Company Presentation November 2016 Important Notice The information - - PowerPoint PPT Presentation

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Company Presentation November 2016 Important Notice The information - - PowerPoint PPT Presentation

Company Presentation November 2016 Important Notice The information in this presentation has been prepared solely by Vietnam Dairy Product Joint Stock Company ( Vinamilk ) and has not been independently verified, and no representation or


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November 2016

Company Presentation

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2 The information in this presentation has been prepared solely by Vietnam Dairy Product Joint Stock Company (“Vinamilk”) and has not been independently verified, and no representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or opinions contained herein or as to the reasonableness of any assumptions herein

  • r the grounds on which they are based. The information set out herein may be subject to updating, revision, verification and amendment and

such information may change materially. Vinamilk is under no obligation to update or keep current the information contained in this presentation and any opinions expressed herein are subject to change without notice. None of Vinamilk or any of its advisers or representatives, or any of their respective affiliates, shall have any liability whatsoever (in negligence or otherwise) for any loss whatsoever arising in connection with this presentation or any oral information provided in connection herewith. This presentation is for information purposes only. Nothing in this presentation constitutes an offer to sell or the solicitation of offers or bids to acquire any securities of Vinamilk. In particular, this presentation is not an offer of securities for sale in the United States and is not for publication or distribution in the United States (within the meaning of Regulation S under the United States Securities Act of 1933, as amended). Attending this presentation in certain jurisdictions may be restricted by law. No action has been taken by Vinamilk or any of its advisors or representatives that would permit the possession or distribution of this presentation in any jurisdiction where action for that purpose is required. Persons attending this presentation are required to inform themselves about and to observe any such restrictions. Certain statements in this presentation constitute "forward-looking statements". These statements, which contain the words "anticipate", "believe", "intend", "estimate", "expect" and words of similar meaning, reflect Vinamilk’s beliefs and expectations and are subject to risks and uncertainties that may cause actual results to differ materially. These risks and uncertainties include, among other factors, changing business

  • r other market conditions and the prospects for growth anticipated by the management of Vinamilk. These and other factors could adversely

affect the outcome and financial effects of the plans and events described herein. As a result, you are cautioned not to place undue reliance

  • n such forward-looking statements. The management of Vinamilk disclaims any obligation to update its view of such risks and uncertainties
  • r to publicly announce the result of any revisions to the forward-looking statements made herein, except where it would be required to do so

under applicable law. Moreover, certain information in this presentation (including expectations and forecasts) relating to the Vietnamese dairy industry and other industry and economic data has been sourced from third party sources that Vinamilk believes are reliable; however, Vinamilk, its advisors and representatives and their respective affiliates cannot ensure you that such information third party information has been prepared on a reasonable basis or is otherwise fair, accurate, complete or correct.

Important Notice

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3

Ngi trình bày

Mai Kieu Lien Member of BOM and CEO

Tran Chi Son Senior Finance Manager

Le Thanh Liem Executive Director - Finance and Chief Accountant

Le Quang Thanh Truc

Company Secretariat, Director

  • f Foreign Subsidiaries

Management

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4

Table of Content 1 Introduction 2 Key Investment Highlights 3 Financial Review

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Section 1 – Introduction

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6

US$

1.8Bn

Extensive Product Offering Across Multiple Categories

Domestic 80% Overseas 20% General Trade 87% Modern Trade & Others 13%

Vinamilk at a Glance

Net Revenue by Channel

FY15 (%)

Net Revenue by Region

FY15 (%)

US$

1.8Bn

Liquid Milk Soymilk Yogurt Powdered Milk Condensed Milk Cheese Ice Cream Beverages

Source Company Filings Source Company Filings

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7

Notes

  • 1. Exchange rate of VND22,260 per US$1.00 as of 14 October 2016
  • 2. EBITDA = Net Revenue – COGS – SG&A + Depreciation & Amortization

40-year Heritage of

Dairy in Vietnam

Largest Consumer & Retail

Company in Vietnam

215,000 Points of Sale ~US$1.8Bn in FY15

Net Revenue(1) Diverse Product Portfolio with More than 200 SKUs

21% Net Revenue CAGR and 17% Net Income CAGR over

last 5 years

~US$500MM in FY15 EBITDA(1)(2) 25% Margin

Vinamilk by the Numbers

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8

9.4 9.4 8.7 7.8 6.0 4.9 4.5 4.5 776 1,421 2,167 2010 2015 2020E

World Ranking

1,368 1,281 322 258 208 144 127 101 93

2015 Total Population (MM) 2015 Disposable Income per Capita (US$)

Large and Young Consumer Base of 93MM People Emerging Middle Class with Rising Income Levels

