Committing itself to leading in quality,

Hoa Phat rose to a new stature

 CONTENT
ANNUAL REPORT 2020

1 Development orientation 09
2 Message from the Chairman of the Board of Management 10
3 10 Impressive milestones of Hoa Phat Group in 2020 12

1 GENERAL INFORMATION
1
2
BASIC INFORMATION
DETAILS OF SHARE
15
15
3 BUSINESS LINES 15
4 ORGANIZATION STRUCTURE 16
5 OPERATING MODEL 16
6 KEY FINANCIAL INDICATORS 17
7 SUBSIDIARIES & THEIR OWNERSHIP PERCENTAGE 18
8 BACKGROUND OF HOA PHAT GROUP 20
9 HISTORY OF DEVELOPMENT 22
10 OPERATIONAL RISKS 24

2 REPORT OF THE BOARD OF DIRECTORS

1
2
LIST OF MEMBERS OF BOD
REPORT OF BOD
29
30
3 OPERATING PERFORMANCE EVALUATION 31
4 FINANCIAL SITUATION 32
5 IMPROVEMENT OF MANAGEMENT STRUCTURE 36
6 BUSINESS PLAN FOR 2021 38

3 PERFORMANCE IN 2020
1 PERFORMANCE OF SUBSIDIARIES
1.1. Iron and Steel
41
41
1.2. Hoa Phat Steel Products 44
1.3. Agriculture 47
1.4. Real Estate 48
2 HUMAN RESOURCE MANAGEMENT 49
3 POLICIES FOR EMPLOYEES 50
4 INVESTMENT STATUS OF KEY PROJECT 51
5 STRUCTURE OF SHAREHOLDERS 51
6 SHAREHOLDER RELATIONS 55

6
4 CORPORATE GOVERNANCE
1
2
LIST OF MEMBERS OF BOM AND OWNERSHIP PERCENTAGE
BOM'S ASSESSMENT OF OPERATION
57
60
3 MAIN ACTIVITIVES OF BOM DURING THE YEAR 62
4 PLANS AND ORIENTATION 63

5 REPORT OF SUPERVISORY BOARD

1
2
LIST OF PERSONNEL AND OWNERSHIP PERCENTAGE
REPORT OF SUPERVISORY BOARD
65
66
3 REPORT OF INTERNAL CONTROL BOARD 67

6 SUSTAINABLE DEVELOPMENT
1
2
"GREEN" STEEL PRODUCTION SOLUTIONS
INITIATIVES AND TECHNICAL IMPROVEMENTS
69
72
3 HOA PHAT WITH DIGITAL TRANSFORMATION 74
4 SOCIAL RESPONSIBILITY 76

7 AUDITED FINANCIAL STATEMENTS

1
2
REPORT OF THE BOD
INDEPENDENT AUDITOR’S REPORT
82
85
3 CONSOLIDATED BALANCE SHEET 87
4 CONSOLIDATED STATEMENT OF INCOME 91
5 CONSOLIDATED STATEMENT OF CASH FLOWS 93
6 NOTE TO THE CONSOLIDATED FINANCIAL STATEMENTS 96

7
 DEVELOPMENT
ORIENTATION
Hoa Phat will be honored in the Top 50 largest steel enterprises with over VND 100,000
billion in annual revenue.

Vision: To become an industrial manufacturer with top quality and core area of steel.

Mission: To provide leading products, contribute to improving living conditions and gain
customers’ trust.

Position: Hoa Phat – Vietnamese brand, global standard.

Core value:
The core value of Hoa Phat Group is the philosophy of Harmony for Joint Development.
This is reflected in the relationship among the employees, between the Group and its
partners, agents, shareholders and the social community, ensuring the harmony of interests
of stakeholders on the same boat, towards sustainable development.

Especially, Hoa Phat Group has built a long-term, sustainable and trusting partnership with
the sales agents who have been with the Group since the beginning of its establishment.

ANNUAL REPORT 2020 9

Mr.
TRAN DINH LONG
CHAIRMAN OF THE BOARD OF MANAGEMENT

ECOSYSTEM OPTIMIZATION
In 2020, Covid-19 pandemic has spread across the Iron and steel remained the core business sector of the
globe and left a trail of crises of all business sectors, Group, continuing to play a key role. Revenue of this
causing consequences of employment and economic sector increased by 81%, and profit from steel products
losses. However, the year 2020 has recorded the increased by 94%. Hoa Phat construction steels and
proudest achievements of Hoa Phat. Hoa Phat steel pipes continue to maintain the No. 1 market share
ecosystem that built on the foundation of a closed in Vietnam of 32.5% and 31.7% respectively. Hoa Phat
production chain has shown its strong resilience. steel sheet continued to grow strongly by nearly 150%
over the same period. Sales volume of drawn steel wire,
RECORD PROFIT, THE 48TH LARGEST wire coating, PC bar reached 100,000 tons, 30,000 tons
exported, which was doubled against 2019. Number of
STEEL MANUFACTURER IN THE HRC orders surpassed 300% over Hoa Phat’s capacity.
WORLD
Hoa Phat’s after-tax profit for the whole year gained By the billet refining plant with electric furnace technology
VND 13,506 billion, exceeding 50% of expected profit, of 300,000 tons/year, at the beginning of 2021, Hoa
an increase of 78% compared to the same period and the Phat’s crude steel output reached 8 million tons per year
highest ever. Also, Hoa Phat achieved revenue of VND over which rose Hoa Phat to lead in crude steel production in
91,000 billion, increasing by 41% against 2019, 6.3 times Southeast Asia and became the 48th largest manufacturer
higher after 10 years (since 2010). For a manufacturing in the Top 50 largest crude steel manufacturers globally
company like Hoa Phat, this is a record number, especially (according to World Steel 2020).
set in a special year like 2020.
The Group’s agriculture sector also gained remarkable especially VND 7,300 billion paid in 2020, equivalent to
results with revenue growth of 32% and contributed 12% the provinces in the Top 40 most typical taxpayers. The
to the Group’s revenue. Particularly, profit from Hoa Phat’s total amount spent by Hoa Phat for charity and social
agriculture tripled the same period in 2019. Australian activities in 2020 reached VND 32 billion, focusing on 4
cow still kept the No.1 market share in Vietnam, bio-safe main groups of activities including: Health - Education
pigs and clean chicken eggs of Hoa Phat also ranked on top. - Transport - Community with many programs such as
construction bridge, heart surgery for poor children,
Real Estate has exceeded after-tax profit target compared support against epidemics, storms, floods, Tet gifts to
with the assigned plan. Pho Noi A, Hoa Mac and Yen My II unlucky circumstances, scholarships for students..., and etc.
Industrial Zone (IZ) of Hoa Phat Group gained occupancy
rate up to 100%. In which, Hoa Phat was approved by the Hoa Phat created employment opportunities with high
Prime Minister to expand Pho Noi A IZ to 100ha. Sales income for over 25,000 employees nationwide; provided
volume of freezers of Hoa Phat Refrigeration increased by high-quality, prestige products for a thousand of agencies
120% against the same period, which supported Hoa Phat level 1, 2; run effective operation to bring net value to
Refrigeration’s profit increase dramatically, surpassing nearly 60,000 shareholders.
nearly 60% of the plan set for the whole year 2020.
In 2021, Covid 19 pandemic is still complicated. However,
vaccines have been vaccinated and many major economies
ECOSYSTEM OPTIMIZATION show signs of recovery after a series of stimulus packages.
Hoa Phat Group still persists in its strategy of sustainable
By the end of 2020, Hoa Phat restructured its operating development, flexibly operates production and business
model with 4 main sectors including Iron and Steel, Steel according to the market situation to ensure the best
products, Agriculture and Real estate which are under business efficiency.
control of independent Corporations. However, they
are developed with high interoperability in the product Hoa Phat is about to complete legal procedures so that
ecosystem of the Group. Hoa Phat Dung Quat Steel Integrated Complex 2 is
early commenced. The Company aims to manufacture
High-quality rolled steel coil is used for production 8 million tons of crude steel, consume all the produced
of drawn steel wire, PC bar, PC Strand, core wire, and products, and continues leading the national market share
etc. HRC is the raw material source for steel pipes and of construction steel and steel pipe and Australian cow.
galvanized steel sheet. Steel pipes and steel sheet are Hoa Phat strives to continue to hold its steady growth of
used in the fabrication of interior, refrigeration products. agriculture and refrigeration products. In respect of real
In addition to selling to the market, Hoa Phat Feed Plant estate, the Group focuses on expanding in housing real
also provides a large amount for the Group’s pig and estate by some projects in dynamic and high- liquidity
chicken farms nationwide. areas. Regarding administration and investment projects
in digital applications, training and improving the skilled
On Feb 20, 2021, the 1 millionth ton of HRC was officially employees are invested in depth.
launched at Hoa Phat Dung Quat Steel Integrated
Complex, which is a memorable milestone, showing Hoa Phat’s missions in 2021 are expressly cleared with
the maturity, ability to master technology, and spirit of challenges, as well great chances for success. With the
difficulties and struggles of Hoa Phat employees. determination and unanimity of over 25,000 employees,
Hoa Phat believes that we will overcome all difficulties and
Self-control of HRC production technology is a perfect go ahead in despite of any struggles.
piece to create a solid foundation for the ecosystem of
other high quality steel products to be manufactured On behalf of the Board of Management, I would like to
such as mechanical steel, empty container shell, and etc. thank the confidence and support of the shareholders,
Hoa Phat’s production chain is expanded and optimized thank the positive cooperation of customers and partners.
gradually, which brings the highest value to its customers, In particular, I would like to express my sincere thanks to
shareholders and society. all employees of Hoa Phat Group, who have joined with us
in the hearts and faithfulness for Hoa Phat’s success and
Additionally, the Group’s manufacturing ecosystem development to this day.
always focuses on sustainable development, solution
implementation and investment in green manufacture.
Each year, Hoa Phat has saved VND trillion by recovering Yours sincerely,
heat and exhausted gas for power generation and re- The Chairman
using, which contributes to reduce greenhouse gas
omission.

HARMONY FOR JOINT DEVELOPMENT

With the philosophy of “Harmony for Joint Development”,
Hoa Phat focuses on implementing social responsibility in TRAN DINH LONG
the most practical way. Annually, Hoa Phat contributes
a thousand of VND billions to the State Budget,
TOP 10 HIGHLIGHTS OF
HOA PHAT GROUP IN 2020

1
After-tax profit broke its
record of VND13,506 billion

2
5.8 million tons of raw steel output was gained, while
steel billets and construction steel output exceeded 5
million tons

3
No. 1 market share in Vietnam for construction steel
and steel pipes, respectively, 32.5% and 31.7%

4
Approximately the first 700,000 tons of Hoa Phat’s
hot-rolled coil was officially launched

5
Hoa Phat steel pipe output reached 820,000 tons,
simultaneously output of galvanized steel sheet
increased by 150% compared to 2019
6
Output of drawn steel wire,
PC bar increased more than twice
over the same period

7
Profit from agriculture sector spiked,
3 times higher than 2019

8
USD 700 million of goods imported from Australia,
Hoa Phat became the largest Vietnamese client of
the country

9
VND 7,300 billion was contributed to the State Budget
by Hoa Phat, increased by 10% compared to 2019

10
Approximately VND 32 billion were spent on
social and charity activities
GENERAL
INFORMATION
1. BASIC INFORMATION

2. DETAILS OF SHARE

3. BUSINESS LINES

4. ORGANIZATION STRUCTURE

5. OPERATING MODEL

6. KEY FINANCIAL INDICATORS

7. SUBSIDIARIES & THEIR OWNERSHIP PERCENTAGE

8. BACKGROUND OF HOA PHAT GROUP

9. HISTORY OF DEVELOPMENT

10. OPERATIONAL RISKS

 BASIC INFORMATION

Transaction name: Hoa Phat Group Joint Stock Company

Business Registration Certificate No.: 0900189284
Authorized capital: VND 33,132,826,590,000
Head office: Pho Noi A Industrial Zone, Giai Pham Commune, Yen My District, Hung Yen Province, Vietnam
Hanoi Office: 66 Nguyen Du, Nguyen Du Ward, Hai Ba Trung District, Hanoi City
Tel: 024. 6284 8666 | Fax: 024. 6283 3456
Da Nang Office: 171 Truong Chinh, An Khe Ward, Thanh Khe District, Da Nang City
Tel: 023. 637 21 232 | Fax: 023.637 22 833
Ho Chi Minh City Office: 643 Dien Bien Phu, 25 Ward, Binh Thanh District, Ho Chi Minh City
Tel: 028. 629 85 599 | Fax: 028. 629 87 799
Website: www.hoaphat.com.vn

DETAILS OF SHARE

Stock ticker: HPG

Stock exchange: HOSE
Initial offering date: 15/11/2007
Par value: VND 10,000 /share
Outstanding shares: 3,313,282,659 shares

BUSINESS LINES

1. Manufacturing hot-rolled coils;

2. Wholesaling and importing, exporting iron and steel, materials and equipment for steel making and refining;
3. Producing rolled steel, roofing iron sheets, galvanized steel sheets, cold galvanized steel sheets,
painted galvanized steel sheets;
4. Producing non-galvanized and galvanized steel pipes, stainless steel pipes;
5. Producing and trading non-ferrous metal and non-ferrous metal scrap;
6. Refining cast iron, steel; Casting cast iron, iron, steel;
7. Producing and wholesaling cokes;
8. Mining metal ores; Trading in metals, metal ores, scrap iron and steel;
9. Manufacturing, trading, assembling, installing, repairing, and maintaining electrical,
electronic, refrigeration, civil electric products and air-conditioners;
10. Investing and constructing synchronously infrastructure for industrial zones and urban areas;
11. Investing and trading Real estate;
12. Producing and trading feeds for livestock and poultry, cattle breeding,
processing meat and meat products, eggs, and etc;
13. Inland waterway, coastal and ocean transport.

