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TRAPHACO JOINT STOCK COMPANY

Audited Consolidated Financial Statements


for the year ended 31 December 2009
TRAPHACO JOINT STOCK COMPANY
75 Yen Ninh - Ba Dinh - Hanoi

CONTENTS
Pages

Report of The Board of Directors 02 - 04


Auditors’ Report 05
Audited Consolidated Financial Statements 06 - 26
Balance Sheet 06 - 08
Income Statement 09
Cash Flow Statement 10
Notes to the Financial Statements 11 - 26

1
TRAPHACO JOINT STOCK COMPANY
75 Yen Ninh - Ba Dinh - Hanoi

REPORT OF THE BOARD OF DIRECTORS


The Board of Directors of Traphaco Joint Stock Company (the “company”) presents its report and the Company’s
Consolidated financial statementsfor the year ended 31 December 2009.

COMPANY
Traphaco Joint Stock Company is a joint stock company which was transformed from State-owned Company into Joint-
Stock Company under Decision No. 2566/1999/QDD-BGTVT dated 27 September 1999 of Mister of Transport.

Company's transaction name is Traphaco Joint Stock Company.

Under Business License No 058437 issued by Hanoi office for Planning and Investment dated 24 December 1999 (the
11th amended on 14 December 2009), the Company’s business fields are:

- Purchasing, cultivating, processing medicinal herbs;


- Manufacturing and trading Pharmaceutical, chemicals and medical equipment;
- Making up a prescription;
- Consulting on producing pharmaceutical, cosmetics;
- Import and export raw materials for drugs and drug products;
- Manufacturing, trading cosmetics;
- Manufacturing, trading food;
- Consulting on Science and Technology services, Technology transfer in the field of medicine and pharmacy;
- Producing, sales of wine, beer, soft drinks (not including business in bars).
The company’s head office is located at 75 Yen Ninh - Ba Dinh - Hanoi.

Company's Legal capital: VND 101,981,500,000 (One hundred and one billion, ninety hundred eighty one million and
five hundred thousand Vietnamese Dongs). Equivalent to 10,198,150 shares with the price of VND 10,000 per share.

The Company’s member entities are as follows:


Name Address

- Hochiminh Branch Road No. 3/2, District No. 10 - Hochiminh City


- Da Nang Branch No. 255 Ton Duc Thang - Lien Chieu District - Da
Nang city
- Nam Dinh Branch Truong Han Sieu Road, Hoa Vuong urban area,
Nam Dinh city, Nam Dinh province.

The Company's subsidiaries are as follows:


Name Address

- Traphacosapa One Member Limited Company Sapa town - Sapa district - Lao Cai province

2
TRAPHACO JOINT STOCK COMPANY
75 Yen Ninh - Ba Dinh - Hanoi

BOARD OF MANAGEMENT, BOARD OF DIRECTORS AND BOARD OF CONTROLLERS

The members of the Board of Management are:


Ms. Vu Thi Thuan Chairman
Ms. Nguyen Thi Mui Vice Chairman
Mr. Nguyen Huy Van Member
Mr. Tran Tuc Ma Member
Ms. Hoang Thi Ruoc Member

The members of the Board of Directors are:


Ms. Vu Thi Thuan Genaral Director
Ms. Nguyen Thi Mui Deputy Genaral Director
Ms. Pham Thi Phuong Deputy Genaral Director
Mr. Nguyen Huy Van Deputy Genaral Director
Mr. Tran Tuc Ma Deputy Genaral Director

The members of the Board of Controllers are:


Mr. Nguyen Tat Van Head of Control Department
Ms. Nguyen Thi Kim Hoa Member
Ms. Nguyen Thi Hau Member

AUDITORS

The auditors of Auditing and Accounting Financial Consultancy Service Company Limited (AASC) take the audit of
financial statements for the Company.

STATEMENT OF THE BOARD OF DIRECTORS’ RESPONSIBILITY IN RESPECT OF THE


CONSOLIDATED FINANCIAL STATEMENTS
The Board of Directors is responsible for the Consolidated financial statements of each financial year which give a true
and fair view of the state of affairs of the Company and of its operation results and cash flows for the year. In preparing
those 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;
- State whether applicable accounting standards have been followed, subject to any material departures disclosed and
explained in the financial statements; and
- Prepare the financial statements on the basis of compliance with accounting standards and system and other related
regulations;
- Prepare the financial statements on going concern basis unless it is inappropriate to presume that the Company will
continue in business.

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

3
TRAPHACO JOINT STOCK COMPANY
75 Yen Ninh - Ba Dinh - Hanoi

We, The Board of Directors, confirm that the consolidated financial statements for the year ended 31 December 2009
prepared by us, give a true and fair view of the financial position at 31 December 2009, its operation results and cash
flows in the year 2009 of Company accordance with the Vietnamese Accounting System and comply with relevant
statutory requirements.

Other commitments
The Board of Directorspledges that the company does not offend obligation of information disclosure under regulation
in Circular No.38/2007/ND-CP dated 18 April 2007 issued by Ministry of Finance guiding disclosure of information on
Securities Market.

Hanoi, 25 January 2010


On behalf of The Board of Directors
Genaral Director

Vu Thi Thuan

4
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No.: /2010/BC.KTTC-AASC.KT2

AUDITORS’ REPORT
On the consolidated financial statements for the year ended 31 December 2009
of Traphaco Joint Stock Company

To: The Board of Management and The Board of Directors


Traphaco Joint Stock Company

We have audited the consolidated financial statements of Traphaco Joint Stock Company prepared on 25
January 2010 including: Balance Sheet as at 31 December 2009, Income Statement, Cash Flow Statement and
Notes to Financial Statements for the year ended 31 December 2009 as set out on pages 06 to 26.

These financial statements are the responsibility of the Company’s Boad of Directors. Our responsibility is to
express an opinion on these financial statements based on our audit.

Basis of opinion
We conducted our audit in accordance with Vietnamese and International standards on Auditing. Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit also includes assessing the
compliance with current accounting standards and system and the accounting principles used and significant
estimates made by Boad of Directors, as well as evaluating the overall financial statements presentation. We
believe that our audit provides a reasonable basis for our opinion.