#1 #2 #3 #4 #5 #9 #10 #12 #14

Source Industry Data

38 27 38 28 31 39 47 24 30 Median Age

2015-20E Nominal GDP CAGR

One of the Fastest-Growing Economies Globally

Source Global Insight Source Industry Data

56,083 52,888 9,555 8,048 5,813 3,346 2,904 2,070

2015 Real GDP per Capita (US$)

Significant Potential in GDP per Capita

Source Industry Data

~27x

Vietnam – One the Most Attractive Markets in ASEAN

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Section 2 – Key Investment Highlights

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10

Vinamilk – Vietnam’s Domestic Champion with a 40-Year Brand Heritage

1

Strong Leadership Across Diversified Product Categories

2

Extensive Nationwide Distribution Network

3

Vertically Integrated Business Model Supported By Modern Production Facilities, Innovation Capability and Long-Term Supplier Relationships

4

Highly Visible Growth Trajectory Driven Increasing Volumes, Enhanced Premiumization and Operational Efficiency

5

Proven Historical Track Record of Financial Performance

6

Highly Experienced Management Team

7

Key Investment Highlights

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11

1

Notes

  • 1. Urban Consumer Reach Points measures how many urban households a brand is reaching and how often they are being purchased

Vinamilk’s Brand Heritage Vinamilk is among the Most Recognized FMCG Brands

  • Pioneered the dairy category in Vietnam in 1976
  • Currently the largest listed company in Vietnam by

market cap

  • Portfolio of well-recognized and trusted brands that

resonate with local consumers

  • Targeting all consumer segments from pre-natal to

the elderly

  • Consistently perceived for delivering quality and value

Vietnam Brand Ranking by Urban CRP(1), 2015 (MM) 70.3 56.4 39.0 25.0 23.6 22.3

Source Kantar World Panel Mama Kids’ Brand Youth & Beauty Premium Infant Formula Elderly’s Milk Family’s Brand Common Infant Formula Functional Infant Formula Pregnant 0-3 years 2-6 years 6-9 years 9-14 years 18-25 years 25-35 + 50+ years 15-17 years

Vinamilk – Vietnam’s Domestic Champion with a 40-Year Brand Heritage

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314 51 34 26 22 15 13 US Malaysia Thailand China Philippines Vietnam Indonesia USDA Recommendation: 220

Consumer Expenditure on F&B per Capita (US$)

Rapid Growth of Consumer Expenditure on Food and Beverages

285 555 844 2010 2015 2020E

Source Industry Data

2,633 3,639 5,254 2012 2015 2020E

Vietnam Dairy Market Valued at US$3.6Bn and Growing at 8% Per Annum

Vietnam Dairy Market Size (US$MM)

Source Industry Data Source Industry Data

Dairy Consumption per Capita (kg)

Significant Upside Potential for per Capita Consumption

~21x

1

Vietnam is One of the Most Attractive Dairy Markets Globally

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Largest Dairy Producer in Vietnam

Market Share by Dairy(1) Retail Value, 2015 (%)

Source Industry Data Notes

  • 1. Includes butter and margarine, cheese, drinking milk products, yoghurt and sour milk products, and other dairy (chilled and shelf stable desserts, chilled snacks, coffee

whiteners, condensed milk, cream, fromage frais and quark)

2 Strong Leadership Position…

49.0% Competitors 51.0% (FrieslandCampina, Abbott, MeadJohnson, Nestle, Nutrifood, IDP, Moc Chau, TH, Yakult, Kinh Do, and others)

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79.4% Others 20.6% 52.9% Others 47.1% 24.9% Others 75.1% 79.3% Others 20.7% 84.3% Others 15.7% 51.8% Others 48.2%

Liquid Milk Infant Formula Condensed Milk Spoon Yogurt Sample Products

2

Leadership Across Product Groups With a Portfolio of More Than 200 SKUs

…Across Diversified Product Categories

Key Product Groups Market Positioning 2014

23.7% Others 76.3% 84.1% Others 15.9%

2014 2014 2014 2015 2015 2015 2015

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15

215,000 Retailers 243 Exclusive Distributors 1,609 Supermarkets 575 Convenience Stores 200 Vinamilk Shops

240,000 215,000 200,000 161,000

Dominance Across Traditional As Well As Modern Trade

Source Company Filings

Extensive Coverage Supported by a Vast POS Network

Source Company Filings

Point of Sales in Vietnam

Sales Office

Ha Noi Da Nang Can Tho

Vinamilk Head Office

Ho Chi Minh City

Logistics Enterprise(1)