ANNUAL REPORT 2020 15

ORGANIZATION STRUCTURE

GENERAL MEETING OF SHAREHOLDERS

SUPERVISORY BOARD IRON AND STEEL

STEEL PRODUCTS
SUBSIDIARIES
BOARD OF MANAGEMENT AGRICULTURE

REAL ESTATE

BOARD OF DIRECTORS

1. Internal control department

2. Financial department
3. IT department
HEAD OFFICE 4. Legal department
5. PR department
6. Administration department
7. R&D department

OPERATING MODEL (2021)

IRON AND STEEL

Hoa Phat Hung Yen Steel Co., Ltd
Hoa Phat Hai Duong Steel JSC
Hoa Phat Dung Quat Steel JSC
An Thong Mineral Investment JSC

STEEL PRODUCTS
Hoa Phat Steel Pipe Co., Ltd
Hoa Phat Steel Sheet Co., Ltd
Hoa Phat Metal Producing Co., Ltd
Hoa Phat Container Production JSC
Hoa Phat Refrigeration Engineering Co., Ltd

AGRICULTURE
Hoa Phat Hung Yen Feeds Co., Ltd
Hoa Phat Development of Livestock JSC
Hoa Phat Trading Co., Ltd
Hoa Phat Poultry Co., Ltd

REAL ESTATE
Hoa Phat Urban Development and Construction JSC
Hoa Phat Ha Noi Real Estate Development JSC
Hoa Phat Sai Gon Real Estate Development JSC

16 GENERAL INFORMATION Organization Structure

KEY FINANCIAL INDICATORS

Indicators (Unit: billion dongs) 2018 2019 2020

INCOME STATEMENT
Revenue from goods sales & services rendering 56,580 64,678 91,279
Net revenue 55,836 63,658 90,119
Gross profit 11,671 11,185 18,904
Net financial expenses (478) (711) (1,833)
Selling expenses 677 873 1,091
Administrative expenses 444 569 690
Other profits (1) 66 65
Pre-tax profit 10,071 9,097 15,357
Corporate income tax 1,471 1,518 1,851
After-tax profit 8,601 7,578 13,506
Profit of shareholder as holding company 8,573 7,527 13,450
Depreciation and amortization 2,286 2,639 4,794
BALANCE SHEET
Total assets 78,223 101,776 131,511
Current assets 25,309 30,437 56,747
Non-current assets 52,914 71,339 74,764
Liabilities 37,600 53,989 72,292
Owner’s equity 40,623 47,787 59,220
Authorized capital 21,239 27,611 33,133
CASH FLOW STATEMENT
Net cash from operating activities 7,642 7,715 11,587
Net cash from investment activities (20,533) (18,064) (18,495)
Net cash from investment activities 11,143 12,378 16,054
Net cash flow during the period (1,748) 2,029 9,146
Cash and equivalents at the beginning of the period 4,265 2,516 4,545
Cash and equivalents at the end of the period 2,516 4,545 13,696
KEY FINANCIAL INDICATORS
Gross profit/Net sales rate 21% 18% 21%
After-tax profit/ Net revenue rate 15% 12% 15%
ROA 11% 7% 10.3%
ROE 21% 16% 23%
EBIT 10,549 10,278 18,194
EBITDA 12,835 12,918 22,988
ANNUAL REPORT 2020 17
SUBSIDIARIES AND OWNERSHIP
PERCENTAGES AS OF 31/12/2020

No. SUBSIDIARIES ADDRESS

1 Hoa Phat Hai Duong Steel JSC Hiep Son Ward, Kinh Mon Town,
Hai Duong Province, Hai Duong, Vietnam

2 Hoa Phat Dung Quat Steel JSC Dung Quat Economic Zone, Binh Dong Commune,
Binh Son District, Quang Ngai Province, Vietnam

3 Hoa Phat Hung Yen Steel Co., Ltd Pho Noi A Industrial Zone, Giai Pham Commune, Yen
My District, Hung Yen Province, Vietnam

4 Hoa Phat Metal Producing Co., Ltd No. 39 Nguyen Dinh Chieu, Le Dai Hanh Ward, Hai
Ba Trung District, Hanoi City, Vietnam

5 An Thong Mineral Investment JSC No. 415, Tran Phu Street, Tran Phu Ward,
Ha Giang City, Ha Giang Province, Vietnam

6 Hoa Phat Steel Pipe Co., Ltd No. 39 Nguyen Dinh Chieu, Le Dai Hanh Ward, Hai
Ba Trung District, Hanoi City, Vietnam

7 Hoa Phat Steel Sheet Co., Ltd Road E1, zone E, Pho Noi A Industrial Park, Lac Dao
Commune, Van Lam District, Hung Yen Province,
Vietnam

8 Hoa Phat Agriculture Development JSC Pho Noi A Industrial Zone, Giai Pham Commune, Yen
My District, Hung Yen Province, Vietnam

9 Hoa Phat Furniture JSC (*) Road B4, Zone B, Pho Noi A Industrial Zone, Lac
Hong Commune, Van Lam District, Hung Yen
Province, Vietnam

10 Hoa Phat Refrigeration Pho Noi A Industrial Zone, Giai Pham Commune,
Engineering Co., Ltd Yen My District, Hung Yen Province, Vietnam

11 Hoa Phat Urban Development and No. 39 Nguyen Dinh Chieu, Le Dai Hanh Ward, Hai
Construction JSC Ba Trung District, Hanoi City, Vietnam

*Note: Since 2021, Hoa Phat Furniture JSC is no longer a subsidiary of Hoa Phat Group.

18 GENERAL INFORMATION Subsidiaries And Ownership Percentages

 CONTRIBUTED OWNERSHIP
PRINCIPAL BUSINESS PERCENTAGE BY
ACTIVITIES AUTHORIZED CAPITAL
(VND billion) HPG
Producing steel and cast iron, exploiting iron ores,
exploiting and collecting lignite; wholesale of metals and 7,000 99.998%
metal ores; producing and trading coke coal.

Producing iron, steel, cast iron; producing, transmitting

and distributing electricity; wholesaling solid, liquid, gas
fuels and related products; coastal and ocean freight
30,000 100%
transportation, inland waterway transportation, etc.

Producing iron, steel, cast iron; Wholesaling

metals and metal ores. 1,000 100%

Manufacturing construction equipment; trading in

construction machinery and equipment and exploiting 400 99.875%
small and medium-sized minerals.

Exploring, exploiting, refining, processing, importing and

exporting minerals in general, mainly iron ores. 500 99.960%

Producing and trading in steel pipes.

1,500 99.967%

Manufacturing roofing sheets made of galvanized steel,

galvanized aluminum alloy, painted and coated with other 2,000 100%
alloys; manufacturing iron, steel, and cast iron.

Producing fertilizers and nitrogen compounds; Pig,

poultry husbandry, and livestock services; Processing and 3,100 99.999%
preserving meat and meat products. Producing feed for
cattle, poultry and fisheries.

Manufacturing and trading in furniture products.

400 99.600%

Producing and trading in refrigeration products.

150 99.667%

Civil construction; industrial construction, real estate

business; investing and building technical infrastructure 1,300 99.846%
synchronously.

ANNUAL REPORT 2020 19

BACKGROUND OF HOA PHAT GROUP

Hoa Phat is a leading industrial manufacturer in Vietnam. Currently, Hoa Phat Group runs its operations in four
Originated from a company specialized in trading sectors: Iron and Steel (construction steel, hot-rolled coil) –
constructional machineries and equipment since 08/1992, Steel products (steel pipe, galvanized steel sheets, drawn
Hoa Phat has constantly expanded its business into steel wire, and pre-stressed concrete bar, pre-stressed
Furniture (1995), Steel pipe (1996), Construction steel concrete strand) – Agriculture – Real estate. Production
(2000), Refrigeration (2001), and Real estate (2001). In of iron, steel and related products is the core, accounting
2007, Hoa Phat was reorganized in the model of a group for over 80% of the Group’s revenue and profit. The crude
structure, with Hoa Phat Group Joint Stock Company steel output of Hoa Phat gained 8 million tons/year. In
restructured as the Parent Company of its subsidiaries. particular, Hoa Phat construction steel and hot-rolled coil
Since November 15, 2007, Hoa Phat has been officially reached 5 million and 3 million tons/year respectively,
listed on the Stock Exchange under the stock ticker ‘HPG’. with production complexes located in Hai Duong, Hung
Yen, and Quang Ngai. With its large output, Hoa Phat has
become the largest manufacturer of construction steel and
steel pipes in Vietnam with a market share of 32.5% and
31.7%, respectively.

20 GENERAL INFORMATION Background Of Hoa Phat Group

Since 2020, the Group has officially launched a new For years, Hoa Phat has been recognized as a National
strategic product, hot-rolled coil (HRC) with its output Brand, and honored Vietnam’s the 50 largest and most
of 3 million tons/year. This is a potential product of Hoa efficient enterprises; Vietnam’s the 10 largest private
Phat Dung Quat Steel Integrated Complex, closing and enterprises, the 30 most typical taxpayers, and etc.
optimizing ecosystem of steel products such as billets,
construction steel, high-quality steel, wire rods, pre- In parallel with business and production development, Hoa
stressed bar, hot-rolled coil, steel pipe, galvanized steel Phat allocates its annual budget of dozens of billion dongs
sheet and container shell. in order to exercise corporate social responsibilities to the
community through various charity and social programs
In the agriculture sector, the Group holds the largest in different parts of the country where the Group and its
market share of Australian cow supply with 50%, leading subsidiaries are located.
the North in production of clean chicken egg. For pig
farming in biosafety methods, Hoa Phat is also in the list
of the leading enterprises.

ANNUAL REPORT 2020 21

OUR HISTORY AND DEVELOPMENT

August 1992 Establishing Hoa Phat Equipment Accessories Co.,

Ltd, (now Hoa Phat Metal Producing Co., Ltd)
- the first company that bore brand of Hoa Phat.

November 1995 Establishing Hoa Phat Furniture JSC.

August 1996 Establishing Hoa Phat Steel Pipe Co., Ltd

2001 Establishing Hoa Phat Steel JSC, now Hoa Phat Hung Yen
Steel Co., Ltd; Hoa Phat Refrigeration Engineering Co., Ltd.
and Hoa Phat Urban Development and Construction JSC.

January 2007 Reorganizing as a group with Hoa Phat

Group Joint Stock Company being the
Parent Company of its subsidiaries

August 2007 Establishing Hoa Phat Hai Duong Steel JSC to

initiate the Hoa Phat Steel Integrated Complex in
Kinh Mon District, Hai Duong Province.

November 15, 2007 Listing HPG shares on the Vietnam Stock

Exchange.

June 2009 An Thong Mineral Investment JSC became

a member of Hoa Phat Group.

December 2009 Finishing the first phase of Hoa Phat Steel

Integrated Complex in Hai Duong.

January 2011 Structuring of operation model of the

Parent Company by separating the steel
production and trading sector.

22 GENERAL INFORMATION Our History And Development

 August 2012 20th anniversary of Hoa Phat development,
Third Class Labour Order awarded by the
President.

October 2013 Finishing the second phase of the Hoa Phat Hai Duong
Steel Integrated Complex, raising the total capacity of
Hoa Phat to 1.15 million tons per year.

March 2015 Hoa Phat Hung Yen Feeds Co., Ltd was officially
launched, marking a new step in the Group’s
development history by investing the agricultural sector.

February 2016 Establishing Hoa Phat Agriculture Development JSC,

which manages and coordinates the operations of all
subsidiaries in the agriculture sector (including feed
and breeding).

February 2016 Finishing the third phase of Hoa Phat Steel

Integrated Complex in Hai Duong, raising the total
capacity of Hoa Phat to 2 million tons per year.

April 2016 Establishing Hoa Phat Steel Sheet Co., Ltd, implementing
the project of prepainted hot dipped galvanized steel
sheet, galvanized steel sheet and galvalum steel sheet
with the capacity of 400,000 tons per year.

February 2017 Establishing Hoa Phat Dung Quat Steel JSC, initiating Hoa
Phat Dung Quat Steel Integrated Complex in Quang Ngai
Province with the capacity of 4 million tons per year and the
total investment of VND 52,000 billion, marking a turning
point in Hoa Phat Group’s development.

2019 The first two blast furnaces of the Hoa Phat Dung Quat
Steel Integrated Complex Project were officially put into
operation, bringing the total construction steel output of
Hoa Phat to 4.4 million tons per year.

2020 November 2020: Hoa Phat Group has officially launched its commercial hot-
rolled coil onto the market, which helps optimized Hoa Phat’s steel ecosystem.

December 2020: Hoa Phat Group restructured its operating model with
establishment of Corporations in charge of the Group’s business sector.
Accordingly, 04 Corporations under the Group have been established,
including: Iron and Steel, Steel Products, Agriculture and Real Estate.

2021 January 2021: the blast furnace No. 4 - Hoa Phat Dung Quat Steel Integrated
Complex was put into operation, marking completion of the entire project, and
bringing Hoa Phat’s total crude steel output to 8 million tons/year.

ANNUAL REPORT 2020 23

OPERATIONAL Disaster risk:
In 2020, many regions of the country were seriously
RISKS suffered from unusual and extreme natural disasters.
Annually, on average, there are about 5-8 storms; yet, by
2020, this number was nearly doubled. Only from mid-
Hoa Phat is a multidisciplinary manufacturing Group, September to mid-November 2020, storms and floods
operating nationwide. On the other hand, in the socio- occurred consecutively in the central region with very
economic conditions in Vietnam that are easily influenced strong intensity, on a large scale, causing considerable
by outside, Hoa Phat Group’s activities cannot avoid risks, damages to human and property. In particular, the super
both objective and subjective. In order to effectively typhoon, Molave 9, the strongest storm in decades,
prevent risks that may arise in the course of production slammed into the Central region with wind speed of level
and business, the Group sets out specific solutions for 12 to 15.
each key risk group, especially in preventing legal, policy
Solutions:
and pandemic risks.
To be hit by the storm No. 9, Hoa Phat Dung Quat
Pandemic risk: focused highly on implementing safety measures for all
By 2020, the whole world spent 365 days to deal with employees and its plants. Hoa Phat Dung Quat Steel
SARS-CoV-2, caused by a new coronavirus. This pandemic Joint Stock Company also joined hands with the local
not only pushed the global health system into crisis, government to welcome nearly 5,000 people into the
but plunged the global economy into the most serious dormitory of the employees to take shelter. Other
contraction since the Great Depression in the 1930s of the member companies of Hoa Phat Group also urgently and
last centuries. In Hoa Phat, plants and farms are spread seriously applied natural disaster prevention and control
across the country, so the prevention and control of measures to ensure safety for employees and assets of
Covid-19 has become more difficult and urgent than ever. the Company. As a result, the Group has minimized the
effects and damages caused by the storm.
Solutions:
At the office buildings, plants, and farms of Hoa Phat Policy risk:
Group’s member companies across the country, anti- Since July 01, 2020, 12 laws have been officially enforced.
epidemic measures against Covid-19 have been Also, throughout 2020, 17 laws were passed at the 9th and
implemented synchronously with the temperature control 10th session of 14th National Assembly. They are important
of all employees and guests, spraying disinfectant, wearing laws with great impacts on the social life of our country
facemasks at the workplace, keeping distance, dividing in general and on Hoa Phat’s production and business in
the shift meal, and etc. The plants have made available for particular. Besides, the system of decrees and circulars has
contingency plans in case of lockdown such as preparing been and is to be issued, requiring Hoa Phat to always
on-site facilities, accommodation, and medical services for follow the changes in each regulation to promptly apply.
workers to ensure their continuous production.
Solutions:
With the aim of a lean apparatus with intensive knowledge
At the Group’s offices, all employees are required, before
of works, Hoa Phat’s member companies always make great
entering elevators, to disinfect their hands, not talk in the
efforts to improve their employees’ legal skills by mean of
elevator, and limit communication among companies in the
training courses, or internal communications. Further, the
building if not really necessary. It is imperative to wear a
Group also set up specialized departments such as Legal
facemask when working/talking to others. The companies
Department, Finance Department, and Internal Control
minimize meetings and crowded works, otherwise it is
Board under the Group to support the member companies
required for members attending the meeting to wear the
in complicated and problematic cases. Additionally, the
facemask with hand washing and disinfection procedures
Group’s specialized departments are to disseminate and
before entering the meeting room.
update professional knowledge on legal, accounting and
taxation to each unit, ensuring that they properly and fully
apply the new effective law provisions.