Auditor’s opinion
In our opinion, the Consolidated Financial Statements of Traphaco Joint Stock Company give a true and fair
view, in all material respects, of the financial position of the Company as at 31 December 2009, and of the
results of its operations and its cash flows for the year then ended in accordance with the Vietnamese
Accounting Standards and system and comply with relevant statutory requirements.

Hanoi, 02 March 2010


Auditing and Accounting Financial Consultancy
Service Company Limited (AASC)
Deputy Genaral Director Auditor

Nguyen Thanh Tung Vu Xuan Bien


Registered Auditor No : Đ0063/KTV Registered Auditor No : 0743/KTV

5
TRAPHACO JOINT STOCK COMPANY Consolidated Financial Statements
75 Yen Ninh - Ba Dinh - Hanoi for the year ended 31/12/2009

CONSOLIDATED BALANCE SHEET


As at 31 December 2009

Code ASSETS Note 31/12/2009 01/01/2009


VND VND

100 A CURRENT ASSETS 341,632,940,979 303,875,667,943

110 I Cash and cash equivalents 5,433,848,068 10,176,464,217


111 1 Cash 3 5,433,848,068 10,176,464,217

120 II Short-term investments 4 567,000,000 17,979,000,000


121 1 Short-term investments 567,000,000 17,979,000,000

130 III Short-term accounts receivable 214,450,965,933 125,238,881,707


131 1 Trade receivables 195,362,720,322 115,851,478,910
132 2 Advances to suppliers 19,928,466,029 8,995,485,978
135 5 Other receivables 5 952,046,187 2,446,307,621
139 6 Provisions for short-term bad debts (*) (1,792,266,605) (2,054,390,802)

140 IV Inventory 117,964,375,418 147,374,323,214


141 1 Inventory 6 117,964,375,418 147,374,323,214

150 V Other current assets 3,216,751,560 3,106,998,805


152 2 VAT deductibles 912,747,483 489,100,420
158 4 Other current assets 2,304,004,077 2,617,898,385

200 B NON- CURRENT ASSETS 64,519,024,042 55,443,872,102

220 II Fixed assets 59,686,632,638 51,463,788,652


221 1 Tangible fixed assets 7 43,011,342,405 35,207,972,145
222 - Cost 107,005,421,817 90,501,419,809
223 - Accumulated depreciation (*) (63,994,079,412) (55,293,447,664)
227 3 Intangible fixed assets 8 15,322,132,165 12,764,332,165
228 - Cost 15,322,132,165 12,764,332,165
229 - Accumulated amortization (*) - -
230 4 Construction in progress 9 1,353,158,068 3,491,484,342

250 IV Long-term investments 10 2,250,000,000 3,925,000,000


252 2 Investments in joint-ventures, associates - 1,675,000,000
258 3 Other long-term investments 2,250,000,000 2,250,000,000

260 V Other long-term assets 2,582,391,404 55,083,450


261 1 Long-term prepaid expenses 11 1,037,533,963 -
262 2 Deferred tax assets 16 117,016,342 -
268 3 Other long-term assets 51,647,950 55,083,450

269 VI GOODWILL 1,376,193,149 -

270 C TOTAL ASSETS 406,151,965,021 359,319,540,045

6
TRAPHACO JOINT STOCK COMPANY Consolidated Financial Statements
75 Yen Ninh - Ba Dinh - Hanoi for the year ended 31/12/2009

CONSOLIDATED BALANCE SHEET


As at 31 December 2009
(continue)

Code RESOURCE Note 31/12/2009 01/01/2009


VND VND

300 A LIABILITIES 142,073,906,846 101,920,924,930

310 I Current liabilities 138,366,085,438 98,264,962,144


311 1 Short-term loans and debts 12 57,641,177,489 25,242,998,187
312 2 Trade payables 26,986,122,350 48,147,285,280
313 3 Advances from customers 601,842,491 913,763,336
314 4 Tax payables and statutory obligations 13 15,885,064,778 11,925,684,495
315 5 Payables to employees 11,198,182,269 2,792,357,498
316 6 Accrued expenses 14 1,502,795,766 258,833,890
319 9 Other payables 15 24,550,900,295 8,984,039,458

330 II Long-term liabilities 3,707,821,408 3,655,962,786


336 6 Provision for unemployment allowances 3,707,821,408 3,655,962,786

400 B OWNER’S EQUITY 264,078,058,175 257,398,615,115

410 I Equity 17 259,176,886,996 252,597,691,351


411 1 Contributed legal capital 101,981,500,000 80,000,000,000
412 2 Share captial surplus 92,063,700,000 112,460,000,000
414 4 Treasury stocks (*) (2,520,000) -
416 6 Foreign exchange differences (407,499,441) -
417 7 Invesment and development fund 54,907,930,557 51,509,961,947
418 8 Financial reserve fund 11,202,531,576 8,627,729,404
420 10 Retained profit (568,755,696) -

430 II Other capital and funds 4,901,171,179 4,800,923,764


431 1 Bonus and welfare fund 5,123,316,839 4,967,619,424
432 2 Subsidized not-for-profit funds 18 (222,145,660) (166,695,660)

439 C MINORITY INTEREST - -

440 C TOTAL RESOURCE 406,151,965,021 359,319,540,045

7
TRAPHACO JOINT STOCK COMPANY Consolidated Financial Statements
75 Yen Ninh - Ba Dinh - Hanoi for the year ended 31/12/2009

OFF-BALANCE SHEET ACCOUNTS


Unit: VND

Item Note 31/12/2009 01/01/2009

5 Foreign currencies - -
- USD 3,139.29 6,466.82

Prepared, 25 January 2010


Prepared by Chief Accountant Genaral Director

Nguyen Ngoc Thuy Dinh Trung Kien Vu Thi Thuan

8
TRAPHACO JOINT STOCK COMPANY Consolidated Financial Statements
75 Yen Ninh - Ba Dinh - Hanoi for the year ended 31/12/2009