Notes

  • 1. Oversee warehouses and transportations of raw materials as well as finished goods

3

Extensive Nationwide Distribution Network

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16 Inventory Management Packaging Ha Noi Ho Chi Minh City

Vertically Integrated Infrastructure and Management Systems

The only FMCG player to have facility in Central Vietnam

13 Production Facilities Across Vietnam

Production Lines

  • Chill tankers deliver raw milk at lower than 6oC

Collection of Raw Milk

  • Manufacturing technologies imported from

Germany, Italy, and Switzerland

  • 100% automation by Tetra PlantMaster
  • Packaging technologies by Tetrapak,

Bencopack, and SIG Combibloc

  • Spray dry technology by Niro – retains high

content of nutrients and minerals

  • ERP technology powered by Oracle manages

inventory and minimizes spoilage loss

  • Automated shipment within warehouses and

factories by LGV robots

North

1 Vinamilk Factories 1 Dairy Farm

Central

4 Vinamilk Factories 6 Dairy Farms

South

8 Vinamilk Factories 3 Dairy Farms

Headquarter Healthcare Clinic

4

Vertically Integrated Business Model Supported By Modern Production Facilities…

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17

Strong Track Record of Product Innovation and Successful Products Overview of Innovation Capabilities

  • Qualified R&D team with deep

knowledge of local tastes and preferences

  • Partnership with 3 leading biotech

companies DSM, Lonza, and Chr. Hansen for research, application and product development

Optimum Gold powdered milk RTD nutrition milk, i.e. Dielac Grow, Dielac Alpha Gold, Dielac Grow Plus, and Optimum Gold Ozé – flavored iced juice Four-Season Twin Cows ice cream Dielac Alpha Organic Fresh milk (made in USA) Drinking yoghurt: Aloe, Pomegranate, Orange, Strawberry Spoon yoghurt – Pomegranate

2015

New Products Launched

2016

New Products Launched

4 …Innovation Capability…

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18

  • Currently has 10 cow-farms producing ~600 tons of

raw milk each day

  • 7 GlobalG.A.P-compliant farms
  • 2 new large-scale farms under construction

with a total designed capacity of ~24,000 cows

  • 1 organic farm – 1st in Vietnam
  • Industrialized farms also serve as technical

support centres for milk cow farmers in the region

  • Local farmers and own farms supply raw fresh milk,

currently accounting for ~30% of the total production demand

  • Domestic supply of raw milk expected to reach

40% in the next five years

  • Imports of milk powders accounts for ~70% of the

total production demand. Imports are mainly from New Zealand, Australia, USA and Europe

Commitment to Increasing Raw Material Self-Reliance and Developing Local Dairy Farm Communities

600 1,000–1,200 2015A 2020E 110,000

160,000-180,000

2015A 2020E Number of Cows Domestic Raw Fresh Milk Supplies (tons per day)

Source Company Filings Source Company Filings Source Company Filings

4 …and Long-term Supplier Relationships

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Continue to Drive the Volume Growth Over and Above the Market Growth

Best-in-class marketing, sales, and R&D

capabilities drive sales growth

Vinamilk Organic

First organic milk in Vietnam, manufactured in accordance with international standards

Optimize the Product Mix to Drive Premiumization

Targeting the growing upper-middle income

class

  • Improves product quality and expands

product portfolio

Product R&D Team

  • Analyses consumer preferences and

trends

  • Conduct consumer research with market

research companies

Marketing Team

  • Understands consumer preferences

through constant contact at various

  • utlets

Sales Team

5

Vinamilk Twin Cows

Premium quality milk manufactured and imported from New Zealand

Optimum Gold

20% increase in DHA derived from pure microalgae, combined with Lutein

Highly Visible Growth Trajectory

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20 Selectively Expand Overseas Market

Potential export markets in Africa

and especially high-end markets like Japan, Canada

Vietnam Current Markets Potential Markets

32.8% 30.5% 34.2% 36.1% 32.5% 40.6% 2010 2011 2012 2013 2014 2015

Gross Margin (%)

Explore Selective Inorganic Growth Opportunities

Past acquisitions have proven

effective in expanding Vinamilk’s international operational footprint Continued Improvement in Operational Efficiency to Drive Margins

5 Highly Visible Growth Trajectory (Cont’d)

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21 Net Revenue (US$MM)(1) EBITDA Margin (%)

Strong 20%+ Revenue Growth over the L5Y Robust Operating Leverage Translating in Consistently Attractive EBITDA Margins