24 GENERAL INFORMATION Operational Risks

 Risk of international trade: order to make proper adjustments, ensure boosting
Not only struggling with the pandemic, the steel output, and build a stable and sustainable distribution
export was also faced an increasing risk of trade system. Meanwhile, Hoa Phat also restructured its
defense lawsuits on the world market, which made production and trading according to the market signals.
difficulties of Vietnam’s steel industry in 2020 be
exacerbated doubly.
Personnel risk:
With over 25,000 employees coming from all parts of the
Particularly, low-priced steel imports from China is
country at young working age, the personnel fluctuation
significantly affecting the domestic consumption. The
is always a special matter to be resolved. While the steel
trade protectionism on the international market has
production sector always needs a large amount of skilled
been badly concerned, and the domestic real estate
workers, the training system of Vietnam in mechanical
as well as construction market have not revealed any
engineering has not yet met the actual requirement.
signs of flourishes. Nonetheless, this is also a “test” for
Hoa Phat to restructure, improve its competitiveness Solutions:
and dominate market share. Considering human resources to be the core value
of success, Hoa Phat consistently focuses on training
Solutions: knowledge and skills for employees. Subsidiaries
European Union–Vietnam Free Trade Agreement
regularly hold training courses, closely coordinate
(EVFTA), taking effect on August 01, 2020, has paved
with universities, colleges, vocational schools in
the way for growth of the steel export market. Hoa
mechanical engineering to attract skilled workers
Phat has already made carefull preparations to welcome
satisfying requirements for business development.
opportunities as well as satisfy committed technical
Development policies in terms of both quality and
standards, understand deeply legal framework of the
quantity are always implemented equally. Hoa Phat
market and technical barriers to be more proactive in
Group has deployed a rating system to standardize
export, and avoid to be trapped in the trade defence
the human resource system on a group scale to be
lawsuits.
applied on a step by step basis in calculation and
payment of salaries to motivate employees.
Hoa Phat is always proactive in accessing, enhancing
its competitiveness by cost-saving, improving
administration capacity, product quality and expanding
the market. The Group has continuously reviewed and
re-evaluated its sales policy and distribution system in

ANNUAL REPORT 2020 25

Committing itself to leading in quality,
Hoa Phat rose to a new stature
REPORT OF
BOARD OF DIRECTORS
1. LIST OF MEMBERS OF BOD
2. REPORT OF BOD
3. OPERATING PERFORMANCE EVALUATION
4. FINANCIAL SITUATION
5. IMPROVEMENT OF MANAGEMENT STRUCTURE
6. BUSINESS PLAN FOR 2021
 LIST OF MEMBERS OF BOD

TRAN TUAN DUONG NGUYEN VIET THANG NGUYEN T. PHAM T. KIM OANH
General Director Deputy General Director THAO NGUYEN CFO & Chief Accountant
Deputy General Director

• Educational qualification: • Educational qualification: • Educational qualification: •Educational qualification:

Bachelor of economics – Bachelor of civil engineering, Bachelor of economics – Hanoi Master of economics, National
National Economics University National University of Civil University of Finance and Economics University
Engineers. Accounting
• Joining date: 1992 • Joining date: 2003 • Joining date: 1998 • Joining date: 2008

Before he became the Deputy Mr. Nguyen Viet Thang Ms. Nguyen Thi Thao Nguyen Ms. Pham Thi Kim Oanh was
Chairman of Management Board had several years in the was the Chief Accountant of appointed as CFO & Chief
cum CEO of Hoa Phat Group management position as Hoa Phat Steel Pipe Co., Ltd. Accountant of Hoa Phat Group
since January 2007, Mr. Tran the Deputy Director of Hoa and the Head of Supervisory Joint Stock Company on April
Tuan Duong held management Phat Urban Development and Legal Board of Hoa Phat 28 2016.
position in subsidiaries such and Construction JSC and Group Joint Stock Company
as: Hoa Phat Equipment & Director of Hoa Phat Hung before she was appointed as
Number of shares held at
Accessories (now Hoa Phat Metal Yen Feeds Co.,Ltd before he the Deputy General Director March 22, 2021
Producing), Hoa Phat Furniture was appointed as the Deputy of Hoa Phat Group Joint Stock
and Hoa Phat Steel Pipe. General Director of Hoa Phat Company on 1st September 0.00%
Group Joint Stock Company 2010.
Number of shares held at on 7th April 2012. He was
March 22, 2021 Number of shares held at
appointed as the Director of

2.68%
March 22, 2021
Hoa Phat Hai Duong Steel
JSC since March 2018.
0.02%
Number of shares held at
March 22, 2021

0.32%

ANNUAL REPORT 2020 29

REPORT OF BOD
Vietnam became one of three countries in the world
with positive growth rate, besides China and Egypt.
Although the goal of 5%-6% set by the National
Assembly was not satisfied, Vietnam economy has
gained remarkable achievements with GDP of 2.91%.
The Government of Vietnam is steadfast in its dual goal
of epidemic prevention and economic development.
Industrial and construction sector accounts for 33.72%
in Vietnam’s economic structure which has kept its
growth of 5.6% against the last year. In which, the
processing, manufacturing sector increased 5.82%,
playing a key role in leading the whole sector’s growth
rate. (Source: VSA, Jan 2021).

2020 is a historic year that brought challenges to

Vietnam’s steel sector. Besides the shock called
Covid-19, the price of iron ores strongly increased
while the sale price of steel sharply declined, which
contributed to decreases in the sector’s profit
margin. At the same time, Hoa Phat Group obtained
outstanding achievements in other sectors. The
Group’s revenue reached VND 91,279 billion and its
The world’s economy in 2020 dramatically declined
after-tax profit up to VND 13,506 billion, increasing
on a large scale with the negative growth rate of
by 41% and 78% respectively compared to 2019,
3.5% for the first time in decades. The picture of grey
exceeding 6% and 50% of the business plan.
economy is caused negatively by a series of natural
disasters, epidemics, conflicts covering many regions
Total payment to the State Budget for the year was
and especially the global pandemic SARS CoV-2. This
VND 7,300 billion, increasing by 10% over the same
is the biggest, unprecedented crisis the world has
period, of which, three provinces that contributed the
struggled since World War II and the biggest economic
most were Quang Ngai, Hung Yen and Hai Duong.
disaster since the Great Depression of 1930. 2020 has
Hoa Phat Group was honored the Top 10 Non-state
been an unforgettable year in the world history.
enterprises, the Top 30 outstanding enterprises with
the fulfillment of tax obligations over the course of
1990-2020 conferred by the Ministry of Finance.

2019 2020 2020 plan (%) Growth rate % achieved

INDICATORS (VND bn) (VND bn) (VND bn) 2020/2019 compared to plan

Revenue 64,678 91,279 86,000 41% 6%

Profit 7,578 13,506 9,000 78% 50%

30 REPORT OF BOARD OF DIRECTORS Report Of Bod

 OPERATING PERFORMANCE
EVALUATION
Despite many challenges, the revenue in 2020 was steel sheet gained 6,770,000 tons, increased 1.2 times
exceeded 6% compared to the plan and increased by 41% compared to 2019. Even though output of finished steel
over 2019. The Group’s growth rate increased 6.3 times products of the whole market reached the negative
after 10 years (since 2010). Additionally, the Group’s profit growth rate of 1.18% over the same period of 2019, Hoa
exceeded 50% of the year plan and achieved an increase Phat’s construction steel still gained 22.53% of the growth
of 78% over the same period in 2019. rate. Hoa Phat Group’s construction steel and steel pipes
continued to maintain the No. 1 market share in the market
Steel production (including construction steel, hot-rolled respectively 32.5% and 31.7%. Hot-rolled coil (HRC) was
coil, steel pipe, prepainted galvanized steel sheet, pre- officially launched on the market in November 2020.
stressed concrete bar, etc.) still played a key role and was
the core business line of the Group with a growth rate of The Group’s agriculture sector obtained striking
81%, mainly contributed from the increase in output of developments with an increase of 32% in revenue and
Hoa Phat Dung Quat Steel Integrated Complex. While, contributed 12% to the Group’s revenue. Specially, Hoa
the steel products obtained more noticeable profit with Phat’s profit in agriculture sector is 3 times higher than
the increase of 94%. the same period of 2019 with the strong growth of the
livestock and feeds. Hoa Phat’s agricultural products such
Revenue and profit after tax of the steel sector respectively as Australian cow, pigs breeded by biosafety technology,
accounted for 84% and 82% of the Group’s revenue and clean chicken eggs leaded the market, showing the high
profit. In 2020, total output of billets, steel pipes and potential for the next year’s development.

CHART OF THE GROUP’S REVENUE

AND PROFIT AFTER TAX OVER THE YEARS (VND Billion)
R A -   


16,000 100,000

14,000
80,000
12,000

10,000
60,000

8,000

40,000
6,000

4,000
20,000
2,000

0 0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
14,493 18,093 17,122 19,200 25,852 27,865 33,885 46,855 56,580 64,678 91,279
1,376 1,297 1,031 2,010 3,250 3,504 6,606 8,015 8,601 7,578 13,506

ANNUAL REPORT 2020 31

The real estate sector completed the after-tax profit target carrying out investment procedures for expansion, site
compared to the assigned plan. During the year, Hoa Phat clearance compensation and infrastructure construction to
Industrial Zones leased 23.5 ha of land, filled almost all areas meet the current high demand for industrial land lease.
invested in technical infrastructure. Hoa Phat is currently

Real Estate Real Estate

4% 6%
Agriculture Agriculture
12% 12%
Iron and Steel Iron and Steel
84% 82%

SHARE OF REVENUE SHARE OF PROFIT

BY SEGMENTS IN 2020 BY SEGMENTS IN 2020

FINANCIAL SITUATION
Total after-tax profit of the Group exceeded 50% of the In 2020, Ebitda (Earnings before interest, tax, depreciation
proposed plan, increased sharply by 78% compared to and amortization) reached VND 22,988 billion, increasing
2019, particularly reaching VND 13,506 billon, the highest by 78% against 2019, which showed net income from
recorded achievement. After-tax profit margin on net operating activities without corporate income tax expense,
revenue in 2020 reached 15%. In the context of challenges depreciation and amortization. The quarterly absolute
and high ore price, the above profit margin shows the value of Ebitda has greatly improved compared to
efficiency in managing the Group’s costs as well as the previous years. In the 4th quarter of 2020, Ebitda was VND
advantages from the closed production process from 7,495 billion, 6.4 times higher than VND 1,163 billion in
upstream. the 1st quarter of 2015. Ebitda increased quarterly, mainly
contributed by Hoa Phat Dung Quat Steel Integrated
Complex. The Ebitda rate increased markedly, currently
maintaining 29%. Therefore, Hoa Phat has a much better
growth rate of revenue and profit margin than steel
companies globally.

32 REPORT OF BOARD OF DIRECTORS Financial Situation

 EBITDA, EBITDA RATE 2015-2020
E R E
7,495 40%
8,000
36%
7,000 35%

29%
6,000 30%
28% 29%
27%
25% 25% 26% 26% 4,572
5,000 24% 24% 23% 25%
25%
23% 22%
23% 23% 21%
4,000 20% 20% 20%
20% 19% 19%
3,000 15%

2,000 10%

1,000 5%

0 0
Q1/2015

Q2/2015

Q3/2015

Q4/2015

Q1/2016

Q2/2016

Q3/2016

Q4/2016

Q1/2017

Q2/2017

Q3/2017

Q4/2017

Q1/2018

Q2/2018

Q3/2018

Q4/2018

Q1/2019

Q2/2019

Q3/2019

Q4/2019

Q1/2020

Q2/2020

Q3/2020

Q4/2020
ASSET STRUCTURE
The Group’s total assets increased sharply by about 30% and rise production scale to a new stature. By the end of
over 2019. In particular, non-current assets still accounted 2020, the asset structure has gradually balanced. Current
for the majority with an increase of VND 3,425 billion, and non-current assets accounted for 43% and 57%
reaching VND 74,764 billion. The Group continued to respectively. The total assets doubled after only 3 years,
increase fixed assets which resulted by the completion of from 2017, the time to start investment in the construction
major projects. In 2020, a sharp increase of VND 26,310 of Hoa Phat Dung Quat Integrated Complex. This is
billion of current assets was recognized, equivalent to an still the appropriate and standard asset structure of the
increase of 86% compared to the same period in 2019. industrial production.
This sharp increase aims to supplement working capital

REVENUE, TOTAL ASSETS, EQUITY

OF THE GROUP FROM 2010-2020
R T A E

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
14,493 18,093 17,122 19,200 25,852 27,865 33,885 46,855 56,580 64,678 91,279
14,904 17,525 19,016 23,076 22,089 25,507 33,227 53,022 78,223 101,776 131,511
6,398 7,414 8,085 9,500 11,796 14,467 19,850 32,398 40,623 47,787 59,220

ANNUAL REPORT 2020 33

Current assets increased sharply, inventories accounted Non-current assets increased slightly due to only a few
for 46%, and inventory turnover as at 31/12/2020 was assets were recorded during the year. Specifically, as of
3.1 times. These figures show the high inventory turnover December 31, 2020, non-current assets reached VND
rate, and the Group’s inventory management is always 74,764billion, an increase of 5% over the same period last
monitored and operated effectively. year. Fixed assets, investment properties and long-term
work in progress accounted for 97%.

ASSET STRUCTURE
FROM 2015-2020
53% 45% 38% 68% 70% 57%
C 

N- 

47% 55% 62% 32% 30% 43%

2015 2016 2017 2018 2019 2020

CAPITAL SOURCE STRUCTURE

CAPITAL SOURCE
STRUCTURE
FROM 2015-2020 43% 40% 39% 48% 53% 55%
(VND BILLION)

L

E
57% 60% 61% 52% 47% 45%

2015 2016 2017 2018 2019 2020

The Group’s capital source structure, in 2020, was increased short-term loans are normal for a larger
maintained stably. Equity increased by 24%, from VND production cycle. On the other hand, the ratio of net
47,787 billion to VND 59,220 billion, originated from the debt-to-equity is currently at 0.54 times, a low average
profit generated during the year. Although the debt-to- level in use of financial leverage. In spite of the year with
equity ratio increased to above coefficient of 1, the ratio the highest bank loan due to a strong increase in scale,
of bank debt to equity increased at 0.91 times. it is still controlled rigidly, which helps the Group build
its resilience to face the near future. Net cash flow from
After Hoa Phat Dung Quat Steel Integrated Complex operating activities dawned better improvement with an
was put into operation, the high debt ratio and strongly increase of 17% over the last period, showing that Hoa
Phat’s financial health is enhanced.

34 REPORT OF BOARD OF DIRECTORS Capital Source Structure

 DEBT RATIO
D--  B / NET  /

1.13 1.22

0.93 0.77 0.91

0.60
0.64 0.54
0.44

2018 2019 2020

Current and quick ratio at the end of 2020 were at 1.09 and 0.54 times respectively, higher than the same
period in 2019. The current ratio is always above 1, showing that the Group’s liquidity ratio is stable.

QUICK RATIO AND CURRENT RATIO

S C 

1.12 1.13 1.09

0.42 0.35 0.54

2018 2019 2020

ANNUAL REPORT 2020 35

BUSINESS PERFORMANCE
Key indicators in evaluating performance are ROE (Return While assets increased by 29.2%, ROA improved over the
on Equity) and ROA (Return on Assets). In 2020, Hoa same period in 2019 mainly due to the sharp increase in
Phat’s ROE reached 22.8%, significantly higher than the profit after tax. In the future, it is certain that this index
rate of 15.9% in 2019. Besides that, the Group’s ROA will be better because the investment assets will operate
also rebounded from 7.4%. in 2019 to 10.3% in 2020. effectively.

EQUITY, ROE AND ROA

OF THE GROUP OVER YEARS
E P/E (ROE) P/T  (ROA)

60,000 40%

50,000 33.3%

30%
40,000
24.2% 24.7%
22.8%
21.2%
30,000 20%
19.9%
13.7% 15.1%
15.9%
20,000
11.0% 10.3% 10%
7.4%
10,000

0 0
2015 2016 2017 2018 2019 2020
14,467 19,850 32,398 40,623 47,787 59,220

IMPROVEMENT OF MANAGEMENT STRUCTURE

As part of the strategy of organizational restructuring, Regarding organization restructure, in December 2020, Hoa
Hoa Phat Group has decided to restructure the Phat Group’s BOM approved resolutions on establishment
operating model by capital divestment at furniture of 04 corporations to manage each sector. In which, Hoa
sector and establishment of specialized Corporations Phat Iron and Steel Joint Stock Company is the legal entity
instead. Hoa Phat also researched to apply modern managing the entire sector of iron and steel production
management solutions such as ERP, e-office and other and business of the Group with subsidiaries including: Hoa
software for better management, towards digital Phat Hai Duong Steel JSC, Hoa Phat Dung Quat Steel JSC,
transformation. Hoa Phat Hung Yen Steel Co., Ltd, and An Thong Mineral
Investment JSC. The charter capital of Hoa Phat Iron and

36 REPORT OF BOARD OF DIRECTORS Business Performance

Steel JSC is VND 39,000 billion with its business lines in system in the management of office blocks. With this
investment, production and trading of construction steel, software, documents are stored synchronously, quickly
hot-rolled coil and ancillary activities, sea transport. searched, while minimizing the time for processing them.
Additionally, the Group equips Microsoft Office 365
Value-added products in Hoa Phat steel ecosystem tools for the office block, which supports employees to
including steel pipes, prepainted galvanized steel, drawn access data anytime, anywhere, on multimedia, integrated
steel wire, prestressed concrete steel and other ancillary messaging, conference meetings, and online calls.
products will be produced, invested and managed by Hoa
Phat Steel Products JSC (Steel Products Corporation). Its In member companies, Hoa Phat Dung Quat Steel JSC has
subsidiaries include Hoa Phat Steel Pipe Co., Ltd, Hoa applied SAP S/4HANA in management of all production
Phat Steel Sheet Co., Ltd, and Hoa Phat Metal Producing and business activities at Hoa Phat Dung Quat Steel
Co., Ltd, Hoa Phat Refrigeration Engineering Co., Ltd. Integrated Complex. SAP is applied in all operations:
finance - accounting, product quality management,
Previously, on December 8, 2020, Hoa Phat Real Estate production management, purchasing, contributing to
Development Joint Stock Company (Hoa Phat Real Estate accurate, strict and consistent data processing, avoiding
Corporation) was incorporated with a charter capital errors and uptime reduction.
of VND 2,000 billion which manages all investment,
construction, real estate and ancillary activities. Thus, the Over the year, many appointments have been made in both
Group has completed its restructure and established 04 the office block and the plant. Personnel appointed to the
corporations under the Group including: Iron and Steel, management level are usually those with rich experience
Steel Products, Agriculture and Real Estate Corporation. in working at the Group, high qualifications and deep
understanding in all business activities. A stable, friendly
In addition to restructuring the operation model, Hoa working environment, attractive remuneration policies and
Phat also gradually carries out digital transformation with open promotion opportunities are key factors that make
effective overall management solutions and application of Hoa Phat’s employees are always willing to devote to the
information technology in organization and management. company.
Hoa Phat Group has applied V-Office (Viettel) e-office

ANNUAL REPORT 2020

BUSINESS PLAN FOR 2021

Positive results in the Covid-19 vaccine research However, new variants of the SARS-CoV-2
in many countries around the world, the success virus have appeared in many countries while
of Brexit trade agreement between the UK the pandemic is not under control. Prevention
and EU, the US government’s approval of the measures the high unemployment index due
stimulus package. etc. have allowed the world to prevention measures, decline of consumer
economy in 2021 to see ‘hope for a brighter demand, and increased fuel prices, etc. are
future’. Vietnam has succeeded in realizing the direct challenges for the economy in 2021.
dual goal of pandemic fighting and economic
development. Last year, Vietnam was one of the Therefore, Hoa Phat concludes that 2021 still
few countries in the world with a positive growth has many challenges for the Group. However,
rate of 2.91%. Vietnam’s economy scale reaches with the determination and unanimity of more
USD 343 billion; the export surplus got a high than 25,000 officers and employees, Hoa Phat
record of USD 19.1 billion; foreign exchange believes that the orientation and direction are
reserves hit USD 100 billion; public debt right. The Group’s leadership strives to achieve
decreased to 56% of GDP. This is an important the following goals:
foundation for Vietnam to continue its positive
development in 2021 with the GDP growth
target of 6 to 6.5%.