CONSOLIDATED INCOME STATEMENT


Year 2009

Code Item Note Year 2009 Year 2008


VND VND

01 1 Revenue from sale of goods and rendering of


services 19 753,766,984,836 785,388,835,470

02 2 Deductible items 6,725,899,684 5,205,801,832

10 3 Net revenue from sale of goods and rendering


of services 747,041,085,152 780,183,033,638

11 4 Cost of goods sold 20 531,919,771,171 618,890,990,912

20 5 Gross profit from sale of goods and rendering


of services 215,121,313,981 161,292,042,726

21 6 Revenue from financial activities 21 4,637,720,698 5,588,999,458


22 7 Financial expenses 22 6,793,842,404 4,432,974,633
23 In which: Interest payable 4,619,625,653 3,750,061,772
24 8 Selling expenses 99,426,062,384 71,986,868,831
25 9 Administrative expenses 39,046,083,826 31,291,566,476

30 10 Net profit from operating activities 74,493,046,065 59,169,632,244

31 11 Other income 682,158,597 58,113,400


32 12 Other expense 5,618,209,988 432,157,194

40 13 Other profit (4,936,051,391) (374,043,794)

50 14 Total profit before tax 69,556,994,674 58,795,588,450

51 15 Current business income tax expenses 23 18,626,847,235 12,757,211,817


52 16 Deferred business income tax expenses 16 (117,016,342) -

60 17 Profit after tax 51,047,163,781 46,038,376,633

70 18 Basic earnings per share 24 6,231 5,755

Prepared, 25 January 2010


Prepared by Chief Accountant Genaral Director

Nguyen Ngoc Thuy Dinh Trung Kien Vu Thi Thuan

9
TRAPHACO JOINT STOCK COMPANY Consolidated Financial Statements
75 Yen Ninh - Ba Dinh - Hanoi for the year ended 31/12/2009

CONSOLIDATED CASH FLOWS STATEMENT


(Under direct method)
Year 2009
Code Item Note Year 2009 Year 2008
VND VND
I Cash flows from operating activities
01 1 Revenue from sale of goods and rendering 744,871,239,452 655,877,062,327
services and other revenue
02 2 Cash paid to suppliers (667,120,049,298) (563,272,012,664)

03 3 Cash paid to employees (52,295,779,564) (50,824,173,730)


04 4 Interest paid (4,592,013,273) (3,750,061,772)
05 5 Enterprise income tax paid (15,447,106,815) (9,384,801,482)
06 6 Other receipts from operating activities 6,527,780,784 2,415,437,240
07 7 Other expenses on operating activities (48,617,335,778) (43,998,903,231)

20 Net cash flows from operating activities (36,673,264,492) (12,937,453,312)

II Cash flow from investing activities


21 1 Purchase of fixed assets and other long-term (6,538,674,589) (4,668,857,566)
assets
22 2 Proceeds from disposals of fixed assets and other 215,000,000 40,000,000
long-term assets
23 3 Loans to other entities and purchase of debt (2,660,000,000) (15,000,000,000)
instruments of other entities
24 4 Repayment from borrowers and proceeds from 20,501,500,000 -
sales of debt instruments of other entities
27 7 Interest, dividends and profit received 4,534,632,630 4,157,668,805

30 Net cash flows from investing activities 16,052,458,041 (15,471,188,761)

III Cash flows from financing activities


32 2 Fund returned to equity owners, issued stock (2,520,000) -
redemption
33 3 Long-term and short-term borrowings received 86,278,056,712 10,552,000,000
34 4 Loan repayment (53,879,877,410) (80,214,400,001)
36 6 Dividends, profit paid to equity owners (16,517,469,000) (15,679,401,600)
40 Net cash flows from financing activities 15,878,190,302 (85,341,801,601)
50 Net cash flows within the period (4,742,616,149) (113,750,443,674)
60 Cash and cash equivalents at the beginning of 10,176,464,217 123,921,091,009
year
61 Impact of foreign exchange fluctuation - 5,816,882

70 Cash and cash equivalents at the end of year 3 5,433,848,068 10,176,464,217

Prepared, 25 January 2010


Prepared by Chief Accountant Genaral Director

Nguyen Ngoc Thuy Dinh Trung Kien Vu Thi Thuan

10
TRAPHACO JOINT STOCK COMPANY Consolidated Financial Statements
75 Yen Ninh - Ba Dinh - Hanoi for the year ended 31/12/2009

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


Year 2009

1 . BACKGROUND
The form of owner's equity
Traphaco Joint Stock Company is a joint stock company which was transformed from State-owned Company into
Joint- Stock Company under Decision No. 2566/1999/QDD-BGTVT dated 27 September 1999 of Mister of
Transport.
The company’s head office is located at 75 Yen Ninh - Ba Dinh - Hanoi.

The Company’s member entities are as follows:


Name Address
- Hochiminh Branch Road No. 3/2, District No. 10 - Hochiminh City
- Da Nang Branch No. 255 Ton Duc Thang - Lien Chieu District - Da
Nang city
- Nam Dinh Branch Truong Han Sieu Road, Hoa Vuong urban area,
Nam Dinh city, Nam Dinh province.

The Company's subsidiaries are as follows:


- Traphacosapa One Member Co., Ltd
The Company's head office is located at Sapa town - Sapa district - Lao Cai Province
Percentage of benefit: 100%
Percentage of rights to vote: 100%
Traphacosapa One Member Limited Company officially became Subsidiary of Traphaco Joint Stock Company on
24 June 2009.
The main activities of Traphacosapa One Member Limited Company are:
- Cultivating and processing medicinal, agricultural and forest products and food;
- Producing, trading pharmaceutical products, medicinal herbs, food;
- Receiving, transferring technology cultivation, processing, manufacturing medicinal;
- Import and export pharmaceutical materials, raw materials for producing of medicines;
- Import and export of agricultural and forest products, chemicals;
- Producing and trading of wine, beer, soft drinks, cosmetics.

Principal activities
Principal activities of the Company are: Pharmaceutical field.

Business field

Under Business License No 058437 issued by Hanoi office for Planning and Investment dated 24 December 1999
(the 11th amended on 14 December 2009), the Company’s business fields are:

- Purchasing, cultivating, processing medicinal herbs;


- Manufacturing and trading Pharmaceutical, chemicals and medical equipment;
- Making up a prescription;
- Consulting on producing pharmaceutical, cosmetics;
- Import and export raw materials for drugs and drug products;
- Manufacturing, trading cosmetics;

11
TRAPHACO JOINT STOCK COMPANY Consolidated Financial Statements
75 Yen Ninh - Ba Dinh - Hanoi for the year ended 31/12/2009

- Manufacturing, trading food;


- Consulting on Science and Technology services, Technology transfer in the field of medicine and pharmacy;
- Producing, sales of wine, beer, soft drinks (not including business in bars).

