Annual Report Vinamilk English PDF

Vinamilk
Never Stop Growing
2012
Annual Report
CONTENTS
04 | FINANCIAL CALENDAR 2012 06 | FIVE-YEAR GROUP PERFORMANCE 08 | VISION MISSION CORE VALUES 10 | CHAIRWOMANS MESSAGE
12 | REPORT OF THE INSPECTION COMMITTEE 16 | REPORT OF THE BOARD OF EXECUTIVE DIRECTORS

Financial performance Distribution network Research and development (R&D) Status of the capital expenditure plan Dairy cow development Improvements on structures, policies and management Future strategic business plan Awards and achievements in 2012
34 | PRODUCT PORTFOLIO 42 | CORPORATE PROFILE Corporate information Group structure Organization and management structure The Board of Management The Board of Executive Directors The Inspection Committee
66 | THE CORPORATE GOVERNANCE Corporate governance report Risk management report 84 | CODE OF CONDUCTS 86 | SUSTAINABILITY REPORT 96 | INVESTOR RELATIONS 100 CONSOLIDATED FINANCIAL STATEMENTS
BIND TO SCIENCE, NOURISH BRAINPOWER
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Annual Report 2012
VINAMILK - Never Stop Growing
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FINANCIAL CALENDAR 2012

Issue of new shares: Announcements of the consolidated financial statements:
Unaudited Quarter 1: Quarter 2: Quarter 3: Full year 04/25/2012 07/20/2012 10/22/2012 01/22/2013 Audited 05/07/2012 08/01/2012 11/06/2012 03/04/2013 According to the Resolution of the shareholders meeting on 23 October 2012, the Company has issued new shares from the owners equity to increase the Companys share capital as follows: Record date Issuing ratio The total new shares in issue The effective listing date The first trading date : : : 12/21/2012 2:1 (meaning a shareholder gets one more share 277,841,042
for every 02 shares held) : 01/23/2013 : 01/25/2013
Annual General Meeting: Dividend:

The Company has paid dividends to its shareholders during the year as follows: The Annual General Meeting of 2012 was held on 23 March 2012. The Annual General Meeting of 2013 will be held on 26 April 2013.
Final dividend of 2011 Dividend per share Record date Payment VND2,000 04/10/2012 04/25/2012
Interim dividend of 2012 VND2,000 08/23/2012 09/06/2012
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FIVE-YEAR GROUP PERFORMANCE
(VND billion) 30,000 25,000 20,000 15,000
Total sales
ar /ye 4% 3 27,102 e at th r w o gr age 22,071 ver a nd u o p Com 16,081

10,820
For the year ended 31 December Income statement (VND billion) Total sales Profit before tax Profit after tax Dividend (VND/share) Basic earnings per share Dividends paid during the year Balance Sheet (VND billion) Share capital Owners equity Total assets Long term borrowings Net book value per share
2008
2009
2010
2011
2012
CAGR
10,000 5,000 -
8,381
2008
2009
2010
2011
2012
8,381 1,371 1,249
10,820 2,731 2,376
16,081 4,251 3,616
22,071 4,979 4,218
27,102 6,930 5,819
34% 50% 47%

(VND billion)
7,000 6,000 5,000
Profit before tax

e rat th w o gr ar /ye % 50
4,979 6,930
3,563 3,900
6,769 2,000
6,834 5,000
5,145 3,000
6,981 4,000
4,000 3,000 2,000 1,000 1,371
e ag ver 4,251 a nd ou mp o C 2,731
1,753 4,666 5,967 22 26,619
3,513 6,455 8,482 12 18,378
3,531 7,964 10,773 22,556
5,561 12,477 15,583 22,437
8,340 15,493 19,698 18,577
48% 35% 35%
2008 2009 2010 2011 2012
(VND billion) 50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 2008 19,698 15,583 10,773 8,482 5,967 4,666 1,753 6,455 3,513 7,964 3,531 5,561 12,477 8,340 15,493 Share capital Owners equity Total assets
Financial ratios Profit before tax/Total sales Return on Equity(ROE) Total liabilities/Owners equity 16% 28% 28% 25% 43% 31% 26% 50% 35% 23% 41% 25% 26% 42% 27%
2009
2010
2011
2012
CAGR: Compound average growth rate
60% 50% 40% 30% 20% 10% 0%2008 2009 2010 2011 2012 28% 16% 43% 31% 25% 35% 25% 26% 23% 50% 41% 42% 27% 26% Profit before tax/ Total sales ROE Total liabilities/ Owners equity
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VISION MISSION CORE VALUES
VISION
To become the leading Vietnamese trusted brand on nutrient and healthy products for human life
MISSION
Vinamilk commits to bring best-quality nutrition to communities that reflects our respect, love and responsibility for the people, life and society
CORE VALUES
To respect the established ethical standards and act accordingly.
Integrity and transparency in actions and transactions.
To have self-respect and respecting colleagues, the Company, partners. To cooperate with respect.
To be fair with employees, customers, suppliers and other parties.
To comply with legal regulations and the Companys Code of Conduct, Companys procedures and policies.
INTEGRITY
RESPECT
FAIRNESS
COMPLIANCE
ETHICS
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Annual Report 2012
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09
CHAIRWOMANS MESSAGE
To: Honourable shareholders,

2012 saw a volatile and difficult year for the global economy. Purchasing power has not yet recovered, and enterprises in Vietnam have been facing many challenges and difficulties in the financial market. Vinamilk was not an exception. The news, however, is not all so grim. Last year, Vinamilk successfully achieved both revenue and profit targets set by shareholders, and its position and positive reputation were solidified in the market. At the years end, Vinamilks revenue reached VND 27,012 billion (102% of the 2012 target and 23% growth over 2011), generating to total 2012 profit before tax of VND 6,930 billion (123% of the 2012 target and 39% growth over 2011). The capitalized value of Vinamilk is VND 73,350 billion (approximately USD 3.52 billion), an increase of 52.6% compared to 2011. With the objective of sustainable development Vinamilk has retained focus on other aspects of development aside from the above-mentioned financial targets. Firstly, Vinamilk has fostered a professional environment with safe working conditions, and employees efforts are rewarded with fair remuneration. Moreover, employees receive health care, and their benefits and rights are guaranteed. To give back to Vietnemese society, Vinamilk has fulfilled its duty by tax payment to the state and has gone beyond that basic requirement to share in social responsibility with practical social activities. To benefit consumers, Vinamilk has put great effort into the diversity and high quality of products to earn the trust from cosumers. Last but not least, Vinamilk has been continuing the long and sustainable cooperation with our partners to ensure mutual benefits.
In these first few months of 2013, operating within a still volatile and difficult economic climate, the company has continued with its mission to introduce Vinamilk to the world. To affirm international status with sustainable development, Vinamilk has been well-prepared with strategies that address infrastructure, corporate governance, etc. Yet success will truly depend on the following: The long-standing trust and loyalty of consumers and customers The trust and support of Vinamilk shareholders Commitment, determination, effort, and boundless creativity of all Vinamilk staff Sustainable cooperation with partners on the basis of mutual respect, equality, and harmony Once again, on behalf of Vinamilk, I would like to extend our gratitude to consumers, customers, shareholders and partners. With our cooperation and best effort, Vinamilk will continue improving in 2013, and Vinamilks position in the national and international markets will continue standing significantly high. Ho Chi Minh City, 28 February 2013
Mai Kieu Lien Chairwoman and Chief Executive Officer
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REPORT TO THE SHAREHOLDERSs MEETING

Dear shareholders of Vietnam Dairy Products Joint Stock Company,
The success of Vinamilk has stood out even more in the context of the year 2012 when there are not only many challenges for Vietnamese enterprises but also economic, political, and social uncertainties all over the world.
Based on the firm foundation of the year 2011, Vinamilk has continued to maintain very successful business operations. In addition to positive sales results, Vinamilk has enhanced its corporate image towards promoting corporate culture and social responsibility and contributed significantly to the national tax budget. The success of Vinamilk has stood out even more in context of the year 2012, when there were not only many challenges for Vietnamese enterprises but also economic, political, and social uncertainties throughout the world. Amid the instability of the macroeconomy, Vinamilks risk management, control, and supervision systems have to be continuously developed and improved in order to help the company achieve the long term sustainable development goals.
and recommend necessary changes for Vinamilk in order to increase the effectiveness of risk management and improve the quality of corporate management. In 2012, IC held regular meetings with Internal Audit (IA); actively cooperated and discussed with BoM, BoD and independent auditors in official meetings; and used professional consulting services to accomplish the following tasks: Monitor the activities of BoD and BoM; Monitor the companys activities through IA; Monitor the companys financial situation; Assist the company in completing the Enterprise Risk Management system (ERM); and Propose and submit to the shareholders meeting for approval of the independent auditors selection for the fiscal year 2013.
Closely control, improve transparency and increase corporate value
I. ACTIVITIES OF THE INSPECTION COMMITTEE

Inspection Committe (IC) consists of three independ-
Monitoring the activities of BoM and BoD

IC found that the BoM and BoD of the company have adequately performed their responsibilities and completely complied with the Company Charter as well as the government laws and regulations. IC participated in all quarterly and on-request meetings of BoM, has kept a close eye on Vinamilks actual business situaVINAMILK - Never Stop Growing
REPORT OF THE INSPECTION COMMITTEE

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Annual Report 2012
ent members who are the representatives of the shareholders and are supported by the Board of Management (BoM) and the Board of Executive Directors (BoD). Its role is to continue to investigate, monitor,
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tions, and offered suggestions to BoM and BoD during the implementation of the business strategies approved by the shareholders meeting in March 2012. The business plans, fundamental investment projects, investment and capital raising opportunities were carefully discussed to ensure they were appropriate and most beneficial to Vinamilks development strategy.
suring necessary quality and independence. With the recommendations of the independent consultant, IC also established the schedule for improving the activities of IA in the next 3 years as part of the Enterprise Risk Management (ERM) development of Vinamilk.
come the first Vietnamese enterprise to take part in the Asia Corporate Governance Association (ACGA). This demonstrates BoMs focus and effort to raise the companys corporate management level. Participation in ACGA has given Vinamilk the opportunity to appoach more advanced corporate management models in the world and enhanced the companys image at both the regional and international level. Representatives of IC and Vinamilk attended the Annual Meeting of ACGA in Bangkok in November 2012 where the trends and outstanding issues of corporate management in the region and in Vietnam were discussed. This information will be useful to Vinamilk in establishing a corporate management culture and integrating beyond the region and into the world.
III. CONCLUSIONS AND PROPOSALS

In review of the results of 2012, IC believes that the risk management, inspection and control activities have provided BoM, BoD and other departments with important information about the systems current status and the necessary steps to continue to improve Vinamilks management and operation, effectively use the resources, and facilitate growth to take advantage of the market opportunities in the long term. In 2013, IA will focus on developing staff, maintaining the quality of audit activities, expanding the processes and scope of audit and re-audit activities, and strengthening post-audit monitoring activities in the key departments of Vinamilk. The improvement of the ERM system will be an important focus and objective in the period of 20132015. A complete and effectively operated ERM system will be an essential link to promote the coherence between activities of IC, IA, and the production and business activities of the company. We are commited to stand side by side with Vinamilk as the company progresses and thank shareholders for the trust and support given to IC in 2012 and in the many years to come. Sincerely, Ho Chi Minh City, 01 March, 2013
Monitoring the companys financial situation in 2012

Together with the representative of the Audit Committee of BoM, IC has had regular meetings with the independent auditor of Vinamilk (PwC Ltd. Co. for 2012) to discuss the scope of audits at the beginning of the year, review audit results and other matters (if any) raised in the management letters. Every quarter, IC also performed an analysis on the financial statements which are reviewed by the independent auditors. Based on the periodic report and data analysis presented by BoM in the BoD meetings, the quarterly and year-end financial statements which are reviewed and audited, IC found that Vinamilk maintained its healthy financial position: The basic indicators of debts, loan capital, liquidity, efficiency of assests usage, provisions, and equity were all highly qualified, and Vinamilks business results all met and exceeded the objectives approved by the shareholders meeting in early 2012.
Monitoring the companys activities through IA

After two years of operation, the Internal Audit department has affirmed its effectiveness, gained the trust and are highly appreciated by the management, positively contributed to the improvement of the companys management system. The audit procedures deployed by IA and directed by IC are fully in accordance with international audit practices. The process involves conducting on-site research across departments and units, checking documents of the audited period, and interviewing managers at various levels in order to ensure the audit process is comprehensive and highly detailed. In 2012, IA conducted 8 audit reviews of the main business management processes of the company which are: marketing activities; internal investment projects management; the An Khang clinics operation; cash, products, and tangible fixed assets management; dairy farms operation; logistics and warehouse management; quality management in production; and fresh milk procurement activities. After each audit review, the IA department provides specific and clear recommendations and receives the consent of relevant audited departments, IC, and the Chief Excutive Officer. The results of these internal audit reviews showed that there were no significant risks in the management processes of Vinamilk and confirmed the compliance of relevant departments and individuals in the Company. The action plans to improve the control system as recommended by IA were fully performed by the units and departments of the company. IC also used an independent consultant to assess the quality of IA activities. It was confirmed that IA has complied with all audit procedures and processes, en-
Proposing and submitting to the shareholders meeting for approval of the independent auditors selection for the fiscal year 2013
IC has directly selected an independent auditor for Vinamilk for the fiscal year 2013. The selection process of IC was carried out with the participation of all members of IC and was fully objective and independent from the BoD. The criteria were clearly defined in details to ensure a fair and accurate selection process. After assessment, IC notified BoM of the procedures to submit to the shareholders meting for approval of the independent auditor selection for the fiscal year 2013.
Assisting Vinamilk in improving the Enterprise Risk Management (ERM) system

In 2012, IC used the risk management consulting service of KPMG to support Vinamilk in reviewing the entire existing ERM system. The results provided BoD and IC with an overview of the existing system and helped to establish a schedule for improvement and development towards an ERM system on par with international standards. IC appreciated the determination of BoD in approval of a specific plan with detailed steps to build and promote the role of ERM as a strategic tool that will support BoM in decisionmaking and corporate management. With the introduction of IC, Vinamilk agreed to beAccording to the Companys regulations, one-third of IC will be re-elected at annual GMS. However, Mr. Nguyen Anh Tuan, a member of IC, submitted his resignation from IC due to personal reason. Therefore, IC would like to submit this to shareholders meeting for approval and election of a substitute.
II. STRUCTURAL CHANGES OF THE INSPECTION COMMITTEE IN THE PERIOD OF 2012-2016
On behalf of the Inspection Committee
Nguyen Trung Kien Head of the Inspection Committee
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1. Financial performance
The Companys financial position is always maintained healthy. Although, the Company has spent an ever biggest amount on capital expenditures of VND 3,111 billion and the dividend payout for the final dividend of 2011 and the interim dividend of 2012 was totalled at VND 2,223 billion (equivalent to VND 4,000 per share), but the cash flow position is still maintained in a high surplus. The financial ratios are also very good and being maintained for many years. Some basic financial information is below:
(VND billion) Total assets Total sales Operating profit Profit before tax Profit after tax Net profit attributable to shareholders (*) Dividend paid during the year Dividend payout ratio 2012 19,698 27,102 6,630 6,930 5,819 5,241 2,223 42% 2011 15,583 22,071 4,751 4,979 4,218 3,802 741 20% % increase/ (decrease) 26% 23% 40% 39% 38% 38%
Maintain a strong financial position and focus on sustainable growing strategy
(*): Appropriation of 10% from the profit after tax to the bonus and welfare fund (please refer to notes 2.19 of the consolidated financial statements, page 120 for more information).
Dividend payments during the years:

Final dividend of 2011 Dividend per share Record date Payment VND 2,000 04/10/2012 04/25/2012 Interim dividend of 2012 VND 2,000 08/23/2012 09/06/2012
REPORT OF THE BOARD OF EXECUTIVE DIRECTORS

Financial performance Distribution network Research and development (R&D) Status of the capital expenditure plan Dairy cow development Improvements on structures, policies and management Future strategic business plan Awards and achievements in 2012
The report on the actual performance versus the budget 2012 is as follows:
Actual Total sales Profit before tax Profit before tax 27,102 6,930 5,819
Budget 26,480 5,625 4,690
% achieved 102% 123% 124%
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In general, although the market conditions are still difficult, Vinamilk has achieved an impressive growth, achieved all the targets set at the beginning of the year. Profit before tax and profit after tax growing faster than the total sales were results of controlling expense budget well and improving the effectiveness of sales and marketing campaigns. Key financial ratios:
2012 i. Liquidity Total assets/ Total liabilities Current ratio Quick ratio Interest cover ii. Debt ratios Total liabilities/Total assets Total liabilities/Owners equity iii. Operating efficiency ratios Inventory turnover ratio Trade accounts receivable turnover ratio Working capital turnover ratio Total assets turnover ratio iv. Profitability ratios Return on net sales (ROS) Return on total assets (ROA) Return on Equity (ROE) 21.9% 33.0% 41.6% 19.5% 32.0% 41.3% 2.4% 1.0% 0.3% 5.2 12.0 2.6 1.5 5.3 13.1 2.8 1.6 (0.1) (1.1) (0.2) (0.1) 21% 27% 20% 25% 4.7 2.7 1.8 2,311.0 5.0 3.2 2.1 356.6 (0.3) (0.5) (0.3) 1,954.4 2011 % increase/ (decrease)
2. Distribution network
The distribution network continues to be consolidated and never stop growing in order to meet the long term growth objectives. The distribution network model is as follows: Modern trade channel: Vinamilk deals directly with supermarkets across the country. General trade channel: Vinamilk set up 250 exclusive distributors national-wide. These distributors deliver products to retailers within their assigned territory. As at 31/12/2012, Vinamilk covered more than 200,000 retailers, increased by 22,000 retailers as compared to that of 2011.
EXPORT:
Export sales contributed 14% of the total sales in 2012. The main export markets include Middel East countries, Cambodia, Philippines, Thailand,. The main export products include powdered milk and condensed milk; especially export of fresh milk increases from 70% - 100%.
Overall, the Companys financial position continues to be maintained healthy. There was a slight drop in liquidity ratios due to significant capital expenditure cash layout. Other ratios are better than those of 2011. Bank loans: The Company operates on its own equity, without bank loans.
DOMESTIC:
Modern trade channel
General trade channel
DISTRIBUTORS SUPERMARKETS RETAILERS
END CONSUMERS
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3. Product Research and Development THE MILESTONES OF 2012
2012 witnessed the implementation of the strategy of hi-end market penetration by pioneering new product introductions
In 2012, Vinamilk continued to have robust growth in sales, production, and range of products. To meet the markets increasing demand, Vinamilk continued to focus on developing products that enhance health and beauty and are good for both physical and intellectual development. This plan also ensures that food quality and safety standards are met. The year 2012 marked particular success in the field of product research and development. Vinamilk launched multiple product lines, including: Vinamilk 100% fresh pasteurized skim milk, ProBeauty yogurt with collagen, Susu yogurt milk with soluble fiber and probiotics, Vanilla ice cream, Icy salted lemonade, GoldSoy milk, Dielac Optimum formula powdered milk (for infants and young children), Sure Prevent nutritional product (for patients in recovery and the elderly), etc.. The most outstanding products among Vinamilks newest offerings are GoldSoy milk, ProBeauty yogurt, and Dielac Optimum formula powered milk. These three products in particular have experienced impressive initial success and earned customers support and appreciation. Nowadays, consumers are tending to choose purely natural products since its widely accepted that nature is the best source of the nutrients our bodies need to be healthy and strong. .. Like other Vinamilk products, nutrient-rich GoldSoy is made from 100% non-genetically modified soybeans and makes consumers feel safe, especially when there is controversy about whether or not genetically modified products can be harmful. . Although it launched very recently, GoldSoy has won consumers trust and has gained a strong fan base among women. Soybean milk contains protein, 8 types of amino acids, zinc, and vitamins such as A, E, and B12. It reduces blood-cholesterol levels, accelerates metabolism, and helps maintain a healthy weight. Specifically, protein-rich soybean milk with calcium and vitamin D helps to prevent osteoporosis and strengthen bones.
Packaging Machine for Probeauty yogurt Tien Son Milk Plant Probeauty yogurt on the production line Tien Son Milk Plant
ProBeauty premium yogurt with collagen is an unmatched health and beauty innovation that came from Vinamilks research and development team. Collagen constitutes about 70% of skin mass and is what makes it resilient and elastic. From the age of 20, total collagen decreases about 1% per year due to aging, stress, and environmental pollution, resulting in wrinkles as early as 25. Gradual collagen supplementation after the age of 20 will therefore help women and men prevent the traces of aging and maintain skins vitality and softness. In recent years, the trend of using collagen, an essential protein for nourishing and revitalizing the skin, in natural health and beauty care has been gaining momentum across the globe, and awareness is growing of how to treat skin from the inside out by eating naturally collagen-rich foods. In an attempt to at long last unleash the fountain of youth, the company has introduced a natural skincare secret: Vinamilk ProBeauty yogurt. Each ProBeauty product contains 1,350 milligrams of collagen (as recommended by the Collagen Research Institute) plus vitamin C and antioxidants from pomegranates and blueberries. Two boxes of Vinamilk ProBeauty yogurt provide the necessary nutrients for firm, vibrant, and smooth skin Another sector of the product market that Vinamilk targeted in 2012 is powdered milk and nutrition powder, introducing Dielac Optimum formula powered milk. This marked a new success in the collaboration of product research between Vinamilk and the companys European partners. Dielac Optimum with Opti-Digest formula supports the digestive system of infants and toddlers by facilitating the maximum absorption of nutrients, increasing immunity, and supporting comprehensive development. The product contains whey rich in alpha-lactalbumin, an easily digested and absorbed protein that provides an ample amount of essential amino acids that support brain development and restful sleep.
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4. Status of the capital expenditure plan
The actual capital expenditure payout in accordance with the Resolution of the shareholders meeting 2012 was as follows:
Total investment Vietnam dairy factory Dielac 2 powder milk factory Da Nang dairy factory Office branches, warehouses Upgrading factories, supply chain, sales department and IT VINAMILK Lam Son Dairy One Member Company Limited Vietnam Dairy Cow One Member Limited Company International Real Estate One Member Limited Company 2,349 1,906 421 598 2,642 7,916 253 2,006 100 10,275
Actual 2012 1,267 869 158 18 539 2,850 57 204 3,111
Budget 2012 1,651 958 176 233 689 3,707 181 646 2 4,537
% budget 77% 91% 90% 8% 78% 77% 31% 32% 0% 69%
Along with vitamins, minerals, and soluble fibers, beneficial bacteria called probiotics are added to the product to improve childrens absorption of nutrients and prevent digestive ailments and imbalances. To build on the success of these new product lines, in 2013 Vinamilk will aim to continuously improve the quality of its product lines and expand into various flavors and types of dairy products in order to satisfy the varied tastes of its target consumers. With the motto of always leading in product and technology development to meet customers needs at a reasonable price, Vinamilk is proud to take part in enhancing community health by providing a wide assortment of delicious, high quality products.
Total
In general, the Company has been focusing all efforts, resources for big and important projects. In which, two key projects, Vietnam milk factory and powdered milk factory, have been constructed under good control of timeline and project quality. The unpaid budget 2012 will be transferred to 2013.
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Designed concept (3D)
To lift dryers by 40.6 meters high
Panorama: basic completion
Detailed status of the 02 key projects

i. Vietnam powder milk factory
This is the second powdered milk factory of Vinamilk. The construction was started on October 1st 2011 on its location of 6 hectares in Vietnam - Singapore Industrial Park I, Binh Duong province. At the moment, the factory has been finished the basic construction and installation of machinery and equipment, and being completed the remaining parts in order to prepare for its trial run in January 2013. The technology of machinery and equipment for this factory is from Europe which meets the international standards. The dryers are the key equipment technology and considered as the heart of the factory. The factory has two dryers and their capacity is the biggest in Asia. The diameter of each dryer is 13.6 meters and 32 meters high. On 24 April 2013, the factory will be opened, on the occasion of the 38th year anniversary of the independence of the South (30/04/1975 30/04/2013). Pasteurized area: completion of test, GEA had trial run and cleaned the system by water
Some pictures during its construction
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Tanks for pasteurized milk
ii. Vietnam dairy factory