Completing construction investment items of Phase 2 and legal procedures for expansion of
Hoa Phat Dung Quat Steel Integrated Complex;

Consuming all the products produced. Continuing to lead the nationwide market share of
construction steel and steel pipe - galvanized steel in the field of steel production and trading.
Striving to continue to hold the No. 1 market share of Australian cow supply in the agricultural
sector.

Managing inventory well, keeping track of the price of raw materials, having a reasonable
regulation policy.

Updating fluctuations of the world and domestic economy, especially the exchange rate,
interest rates to have effective cash flow management policies.

Investing digital technology in business administration.

Business target for 2021:

• Revenue: VND120,000 billion
• Profit after taxes: VND18,000 billion

38 REPORT OF BOARD OF DIRECTORS Business Plan For 2021

ANNUAL REPORT 2020 39
 PERFORMANCE IN 2020
1. PERFORMANCE OF SUBSIDIARIES
1.1. Iron and Steel
1.2. Hoa Phat Steel Products
1.3. Agriculture
1.4. Real Estate
2. HUMAN RESOURCE MANAGEMENT
3. POLICIES FOR EMPLOYEES
4. INVESTMENT STATUS OF KEY PROJECT
5. STRUCTURE OF SHAREHOLDERS
6. INVESTOR RELATIONS

BÁO CÁO BAN GIÁM ĐỐC Đánh giá kết quả hoạt động sản xuất kinh doanh
PERFORMANCE OF SUBSIDIARIES

IRON AND STEEL

With a charter capital of VND 39,000
billion, Hoa Phat Iron and Steel JSC (Hoa
Phat Iron and Steel Corporation) is the
legal entity managing the entire iron and
steel production and supporting activities
of the Group. By impressive business
results, member companies in the iron and
steel sector play a leading role in keeping
the growth pace.

CHART OF HPG CONSTRUCTION STEEL

OUTPUT AND MARKET SHARE
V HPG V  S  A  HPG   M 
( )
12 35%
33%

10 30%
26%
24% 24%
8 22% 25%
21%
19%
6 20%
15%

4 15%
3,4
2,8
2,2 2,4
2 1,8 10%
1,4
1,0
0,7
0 0
2013 2014 2015 2016 2017 2018 2019 2020

ANNUAL REPORT 2020 41

 CHART OF % GROWTH RATE
OF CONSTRUCTION STEEL SALES VOLUME IN 2007-2020
%    HPG’    %    V
  S A

 ’   

64

43
38

31 31

22 21 23
19 24 26 17
14
16 11 14 9
12
10
1 3 6 -1
-5

-4 -8
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Hoa Phat’s crude steel output reached in the Top 50 largest global crude steel manufacturers
(according to World Steel 2020).
5.8 million tons for the first time
Hoa Phat’s production capacity has increased to 26
Hoa Phat owns two modern steel integrated complexes
times compared to the time Hoa Phat put its first step in
in Hai Duong and Dung Quat and a steel mill complex in
construction steel in 2001. From the steel billet refinery
Hung Yen. Accumulating the whole year of 2020, Hoa Phat
used electric furnace technology with output of 300,000
Group achieved 5.8 million tons of crude steel output,
tons/year, Hoa Phat has increased crude steel output up
doubled the same period in 2019. It surpassed Formosa
to 8 million tons/year at the beginning of 2021, mainly
for the first time to become the largest steel manufacturer
by blast furnace and oxygen furnace. With this capacity,
in Vietnam throughout the last 4 months of 2020. High
Hoa Phat has risen to the No. 1 position in crude steel
crude steel output is the basis for Hoa Phat to concrete and
production in Vietnam in particular and Southeast Asia
improve market share of construction steel, boost billet
in general. Hoa Phat Steel equaled to the 48th position
export, and provide hot rolled coil (HRC) to the market.

CHART OF TOP 5 MARKET SHARE

OF ENTERPRISES IN MANUFACTURING CONSTRUCTION STEEL
35%

33%
30%

V 
25%
26%
24% 24%
20% 22%
21%
POM 19%
15%
15%
HPG 13% 14%
10% 12%
V

5%

F
 
0
2010 2012 2014 2016 2018 2020

42 PERFORMANCE IN 2020 Performance Of Subsidiaries

Consumption of billets and construction share with 32.5%, increasing by 6.3% compared to 2019.
In term of regions, the South recorded 784,000 tons, a
steel surpassed 5 million tons for the
remarkable increase of 70% compared to same period. In
first time the Central region, despite the stressful Covid-19 epidemic
Regarding consumption, in 2020, for the first time, Hoa
and unfavorable weather conditions, consumption still
Phat steel reaches a record of over 5 million tons. In
grew slightly compared to 2019. Hoa Phat Steel in the
particular, finished construction steel products reached
North still maintained the largest position in consumption,
more than 3.4 million tons, up 22.5% over the same period
accounting for 48% of Hoa Phat’s total finished steel
in 2019. Hoa Phat Steel solidified Vietnam’s No. 1 market
products.

MARKET SHARE OF HPG CONSTRUCTION STEEL IN REGIONS

N S 
C E
60%

53%
50%

40%
37%
34%
30%

23%
20%

10%

0
2013 2014 2015 2016 2017 2018 2019 2020

In the export market, the amount of finished steel for as Thailand, China, Malaysia, Indonesia, Taiwan, Sri Lanka.
export reached nearly 540,000 tons, a twice increase Particularly, the output of billets exported to China is 12
over the same period. Construction steel export markets times higher than in 2019.
consist of Japan, Korea, Canada, Australia, Cambodia,
Laos, Malaysia, Taiwan, Indonesia, Ghana, and Kenya. In Impressive steel consumption is the main contributor for
addition, Hoa Phat Group also exported 1.7 million tons Hoa Phat’s record profitability in 2020, especially in the
of billet for construction steel production to countries such last 6 months.

Hoa Phat hot-rolled coil was HRC output of Hoa Phat Dung Quat Steel Integrated
Complex in 2020 reaches nearly 700,000 tons. The Group
officially launched to the market
aims for HRC output in 2021 to reach 2.7 million tons,
meeting needs of enterprises specialized in steel pipe,
In August 2020, the blast furnace No. 3 of Hoa Phat
galvanized sheet and other mechanical engineering
Dung Quat Steel Integrated Complex was officially put
industries. Vietnam steel industry also actively added input
into operation. At that time, Hoa Phat’s hot rolled coils
materials for domestic enterprises and promoting exports.
(HRC) continuously attracted a large amount of domestic
and foreign customers, but until November 2020, HRC
On February 20, 2021, the millionth ton of HRC was officially
products with Hoa Phat brand were officially offered
released at Hoa Phat Dung Quat Steel Integrated Complex.
outside markets.
This is a memorable milestone in the development process
of Hoa Phat Dung Quat Steel Joint Stock Company in
The number of HRC orders delivered in the 1st quarter of
particular and Hoa Phat Group in general.
2021 exceeded 300% of the Group’s production capacity.

ANNUAL REPORT 2020 43

Hoa Phat has self-control over The refined iron ore and iron ore pellets of An Thong
Company are mainly supplied to Hoa Phat Steel
500,000 tons of iron ore domestically
Integrated Complex in Kinh Mon, Hai Duong. Minh Son
iron ore refining factory has actively researched and
With steel production using blast furnace technology
changed its technology to suit features of the original
and oxygen furnace, iron ore is the input material
ore at Sang Than iron mine. The main goal is to produce
accounting for 30-40%. Therefore, the partial self-control
high-quality refined iron ore, consistent with current
of domestic ore resources is always given maximum
steel production technology of Hoa Phat Hai Duong
priority. Last year, An Thong Mineral Investment JSC
Steel Joint Stock Company.
achieved an output over 500,000 tons of ore in exploiting
and processing.

HOA PHAT As a part of the strategy for operating model completion, Hoa
Phat Steel Products JSC (Hoa Phat Steel Products Corporation)

STEEL PRODUCTS was duly incorporated at the end of 2020 which takes
responsibilities for managing and operating all investment,
production and business activities of Hoa Phat steel pipes,
prepainted hot dipped galvanized steel sheet, prestressed
concrete steel and drawn steel wire and supporting activities.
Its subsidiaries include Hoa Phat Steel Pipe Co., Ltd., Hoa Phat
Steel Sheet Co., Ltd, Hoa Phat Metal Producing Co., Ltd and
Hoa Phat Refrigeration Engineering Co., Ltd.

Hoa Phat Steel pipe sales Accumulated in 2020, Hoa Phat Steel Pipe Co., Ltd has
provided over 820,000 tons of steel pipes to both domestic
volume surpassed 820,000 tons
and foreign market, increasing by 10% compared to 2019,
firmly at Vietnam’s No.1 market share of 31.7%.

44 PERFORMANCE IN 2020 Performance Of Subsidiaries

In the South, Hoa Phat’s steel pipe output achieved the
best growth rate of 15%, followed by the North with an
increase of 11% over the same period, while the Central’s
output decreased slightly because of effects of storms, 26.7%
31.7%
floods and Covid-19 pandemic. Steel pipe exports for the
whole year reached over 21,000 tons, up 12% over the same 27.7% 31.5%
period in 2019. Hoa Phat Steel Pipe’s export markets include
the US, Canada, Australia, Mexico, Southeast Asia, etc.

According to Vietnam Steel Association (VSA), global hot-

8.2%
rolled coil - HRC market has fluctuated, causing a shortage
8.5% 15.3%
of HRC supply, and high input prices of cold rolled steels, 7.7%
galvanized steel coils and steel pipes. However, with the 9.6%
advantage of HRC input from Hoa Phat Dung Quat Steel
Integrated Complex, material sources within the intra 6.7%
16.8%
Group, Hoa Phat Steel Pipe still maintained an impressive
9.6%
output, especially in the fourth quarter of 2020.

Over the year, Hoa Phat’s large-sized steel pipes have H P M N TVP
been increasingly welcomed by the market, replacing
H S V D O

imported products with faster and timely response speed

with superior quality products and applications better than
equivalent categories. Customer-trusted products include MARKET SHARE
large-sized round pipes with diameter of Ø273mm and
OF STEEL PIPES IN 2020
Ø323.8mm, square pipes with dimension of 200x200mm,
250x250mm and 200x300mm rectangular pipes.
(OUTSIDE) AND 2019 (INSIDE)

With a factory’s nationwide capacity of 1 million tons/year,

Hoa Phat Steel Pipe is the largest steel pipe producer in
Vietnam. In 2021, the Company targets to achieve sales
volume of 920,000 tons, an increase of 12% compared
to 2020.

ANNUAL REPORT 2020 45

Galvanized steel sheet with Output of drawn steel wire, PC Bar of
growth rate of 150% compared to 2019 Hoa Phat has doubled
After 3 years of official launch in Vietnam market, Hoa In 2020, Hoa Phat Metal Producing Co., Ltd’s sales volume
Phat steel sheet products has been spread widely, gaining of drawn steel wire , wire coating and prestressed concrete
a foothold in the domestic market. Hoa Phat steel sheet steel bar (PC Bar) reached about 100,000 tons, nearly
products continued to grow strongly by nearly 150% over doubling that of 2019. In addition, 30,000 tons of products
the same period. were also exported to many countries around the world,
2 times higher than last year, with markets such as USA,
In 2020, Hoa Phat steel sheet products have been seen Canada, Korea, Malaysia, Cambodia, Myanmar, Taiwan,
impressive results with a new product line – Premium since Laos, etc.
May 2020. This is a high-class line of steel sheets with
AZ150 galvanized aluminum steel sheet layer and marble- The company has put the second galvanized drawn steel
patterned coating technology, creating the best aesthetic wire line into production in Hung Yen, contributing to
steel sheet line on the market. double the capacity of drawn steel wire products. Besides,
PC bar has been delivered to the market since the first
Hoa Phat prepainted steel sheets are manufactured on quarter of 2019. In 2021, the Company expects to import
a technological line imported from Europe, meeting more lines to double the PC bar output compared to 2020,
JIS - Japan, ASTM - US, EN – Europe and AS - Australia and at the same time, launch the prestressed concrete
standards. As a result, Hoa Phat steel sheet has gradually steel cable (PC Strand) to the market.
penetrated and promoted the export to many difficult
markets around the world and highly appreciated by Hoa Phat Refrigeration exceeded
customers and partners for quality such as Americans,
profit target, its freezers ranked first in
Mexican, Europeans, Australians, Malaysians, Indonesians,
Thailands, Cambodians, etc.
output
In 2020, Hoa Phat Refrigeration’s sales volume of freezers
Since 2021, Ton Hoa Phat sets an annual production goal
increased by 120% over the same period which contributes
of 300,000 - 400,000 tons, of which maintaining the export
to Hoa Phat Refrigeration's profit increase dramatically,
ratio of 30-40%, diversifying export markets to maximize
surpassing nearly 60% of the plan for the whole year 2020.
available advantages and effectively exploiting the FTAs
to which Vietnam is a member.
To prepare for the recent New Year’s Eve, the company
has promoted research and continuously released new
products to the market with lines of household freezers
including 100 liters, 150 liters and 200 liters. This product
line's advantage is the ability to divide into separate
compartments, easy to classify as well as take foods.

By the modern production line, Hoa Phat freezer has

designed to meet standards in attractive appearance,
energy-saving, with wheel bases easy to move. The
freezer body and doors are made of thick power-coated
steel, making the surface attractive and aesthetic.
Polyurethane insulation layer with thickness of 50 to 62mm
helps the freezers keep heat well, while foam insulation
uses Cyclopentane system, friendly to the environment,
ensuring food safety and health of users. Hoa Phat freezer
is your “companion” to help preserve food for a long time.

46 PERFORMANCE IN 2020 Performance Of Subsidiaries

 AGRICULTURE

Hoa Phat entered into the sector of high-tech agriculture, biosafety from the mid-2015 by feeds production, pig,
cow and poultry farming. Hoa Phat Agriculture Development Joint Stock Company is the legal entity managing
and operating all agricultural production and business activities of Hoa Phat Group. By 2020, the agriculture's
revenue and profit contribution were 12%. Particularly, after-tax profit tripled in 2019.