2 . ACCOUNTING SYSTEM AND ACCOUNTING POLICY


Annual accounting period commences from 1st January and ends on 31st December.
The Company maintains its accounting records in VND.

Accounting Standards and Accounting system

Accounting System

The company applies Enterprise Accounting System issued under Decision No.15/2006/QĐ-BTC dated 20
March, 2006 by Minister of Finance.

Announcement on compliance with Vietnamese standards and accounting system

The company applies Vietnamese Accounting Standards and supplement documents issued by the State. Financial
statements are prepared in accordance with regulations of each standard and supplement documents as well as
with current accounting system.

Form of accounting record


The company is applying accounting record by General Journal.

Basis for consolidation of financial statements


Consolidated financial statements are prepared based upon consolidating separate financial statements of the
Company and subsidiaries under its control as at 31 December annually. Control rights is in practice when the
company has power to govern the financial and operating policies of invested companies to obtain benefits from
their activities.

Financial statements of subsidiaries are prepared for the same fiscal year with that of parent companies. If
necessary, financial statements of subisidaries may be adjusted to ensure the consistence between accounting
policies applied at the company and its subsidiaries.

Operation results of subsidiaries which were purchased or liquidated in the period are presented on consolidated
financial statements since the purchasing or liquidated dates.

Balance, main income and expense, including unrealized profits from intra-group transactions are eliminated in
full from consolidated financial statements.

Minority interest reflecting profits or losses and net assets which are not held by shareholders of the company will
be presented in a separate item on consolidated balance sheet and consolidated income statement.

Goodwill

Goodwill presented on consolidated financial statements is the surplus between its purchase cost and benefit of
the company in total fair value of assets, liabilities and contingent liabilities of subsidiaries, associates or joint
ventures at the investment date. Goodwill is treated as intangible fixed assets, amortized under straight-line basis
with estimated useful life not beyond 10 years.

When selling subsidiaries, associates and joint ventures, the carrying amount of goodwill which is not fully
amortised is accounted into profit/loss of the selling transaction.

12
TRAPHACO JOINT STOCK COMPANY Consolidated Financial Statements
75 Yen Ninh - Ba Dinh - Hanoi for the year ended 31/12/2009

Recognition of cash and cash equivalents

Cash and cash equivalents comprise cash on hand, cash in banks and short term, highly liquid investment with an
original maturity of three months or less since the date of financial statements which are readily convertible into
known amounts of cash without notice.

Recognition of Provision for bad debts


The provision for bad debts has been made for receivables that were outstanding for 6 months and over from the
balance sheet date or were difficult to be paid due to the debtors were in liquidation, insolvency or other similar
difficulties.

Recognition of inventory

Inventories are stated at original cost. Where the net realizable value is lower than cost, inventories should be
measured at the net realizable value. The cost of inventories should comprise all costs of purchase, costs of
conversion and other costs incurred in bringing the inventories to their present location and condition.

The cost of inventory at the year-end is calculated by weighted average method.

Inventory is recorded by perpetual method.

Provisions for inventories obsolescence made at the end of the year are the excess of original cost of inventory
over their net realizable value.

Recognition and depreciation of fixed assets

Fixed assets (tangible and intangible) are stated at the historical cost. During the using time, fixed assets (tangible
and intangible) are recorded at cost, accumulated depreciation (armotisation) and net book value.

The cost of finance lease fixed assets is recognised at fair value or present value of the minimum lease payments
(excluded value added tax) and initial cost directly attributable to finance lease fixed assets. During the using
time, finance lease fixed assets are recorded at cost, accumulated depreciation and net book value.

Depreciation is provided on a straight-line basis. Annual rates calculated to write off the cost of each asset evenly
over its expected useful life as follows:

- Buildings 15 - 25 year
- Machinery, equipment 03 - 07 year
- Transportation equipment 05 - 08 year
- Office equipment and furniture 03 - 06 year
- Other properties 05 - 15 year

Recognition of financial investment

Investments in subsidiaries over which the Company has control are stated at original cost. Distributions from
accumulated net profits from subsidiaries arising subsequent to the date of acquisition are recognized in the
Income Statement. Other distributions received (in excess of such profits) are considered a recovery of investment
and are deducted to the cost of the investment.

Securities investment at the balance sheet date, if:

- Having maturity not over than 3 months from the date of acquisition are recognised as “cash equivalents”;

- Having maturity less than 1 year/1 operating cycle are recognised as short-term assets;
- Having maturity over than 1 year/1 operating cycle are recognised as long-term assets.

13
TRAPHACO JOINT STOCK COMPANY Consolidated Financial Statements
75 Yen Ninh - Ba Dinh - Hanoi for the year ended 31/12/2009

Provisions for devaluation of investments are made based on the excess of original cost in accounting books over
their market value at year-end.

Recognition and capitalization of borrowing costs


Borrowing costs are recognized into operating costs during the period, except for which directly attributable to
the acquisition, construction or production of a qualifying asset included (capitalized) in the cost of that asset,
when gather sufficient conditions as regulated in SAV No. 16 “Borrowing costs”.

Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset
should be included (capitalized) in the cost of that asset, includes interest on borrowings, amortization of
discounts or premiums relating to issuing bonds and ancillary costs incurred in connection with the arrangement
of borrowings.

Recognition and allocation of prepaid expenses

Prepaid expenses only related to present fiscal year are recognised as short-term prepaid expenses and are
allocated into operating costs.

The following types of expenses incurred during the year are recorded as long-term prepaid expenses, and are
amortised to the income statement in several years:
- Test run and trial production costs;
- Tools and consumables with large value issued into production;
- Substantial expenditure on fixed asset overhaul.

The calculation and allocation of long-term prepaid expenses to profit and loss account in the period should be
based on nature of those expenses to choose reasonable method and allocated factors. Prepaid expenses are
allocated partly into operating expenses on a straight-line basis.