The construction was started on 01 September 2011 on its location of 20 hectares in My Phuoc 3 Industrial Park, Binh Duong province. Machinery and equipment were directly imported from well-known suppliers in Europe. Especially, the factory will be equipped with the entirely auto warehouse, called the intelligent warehouse. We have finished the main construction work and installation of machinery and equipment and being completed the remaining parts in order to prepare for its trial run commercial operation in quarter 2 of 2013.
Some pictures during its construction: 5. Dairy cow development Purchase of fresh milk:
Purchased volume in 2012 was 161,591 ton, achieved by 100.64% as compared to the budget and increased by 12.24% as compared to that of 2011. In which, the purchase from Vietnam Dairy Cow One Member Limited Company was 20,051 ton.
Dairy cow development:

Packaging area of liquid milk production lines
Currently, Vinamilk has five cow farms with 8,200 cows in total. The size of each farm is from 2,000 3,000 heads. The total cows imported during the year were 664 heads. According to our strategic business plan 2012 2016, Vinamilk will increase the number of cows at our farms to 25,500 heads by 2015 and to 28,000 heads by 2016. The Company continues to work with local authorities in order to invest more 04 cow farms in Thanh Hoa, Tay Ninh and Ha Tinh. The total investment for these 04 farms is more than VND1,500 billion.
Main workshop area before installing machinery & equipment
Intelligent warehouse under construction

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Special aircraft carried cows to arrive at Tan Son Nhat airport
Cow girls enjoyed hearty meal before going to the milking house
Cows carried by special aircraft: A special aircraft of giant Boeing 747, marked MH 6204, of Malaysia airline carrying 300 cows (adult and pregnant cows) from Australia safely arrived at Tan Son Nhat airport at 8:05PM on 15 may 2012. This is the 8th import from Australia, importing high quality cows in order to add more cows into Vinamilks farms. Since 2009, Vinamilk has imported more than 4,000 HF high productivity heads from Australia and New Zealand. All cows have clear profile (certified by Australian/ New Zealand Seed Federation), and approved by Vietnamese /overseas veterinary institutes.
Improving quality and increasing volume of raw fresh milk

In order to produce high quality products, it is required to have a complete process: raising cows feed environment harvesting processing into finished products. Such process has been developed for years at Vinamilk, especially the strict control over source of raw fresh milk supply and production process. All cows at our five farms, together with thousands of cows from local farmers are taken care in due course and in compliance with technical guidelines in order to ensure raw fresh milk is at high and pure quality. Annually, Vinamilk purchases about 60% fresh milk volume of the whole country with the improving quality. The Company not only creates jobs for local farmers, but also contributes to the development of the Vietnamese dairy industry for its stability and sustainability. For coming time, Vinamilk continues its supporting policy in order to improve quality of cow breed, productivity and develop more industrial cow farm models. Local farmers will be able to buy high quality cow breed and sperm which Vinamilk imports from well-known companies in the world.
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6. Improvements on organization structure, policies and management:

a. Deploy the online sales system: In 2012, Vinamilk has signed contract with Viettel supplier in order to deploy the online sales system nationwide. The advantages of this system over the existing sales system are: Using Tablet with more functions than Palm. Real-time information, help to update sales by each retailer, showroom and distributor fast. Monitor salesmens location, sales supervisors, sales routes and retailers visited during day. Improve the accuracy of information about retailers/ customers, plan sales routes better and monitor and supervise sales staff better. Help sales forces at different levels in their management and reporting more efficiently. Improve professionalism, management knowledge and fast reaction to the changes of the market conditions. Improve the quality of training and reminding staff timely. The Companys management team has updated information of sales from all distributors, showrooms in real- time and have intelligent business analysis reports. Develop customer service programs, customer membership,.
f. Risk management: Develop and improve the risk management system under KPMGs consultancy. Please refer to Risk management report, page 79. This is a significant step in improving the Companys quality of corporate governance. g. Human resources: Adjusted organisational structure and management of sales, Supply Chain to improve the efficiency of sales and distribution activities. Issue the professional competence kit the standard competence. Apply them in staff performance appraisal. Issue and apply the new salary frame and remuneration by work performance. Issue the new policy on supporting working conditions across the Company.
The approved strategic plan for 2012 2016 :

(VND billion) Total revenues Profit before tax Profit after tax 2011 22.071 4.979 4.218 2012 26.480 5.625 4.690 2013 31.780 6.355 5.230 2014 38.130 7.180 5.720 2015 45.760 8.115 6.180 2016 54.900 9.170 6.870 CAGR 20% 13% 10%
(Extracted from the solution of the shareholders meeting 2012)
Plan on capital expenditures The AGM approved the additional capital expenditure of 1,545 billion VND (including 373 billion VND for provision) for 2012-2016, totalling to 10,275 billion VND until 2016. The additional capital is used for: Expansion of Lamson Dairy factory to serve Thanh Hoa province and neighboring regions: 137 billion VND. Infrastructure upgrade for sales and offices: 238 billion VND. Expansion of the existing farms and building more new farms, increasing Vinamilks current herds of 8,200 cows to 30,000 cows by 2020: 1,170 billion VND.
7. Business plan in the future

The Companys business objectives in mid-term and long-term are defined as follows: The overall long- term business strategy: Focus on our core business of producing dairy: focus on 04 key categories of liquid milk, condensed milk, powdered milk and spoon yogurt. Develop more into healthy beverage with key products such as fruit juices, soy milk, traditional drinks e.g green tea, aloe drink, lemonade, Look for investment opportunities in foreign countries in order to ensure the stability and safety of raw materials supply and develop export markets. Continue to improve the local distribution network, open more retailers and increase the delivery coverage. Continue to expand the export markets.
Therefore, total investment until 2016 is as follows:

(VND billion) TOTAL Total investment 10,275 Already paid 2,572 Budget 2012 4,537 Budget 2013 - 2016 3,166
VINAMILK Viet Nam dairy factory project Dielac II dairy factory project Da Nang dairy factory project Branch office building, warehouses Expansion at existing factories, branches
7,916 2,349 1,906 421 598 2,642
2,489 415 569 204 75 1,225
3,707 1,651 958 176 233 689
1,720 283 379 40 291 727
In 2012, the Company has deployed this system to 29 distributors in Ho Chi Minh City and it is expected to complete this deployment for remaining distributors nation-wide by this June 2013. b. Promulgate the Companys corporate governance in accordance with IFCs guidances and standards. c. Promulgate the Companys social responsibility policy. d. Finalize the method, content and standard for preparing the sustainability report (the Companys social responsibility) for 2012. e. Deploy the stage 1 of the security system in accordance with ISO 27001.
Lam Son Dairy One Member Company Limited Vietnam Dairy Cow One Member Limited Company International Real Estate One Member Limited Company (Extracted from the resolution of the AGM 2012)
253 2,006 100
47 36 0
181 646 2
25 1.323 98
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8. Awards and achievements in 2012

During the year, the Company has achieved several awards and achievements from the local and foreign bodies:
Seq.
1 2 3 4
Name of awards/achievements
National brand 2012 Strong brand Top 5 Vietnamese high quality product 2012 Trust & Use product Leading contribution to Vietnamese using Vietnamese products 2012 Excellent achievement in the campaign Vietnamese using Vietnamese products 2012 One of Top 500 Vietnamese fastest growing enterprises Top 50 most profitable enterprises in Vietnam
Time
Jan, 2013 Mar, 2012 Mar, 2012 Nov, 2012
Granted by
Ministry of Industry & Commerce VnEconomy SGTT News VnEconomy Daklak peoples committee (Credit) HCM City people committee (Credit) Fast 500
Nov, 2012
6 7
Jan, 2012 Mar, 2012
May, 2012
Nhip Cau Dau Tu News
Excellent efforts in organization of Net Ve Xanh Contest Excellent efforts in organization of Net Ve Xanh Contest
Apr, 2012
Vietnamese High Quality
10
Jun, 2012
HCM City people committee (Credit)
11
Top 30 Best Annual Report 2012
Jul, 2012
HOSE and Securities Investment magazine
Besides the above awards, Madam Mai Kieu Lien (Chairwoman and CEO) was honoured with 04 achievements:
Seq.
12 Credit from State Securities Commission for the Best Annual Report in 5 years: 2008 2012 Jul, 2012 State Securities Commission 1 2
Award name
Top 50 Asia's Most Powerful Businesswomen. One of Top 51 excellent Businesswoman in Asia, 2012.
Time
Mar, 2012 May, 2012
Granted by
Forbes Asia
13
The best Investor Relations 2012 in Vietnam
Jul, 2012
VietStock Communications SGGP News and Department of natural resources & environment
Corporate Governance Asia Journal Corporate Governance Asia Journal Forbes Asia
14
Green business for 3 factories: Truong Tho, Thong Nhat and Sai Gon
Best Corporate Investor Relations
2012
Dec, 2012
Top 50 for Achievement In Business - Asia's Women In Mar, 2013 The Mix:
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33
for a
beautiful life
BOUNDLESS energy
PRODUCT PORTFOLIO
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We have more than 200 SKUs which are grouped into the following categories: Powdered milk, infant cereals and nutrition products Condensed milk Liquid milk Yoghurt, ice-cream, cheese Soy milk, fruit juices and beverage
Some products by each category:
POWDERED MILK, INFANT RECEALS AND NUTRITION PRODUCTS
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CONDENSED MILK
LIQUID MILK
38
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YOGHURT, ICE-CREAM & CHEESE
SOY MILK, FRUIT JUICES & BEVERAGE
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CORPORATE INFORMATION
1976
Our Company was founded under the name of Southern Coffee-Dairy Company, a subsidiary of the Food General Directorate and had two factories in operation, namely Thong Nhat Dairy Factory and Truong Tho Dairy Factory.
1992
The United Enterprises of Milk Coffee Cookies and Candies I was formally renamed Vietnam Dairy Company and came under the direct management of the Ministry of Light Industry.
1978
The Company had more factories: Bich Chi Powder Factory, Lubico Cake Factory and Bien Hoa Coffee Factory. The Company was transferred to the Ministry of Food Industry and the Company was renamed United Enterprises of Milk Coffee Cookies and Candies I.
1994
In the expansion plan to meet the market demand in the North, the Company built the Hanoi dairy factory. On 7 October 1994, the sales office was opened and responsible for sales activities in the north provinces.
1989
1996
Binh Dinh Dairy Joint Venture Enterprise was founded as the result of our joint venture with Dong Lanh Quy Nhon Joint Stock Company. Ha Noi Dairy Factory came into operation. In May 1996, Da Nang sales office was opened and responsible for sales activities in the central provinces.
A steady growth & improvement
Dielac Powdered Milk Factory came into operation and introduced its first batch of products to the market in Vietnam.
1991
The white revolution started the development of fresh milk. The first time we launched UHT milk products and yoghurt to the Vietnam market.
CORPORATE PROFILE
43
2007
In September 2007, the Company acquired a controlling stake of 55% in Lam Son Milk Company Ltd., located in Le Mon Industrial Zone, Thanh Hoa province and changed its name into Lam Son Milk Joint Stock Company. Acquired 100% shares from F&N Vietnam Limited and changed its name to Dielac Dairy One Member Co., Ltd. This is 100% new and the second powdered milk factory of Vinamilk. Acquired the remaining shares of Lamson Milk Joint Stock Company and changed its name to Lam Son Dairy One Member Co., Ltd. Inaugurated and put the Beverage Factory into operation in Binh Duong. Vinamilk was honored by Forbes Asia for its Top 200 Best Under A Million in Asia 2012. This was the first and unique a Vietnamese company was honored in the list of Forbes Asia.
1998
Can Tho sales office was opened in order to develop sales activities in the mekong delta provinces.
2005
Bought our joint venture partners remaining equity in Binh Dinh Dairy Products Company Ltd (which was then known as Binh Dinh Dairy Factory) and inaugurated Nghe An Dairy Factory, located in Cua Lo Industrial Zone, Nghe An province, on 30 June 2005.
2008
Tien Son Dairy Factory was inaugurated and put into operation in Hanoi.
2001
Can Tho Dairy Factory was inaugurated and put into operation in the Mekong Delta.
2006
Vinamilk was listed on Hochiminh City Stock Exchange (HOSE) on 19 January 2006. In June, An Khang Clinic was opened in Ho Chi Minh City. The clinic provides nutrition advices, paediatrics, and general health checks for all functions. It is the first clinic in Vietnam to be managed information by electronics. In November, we started our cow farm development by buying Tuyen Quang cow farm with 1,400 heads. The farm was put into operation afterwards.
2009
In September, the cow farm in Nghe An was opened. This is the most modern farm in Vietnam with its designed size of 3,000 cows.
2003
The company was formally transformed into a joint stock company in November 2003 and renamed as Vietnam Dairy Products Joint Stock Co., to reflect its change in legal status.
2012
In June 2012, Da Nang dairy factory was opened and put into commercial operation.
2010
The Company started its strategy of investment overseas by contributing nearly USD 10 million (equivalent to 19.2% of the projects share capital) in powdered milk project in New Zealand.
2004
Acquired Saigon Milk Joint Stock Company and increased share capital of the company to VND 1,590 billion.
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45

100%
International Real Estate One Member Co., Ltd
Vietnam Dairy Cow One Member Co., Ltd
100%
Vietnam Dairy Cow One Member Co., Ltd
100%
Lam Son Dairy One Member Co., Ltd
15%
Asia Saigon Food Ingredients JSC
19,3%
Miraka Limited
DETAILS OF SUBSIDIARIES AND ASSOCIATES

Share capital (VND billion) 1,550 Owned by Vinamilk (%)
100
Seq.
Company name Vietnam Dairy Cow One Member Co., Ltd. Lam Son Dairy One Member Co., Ltd. International Real Estate One Member Co., Ltd Asia Saigon Food Ingredients JSC. Miraka Limited
Nature of business
Was founded on 11 July 2007 and 100% owned by Vinamilk. It builds the model cow farms to provide the breed and technology support to farmers to secure the stable and good quality fresh milk supply to the parent company as input materials. All these farms are received intensive investments into breeding cows, quality input feeding, breeding facilities and milking technology meeting the Europe standards in order to ensure that fresh milk materials are at the best quality. This is the key material source for the production of 100% fresh milk products of the parent Companys factories.
As at 31 December 2012, this company manages five dairy cow farms in Tuyen Quang, Nghe An, Thanh Hoa, Binh Dinh and Lam Dong with 8,200 heads (2011: 6,712 heads). During 2012, this company also supplied 20,051 tons of raw fresh milk to Vinamilk, increased by 56% as compared to 2011 (12,848 tons). Please refer to page 27 29 for more information about our cow farm development.
Breeding dairy cows Producing and trading dairy products and beverages Real estate business (not yet operating) Producing cream powder used for foods Manufacturing and trading dairy products
80
100
160
100
4 5
120 NZD 55 million
15 19.3
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MILKING WORKER WORKING PASSION The milking process plays an important part in ensuring that milk harvested by Vinamilk is nutritious and conforms to all food safety standards. Cleaning and pasteurizing phases must strictly comply with the process as detailed below in order to harvest fresh milk of the best quality and highest hygienic standards. The farm workers on the milking team receive periodical medical check-ups and tests so as to ensure that they are always in the best health
Milking workers comply with the following process: Step 1: Clean cow udders Step 2: Extract first milk-ray Step 3: Clean teats Step 4: Plug teat cups of milking machine into cow udders Step 5: Pasteurize teats after milking
All steps require workers to be gentle and friendly with the cows to ensure expedient and effective milking. Workers are not allowed to use phones, to talk loudly, or to hurt, startle, or scare the cows because these actions reduce the amount of Oxytocine released.
All farms are equipped with automatic milking system of advanced technology from nations in G7 (European standard), all cows have chips attached to identify and monitor daily milk capacity, and also remove sick cows before moving to milking rack. Cows are milked twice a day: morning shift from 4.00 to 8.00; evening shift from 16.00 to 20.00.
Workers are performing in modern milking rack (60 cows/turn, each turn lasts 8-10 minutes)
The cows are eagerly waiting for their turns
A herd of cows are wandering in a green field in Thanh Hoa Farm
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Lam Son Dairy One Member Co., Ltd
International Real Estate One Member Co., Ltd
The company has the factory located in Le Mon Industrial Park, Thanh Hoa City, Thanh Hoa Province. This factory is planned to produce mainly liquid milk and yoghurt under Vinamilks brand and orders in order to serve the local market demand in the surrounding provinces. This company is expanding its production capacity up to 49.28 litres of liquid milk and 156 million jars of yoghurt.
Was founded on 22 February 2006 to invest in real estate. However, Vinamilk s strategy is to focus on its core business and as such the company has been dormant.
Some basic financial information: (VND billion)

Total sales Profit before tax Profit after tax Total assets
2012
331 43 39 220
2011
284 61 61 164
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Asia Saigon Food Ingredients JSC
Miraka Limited
Was founded on 7 May 2008. Its current share capital is VND 120 billions of which Vinamilk contributed by VND 18 billion, equivalent to 15%.
The designed capacity of the factory is 11,000 ton/year, producing raw materials used in the foodstuff processing industry. The company started its first commercial production in May 2011.
Some basic financial information: (VND billion)

Total sales Profit before tax Profit after tax Total assets
Its share capital is NZD55 million, in which Vinamilk has contributed NZD 12.5 million (equivalent to 19.3%). This is the first investment project in overseas. The plant is located in the central of Taupo, New Zealand The plant buys raw fresh milk from the local farmers in Taupo and produces high-quality milk powders to oversea markets. This high-quality milk powder plant has the capacity of 32,000 ton/ year. The plant is equipped with modern technology at the international standard. The plant is powered by renewable steam and electricity from the
nearby Tuaropaki geothermal power station. The plant is of high automation, robot can replaces a lot of human forces. This is the right investing strategy for long-term view in order to better secure the high- quality and stable supply of milk materials for Vinamilk. Miraka started its commercial operation in August 2011 and achieved 100% capacity utilization by August 2012.
2012 277 44 44 224
2011 114 (13) (13) 212
Some basic financial information: the fiscal year ended as at 31st July (NZD) Total sales Profit before tax Profit after tax Total assets 2012 125,361,635 2,555,950 1,813,662 97,082,279 2011 (1,892,902) (1,366,624) 75,137,435
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ORGANIZATION AND MANAGEMENT STRUCTURE
SHAREHOLDERS MEETING
INSPECTION COMMITTEE BOARD OF MANAGEMENT
CHIEF EXECUTIVE OFFICER

INTERNAL CONTROL AND RISK MANAGEMENT DIRECTOR
INTERNAL AUDIT DIRECTOR
INFORMATION TECHNOLOGY DIRECTOR (IT)
PUBLIC RELATION DIRECTOR
PRODUCT DEVELOPMENT DIRECTOR
EXECUTIVE DIRECTOR RAW MATERIALS DEVELOPMENT
EXECUTIVE DIRECTOR PRODUCTION and R & D
EXECUTIVE DIRECTOR SUPPLY CHAIN
EXECUTIVE DIRECTOR FINANCE
EXECUTIVE DIRECTOR PROJECT
EXECUTIVE DIRECTOR MARKETING
EXECUTIVE DIRECTOR SALES
EXECUTIVE DIRECTOR HR & ADMIN
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THE BOARD OF MANAGEMENT

The Board of Management consists of 05 members with the current board period of 05 years from 2012 to 2016. During the year, the Board has accepted a resignation letter from a member and appointed Mr. Pascal De Petrini, the representative of the major shareholder F&N Dairy Investments Pte Ltd, to the Board on 04 April 2012. The annual shareholder meeting in 2013 will approve this change.
Ms. Mai Kieu Lien

Chairwoman and Chief Executive Officer
From August 1976 to August 1980, she was an engineer in charge of the condensed milk production at Truong Tho Dairy Factory. From September 1980 to February 1982, she was a technology engineer in the Technical Department of the United Enterprises of Milk Coffee Cookies and Candies I. From February 1982 to June 1983, she worked as a Vice Technical Director in charge of production at Thong Nhat Dairy Factory. After finishing her training at Economic University of Leningrad in the former Soviet Union (currently Russia), in 1984, she was appointed Deputy Chief Executive Officer of the United Enterprises of Milk Coffee Cookies and Candies I. In December 1992, she was promoted to Chief Executive Officer of Vietnam Dairy Products Company. From 1996 2001, she was a member of the Central Committee of the Vietnamese Communist Party. On 14 November 2003, she was elected Chairwoman of the Board of Management and thereafter appointed as Chief Executive Officer of our Company for 3 consecutive board periods: 2003 2007;2007 2011 and 2012 - 2016.
Ms. Lien graduated from Mosco University of Meat & Milk Processing Technology, Russia with a bachelor of science degree in 1976. She holds a Certificate of Leningrad Economic Management from University of Economy, Russia, and a Certificate of Government Management from National Political Institute, Vietnam.
In 2001, she was granted the Labor Medal II by the Government. In 2005, she was granted the Hero of Labor in the innovation period and Labor Medal I in 2006 by the Government. In February 2012, she was in the Top Asias 50 Most Powerful Businesswomen, honored by Forbes Asia. In May 2012, she was One of Top 51 excellent Businesswoman in Asia 2012, honored by Corporate Governance Asia Journal. In 2012, she was in the Best Corporate Investor Relations, honored by Corporate Governance Asia Journal. In March 2013, she was again in the Top 50 for Achievement In Busines - Asias Women In The Mix, honored by Forbes Asia.
Her positions at other entities:

Chairwoman of Vietnam Dairy Association for the period 2010 2015. Member of the management board, period 2010 2015 at Miraka Limited, New Zealand.
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Mr. Le Song Lai

Member
Mr. Le Anh Minh

Member
Mr. Pascal De Petrini

Member
Ms. Ngo Thi Thu Trang

Member, Executive Director Finance
Member of the Board of Management since April 2012. His work and experience are summarized below: From August 1996 to October 1996: Lawyer, Freshfields Law firm, Ha Noi branch. From October 1996 to November 2003: Officer at Insurance Department, Ministry of Finance From November 2003 to August 2006: Vice Department Head of Insurance Department, Ministry of Finance From August 2006 up to now: Deputy General Director of the State Capital Investment Corporation.
His positions at other entities: Member of the Board of Management (concurrently) Bao Minh Joint Stock Corporation ember of the Board of Management (concurrently) M Vietnam National Reinsurance Joint Stock Corporation Member of the Board of Management (concurrently) FPT Joint Stock Company Chairman of the Board of management (concurrently) Trang Tien Investment & Trading Co., Ltd
Mr. Minh holds a Bachelor of Administration and Economics from Vietnams University of Banking in 1991. He obtained his Master of Business Administration from Wharton Business School, University of Pennsylvania USA. He first started working for Peregine Capital Vietnam under the financial institutions group. He was credited for the successful acquisition of Dai Nam Bank, a first case for Vietnam, and restructured the bank within 12 months. He was the Deputy CEO of Dai Nam Bank from 1994 to 1996 managing the Business Development and Credit portfolio. Later he became the Chief Finance Officer in Coca Cola Southeast Group for four years. He joined Dragon Capital Group Limited in 2002 with position of Director of Finance. Beside his enterprise financial activities, he is currently a member of the Investment Council of several investment funds and securities companies.
Member of the Board of Management since April 2012. From 1984 to 2011, he worked for Danone Group, France. His last appointment with Danone was Vice President of Danone Baby Nutrition Asia Pacific (Singapore) from 2007 to 2011. From 2011 to today, Mr. De Petrini was appointed Chief Executive Officer, Food & Beverage of the Fraser and Neave Limited, Singapore. Mr. Pascal De Petrini graduated with a Masters degree from Mines De Nancy, France, in 1981 and a Master of Science in Management, ESSSEC, France, in 1983.
She has been Deputy General Director and Financial Director of our Company since March 2005. She joined the Company in 1985 as a financial analyst, and in January 1995, she became a Vice Manager in the Accounting-Statistics Department of the Vietnam Dairy Products Company. She held this position until December 1997 and served between January 1998 and February 1998 as the Head of the Accounting Statistic Department. From February 1998 to March 2005, she held the position of the Chief Accountant in charge of the Accounting Department of the Vietnam Dairy Products Company. In March 2005, she was appointed Deputy General Director and Finance Director. From 20 August 2009, the title of Ms. Trang has been changed to Executive Director Finance. Ms. Trang graduated from the Finance-Accounting University of Ho Chi Minh City, majoring in accounting and finance in 1984. She also holds a Master of Business Administration degree in 1998.
Education background: Master degree in Laws
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THE BOARD OF EXECUTIVE DIRECTORS
Ms. Mai Kieu Lien

Chairwoman and Chief Executive Officer
Mr. Mai Hoai Anh

Executive Director Sales
Ms. Nguyen Thi Nhu Hang

Executive Director Raw Materials Development
Ms. Nguyen Thi Thanh Hoa

Executive Director Supply Chain
(Refer to Board of Management for information about Ms. Mai Kieu Lien on page 56 57) The Chief Executive Officer is assisted by the Executive Board with 08 members in charge of different operational functions and 04 functional Directors reporting directly to the Chief Executive Officer. During the year, the Board of Management has approved the resignation letter from Mr. Pham Phu Tuan, Acting Executive Director Sales for his personal reason to live abroad and the Board has appointed Mr. Mai Hoai Anh to replace this position since May 2012.
Mr. Mai Hoai Anh was appointed Executive Director Sales in May 2012. He has been working for Vinamilk more than 16 years holding different positions as follows: From February 1996 to April 2001: staff in Import Export department. From May 2001 to December 2003: Vice department head of Import Export department. From January 2004 to December 2004: Department Head of Import Export. From January 2005 to May 2012: Import Export Director. From May 2012 to today: Executive Director Sales.
Mr. Mai Hoai Anh graduated from Ho Chi Minh Economics University with a bachelor degree and Master of Business Administration in 2011 from Bolton University, United Kingdom.
Ms. Hang first joined our Company in 1981 where she held the position of Deputy Manager in the consumption department until 2001. She was later promoted to the position of Director of Logistics Enterprise in August 2001 and held this position until December 2002. Then Ms. Hang was promoted to Deputy General Director in January 2003, where she was in charge of the technical project department. From July 2006, Ms. Hang was in charge of customers services and then in charge of managing and developing dairy farms that supply fresh milk to the Company. In July 2007, Ms. Hang was appointed Director of Vietnam Dairy Cow One Member Co., Ltd., a subsidiary of Vinamilk. From 20 August 2009, the position of Ms. Hang has been changed to Executive Director in dairy development. Ms. Hang graduated from the Ho Chi Minh City University of Economics with a Bachelor degree in business administration.
Between September 1978 and June 1983, Ms. Hoa was a lecturer at the Ho Chi Minh Polytechnic University. She later joined our Company in 1983 as a Process Engineer at Truong Tho Dairy Factory. Ms. Hoa held the position of Deputy Director and then Director of Truong Tho Dairy Factory from July 1991 to 1999. In December 1999, Ms. Hoa was appointed Deputy General Director of our Company. From 20 August 2009, her title has been changed to Executive Director in charge of supply chain. She is currently in charge of planning, import - export, customer services departments, supply chain and logistics enterprises of our Company. Ms. Hoa graduated from Moscow University of Meat & Milk Processing Technology (now called Moscow National General University of Applied Biology Technology) in 1978 with a Bachelor degree in Milk Processing Technology.
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THE BOARD OF EXECUTIVE DIRECTORS
Mr. Nguyen Quoc Khanh

Executive Director Production and R&D
Ms. Nguyen Huu Ngoc Tran

Acting Executive Director Marketing
Ms. Ngo Thi Thu Trang

Member, Executive Director Finance
Mr. Tran Minh Van

Executive Director Project
Has been holding the position Executive Director Production And R & D in charge of production and product development since September 2009, he currently is responsible to manage factories and research and development center of our Company. Mr. Khanh joined our Company in January 1988 at the position of KCS at checking department, Thong Nhat Dairy Factory. In 1996, Mr. Khanh was appointed Deputy Manager of production workshop, then was Manager of production workshop of Thong Nhat Dairy Factory in 1998. In 2003, Mr. Khanh was promoted to the position of Acting Director of Can Tho Dairy Factory. In 2004, he was appointed Director of Can Tho Dairy Factory and held this position until September 2009. Mr. Khanh graduated from Ho Chi Minh City Polytechnic University in 1987, majoring in Chemical Technique and Foods. He also held a Bachelor in Business Administration from Ho Chi Minh City University of Economics in 1997 and a Bachelor of English from Ho Chi Minh City University of Social Science and Humanism in 2001.
Ms. Tran joined Vinamilk in July 2008 at the position of Director in charge of developing marketing strategy. In August 2009, she was appointed Acting Executive Director, in charge of Marketing. She is responsible to developing Marketing strategies for dairy and beverage products of our Company. Previously, Ms. Tran served as Marketing Manager for Pepsi Vietnam Co., Ltd. between 2003 and 2005. She was then moved to Pepsi Malaysia at position of Marketing Manager. Prior working for Vinamilk, Ms. Tran had a period working for Tan Hiep Phat Group at the position of Marketing Manager. Ms. Tran graduated from Ho Chi Minh City University of Foreign Trade.
(Refer to Board of Management for information about Ms. Ngo Thi Thu Trang on page 59)
Between 1990 and July 1994, Mr. Van was a Deputy Director assisting the Director of Thong Nhat Dairy Factory. In August 1994, he was appointed Director of the Thong Nhat Dairy Factory and continued to hold this position until June 2006. He was appointed Deputy General Director in charge of the Project Department of our Company in July 2006. In December 2006, Mr. Van was appointed Director of a subsidiary namely, International One-Member Real Estate Investment Co., Ltd. From 20 August 2009, position of Mr. Van has been changed to Executive Director in charge of projects. Mr. Van graduated from Ho Chi Minh City Polytechnic University in 1981 with a Bachelor degree in engineering. He obtained a Bachelor in Business Administration from Ho Chi Minh City University of Economics in 1994, a Bachelor of Law with major in commercial laws from Ha Noi University of Laws in 2001 and a Master in Business Administration from Ha Noi Polytechnic University in 2004.
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THE INSPECTION COMMITTEE

Mr. Nguyen Trung Kien
Head of Inspection Committee
Member of the Inspection Committee since March 2009, Mr. Kien is currently the Director of MDKT Co., Limited. From 2001, he was an analyst on the corporate finance and M&A team at Credit Suisse First Boston, Singapore. After that, Mr. Kien was an Manager on the structured finance team at Commonwealth Bank of Australia, New York branch, USA. From 2004 to 2005, he was Assistant Vice President, Corporate Development at OCBC Bank, Singapore where he helped with the analysis and execution in the M&A activities for the bank. Subsequently, he joined the investment team at Temasek Holdings, Singapore as an Associate Director. Mr. Kien was the founder and Managing Director of TNK Capital in Vietnam from 2008 to 2011. He was awarded a Bachelor of Applied Finance from Macquarie University, Australia and a Master of Business Administration from University of Chicago Booth School of Business, USA.
Mr. Nguyen Anh Tuan

Member
Member of the Inspection Committee since March 2008, Mr. Tuan was a founder, the Boards Chairman and General Director of Goldengate Medical Supplies Joint Stock Companny since 2004. From 1990 to 1992, he was an officer of the Department of Monetary-Credit Research of the State Bank of Vietnam. From 1992 to 1994, he was a Sales Executive of Gold & Gemstones Corporation of the State Bank of Vietnam. In 1994, he moved to work as a Sales Executive for the representative office of Taisei Corporation of Japan and had been working here until 1997. In 1999, he joined Johnson & Johnson Medical, United States as a Marketing Director in charge of ASEAN region and stayed here until 2004.
Mr. Tuan graduated from American University, Washington D.C., USA with Master Degree in Business Administration.
Mr. Nguyen Ngoc Vu Chuong

Member
Member of the Inspection Committee since April 2012. From 2006 to 2009, he was a credit officer for Asia Commercial Bank (ACB) and an investment analyst for ACB Capital. He also concurrently joined a team to set up the ACBs financial leasing company during this time. From 2010 to present, he is a portfolio management officer at the State Capital Investment Corporation (SCIC), in charge of investment portfolio of aquaculture, real estate and sugar companies in Ba Ria Vung Tau and Soc Trang provinces.
Mr. Chuong graduated from Ho Chi Minh Banking University, major in Finance & Banking. He also passed level 2 of the Chartered Financial Analyst (CFA), USA. In addition, he also had different certificates on Stock market, Securities law and Asset management, granted by the State Securities Commission.
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Order from left to right Annual Report 2012 VINAMILK - Never Stop Growing
65
CORPORATE GOVERNANCE REPORT

The two events below marked the important turn-point in the corporate governance at Vinamilk:
Corporate Governance Asia Journal, Hongkong just selected Ms. Mai Kieu Lien Chairwoman and Chief Executive Officer of Vinamilk as the Most Powerful Businesswomen in Asia.
The award named The Most Powerful Businesswomen In Asia is honored annually by this Journal to recognize the talented business leaders. There is a unique and one representative from Vietnam, the Chief Executive Office of Vinamilk, among 51 Asian business leaders.
Vinamilk is approaching to the best practice of the corporate governance
Vinamilk becomes first Vietnamese enterprise join the Asian Corporate Governance Association (ACGA), Hongkong.
ACGAs members comprise of 94 members, in which 56 members from Asia- Pacific and 38 members from Europe and North America. They are global and regional pension and investment funds, financial institutions, listed and unlisted companies, law and accounting firms, and educational institutions. Vinamilk is the first Vietnamese member of this organization. The organization members can engage in a constructive dialogue with other businesses and individuals on practical issues affecting the implementation of better corporate governance practices.
THE CORPORATE GOVERNANCE REPORT

67
A. MATTERS ON THE BOARD OF MANAGEMENT CONDUCT OF AFFAIRS (THE BOARD)
3. Term of appointment
The Board term is 05 years. The new Board term 2012 2016 was approved at the annual shareholders meeting held on 23-March-2012. In addition, according to the Companys Charter, there is at least 1/3 Board members to be re-elected at each annual shareholders meeting.
4. The Boards Committees

To facilitate the effective management, the Board has established its 04 committees as follows: Seq.
1 2 3 4
Committee name
Strategy and development committee Audit committee Nominating committee Remuneration committee
Head of committee
Mr. Le Song Lai Mr. Le Anh Minh Ms. Mai Kieu Lien Mr. Wang Eng Chin (*)
Member
Ms. Mai Kieu Lien Ms. Ngo Thi Thu Trang Mr. Wang Eng Chin (*) Mr. Le Song Lai Mr. Le Anh Minh Ms. Ngo Thi Thu Trang
Note: (*) Mr. Pascal De Petrini was temporarily appointed as a Board member to replace Mr Wang Eng Chins position at the committees since December 2012.
1. Responsibility of the Board

The responsibility and duty of the Board are stipulated in the Companys charter and corporate governance statute. Accordingly, the Board is responsible for develop the strategy and determine the priorities of the Companys operations, determine the business directions, manage and make decisions for matters which do not belong to the authorization of the shareholders meeting. The main responsibilities of the Board comprise of contents below: Supervise the strategy and monitor the operations, appoint and supervise the Chief Executive Officer and the senior managers. Ensure the shareholders right through organizing the annual shareholders meeting, develop the dividend policy and solve the conflicts of interest between the Company and its shareholders. Responsibilities relating to the Companys share capital and assets. Disclose information and its transparency..
2. Board composition and its structure

The Board term of 2012 2016 has 05 members as below: - Ms. Mai Kieu Lien - Mr. Wang Eng Chin - Mr. L Song Lai - Mr. L Anh Minh : Chairwoman : Member : Member : Member
These Boards Committees operate under clearly defined principles and practices in accordance with the Companys corporate governance.
5. The Boards meetings and attendance

The Board conducts its meeting on a quarterly basis during the year. The extraordinary meetings are convened when circumstances required. The members of the Inspection Committee are also informed and invited to attend the meetings of the Board for their supervisory purpose. The attendance record of Board meetings held during the fiscal year ended 31 December 2012 is set out in the table below: Stt
Ms. Mai Kieu Lien Mr. Le Song Lai (*) Mr. Le Anh Minh Ms. Ngo Thi Thu Trang Mr. Wang Eng Chin Mr. Hoang Nguyen Hoc (*)
- Ms. Ng Th Thu Trang : Member
During the year, the Board has approved the resignation letter from Mr. Wang Eng Chin. Mr. Pascal De Petrini was appointed to the Board in accordance to the Boards Resolution No. 20/NQ-CTS.HQT/2012 , dated December 4th 2012. The nearest shareholders meeting (2013) will consider and approve this appointment. The Board has 3 non-executive members whose brief biography is mentioned from page 56 59 of this annual report. Vinamilks Board members consist of those who have much experience and capability in business, finance, accounting and corporate governance. These members have an independent view on their work and great contribution to the Company.
Full name
Number of meetings
4 3 4 4 4 1
Number of attendance
4 3 4 4 4 1
In 2012, the Board has executed its responsibilities and duties accordingly.
(*): Mr. Le Song Lai was appointed to the Board and Mr. Hoang Nguyen Hocs term of office expried in accordance with the resolution of the shareholders meeting held on 23/03/2012.
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Main contents of the Board meetings are as follows

Meeting Numbers of Attendants
Meeting 1 1/31/2012 5/5 Observers: IC members
Approved the bonus multiples for the Executive Team and the Chief Account based on 2012 business results. Approved the adjustment and change in the ERMs structure upon the proposal of KPMG. Approved issues on CSR report upon GRI standards. Approved the establishment of Vinamilks representative office in Cambodia. Approved the charter capital increase of 710 billion dong of Vietnam Dairy Cow Co., from 840 billion to 1,550 billion dong. The capital contribution should be made upon the progress of the project.
Content
Approved the business result in 2011. Approved the plan to organize AGM 2012. Approved the business plan for 2012-2016 to propose to the AGM. Approved the 2012 remuneration for BOM, IC to propose to the AGM. Approved the dividend of 2012 to propose to the AGM. Amended ESOP policy: For an employee who has passed away, his her shares should be lifted. For an employee whose ESOP shares are being recalled (the payment has been made to him/her) whereas the procedures have not been completed, the benefits rising from their being-recalled shares are revoked as well. Approved the Board meeting schedule in 2012. The new-term Board reviewed issues on corporate governance as: the outstanding issues from the previous term, the content of Boards authorization to the CEO, the rules and regulations required to be issued, committees of the Board to be set up, the appointment of company secretaries in the new term, etc. Determined the priorities of the Board in 2012 and in the term of 2012-2016: (i) Business targets: 20%/year growth in revenue, 13%/year growth PBT; (ii) to build operation processes for Vinamilk to meet the standards of listing on international markets. Approved the business results in Q1/2012 and the business plan for Q2/2012. Approved the dissolution of Dielac Dairy One-member Ltd. and its conversion into a branch of Vinamilk. Approved the business result in Q2/2012 and business plan for Q3/2012. Approved the adjustment of investment plan for the period of 20122016: adjustments of investment capital among the projects and additional items. The total investment capital remained unchanged. Approved the record date for the first installment of dividend 2012. Approved the adjusted corporate governance policy, the corporate social responsibility policy, the adjusted information disclosure policy. Approved the adjusted salaries for the Executive Team and the Chief Accountant. Discussed on issuing bonus shares at ratio of 1 : 2 in order to collect the shareholders opinions. Approved the business plan for Q4/2012. Approved the updated business plan for 2013 and updated strategic plan 2012-2016. Approved lifting of ESOP shares to be conducted at every June 30th in 2013 and 2014. 19 20 21 22 23 19/ NQ-CTS.HQT/2012 20/ NQ-CTS.HQT/2012 21/ NQ-CTS.HQT/2012 22/ NQ-CTS.HQT/2012 23/ NQ-CTS.HQT/2012 11 12 13 14 15 16 17 18 11/ NQ-CTS.HQT/2012 12/ NQ-CTS.HQT/2012 13/ NQ-CTS.HQT/2012 14/ NQ-CTS.HQT/2012 15/ NQ-CTS.HQT/2012 16/ NQ-CTS.HQT/2012 17/ NQ-CTS.HQT/2012 18/ NQ-CTS.HQT/2012
After these meetings, the BOM passed the following resolutions:

No.
1 2 3 4 5 6 7 8 9 10
Reference
01/NQ-CTS.HQT/2012 02/ NQ-CTS.HQT/2012 03/ NQ-CTS.HQT/2012 04/ NQ-CTS.HQT/2012 05/ NQ-CTS.HQT/2012 06/ NQ-CTS.HQT/2012 07/ NQ-CTS.HQT/2012 08/ NQ-CTS.HQT/2012 09/ NQ-CTS.HQT/2012 10/ NQ-CTS.HQT/2012
Date
1/31/2012 1/31/2012 3/14/2012 4/27/2012 4/27/2012 5/21/2012 5/21/2012 6/27/2012 6/27/2012 8/1/2012 8/15/2012 8/24/2012 8/29/2012 8/29/2012 8/29/2012 9/14/2012 10/15/2012 11/14/2012 11/22/2012 12/4/2012 12/5/2012 12/26/2012 12/26/2012
Description
Result of the meeting as of Jan 30th 2012. Adjustment of ESOP policy. Investment plan to 2016 Dissolution of Dielac Dairy One-Member Co. Ltd. Result of the meeting as of April 27th 2012 Approved the resignation of Mr. Pham Phu Tuan. Appointed Mr. Mai Hoai Anh as Acting Director of Domestic and Export Sales Approved the remuneration for the Board and the IC 2012 Approved the first installment of dividend 2012. Approved collecting shareholders opinions on issue of bonus shares. Approved issue of salary frame for the Executive Team and the Chief Account. Approved the adjusted remuneration for the Board and the IC. Result of the meeting as of July 27th 2012. Approved the transfer of TH2 dairy farm to Lamsonmilk Approved Tien Son factorys expansion on workshop 3. Ninh Approved the investment in Tay Dairy Farm. Approved the establishment of Vinamilk branch - Vietnam powder milk factory Approved the record date for issuing bonus shares Approved the change in Resolution No.17 (regarding to address change) Approved the resignation of Mr. Wang Eng Chin and appointment of a new member. Result of the meeting as of Nov 30th 2012 Approved the additional investment in Mirakas UHT project. Approved the establishment of Vinamilks representative office in Cambodia
Meeting 2
4/27/2012
5/5 Observers: IC members
Meeting 3
7/27/2012
5/5 Observers: IC members
Meeting 4 11/30/2012
5/5
Observers: IC members
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6. Chairwoman
The Chairwoman is also the Chief Executive Officer of the Company. This concurrent holding brings more convenient and effective internal communications. The concurrent holding must be approved by the annual shareholders meeting.
9. Access of Information
Board members are provided with adequate and timely information related to the Company on an on-going basis to enable them to carry their duties. The Executive Board provides adequately and timely information as well as reviews the Companys performance prior to the Board meetings. The Board has a separate and independent access to Vinamilk information from senior management and the Board Secretaries if they have any queries on the operations. A notice of meeting, which contains an agenda, is delivered to the Board prior to each meeting. The Board Secretaries attend all Board meetings and are responsible for ensuring that the meeting is held in accordance with the procedures and regulations. The Board Secretaries comprise of 03 members: Mr. Nguyen Thanh Tu Ms. Le Quang Thanh Truc Mr. Nguyen Trung
B. REMUNERATION MATTERS
1. Remuneration Policy
The Remuneration Committee reviews and recommends to the Board an appropriate and competitive remuneration policy. A formal and transparent procedure is applied to determine the remuneration of each member of the Board of Management and each members of the Board of Executive Directors. The approved remuneration policy for the Board members consists of the following: A fixed allowance and an allowance for attending the board meetings. An allowance for position at Boards committees. An allowance for additional responsibilities such as chairwoman, head of Board committee. When proposing remuneration levels, the Remuneration Committee takes into consideration the payment levels and the occupations in the same industry and in comparable companies, the relative performance of corporate performance, of each individual Board member and key executive officer. The annual bonus scheme is also applied to all employees.
7. Board membership
Vinamilk maintains a formal and transparent process for the appointment of new Board members. Any appointment of a new member must undergo a formal selection process. According to the Companys corporate governance, the nominating committee will review and evaluate for the new candidates to the Board. If there are changes of the Board members during the year, the Board will appoint new members and then submit to the nearest shareholders meeting for the official approval.
3. Disclosure of Remuneration
The allowance of the Board of management, Inspection Committee is approved annually by the shareholders meeting. The approved allowance for 2012 was VND5.2 billion. This amount has been exactly paid during the year. Remuneration of the members of the Board of Management and the Board of Executive Directors is disclosed annually. This enables investors to understand the relation between remuneration of Directors, key executives and their performance. Remuneration of key management is disclosed in the note no.31 of the consolidated financial statements, page 140.
2. Remuneration level and structure

