT-TERM LOANS AND BORROWINGS (continued)
Short-term loans from banks comprised: (continued)
Name of bank
30 June 2011
Term and Interest
maturity date
rate
VND
(%/pa)
Description of
collateral
(Notes 6, 10,
13 and 14)
An Binh Commercial
Joint Stock Bank –
Saigon branch
In which
Loan 1
Loan 2
TOTAL
2,862,288,465 6 months and from 14
October 2011 to 20
June 2012
1,500,000,000 4 months and from 11
October 2011 to 15
October 2011
22.00
Unsecured
22.00 Inventories and
trade
receivables
914,766,746,279
Short-term loans from individuals comprised:
30 June 2011
Term and
maturity date
VND
Interest
rate
Description of
collateral
(%/pa)
Individuals
Loan 1
3,028,200,000
From 2 April 2012 to
22 June 2012
12.60 20
Unsecured
Loan 2
2,500,000,000
Undefined
20.00
Unsecured
Employees’
investment fund
1,897,263,145
Undefined
12.50
Unsecured
TOTAL
7,425,463,145
The Group obtained these loans to finance for its working capital requirements.
18.
ADVANCES FROM CUSTOMERS
30 June 2011
VND
31 December 2010
Amounts due to third parties
Amounts due to related parties (Note 30)
631,645,040,754
12,634,812,670
182,969,748,247
-
TOTAL
644,279,853,424
182,969,748,247
29
Hoa Binh Construction & Real Estate Corporation
B09a-DN/HN
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
as at and for the six-month period ended 30 June 2011
19.
20.
21.
STATUTORY OBLIGATIONS
30 June 2011
VND
31 December 2010
Corporate income tax (Note 29.2)
Value-added tax
Others
13,519,461,424
6,233,352,123
1,096,217,750
25,332,736,454
15,638,760,675
3,153,524,933
TOTAL
20,849,031,297
44,125,022,062
30 June 2011
VND
31 December 2010
Construction costs due to sub-contractors
Interest expenses
Others
51,517,622,830
10,064,204,228
1,111,046,475
11,074,041,666
1,603,032,718
1,240,401,097
TOTAL
62,692,873,533
13,917,475,481
30 June 2011
VND
31 December 2010
82,267,691,202
12,172,899,600
6,136,610,392
-
4,579,183,400
2,806,618,467
2,272,432,164
101,826,392,669
8,409,042,556
30 June 2011
VND
31 December 2010
Loans from banks
27,796,178,065
35,093,082,988
TOTAL
27,796,178,065
35,093,082,988
In which:
Current portion (Note 17)
Non-current portion
17,860,612,139
9,935,565,926
17,348,133,579
17,744,949,409
ACCRUED EXPENSES
OTHER PAYABLES
Deposits
Dividends payable
Allowance to members of the Board of
Directors and the Board of Supervision
Others
TOTAL
22.
LONG-TERM LOANS
30
Hoa Binh Construction & Real Estate Corporation
B09a-DN/HN
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
as at and for the six-month period ended 30 June 2011
22.
LONG-TERM LOANS (continued)
Long-term loans from banks comprised:
Loan Contract No.
30 June 2011 Term and maturity date
VND
Description of
Interest
collateral
rate (Notes 6 and 13)
(%/pa)
Bank for Investment and Development of Vietnam – Ho Chi Minh branch
38/2009/101285
(US$)
14,655,372,773
36 months and from
14 August 2011 to 14
August 2012
7.80
22/2009/101285
(VND)
2,325,258,000
36 months and from
22 September 2011 to
22 June 2012
21.50
Machinery &
equipment;
cash in banks
and cash
equivalents
and trade
receivables
Sai Gon Thuong Tin Commercial Joint Stock Bank – Vo Thi Sau branch
LD1024400184
10,011,802,250 48 months and from 3
September 2014 to 30
November 2014
17.60 –
19.65
Machinery &
equipment
Bank for Investment and Development of Vietnam – Phu Yen branch
01/08/HD
TOTAL
803,745,042
60 months and from
19 August 2011 to 19
May 2012
22.00
Unsecured
27,796,178,065
The Group obtained these loans to finance for its purchase of machinery and equipments
used for construction works.
23.
LONG-TERM PROVISION
This represents the warranty provision for construction projects.