Recognition of accrued expenses


Expenses not yet occurred may be charged in advance into production and operating costs in order to ensure
when these expenses arise, they do not make material influence on production and operating costs on the basis of
suitability between revenue and cost. When these expenses arise, if there is any difference with the amount
charged, accountants additionally record or make decrease to cost equivalent to the difference.

Recognition of provision

Value of a provision is a reasonable estimate of an amount used to settle present liabilities at the balance sheet
date.

Only expenditures that relate to the original provision are set against it.

In case provision set for the previous period but not used up exceeds the one set for the current period, the
difference is recorded as decrease in production and operation expenditures. This method is not applied for
provision for warranty of construction work that is recorded into other income.

Recognition of owner’s equity

Owner’s equity is stated at actually contributed capital of owners.


Premium reserve is recorded by the difference (over/under) between the selling price and the par value of treasury
stocks when stocks are firstly or additionally issued or reissued.
Exchange difference on Balance sheet is the dfference revaluating foreign currency monetary items and short-
term liabilities at the ended term.

14
TRAPHACO JOINT STOCK COMPANY Consolidated Financial Statements
75 Yen Ninh - Ba Dinh - Hanoi for the year ended 31/12/2009

Undistributed earnings is the profit of business operations after deduction (-) regulated items due to applying a
change in accounting retrospectively or to make a retrospective restatement to correct materiality in previous year.

Net profit after tax is available for appropriation to investors after approval by Board of Management and after
making appropriation to financial reserve funds and other funds in accordance with the Company’s Charter and
Vietnamese regulatory requirements.

Dividends to be paid to shareholders are recognised as a payable in Balance sheet after declaration from the
Board of management.

Foreign currency transactions


Transactions in currencies other than accounting unit of the Company (VND/USD) are recorded at the rate of
exchange ruling at the dates of transactions (or at the inter-bank exchange rate). Monetary assets denominated in
foreign currencies are revalued at the inter-bank exchange rate issued by the State Bank of Vietnam at the balance
sheet date. All exchange differences arising on settlement will be recorded into the financial income or expense in
the fiscal year.

Principles and method of recording revenue

Revenue from sale of goods

Revenue from sale of goods should be recognised when all the following conditions have been satisfied:

- The significant risks and rewards of ownership of the goods have been transferred to the buyer;
The Company retains neither continuing managerial involvement as a neither owner nor effective control over
-
the goods sold;
- The amount of revenue can be measured reliably;
- The economic benefits associated with the transaction of goods sold have flown or will flow to the Company;
- The costs incurred or to be incurred in respect of the transaction of goods sold can be measured reliably.

Revenue from rendering of services


Revenue from rendering of services is recognised when the outcome of that transaction can be measured reliably.
Where a transaction involving the rendering of services is attributable to several periods, each period’s revenue
should be recognised by reference to the stage of completion at the balance sheet date. The outcome of a
transaction can be estimated reliably when all the following conditions are satisfied:
- The amount of revenue can be measured reliably;
- It is probable that the economic benefits associated with the transaction will flow to the Company;
- The stage of completion of the transaction at the balance sheet date can be measured reliably;
- The costs incurred for the transaction and the costs to complete the transaction can be measured reliably.

The stage of completion of a transaction may be determined by surveys of work completed method

Financial income
Income from interest, royalties and dividends and other financial income earned by the Company should be
recognised when these two conditions are satisfied:
- It is probable that the economic benefits associated with the transaction will flow to the Company;
- The amount of the income can be measured reliably.

Dividends should be recognised when the Company’s right to receive payment is established

15
TRAPHACO JOINT STOCK COMPANY Consolidated Financial Statements
75 Yen Ninh - Ba Dinh - Hanoi for the year ended 31/12/2009

Revenue from construction contract

Revenue is recognised based on completed stage of construction contract, completed stage is measured by
reference to actual expenses of completed work incurred to date as a percentage of total estimated expenses for
each contract.

Recognition of financial expenses


Items recorded into financial expenses consist of:
- Expenses or losses relating to financial investment activities;
- Expenses of capital lending and borrowing;
- Loss due to foreign exchange differences arising from transactions relating to foreign currencies;
- Provision for devaluation of securities investment.
The above items are recorded by the total amount arising within the period without compensation to financial
revenue.

Principles and method of recording tax


Current tax

Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be
recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are
those that are enacted by the balance sheet date.

Deferred income tax

Deferred tax is provided using the balance sheet liability method on temporary differences at the balance sheet
date between the tax base of assets and liabilities and their carrying amount for financial reporting purpose.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply in the year when
the asset realised or the liability is settled based on tax rates and tax laws that have been enacted at the balance
sheet date.

Change in accounting policy in the year


From 2009, Exchange differences arising on revaluation monetary assets and short-term debts denominated in
foreign currencies at the year end will be recorded to Account No. 413 – “Differences from foreign exchange
rate”. Exchange differences arising on revaluation long-term debts denominated in foreign currencies at the year
end will be recorded into the financial income or expense in the fiscal year.

16
TRAPHACO JOINT STOCK COMPANY Consolidated Financial Statements
75 Yen Ninh - Ba Dinh - Hanoi for the year ended 31/12/2009

3 . CASH
31/12/2009 01/01/2009
VND VND
Cash on hand 1,039,425,204 944,445,604
Cash at bank 4,394,422,864 9,232,018,613

Total 5,433,848,068 10,176,464,217

4 . SHORT- TERM FINANCIAL INVESTMENTS


31/12/2009 01/01/2009
VND VND
Other Short-term investments (lending) 567,000,000 17,979,000,000

Total 567,000,000 17,979,000,000

5 . OTHER SHORT- TERM RECEIVABLES


31/12/2009 01/01/2009
VND VND
Others 952,046,187 2,446,307,621
- Receivables from collaborators 345,565,400 -
- Mr. Hoang Ngoc Dai 400,232,802 400,232,802
- Other receivables in Traphaco Joint Stock Company 135,152,485 2,046,074,819
- Other receivables in Traphacosapa One Member Co., ltd 71,095,500 -
Comprising: Dang Thi Mo 20,000,000 -
Tran The Anh 22,000,000 -
Luong Thu Huong 23,500,000 -
Nguyen Thi Ly 5,000,000 -
Others 595,500 -