The level of remuneration should be appropriate for the purposes of attracting, keeping and motivating the Board members and the Directors in order to run Vinamilk successfully. A portion of the remuneration level is based on the Companys performance and individuals performance as well. Below is the detail of the Boards allowance in 2012:
8. Board Performance
The company maintains a formal assessment on the performance efficiency of the Board especially contribution of each member in particular. The assessment process is detailed in the Companys corporate governance.
VND million
Fixed allowance THE BOARD OF MANAGEMENT

Ms. Mr. Mr. Mai Kieu Lien Wang Eng Chin Hoang Nguyen Hoc
Allowance for AllowAllowance Allowchairwoman, ance for for head ance for head of inspec- committee of Boards attending tion committee members committee meetings 102 15 50 167 120 120 30 90 120 120 600 33 18 15 18 33 117 60 60 15 45 60 60 45 60 45 450
Bonus
Total
120 300 120 180 300 120 60 263 263 203 1,928
342 285 71 214 285 285 50 143 186 107 1,969
777 783 251 547 798 585 125 450 558 355 5,200
Mr.
Mr. Ms. Ms.
Le Song Lai
Le Anh Minh Ngo Thi Thu Trang
THE INSPECTION COMMITTEE Nguyen Thi Tuyet Mai Nguyen Anh Tuan Nguyen Trung Kien Nguyen Ngoc Vu Chuong Mr. Mr. Mr. Total
Note: (*) the perm of these 02 personnel ended at the shareholders meeting 2012.
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C. ACCOUNTABILITY AND AUDIT

1. Accountability
The Board of Management is accountable to the shareholders while the Board of Executive Directors is accountable to the Board of Management. The Board of Management should present and disclose the financial statements and other information which help the viewer to understand Vinamilks position and prospects in the annual reports and other reports. The Board of Management holds quarterly meetings to review corporate performance. The quarterly detailed and summarized financial statements are submitted to the Ho Chi Minh City Stock Exchange (HOSE). The annual shareholders meeting is held to approve the Companys business objectives. bilities. They also should possess professional qualifications and experiences on accounting and financial management. The Inspection Committee has the authority to investigate any matters within their responsibilities, has full access to and work of the Board of Management as well as has full discretion to invite any Director or executive officers to attend meetings. It has reasonable resources to enable it to discharge its functions properly. Annually, and as deemed appropriate, the Inspection Committee works with the internal and external auditors, without the presence of the Board of Executive Directors. The Inspection Committee considers the independence and objectivity of the external auditors and recommends to the Board of Management the nominees of the external auditors for re-appointment. The Inspection Committee reviews the level of non-audit services provided by the external auditors to ensure that their independence as external auditors of the company is not compromised.
D. INFORMATION ON SHARE CAPITAL AND SHAREHOLDERS

As at 31 December 2012, the Companys share capital is as follows: The Companys share capital The total listed shares The total outstanding shares The treasury shares Face value per share The market capitalization value : VND8,339,557,960,000. : 833,955,796 shares : 833,525,676 shares : 430,120 shares : VND10,000 : VND73,350 billions, the biggest on the Vietnam Stock Market.
Local Shaholders (Except SCIC) 6% SCIC 45%
In which, the share capital has increased by VND2,778,41,420,000 as a result of share split from the source of owners equity.
1. Shareholder structure
The shareholder structure is unchanged as compared with 2011. The State Capital Investment Corporation (SCIC) holds 45%, the foreign shareholders hold 49% and the local shareholders hold 6% of the Companys share capital.
2. The Inspection Committee

The Inspection Committee operates in accordance with written regulations and principles, which clearly set out its authority and duties. This Board is responsible to review the scope of works and results of the internal and external audit, cost-efficiency, material issues on the financial statements, and adequacy of the internal control system, as well as the efficiency of the internal audit function. The Inspection Committee has three members and being appointed at the shareholders meeting for a term of five years. The current term is from 2012 to 2016. All the members of the Inspection Committee are not employees of Vinamilk. Mr. Nguyen Trung Kien Mr. Nguyen Anh Tuan Mr. Nguyen Vu Ngoc Chuong : Head : Member : Member
Foreign Shaholders 49%
2. Treasury share transactions

During the year, the Company conducted 10 transactions to buy back employees share in accordance with the statute of share scheme for employees due to their resignation or change of position. The details of the buying transactions are disclosed below:
Transaction type Buying Buying Buying Buying Buying Buying Buying Buying Buying Buying Transaction date 21-Feb-12 26-Apr-12 5-Apr-12 22-May-12 12-Jun-12 11-Jul-12 4-Jul-12 25-Jul-12 21-Aug-12 12-Oct-12 Reporting date 22/02/2012 8-May-12 10-Apr-12 26-May-12 13-May-12 11-Jul-12 4-Jul-12 25-Jul-12 23-Aug-12 15-Oct-12 Retrieval number 50,870 9,620 4,600 11,630 6,210 19,360 54,360 1,630 5,300 19,400 182,980 The treasury shares as at January 1st 2012 The treasury shares as at December 31st 2012 247,140 430,120
3. The Internal control system

The Board of Management should ensure that the Board of Executive Directors maintains a comprehensive and complete internal control system to protect the companys assets and shareholders investments. With assistance from the Internal Audit, the Board of Management and the Inspection Committee review the effectiveness of the key internal control instruments to ensure timely and necessary corrective actions are taken. There are formal procedures in place for both internal and external auditors to report their independent conclusions and recommendations to the Board of Executive Directors and the Inspection Committee.
Seq. 1 2 3 4 5 6 7 8 9 10
Notice 246/CV-CTS.DT/12 664/CV-CTS.DT/12 702/CV-CTS.DT/12 796/CV-CTS.DT/12 1045/CV-CTS.DT/12 1401/CV-CTS.DT/12 1529/CV-CTS.DT/12 1666/CV-CTS.DT/12 2043/CV-CTS.DT/12 2402/CV-CTS.DT/12
Date 01/31/2012 03/14/2012 03/17/2012 03/29/2012 04/20/2012 05/26/2012 06/11/2012 06/28/2012 08/06/2012 09/10/2012
Members of the Inspection Committee have qualified capacity and competence to discharge their responsi-
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75
3. Transaction of the internal shareholders, major shareholders and their related parties
Share trading: Trading of shares from the internal shareholders: Related personnel at Vinamilk
Mr. Le Anh Minh, the Board member Mr. Le Anh Minh, the Board member Mr. Nguyen Thi Nhu Hang, Executive Director Raw materials development Of major shareholder group
4. Changes in ownership rate of internal shareholders

31/12/2011
The Board of management
31/12/2012
% change
Shareholder name
Grinling International limited Amersham Industries Limited
Trading type
Selling Selling
Share volume
512,400 2,000,000
Trading time
12/13 12/14 11/15 11/16
% interest after trading

0.75% 1.99%
The State Capital Investment Corporation (SCIC) 1 (Represented by Mr. Le Song Lai: 66.67%, Ms. Mai Kieu Lien: 16.665% and Ms. Ngo Thi Thu Trang: 16.665%) Ms. Mai Kiu Lin (personal) Ms. Ngo Thi Thu Trang (personal) Vietnam Enterprise Investments Limited (Represented by Mr. Le Anh Minh) Grinling International Limited (Represented by Mr. Le Anh Minh) Amersham Industries Limited (Represented by Mr. Le Anh Minh) F&N Dairy Investments Pte Ltd (Represented by Mr. Pascal De Petrini ) 45.0425% 45.0542% 0.0117%
2 3 4
0.2716% 0.0823% 2.3393% 0.8373% 2.3522% 9.5313%
0.2717% 0.0823% 2.3399% 0.7454% 1.9931% 9.5338%
0.0001% 0.0000% 0.0006% -0.0919% -0.3591% 0.0025%
Ms. Nguyen Thi Nhu Hang Deutsche Bank Aktiengesellschaft
Selling
60,000
4/17 4/26
0.04%
5 7 8
Buying
3,554,690
08/15/2012
4.73%
Trading of the internal shareholders related parties: nil
Other transactions: (transactions of the internal shareholders, major shareholders and their related parties with the Company): Regarding to the responsibility of honesty and avoidance of conflict of interests as stipulated in the Companys Charter, the Board members, the Inspection Committee members, Executive Directors, Chief Accountant and other key positions who are appointed and removed by the Board of Management basing the Chief Executive Officers recommendation, has responsibility to disclose to the Board all their interests which may cause conflict of interests through other legal entities, transactions or other individuals within 7 working days from the date those interest incur. During 2012, the Company did not receive any notice from these members and their related parties The Company also did not provide any loan, guarantee or credit facility to these members and their related parties. During 2012, the Board of Management and Inspection Committee has declared their related parties in due time according to Vinamilks internal policies.
The Inspection Committee 9 10 11 Mr. Nguyen Trung Kien Mr. Nguyen Anh Tuan Mr. Nguyen Vu Ngoc Chuong 0.0027% 0.0000% 0.0000% 0.0027% 0.0000% 0.0000% 0.0000% 0.0000% 0.0000%
The Board of Executive Directors 12 13 14 15 16 17 18 19 Ms. Mai Kieu Lien (as above) Ms. Ngo Thi Thu Trang (as above) Mr. Mai Hoai Anh Ms. Nguyen Thi Nhu Hang Ms. Nguyen Thi Thanh Hoa Mr. Nguyen Quoc Khanh Ms. Nguyen Huu Ngoc Tran Mr. Tran Minh Van 0.0183% 0.0539% 0.0638% 0.0285% 0.0253% 0.0504% 0.0183% 0.0431% 0.0638% 0.0285% 0.0253% 0.0504% 0.0000% -0.0108% 0.0000% 0.0000% 0.0000% 0.0000%
Chief Accountant 20 Mr. Le Thanh Liem 0.0174% 0.0174% 0.0000%
Except for the transactions of the internal shareholders as mentioned in page 76, the change of the ownership was mainly due to the share split (2:1) in 2012, as there was not share split on the treasury shares of 430,120.
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77
5. Changes in ownership of the major shareholders

Shareholder name
1 2 3 The State Capital Investment Corporation (SCIC) F&N Dairy Investments Pte Ltd A group of shareholders (*) BEIRA LIMITED Deutsche Bank AG London EPSOM LIMITED GREYSTANES LIMITED
RISK MANAGEMENT REPORT

12/31/2012
45.0542% 9.5338% 5.4976% 0.2566% 4.7926% 0.3689% 0.0796%
12/31/2011
45.0425% 9.5313% 4.7790% 0.2411% 4.0896% 0.3688% 0.0796%
% change
0.0117% 0.0025% 0.7186% 0.0155% 0.7030% 0.0001% 0.0000%
In 2012, Vinamilk implemented the integration and improvement of a risk management system. Since it was a challenging year with many changes and important turning points, a future position of risk management was opened for the next periods. Risk management (RM) consulted by KPMG Vietnam at Vinamilk is organized as follows:
Note (*): this group of shareholders became the major shareholder based on their transaction reported on August 24th 2012. The reporting figures above are from the shareholder listing as at December 21st 2012 and its comparative figures were as at right before becoming the major shareholder.
THE SHAREHOLDERS MEETING
BoM
6. Other information about the share structure:

The information below is based on the shareholder listing as at December 21st 2012:
Number of shareholders - Total number of shareholders - Treasury shares 9,603 1 9,604 - Local shareholders Institutional Individual 8,503 62 8,441 1,101 153 948 Share volume 833,525,676 430,120 833,955,796 425,219,745 382,926,376 42,293,369 408,736,051 405,268,257 3,467,794 % share capital 99.95% 0.05% 100.00% 50.99% 45.92% 5.07% 49.01% 48.60% 0.42%
Notes
Functions of RM Function of independence assurance Risk owners Reporting channel of risks Two-way communications of risks
IC
RM Committee
IA RM Council
CEO
RM Manager
- Foreign shareholders Institutional Individual
Financial Unit
Project Unit
Marketing Unit
Sales Unit
Administration HR Unit
Material Areas Develoment Unit
Product Production & Development
Supply Chain Unit
Risk Specialist
E. THE IMPLEMENTATION OF THE CORPORATE GOVERNANCE

In 2012, Vinamilk has revised and issued its corporate governance in order to approach to the best practices of the corporate governance. Vinamilk has been trying to implement its corporate governance comprehensively. However, there are still some areas which have not been implemented. At the moment, the Company does not have the independent Board members. This is due the fact that i) the candidates must be introduced by the major shareholders/ or their related parties; ii) the current Board members of five are not feasible to ensure that the required ratio of independent Board members is met. In coming time, when the size of the Board is increased appropriately, the Company will recommend candidates for the shareholders meeting to approve them as the independent Board members.
Coordinate with speci c professionals (SMEs) when necessary Speci c Professionals
RM structure in Vinamilk constitutes of 4 protective layers as shown in the below chart: In this kind of structure, most of risks will be regularly managed by business units (the 1st protective layer) Risks are also managed by IA & RM department, which is responsible for inspecting and analyzing risk information from various sources. RM Manager (RMM) takes the responsibility of developing and enforcing the RM framework in the Company. RRM is also in charge of consulting about RM, supporting Heads of RM departments, and re
porting Hnh to BoD and BoM about RM efforts, and Informachnh - Nhn s tion of risk situations (the 2nd protective layer) GM and BoM of the Company take the official responsibility of RM. IA provides independent assurance for verification of risks information and effectiveness of control practices (the 3rd protective layer). Finally, BoD takes the final responsibility in front of shareholders and makes sure that risks have been properly managed (the 4th protective layer)
Khi
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Annual Report 2012
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Accomplishments in 2012:
In 2012, risk management has achieved the following major accomplishments: Risk management activities were conducted quarterly at various levels (e.g., company, unit, department) to identify, analyze, rank, and respond in a timely manner to all risks. The results were periodically reported to the BoM. Simultaneously, a list of important risks to which the company had to allocate resources to appropriately address was defined and approved. Methods and techniques for major risk assessment (e.g., checklist, Delphi method) were applied and managed by the department in order to ensure comprehensive risk identification and analysis.
An integrated risk management system in Vinamilk:

In 2012, Vinamilk gradually integrated risk management into business activities in three steps, as follows: 1. Risk management is one of the top rules of corporate management, and as such, it is given special care by the Management (BoM). The BoMs regulations state that the risk management system must be continuously developed by the company in order to enhance the value and quality of corporate management. 2. Risk management is applied to specific business activities. It is integrated by the Board of Managers into major processes such as production capacity creation, product development, new product launch, etc. Accordingly, risk management has been integrated
into production, marketing, and new product launch in 2012. 3. Risk management is the basis for strengthening the internal control system by providing assessment of its relevance and efficiency. Thus, it can provide a basis for management to make business decisions in consideration of all aspects of the companys operations.
A risk management system to enter the improvement period at Vinamilk:

Continuous improvement is one of the important principles of any system. In 2012, the company reviewed its new risk management activities and the results of that process. Through this review, the company has identified its relevance and weaknesses and devised solutions to strengthen Vinamilks corporate culture and market position.
A list of effective control methods was developed, which aided in developing an action plan of establishing proper control methods. This provides managers with a basis for assessment of the relevance of any control system to effectively manage future risks.
Improve and update managers knowledge of risk management as well as enhance their skills in risk assessment through real risk assessment sessions with the participation of risk departments and stakeholders.
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Vinamilk company risks:

In 2012, Vinamilk identified and categorized major risks throughout the organization. Top-level managers (risk owners) were assigned specific responsibilities related to risks under the control of their department. Risks are classified into four groups: i) Strategic risks, ii) Operational risks, iii) Financial risks, and iv) Compliance risks. These risks are as follows: No.
Strategic risks 1 2 Risk of losing market share due to competition Risk of bad handling of crisis Executive Director Marketing Public Relation Director
Major risks
Risk owner
Operational risks 3 4 5 6 7 8 Risk of products being undermined Risk of defective products falling out of circulation Risk of fire and explosion at production facilities Risk of interruption due to IT system Risk of unqualified human resources Risk of bad project management IT Director HR Director Executive Director Project Executive Director Production and R&D
Financial risks 9 Risk of loss of money Executive Director Finance
Position and direction of RM in the next period

Vinamilk always treats risk management activities as being in harmony with its business operations. The goal of risk management is to continuously develop new methods and improve practices to conform to the latest risk management standards in the world.
Compliance risks 10 11 12 Risk of litigation/dispute regarding to obligations under contract agreement Risk of untimely update of law and regulation changes Risk of leakage and loss of confidential information
2. The basic principles of the existing risk management system will be built upon to create an advanced model. This will include development of a comprehensive Vinamilk Risk Management Handbook containing procedures, guidelines, and methods. 3. A team of professionals with knowledge and skills in crucial areas of the business will be identified. They will be tasked with providing input for risk assessment, and each individual will monitor the management process in his or her area of expertise. 4. The BoM has made management of major risks a high priority for the company. A major goal for 2013 is development of a self-assessed and selfcontrolled mechanism to gradually improve the quality and value of the risk management system. In 2013, Vinamilk will also retain focus on the activities outlined in the 2012 plan to ensure that planned changes are executed in the best possible manner.
Internal Control & Risk Management Director
2013 Implementation plan

With its improved market position and more developed direction, Vinamilk will implement several strategically planned changes in 2013. This will include restructuring the risk management system as follows: 1. Risk owners will be classified into many layers. The structure aims to establish a committee within the BoM responsible for risk management. This Board of Risk Management will consist of carefully selected top-level managers. Its tasks will include identifying managers who are in charge of specific risks and holding them accountable for taking appropriate action.
To best manage and control these as well as risks in the development process, Vinamilk has been improving and enhancing the risk management system, including policies, procedures, and reporting. In addition, a control system for each activity (e.g., regulations on investment management, information disclosure, and monetary policies) has been generated. Based on this progress, Vinamilk will develop a comprehensive response plan to prevent and handle risks properly and effectively.
Please note that financial risks are handled separately and are detailed within the companys consolidated financial statements (pages 142 to 149). In 2012, the company managed and controlled all types of risks, resulting in no loss of assets or other issues.
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THE CODE OF CONDUCTS

The Code of Conduct is our commitment for highly appreciating the Integrity, enhancing the Respect, ensuring the Fairness, maintaining the Compliance and esteeming the Ethics. The core values and commitments set out in this Code of Conduct will reflect our talents and professionalism, which create a distinguished view on Vinamilk from its consumers, partners, shareholders employees and the public.
The basic commitments in Vinamilks Code of Conduct are: o To Laws:

We always comply with the Laws of Vietnam and with laws in any country where we operate.
o To Employees:
We treat all employees fairly and respectfully. We create fair opportunities for every one, build and maintain a safe, friendly and an open working environment.
o To Customers, Consumers:
We commit to provide a diversified product portfolio and services with the best quality, competitive price and we are always honest in all transactions.
o To Suppliers, Partners:
We will respect and fair in all transactions with our suppliers and partners. We also repsect a long term relationship on the basis of mutual trust, transparency and benefits. Please visit our website at http://www.vinamilk.com. vn/?vnm=boquytac for the full set of our Code of Conduct
o To Shareholders:
THE CODE OF CONDUCTS
We are continuously improving the considerable value to the shareholders by using and protecting effectively Vinamilks resources while complying strictly our ethics and laws in doing business.
85
2012 was the year that Vinamilk focused on and made an official announcement regarding the sustainable development orientation, social responsibility and responsibility commitments regarding relevant parties. Accordingly, Vinamilk issued its Corporate Social Reponsibility policy and it is in the fiscal year 2012 Vinamilk had made a sustainable development report for the first time. The sustainable development report along with the annual report will make up an overall picture of Vinamilks activities in one year. The 2012 sustainable development report includes 5 main points as follows:
2 0 1 2 was the year that Vinamilk paid more attention to sustainability activities, social responsibilities systematically and targets at disclosure in compliance with good practices and standards in the world.
RESPONSIBILITY FOR PRODUCT

Being the manufacturer of nutritious and healthy products, our main principle in doing business is quality is the highest priority. Focus on product safety. Focus on research and product development in order to manufacture the best nutritional products for humans intellectual and physical health. Provide truthful and complete information to customers. Thus, along with business targets, the Company has also been seriously taking environment protection into consideration. The Company considers the environment protection a great contribution to the sustainable development of the society as well as Vinamilk itself. Therefore Vinamilk has always been seeking the solutions to prevent pollution, reduce the amount of waste, utilize the natural resources in an environmentally friendly, effective and economical way.
ECONOMIC DEVELOPMENT
Being a component of national economy, Vinamilk has always combined its business with regional economic development and consolidate its cooperation with regions.
WORKING ENVIRONMENT
For the human resource development strategy, Vinamilk focuses on such following targets: Safe working conditions and health care. Developing a diverse workforce, respecting differences. Labour agreement is made on the basis of free will and legal compliance. Employees performance is recognized and compensated satisfactorily. Employee improvement plan. Promoting a harmonious working culture.
Protect & Contribute to building a Green Environment
SOCIAL ACTIVITIES
Over the past years, along with contributing efforts to improve the quality of life by manufacturing valuable products, Vinamilk has been organizing many social activities as well as charity activities and human development programmes, especially targeting the Vietnamese children. Social activities of Vinamilk aim at:

Developing physical and intellectual health for children.