31
Hoa Binh Construction & Real Estate Corporation
B09a-DN/HN
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
as at and for the six-month period ended 30 June 2011
24.
OWNERS’ EQUITY
24.1
Increase and decrease in owners’ equity
VND
Share capital
Share premium
Treasury shares
Foreign
exchange
Investment and
difference development fund
Financial
reserve fund
Undistributed
earnings
Total
12,580,855,178
4,865,847,240
38,916,520,174
575,506,586,969
For the six-month period ended 30 June 2010:
As at 31 December 2009
Treasury shares purchased
during the period
Net profit for the period
Profit appropriation
Transferred to bonus and
welfare fund
Allowance for the Board of
Directors
Foreign exchange difference
151,195,400,000
368,383,473,203
- (435,508,826)
-
-
(17,947,727,609)
-
-
7,721,936,042
2,573,978,682
52,689,399,313
(10,295,914,724)
(17,947,727,609)
52,689,399,313
-
-
-
-
-
-
-
(5,650,224,862)
(5,650,224,862)
-
-
-
435,508,826
-
-
(2,070,000,000)
-
(2,070,000,000)
435,508,826
As at 30 June 2010
151,195,400,000
368,383,473,203
(17,947,727,609)
-
20,302,791,220
7,439,825,922
73,589,779,901
602,963,542,637
32,066,340,578 11,361,009,041
291,647,262
97,216,088
104,066,229,555
68,530,805,428
(40,571,630,000)
(12,172,899,600)
(388,863,350)
665,393,216,491
68,530,805,428
(12,172,899,600)
-
For the six-month period ended 30 June 2011:
As at 31 December 2010
Net profit for the period
Stock dividends
Dividends declared
Profit appropriation
Transferred to bonus and
welfare fund
Utilization of fund
Allowance for the Board of
Directors
Foreign exchange difference
167,310,030,000
40,571,630,000
-
368,383,473,203
-
(17,947,727,609)
-
153,861,723
-
-
-
-
-
(3,000,000)
-
(639,769,285)
-
(639,769,285)
(3,000,000)
-
-
- (153,861,723)
-
-
(4,586,120,432)
-
(4,586,120,432)
(153,861,723)
As at 30 June 2011
207,881,660,000
368,383,473,203
32,354,987,840 11,458,225,129
114,237,752,316
716,368,370,879
(17,947,727,609)
32
-
Hoa Binh Construction & Real Estate Corporation
B09a-DN/HN
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
as at and for the six-month period ended 30 June 2011
24.
OWNERS’ EQUITY (continued)
24.1
Increase and decrease in owners’ equity (continued)
During the period, the Group issued 4,057,163 new shares to its existing shareholders
under the form of stock dividends via usage of undistributed earnings to increase its charter
capital to VND 207,881,660,000 in accordance with the Shareholder’s Resolution on 27
April 2011. This issuance was approved by the State Securities Commission and the DPI of
Ho Chi Minh City through the issuance of the amended Business Registration Certificate
dated 6 April 2011.
24.2
Capital transactions with owners and distribution of dividends
For the six-month
period ended
30 June 2011
VND
For the six-month
period ended
30 June 2010
Beginning balance
Increase
167,310,030,000
40,571,630,000
151,195,400,000
-
Ending balance
207,881,660,000
151,195,400,000
12,172,899,600
-
-
Contributed capital
Dividends
Dividends declared
Dividends paid
24.3
Share capital – ordinary share
30 June 2011
31 December 2010
Shares
Par value
(VND)
Shares
Par value
(VND)
Authorised shares
20,788,166
207,881,660,000
16,731,030
167,310,300,000
Shares issued and fully
paid
Ordinary shares
20,788,166
207,881,660,000
16,731,030
167,310,300,000
(500,000)
(5,000,000,000)
(500,000)
(5,000,000,000)
20,288,166
202,881,660,000
16,231,030
162,310,300,000
Treasury shares
Ordinary shares
Shares in circulation
Ordinary shares
33
Hoa Binh Construction & Real Estate Corporation
B09a-DN/HN
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
as at and for the six-month period ended 30 June 2011
25.