Total 952,046,187 2,446,307,621

6 . INVENTORY
31/12/2009 01/01/2009
VND VND
Raw material 53,012,562,810 66,267,040,776
Work in process 14,453,635,399 13,117,589,707
Finished goods 21,030,960,047 25,302,044,960
Merchandise 29,467,217,162 42,687,647,771

Total cost of inventories 117,964,375,418 147,374,323,214

17
TRAPHACO JOINT STOCK COMPANY Consolidated Financial Statements
75 Yen Ninh - Ba Dinh - Hanoi for the year ended 31/12/2009

7 . INCREASE AND DECREASE IN TANGIBLE FIXED ASSETS


Unit: VND
Machinery, Transportation Manegement
Item Buildings Total
equipment equipment equipment
I. Original cost
1. Opening balance 30,789,720,238 32,665,983,674 17,040,091,573 10,005,624,324 90,501,419,809
2. Increase 8,686,709,223 3,896,976,504 3,746,658,280 1,182,900,651 17,513,244,658
- Purchase in the year - 3,601,197,164 3,746,658,280 1,182,900,651 8,530,756,095
- Finished construction investment 7,814,316,151 - - - 7,814,316,151
- Others 872,393,072 295,779,340 - - 1,168,172,412
3. Decrease - 333,866,363 627,612,215 47,764,072 1,009,242,650
- Liquidating, disposing - 333,866,363 627,612,215 47,764,072 1,009,242,650
4. Closing balance 39,476,429,461 36,229,093,815 20,159,137,638 11,140,760,903 107,005,421,817
II. Accumulated depreciation - - - - -
1. Opening balance 16,105,359,895 20,541,902,223 11,160,154,080 7,486,031,466 55,293,447,664
2. Increase 2,784,091,512 3,486,180,239 1,844,876,795 1,422,614,219 9,537,762,765
- Depreciation within period 2,159,053,440 3,190,400,899 1,844,876,795 1,422,614,219 8,616,945,353
- Others 625,038,072 295,779,340 - - 920,817,412
3. Decrease - 333,866,363 455,500,582 47,764,072 837,131,017
- Liquidating, disposing - 333,866,363 455,500,582 47,764,072 837,131,017
4. Closing balance 18,889,451,407 23,694,216,099 12,549,530,293 8,860,881,613 63,994,079,412
III. Net book value - - - - -
1. Opening 14,684,360,343 12,124,081,451 5,879,937,493 2,519,592,858 35,207,972,145
2. Closing 20,586,978,054 12,534,877,716 7,609,607,345 2,279,879,290 43,011,342,405
In which:
- Ending netbook value of tangible fixed assets pledged as loan securities: VND 11,475,272,593;
- Cost of fully depreciated tangible fixed assets but still in use in Traphaco Joint Stock Company: VND 26,440,346,094;
- Cost of fully depreciated tangible fixed assets but still in use in Traphacosapa One Member Limited Company: VND 295,779,340;
- Other increase is the value of asset transfered from Traphacosapa Limited Company to Traphacosapa One member Limited Company.

18
TRAPHACO JOINT STOCK COMPANY Consolidated Financial Statements
75 Yen Ninh - Ba Dinh - Hanoi for the year ended 31/12/2009

8 . INCREASE AND DECREASE IN INTANGIBLE FIXED ASSETS


Other intangible
Item Land use rights fixed assets Total
I. Original cost
1. Opening balance 12,764,332,165 - 12,764,332,165
2. Increase 2,557,800,000 - 2,557,800,000
- Purchase in the year 2,557,800,000 - 2,557,800,000
3. Decrease - - -
4. Closing balance 15,322,132,165 - 15,322,132,165
II. Accumulated depreciation
1. Opening balance - - -
4. Closing balance - - -
III. Net book value
1. Opening 12,764,332,165 - 12,764,332,165
2. Closing 15,322,132,165 - 15,322,132,165

9 . CONSTRUCTION IN PROGRESS
31/12/2009 01/01/2009
VND VND
Construction in progress 1,353,158,068 3,491,484,342
- New office construction in Hochiminh Branch 47,902,584 43,813,182
- New office construction in Hoang Liet 622,559,591 3,447,671,160
- New office construction in Yen Ninh 588,042,802 -
- New office construction in Nghe An 67,454,455 -
- New office construction in Thanh Hoa 10,073,636 -
- Other constructions 17,125,000 -

Total 1,353,158,068 3,491,484,342

10 . LONG- TERM INVESTMENTS


31/12/2009 01/01/2009
VND VND
Investments in associates, joint venture - 1,675,000,000
- Traphacosapa One Member Limited Company (*) - 1,675,000,000
Other long-term investments 2,250,000,000 2,250,000,000
- Traphaco High Tech Joint Stock Company 2,250,000,000 2,250,000,000

Total 2,250,000,000 3,925,000,000

(*) On 24/6/2009, Traphaco Joint Stock Company has bought the shares of other shareholders in Trapacosapa
Limited Company, Trapacosapa Limited Company has become Traphacosapa One Member Limited Company -
Subsidiary of Traphaco Joint Stock Company.

11 . LONG-TERM PREPAID EXPENSES


31/12/2009 01/01/2009
VND VND
Tools and consumables with large value issued into production 44,000,000 -
Repairing factory in Hoang Liet 993,533,963 -
Total 1,037,533,963 -

19
TRAPHACO JOINT STOCK COMPANY Consolidated Financial Statements
75 Yen Ninh - Ba Dinh - Hanoi for the year ended 31/12/2009

12 . SHORT-TERM LOANS AND DEBTS


31/12/2009 01/01/2009
VND VND
Short-term loans 57,641,177,489 25,242,998,187
- From banks 39,651,321,489 -
- From other entities 17,989,856,000 25,242,998,187

Total 57,641,177,489 25,242,998,187

Short-term loans:
Type of
Balance of loan
Loan agreement Interest rate Term Total principle secure

Bank for Investment and Development of Vietnam - Transaction office No. III
Contract No. 10,5% - 12% 6 months 2,266,065,286 2,266,065,286 Pledged (*)
01/2467488/2009/HĐTD
Contract No. 10.50% 3 months 6,216,729,742 6,216,729,742 Pledged (*)
02/2467488/2009/HĐTD
Contract No. 4,717,912,088 4,717,912,088 Pledged (*)
03/2467488/2009/HĐTD
- From 17/11/2009 to 16/02/2010 10.50% 6 months
- From 17/02/2010 to 17/05/2010 saving interest 6 months
+ 2,7%/annum