Supporting the poor and sick people, and others affected by natural disasters, etc.
ENVIRONMENTAL RESPONSIBILITY
SUSTAINABILITY REPORTING
Vinamilk has always been aware of the impact on the environment of its business and production activities.
For more details, please refer to 2012 Sustainable Development Report.
87
Truong Tho Milk Plant awarded the 1st prize of Green Business Award 2012
Entrance of Hang Duong cemetery
VINAMILK A GREEN BUSINESS

With a focus on providing sustainable development and long-term benefits to the community, Vinamilk dedicates time and resources to look for solutions to prevent pollution, reduce emissions, save natural resources, and reduce fossil fuel usage. The company is always moving toward becoming more environmentally friendly, and efforts related to that goal were part of Vinamilks outstanding success in 2012. Vinamilk significantly decreased its average spring water and energy usage as compared to the prior year; the company used 4.13% less electricity, 11.46% less FO oil, and 0.3% water per ton of products. These figures show that Vinamilks existing policies on environmental protection and natural resources management and usage continue to produce positive results. In 2012, all three Vinamilk plants in Ho Chi Minh City (HCMC) Truong Tho, Thong Nhat, and Sai Gon won the Green Business Award, a prestigious environmental award presented by the HCMC Peoples Committee and the Ministry of Natural Resources and Environment. This award honors local enterprises that have taken practical actions to protect the environment, raise community awareness about green living, and improve the quality of life in HCMC. Truong Tho Milk Plant was awarded the 1st prize in the category of foreign-invested enterprises and large-scale enterprises thanks to its excellent achievements in production methods that are good for the environment, and all of Vinamilks plants were certified as complying to ISO 14001:2004, a global standard for environment management systems. The company has also set up an investment fund to aid causes that improve the quality of living conditions, collect and recycle materials, and benefit society and the environment in other ways. Through this fund, Vinamilk financed the construction of solar LED lighting system at Hang Duong Cemetery, Con Dao in 2012. LEDs are a green light source due to their small size; easy recyclability; lack of toxic substances like mercury, lead, and cadmium; and insignificant heat produced during operation. As an added benefit, LEDs do not emit the greenhouse gas CO2 or radiation. The lights are installed at main entrance, near monuments, and along the aisles in the cemetery. This modern lighting system makes use of solar panels a clean and limitless source of energy to power it. With the health and wellness of present and future generations in mind, Vinamilk is committed pioneering energy-saving solutions and new ways to effectively use natural resources in order to contribute to environmental protection in Vietnam and around the world.
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VINAMILK FUNDS SOLAR LIGHTING SYSTEM IN CON DAO
VINAMILK PARTCIPATING IN THE RECYCLING DAY
Produce roof sheets from aluminium and plastic seperated from yogurt boxes
Yogurt boxes to enter processing tank
Produce recycled papers
To celebrate the Vietnam Veterans Day of 27 July, respond to Gratitude Activities, and apply new energy-saving technology, Vinamilk financed the construction of solar LED lighting system at Hang Duong cemetery, Con Dao. The lights were installed at main entrance, monuments and along the aisle in the cemetery. In the night, they shine brightly and sparklingly as thousands of candles for heroes sacrificing themselves for the country in Hang Duong cemetery. This is a modern lighting system completely using solar energy. Its total investment value is more than VND600 million and Vinamilk is the main sponsor.
Solar energy is a clean and limitless source of energy. Solar cells in the panels are small and can produce electricity directly from sunlight. Solar cell panels, or photovoltaic panels, are made of special materials constituting photovoltaic cells operating in sync with each other and converting solar energy of sunlight into electricity.
Nowadays, the image of paper milk boxes has become familiar to millions of Vietnamese consumers. Due to special multi-layer design to block light, ultraviolet rays, and block oxygen and steam in the air, with UHT technology, products in UHT packaging can be stored in a relatively long time. The nutrients remain the same even when preservatives are not used. Paper packaging is easily collected and recycled. On average, it takes 2.2 to 4.4 tons of wood to produce one ton of pulp. However, it only takes 1.4 tons of used paper to produce one ton of recycled paper. Therefore, recycled paper helps to save:: 24 natural forest trees The amount of oxygen for 12 adults in a year 39,084 liters of water (enough for 875 times of bathing, each lasts 5 minutes; 3,000 times of toilet flush) Nearly 4,000 kWh of electricity (enough for a house with 3 bedrooms to use in a year) 605 liters of crude oil Reduction in CO2 emissions by an amount equivalent to car emission in 6 weeks (less 95% of pol-
lutant emissions than the production process of 1 ton of paper from wood) Currently, the development of used paper recycling technology has allowed us to recycle food packaging, i.e. the type of paper consisting of many layers and having contacted with food. Vinamilk milk boxes will be moved to the recycling plant after being collected. In the plant, they will be soaked, washed, crushed and separated from paper fiber. Paper fiber pulp will be processed and transferred to paper making machine to produce recycled paper products. These products are very plentiful and can be used in many areas of our lives such as stationery, cardboard, decorations, roof sheets, etc.. Vinamilk also takes part in the Recycling Day held by Waste Recycling Fund of Ho Chi Minh city Department of Natural Resources and Environment in Ho Chi Minh on 5 April, 2012. This activity aims to raise consumers awareness of environmental protection and saving morale as well as encourage them to use environmentallyfriendly products.
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VINAMILK ONE MILLION GREEN TREES FOR VIETNAM FUND
VINAMILK CONTINUES GRANTING TO STUDENTS STUDYING ABROAD IN RUSSIA
The One million green trees for Vietnam fund is established by Vfresh, a brand name of Vietnam Dairy Products Joint Stock Company (Vinamilk), and the Vietnam Environment Administration under the Ministry of Natural Resources and Environment, aiming to plant green trees in the cities and improve the living conditions for Vietnamese people.
Objectives of the One million green trees for Vietnam fund: Improve the living conditions of urban residents in Vietnam by planting more green trees in these areas. Call upon communities to plant more green trees in Vietnam.
The grant program for student studying in Russia began in 1993. At the time being, there are 39 students in Russia in this program and 30 current employees previously trained in Russia. In 2012, Vietnam Dairy Products Joint Stock Company Vinamilk recruited 15 students for training at Moscow State University of Food Production, Russia. The majors include: Technology of milk and milk product processing, Automation of production line; Veterinary Epidemiology Test. Total 5-year tuition fee of the course will be at the Companys expense. This is a specially favourable policy of Vinamilk to attract and train talents. The students graduated under this program have a long-term commitment to serve in the departments of Vinamilk. Students who have good learning records and strive to develop themselves through the scholarship will have opportunities of contributing to the development of Vinamilk in particular, and the dairy industry in Vietnam in general. This program has been maintained for years, and now, over 60 students across Vietnam have been granted full scholarships to Russia. Many of them are holding important management positions in Vinamilk.
Website: www.trieucayxanh.com.vn In summary of the first-year implementation, Vinamilk planted trees in 8 provinces and cities.
3500 willow trees planted by One million green trees for Vietnam fund in the 12 kms walking street along the lakes and the canals in Hai Phong province
The One million green trees for Vietnam fund for planting trees in Hoi An, Quang Nam
Deputy Prime Minister Hoang Trung Hai participates in the afforestation in Vinh Phuc province
Students receiving scholarship to study in Russia in 2011 took photographs with friends in Russia
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VINAMILK SUPPORTS VND500 MILLION FOR PATIENTS HEART SURGERY
OTHER SOCIAL ACTIVITIES - CHARITIES:
In the spirit of solidarity and sharing difficulties with poor patients, Vinamilks representative has directly granted VND500 million to the Poor Patient Support Fund to support the Sponsoring Association for Poor Patients in Ho Chi Minh city in the heart surgery program for children with defective hearts. The amount includes donation of all employees of Vinamilk and a part of Vinamilks Welfare Fund. This meaningful activity has been maintained for over 10 years, and until now, Vinamilk has supported more than VND2.7 billion for childrens heart surgeries. Mr. Nguyen Thanh Tu, Chairman of the Vinamilks Labor Union, said, Supporting poor children in their difficult times shows Vinamilks CSR towards the community. This is the beautiful traditional of Vietnamese people in general and Vinamilks culture in particular. In more than 36 years operating in Vietnamese market, Vinamilk not only gave consumers a variety of healthy products but also cared about community-oriented activities.
Ms. Nguyen Thi Nghia, Deputy President of the Ministry of Education and Training, and Ms. Mai Kieu Lien, Chairman and General Director of Vinamilk, awarded the scholarship of Vinamilk Nurturing Vietnamese Young Talents Scholarship Fund to primary school students in 2011-2012 school year
Since 2008, Vinamilk has cooperated with Vietnam Children Support Fund under the Ministry of Labor, War Invalids, & Social Welfare to establish the Vietnam Never Stops Growing Milk Fund. Until 2012, more than 273 thousand children across the country have enjoyed nearly 19 million glasses of milk in the program with a total value of about VND69 billion granted by Vinamilk. In nine consecutive years, until 2012, the Vinamilk - Nurturing Vietnamese Young Talents Scholarship Fund had granted VND18 billion of scholarships to over 33 thousand primary school students in 63 provinces. In 2012, Vinamilk supported VND500 million to the For Changsha dear students program; VND1.4 billion to the Collect Stones to Build Changsha program; cooperated with the Central Vietnam Disaster Prevention Support Fund to present 70 lifeboats with the value of nearly 600 million for local youth volunteer teams in Binh Dinh, Hue, Quang Binh, Thanh Hoa, Ninh Thuan, Khanh Hoa, and Phu Yen.
Earlier, the delegation of Vinamilk in collaboration with the delegation of the Ministry of Health have visited and given milk to people suffering from strange disease in Ba To district, Quang Ngai province with a total value of nearly VND500 million. In many years, when there were floods in the Middle region, Vinamilk directly visited, encouraged and gave gifts to many people there. It took about billions of VND per year. In 2012, Vinamilk also granted VND500 million to support the Poor Patient Support Fund in the heart surgery program for children with defective hearts. Vinamilk had maintained this activity for over 10 years, and supported more than VND2.7 billion for the childrens heart surgery. Vinamilk also established health and nutrition consulting centers across the country to examine thousands of primary school and malnourished children and provide them with free milk. With practical and meaningful activities and programs, Vinamilk is truly the brand for the community./.
Support the Poor Patients Fund to conduct childrens congenital heart surgery
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We are of the best investor relations for 02 consecutive years 2011 - 2012
To ensure and maintain an uninterrupted communication between Vinamilk and its shareholders, investors, local authorities and other stakeholders
According to Vietstocks survey, Vinamilk is the best enterprise in term of investor relations for the last 02 years. In 2012, Vinamilk has the prominent voting by the viewer at 81.91%, which is 27.3% higher than the second best enterprise. And in 2011, Vinamilk also had the prominent voting by the viewer at 61.46%, which was 32.68% higher than the second best enterprise. Some key investor relations activities during the year: ovember 16th 2012: Attended the N investment seminar in Hongkong organized by Daiwa Securities Group. This is their big and prestigious annual event in the region. At the
event, Vinamilk met more than 26 institutional investors, such as: Blackrock, Wellington Global Investment Management, SAC, Mirae Asset Management, Harvest Global Investors, ICBC Asia Investment Management, ctober 23rd 2012: Attended the O investment seminar in Ho Chi Minh City, organized by Vietcapital. Vinamilk met with more than 100 local and foreign investors. ay 23rd 2012: Attended the investM ment seminar in Bankok, Thailand, organized by UBS Corporation. At this event, Vinamilk met with more than 25 institutional investors, such
INVESTOR RELATIONS
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as Blue Pool, Lynas Capital, Indus Capital, Government Pension Fund, One Asset Management, BBL Asset Management, TAR, Morgan Stanley, Mount Kellett, Overlook, JP Morgan Asset Management, Prusik, Quest Capital, Ward Ferry, Lloyd George, Coupland Cardiff, BNP Paribas, Rohatyn, Charlemagne Capital, Proa Partners, Elliott, MFC Asset Management, Brooker Group, Genesis, UBS. March 23rd 2012, the Company organized the annual shareholders meeting in order to approve on the performance of 2011, approve on the targets for 2012 and approve other important matters of the Company.
In addition, Vinamilk has received more than 100 investors at its head office. Some big investors such as Matthews Group, Route One, Fidelity, Citigroup, Arisaig, Dempsey Hill Capital, Deutsche Bank, Goldman Sachs, Nomura, KITMC, Bridger Capital,. The Companys financial and non-financial information is disclosed adequately and timely on our website at http:// www.vinamilk.com.vn/?vnm=share Our investor relations function is very flexible and to create the most convenient conditions for the investors to get update on the Companys operations through:
Attending the Companys annual shareholders meeting Visiting our head office directly. Investor relations personnel can discuss with investors through telephone, teleconference Responding to investors queries by email Responding to investors queries through Q&A on our website at http://www.vinamilk.com. vn/?vnm=FAQ Investor relation personnel can attend investment seminars organized by securities companies, institutional funds
With non-stopping effort in improving the transparency and provision of information adequately and timely to its shareholders and potential investors, Vinamilk has been improving the quality of its annual report and achieved the award one of the best annual report in 05 years 2008 - 2012 from the coorganizers HOSE and Vietnam Investment Review.
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Achieve the goal of $3 billion revenue and get in the Top 50 Worlds biggest dairy product companies by 2017
CONSOLIDATED FINANCIAL STATEMENTS

Corporate information Statement by the Board of Directors Auditors report Consolidated balance sheet Consolidated income statement Consolidated cash flow statement Notes to the consolidated financial statements
CORPORATE INFORMATION
STATEMENT OF THE RESPONSIBILITY OF THE BOARD OF DIRECTORS IN RESPECT OF THE CONSOLIDATED FINANCIAL STATEMENTS
4103001932 dated 20 November 2003 issued by the Planning and Investment Department of Ho Chi Minh City.
Business Registration Certificate No.
The Business Registration Certificate has been amended severaltimes and its latest amendment no. 0300588569 dated 6 November 2012 was issued by the Planning and Investment Department of Ho Chi Minh City.
The Board of Directors is responsible for the consolidated financial statements of Vietnam Dairy Products Joint Stock Company (the Company) and its subsidiaries (together the Group) which give a true and fair view of the consolidated financial position of the Group as at 31 December 2012 and of the consolidated results and cash flows for the year then ended. In preparing these consolidated financial statements, the Board of Directors is required to: select suitable accounting policies and then apply them consistently; make judgments and estimates that are reasonable and prudent; and prepare the consolidated financial statements on a going concern basis unless it is inappropriate to presume that the Company and its subsidiaries will continue in business.
Board of Management Mdm Mai Kieu Lien Mr Le Song Lai Mr Hoang Nguyen Hoc Ms Ngo Thi Thu Trang Mr Pascal De Petrini Mr Wang Eng Chin Mr Le Anh Minh Board of Directors Mdm Mai Kieu Lien Ms Nguyen Thi Thanh Hoa Ms Nguyen Thi Nhu Hang Ms Ngo Thi Thu Trang Mr Tran Minh Van Mr Nguyen Quoc Khanh Ms Nguyen Huu Ngoc Tran Mr Pham Phu Tuan Mr Mai Hoai Anh Legal representative Mdm Mai Kieu Lien
Chairwoman Member (appointed on 23 March 2012) Member (resigned on 23 March 2012) Member Member (appointed on 4 December 2012) Member (resigned on 4 December 2012) Member Chief Executive Officer Executive Director - Supply Chain Executive Director Dairy Farm Development Executive Director - Finance Executive Director - Project Acting Executive Director Production and Products Development Acting Executive Director - Marketing Acting Executive Director - Sales (resigned on 21 May 2012) Acting Executive Director - Sales (appointed on 21 May 2012) Chief Executive Officer
The Board of Directors is responsible for ensuring that proper accounting records are maintained, which disclose, with reasonable accuracy at any time, the financial position of the Group and which enable these consolidated financial statements to be prepared which complies with the basis of accounting set out in Note 2 to these consolidated financial statements. We are also responsible for safeguarding the assets of the Company and its subsidiaries and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
APPROVAL OF THE CONSOLIDATED FINANCIAL STATEMENTS

We hereby approve the accompanying consolidated financial statements set out on pages 5 to 46 which give a true and fair view of the consolidated financial position of the Group as at 31 December 2012, and of the consolidated results of operations and cash flows for the year then ended in accordance with Vietnamese Accounting Standards, the Vietnamese Accounting System and applicable regulations in SR Vietnam. On behalf of the Board of Directors
Mai Kieu Lien Chief Executive Officer Ho Chi Minh City, SR Vietnam 28 February 2013
Registered office 10 Tan Trao Street, Tan Phu Ward, District 7, Ho Chi Minh City, SR Vietnam Auditor PricewaterhouseCoopers (Vietnam) Limited
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INDEPENDENT AUDITORS REPORT TO THE SHAREHOLDERS OF VIETNAM DAIRY PRODUCTS JOINT STOCK COMPANY
We have audited the accompanying consolidated financial statements of Vietnam Dairy Products Joint Stock Company (the Company) and its subsidiaries (together the Group), which were approved by the Board of Directors on 28 February 2013. These consolidated financial statements comprise the consolidated balance sheet as of 31 December 2012, the related consolidated income statement and cash flow statement for the year then ended, and explanatory notes to the consolidated financial statements including significant accounting policies, as set out on pages 106 to 149.
Opinion
In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at 31 December 2012, and its consolidated financial performance and cash flows for the year then ended in accordance with Vietnamese Accounting Standards, the Vietnamese Accounting System and applicable regulations in SR Vietnam.
Board of Directors Responsibility for the Consolidated Financial Statements

The Board of Directors of the Company is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with Vietnamese Accounting Standards, the Vietnamese Accounting System and applicable regulations in SR Vietnam. This responsibility includes: designing, implementing and maintaining internal controls relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies and making accounting estimates that are reasonable in the circumstances. Ian S. Lydall AC No. N.0559/KTV Chairman PricewaterhouseCoopers (Vietnam) Limited Ho Chi Minh City, SR Vietnam Audit report number HCM3352 28 February 2013 Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with Vietnamese Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit in order to obtain reasonable assurance as to whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditors judgment, including an assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal controls relevant to the entitys preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entitys internal controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Board of Directors, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Quach Thanh Chau AC No. N.0875/KTV
Auditors Responsibility
As indicated in Note 2.1 to the consolidated financial statements, the accompanying consolidated financial statements are not intended to present the financial position and consolidated results of operations and cash flows in accordance with accounting principles and practices generally accepted in countries and jurisdictions other than SR Vietnam, and furthermore their utilisation is not designed for those who are not informed about SR Vietnams accounting principles, procedures and practices.
PricewaterhouseCoopers (Vietnam) Ltd., 4th Floor, Saigon Tower, 29 Le Duan Street, District 1, Ho Chi Minh City, Vietnam T: +84 (8)38230796, F:+84 (8) 38251947, www.pwc.com/vn
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Form B 01 DN/HN
Form B 01 DN/HN
CONSOLIDATED BALANCE SHEET

Unit: VND As at 31 December 2012 11,110,610,188,964 3 1,252,120,160,804 852,120,160,804 400,000,000,000 4(a) 3,909,275,954,492 4,039,304,630,112 (130,028,675,620) 2,246,362,984,001 5 1,269,841,759,012 576,619,318,260 6 403,754,490,615 (3,852,583,886) 7 3,472,845,352,518 3,476,300,517,903 (3,455,165,385) 230,005,737,149 8(a) 72,343,567,655 154,118,437,302 3,543,732,192 2011 9,467,682,996,094 3,156,515,396,990 790,515,396,990 2,366,000,000,000 736,033,188,192 815,277,431,792 (79,244,243,600) 2,169,205,076,812 1,143,168,467,855 795,149,182,591 232,805,433,796 (1,918,007,430) 3,272,495,674,110 3,277,429,580,780 (4,933,906,670) 133,433,659,990 56,909,099,519 74,772,661,634 1,751,898,837
CONSOLIDATED BALANCE SHEET (continued)

Unit: VND As at 31 December 2012 8,587,258,231,415 8,042,300,548,493 9(a) 4,223,443,459,603 6,512,875,316,427 (2,289,431,856,824) 9(b) 253,615,655,556 387,180,023,184 (133,564,367,628) 9(c) 10 3,565,241,433,334 96,714,389,090 117,666,487,460 (20,952,098,370) 4(b) 284,428,762,040 217,944,646,507 80,840,000,000 (14,355,884,467) 11 13,662,186,598 150,152,345,194 8(b) 12 41,073,978,122 108,001,947,072 1,076,420,000 19,697,868,420,379 2011 6,114,988,554,657 5,044,762,028,869 3,493,628,542,454 5,301,826,836,260 (1,808,198,293,806) 256,046,089,531 383,409,370,867 (127,363,281,336) 1,295,087,396,884 100,671,287,539 117,666,487,460 (16,995,199,921) 846,713,756,424 205,418,475,253 783,646,073,800 (142,350,792,629) 15,503,335,522 107,338,146,303 25,598,314,795 80,643,411,508 1,096,420,000 15,582,671,550,751
Code 100 110 111 112 120 121 129 130 131 132 135 139 140 141 149 150 151 152 158
ASSETS CURRENT ASSETS Cash and cash equivalents Cash Cash equivalents Short-term investments Short-term investments Provision for diminution in value of short-term investments Accounts receivable Trade accounts receivable Prepayments to suppliers Other receivables Provision for doubtful debts Inventories Inventories Provision for decline in value of inventories Other current assets Short-term prepayments Value Added Tax to be reclaimed Other current assets
Note
Code 200 220 221 222 223 227 228 229 230 240 241 242 250 252 258 259 260 270 271 272 278 280
ASSETS LONG-TERM ASSETS Fixed assets Tangible fixed assets Cost Accumulated depreciation Intangible fixed assets Cost Accumulated depreciation Construction in progress Investment properties Cost Accumulated depreciation Long-term investments Investments in joint ventures and associates Other long-term investments Provision for diminution in value of long-term investments Goodwill Other long-term assets Long-term prepayments Deferred income tax assets Other long-term assets TOTAL ASSETS
Note
The notes on pages 113 to 149 are an integral part of these consolidated financial statements.
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Form B 01 DN/HN
CONSOLIDATED BALANCE SHEET (continued)

Unit: VND As at 31 December 2012 4,204,771,824,521 4,144,990,303,291 13 2,247,659,149,802 21,589,364,414 14 333,952,869,847 106,150,509,860 15 16 365,103,636,850 664,137,048,409 406,397,724,109 59,781,521,230 17 18 59,635,777,000 145,744,230 15,493,096,595,858 15,493,096,595,858 19, 20 20 20 20 20 20 8,339,557,960,000 1,276,994,100,000 (4,504,115,000) 93,889,017,729 588,402,022,008 5,198,757,611,121 19,697,868,420,379 2011 3,105,466,354,267 2,946,537,015,499 1,830,959,100,474 116,844,952,210 287,462,890,828 44,740,312,110 260,678,009,293 59,478,925,315 346,372,825,269 158,929,338,768 92,000,000,000 66,923,897,268 5,441,500 12,477,205,196,484 12,477,205,196,484 5,561,147,540,000 1,276,994,100,000 (2,521,794,000) 908,024,236,384 556,114,754,000 4,177,446,360,100 15,582,671,550,751
OFF BALANCE SHEET ITEMS

Included in cash and cash equivalents are balances held in following foreign currencies:
Unit: VND As at 31 December 2012 USD EUR 11,737,838.41 49,847.54 2011 27,989,325.30 1,482,877.52
Code 300 310 312 313 314 315 316 319 320 330 333 336 338 400 410 411 412 414 417 418 420 440
RESOURCES LIABILITIES Current liabilities Trade accounts payable Advances from customers Taxes and other payables to the State Budget Payable to employees Accrued expenses Other payables Bonus and welfare fund Long-term liabilities Other long-term liabilities Provision for severance allowances Unearned revenue OWNERS EQUITY Capital and reserves Share capital Share premium Treasury shares Investment and development fund Financial reserve fund Undistributed earnings TOTAL RESOURCES
Note
Le Thanh Liem
Ngo Thi Thu Trang Mai Kieu Lien Chief Executive Officer 28 February 2013
Chief Accountant Executive Director - Finance
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Form B 02 DN/HN
Form B 03 DN/HN
CONSOLIDATED INCOME STATEMENT