BASIC EARNINGS PER SHARE
Basic earnings per share are calculated as follows:
Net profit for the period attributable to the
Company’s shareholders (VND)
Weighted average number of shares
Basic earnings per share (VND)
For the six-month
period ended
30 June 2011
For the six-month
period ended
30 June 2010
68,530,805,428
20,288,166
3,378
52,689,399,313
14,794,540
3,561
There have been no dilutive potential ordinary shares during the period and up to the date of
these interim consolidated financial statements.
26.
REVENUE
26.1
Revenue from sale of goods and rendering of services
For the six-month
period ended 30
June 2011
VND
For the six-month
period ended 30
June 2010
Gross revenue
1,326,057,736,640
746,515,721,415
Of which:
Sale from construction contracts
Sales of real estate
Sale of merchandised goods
Others
1,270,419,318,156
22,284,958,887
17,338,570,862
16,014,888,735
746,515,721,415
-
(633,092,437)
-
Net revenue
1,325,424,644,203
746,515,721,415
Of which:
Sale from construction contracts
Sales of real estate
Sale of merchandised goods
Others
1,270,419,318,156
22,284,958,887
16,705,478,425
16,014,888,735
746,515,721,415
-
For the six-month
period ended 30
June 2011
VND
For the six-month
period ended 30
June 2010
Interest income
Gains from disposal of investments
Others
15,840,969,324
5,129,896,551
954,089,234
7,788,669,837
7,614,100,000
86,503,495
TOTAL
21,924,955,109
15,489,273,332
Less
Sales returns of merchandised goods
26.2
Finance income
34
Hoa Binh Construction & Real Estate Corporation
B09a-DN/HN
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
as at and for the six-month period ended 30 June 2011
27.
28.
29.
FINANCE EXPENSES
For the six-month
period ended 30
June 2011
VND
For the six-month
period ended 30
June 2010
Loan interest
Unrealised foreign exchange losses
Others
62,324,089,438
1,198,416,825
615,442,765
20,549,185,755
385,942,187
TOTAL
64,137,949,028
20,935,127,942
For the six-month
period ended 30
June 2011
VND
For the six-month
period ended 30
June 2010
Other income
Insurance compensation
Rental income
Others
2,902,688,663
2,294,568,280
608,120,383
2,238,783,816
977,397,955
1,261,385,861
Other expenses
Rental expenses
Others
(422,914,061)
(422,914,061)
(1,306,841,055)
(880,781,128)
(426,059,927)
NET
2,479,774,602
931,942,761
OTHER INCOME AND EXPENSES
CORPORATE INCOME TAX
The statutory corporate income tax (“CIT”) rate applicable to the Group is 25% of taxable
profits except for Hoa Binh Hue Development Joint Stock Company (“HBL”) as explained in
the following paragraph.
HBL has the obligation to pay CIT at the rate of 15% of taxable profits for first fifteen (15)
years and 25% of taxable profits for the years thereafter. HBL is entitled to an exemption
from CIT for four (4) years from the first profit making year, and a 50% reduction for the
following nine (9) years.
The tax returns filed by Group are subject to examination by the tax authorities. As the
application of tax laws and regulations is susceptible to varying interpretations, the amounts
reported in the interim consolidated financial statements could change at a later date upon
final determination by the tax authorities.
29.1
Current CIT expenses
Current CIT expenses
35
For the six-month
period ended
30 June 2011
VND
For the six-month
period ended
30 June 2010
21,809,709,721
17,678,107,148
Hoa Binh Construction & Real Estate Corporation
B09a-DN/HN
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
as at and for the six-month period ended 30 June 2011
29.
CORPORATE INCOME TAX (continued)
29.2
Current CIT
The current tax payable is based on taxable profits for the period. The taxable profits of the
Group for the six-month period differs from the profit as reported in the interim consolidated
income statement because it excludes items of income or expense that are taxable or
deductible in other years and it further excludes items that are not taxable or deductible. The
Group’s liability for current tax is calculated using tax rates that have been enacted at
balance sheet date.