Source Company Filings Source Company Filings

708 972 1,193 1,390 1,576 1,801 2010 2011 2012 2013 2014 2015

Growth 48.4% 37.3% 22.8% 16.5% 13.3% 14.3%

Notes

  • 1. Exchange rate of VND22,260 per US$1.00 as of 14 October 2016

23.1% 21.9% 25.4% 26.1% 22.7% 24.6% 2010 2011 2012 2013 2014 2015

6

Proven Historical Track Record of Financial Performance

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22

  • Mrs. Mai Kieu Lien

Chief Executive Officer and Board Member

  • Bachelor/Engineer in Meat and Milk Processing
  • Certificate of Leningrad Economic Management
  • Certificate of Government Management
  • Mr. Trinh Quoc Dung

Executive Director - Dairy Development

  • Engineer of Energy and Automation
  • Mrs. Bui Thi Huong

Executive Director - Human Resources Administration & PR

  • Bachelor in Russian language
  • Bachelor in Economics
  • Mr. Mai Hoai Anh

Chief Operating Officer and Executive Director – Sales

  • Bachelor in Economics
  • MBA
  • Mrs. Nguyen Thi Thanh Hoa

Executive Director – Production and R&D

  • Bachelor in Milk Processing Technology
  • Mr. Nguyen Quoc Khanh

Executive Director – Research & Development

  • Bachelor in Chemical Technique and Foods
  • Bachelor in Business Administration
  • Bachelor in English
  • Mr. Le Thanh Liem

Acting Executive Director - Finance anh Chief Accountant

  • Bachelor in Economics, major in Enterprise Financial

Accounting

  • Master of International Commerce and Finance
  • Mrs. Ngo Thi Thu Trang

Executive Director – Project

  • Bachelor in Finance - Accounting
  • MBA
  • Mr. Phan Minh Tien

Executive Director - Marketing

  • Bachelor in Business Management Institute
  • Mr. Tran Minh Van

Executive Director - Production

  • Bachelor in Engineering
  • Bachelor in Business Administration
  • Bachelor of Law with major in commercial laws
  • MBA

Years of Experience with Vinamilk

7 Highly Experienced Management Team

20 33 28 31 35 40 11 11 22 2

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Section 3 – Financial Review

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% Domestic % Export 633 847 1,026 1,192 1,320 1,445 74 125 167 198 255 356 708 972 1,193 1,390 1,576 1,801 2010 2011 2012 2013 2014 2015 Domestic Export 11% 13% 14% 14% 16% 20% 89% 87% 86% 86% 84% 80%

Notes

  • 1. Net Revenue = Total Revenue – Revenue Deductions (Sale Discounts, Sale Returns, Sales Allowances)
  • 2. Exchange rate of VND22,260 per US$1.00 as of 14 October 2016

36.7% 17.9% CAGR

Net Revenue(1) (US$MM)(2)

Attractive Sales Growth with Strength in Volumes

Source Company Filings

Robust Sales Growth through the Cycle

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23.1% 21.9% 25.4% 26.1% 22.7% 24.6% 2010 2011 2012 2013 2014 2015

Source Company Filings

Strong Operating Leverage Driving Superior Margins

EBITDA(1) Margin (%)

Robust EBITDA Margin Consistently above 20%

Notes

  • 1. EBITDA = Net Revenue – COGS – SG&A + Depreciation & Amortization

Strong Operating Leverage Driving Superior Margins

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32 35 43 39 30 31 2010 2011 2012 2013 2014 2015 63 68 70 62 52 56 2010 2011 2012 2013 2014 2015 13 15 17 19 20 19 2010 2011 2012 2013 2014 2015 44 47 44 41 43 44 2010 2011 2012 2013 2014 2015

Inventory Days(1) Receivable Days(2) Payable Days(1) Cash Conversion Cycle (Days)

Average Inventory Days Increased to 56 in 2015 Average Receivable Days Decreased to 19 in 2015 Average Payable Days Increased to 31 in 2015 Stable Cash Conversion Cycle Stable at ~40 in the L5Y

Source Company Filings Source Company Filings Source Company Filings Source Company Filings

Prudent Working Capital Management

Notes

  • 1. Inventory turnover days and trade payable days assuming average of beginning and ending balances divided by cost of goods sold and multiplied by 365
  • 2. Trade receivable days calculated assuming average of beginning and ending balances divided by net revenue and multiplied by 365

Prudent Working Capital Management

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27 Selected Balance Sheet Items, US$MM(1) Dividend Payout Ratio (%)

Conservative Capital Structure Consistent Improvement in Dividend Payout

Source Company Filings Source Company Filings Notes

  • 1. Exchange rate of VND22,260 per US$1.00 as of 14 October 2016
  • 2. Includes cash and cash equivalents and short-term financial investments
  • 3. EBITDA = Net Revenue – COGS – SG&A + Depreciation & Amortization