Unit: VND For the year ended 31 December 2012 27,101,683,739,278 (540,109,559,314) 22(a) 23 26,561,574,179,964 (17,484,830,247,188) 9,076,743,932,776 22(b) 24 475,238,586,049 (51,171,129,415) (3,114,837,973) 25 26 (2,345,789,341,875) (525,197,269,346) 6,629,824,778,189 350,323,343,748 (63,006,276,113) 27 287,317,067,635 12,526,171,255 6,929,668,017,079 28 28, 12 (1,137,571,835,560) 27,358,535,564 5,819,454,717,083 29 6,981 2011 22,070,557,490,766 (443,128,597,657) 21,627,428,893,109 (15,039,305,378,364) 6,588,123,514,745 680,232,453,133 (246,429,909,362) (13,933,130,085) (1,811,914,247,629) (459,431,997,199) 4,750,579,813,688 323,106,037,829 (85,880,005,676) 237,226,032,153 (8,813,950,770) 4,978,991,895,071 (778,588,561,106) 17,778,374,972 4,218,181,708,937 5,145
CONSOLIDATED CASH FLOW STATEMENT

(Indirect method)
Unit: VND For the year ended 31 December 2012 2011
Code 01 02 10 11 20 21 22 23 24 25 30 31 32 40 41 50 51 52 60 70 Sales Less deductions Net sales Cost of sales Gross profit Financial income Financial expenses - In which: Interest expenses on loans Selling expenses General and administration expenses Operating profit Other income Other expenses Net other income Share of associates result Net accounting profit before tax Business income tax - current Business income tax - deferred Net profit after tax Basic earnings per share (VND)
Note
Code CASH FLOWS FROM OPERATING ACTIVITIES 01 02 03 04 05 05 05 06 08 09 10 11 12 13 14 15 16 20 Net profit before tax Adjustments for: Depreciation and amortisation (Reversal of provisions)/provisions Unrealised foreign exchange losses Losses from disposal of fixed assets Interest and dividends income Losses from other investing activities Interest expense Operating profit before changes in working capital Increase in receivables Increase in inventories Increase in payables Increase in prepaid expenses Interest paid Business income tax paid Other receipts from operating activities Other payments on operating activities Net cash inflows from operating activities
Note
6,929,668,017,079 9,10 535,451,905,298 (75,028,609,419) 22, 24 27 22(b) 23,750,178,315 20,674,462,045 (362,908,428,453) 12,177,054,066 24 3,114,837,973 7,086,899,416,904 (177,763,748,924) (273,491,911,774) 268,727,745,184 (18,320,018,252) (3,114,837,973) (1,073,341,754,164) 3,704,175,480 (518,731,228,162) 5,294,567,838,319
4,978,991,895,071 414,590,126,008 46,246,669,182 7,605,774,684 22,448,930,471 (492,526,979,114) 9,240,144,764 13,933,130,085 5,000,529,691,151 (1,105,678,269,247) (1,021,809,144,291) 703,897,108,817 (28,541,385,553) (14,785,659,974) (793,480,641,563) 1,255,501,334 (330,218,588,434) 2,411,168,612,240
CASH FLOWS FROM INVESTING ACTIVITIES 21 22 23 23 24 24 24 24 Purchases of fixed assets and constructions Proceeds from disposals of fixed assets Loans granted to associates Loans granted to third party (Increase)/decrease in deposits at banks Collection of loans granted to associates Proceeds from disposal of long term investments Proceeds from bonds matured Dividends and interest received Net cash (outflows)/inflows from investing activities (3,133,999,297,771) 16,830,384,644 (30,000,000,000) (2,536,900,000,000) 18,000,000,000 70,114,387,315 250,000,000,000 372,293,347,387 (4,973,661,178,425) (1,767,206,055,153) 47,134,169,534 (18,000,000,000) 1,170,408,000,000 1,161,512,182 100,000,000,000 472,509,194,809 6,006,821,372
Le Thanh Liem
27 30
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Form B 03 DN/HN
Form B 09 DN/HN
CONSOLIDATED CASH FLOW STATEMENT

(Indirect method) (continued)
Unit: VND For the year ended 31 December Code Note 2012 CASH FLOWS FROM FINANCING ACTIVITIES 31 32 33 34 36 40 50 60 61 70 Proceeds from issuance of shares Payment for share returns and repurchases Proceeds from borrowings Repayments of borrowings Dividends paid Net cash (outflows)/inflows from financing activities Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at beginning of year Effect of foreign exchange differences Cash and cash equivalents at end of year 3 3 20, 21 19, 20 (1,982,321,000) (2,222,994,056,000) (2,224,976,377,000) (1,904,069,717,106 3,156,515,396,990 (325,519,080) 1,252,120,160,804 1,454,528,400,000 (1,852,743,000) 624,835,000,000 (1,209,835,000,000) (741,428,260,000) 126,247,397,000 2,543,422,830,612 613,472,368,080 (379,801,702) 3,156,515,396,990 2011
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012
1. GENERAL INFORMATION
Vietnam Dairy Products Joint Stock Company (the Company, or Vinamilk) was initially established as a State Owned Enterprise under the control of the Ministry of Industry of the Socialist Republic of Vietnam (SR Vietnam or the State) in accordance with Decision No. 420/CNN/TCLD dated 29 April 1993. On 1 October 2003, the Company was equitised following Decision No. 155/2003/QD-BCN issued by the Ministry of Industry. On 20 November 2003, the Company was incorporated as a joint stock company under the Law on Enterprises of SR Vietnam according to Business Registration Certificate No. 4103001932 issued by the Planning and Investment Department of Ho Chi Minh City. The Company was subsequently listed on the Ho Chi Minh City Stock Exchange on 19 January 2006 according to the Listing Licence No. 42/UBCK-GPNY dated 28 December 2005 issued by the State Securities Commission. On 19 April 2011, the Planning and Investment Department of Ho Chi Minh City issued another amended Business Registration Certificate No. 0300588569 approving the change in the Companys registered office and the increase in owners capital to 3,565,706,400 thousand Vietnamese Dong. On 23 August 2011, the Planning and Investment Department of Ho Chi Minh City issued another amended Business Registration Certificate No. 0300588569 approving the increase in owners capital to 3,708,255,500 thousand Vietnamese Dong. In December 2012, the Company increased the share capital to 8,339,557,960 thousand Vietnamese Dong by issuing bonus shares to existing shareholders at ratio 2:1 as approved by the relevant authorities. At the date of approval of the financial statements, the Company is in the process of registration for amended Business Registration Certificate for the increase in share capital. The principal activities of the Company and its subsidiaries are: Process, manufacture and distribute milk cake, soya milk, fresh milk, refreshment drinks, bottled milk, powdered milk, nutritious powder and other products from milk; Trading in food technology, spare parts, equipment, materials and chemicals; Trading in houses, brokerage and leasing of real estate; Warehousing, transportation services and loading; Manufacture, sell and distribute beverages, grocery and processing foods, roasted-ground-filtered and instant coffee; Manufacture and sell plastic packages and label printing; Manufacture and sell plastic products; Health care clinic operations; Cattle raising and agricultural operations; Cattle raising: supply of breeding animals and breeding techniques; Activities supporting agricultural operations such as: supply of seeds of cultivated crops, guidance on cultivation techniques, cultivation harvest, soil working, irrigation; Post-harvest services; Treatments on seeds for multiplication purposes; and Manufacture biscuits.
Le Thanh Liem
In December 2011, the Company increased the share capital to 5,561,147,540 thousand Vietnamese Dong by issuing bonus shares to existing shareholders at ratio 2:1 as approved by the relevant authorities. The amended Business Registration Certificate No. 0300588569 for such increase in share capital was issued by the Planning and Investment Department of Ho Chi Minh City on 7 March 2012.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012 (continued)
1. GENERAL INFORMATION (continued)
The consolidated financial statements for the year ended 31 December 2012 comprises of the financial statements of the Company and its subsidiaries (together referred to as the Group) and the Groups interest in associates and joint ventures as listed below:
2. ACCOUNTING SYSTEM AND ACCOUNTING POLICIES
2.1 Basis of preparation of consolidated financial statements The purchase method of accounting is used to acThe consolidated financial statements have been prepared in accordance with Vietnamese Accounting Standards, the Vietnamese Accounting System and applicable regulations in SR Vietnam. The consolidated financial statements have been prepared under the historical cost convention. count for the acquisition of subsidiaries by the Group. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the fair value of the Groups share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the income statement. Inter-company transactions, balances and unrealised gains and losses on transactions between group companies are eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group. Transactions and minority interests The Group applies a policy of treating transactions with minority interests as transactions with parties external to the Group. Disposals to minority interests result in gains and losses for the Group that are recorded in the income statement. Purchases from minority interests result in goodwill, being the difference between any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary. sessing whether the Group controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.
12.31.2012 Name Address (%) of ownership % of voting rights
12.31.2011 (%) of ownership % of voting rights
Subsidiaries: Vietnam Dairy Cow One Member Limited Company Lam Son Dairy One Member Company Limited International Real Estate One Member Limited Company Dielac Dairy One Member Company Limited (*) Jointly controlled entities: Dairy Cow Development Project Horizon Apartment -Business Cooperation Contract Associates: Asia Saigon Food Ingredients Joint Stock Company Lot C, 9E My Phuoc 3 Industrial Zone, Ben Cat District, Binh Duong Province, Vietnam Becker Findlay Allen C Tower 109 Tuwharetoa St, PO Box 1091, Taupo, New Zealand 15% 15% 15.79% 15.79% Tu Tra Ward, Don Duong District, Lam Dong Province, Vietnam 214, Tran Quang Khai, District 1, Ho Chi Minh City, Vietnam 25% 24.5% 25% 24.5% 25% 24.5% 25% 24.5% 10, Tan Trao Street, Tan Phu Ward, District 7, Ho Chi Minh City, Vietnam Le Mon Industry Zone, Thanh Hoa Province, Vietnam 10, Tan Trao Street, Tan Phu Ward, District 7, Ho Chi Minh City, Vietnam 9, Tu Do Venue, Vietnam - Singapore Industrial Zone, Thuan An, Binh Duong 100% 100% 100% 100%
The accompanying consolidated financial statements are not intended to present the financial position and results of operations and cash flows in accordance with accounting principles and practices generally accepted in countries and jurisdictions other than SR Vietnam. The accounting principles and practices utilised in SR Vietnam may differ from those generally accepted in countries and jurisdictions other than SR Vietnam. 2.2 Fiscal year The Groups fiscal year is from 1 January to 31 December. 2.3 Consolidation In 2012, the Company prepared its consolidated financial statements in accordance with Vietnamese Accounting Standard 25 Consolidated Financial Statements and Accounting for Investments in Subsidiaries. Subsidiaries Subsidiaries are all entities over which the Group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when as-
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Miraka Limited
19.3%
19.3%
19.3%
19.3%
(*) On 18 September 2012, the Board of Management of the Company issued the decision to liquidate Dielac Dairy One Member Company Limited (Dielac) to convert it to a branch of the Company. The liquidation of Dielac was approved by the Management Board of Vietnam Singapore Industrial Park on 25 September 2012. On 29 November 2012, the tax code of Dielac was closed by Binh Duong Provinces tax department. On 4 December 2012, the Business Registration Certificate of the branch was issued by the Planning and Investment Department of Binh Duong Province, which renamed Dielac as Vietnam Powder Milk Factory. As at 31 December 2012, certain liquidation procedures of Dielac were still in progress. As at 31 December 2012, the Group had 5,000 employees (2011: 4,638 employees).
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2. ACCOUNTING SYSTEM AND ACCOUNTING POLICIES (continued)
2.3 Consolidation (continued) Joint ventures and associates Joint ventures are contractual arrangements whereby two or more parties undertake an economic activity which is subject to joint control. Associates are all entities over which the Group has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investments in joint ventures and associates are accounted for using the equity method of accounting and are initially recognised at cost. The Groups investment in joint ventures and associates includes goodwill identified on acquisition, net of any accumulated impairment loss. The Groups share of its joint ventures and associates post-acquisition profits or losses is recognised in the consolidated income statement, and its share of postacquisition movements in reserves is recognised in consolidated reserves. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment. When the Groups share of losses in a joint venture or associate equals or exceeds its interest in the joint venture or associate, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the joint venture or associate. Unrealised gains and losses on transactions between the Group and its joint ventures and associates are eliminated to the extent of the Groups interest in the joint ventures and associates. Accounting policies of joint ventures and associates have been changed where necessary to ensure consistency with the policies adopted by the Group. 2.4 Use of estimates The preparation of the consolidated financial statements in conformity with Vietnamese Accounting Standards requires the Board of Directors to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of financial statements and the amounts of revenues and expenses during the year. Although these estimates are based on the Board of Directors best knowledge of current events and actions, actual results may differ from those estimates. 2.5 Currency The consolidated financial statements are prepared and presented in Vietnamese Dong. Transactions arising in foreign currencies are translated at exchange rates ruling at the transaction dates. Foreign exchange differences arising from these transactions are recognised in the income statement. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the rates of exchange ruling at the balance sheet date. Foreign exchange differences arising from these translations are recognised in the income statement. 2.6 Form of records applied The Group uses voucher ledgers to record its transactions. 2.7 Cash and cash equivalents Cash and cash equivalents comprise cash on hand, cash at bank, cash in transit, demand deposits and other short-term investments with an original maturity of three months or less.
2.8 Trade receivables Trade receivables are carried at original invoice amount less an estimate made for doubtful receivables based on a review by the Board of Directors of all outstanding amounts at the year end. Bad debts are written off when identified. 2.9 Inventories Inventories are stated at the lower of cost and net realisable value. Cost is determined by the weighted average method and includes all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. In the case of manufactured products, cost includes all direct expenditure and production overheads based on normal levels of operating activity. Net realisable value is the estimated selling price in the normal course of business, less the estimated costs of completion and selling expenses. Provision is made, where necessary, for obsolete, slow-moving and defective inventory items. 2.10 Investments (a) Short-term investments Short-term investments are investments with maturities less than 12 months from the balance sheet date and investments that are held with the intention to dispose within 12 months from the balance sheet date. Short-term investments are initially accounted for at cost. Provision for diminution is recognised for short term equity securities where the cost exceeds the fair value of such securities. (b) Investments in joint ventures and associates Investments in joint ventures and associates are accounted under the equity method of accounting in the consolidated financial statements. (c) Long-term investments (i) (i) Long-term bank deposits are those maturing after 12 months from the balance sheet date and are accounted for at cost. (ii) (ii) Investments in bonds are classified as longterm when they are held with no intention to dispose within 12 months from the balance sheet date. Investments in bonds are initially stated at cost. Subsequently, they are measured at cost less provision. Provision is required if there is evidence of a long-term decline in the value of the securities or in the case where the Group cannot recover its investments. (iii) Other long-term investments comprise shareholding of less than 20% in listed and unlisted entities which are held with no intention to dispose within 12 months from the balance sheet date. These investments are initially stated at cost of acquisition. Provision is made where there is a diminution in value of these investments. 2.11 Fixed assets Tangible and intangible fixed assets Fixed assets are stated at historical cost less accumulated depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the fixed assets. Depreciation Fixed assets are depreciated on the straight-line method, to write off the cost of the assets to their residual value over their estimated useful lives or over the term of the project if shorter. The estimated useful lives of the assets are as follows:
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Form B 09 DN/HN
2.11 Fixed assets (continued) Years Buildings and structures Machinery and equipment Motor vehicles Office equipment Software Livestock 10 - 50 8 - 10 10 3-8 6 6 2.13 Investment properties Investment properties are a building or part of a building or infrastructure held by the Group to earn rentals or for capital appreciation or both rather than for use in the production or supply of goods or services or administrative purposes or for sale in the normal course of business. Investment properties are stated at historical cost less Land use rights are amortised, using the straight-line method over the terms indicated in the land use right certificates. Land use rights which are granted for an indefinite term are carried at cost and not amortised. Subsequent expenditure Subsequent expenditure relating to fixed assets that has already been recognised is added to the carrying amount of the asset only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repair and maintenance expense is recognised in the income statement when incurred. Disposals Gains and losses on disposals are determined by comparing net disposal proceeds with the carrying amount and are recognised as income or expense in the income statement. 2.12 Leased assets Leases where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under accumulated depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the investment properties. Depreciation Investment properties are depreciated on the straightline method to write off the cost of the assets over their estimated useful lives, as follows: Years Buildings Infrastructure 10 - 50 10 operating leases are charged to the income statement on the straight-line basis over the period of the lease.
2.14 Share capital and treasury shares Ordinary shares in issue are classified as equity. Incremental costs directly attributable to the issuance of new shares or options are shown in equity as a deduction from the proceeds. Where the Group purchase the Groups equity share capital (treasury shares), the consideration paid, including directly attributable incremental costs, is deducted from equity attributable to the Groups equity holders until the shares are cancelled or reissued. Where such shares are subsequently sold or reissued, any consideration received less any directly attributable incremental transaction costs is included in equity attributable to the Groups equity holders. 2.15 Borrowing costs Borrowing costs that are directly attributable to the construction or production of any qualifying assets are capitalised during the period of time that is required to complete and prepare the asset for its intended use. Other borrowing costs are recognised in the income statement when incurred. 2.16 Revenue recognition (a) Sales of goods Revenue from the sale of goods is recognised in the income statement when the significant risks and rewards of ownership have been transferred to the buyer. No revenue is recognised if there are significant uncertainties regarding recovery of the consideration due or the likely return of goods. (b) Provision of services Revenue from the provision of services is recognised in the income statement when the services are rendered, by reference to completion of the specific transaction assessed on the basis of the actual service provided as a proportion of the total services to be provided. (c) Interest income Interest income is recognized on the basis of the actual time and interest rate in each period. (d) Dividend income Dividend income is recognised in the period in which the dividends are declared by the investee entities. 2.17 Current and deferred income tax Income taxes include all income taxes which are based on taxable profits including profits generated from production and trading activities in other countries that the Socialist Republic of Vietnam has not signed any double tax relief agreement. Income tax expense comprises current tax expense and deferred tax expense. Current income tax is the amount of income taxes payable or recoverable in respect of the current year taxable profit and the current tax rates. Current and deferred tax should be recognized as income or an expense and included in profit or loss for the period, except to the extent that the tax arises from a transaction or event which is recognized, in the same or a different period, directly in equity.
Land use rights are amortised, using the straight-line method over the terms indicated in the land use right certificates. Land use rights which are granted for an indefinite term are carried at cost and not amortised. Disposals Gains or losses on disposals are determined by comparing net disposal proceeds with the net book value and are recognised as income or expense in the income statement
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Form B 09 DN/HN
2.17 Current and deferred income tax (continued) Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of occurrence affects neither the accounting nor the taxable profit or loss. Deferred income tax is determined at the tax rates that are expected to apply to the financial year when the asset is realised or the liability is settled, based on tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. 2.18 Dividend distribution The Companys net profit after tax is available for appropriation to shareholders as dividends after approval by shareholders at the Companys Annual General Meeting and after making appropriation to reserve funds in accordance with the Companys Charter. Interim dividends are declared and paid based on the estimated earnings of the year. Final dividends are declared and paid in the following year from undistributed earnings based on the approval of shareholders at the Companys Annual General Meeting. 2.19 Method of reserve appropriation Appropriation to reserve funds in accordance with the Companys Charter is as follows: Investment and development fund Bonus and welfare fund Financial reserve fund 10% of profit after tax 10% of profit after tax up to 5% of profit after tax
2.20 Related parties (continued) In considering each possible related party relationship, attention is directed to the substance of the relationship, and not merely the legal form. 2.21 Provisions Provisions are recognised when: the Company or its subsidiaries have a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Provisions are not recognised for future operating losses. Provisions are measured at the expenditures expected to be required to settle the obligation. If the time value of money is material, provisions will be measured at their present value using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as interest expenses. 2.22 Provision for severance allowances In accordance with Vietnamese labour laws, employees of the Company and its subsidiaries are entitled to a severance allowance based on their years of service. This will be paid as a lump sum when the employee leaves the Company and its subsidiaries. A provision for severance allowance is made for the estimated liability for employment termination as a result of services rendered by employees. Pursuant to Law on Social Insurance, effective from 1 January 2009, the Company and its subsidiaries are required to contribute to an unemployment insurance fund managed by the Vietnam Social Insurance Agency. With the implementation of the unemployment scheme, the Company and its subsidiaries are no longer required to provide for the service period after 1 January 2009. However, provision for severance allowance as of 31 December 2012 is determined based on the employees number of years of service up to 31 December 2008 and their average salary for the six-month period prior to the balance sheet date.
Appropriation to financial reserve fund will cease when the amount reaches 10% of the Companys paid-in capital. Utilisation of the above reserve funds requires approval of the Chief Executive Officer, the Board of Directors or the shareholders depending on the nature and magnitude of the transactions involved as stated in the Companys Charter and financial regulations. 2.20 Related parties Enterprises and individuals that directly, or indirectly through one or more intermediaries, control, or are controlled by, or are under common control with, the Company, including holding companies, subsidiaries and fellow subsidiaries are related parties of the Company. Associates and individuals owning, directly or indirectly, an interest in the voting power of the Company that gives them significant influence over the enterprise, key management personnel, including directors and officers of the Company and close members of the family of these individuals and companies associated with these individuals also constitute related parties. The State Capital Investment Corporation holds the largest shareholding in the Company and accordingly is regarded as a related party. However, enterprises which are controlled or significantly influenced by the State Capital Investment Corporation are not considered as related parties of the Company for the purposes of disclosure since they do not influence, or are not influenced by, the Company.
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Form B 09 DN/HN
3. CASH AND CASH EQUIVALENTS
Unit: VND 2012 Cash on hand Cash at bank Cash in transit Cash equivalents (*) 1,007,244,458 850,362,916,346 750,000,000 400,000,000,000 1,252,120,160,804 2011 748,676,117 789,766,720,873 2,366,000,000,000 3,156,515,396,990
4. INVESTMENTS (continued)
(a) Short-term investments (continued) Movements in the provision for diminution in value of short-term investments during the year were as follows:
Unit: VND 2012 Opening balance Increase Reclassification from provision for diminution in value of long-term investments (Note 4(b)) Reversal Closing balance 79,244,243,600 54,008,653,800 (3,224,221,780) 130,028,675,620 2011 70,657,669,500 8,586,574,100 79,244,243,600
(*) Cash equivalents include term deposits with an original maturity of 3 months or less.
4. INVESTMENTS
(a) Short-term investments
Unit: VND
(b) Long-term investments The details of the long-term investments of the Group are as follows:
Unit: VND 2012 Long-term equity investments in associates and joint ventures: 2012 2011 82,283,660,000 24,993,771,792 440,000,000,000 50,000,000,000 200,000,000,000 18,000,000,000 815,277,431,792 (79,244,243,600) 736,033,188,192 Other long-term investments: Long-term bonds issued by local corporates Long-term bonds issued by local credit institutions (130,028,675,620) 3,909,275,954,492 Other long-term investments: Listed equity securities Investment funds 30,540,000,000 300,000,000 80,840,000,000 Provision for diminution in value of long-term investments (14,355,884,467) 284,428,762,040 206,996,073,800 106,350,000,000 120,300,000,000 783,646,073,800 (142,350,792,629) 846,713,756,424 50,000,000,000 50,000,000,000 300,000,000,000 Miraka Limited Asia Saigon Food Ingredients Joint Stock Company Horizon Apartment Business Cooperation Contract Dairy Cow Development Project 178,904,317,366 21,888,373,590 9,942,684,826 7,209,270,725 217,944,646,507 173,228,494,143 15,038,025,559 9,942,684,826 7,209,270,725 205,418,475,253 2011
Investment in unlisted equity securities Investment in listed equity securities Short-term deposits at banks Bonds issued by local corporates Bonds issued by local credit institutions Other short-term investments
82,283,660,000 211,020,970,112 2,974,000,000,000 300,000,000,000 472,000,000,000 4,039,304,630,112
Provision for diminution in value of short-term investments
Provision for diminution in value of short-term investments has been made to reflect the fall in market prices of the related shares as at year end.
Others
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Form B 09 DN/HN
4. INVESTMENTS (continued)
(b) Long-term investments (continued) The movements in the provision for diminution in value of long-term investments were as follows:
Unit: VND 2012 Opening balance Increase Reversal Reclassification to provision for diminution in value of short-term investment (Note 4(a)) (*) Closing balance 142,350,792,629 763,261,300 (74,749,515,662) (54,008,653,800) 14,355,884,467 2011 108,580,084,548 34,898,977,981 (1,128,269,900) 142,350,792,629
7. INVENTORIES
Unit: VND 2012 Goods in transit Raw materials Tools and supplies Work in progress Finished goods Merchandise goods Goods on consignment 702,869,203,610 2,041,420,485,347 8,332,323,313 89,198,796,393 591,779,813,093 20,857,268,341 21,842,627,806 3,476,300,517,903 Provision for decline in value of inventory (3,455,165,385) 3,472,845,352,518 2011 972,360,197,401 1,590,350,151,377 1,833,344,075 61,562,596,516 579,265,915,242 23,686,995,937 48,370,380,232 3,277,429,580,780 (4,933,906,670) 3,272,495,674,110
(*) As at 31 December 2012, long-term investments in listed equity securities amounting to VND189,402,373,800 and the corresponding provision of VND54,008,653,800 were reclassified to short-term investments as the Companys management had intention to dispose them within 12 months from the balance sheet date.
5. TRADE ACCOUNTS RECEIVABLE