In a speech delivered at the 5th anniversary of the In fact, Hoa Phat's agriculture sector has achieved proud
establishment and development of Hoa Phat Agriculture achievements. Hoa Phat’s Australian cow takes the leading
Development Joint Stock Company in November 2020, position in the country with market share of more than 50%
Chairman of Hoa Phat Group, Mr. Tran Dinh Long said: while clean chicken eggs are also leading in production
“For 5 years in agriculture, we have done a lot of things in the North with 700,000 eggs/day. In 2020, Hoa Phat
and created position for Hoa Phat’s agriculture in the delivered 150,000 Australian cows and about 385,000 pigs
market. Currently, one in every two Australian cows in to the market.
Vietnam is of Hoa Phat, taking the lead in the country. This
has been clear evidence that Hoa Phat Group has always
been doing well in any sector.”

CHART OF REVENUE AND PROFIT GROWTH

OF AGRICULTURE SECTOR IN 2016-2020 PERIOD (Unit: vnd billion)
R P

12,000

10,000

8,000

6,000

4,000

2,000

0
2016 2017 2018 2019 2020
1,477 3,009 4,712 8,127 10,720
26 52 152 579 1,677

By 2022, the company goals to reach maximum output and more efficient scale. Hoa Phat simultaneously aims to
of 600,000 tons of feeds per year; 500,000 commercial develop 3F chain (Feed - Farm - Food), improve product
pigs/year; 250,000 cows and 300 million clean chicken quality, ensure to provide consumers with the best
eggs a year, contributing to promoting the development products.
of Vietnam's agriculture towards a large, modern, biosafe

ANNUAL REPORT 2020 47

 REAL ESTATE

Hoa Phat’s real estate sector includes real estate in industrial zones (IZ) and urban areas. Since December 2020,
the entire real estate business was undertaken by Hoa Phat Real Estate Development Joint Stock Company (Real
Estate Corporation).

IZ Real Estate: Welcoming investment Therefore, Pho Noi A IZ has been investing in expanding
in the East, while Yen My II IZ will also be expanded in
waves, increasing occupancy rates
phase 2 by more than 200 hectares. It is expected that
the IZs complete their investments in infrastructure for the
The shift of investment capital flows from China and
extension to be leased from 2021. This is an important
some other countries has created new development
foundation for Hoa Phat to continue the expansion of
opportunities for industrial zones in Vietnam. In that
business and exploiting infrastructure in the IZs, welcoming
context, the industrial zones (IZs) including Pho Noi A,
more domestic and foreign investors to rent land in the
Hoa Mac, Yen My II of Hoa Phat Group have continuously
near future.
welcomed new investors to lease land for plants or
production expansion.
Hoa Phat Group plans to promote the development of
housing residential real estate projects, focusing in high
Currently, Hoa Phat has been investing and exploiting
liquidity markets such as Hanoi, Da Nang, and Ho Chi Minh
technical infrastructure in 3 industrial zones, including Pho
City. It is expected that, in 2021, Hoa Phat will deploy one
Noi A IZ (600ha) and Yen My II IZ - Hung Yen (phase 1:
or two M&A projects in these markets.
97.5ha); Hoa Mac IZ - Ha Nam (131ha). Hoa Mac IZ has
increased its occupancy rate to 75% of the area, while Pho
Noi A and Yen My II IZ have reached 100% of invested
technical infrastructure area.

48 PERFORMANCE IN 2020 Performance Of Subsidiaries

HUMAN RESOURCE MANAGEMENT
QUALIFICATION GENDER
TOTAL
No. COMPANY Above
university University College Vocational Technical Unskilled Males Females
degree degree worker worker

Total 25,428 63 4,440 3,996 3,504 5,139 8,286 21,996 3,432

A, LABORS IN VIETNAM 25,419 60 4,434 3,996 3,504 5,139 8,286 21,993 3,426

Hoa Phat Group JSC 111 1 53 11 9 7 30 56 55

Iron and Steel 16,759 29 2,764 3,116 2,674 4,321 3,855 15,316 1,443

1 Hoa Phat Hung Yen Steel Co., Ltd 793 4 132 89 134 211 223 664 129
2 Hoa Phat Hai Duong Steel JSC 5,217 10 742 850 844 1,751 1,020 4,781 436
3 Hoa Phat Dung Quat Steel JSC 10,460 11 1,838 2,156 1,676 2,286 2,493 9,638 822
4 An Thong Mineral Investment JSC 289 4 52 21 20 73 119 233 56

Steel Products 4,016 13 707 555 556 502 1,683 3,545 471

1 Hoa Phat Steel Pipe Co., Ltd 2,622 9 354 409 394 337 1,119 2,381 241
2 Hoa Phat Steel Sheet Co., Ltd 570 3 207 90 68 59 143 495 75
3 Hoa Phat Metal Producing Co., Ltd 489 1 82 22 33 62 289 420 69
4 Hoa Phat Refrigeration Engineering Co., Ltd 335 0 64 34 61 44 132 249 86

Agriculture 2,034 12 539 182 134 161 1,006 1,439 595

1 Hoa Phat Agriculture 2 0 2 0 0 0 0 1 1
Development JSC
2 Hoa Phat Hung Yen Feeds Co., Ltd 242 3 110 36 14 29 50 185 57
3 Hoa Phat Dong Nai Feeds Co., Ltd 288 0 93 47 45 7 96 240 48
4 Hoa Phat Development 821 7 213 59 31 48 463 569 252
of Livestock JSC
5 Hoa Phat Trading Co., Ltd 382 0 72 13 23 64 210 251 131
6 Hoa Phat Poultry Co., Ltd 299 2 49 27 21 13 187 193 106

Real Estate 622 2 175 37 22 51 335 446 176

Hoa Phat Urban Development
1 622 2 175 37 22 51 335 446 176
and Construction JSC

Others 1,877 3 196 95 109 97 1,377 1,191 686

1 Hoa Phat Furniture JSC (*) 1,877 3 196 95 109 97 1,377 1,191 686

B. OVERSEA LABORS 9 3 6 0 0 0 0 3 6

1 Hoa Phat Trading International PTE LTD 8 2 6 0 0 0 0 2 6

(Hoa Phat Singapore)
Dragon Trading &Investment PTY LTD
2 1 1 0 0 0 0 0 1 0
(Hoa Phat Australia)

Note (*): By the end of 2020, Hoa Phat Group restructured its operating model and divested from Furniture sector. Since
2021, the Group has 04 corporations managing each field: Iron and Steel, Steel Products, Agriculture and Real Estate
Corporation. Details are shown in Part II - Report of the Board of Directors, section “Improving organization structure and
management”, in this report.

ANNUAL REPORT 2020 49

POLICY FOR EMPLOYEER
Hoa Phat Group is large-scale industrial manufacturer Welfare policy
with a wide range of factories located in provinces Employees in Hoa Phat received not only salary, 13th-month
and cities from the North to the South of Vietnam. bonus, end-of-year bonus but also many other benefits such
Therefore, the workforce is up to over 25,000. as unscheduled bonus for outstanding achievements or
For the purpose of long-term attachment of its innovative initiatives applied to manufacturing process. As
a result, they were always dedicated and maximized their
employees, the Group implemented encouragement
creativity in order to improve work efficiency. Dozens of
and training policies, attractive welfare benefits and initiatives were given, contributing over 150 billion dong to
offered a working environment that promoted them the Group.
to maximize their creative abilities.
Particularly, Hoa Phat always complied with the Government’s
Personnel Size & Training regulations on employment. All employees were entitled
The Group had 25,428 employees in 2020, an increase of to social insurance, health insurance, etc.. Subsidiaries and
14.2% compared to 2019. Of which Hoa Phat Dung Quat affiliates coordinated with local trade unions to improve
Steel JSC had the highest number of employees of nearly the spiritual and physical life of the employees through a
10,500, accounting for 40% of total employees in the large number of welfare programs. Those who have difficult
Group. This Company’s workforce is expected to increase situation, become ill or have close family members who
in the years to come as the project of Hoa Phat Dung Quat become ill were shared, encouraged and helped with aids of
Steel Integrated Complex No2 will be estimatedly started cost of living and treatment.
in 2022.
When the Covid-19 epidemic broke out and has lasted
Currently, number of qualified employees (from vocational from the beginning of 2020, the Group actively took many
school or higher) was nearly 12,000, equivalent to 50% of measures to prevent infection such as forced to wear a face
total number of employees. As an industrial manufacturer, mask, sanitizing hands, and measuring body temperature
male employees made up the majority with 86.5%. before entering workplace; and spraying antiseptics at office
premises and factories. In addition, the Group also applied
The Board of Management of the Group always considered many support and propaganda measures such as sticking
the quality of human resources to be a core value instructional posters at offices and factories, arranging hand
determining its success. Professional training and personnel washing water, and distributing free of charge face masks to
development were the first priorities. Subsidiaries and customers and partners coming to work to ensure that all
affiliates of the Group organized many training courses to people worked in a safe environment.
improve employee’s skills and qualifications on a regular
basis. At the end of 2020, the Board of Management decided
to increase the unit price of salary for all employees of the
During the year, Hoa Phat Dung Quat Steel JSC coordinated Group. This was a great joy for them.
with the Hanoi University of Science and Technology and
the Vietnam Korea Vocational College to hold the second Extracurricular activities,
bachelor’s degree program and the inter-college program culture and sport activities
in Materials Engineering in Quang Ngai province for the Activities such as sightseeing, holiday, team building,
Company’s employees. As of December 2020, Hoa Phat exercise and sport were still organized in 2020. However,
Hai Duong Steel JSC organized nearly 100 courses for to prevent the Covid-19, they were only organized at a
thousands of people. small size when the epidemic was basically controlled.

Other affiliated companies of the Group regularly In response to the Government’s policy of epidemic
collaborated with relevant institutions to organize training prevention in combination with economic development,
courses in environmental safety, occupational health and Hoa Phat Group will maintain strict prevention measures
safety, fire prevention and other incidents. Not only factory and at the same time boost production and business. This
employees but also office employees attended training is also a key solution for the Group to fulfill its targets in the
and professional courses to enhance their work efficiency. coming time, thereby creating jobs and stable income, and
implementing better welfare programs for its employees.

50 PERFORMANCE IN 2020 Policy For Employeer

INVESTMENT STATUS OF KEY PROJECTS
Hoa Phat Dung Quat Steel Integrated Complex Project
• Address: Dung Quat economic zone, Quang Ngai province
• Total investment: VND 60,000 billion;
• Designed capacity: 5.6 million tons per year
• First phase: 2.6 million tons of long steel per year
• Second phase: 3 million tons of hot-rolled coil (HRC) per year
• Progress: The first phase and the second phase of Hoa Phat Dung Quat Steel Integrated Complex
were completed and put into operation. Hoa Phat manufactured the first hot-rolled coil in June 2020
and reached one million tons of hot-rolled coil after nine months of operation. The total accumulated
amount of investment disbursed for the project at the end of 2020 was 56,000 billion dong.

North Pho Noi Urban Area Project in Hung Yen Province

• Address: Phan Dinh Phung commune, Nhan Hoa commune, Ban Yen Nhan town, My Hao District,
Hung Yen province.
• Area: 262 ha.
• Size: Complex of urban area and social infrastructure, including trading centers, office services, high-
rise and low-rise apartment buildings, townhouses, villas.
• Total investment: The project is divided into two phases. Total investment of the first phase is about
6,500 billion dong. Upon completion of the first phase, the second phase will be invested in.
• Progress: Land clearance, tree growing and infrastructure were completed. Sale of goods is expected
to start in 2021.

STRUCTURE OF SHAREHOLDER
Details of shares information
• Stock sticker symbol: HPG
• Initial offering date: 15/11/2007
• Outstanding shares: 3,313,282,659 shares
• Market capitalisation (as at 31/12/2020): VND 137,335,566,215,550

Changes in owner’s equity during the year

• On August 05, 2020, HPG changed the number of outstanding shares as a result of share
issuance to pay dividend for 2019:
- Authorized capital before issuance: VND 27,610,741,150,000
- Authorized capital after issuance: VND 33,132,826,590,000
• Treasure share: The Group has no treasury share

ANNUAL REPORT 2020 51

CHART OF SHAREHOLDER STRUCTURE

30% 30%
36%
B  M,
S  B, B 
D  , C  A  D 
R    F  

O  
70%
F  

24% 10%
STRUCTURE OF SHAREHOLDER
BY GEOGRAPHICAL REGION
STRUCTURE OF
SHAREHOLDER BY GROUP

Share transaction of insiders and their related people

From 01/01/2020 to 31/12/2020

Relation to Insider Shares held at the Shares held at the

Trader Reason
beginning of period end of period
No.
Shares Rate (%) Shares Rate(%)

Younger sister
1 Ta Thi Hang of Mr. Ta Tuan Quang, 28,252 0.00 0.00 Sale
Member of BOM
Son of Mr. Tran Dinh Long
2 Tran Vu Minh - 0.00 48,000,000 1.45 Purchase
- Chairman of BOM
Transferring
Elder brother shares to
3 Tran Dinh Thang of Mr. Tran Dinh Long - 450,361 0.02 150,361 0.00 wife and
Chairman of BOM children
Sale,
4 Ta Tuan Quang Member of BOM 3,591,369 0.13 4,369,642 0.13 purchase
Sale,
5 Doan Gia Cuong Vice Chairman of BOM 54,608,837 1.98 41,530,604 1.25 dividend
Purchase,
6 Tran Dinh Long Chairman of BOM 700,000,000 25.35 864,000,000 26.08 dividend

Fund related to Mr. Hans

PENM III Germany GMBH Sale,
7 Christian – Member of 63,773,811 2.31 66,520,003 2.01 dividend
& CO.KG BOM
Sale,
8 Nguyen Ngoc Quang Member of BOM 53,108,837 1.92 62,730,604 1.89 dividend

52 PERFORMANCE IN 2020 Chart Of Shareholder Structure

List of major shareholders as at 22/3/2021

Shareholder Address Shares Ownership %

No.

119 Bui Thi Xuan, Hai Ba

1 Tran Dinh Long 864,000,000 26.08%
Trung district, Ha Noi City

119 Bui Thi Xuan, Hai Ba

2 Vu Thi Hien 243,060,000 7.34%
Trung district, Ha Noi City

1501 Me Linh Point Tower,

3 Dragon Capital 2 Ngo Duc Ke, Dist 1, Ho 197,807,852 5.97%
Chi Minh City

Total 1,304,867,852 39.39%

ANNUAL REPORT 2020 53

Payment of dividends and bonus shares

HOA PHAT DIVIDEND PAYOUT RATIO FOR 2007 - 2020

60%

50% 50%

40%

35%
30% 30% 30% 30% 30% 30%
25%
20% 20%

estimate
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Hoa Phat increase of authorized capital for 2007-2020

HOA PHAT INCREASE

OF AUTHORIZED CAPITAL FOR 2007-2020

2007 2008 2010 2012 2014 2015 2016 2017 2018 2019 2020
1,320 1,964 3,178 4,191 4,819 7,330 8,429 15,171 21,239 27,611 33,133

54 PERFORMANCE IN 2020 Chart Of Shareholder Structure

SHAREHOLDER RELATIONS

Due to the effect of Covid 19, IR activities in 2020 were HPG remained as one of the strongest shares drawing
mainly held online using email or telephone. Thanks to investors’ attention. With its good intrinsic value and high
these tools, the IR department still maintained relation liquidity, Hoa Phat is called as "national share", which is
and exchange with shareholders, analysts and domestic always included in Top 10 highest value shares and exerts
and foreign investors on the regular and daily basis. positive effect on stock exchange indicators.
Information about the production and sale of main articles
such as steel, agricultural products and real estate and the On October 15, 2020, Hoa Phat was honored by Forbes
schedule of Dung Quat Steel Integrated Complex was Vietnam as one of the 50 best listed companies in 2020.
always updated on the Group website and other public This was the eighth time in a row HPG was included in
media. this list and the second time Hoa Phat was in the top 5
listed companies in terms of revenue and top 10 in terms
The General Meeting of Shareholders was held at the of profit. Additionally, Hoa Phat was also one of the 10
end of June 2020 with the participation of 333 delegates listed companies with the largest market capitalization on
representing 78% of outstanding voting shares. At the Ho Chi Minh City Stock Exchange. These results reflect
the event, the Group’s Leaders reported in detail the an outstanding development of Hoa Phat in a fruitful year.
production and business, the revenue and profit from all Its profits continuously set new milestones even though
lines of business to all shareholders. Vietnam faced unprecedented challenges caused by the
Covid-19 pandemic.
Noticeably, Mr. Tran Dinh Long, as Chairman of the BOM,
frankly responded to shareholders’ questions related to In the upcoming years, IR department will continue to
the Group’s segment of business, especially the Hoa Phat promote IR activities in order to obtain and provide
Dung Quat Steel Integrated Complex Project and the exact information to and promptly respond to all queries
area of agriculture. He also answered questions in relation from investors. Hoa Phat will always comply with legal
to payment of dividends in 2020, future development regulations on disclosure and publicity to create equal
orientation and other key issues. investment opportunity to all investors. The Group aims to
step by step professionalize IR activities in various forms.
During the year, the Group had virtual meetings with many Please contact us at [email protected].
investment funds such as Dragon Capital, VOF, PENM,
Consilium, Truck Capital, Sumitomo Mitsui DSAM, RWC,
etc. Hoa Phat also took part in face-to-face meetings with
domestic and foreign investors with a view to exchanging
opinions and updating the status of the Group.