A reconciliation between the taxable profits and profit before tax is presented below:
VND
For the six-month For the six-month
period ended
period ended
30 June 2011
30 June 2010
Profit before tax
Adjustments to increase (decrease) in
accounting profits
Unrealised profit (losses)
Provision for severance allowance
Losses of subsidiaries
Non-deductible expenses
Share of profits (loss) from associates and
joint venture
89,123,934,279
70,484,015,539
4,993,039,667
3,670,561,084
278,477,649
143,910,763
(1,449,605,402)
500,807,952
50,329,914
(10,209,022,437)
1,583,904,701
Estimated current taxable profit
88,000,901,005
71,169,452,704
Estimated current CIT at flat rate of 25%
CIT exemption
22,000,225,253
(190,515,532)
17,792,363,176
(114,256,028)
21,809,709,721
25,332,736,454
(33,622,984,751)
17,678,107,148
12,977,870,521
(3,181,108,986)
13,519,461,424
27,474,868,683
Estimated current CIT after exemption
CIT payable at beginning of period
CIT paid during the period
CIT payable at end of period
36
Hoa Binh Construction & Real Estate Corporation
B09a-DN/HN
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
as at and for the six-month period ended 30 June 2011
29.
CORPORATE INCOME TAX (continued)
29.3
Deferred corporate income tax
The following are the deferred tax assets recognized by the Group, and the movements
thereon, during the current and prior reporting period.
Interim consolidated balance
sheet
30 June 2011 31 December
2010
Provision for severance
allowance
Unrealised profit
Accruals
Provision for doubtful debts
30.
73,816,916
82,257,340
16,946,792
10,071,150
1,645,422,081
183,092,198
For the six- For the sixmonth period month period
ended 30
ended 30
June 2011
June 2010
856,593,563
605,736,320
-
13,392,985
-
Deferred income tax credit to the interim consolidated
1,462,329,883
income statement
13,392,985
Deferred tax assets
930,410,479
687,993,660
16,946,792
10,071,150
VND
Interim consolidated income
statement
TRANSACTIONS WITH RELATED PARTIES
Significant transactions with related parties during the period were as follows:
Related parties
Relationship
Transaction
Amount
VND
Construction Corporation No.1
Company Limited
Hoa Binh Infrastructure
Construction Investment Joint
Stock Company
Nhan Hung Construction
Corporation
Related party
Construction
works rendered by
the Group
67,466,117,131
Associate
Loans
Interest income
7,097,000,000
1,777,980,663
Joint venture
Interest income
Capital contribution
26,032,725
648,000,000
37
Hoa Binh Construction & Real Estate Corporation
B09a-DN/HN
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
as at and for the six-month period ended 30 June 2011
30.
TRANSACTIONS WITH RELATED PARTIES (continued)
Amounts due to and due from related parties at the balance sheet date were as follows:
Relationship
Transaction
Receivable
(payable)
VND
Short term investments
Hoa Binh Infrastructure
Investment and Construction
Joint Stock Company
Associate
Loans
20,704,856,717
Vietnam - Korean Housing
Project & Development
Company Limited
Related party
Loans
2,000,000,000
Tam Hoang Tan Trading and
Technical Service Company
Related party
Loans
475,857,756
23,180,714,473
Trade receivable
Golden Lotus Securities
Corporation
Associate
Rental income
48,284,775
Director of HBE
Borrowing
2,504,447,382
Mr Le Quoc Duy
Member of the
Board of Directors
Borrowing
1,520,211,896
Mr Le Viet Hung
Member of the
Management
Borrowing
679,884,430
Mr Pham Nguyen Cuong
Director of AHA
Borrowing
500,000,000
Mr Phan Minh Phuc
Director of HBL
Borrowing
49,447,345
Associate
Loan interest
38,500,000
Other receivables
Mr Pham Dieu
Hoa Binh Infrastructure
Investment and Construction
Joint Stock Company
5,292,491,053
Construction contractor receivables based on agreed progress billings
Construction Corporation
No.1- Company Limited
Related party
Construction
works rendered
to related party
30,857,292,607
Construction
works rendered
to related party
(12,634,812,670)
Advance from customers
Construction Corporation No.1Company Limited
Related party
38
Hoa Binh Construction & Real Estate Corporation
B09a-DN/HN
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
as at and for the six-month period ended 30 June 2011
31.
COMMITMENTS
Operating lease commitments
Operating lease commitments represent committed amounts relating to office rental under
the operating lease agreements. Future rental amounts due as at 30 June 2011 are as
follows:
30 June 2011
VND
31 December 2010
Less than 1 year
From 1 - 5 years
3,591,985,488
2,698,896,200
3,582,171,320
4,485,074,776
TOTAL
6,290,881,688
8,067,246,096
Capital obligation commitments
The total capital obligation commitments that the Group has entered into in relation to its
other long-term investments as at 30 June 2011 was VND 167,380,838,496 (31 December
2010: VND 168,297,208,496).