Unit: VND 2012 Third parties 1,269,841,759,012 2011 1,143,168,467,855 Opening balance 2012 4,933,906,670 8,686,194,492 (8,476,656,163) (1,688,279,614) 3,455,165,385 2011 4,133,214,915 10,074,642,239 (8,018,602,015) (1,255,348,469) 4,933,906,670
Movements in the provision for inventories during the year were as follows:
Unit: VND
6. OTHER RECEIVABLES
Unit: VND 2012 Dividends receivable Interest income on deposits Interest income receivable on bonds and loans granted to other entities Import duty refundable Rebates receivable from suppliers Others 55,733,508,797 27,586,763,700 235,708,097,835 76,841,890,627 7,884,229,656 403,754,490,615 2011 6,144,600 39,118,333,339 53,480,095,630 128,535,499,715 11,665,360,512 232,805,433,796
Increase Reversal Written-off Closing balance
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Form B 09 DN/HN
8. PREPAYMENTS
(a) Short-term prepayments
Unit: VND 2012 Advertising expenses Land, warehouse and other rental expenses Software development and server maintenance expenses Tools and supplies supporting selling activities Other tools and supplies Repair and maintenance expenses Other expenses 2,542,287,500 1,587,393,638 2,499,507,569 46,373,495,946 10,519,642,156 7,133,316,219 1,687,924,627 72,343,567,655 2011 8,320,100,182 2,414,274,654 3,862,183,375 34,676,924,998 4,255,096,359 1,381,630,958 1,998,888,993 56,909,099,519
9. FIXED ASSETS
(a) Tangible fixed assets
Unit: VND
Buildings and structures

Historical cost At 1 January 2012 New purchases Transfers from construction in progress (Note 9(c)) Transfers from inventory Reclassifications Disposals 910,815,133,889 26,327,202,110
Machinery and equipment
Motor vehicles
Office equipment
Livestock
Total
3,595,320,134,802 136,900,621,045
342,750,559,768 58,794,694,591
257,437,883,086 56,748,352,395
195,503,124,715 -
5,301,826,836,260 278,770,870,141
257,951,636,615
681,819,789,341
14,868,734,720
6,522,338,934
961,162,499,610
2,201,083,457 (9,982,438,826) 1,187,312,617,245
(2,382,953,980) (7,508,693,865) (3,584,680) 4,404,145,312,663
251,261,432 (54,545,807,852) 362,119,442,659
(69,390,909) (4,619,456,413) 316,019,727,093
72,831,881,331 (25,056,789,279) 243,278,216,767
72,831,881,331 (101,713,186,235) (3,584,680) 6,512,875,316,427
(b) Long-term prepayments

Unit: VND 2012 Land rental Tools and supplies supporting selling activities Other expenses 2,159,885,571 15,699,234,727 23,214,857,824 41,073,978,122 2011 2,434,012,586 11,241,646,159 11,922,656,050 25,598,314,795
Other decreases At 31 December 2012 Accumulated depreciation At 1 January 2012 Charge for the year Reclassifications
217,612,580,950 48,704,874,132 67,482,521 (2,152,794,721) 264,232,142,882
1,285,791,657,838 362,635,368,504 (126,500,985) (6,873,800,632) 1,641,426,724,725
143,083,992,356 30,188,603,674 67,003,048 (21,809,552,972) 151,530,046,106
120,979,925,716 46,006,042,200 (7,984,584) (4,574,502,487) 162,403,480,845
40,730,136,946 36,488,175,567 (7,378,850,247) 69,839,462,266
1,808,198,293,806 524,023,064,077 (42,789,501,059) 2,289,431,856,824
Movement of long-term prepayments during the year was as follows:

Unit: VND 2012 Opening balance Increase Charged to income statement Transfers to intangible fixed assets Transfers to short-term prepayments (*) Closing balance 25,598,314,795 98,456,539,909 (8,365,677,045) (74,615,199,537) 41,073,978,122 2011 97,740,813,322 75,772,676,087 (3,668,511,654) (82,680,130,919) (61,566,532,041) 25,598,314,795
Disposals At 31 December 2012 Net book value At 1 January 2012 At 31 December 2012
693,202,552,939 923,080,474,363
2,309,528,476,964 2,762,718,587,938
199,666,567,412 210,589,396,553
136,457,957,370 153,616,246,248
154,772,987,769 173,438,754,501
3,493,628,542,454 4,223,443,459,603
Included in the tangible fixed assets were assets costing VND671,586,199,605 which were fully depreciated as at 31 December 2012 (31 December 2011: VND628,995,160,327), but which are still in active use.
(*) Represented a portion of long-term prepayments to be allocated within a year.
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Form B 09 DN/HN
9. FIXED ASSETS (continued)
(b) Intangible fixed assets
Unit: VND Land use rights Historical cost At 1 January 2012 Additions Disposals At 31 December 2012 Accumulated amortisation At 1 January 2012 Charge for the year Disposals At 31 December 2012 Net book value At 1 January 2012 At 31 December 2012 245,798,460,101 241,722,131,852 10,247,629,430 11,893,523,704 256,046,089,531 253,615,655,556 78,679,820,739 4,076,328,249 82,756,148,988 48,683,460,597 3,395,614,523 (1,270,856,480) 50,808,218,640 127,363,281,336 7,471,942,772 (1,270,856,480) 133,564,367,628 324,478,280,840 324,478,280,840 58,931,090,027 5,041,508,797 (1,270,856,480) 62,701,742,344 383,409,370,867 5,041,508,797 (1,270,856,480) 387,180,023,184 Software Total
9. FIXED ASSETS (continued)
(c) Construction in progress (continued) Main projects relate to the following locations:
Unit: VND 2012 Vietnam milk factory Dielac 2 powder milk factory Can Tho branch Dairy cow farms Da Nang milk factory Saigon milk factory Tien Son milk factory Nghe An milk factory Dielac milk factory 1,819,204,239,183 1,509,809,070,248 45,086,527,051 35,366,294,536 21,448,226,014 591,352,078 2011 252,972,591,210 383,594,721,240 44,989,951,351 15,893,206,674 237,931,390,899 80,403,563,112 81,555,694,010 35,495,060,435 33,679,200,351
10. INVESTMENT PROPERTIES

Unit: VND Land use rights Historical cost At 1 January 2012 and 31 December 2012 Accumulated depreciation At 1 January 2012 Charge for the year 1,144,301,491 599,429,017 1,743,730,508 15,850,898,430 3,357,469,432 19,208,367,862 16,995,199,921 3,956,898,449 20,952,098,370 27,489,150,000 5,994,290,197 84,183,047,263 117,666,487,460 Infrastructure Buildings Total
Included in the intangible fixed assets were assets costing VND45,221,516,597 which were fully amortised as at 31 December 2012 (2011: VND43,568,790,597), but which are still in active use. (c) Construction in progress
Unit: VND 2012 Opening balance Additions Transfers to tangible fixed assets (Note 9(a)) Transfers to inventory Other decreases Closing balance 1,295,087,396,884 3,244,215,655,105 (961,162,499,610) (12,899,119,045) 3,565,241,433,334 2011 665,282,453,729 1,765,978,487,062 (1,130,614,746,336) (4,529,164,165) (1,029,633,406) 1,295,087,396,884
At 31 December 2012 Net book value At 1 January 2012 At 31 December 2012
27,489,150,000 27,489,150,000
4,849,988,706 4,250,559,689
68,332,148,833 64,974,679,401
100,671,287,539 96,714,389,090
The land use rights represented freehold land in Hai Chau District, Da Nang City and was carried at cost and not amortised. Included in the investment properties were assets costing VND6,976,800,000 which were fully depreciated as at 31 December 2012 (31 December 2011: VND6,976,800,000), but which are still in active use.
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Form B 09 DN/HN
11. GOODWILL
Movements of goodwill during the year were as follows:
Unit: VND 2012 Opening balance Decrease Charged to the income statement Closing balance 15,503,335,522 (1,841,148,924) 13,662,186,598 2011 19,556,808,664 (2,269,050,480) (1,784,422,662) 15,503,335,522
14. TAXES AND OTHER PAYABLES TO STATE BUDGET
Unit: VND 2012 Value Added Tax Import duty Business income tax Personal income tax Others 59,106,005,706 3,932,727,653 252,860,913,932 18,020,617,756 32,604,800 333,952,869,847 2011 78,912,830,769 5,819,918,779 188,626,252,026 13,715,531,182 388,358,072 287,462,890,828
12. DEFERRED INCOME TAX ASSETS

The gross movement in the deferred income tax, without taking into consideration the offsetting of balances within the same tax jurisdiction, is as follows:
Unit: VND 2012 Opening balance Income statement credit Closing balance 80,643,411,508 27,358,535,564 108,001,947,072 2011 62,865,036,536 17,778,374,972 80,643,411,508 Sales incentives for distributors Expenses for product display Advertising expenses Transportation expenses Fuel expenses
15. ACCRUED EXPENSES

Unit: VND 2012 172,183,794,781 116,910,036,213 23,976,054,607 7,115,522,438 5,797,227,711 11,164,299,513 27,956,701,587 365,103,636,850 2011 166,981,423,467 138,181,804 29,428,701,502 25,359,546,962 5,795,564,015 6,357,023,147 7,252,173,600 19,365,394,796 260,678,009,293
The deferred income tax asset mainly arises from unrealised foreign exchange differences, provisions and accruals.
Repair and maintenance expenses Expenses for outsourced employees
13. TRADE ACCOUNTS PAYABLE

Unit: VND 2012 Third parties Related parties (Note 31(b)) 2,242,761,181,733 4,897,968,069 2,247,659,149,802 2011 1,722,763,113,643 108,195,986,831 1,830,959,100,474
Others
Other accrued expenses as at 31 December 2012 mainly comprised of land rentals and other general and administration expenses.
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16. OTHER PAYABLES
Unit: VND 2012 Deposits received from customers Import duty payable not past due Payables to minority shareholders of subsidiaries Other payables relating to financial investments (*) Staff insurance and trade union fees Others 18,642,185,025 176,541,502,888 448,007,419,155 582,711,892 20,363,229,449 664,137,048,409 2011 13,510,621,271 31,891,388,948 34,800,000 184,859,155 615,429,742 13,241,826,199 59,478,925,315
19. SHARE CAPITAL
On 20 November 2012, the Ho Chi Minh City Stock Exchange issued Notification No. 926/2012/TB-SGDHCM to approve for the registration of 277,841,042 bonus shares of 2:1 ratio in circulation, which were issued using the Investment and Development Fund and undistributed earnings to raise the share capital to VND8,339,557,960,000. As at 31 December 2012, the Company is in the process of registration for amended Business Registration Certificate for the increase in share capital. The Companys authorised and issued share capitals are:
12.31.2012 Number of shares Authorised share capital Issued share capital Ordinary shares Treasury shares 833,955,796 8,339,557,960,000 556,114,754 5,561,147,540,000 833,955,796 VND 8,339,557,960,000 12.31.2011 Number of shares 556,114,754 VND 5,561,147,540,000
(*) Other payables relating to financial investments included an advance payment of VND447,822,000,000 received from a third party in respect of the future transfer of the Companys investment in a bank. The transfer can only be effective upon approval by the banks Annual General Meeting or Board of Management and its founding shareholders; or after five years from the date of establishment of the bank, whichever comes first. The advance amount comprised of VND92,000,000,000 received in previous years and VND355,822,000,000 received in 2012.
Ordinary shares Shares currently in circulation Ordinary shares
(430,120)
(4,504,115,000)
(247,140)
(2,521,794,000)
833,525,676
8,335,053,845,000
555,867,614
5,558,625,746,000
17. OTHER LONG-TERM LIABILITIES

Other long-term liabilities were reclassified to other short-term payables in 2012 as they will be settled within 12 months from the balance sheet date (Note 16).
All ordinary shares have a par value of VND10,000. Each share is entitled to one vote at shareholders meetings. Ordinary shares are ranked equally with regard to the Companys residual assets. Shareholders are eligible to dividends declared by the Company. In respect of shares bought back by the Company, all rights are suspended until those shares are reissued.
20. MOVEMENTS IN OWNERS EQUITY 18. PROVISION FOR SEVERANCE ALLOWANCES

Movements for provision for severance allowances during the year were as follows:
Unit: VND 2012 Opening balance Increase Payment during the year Reversal Closing balance 66,923,897,268 1,687,443,587 (680,685,501) (8,294,878,354) 59,635,777,000 2011 51,373,933,083 16,618,656,982 (1,068,692,797) 66,923,897,268
As at 1 January 2011 Capital increase during the year Purchase of treasury shares Profit for the year Appropriations to reserves Dividends paid As at 31 December 2011
Unit: VND
Share capital
3,530,721,200,000 2,030,426,340,000 5,561,147,540,000
Share premium
1,276,994,100,000 1,276,994,100,000
Treasury shares
(669,051,000) (1,852,743,000) (2,521,794,000)
Investment Financial and developreserve fund ment fund

2,172,290,789,865 (1,852,892,040,000) 588,625,486,519 908,024,236,384 353,072,120,000 203,042,634,000 556,114,754,000
Undistributed earnings
1,909,021,531,417 4,218,181,708,937 (1,208,328,620,254) (741,428,260,000) 4,177,446,360,100
Total
7,964,436,590,282 1,454,528,400,000 (1,852,743,000) 4,218,181,708,937 (416,660,499,735) (741,428,260,000) 12,477,205,196,484
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20. MOVEMENTS IN OWNERS EQUITY (continued)
Unit: VND
22. REVENUE (continued)
(b) Financial income
Unit: VND
Share capital
As at 1 January 2012 Capital increase during the year Purchase of treasury shares Profit for the year Appropriations to reserves Dividends paid (Note 21) As at 31 December 2012 5,561,147,540,000 2,778,410,420,000 8,339,557,960,000
Share premium
1,276,994,100,000 1,276,994,100,000
Treasury shares
(2,521,794,000) (1,982,321,000) (4,504,115,000)
Investment Financial and developreserve fund ment fund

908,024,236,384 (1,628,883,194,992) 814,747,976,337 93,889,017,729 556,114,754,000 32,287,268,008 588,402,022,008
Undistributed earnings
4,177,446,360,100 (1,149,527,225,008) 5,819,454,717,083 (1,425,622,185,054) (2,222,994,056,000) 5,198,757,611,121
Total
2012
12,477,205,196,484 (1,982,321,000) 5,819,454,717,083 (578,586,940,709) (2,222,994,056,000) 15,493,096,595,858
2011 468,750,000 2,445,000,000 366,516,423,111 97,988,961,693 25,576,594,310 133,011,736,352 53,335,201,499 1,358,536,168 680,232,453,133
Interest income on loan granted Interest income on deposits Interest income on bonds Dividends income Realised foreign exchange gains Gains from foreign currency translation at year end Gain on disposal of investments
249,762,897,095 77,056,806,958 35,619,974,400 103,438,947,734 8,790,592,000 100,617,862 475,238,586,049
21. DIVIDENDS
During 2012, the Company has declared and paid final dividends of 20% in cash of the year ended 31 December 2011 and interim dividends of 20% in cash of the year ended 31 December 2012. Final dividends in respect of the year ended 31 December 2012 are to be proposed at the Companys Annual General Meeting in 2013.
Others
23. COST OF SALES

Unit: VND 2012 Merchandise goods sold 313,985,989,376 17,110,723,660,326 5,511,306,230 1,021,956,715 6,163,282,024 47,214,514,188 209,538,329 17,484,830,247,188 2011 286,607,568,444 14,684,630,075,415 5,461,852,413 1,314,885,592 2,017,880,798 57,217,075,478 2,056,040,224 15,039,305,378,364
22. REVENUE
(a) Net sales
Unit: VND 2012 Sales Sales of merchandise goods Sales of finished goods Revenue from provision of real estate services Revenue from provision of other services 378,856,511,250 26,687,053,494,046 11,694,544,989 24,079,188,993 27,101,683,739,278 Sales deductions Trade discounts Sales returns (529,926,422,029) (10,183,137,285) (540,109,559,314) Net sales 26,561,574,179,964 (441,891,678,905) (1,236,918,752) (443,128,597,657) 21,627,428,893,109 302,234,100,241 21,737,996,256,230 9,636,945,888 20,690,188,407 22,070,557,490,766 Expenses in excess of normal value Provision for the decline in value of inventory 2011 Finished goods sold Real estate services provided Other services provided Inventories deficiencies
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24. FINANCIAL EXPENSES
Unit: VND 2012 Payment discounts for distributors Interest expenses on loans Interest expenses on deposits received Realised foreign exchange losses Losses on foreign currency translation at year end (Reversal of provision)/provision for diminution in value of investments Other financial expenses 31,602,235,707 3,114,837,973 1,016,360,739 37,855,110,550 23,750,178,315 (77,210,476,142) 31,042,882,273 51,171,129,415 2011 22,667,657,049 13,933,130,085 1,173,590,655 105,298,278,209 60,940,976,183 42,357,282,181 58,995,000 246,429,909,362
26. GENERAL AND ADMINISTRATION EXPENSES
Unit: VND 2012 Staff costs Material expenses Office supplies Depreciation expense Fees and duties Provision of doubtful debts and severance allowance Transportation for internal transfer of goods Outside service expenses Loading expenses Per diem allowances Bank charges Others 165,496,215,666 13,566,054,345 4,275,239,859 60,091,120,002 15,421,910,323 1,344,579,930 50,852,128,502 123,243,688,760 24,670,644,465 18,037,151,325 5,975,197,656 42,223,338,513 525,197,269,346 Unit: VND 2011 139,108,109,646 10,884,949,950 5,130,371,249 50,962,059,856 5,136,600,449 18,452,003,759 47,134,745,105 96,091,668,645 32,483,865,536 14,907,572,769 6,926,788,557 32,213,261,678 459,431,997,199
25. SELLING EXPENSES 27. NET OTHER INCOME
2012 Advertising expenses Promotion expenses Support and commission expenses for distributors Staff costs Material expenses Tools and supplies expenses Depreciation expenses Expenses of damaged goods Transportation for goods sold Outside service expenses 586,620,623,362 635,694,113,386 405,354,439,716 154,142,240,782 56,236,043,231 61,297,993,881 25,653,373,488 13,803,784,829 307,016,838,337 99,969,890,863 2,345,789,341,875
2011 400,203,453,923 501,645,805,671 330,271,502,489 126,040,690,295 46,661,138,368 36,459,224,005 25,827,515,080 10,079,299,960 254,224,204,720 80,501,413,118 1,811,914,247,629
n v tnh: VN 2012 Other income Compensation received from other parties Proceeds from disposals of fixed assets Proceeds from sales of scraps, tools and supplies Rebate income from suppliers Sundry income 789,778,800 38,249,877,676 94,593,140,503 196,470,446,738 20,220,100,031 350,323,343,748 Other expenses Net book value of fixed assets disposed Cost of tools, supplies and scraps disposed Fines due to contract breach Sundry expenses (58,923,685,176) (81,732,178) (4,000,858,759) (63,006,276,113) Net other income 287,317,067,635 (81,065,291,516) (1,395,686,642) (722,472,308) (2,696,555,210) (85,880,005,676) 237,226,032,153 3,140,520,594 58,616,361,045 81,356,185,908 166,810,521,148 13,182,449,134 323,106,037,829 2011
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Form B 09 DN/HN
28. BUSINESS INCOME TAX
The Company is required to pay business income tax (BIT) at rates ranging from 15% to 25%, depending on locations of its factories, on taxable profits. In the Group, only the Company and Lam Son Dairy One Member Company Limited incurred the business income tax charges. Other companies have no taxable income. The tax on the Groups profit before tax differs from the theoretical amount that would arise using the normal tax rate of 25% as regulated in current tax regulations as follows:
Unit: VND 2012 Net accounting profit before tax Tax calculated at the tax rate of 25% Effect of: Different tax rates applicable for branches and subsidiaries Income not subject to tax Expenses not deductible for tax purposes Tax incentives Recognition of deferred income tax asset which was not previously recognised Deferred income tax asset written off Current tax losses in subsidiaries for which no deferred income tax asset was recognised Under-provision in previous years Business income tax charge (313,944,391,849) (21,681,732,054) 6,147,267,330 (316,897,335,259) (7,099,509,506) 5,315,132,448 7,720,353,075 18,236,511,541 1,110,213,299,996 (226,947,759,566) (24,161,191,796) 5,821,560,435 (251,427,181,503) 7,362,992,662 5,413,792,134 760,810,186,134 6,929,668,017,079 1,732,417,004,270 2011 4,978,991,895,071 1,244,747,973,768
29. BASIC EARNINGS PER SHARE (continued)
Unit: VND 2012 Net profit attributable to shareholders (VND) Weighted average number of ordinary shares in issuance Basic earnings per share based on weighted average number of ordinary shares in issuance (VND) Weighted average number of ordinary shares in issuance recalculated on the assumption that the bonus shares issued in December 2012 had been issued since 1 January 2011 Basic earnings per share recalculated on the assumption that the bonus shares issued in December 2012 had been issued since 1 January 2011 (VND) 5,819,454,717,083 833,639,586 6,981 2011 4,218,181,708,937 546,582,775 7,717
833,639,586
819,874,163
6,981
5,145
The Group does not have potentially dilutive ordinary shares.
30. COST OF GOODS MANUFACTURED BY FACTORS