ANNUAL REPORT 2020 55

 CORPORATE
GOVERNANCE
1. LIST OF MEMBERS OF BOM AND OWNERSHIP PERCENTAGE

2. BOM ASSESSMENT OF OPERATION

3. MAIN ACTIVITIVES OF BOM DURING THE YEAR

4. PLANS AND DIRECTIONS

BÁO CÁO BAN GIÁM ĐỐC Đánh giá kết quả hoạt động sản xuất kinh doanh
 LIST OF BOM MEMBERS AND
OWNERSHIP PERCENTAGE

TRAN DINH LONG TRAN TUAN DUONG NGUYEN MANH TUAN

Chairman of BOM Vice Chairman of BOM Vice Chairman of BOM

• Educational qualification: • Educational qualification: • Educational qualification:

Bachelor of economics Bachelor of economics Bachelor of economics
- National Economics University – National Economics University – National Economics University
• Joining date: 1992 • Joining date: 1992 • Joining date: 1996

As founding shareholder and holding Mr. Duong held management position in In 1996, Mr. Tuan was a Vice Director of
Chairman position of member companies, subsidiaries such as: Hoa Phat Equipment Hoa Phat Steel Pipe Co., Ltd cum Head of
Mr. Long was the first person setting up & Accessories Co., Ltd, Hoa Phat Furniture trading department. Since 10/2004, being
the foundation for Hoa Phat Equipment & JSC and Hoa Phat Steel Pipe Co., Ltd; Director of Hoa Phat Steel Pipe Company,
Accessories, "currently is Hoa Phat Metal before he became the Deputy Chairman Mr. Tuan has helped the Hoa Phat steel
Producing Co., Ltd the earliest member of Management Board cum CEO of Hoa pipe become a top steel pipe maker.
in the Group. Mr. Long employed a lot of Phat Group since January 2007. With
experts who had consensus ambition and his in deep experience, Mr. Duong has
responsibilities. During the establishment contributed greatly to strengthen the Number of shares held at
March 22, 2021
and development of Hoa Phat, Mr. Long position of Hoa Phat steel and Hoa Phat
was the person who oriented business
strategy for each subsidiary.
Group as a whole.
2.63%
Number of shares held at
Number of shares held at March 22, 2021
March 22, 2021

26.08% 2.68%

ANNUAL REPORT 2020 57

LIST OF BOM MEMBERS AND
OWNERSHIP PERCENTAGE

DOAN GIA CUONG NGUYEN NGOC QUANG TA TUAN QUANG

Vice Chairman of BOM Member of BOM Member of BOM

• Educational qualification: • Educational qualification: • Educational qualification:

MBA, National Economics University Vocational training National Economics University

• Joining date: 1999 • Joining date: 1992 • Joining date: 1995

Mr. Cuong was appointed first in the Mr. Nguyen Ngoc Quang had been Mr. Quang was among founders of
position of Vice Director before promoting Director of Hoa Phat Equipment & Hoa Phat Furniture, he was Director of
as a Director of Hoa Phat Furniture JSC. Accessories in Ho Chi Minh subsidiary for Hoa Phat Furniture for 11 years. Since
From 01/2007, he additionally held the 4 years (1992-1996). He has been Director December 2006, he has been Director
Deputy Chairman position of Hoa Phat of the Company (currently as Hoa Phat of Hoa Phat Refrigeration Engineering
Group JSC. With his straight forward Metal Producing Co.,Ltd) since 1997. As where he has contributed signicantly
orientation in achieving realistic goals, one of the top construction equipments to its success and brand name of Funiki
Mr. Cuong has helped Hoa Phat Furniture producer in Vietnam, products of Hoa position.
becoming familiar to every Vietnamese Phat Equipment & Accessories under
consumer. From April 2016, he held his management have been successfully Number of shares held at
the position of Director of Hoa Phat persuading customers in domestic and March 22, 2021

0.13%
Agricultural Development Joint Stock foreign country on their qualities, prices
Company, responsible for managing the and after sales services.
whole agricultural segment of Hoa Phat
Group. Number of shares held at
March 22, 2021
Number of shares held at
March 22, 2021 1.89%
1.25%

58 CORPORATE GOVERNANCE List Of BOM Members And Ownership Percentage

 HOANG QUANG VIET NGUYEN VIET THANG HANS CHRISTIAN JACOBSEN
Member of BOM Member of BOM Member of BOM

• Educational qualification: • Educational qualification: • Educational qualification:

Graduated from People’s Bachelor of Civil Engineering Master of Business, Denmark
Security University
• Joining date: 2001 • Joining date: 2003 • Joining date: 2012

Joining the Group since 2001, Mr. Viet has Mr. Nguyen Viet Thang had several years Being appointed as a member of the
been elected as a Director of Hoa Phat in the management position as the Deputy Management Board in 2012, Mr. HANS
Urban Development and Construction Director of Hoa Phat Urban Development CHRISTIAN has held many important
Jsc. He was successful in real estate, and Construction JSC before he was responsibilities of the Industrialization
initically with constructings trading for appointed as the Deputy General Director Fund for Developing Countries (IFU),
industrial infrastructure starting with Pho of Hoa Phat Group Joint Stock Company Denmark (1983-1989); Regional Director,
Noi A industrial park. Mr. Viet and Board on 7th April 2012. In March, 2015, he has Investment Fund for the Europe Central
of Directors are now going to deploy been assigned as Director of Hoa Phat and East, Denmark (1989 - 1991); CEO of
other housing and urban areas after the Feeds Co., Ltd. Inst March 2018, he has array of agriculture, the European Bank
success of Pho Noi A. been assigned as Director of Hoa Phat for construction and development (EBRD),
Hai Duong Steel JSC. London (1991-2006); CEO of PENM I,
Number of shares held at PENM II, PENM IV (2006 - present).
March 22, 2021
Number of shares held at
0.49% March 22, 2021 Number of shares held at
March 22, 2021
0.32% 0%

ANNUAL REPORT 2020 59

BOM’S ASSESSMENT
OF OPERATION
2020 was seen as a year of great difficulties and challenges. Nevertheless, the
Group still achieved outstanding results with a wide range of new records in terms
of production and business, especially the area of steel.

IRON AND STEEL STEEL PRODUCT

(Steep Pipe - Prepainted Galvanized
Experiencing an unpredictable year for the global steel Steel Sheet – Drawn steel wire and
industry and with the impact from the epidemic, the
Prestressed concrete steel)
demand for steel was declined as countries fell into a state
of shutdown and faced great loss in steel production,
In 2020, Hoa Phat Steel Pipe completed its production plan
resulting in the imbalance of steel demand and supply. with output of more than 820,000 tons, a 10% increase
With the unpredictable fluctuation and increase of iron compared with 2019. The Southern Region hit the best
ore and coal prices in final months of 2020, the Board growth rate of 15%, followed by the Northern Region
of Management was forced to be very careful in making with 10% over the same period. The Central Region saw a
decisions. slight decline due to unfavorable weather conditions and
complexity of Covid-19. During the year, Hoa Phat Large-
As a result, Hoa Phat Group’s productivity of raw steel in Sized Steel Pipe was officially launched and has welcomed
2020 reached 5.8 million tons, doubling the same period of positively by market.
2019. This was the first time Hoa Phat surpassed Formosa
to become the largest steel manufacturer in Vietnam Three years after launching its product in the Vietnamese
during the four final months of 2020. market, Hoa Phat Steel Sheet has been so far popular
and obtained a firm position in the local market. Hoa
The Blast Furnace No. 3 of Hoa Phat Dung Quat Integrated Phat Iron continued to grow strongly, nearly 150% over
Complex was put into operation in August 2020 and HRC the same period. At the same time, it was also exported
product under Hoa Phat brand was officially launched to fastidious markets around the world and highly
to markets in November 2020. The Group aims to reach appreciated by customers and partners for quality such
2.7 million tons of HRC in 2021 to meet the demand as the United States, Mexico, EU, Australia, Malaysia,
of enterprises of steel pipe, galvanized steel coil and Indonesia, Thailand, Cambodia and so on.
other mechanical industries, helping the Vietnamese
steel industry take initiative in providing input materials The output of Hoa Phat drawn steel wire and Prestressed
to domestic enterprises as well as exporting to other concrete Bar was 100,000 tons, twice as high as 2019.
Not only being consumed strongly in the local market,
countries.
these steel products were exported to countries such as
the United States, Canada, Korea, Malaysia, Cambodia,
Myanmar, Taiwan and Laos.

60 CORPORATE GOVERNANCE Bom’s Assessment of Operation

AGRICULTURE SOCIAL RESPONSIBILITY
With Hoa Phat Agriculture, 2020 is a year to be proud of. With the strong growth of production and business,
Experiencing five years of operation in agriculture, Hoa the amount paid to the State Budget by Hoa Phat is
Phat has attained achievements and shaped the position increasingly high. Revenue of Hoa Phat Group in the 2015-
of Hoa Phat Agriculture in the market. 2020 period reached 321,000 billion dong, of which the
amount paid to the state budget in this period was more
Agriculture was also the first area which the Board of than 31,000 billion dong. Particularly the amount paid in
Management decided to invest in under the model of 2020 was 7,300 billion dong, equivalent to amount of one
corporation. The parent company (Hoa Phat Agriculture province listed in Top 40 provinces and cities having the
Development JSC) devised the Group’s common policies highest amount paid to the state budget.
and supervised the implementation of such policies but
still ensured the independence in operation model of each Not only positively contributing to the State Budget, Hoa
affiliated company. Thanks to this flexibility, at the end of Phat also joined hands in implementing social responsibility
2020, Hoa Phat Australian Cow won the first share market under the motto “Harmony for Joint Development”. With
with over 50% and clean chicken egg led in output in the focus on four main activities of Health, Education, Traffic
Northern Region with 700,000 eggs per day. and Community, the total fund for social and charity
activities in 2020 was approximately 32 billion dong.
The company’s goal by 2022 is to reach maximum output
design capacity of 600,000 tons of feeds per year; 500,000 With the desire to join hands with the Government and
commercial pigs per year; 250,000 cows cattles and Ministries coping with the Covid 19 in Vietnam, Hoa Phat
300 million clean chicken eggs per year, contributing to Group donated 11 billion dong in cash to the Fund of
promoting the development of Vietnamese agriculture the Ministry of Health, the National Hospital of Tropical
towards a large-scale, modern, biosafe and more efficient Diseases and the Fatherland Fronts in Da Nang, Quang
model. At the same time, Hoa Phat tends to develop a 3F Nam and Quang Ngai provinces. Affiliated companies of
chain (Feed - Farm - Food), improve product quality and Hoa Phat Group also provided practical support in cash
ensure to provide consumers with the best products. or by medical equipment to provinces such as Hai Duong,
Bac Giang, Thai Binh, etc. At the same time, Hoa Phat also
gave 9 billion dong to the Fatherland Fronts in Quang
REAL ESTATE Binh, Quang Tri and Quang Ngai provinces to overcome
storm and flood consequences.
During the year 2020, the COVID-19 epidemic broke out
in our country and influenced the economic development,
and the field of real estate was not an exception. The supply
was insufficient. Real estates did not have new projects or
was unable to perform projects due to licensing problems.

However, in another aspect, the Board of Management

recognized that the movement of investment and
production capital flows from China and some other
countries has offered new development opportunities for
industrial zone (IZ) in Vietnam. In such context, Pho Noi
A IZ, Hoa Mac IZ, Yen My II IZ of Hoa Phat Group still
welcomed a lot of new investors coming to lease land to
build factories or expand their production.

In addition, Pho Noi A IZ is implementing investment

procedures to expand to the East while Yen My II IZ will
also be expanded more than 200ha in the second phase.
The expansion of these industrial parks is expected to be
completed to lease land from 2021. This is an important
foundation for Hoa Phat to continue leasing industrial park
infrastructure as well as welcoming many domestic and
foreign countries in the time to come.

ANNUAL REPORT 2020 61

BOM ASSESSMENT
OF BOD OPERATION
In the last year, the Board of Management realized that the BOD of the
Group and the BODs of affiliated companies made great efforts to implement
operating activities and internal control successfully. The year 2020 recognized
the revenue of 91,279 billion dong equivalent to 106% of the plan approved
by the General Meeting of Shareholders and the profit of 13,506 billion dong
equivalent to 150% of the plan set forth by the General Meeting of Shareholders.
Each segment of business made strong improvement, as a solid foundation
for development in the following years. The BOD of the Group implemented
many flexible and prompt solutions in line with the BOM orientation as well as
market developments.

The Board of Management carried out the following supervisions in accordance

with the Articles of Incorporation, Regulations, Internal Control Regulation and
Applicable Law:

• The Board of Management assigned its members to undertake major projects

and strengthened the inspection and supervised of these projects;
• Regularly giving directions to the BODs of affiliated companies in relation to
production, sale and investment;
• Directing seriously the preparation of Quarterly Financial Report, Interim
Financial Report, Annual Financial Report and Annual Report;
• Supervising and directing the disclosure of information to ensure the
transparence and timeliness as specified;
• Supervising the realization of Resolutions promulgated by the General
Meeting of Shareholders and the Board of Management and inspecting the
BOD control of production and business activities;
• Financing for implemented and ongoing projects under progress by affiliated
companies.

MAIN ACTIVITIES
OF BOM DURING THE YEAR
In 2020, the Board of Management promulgated
12 Resolutions and approved key contents:
• Approving the Group’s production and business plan for 2020 and submitting it to
the General Meeting of Shareholders;
• Approving the detailed method of dividend payment for 2019;
• Approving the formation of Companies of Iron and Steel, Steel Product, Real Estate;
• Other important decisions.
PLAN AND ORIENTATION
Due to the extensive economic integration, although With its good foundation, the Vietnamese economy will be
the Vietnamese economy was heavily affected by the recovered in 2021 if the COVID-19 epidemic in Vietnam
COVID-19 epidemic, it exhibited considerable resistance. and in the world is controlled. The COVID-19 pandemic
Initial impact of the epidemic was not as serious as in many also requires stronger renovations to recover the economy
other countries as a result of proactive countermeasures at in medium-term such as improvement of business
both central and local levels. With GDP in 2020 increasing environment, enhancement of investment effectiveness
by 2.91% over the previous year, Vietnam was in the group and development towards digital transformation. These
of countries with the highest growth in the world. This was issues must be taken into account for faster and stronger
deemed as a great success while the COVID-19 epidemic renovation.
has adversely influenced all socio-economic elements.

From the above assessment and forecast,

the orientation of the Board of Management for 2021 is as follows:
• Restructuring with a focus on four main areas of Iron and Steel; downstream Steel Products (including Steel pipe,
prepainted galvanized steel sheet, drawn steel wire, PC Bar, PC Strand); Agriculture and Real Estate; Solidation
of Governance Apparatus from Corporations to Affiliated Companies by upholding effectiveness of governance,
management and control of the whole system.
• Closely monitoring and following and quickly grasp the market developments, especially in the context of price
fluctuations to provide effective and timely response solutions.
• Promoting the implementation of important projects of the Group, and increasing the implementation of real estate
projects.
• Strengthening and expanding the steel ecosystem of the Group in the direction of researching high quality steel
project, container project, etc.
• Raising the workers' income, creating a stable environment for them, especially in the current epidemic progression
period.
• Promoting charity and sponsoring activities, especially in difficult socio-economic situation due to pandemic, natural
disaster, storm and flood.