32.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group’s principal financial liabilities are loans and borrowings. The main purpose of
these financial liabilities is to finance the Group’s working capital requirements and
purchase of machinery and equipments used for construction works. The Group has loan
receivable, trade and other receivables, trade and other payable and cash and short-term
deposits that arise directly from its operations. The Group does not hold or issue any
derivative financial instruments.
The Group is exposed to market risk, credit risk and liquidity risk.
Management reviews and agrees policies for managing each of these risks which are
summarized below.
Market risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will
fluctuate because of changes in market prices. Market prices comprise four types of risk:
interest rate risk, currency risk, commodity price risk and other price risk, such as equity
price risk. Financial instruments affected by market risk include loans and borrowings and
deposits.
The sensitivity analyses in the following sections relate to the position as at 30 June 2011
and 31 December 2010.
The sensitivity analyses have been prepared on the basis that the amount of net debt, the
ratio of fixed to floating interest rates of the debt are all constant.
In calculating the sensitivity analyses, management assumed that the statement of the
balance sheet relates to available-for-sale debt instrument; the sensitivity of the relevant
income statement item is the effect of the assumed changes in respective market risks. This
is based on the financial assets and financial liabilities held as at 30 June 2011 and 31
December 2010.
39
Hoa Binh Construction & Real Estate Corporation
B09a-DN/HN
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
as at and for the six-month period ended 30 June 2011
32.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
Market risk (continued)
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument
will fluctuate because of changes in market interest rates. The Group’s exposure to market
risk for changes in interest rate relates primarily to the Group’s long-term debt obligations
with floating interest rates.
The Group manages interest rate risk by looking at the competitive structure of the market
to obtain rates which are favorable for its purposes within its risk management limits.
Interest rate sensitivity
The following table demonstrates the sensitivity to a reasonably possible change in interest
rates on that portion of loans and borrowings.
With all other variables held constant, the Group’s profit before tax is affected through the
impact on floating rate borrowings as follows:
For the six-month period ended 30 June 2011
VND
VND
For the six-month period ended 30 June 2010
VND
VND
Increase/decrease
in basis points
VND
Effect on
profit before tax
300
-300
(833,885,342)
833,885,342
300
-300
(1,052,792,490)
1,052,792,490
Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of a financial
instrument will fluctuate because of changes in foreign exchange rates. The Group’s
exposure to the risk of changes in foreign exchange rates relates primarily to the Group’s
operating activities.
The Group does not manage its foreign currency risk, as the Group's exposure to foreign
currency risk is minimal at reporting date.
Credit risk
Credit risk is the risk that counterparty will not meet its obligations under a financial
instrument or customer contract, leading to a financial loss. The Group is exposed to credit
risk from its operating activities primarily for trade receivables and from its financing
activities primarily for deposit with banks.
Trade receivables
Customer credit risk is managed by the Group based on its established policy, procedures
and control relating to customer credit risk management.
Outstanding customer receivables are regularly monitored. The requirement for impairment
is analyzed at each reporting date on an individual basis for major clients. The Group seeks
to maintain strict control over its outstanding receivables to minimize credit risk.
40
Hoa Binh Construction & Real Estate Corporation
B09a-DN/HN
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
as at and for the six-month period ended 30 June 2011
32.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
Credit risk (continued)
Bank deposits
The Group's bank balances are mainly maintained with well-known banks in Vietnam. Credit
risk from balances with banks is managed in accordance with the Group’s policy.
Investments of surplus funds are made only with approved counterparties.
The Group’s maximum exposure to credit risk for the components of the balance sheet at
each reporting dates are the carrying amounts as illustrated in Note 4. The Group evaluates
the concentration of credit risk in respect to bank deposit is as low.
Liquidity risk
The liquidity risk is the risk that the Group will encounter difficulty in meeting financial
obligation due to shortage of funds. The Group’s exposure to liquidity risk arises primarily
from mismatches of maturities of financial assets and liabilities.
The Group monitors its liquidity risk by maintain a level of cash and cash equivalents and
bank loans deemed adequate by management to finance the Group’s operations and to
mitigate the effects of fluctuations in cash flows.