Debt Receipt from No. 15 to 23 10.3% -10.5% 6 months 29,597,703,529 26,450,614,373 Pledged (**)

Other individuals 12.00% 6 -12 months 17,989,856,000 17,989,856,000

Total 60,788,266,645 57,641,177,489

(*) Pledges including:


- All balance of cash in bank in VND and in foreign currency of Borrow Party in Bank and other credit
institution.
- All trade receivables under Business contract signed by Borrow Party and the partners, in which Borrow Party is
the beneficiary and other legal receivables of Borrow Party.
- Assets established in future generated by L/C opened by the Bank to the Borrower and/or assets established in
the future generated by own capital or bank loans.
- All other assets under and will be under the management or ownership of the borrower such as inventory, fixed
assets, land use rights, capital contribute in other entities, other property right ...

(*) Pledges including:


- Factory associated with land use rights and machinery in factories producing drugs in Hoang Liet, worth of
assets are USD 13.162 billion.
- Pledge is office in Hochiminh Branch - Traphaco Joint Stock Company, address No. 108/14/28, Road No. 3/2,
Ward No. 14, District No. 10, Hochiminh City, total assets value are VND 3,870,000,000.
- Pledge is office in Da Nang Branch - Traphaco Joint Stock Company in 255 Ton Duc Thang, Minh Hoa ward,
Lien Chieu Districts, Da Nang City, asset's value is VND 3,480,000,000.
- Pledges are machinery producing drugs, transportation vehicle, assets' value is VND 15,953,000,000.

20
TRAPHACO JOINT STOCK COMPANY Consolidated Financial Statements
75 Yen Ninh - Ba Dinh - Hanoi for the year ended 31/12/2009

13 . TAX AND STATUTORY OBLIGATIONS


31/12/2009 01/01/2009
VND VND
VAT 595,467,799 351,454,834
Export, import duties 16,881,501 137,444,494
Business income tax 14,316,946,466 8,569,795,866
Personal income tax 955,769,012 2,866,989,301

Total 15,885,064,778 11,925,684,495

The Company’s tax settlements are subject to examination by the tax authorities. Because the application of tax
laws and regulations on many types of transactions is susceptible to varying interpretations, amounts reported in
the financial statements could be changed at a later date upon final determination by the tax authorities.

14 . ACCRUED EXPENSES
31/12/2009 01/01/2009
VND VND
Electrics, water expense of December in Hoang Liet 104,774,600 -
Advertising expense 463,367,270 -
Renting store 240,000,000 -
Accrued loan interest expenses 27,612,379 -
Other accrued expenses 667,041,517 258,833,890

Total 1,502,795,766 258,833,890

15 . OTHER SHORT-TERM PAYABLES


31/12/2009 01/01/2009
VND VND
Trade union fund 276,703,948 -
Social insurance 6,665,999 -
Health insurance 1,206,691 7,701,416
Others 24,266,323,657 8,976,338,042
- Payables to employees - 3,109,709,961
- State capital Investment Corporation (SCIC) - 3,520,598,400
- Scientific research group named Mr. Nguyen Khac Vien 2,313,246,120 -
- Boad of Mangement and Boad of Controllers fee 638,851,694 -
- Divident for the fiscal year 2009 20,750,542,400 -
- Others 563,683,443 2,346,029,681

Total 24,550,900,295 8,984,039,458

16 . DEFERRED TAX ASSETS AND DEFERRED TAX LIABILITIES


Deferred tax assets
31/12/2009 01/01/2009
VND VND

Deferred tax assets related to temporary differences 117,016,342 -

Deferred tax assets 117,016,342 -

21
TRAPHACO JOINT STOCK COMPANY Consolidated Financial Statements
75 Yen Ninh - Ba Dinh - Hanoi for the year ended 31/12/2009

17 . OWNER’S EQUITY
a) Increase and decrease in owner’s equity
Unit: VND
Foreign Investment and
Contributed legal Share capital Financial Retained
Item Treasury Stock exchange development Total
capital surplus reserve fund earnings
differences funds
Beginning balance of previous 80,000,000,000 112,460,000,000 - - 37,436,995,872 6,607,885,967 - 236,504,881,839
year
Profit of the previous year - - - - - - 46,038,376,633 46,038,376,633
Other increase - - - - 14,072,966,075 2,019,843,437 - 16,092,809,512
Other decrease - - - - - - 46,038,376,633 46,038,376,633
Ending balance of previous 80,000,000,000 112,460,000,000 - - 51,509,961,947 8,627,729,404 - 252,597,691,351
year
Increase in capital 21,981,500,000 - - - - - - 21,981,500,000
Profit of the previous year - - - - - - 51,047,163,781 51,047,163,781
Other increase - - 2,020,000,000 - 3,397,968,610 2,574,802,172 11,018,366 8,003,789,148
Decrease in capital - 20,396,300,000 - - - - - 20,396,300,000
Decrease for distribution of
- - - - - - 51,600,394,574 51,600,394,574
funds and divident
Other decrease - - 2,022,520,000 407,499,441 - - 26,543,269 2,456,562,710
Ending balance of current 101,981,500,000 92,063,700,000 (2,520,000) (407,499,441) 54,907,930,557 11,202,531,576 (568,755,696) 259,176,886,996
year

Profit of Traphaco Joint Stock Company is distributed fully in the year, balance of Retained earning is negative as it is effected of:
- Retained earning in Subsidiary is VND (12,035,532)
- Eliminating unrealized internal profit in inventories with the value of VND 468,065,368 as well as increasing Deferred tax assets with the value of VND 117,016,342;
- Apporting Goodwill in the year with the value of VND 91,746,210.
- Eliminating retained earning of Subsidiary as at the date of acquisition when preparing consolidated financial statements with the value of VND 113,924,928.