Unit: VND 2012 Raw materials Labour costs Depreciation expenses Outside service expenses Other cash expenses 16,367,691,633,669 736,961,575,667 534,303,105,072 922,116,282,884 1,842,875,132,323 20,403,947,729,615 2011 14,287,698,212,202 601,635,087,269 414,590,126,002 747,394,008,140 1,418,792,597,684 17,470,110,031,297
31. SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES

The largest shareholder of the Company is the State Capital Investment Corporation (SCIC) which owns 45.05% of the Companys share capital. The SCIC is controlled by the Government of SR Vietnam. (a) Related party transactions During the year, the following transactions were carried out with related parties: i) Sales of goods and services
Unit: VND 2012 2011
The Groups business income tax charge for the year is based on estimated taxable income and is subject to review and possible adjustment by the respective local tax authorities.
29. BASIC EARNINGS PER SHARE

The calculation of basic earnings per share at 31 December 2012 was based on the profit attributable to ordinary shareholders and a weighted average number of ordinary shares outstanding.
Associates: Asia Saigon Food Ingredients Joint Stock Company -
112,180,852
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31. SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES (continued)
ii) Purchases of goods and services
Unit: VND 2012 Jointly controlled entities: Dairy Cow Development Project Associates: Miraka Limited Asia Saigon Food Ingredients Joint Stock Company 376,348,603,444 37,676,635,000 417,787,058,542 208,625,385,663 8,283,190,000 220,392,452,176 3,761,820,098 3,483,876,513 2011
32. SEGMENTAL REPORTING
Segment information is presented in respect of the Groups geographical segment. The primary format, geographical segments, is based on the Groups management and internal reporting structure. Segment results include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise assets and liabilities, financial income and expenses, selling, general and administration expenses, other gains or losses, and corporate income tax. Geographical segments In presenting information on the basis of geographical segments, segment revenue is based on the geographical location of customers, which is located in Vietnam (Domestic) or countries other than Vietnam (Export).
Unit: VND
iii) Collection of loans granted to an associate 2012 During the year, Asia Saigon Food Ingredients Joint Stock Company has paid off the loan of VND18 billion granted by the Company in 2011. iv) Dividends paid
Unit: VND 2012 Major shareholder: The State Capital Investment Corporation 1,001,952,000,000 333,984,000,000 2011
Sales revenue Cost of sales Segment income
Domestic 2011
18,854,564,315,218 (12,815,260,529,233) 6,039,303,785,985
Export 2012
3,712,422,796,844 (2,938,562,514,482) 773,860,282,362
Total 2011
2,772,864,577,891 (2,224,044,849,131) 548,819,728,760
2012
26,561,574,179,964 (17,484,830,247,188) 9,076,743,932,776
2011
21,627,428,893,109 (15,039,305,378,364) 6,588,123,514,745
22,849,151,383,120 (14,546,267,732,706) 8,302,883,650,414
33. CAPITAL COMMITMENTS

Capital expenditure contracted for at the balance sheet date but not recognised in the financial statements is as follows:
Unit: VND Unit: VND 2012 Buildings, factories, machineries and equipment 453,394,023,691 2011 2,142,064,573,853
v) Remuneration of key management
2012 Remuneration of members of Board of Management and Board of Directors 56,403,673,599
2011 46,643,535,904
34. COMMITMENTS UNDER OPERATING LEASES

The future minimum lease payments under non-cancellable operating leases are as follows:
(b) Year end balances with related parties

Unit: VND 2012 Trade accounts payable (Note 13) Jointly controlled entities: Dairy Cow Development Project Associates: Asia Saigon Food Ingredients Joint Stock Company Miraka Limited 3,204,539,250 4,897,968,069 108,050,477,828 108,195,986,831 1,693,428,819 145,509,003 2011
Unit: VND Land and warehouse rental S c phiu Within 1 year Between 1 and 5 years Over 5 years Total minimum payments 9,046,521,632 36,186,086,528 256,388,911,967 301,621,520,127 VN 5,281,677,565 21,133,710,260 175,917,048,989 202,332,436,814
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Form B 09 DN/HN
35. FINANCIAL RISK MANAGEMENT Financial risk factors
Overview The Group has exposure to the following risks from their use of financial instruments: Market risk Liquidity risk Credit risk
35. FINANCIAL RISK MANAGEMENT (continued) Financial risk factors (continued)
(a) Market risk (continued) (i) Currency risk (continued)
As at 31 December 2012 Original currency USD Financial assets Cash and bank deposits Trade and other receivables 11,737,838 26,862,852 38,600,690 49,848 9,151 58,999 244,147,038,928 558,747,318,929 802,894,357,857 1,360,887,689 249,831,451 1,610,719,140 EUR Equivalent to VND USD EUR
The Board of Directors (the Board) has overall responsibility for the establishment and oversight of the Groups risk management framework. The Board establishes policies to identify and analyse the risks faced by the Group, to set up appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Groups activities. (a) Market risk Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: currency risk, interest rate risk and price risk. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return. (i) Currency risk The Group is exposed to foreign currency risk on sales and purchases that are denominated in currencies other than the VND. The currencies giving rise to this risk are primarily United States Dollar (USD) and Euro (EUR). The Group ensures that the net exposure to this risk is kept to an acceptable level by buying or selling foreign currencies at spot rates where necessary to address short-term imbalances. The Board does not enter into currency hedging transactions since it considers that the cost of such instruments outweigh the potential risk of exchange rate fluctuations. The Groups currency exposure to the USD and EUR is as follows:
Financial liabilities Trade and other payables Currency exposure (35,559,707) 3,040,983 (12,185,695) (12,126,696) (739,641,898,740) 63,252,459,117 (332,681,669,023) (331,070,949,883)
As at 31 December 2011 Original currency USD Financial assets Cash and bank deposits Trade and other receivables 27,989,325 25,905,903 53,895,228 Financial liabilities Trade and other payables Currency exposure (38,849,352) 15,045,876 (12,606,518) (11,123,640) (809,154,305,747) 313,375,511,013 (348,355,921,842) (307,379,567,332) 1,482,878 1,482,878 582,961,667,350 539,568,149,410 1,122,529,816,760 40,976,354,510 40,976,354,510 EUR Equivalent to VND USD EUR
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Form B 09 DN/HN
(a) Market risk (continued) (i) Currency risk (continued)
(b) Credit risk (continued)
At 31 December 2012, if the USD had strengthened/ weakened by 10% against the VND with all other variables including tax rate being held constant, the Groups consolidated profit after tax for the financial year would have been VND4,743,934,434 higher/lower as a result of currency translation gains/losses on the remaining USD-denominated financial instruments. At 31 December 2012, if the EUR had strengthened/ weakened by 10% against the VND with all other variables including tax rate being held constant, the Groups consolidated profit after tax for the financial year would have been VND24,830,321,241 lower/ higher as a result of currency translation losses/gains on the remaining EUR-denominated financial instruments. (ii) Price risk The Group invests in equity investments of listed and non-listed companies and is exposed to risks of price fluctuations of these investments. The risk factors affecting the performance of these investments include financial performance and position of invested companies and market conditions. The Board manages the former factor by selecting industries and entities to invest in. The latter factor is itself affected by general economic conditions in Vietnam and behaviours of investors, which are all out of the Boards control. These factors have caused market conditions to be volatile in the past two years. For the investments in listed securities, if the share prices had increased/decreased by 10% with all other
variables including tax rate being held constant, the Groups consolidated profit after tax would have been VND10,425,695,430 higher/lower. (iii) Interest rate risk The Group is not exposed to significant interest rate risk on its borrowings as the Groups policy is to maintain 100% of fixed-rate borrowings. In addition, as at 31 December 2012, the Group had fully repaid all of its borrowings. (b) Credit risk Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Groups receivables from customers. Trade and other receivables The Groups exposure to credit risk is influenced mainly by the individual characteristics of each customer. The Board has established a credit policy under which each new customer is analysed individually for creditworthiness before the Groups standard payment and delivery terms and conditions are offered. Purchase limits are established for each customer, which represents the maximum open amount without requiring approval from the Board. Customers that fail to meet the Groups benchmark creditworthiness may transact with the Group only on a prepayment basis.
The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and other receivables and investments. The main components of this allowance are a specific loss component that relates to individually significant exposures, and a collective loss component established for groups of similar assets in respect of losses that have been incurred but not yet identified. The collective loss allowance is determined based on historical data of payment statistics for similar financial assets. Investments The Group limits its exposure to credit risk by investing only in liquid securities and only with counter parties that have good creditworthiness. The Board actively monitors credit risk and does not expect any counter party failing to meet its obligations. Balances with banks All the bank balances are placed with local financial institutions. The Board does not expect any losses arising from performance of these financial institutions. The maximum exposure to credit risk for each class of financial assets is the carrying amount of that class of financial instruments presented on the balance sheet. The Groups major classes of financial assets are bank deposits and trade and other receivables, and investments.
(i) Financial assets that are neither past due nor impaired Bank deposits and investments in bonds that are neither past due nor impaired are mainly term deposits and investments in bonds issued by local banks which have high credit-ratings in Vietnam as assessed by the Board. Trade and other receivables that are neither past due nor impaired are substantially companies with good collection track records with the Group. The Groups trade and other receivables not past due amounted to VND1,651,987,314,538 (2011: VND1,353,317,082,254). (ii) Financial assets that are past due and/or impaired There is no other class of financial assets that is past due and/or impaired except for trade and other receivables. Trade and other receivables that are past due but not impaired are as follows:
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Form B 09 DN/HN
Form B 09 DN/HN
(b) Credit risk (continued) (ii) Financial assets that are past due and/or impaired (continued)
Unit: VND As at 31 December 2012 Past due 1 to 30 days Past due 31 days to 60 days Past due 61 days to 90 days Past due over 90 days 13,392,747,256 214,534,274 574,491,413 14,181,772,943 2011 15,058,558,138 287,717,434 630,000 3,727,445,863 19,074,351,435
(c) Liquidity risk Liquidity risk is the risk that the Group will encounter difficulty in meeting obligations associated with financial liabilities. The Groups policy is to regularly monitor current and expected liquidity requirements to ensure that the Group maintains sufficient reserves of cash to meet its liquidity requirements in the short and medium term. The Groups holdings of cash, together with net cash flows from operations, are expected to be sufficient to cover the Groups liabilities due in the next financial year. The table below analyses the Groups non-derivative financial liabilities into relevant maturity groupings based on the remaining period from the balance sheet date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.
Unit: VND Less than 1 year As at 31 December 2012 Between 1 and 2 years
The carrying amount of trade and other receivables determined to be impaired and the movement in the related allowance for impairment are as follows:
Unit: VND As at 31 December 2012 Carrying amount Gross amount Less: Allowance for impairment 7,427,162,147 (3,852,583,886) 3,574,578,261 Allowance for impairment Beginning of financial year Allowance made Written-off End of financial year 1,918,007,430 1,972,328,394 (37,751,938) 3,852,583,886 596,556,111 1,833,346,777 (511,895,458) 1,918,007,430 3,582,467,962 (1,918,007,430) 1,664,460,532 2011
Trade and other liabilities As at 31 December 2011 Trade and other liabilities
3,383,050,344,921
2,195,856,347,192
92,000,000,000
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Annual Report 2012
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Form B 09 DN/HN
Form B 09 DN/HN
(d) Fair value measurements The carrying value less provision of trade receivables, deposits and trade and other payables approximate to their fair values. Below are the fair values of short-term and long-term investments:
Unit: VND
(d) Fair value measurements (continued) Market value of equity securities listed on the Ho Chi Minh Stock Exchange is based on the closing prices of the last official trading date of the year at the Ho Chi Minh Stock Exchange. Market value of unlisted equity securities is based on the average of trading prices provided by 3 securities companies. Market value of investment funds is based on Net Asset Value of funds portfolio which is verified by the appointed securities company and supervising bank.
Compared to market value Book value Increase

As at 31 December 2012 Short-term investments Listed equity securities Unlisted equity securities Other long-term investments Investment funds 30,540,000,000 323,844,630,112 14,318,490,708 (14,355,884,467) (144,384,560,087) 16,184,115,533 193,778,560,733 (14,355,884,467) (144,384,560,087) 211,020,970,112 82,283,660,000 14,318,490,708 (61,470,408,420) (68,558,267,200) 163,869,052,400 13,725,392,800 (61,470,408,420) (68,558,267,200)
Market value Decrease
Provision
36. COMPARATIVE FIGURES

Certain comparative figures have been reclassified to conform to the current years presentation. The consolidated financial statements were approved by the Board of Directors on 28 February 2013.
As at 31 December 2011 Short-term investments Listed equity securities Unlisted equity securities Other long-term investments Listed equity securities Investment funds 206,996,073,800 106,350,000,000 420,623,505,592 5,973,328,500 17,736,131,208 (96,442,805,500) (45,907,987,129) (221,595,036,229) 116,526,596,800 60,442,012,871 216,764,600,571 (96,442,805,500) (45,907,987,129) (221,595,036,229) 24,993,771,792 82,283,660,000 11,762,802,708 (10,685,976,400) (68,558,267,200) 26,070,598,100 13,725,392,800 (10,685,976,400) (68,558,267,200)
Le Thanh Liem
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SALES OFFICES
Ha Noi branch Floor 11, Tower B, Handi Resco Tower, 521 Kim Ma Street, Ngc Khanh Ward, Ba Dinh District, Ha Noi Capital. Tel : (84 4) 37 246 019 Fax : (84 4) 37 246 005 Da Nang branch 12 Chi Lang Street, Hai Chau 2 Ward, Hai Chau District, Da Nang City Tel : (84 511) 3 584 848 Fax : (84 511) 3 897 223 Can Tho branch 86D Hung Vuong Street, Thoi Binh Ward, Ninh Kieu District, Can Tho City Tel : (84 710) 6 256 555 Fax : (84 710) 3 827 334
SUBSIDIARIES, ASSOCIATES
Vietnam Dairy Cow One Member Co., Ltd. 10 Tan Trao Street, Tan Phu Ward, District 7, Ho Chi Minh City Tel: (84 8) 54 155 555 Fax : (84 8) 54 161 226 Asia Saigon Food Ingredients JSC. Lot C- 9E - CN, My Phuoc 3 Industrial Park, Ben Cat District, Binh Dng province Tel : (84 650) 3 510 175 Fax : (84 650) 3 510 176 Website : www.afi.vn International Real Estate One Member Co., Ltd 10 Tan Trao Street, Tan Phu Ward, District 7, Ho Chi Minh City Tel: (84 8) 54 155 555 Fax : (84 8) 54 161 226 Miraka Limited 108 Tuwharetoa St, Taupo, New Zealand, PO Box 740, Taupo, 3351, New Zealand Tel : +64 7 376 0075 Fax: +64 7 377 0694 Lam Son Dairy One Member Co., Ltd. Le Mon Industrial Park, Thanh Hoa City, Thanh Hoa province Tel : (84 37) 3 912 540 Fax : (84 37) 3 912 541
FACTORY BRANCHES
Truong Tho Dairy Factory 32 Dang Van Bi Street, Truong Tho Ward, Thu Duc District, Ho Chi Minh City Thong Nhat Dairy Factory 12 Dang Van Bi Street, Truong Tho Ward, Thu Duc District, Ho Chi Minh City Tel : (84 8) 625 29 555 Fax : (84 8) 62 88 57 27 Nghe An Dairy Factory Sao Nam Street, Nghi Thu Ward, Cua L Town, Nghe An Province Tel : (84 38) 6 259 555 Fax : (84 38) 3 824 717 Tien Son Dairy Factory Tien Son Industrial Park, Hoan Son Ward, Tien Du District, Bac Ninh Province Tel : (84 241) 31 739 568 Fax : (84 241) 31 714 814 Viet Nam Dairy Factory Lot A-4-CN, A-5-CN, A-6-CN, My Phuoc 2 Industrial Park, Ben Cat District, Binh Duong Province (Construction in progress) Dielac Dairy Factory Bien Hoa I Industrial Park, Binh An Ward, Bien Hoa City, ong Nai Province Tel : (84 61) 6 256 555 Fax : (84 61) 3 836 015 Sai Gon Dairy Factory Lot 1-18, G1 Area, Tan Thoi Hiep Industrial Park Avenue 80, Hiep Thanh Ward, District 12, Ho Chi Minh City Tel : (84 8) 62528 555 Fax : (84 8) 37 176 353 Can Tho Dairy Factory Lot 46, Tra Noc I Industrial Park, Tra Noc Ward, Binh Thuy District, Can Tho City Tel : (84 710) 6 258 555 Fax : (84 710) 6 255 998 Da Nang Dairy Factory Lot Q, Road No. 7, Hoa Khanh Industrial Park, Lien Chieu District, Da Nang City Tel : (0511) 6259 777 Fax: (0511) 6259 555 Ho Chi Minh Logistics Enterprise 32 Dang Van Bi Street, Truong Tho Ward, Thu uc District, H Ch Minh City Tel : (84 8) 62 526 555 Fax : (84 8) 38 960 804 Ha Noi Logistics Enterprise Km 10/National road No. 5, Dng Xa Ward, Gia Lm District, H Ni Capital Tel : (84 4) 38 276 418 Fax : (84 4) 38 276 966 An Khang Clinic 87A Cach Mang Thang 8 Street, District 1, H Ch Minh City Tel : (84 8) 62 911 722 Fax : (84 8) 39 253 727 Vietnam Beverage Factory Lot A-2-CN, A-9-CN, My Phuoc 2 Industrial Park, Ben Cat District, Binh Duong Province Tel : (84 650) 3 556 839 Fax : (84 650) 3 556 890 Viet Nam Milk Powder Factory No. 9, Tu Do Avenue, Vietnam - Singapore Industrial Park I , Thuan An Town, Binh Duong Province (Construction in progress)
CONTACTS
Head office
10 Tn Tro Street, Tn Ph Ward, District 7, Ho Chi Minh City Tel: (84 8) 54 155 555 Fax : (84 8) 54 161 226 Email : vinamilk@vinamilk.com.vn Website : www.vinamilk.com.vn
Tel : (84 8) 62 527 555 Fax : (84 8) 38 966 884 Binh Dinh Dairy Factory 87 Hoang Van Thu Street, Quy Nhon City, Binh inh Province Tel : (84 56) 6 253 555 Fax : (84 56) 3 746 065
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Annual Report 2012
Head o ce 10 Tan Trao Street, Tan Phu Ward, District 7, Ho Chi Minh City Tel: (84 8) 54 155 555 Fax : (84 8) 54 161 226 Email : vinamilk@vinamilk.com.vn Web : www.vinamilk.com.vn

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Vinamilk

Never Stop Growing

12 | REPORT OF THE INSPECTION COMMITTEE 16 | REPORT OF THE BOARD OF EXECUTIVE DIRECTORS

BIND TO SCIENCE, NOURISH BRAINPOWER

Annual Report 2012

VINAMILK - Never Stop Growing

FINANCIAL CALENDAR 2012

for every 02 shares held) : 01/23/2013 : 01/25/2013

Annual General Meeting: Dividend:

Interim dividend of 2012 VND2,000 08/23/2012 09/06/2012

Annual Report 2012

VINAMILK - Never Stop Growing

FIVE-YEAR GROUP PERFORMANCE

(VND billion) 30,000 25,000 20,000 15,000

ar /ye 4% 3 27,102 e at th r w o gr age 22,071 ver a nd u o p Com 16,081

8,381 1,371 1,249

10,820 2,731 2,376

16,081 4,251 3,616

22,071 4,979 4,218

27,102 6,930 5,819

34% 50% 47%

Profit before tax

4,000 3,000 2,000 1,000 1,371

e ag ver 4,251 a nd ou mp o C 2,731

1,753 4,666 5,967 22 26,619

3,513 6,455 8,482 12 18,378

3,531 7,964 10,773 22,556

5,561 12,477 15,583 22,437

8,340 15,493 19,698 18,577

48% 35% 35%

2008 2009 2010 2011 2012

CAGR: Compound average growth rate

Annual Report 2012

VINAMILK - Never Stop Growing

VISION MISSION CORE VALUES

Integrity and transparency in actions and transactions.

To be fair with employees, customers, suppliers and other parties.

VINAMILK - Never Stop Growing

To: Honourable shareholders,

Mai Kieu Lien Chairwoman and Chief Executive Officer

Annual Report 2012

VINAMILK - Never Stop Growing

REPORT TO THE SHAREHOLDERSs MEETING

Closely control, improve transparency and increase corporate value

I. ACTIVITIES OF THE INSPECTION COMMITTEE

Monitoring the activities of BoM and BoD

REPORT OF THE INSPECTION COMMITTEE

III. CONCLUSIONS AND PROPOSALS

Monitoring the companys financial situation in 2012

Monitoring the companys activities through IA

Assisting Vinamilk in improving the Enterprise Risk Management (ERM) system

II. STRUCTURAL CHANGES OF THE INSPECTION COMMITTEE IN THE PERIOD OF 2012-2016

On behalf of the Inspection Committee

Nguyen Trung Kien Head of the Inspection Committee

Annual Report 2012

VINAMILK - Never Stop Growing

Maintain a strong financial position and focus on sustainable growing strategy

Dividend payments during the years:

REPORT OF THE BOARD OF EXECUTIVE DIRECTORS

Budget 26,480 5,625 4,690

% achieved 102% 123% 124%

Annual Report 2012