The table below summarizes the maturity profile of the Group’s financial liabilities based on
contractual undiscounted payments:
VND
Less than 1 year From 1 to 5 years
Total
30 June 2011
Loans and borrowings
Trade payables
Other payables and
expenses
940,052,821,563
283,189,711,052
9,935,565,926
-
949,988,387,489
283,189,711,052
223,259,621,385
40,830,413,780
264,090,035,165
1,446,502,154,000
50,765,979,706
1,497,268,133,706
531,811,018,166
327,007,811,325
17,744,949,409
-
549,555,967,575
327,007,811,325
121,822,148,714
22,959,798,186
144,781,946,900
980,640,978,205
40,704,747,595
1,021,345,725,800
accrued
31 December 2010
Loans and borrowings
Trade payables
Other payables and
expenses
accrued
The Group assessed the concentration of risk with respect to refinancing its debt and
concluded it to be low. Access to sources of funding is sufficiently available and debt
maturing within 12 months can be rolled over with existing lenders.
Collateral
The Group has pledged its cash in banks and cash equivalents, trade receivables,
inventories, machinery & equipments, building & structure and land use rights in order to fulfil
the collateral requirements for the short-term loans and long-term loans obtained from banks
(Notes 16 and 21). The Bank has an obligation to return these collateral to the Group. There
are no other significant terms and conditions associated with the use of collateral.
The Group did not hold any collateral from third parties at 30 June 2011 and 31 December
2010.
33.
FINANCIAL ASSETS AND FINANCIAL LIABILITIES
Set out below is a comparison by class of the carrying amounts and fair value of the Group’s
financial instruments that are carried in the interim consolidated financial statements.
41
Hoa Binh Construction & Real Estate Corporation
B09a-DN/HN
NOTES TO THE INTERIM SEPARATE FINANCIAL STATEMENTS (continued)
as at and for the six-month period ended 30 June 2011
33.
FINANCIAL ASSETS AND FINANCIAL LIABILITIES (continued)
VND
Carrying amount
30 June 2011
Financial assets
Short term deposits
Trade receivables
Receivable from related parties
Other receivables
Cash and cash equivalents
Total
Fair value
31 December 2010
30 June 2011
31 December 2010
(47,392,536)
-
35,777,354,473
336,006,762,705
36,198,068,435
717,207,758,302
585,720,114,055
1,394,493,283
320,355,932,026
16,916,582,864
448,483,876,209
258,119,214,731
(47,392,536)
1,710,910,057,970
1,045,270,099,113
Cost
Provision
Cost
Provision
35,777,354,473
336,415,887,670
36,198,068,435
717,207,758,302
585,720,114,055
(409,124,965)
-
1,394,493,283
320,403,324,562
16,916,582,864
448,483,876,209
258,119,214,731
1,711,319,182,935
(409,124,965)
1,045,317,491,649
VND
Carrying amount
Financial liabilities
Loans and borrowings
Payable to related parties
Trade payables
Other current liabilities
Total
Fair value
30 June 2011
31 December 2010
30 June 2011
31 December 2010
949,988,387,489
283,189,711,052
223,259,621,385
549,555,967,575
318,516,968
326,689,294,357
121,822,148,714
949,988,387,489
283,189,711,052
223,259,621,385
549,555,967,575
318,516,968
326,689,294,357
121,822,148,714
1,456,437,719,926
998,385,927,614
1,456,437,719,926
998,385,927,614
The fair value of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between
willing parties, other than in a forced or liquidation sale. The following method and assumption were used to estimate the fair values:

Cash, trade receivables, trade payables and other current liabilities approximate their carrying amounts largely due to the short-term maturities of these
instruments.
The fair value of borrowings is estimated by discounting future cash flows using rates currently available for debt or similar terms and remaining maturities.
As at 30 June 2011, the carrying amounts of such borrowings, are not materially different from their calculated fair values.
42
Hoa Binh Construction & Real Estate Corporation
B09a-DN/HN
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
as at and for the six-month period ended 30 June 2011
34.
EVENT AFTER THE BALANCE SHEET DATE
There has no any matter or circumstance that has arisen since the balance date that has
affected or may significantly affect the operations of the Group, the results of those
operations or the state of affairs of the Group in subsequent periods.
Nguyen Thi Nguyen Thuy
Chief Accountant
Le Viet Hai
General Director
29 August 2011
43