22
TRAPHACO JOINT STOCK COMPANY Consolidated Financial Statements
75 Yen Ninh - Ba Dinh - Hanoi for the year ended 31/12/2009

b) Details of owner’s invested capital


Closing Beginning
% VND % VND
Invested capital of State 36% 36,672,900,000 37% 29,338,320,000
Invested capital of others 64% 65,308,600,000 63% 50,661,680,000

Total 100% 101,981,500,000 100% 80,000,000,000

c) Capital transactions with owners and distribution of dividends and profits


Current year Previous year
VND VND
Owner’s invested capital 101,981,500,000 80,000,000,000
- At the beginning of year 80,000,000,000 80,000,000,000
- Increase in the year 21,981,500,000 -
- At year end 101,981,500,000 80,000,000,000
Distributed dividends and profit 33,449,932,000 15,679,401,600
- Distributed dividends on last year profit - 15,679,401,600
- Estimate-distributed dividends on this year profit 33,449,932,000 -

According to Resolution No. 10/2009/NQ-ĐHĐCĐ dated 20 March 2009 of Annual Congress of Shareholders,
the Company announced its plan of dividend distribution in 2009 is 36% on par value.

d) Stock
Closing Beginning
VND VND
Quantity of Authorized issuing stocks 10,198,150 8,000,000
Quantity of issued stocks 10,198,150 8,000,000
- Common stocks 10,198,150 6,624,000
- Preferred stocks - 1,376,000
Quantity of repurchased stocks 252 -
- Common stocks 252 -
Quantity of circulation stocks 10,197,898 8,000,000
- Common stocks 10,197,898 6,624,000
- Preferred stocks - 1,376,000
Par value per stock 10,000 10,000

e) Company’s funds
Closing Beginning
VND VND
Investment and development fund 54,907,930,557 51,509,961,947
Financial reserve fund 11,202,531,576 8,627,729,404

Total 66,110,462,133 60,137,691,351

23
TRAPHACO JOINT STOCK COMPANY Consolidated Financial Statements
75 Yen Ninh - Ba Dinh - Hanoi for the year ended 31/12/2009

18 . SUBSIDIZED NOT-FOR-PROFIT FUND


31/12/2009 01/01/2009
VND VND
Beginning subsidized not-for-profit fund (166,695,660) 18,104,340
Fund received in the year 1,190,000,000 136,000,000
Not-for-profit expenditure (*) (1,245,450,000) (320,800,000)

Ending subsidized not-for-profit fund (222,145,660) (166,695,660)

19 . TOTAL REVENUE FROM SALE OF GOODS AND RENDERING OF SERVICES


Year 2009 Year 2008
VND VND
Revenue from sale of goods 437,086,591,166 379,431,070,532
Revenue from rendering of goods 316,680,393,670 405,957,764,938

Total 753,766,984,836 785,388,835,470

20 . COSTS OF GOODS SOLD


Year 2009 Year 2008
VND VND
Costs of mechandise 361,629,284,439 365,052,581,374
Costs of finished goods 170,290,486,732 253,838,409,538
Total 531,919,771,171 618,890,990,912

21 . FINANCIAL INCOME
Year 2009 Year 2008
VND VND
Interest income 3,994,632,630 4,805,710,737
Dividends, profits earned 540,000,000 570,558,000
Realized gain from foreign exchange difference 103,088,068 123,860,928
Unrealized gain from foreign exchange difference - 88,869,793
Total 4,637,720,698 5,588,999,458

22 . FINANCIAL EXPENSES
Year 2009 Year 2008
VND VND
Interest expenses 4,619,625,653 3,750,061,772
Realized loss from foreign exchange difference 2,174,216,751 682,912,861

Total 6,793,842,404 4,432,974,633

24
TRAPHACO JOINT STOCK COMPANY Consolidated Financial Statements
75 Yen Ninh - Ba Dinh - Hanoi for the year ended 31/12/2009

23 . CURRENT INCOME TAX EXPENSE


Year 2009 Year 2008
VND VND

Tax expenses in respect of the current year taxable profit 18,626,847,235 12,757,211,817

Total 18,626,847,235 12,757,211,817

24 BASIC EARNNINGS PER SHARE

Earning per share distributed to common shareholders of the company is calculated as follows :

Year 2009 Year 2008


VND VND
Profit after tax 51,047,163,781 46,038,376,633

Adjustments to accounting profit or loss after tax - -

Profit or loss allocating for shareholders owned common


stocks 51,047,163,781 46,038,376,633
Average circulation of common stocks in the period 8,191,983 8,000,000
Basic earnings per share 6,231 5,755

25 . PRODUCTIONS COST BY ITEMS

Year 2009 Year 2008


VND VND
Raw materials 208,979,274,148 282,629,244,828
Labor 86,467,104,356 61,693,382,625
Depreciation expenses 8,616,945,353 7,104,840,369
Expenses from external services 19,196,431,503 18,151,821,768
Other expenses by cash 63,944,958,097 43,811,201,997

Total 387,204,713,457 413,390,491,587

26 . EVENTS AFTER BALANCE SHEET DATE

There have been no significant events occurring after the balance sheet date, which would require adjustments or
disclosures to be made in the financial statements.

25
TRAPHACO JOINT STOCK COMPANY Consolidated Financial Statements
75 Yen Ninh - Ba Dinh - Hanoi for the year ended 31/12/2009

27 . TRANSACTION WITH RELATED PARTIES

During operation, there are a number of transactions between the companies with related parties as follows:
Year 2009 Year 2008
Related parties Relation VND VND
Revenue
- Traphaco High Tech Joint Stock
Company Other investment 49,089,090,668 105,049,686,348
Purchase of raw materials
- Traphaco High Tech Joint Stock
Company (purchasing goods,
materials) Other investment 176,935,491,237 188,160,110,685

- Traphaco High Tech Joint Stock


Company (renting warehouse) Other investment 3,731,190,000 -

- Traphacosapa Limited Company Joint venture


3,244,240,000 7,447,749,140
Interest receivables
- Traphaco High Tech Joint Stock
Company Other investment 1,485,000,000 -

28 . COMPARATIVE FIGURES

The corresponding figures are those taken from the accounts for the fiscal year ended as at 31 December 2008,
which was audited by Auditing and Accounting Financial Consultancy Company Limited (AASC).

Prepared, 25 January 2010


Prepared by Chief Accountant Genaral Director

Nguyen Ngoc Thuy Dinh Trung Kien Vu Thi Thuan

26