ANNUAL REPORT 2020 63

 REPORT OF
SUPERVISORY BOARD
1. LIST OF PERSONNEL AND OWNERSHIP PERCENTAGE

2. REPORT OF SUPERVISORY BOARD

3. REPORT OF INTERNAL CONTROL BOARD

64
 LIST OF PERSONNEL AND OWN-
ERSHIP PERCENTAGE

BUI THI HAI VAN LE THI KIM ANH VU THANH THUY

Head of Supervisory Board Member of Supervisory Board Member of Supervisory Board

• Educational qualification: • Educational qualification: • Educational qualification:

Finance-Accounting Bachelor Master of Business Administration Economic Bachelor

• Joining date: 2008 • Joining date: 2018 • Joining date: 2005

Before coming Head of Supervisory Before being voted as a member of Supervisory Before becoming a member of
Board, Ms Van held position Deputy Chief Board, Mrs. Le Thi Kim Anh held a number of Supervisory Board, Ms Thuy held a
accountant - Hoa Phat Hai Duong Steel position in: auditor of Pricewater house Coopers number of position in: staff member
JSC (2008 - 2016) and currently she is Vietnam Co.,Ltd (2001 – 2004); manager of in accounting department of Hoa Phat
also head of Internal control Board of Hoa Portfolio Management Department, project Hai Duong Steel JSC (2005-2006); staff
Phat Group JSC (2016 - present). manager of Vietfund Management (2008 – member in Finance Department of Hoa
2014), manager of Investment Department – Phat Group (2007-present)
PENM Partners ApS Fund (from 2017 – now).
Number of shares held at
Number of shares held at
March 22, 2021
March 22, 2021 Number of shares held at

0.00%
March 22, 2021
0.00%
0.00%

ANNUAL REPORT 2020 65

REPORT OF SUPERVISORY BOARD
The personnel of the Supervisory Board in 2020 remained unchanged. The Supervisory Board
successfully implemented its role of supervision and control and other duties as regulated by Law
and the Group’s Charter.

Meetings of the Supervisory Board were mainly held online to prevent the epidemic. The Supervisory
Board had two meetings to approve the appraisal result of the Financial Report 2019 and the
appraisal result of the Interim Financial Report 2020 reviewed by KPMG Co., Ltd. and to agree on
things to do in the year.

The inspection and supervision of the Company’s operations in 2020 mainly focused on the
following:

• Supervising the compliance of the Company’s operations with the Charter, applicable laws
• Supervising the realization of Resolutions of the General Meeting of Shareholders in 2020 and
Resolutions of the Board of Management.
• The Supervisory Board participated in all meetings of the BOM and the Executive Board to be
aware of the production and business and the construction investment and submit its suggestions
to the BOM and the Executive Board within its scope of responsibility and authority.
• Reviewing financial reports and operating expenses of the Company during the year; Evaluating
effect of material problems as mentioned in audit report, and supervising enforcement of
recommendations from audit company, thereby proposing proper suggestions and solutions to the
Executive Board.
• Coordinating with the Internal Control Board to supervise the implementation of ongoing
procedures. Promptly giving recommendations for Companies to adjust and comply with rules.

On the basis of the Group’s business orientations and plans as well as collaboration mechanism
among the BOM, the Executive Board and the Supervisory Board, in 2021, the Supervisory Board
will focus on the following:
• Strengthening supervision of the compliance with Law;
• Appraising financial reports as specified;
• Enhancing role of Internal Auditor as the third protection level;
• Periodically reviewing and promptly updating internal rules of the Supervisory Board;
• Other duties as specified.

Recommendations:
Based on a result of the supervision, the Supervisory Board presents the following key
recommendations to the Board of Management and the Executive Board:
• Developing an internal audit system based on internal control, enhancing role and function and
improving actual efficiency of independent inspection and control units which belong to the first
and second protection levels;
• Strengthening training and development of human resources and building employee policy in line
with current situation and development requirement of the Company.
• Facilitating the Supervisory Board to operate in compliance with regulations and on the principle
of preventing and limiting any error in all activities, especially financial activities.

66 REPORT OF SUPERVISORY BOARD Report of Supervisory Board

REPORT OF INTERNAL CONTROL BOARD
According to the regulations and the operating charter, the Internal Control Board actively
inspected the effectiveness in production and business activities and the compliance of companies
under the Group. Specifically, the Supervisory Board carried out the following regular and irregular
inspections:

• Conducting overall control at affiliated companies in respect to cash and advance management;
receivable management; inventory management; accounting and tax declaration; etc. then giving
consultancies or proposals as well as enhancing the operating activities of each Company.
• Reviewing quarterly, semi-annual and annual financial reports and coordinating with the Finance Board
to ensure true and valid data in accordance with accounting standards and prevailing regulation before
submitting them to the BOM and the General Meeting of Shareholders or publicizing them.
• Comparing prices on code look-up systems of the Group and affiliated companies on quarterly
basis to optimize set of material codes and enable affiliated companies to easily look up codes during
procurement. The Group’s price look-up system has been becoming a useful information channel for
companies to consult prices before selection of proper suppliers.
• Giving consultancy and solving problems in tax and accounting policies in favor of companies under
the Group. At the same time, collaborating with the Legal Department to regularly update new policies
influencing the Group.
• Reviewing and comparing pay scales of Companies under the Group to the salary and social insurance
policy in accordance with the Group’s policy and applicable law; proposing Companies to update pay
scale and social insurance system based on latest regulations of law.
• Collaborating with relevant departments to conduct unscheduled inspections at kitchens and factories
to ensure food hygiene and safety and fire prevention; receiving feedbacks from employees to ensure
safe and effective working environment and improve benefits.
• Supervising the deployment of SAP software, coordinating with other departments to evaluate
advantages and disadvantages in implementing process to give recommendations to solve any software
problems.
• Coordinating with the IT Department to conduct a survey of the use of software at departments and the
affiliated companies to complete, standardize and synchronize the software system of the Group.

After inspections, the Internal Control Board realized that Companies complied strictly with laws and the
Group’s regulations. For minor errors during the operation of affiliated companies, the Internal Control
Board proposed measures to overcome.

In 2021 and the following years, the Internal Control Board aims to maintain effective control and
collaborate with the Group’s departments to enable Companies to effect production and business plan
set out by the Board of Management. The operating direction for the coming years is as follows:

• Conducting regular and irregular overall control at affiliated companies.

• Finding out latest legal policies influencing the Group: updated legal documents, new tax policy,
international accounting standard, etc. for Companies under the Group.
• Planning to carry out special subjects in relation to each specific control.

ANNUAL REPORT 2020 67

SUSTAINABLE
DEVELOPMENT
1. "GREEN" STEEL PRODUCTION SOLUTIONS

2. INITIATIVES AND TECHNICAL IMPROVEMENTS

3. HOA PHAT WITH DIGITAL TRANSFORMATION

4. SOCIAL RESPONSIBILITY
“GREEN” STEEL
PRODUCTION SOLUTIONS
Because the steel production is characterized by using Heat and exhaust gas recovery
a large amount of electricity, water, coal, etc., Hoa Phat
technology to reduce greenhouse
valued the saving of these kinds of energy and natural
resources as well as took environmental protection
emissions
As mentioned above, the application of environmentally
measures at all its sites throughout the country. Thanks
friendly energy-saving technologies which reuse water and
to the implementation of measures and the investment exhaust gas generated from production has becoming the
in green steel production, each year Hoa Phat saved inevitable trend in modern steel industry. At Hoa Phat,
thousands of billion dong through waste heat recovery technology is always the first priority. Upon operation of
to generate electricity, contributing to the reduction of the first steel integrated complex in Hai Duong, the heat
greenhouse emissions. recovery technology using heat and gas generated from
coke and coal blast furnace to generate electricity brought
“Green” element in Hoa Phat’s steel remarkable efficiency in making “green” and competitive
Hoa Phat steel products.
production
In the field of steel production, the investment in equipment
and technologies aims to control environmental problems With this solution, Hoa Phat became the first private steel
and radically treat all kinds of waste and exhaust gas. Of manufacturer in Vietnam which was granted with ODA
which the most important technology is environmentally- from Japan to invest in the second phase of the coke
friendly closed-loop circulation which has been used at and thermoelectricity Plant at Hoa Phat Hai Duong Steel
two Hoa Phat Steel Integrated Complex projects in Hai Integrated Complex (2009). The Group’s steel integrated
Duong and Quang Ngai. At the Dung Quat project, Hoa complexes produced clean coke using the heat recovery
Phat poured up to 30% of the total investment of projects technology which meets environmental standards under
for the environmental protection in accordance with CDM and reduces greenhouse emissions under the Kyoto
European, Japanese and Korean standards which require Protocol. This technology eliminates all kinds of gases,
strict environmental protection. smoke and harmful chemicals generated from the coking
process, only recovers the heat to run generators used for
Besides, Hoa Phat Steel was granted with the Certificate
steel production.
of Environmental Management System TCVN ISO14001:
2015 by the Certificate Centre (Quacert) under the
Directorate for Standards, Metrology and Quality. With the clean coking & heat recovery technology (Coke
Dry Quenching using Nitrogen), the power of Hai Duong
To ensure the “green” element in the steel production of Steel Integrated Complex was 64MW. In 2020 alone, the
Hoa Phat, water and air were treated using cutting-edge power output of this Complex reached 478 million KWh,
environmental protection equipment worth hundreds of equivalent to 70% used for production. In comparison with
millions of USD. Mr. Tran Tuan Duong, General Director current productive electricity, the Complex saved more
of Hoa Phat Group said that the production of one ton than 800 billion dong. Furthermore, Hoa Phat treated and
of steel in Hoa Phat used less coal and electricity which recovered the whole coal gas from the blast furnace to
contributing to the “green” production. When millions of use for production, thereby saving additional hundreds of
tons of steel are produced at Dung Quat, a large amount
billion dong each year.
of heat is generated. However, because Hoa Phat used
the German technology, this huge amount of excess heat
was converted to input energy used to generate electricity By using these solutions, the amount of saving at Hoa Phat
with 240MW plants. With this, Hoa Phat itself provides Dung Quat Steel Integrated Complex was 2.5 times higher
80% of electricity for steel production and only needs to than Hai Duong Complex because of larger production
buy 20% from EVN. size and more modern system. The power capacity of
Hoa Phat Dung Quat is 240MW, three times higher than
The electricity generated by Hoa Phat is “green” because Hai Duong. In 2020, this Complex used nearly 1.6 billion
it does not use coal or any other materials, contributing KWh, of which the self-produced power was 1.2 billion
to the saving of costs and the environmental protection. KWh, equivalent to nearly 80%. Accordingly, the amount
Thanks to this, Dung Quat steel products have strong of saving from the heat and exhaust gas recovery at Hoa
competitiveness in Vietnam and in the world as well. Phat’s complexes from 2021 onwards is approximately
4,000 billion dong.

ANNUAL REPORT 2020 69

 ENVIRONMENTAL FRIENDLY CLOSED STEEL PRODUCTION PROCESS

Procedure
E P Dust
W-  
Coalgas
C
  

COLLECTING DELIVERING
FILTER SYSTEM COAL GAS TANK
Clean when collecting Contain and redistributes furified gas for
from the factory various production states.

MATERIAL PROCESSING IRON STEEL REFINING STEEL MILLING

FACTORY FACTORY FACTORY FACTORY

Ingot
Producing Blowing Refining casting
Pelleting Sintered Furnace
Lime furnace furnace machine

All collected dust containing

high iron contest is reused

REUSE HEAT IN COKE SMELTING

100% of the residual heat is

collected to generate electricity,
meeting 70% of the electricity
demand in the Hai Duong Iron
and Steel Complex. It is
expected to meet 80% of the
Desulphurization total power demand in the Dung
POWER Quat Iron and Steel Complex.
COKE SMELTING PLANT THERMAL POWER PLANT STATION

Hoa Phat also applied many measures to treat dust and steel production process and mill scales were reused
generated from production such as electrostatic dust in production stages, both saving costs and improving the
filter, cloth bag dust filter, wet dust collector, enclosure working environment.
wall and green trees to prevent the spreading of dust
and to absorb sound. Factory premises and surrounding With the capacity of eight million tons of steel per year, the
roads were covered with trees, flower gardens, mini above solutions have made great contribution to the saving
landscapes, contributing to create a green-clean-beautiful of costs, the enhancement of product competiveness as
environment around Complexes. Every year, a wide range well as the reduction of greenhouse emissions and the
of initiatives was applied by relevant departments to environmental protection. This is also the way Hoa Phat
radically treat dust. Iron dust collected from the cast iron creates green and sustainable products.

70 SUSTAINABLE DEVELOPMENT
Using Granulated Blast Furnace Slag as The quality of S95 complies with TCVN 11586:2016 and
meets GGBS requirements under BS-EN 15167-1:2006.
Construction Materials S95 can be used to product bulk concrete, heat-resistant
Granulated blast furnace slag is a byproduct of the cast
concrete and seawater-resistant concrete, etc.
iron and steel production process using closed-loop blast
furnace technology. Thanks to the ultra-fast cooling using
With two steel integrated complexes in Kinh Mon district,
high pressure water, granulated blast furnace slag is a good
Hai Duong province and Dung Quat, Quang Ngai
mineral additive used for cement and concrete production
province, each year Hoa Phat can supply millions of tons
and has been used for a long time in the world and in
of granulated blast furnace slag to domestic markets as
Vietnam as well. S95 granulated blast furnace slag is used
well as export to foreign markets.
to radically treat solid waste in the process of green steel
production, both protecting environment and creating
stable income for Hoa Phat Group.

ANNUAL REPORT 2020 71

INITIATIVES AND TECHNICAL IMPROVEMENTS
CONTRIBUTING TO SAVING HUNDREDS OF BILLION DONG

Hoa Phat always valued the saving of energy and

natural resources and encouraged the application of
initiatives and technical improvements throughout
the Group. Therefore, the initiative and improvement
movements took place very hotly at factories.

36 initiatives and improvements

bringing a profit of nearly 160 billion
dong to Hoa Phat Hai Duong Steel
Hoa Phat Hai Duong Steel JSC is leading itself in quantity
as well as value of initiatives and improvements. Every
six months, the Company collects initiatives, organizes
review and rewards individuals and units having the most
outstanding initiatives. In 2020, the Company had 36
initiatives bringing total profit of nearly 160 billion dong.
The most outstanding initiative is the “Converting Furnace
#1 End Point Temperature and Carbon Forecast System”
proposed by Mr. Dong Xuan Van of the Electrical Equipment
Department and Mr. Pham Tien Chien of the Technology
Department, saving materials, reducing time of converting
and increasing productivity of the converting furnace 1.
This initiative brings annual profit of 39 billion dong.

Another initiative to be mentioned is the “Mixing materials

on the drying line to use on the sintering line” proposed Hoa Phat Steel Pipe and solutions to
by Mr. Dang Viet Thanh of the Technology Department. save materials and reduce consumption
This initiative was performed by the Materials Processing
Factory and the Cast Iron Making Factory with the With a lot of proposed initiatives which have been
assistance of the Technology Department and the efficiently applied, affiliated companies of Hoa Phat Steel
Warehouse section. When this initiative was applied, the Pipe saved billions of dong each year. More importantly,
Company added new materials at lower prices but still this movement has spread to officers, engineers and
ensured the quality and reduced the consumption of coal. workers at all plants and factories of Hoa Phat Steel Pipe
The profit earned from this initiative was more than 34 throughout the country.
billion dong (for used batches).
At Hoa Phat Hung Yen Steel Pipe Factory, 16 initiatives
Other initiatives are also beneficial to Hoa Phat Steel were carried out in 2020. These initiatives are originated
with tens of billion dong per year, such as the innovation from actual production requirement, bring high efficiency,
of boilder #5 coal saving device of the coke production reduce materials consumption and contribute to
and thermal power plant; the upgrading of the materials environmental protection.
sliding plate system from removable plate to fixed plate;
the installation of Pinch roll and new construction of a To increase productivity, Mr. Hoang Ngoc Thach, Factory
conduit to the D20 rolling line at the Rolling Plant 3; the Deputy Director proposed to upgrading equipment from
upgrading of the control system of generating turbines; manual removal of one pipe to automatic removal of two
the innovation of the slag container with new design, and pipes. At the same time, this proposal contributed to the
so on. reduction in fuel consumption and the increase in labor
productivity, with an increase of 35% in output compared
In addition, the Company has some other important to previous time with the same number of workers.
initiatives to serve production, ensure stable operation of
machines, reduce cost of materials, ensure occupational Other initiatives of Hoa Phat Hung Yen Steel Pipe focused
health and safety, save electricity and water for Complexes on increasing productivity and quality, such as the theme
and increase productivity and operational efficiency.