30/06/2016

Gross Debt ST Debts and Current Portion of LT Debts 56 LT Debts

  • Total Gross Debt

56 Less: Cash and Cash Equivalents(2) (519) Net Debt (463) Total Equity 1,003 Total Debt / Total Equity 5.6% LTM EBITDA(2) 503 Total Debt / LTM EBITDA 0.1x 29.3 43.9 44.9 61.2 60.4 82.4 2010 2011 2012 2013 2014 2015

Strong Balance Sheet and Attractive Dividend Payout Ratio

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28 Capex (US$MM)(1) and Capex as % of Total Revenue (%)

Capex as % of Net Revenue Remained Low at 2.7% in 2015

Source Company Filings

Improved Capital Intensity over Time

64 79 141 67 39 48 9.1% 8.2% 11.8% 4.8% 2.4% 2.7% 2010 2011 2012 2013 2014 2015 Capex Capex as % of Total Revenue

Notes

  • 1. Exchange rate of VND22,260 per US$1.00 as of 14 October 2016

Improved Capital Intensity over Time

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Q&A

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Appendix

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31 FYE 31 December, (US$MM)(1)

Income Statement Summary

Source Company Filings

Financial Summary

Notes

  • 1. Exchange rate of VND22,260 per US$1.00 as of 14 October 2016
  • 2. EBITDA = Net Revenue – COGS – SG&A + Depreciation & Amortization
  • 3. EBIT = Net Revenue – COGS – SG&A
  • 4. Last 12 months up to 30 June 2016

2010 2011 2012 2013 2014 2015 LTM(4)

Net Revenue 708 972 1,193 1,390 1,576 1,801 1,941 % Growth 48.4% 37.3% 22.8% 16.5% 13.3% 14.3% Gross Profit 232 296 408 502 512 731 824 Gross Margin 32.8% 30.5% 34.2% 36.1% 32.5% 40.6% 42.4% EBITDA(2) 163 213 303 363 357 443 503 EBITDA Margin 23.1% 21.9% 25.4% 26.1% 22.7% 24.6% 25.9% EBIT(3) 150 194 279 328 311 394 454 EBIT Margin 21.2% 20.0% 23.4% 23.6% 19.7% 21.9% 23.4% Net Income to Company 162 189 261 294 273 349 402 Net Margin 23.0% 19.5% 21.9% 21.1% 17.3% 19.4% 20.7%

Financial Summary

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32 As of 31 December Unless Stated Otherwise, (US$MM)(1)

Balance Sheet Summary

Source Company Filings

Financial Summary (Cont’d)

Notes

  • 1. Exchange rate of VND22,260 per US$1.00 as of 14 October 2016
  • 2. Includes cash and cash equivalents, and short-term financial investments
  • 3. Includes accounts receivables from customers and allowance for doubtful debts
  • 4. Includes inventories and allowance for inventories
  • 5. Includes tangible fixed assets and long-term work in progress

2010 2011 2012 2013 2014 2015 30/06/2016

Cash and Cash Equivalent(2) 106 175 232 311 404 450 519 Accounts Receivable(3) 26 51 57 85 89 99 112 Inventories(4) 106 147 156 145 160 171 181 Others 293 227 286 356 446 482 546 Current Assets 425 425 499 585 694 752 839 PP&E(5) 146 215 350 377 379 388 273 Others (88) 60 36 66 84 95 170 Non-current Assets 59 275 386 443 463 483 443 Total Assets 484 700 885 1,028 1,158 1,234 1,282

Financial Summary (Cont’d)

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33 As of 31 December Unless Stated Otherwise, (US$MM)(1)

Balance Sheet Summary (Cont’d)

Source Company Filings

Financial Summary (Cont’d)

Notes

  • 1. Exchange rate of VND22,260 per US$1.00 as of 14 October 2016
  • 2. Includes accounts payable to suppliers

2010 2011 2012 2013 2014 2015 30/06/2016

ST Debt & Current Portion of LT Debt 26

  • 8

57 66 56 Accounts Payable(2) 49 82 101 88 85 99 76 Others 44 50 85 126 102 105 143 Current Liabilities 119 132 186 223 245 270 275 LT Debt

  • 8

16 17

  • Others

7 7 3 7 8 8 4 Non-current Liabilities 7 7 3 16 23 25 4 Total Liabilities 126 140 189 238 268 294 280 Total Equity 358 561 696 789 889 940 1,003 Total Liabilities & Equity 484 700 885 1,028 1,158 1,234 1,282

Financial Summary (Cont’d)