72 SUSTAINABLE DEVELOPMENT Research & Development

“Upgrading of pipe lifting struss to reach pipes less than time, components of zinc generator were changed to
four meters”. After new lifting trusses were installed, the increase the fluidity for enhancement of high quality and
period for handling pipe heads was shortened, thereby reduction of zinc consumption. The project has been put
reducing personnel and enhancing productivity and into operation since October 2020. The conversion to
quality. More importantly, this initiative bettered the manual dip was more suitable with larger pipes D168.3,
export of powder coated short pipes. resulting in better sale of the Company’s products.

Hoa Phat Cold Rolled Steel Factory also had many Another to be mentioned is the storage method of
initiatives. Of which the remarkable ones include the waste galvanized steel pipes by coating chromate. This
water treatment and treated water re-use; the upgrading improvement completely changed the quality of
of materials cage of roller 1; the design of dry blowing galvanized steel pipe. The pipe has good resistance to
system to make cast iron surface dry; the design of central mold caused by rain water, contributing to enhancing the
air filter to provide clean air to one-way engine of roller. quality of galvanized steel pipe and the brand value of the
Company.
At Hoa Phat Da Nang Steel Pipe Factory, many technical
improvements were carried out. Of which the upgrading At Hoa Phat Long An Steel Pipe Factory, 11 initiatives
of washing device of roll line and roll axis lock; the were applied successfully, improving the product quality.
manufacturing of wagon to transport 25 tons of galvanized Of which the most noticeable was the upgrading of weld
steel coils; the manufacturing of high-frequency cooling line guide frame; the upgrading of progressive die; the
fan for bending machine. manufacturing of polishing device.

Hoa Phat Binh Duong Steel Pipe Co., Ltd contributed

10 initiatives of equipment improvement in 2020.
With materials available in the Factory, the Technology
Department and M&E Workshop completed the conversion
of automatic coating to manual dip coating. At the same

ANNUAL REPORT 2020 73

HOA PHAT WITH DIGITAL TRANSFORMATION

With the development of information technology, employees, provide exact data and resolve financial
digital transformation is a common trend all over the problems especially the management of cash flow,
world. Vietnam in general and the business community production, inventory and so on.
in particular are not exceptions. At Hoa Phat, scientific
Since early 2019, the Group has carried out the pilot
and technological achievements, such as production
application of the ERP- SAP solution at Hoa Phat Dung
management, sale and accounting software, have been Quat. Mr. Mai Van Ha, Director of Hoa Phat Dung Quat
applied for a long time. More specifically, they include Steel JSC resumed that with the capacity of more
modern corporate governance solutions such as ERP - than 5 million tons a year, Hoa Phat Dung Quat Steel
SAP, ERP - Bravo, Smart MES, etc. Integrated Complex has so far become the largest project
of the Group. Hence, Hoa Phat has focused to provide
Over the last ten years, Hoa Phat Group has applied this project with the best conditions and equipment with a
administration solutions and production, sale and view to increasing its operational efficiency.
accounting management software, especially Bravo. This
tool is now upgraded to a master administration solution The project has been performed using master solutions
integrated with many functions relatively suitable with Hoa including applications in production management; quality
Phat. Almost affiliated companies of the Group has used control; purchase and sale; warehouse and barcode,
this software. financial accounting, management accounting, integrated
electronic balance and equipment, etc. With this ERP
With this solution, the monitoring and management solution, Hoa Phat Dung Quat Steel had an international
of production, business and accounting activities have standard management system with real-time production
been smoothly carried out in the entire Group. Boards and business data and availability of performance indexes
of Directors, Chief Accountants and Heads of Sales which help the executive board quickly make their
Departments of affiliated companies can easily review decisions. This system also helped the Group cope with
and make reports at the request by the Group’s Leaders. unscheduled situations and incidents and effectively use
This solution also can optimize the work efficiency of production tools in order to reduce prices and increase
competitiveness.

74 SUSTAINABLE DEVELOPMENT Hoa Phat With Digital Transformation

After two years of applying the SAP ERP to Hoa Phat Investment in automatic quality analysis
Dung Quat Steel, the Company’s Leaders realized many
benefits. The best efficiency was to easily control products,
system worth millions of USD
materials, supplies based on their specifications, to monitor
and manage product quality and to certify quality for semi- At Hoa Phat Dung Quat Steel Integrated Complex, Hoa
finished products and finished products. This solution also Phat invested in the construction of two buildings with
helped the company cope with unscheduled situations total value of more than 100 billion dong, one of which
and incidents and effectively use production tools in is functioned as iron and steel quality analysis area and
order to reduce prices and increase competitiveness. the other is mechanical and physical testing area. The iron
Hoa Phat Dung Quat is finishing the remaining functions, and steel quality analysis area is to check the quality of
particularly the innovation of processes to meet additional fluid cast iron and slag generated by blast furnace and
requirements for production and business. the quality of steel in all segments of production including
desulfurization, conversion, refining, degassing and
As an industrial manufacturer, Hoa Phat should have casting.
a proper roadmap, from pilot application to partial
application then large-scale application if effective. After This is the modest automatic sampling system in the world.
effective application of SAP at Hoa Phat Dung Quat Steel, Although factories are 1.5 to 1.7km far from the analysis
the Group will implement this solution at other affiliated area, it takes only 30 to 70 seconds to bring samples to
companies. the analysis area through modern sample conduits using
compressed air. Then ABB robot (Switzerland) will receive
Apart from ERP, Hoa Phat Dung Quat Steel also carried samples and transfer them to analyzers then transmit results
out some other product optimization solutions such as to senders through automatic system. The maximum time
EMS. It will ensure better collection and management of to transmit results for steel sample, cast iron sample and
energy data (electricity, water, gas). Some fundamental
slag sample is 2 minutes 30 seconds, 5 minutes and 7-10
advantages of the EMS include updating continuous data
minutes, respectively.
and making forecast for reasonable distribution of energy;
supervising kinds of energy used at each factory for
Through sample analysis using robot, Hoa Phat will easily
optimization of consumption items. The EMS can ensure
diversify steel grades and provide the market with high
production safety through detecting and issuing alarms,
promptly fixing any trouble, etc. quality products.

ANNUAL REPORT 2020 75

SOCIAL RESPONSIBILITY

Hoa Phat always realizes corporate social responsibility “Heartbeat for Love”
under the motto “Harmony for Joint Development” One of the programs Hoa Phat is very passionate to
through making increasingly high contributions to the perform is the “Heartbeat for Love”. Launched since 2015,
State Budget, providing stable jobs to tens of thousands it becomes a reliable destination for children with CHD
of people, carrying out the task of social security and a who have difficult situation and need support. After five
wide range of meaningful charity programs. Hoa Phat years of operation, the program has provided supports
focuses on four main activities of Health, Education, to 221 pediatric patients, many of them was sponsored
Traffic and Community. The total amount for social and in multi surgeries. In 2020 alone, Hoa Phat sponsored 83
charity activities in 2020 reached approximately 32 patients, of which 62 cases underwent successful surgeries
billion dong. with total cost of 2.8 billion dong, 1.5 times higher than
the same period of 2019 Cuu Long River and 21 cases are
In the last year, Vietnam was hit by natural disasters and receiving resuscitation treatment and waiting for surgery.
epidemics affected the national economy and people’s Hoa Phat wishes to expand the program in 2021, bringing
life. With the desire to join hands with the Government the “Heartbeat for Love” to children with congenital heart
and Ministries coping with the Covid 19 in Vietnam, Hoa disease who have difficult situation and need support
Phat Group donated 11 billion dong in cash to the Fund nationwide.
of the Ministry of Health, the National Hospital of Tropical
Diseases and the Fatherland Fronts in Da Nang, Quang Building bridges at rural area
Nam and Quang Ngai provinces. Affiliated companies of Building bridges spanning canals in localities of the
Hoa Phat Group also provided practical support in cash Mekong Delta are new projects performed by Hoa Phat
or by medical equipment to provinces such as Hai Duong, since 2019. These projects aim to enhance the quality of
Bac Giang, Thai Binh, etc. At the same time, Hoa Phat also people’s life, boost the development of local economy as
spent 9 billion dong to the Fatherland Fronts in Quang well as ensure the safety for people and children in flood
Binh, Quang Tri and Quang Ngai provinces to overcome
storm and flood consequences.

76 SUSTAINABLE DEVELOPMENT Social Responsibility

season. In 2020, Hoa Phat completed the construction of Group. Before each Lunar New Year, affiliated companies
three new bridges in Ben Tre province (Dinh Nhon village, of Hoa Phat organizes charity programs to present gifts
Dinh Thuy commune, Mo Cay Nam district), Hau Giang to poor people in three regions of the country. These
province (Binh Hieu local market bridge, Vinh Trung ward, activities attract the participation of many employees
Long My town), Soc Trang province (Dac Thang village, with the spirit “the leaves protect tattered ones” to share
Ho Dac Kien commune, Chau Thanh district). The Group difficult situations and bring a warm and joyful “Tet” to
confirmed two new positions in Ca Mau and Kien Giang people.
which are prepared for construction.

Spring of Love
This is an annual activity carried out by Hoa Phat Group
before Lunar New Year with an aim to bring a warm and
happy “Tet” to families with difficult situations.

The “Spring of Love” presents Tet gifts to families with

difficult situation and under preferential treatment policy
in localities where Hoa Phat factories and breeding farms
are situated nationwide. In 2020, Hoa Phat Group gave
nearly 3,500 gifts worth 500,000 dong for each and more
than 1.7 billion dong in total in 14 provincies and cities
throughout the country.
The “Spring of Love” has become a tradition of Hoa Phat

ANNUAL REPORT 2020 77

Committing itself to leading in quality,
Hoa Phat rose to a new stature
AUDITED FINANCIAL
REPORT 2020
1. REPORT OF THE BOD

2. INDEPENDENT AUDITOR’S REPORT

3. CONSOLIDATED BALANCE SHEET

4. CONSOLIDATED STATEMENT OF INCOME

5. CONSOLIDATED STATEMENT OF CASH FLOWS

6. NOTE TO THE CONSOLIDATED FINANCIAL STATEMENTS

The audited consolidated Financial Statement is posted on

Company’s website at: www.hoaphat.com.vn
81
HOA PHAT GROUP JOINT STOCK COMPANY
REPORT OF THE BOARD OF DIRECTORS

The Board of Directors of Hoa Phat Group Joint Stock Company (“the Company”) presents this report
and the consolidated financial statements of the Company and its subsidiaries (together referred to as “the
Group”) for the year ended 31 December 2020.

The members of the Board of Management and the Board of Directors of the Company during the year and at
the date of this report are as follows:

Board of Management Mr. Tran Dinh Long Chairman

Mr. Tran Tuan Duong Vice Chairman
Mr. Nguyen Manh Tuan Vice Chairman
Mr. Doan Gia Cuong Vice Chairman
Mr. Nguyen Ngoc Quang Member
Mr. Ta Tuan Quang Member
Mr. Hoang Quang Viet Member
Mr. Nguyen Viet Thang Member
Mr. Hans Christian Jacobsen Member

Board of Directors Mr. Tran Tuan Duong General Director

Mrs. Nguyen Thi Thao Nguyen Deputy General Director
Mr. Nguyen Viet Thang Deputy General Director

CORPORATE INFORMATION

The Company was originated from Hoa Phat Steel Joint Stock Company incorporated under the Law on
Enterprise of Vietnam pursuant to the initial Business Registration Certificate No. 0503000008 issued by Hung
Yen Department of Planning and Investment on 26 October 2001. In accordance with the 8th amendment
of the Business Registration Certificate No. 0503000008 issued by Hung Yen Department of Planning and
Investment on 9 January 2007, Hoa Phat Steel Joint Stock Company was transformed into Hoa Phat Group
Joint Stock Company.

The Company’s Enterprise Registration Certificate has been amended several times, the most recent of which
is by Enterprise Registration Certificate No. 0900189284 dated 1 September 2020. The Enterprise Registration
Certificate was issued by the Hung Yen Department of Planning and Investment.

The registered office of the Company is located in Pho Noi A Industrial Zone, Giai Pham Commune, Yen My
District, Hung Yen Province, Vietnam.

The subsidiaries of the Company are disclosed in Note 1.4 to the consolidated financial statements.

82
HOA PHAT GROUP JOINT STOCK COMPANY
REPORT OF THE BOARD OF DIRECTORS (CONTINUED)

OPERATING RESULTS AND DIVIDENDS

The consolidated net profit attributable to the shareholders of the Company for the year ended 31 December
2020 was VND13,450,300 million (2019: VND7,527,443 million).

On 25 June 2020, the Company’s General Meeting of Shareholders passed the resolution on the distribution
of 2019 dividends to the shareholders at the rate of 25% including 20% in the form of shares (shareholders will
receive 2 additional shares for every 10 ordinary shares they own) and 5% in cash (shareholders will receive
VND500 for every ordinary share they own). This dividend payment scheme was approved for execution by the
Company’s Board of Management in the resolution dated 29 June 2020 and implemented in the third quarter
of 2020.

AUDITOR

The auditor of the Company and the Group is KPMG Limited.

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

CONSOLIDATED FINANCIAL STATEMENTS

The Board of Directors is responsible for the preparation and presentation of the consolidated financial
statements which give a true and fair view of the Group’s consolidated financial position as at 31 December
2020, consolidated results of operations and consolidated cash flows for the year then ended in accordance
with Vietnamese Accounting Standards, the Vietnamese Accounting System for Enterprises and the relevant
statutory requirements applicable to financial reporting. In preparing the 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;
• confirm that applicable accounting standards have been followed, subject to any material de
partures disclosed and explained in the consolidated financial statements; and
• prepare the consolidated financial statements on the going concern basis unless it is inappropriate
to presume that the Group will continue in business.

The Board of Directors is also responsible for ensuring that proper accounting records are prepared and kept
which disclose, with reasonable accuracy at any time, the financial position of the Group and to ensure that
the accounting records comply with Vietnamese Accounting Standards, the Vietnamese Accounting System for
Enterprises and the relevant statutory requirements applicable to financial reporting. The Board of Directors
is also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.

The Board of Directors confirms with the Company’s Board of Management and Shareholders that they have
complied with the above requirements in preparing the consolidated financial statements.

83
HOA PHAT GROUP JOINT STOCK COMPANY
REPORT OF THE BOARD OF DIRECTORS (CONTINUED)

APPROVAL OF THE CONSOLIDATED FINANCIAL STATEMENTS

We hereby approve the accompanying consolidated financial statements for the year ended 31 December
2020. These financial statements give a true and fair view of the consolidated financial position of the Group
as at 31 December 2020, its consolidated results of operations and its consolidated cash flows for the year
then ended in accordance with Vietnamese Accounting Standards, the Vietnamese Accounting System for
Enterprises and the relevant statutory requirements applicable to financial reporting.

On behalf of the Board of Directors

Tran Tuan Duong

General Director

Hung Yen, 16 March 2021

84
INDEPENDENT AUDITOR’S REPORT

TO THE SHAREHOLDERS AND BOARD OF MANAGEMENT

HOA PHAT GROUP JOINT STOCK COMPANY

We have audited the accompanying consolidated financial statements of Hoa Phat Group Joint Stock Company
(“the Company”) and its subsidiaries, which comprise the consolidated balance sheet as at 31 December 2020,
the consolidated statements of income and cash flows for the year then ended and the explanatory notes
thereto which were authorised for issue by the Company’s Board of Directors on 16 March 2021, as set out on
pages 6 to 76.

MANAGEMENT’S RESPONSIBILITY

The Company’s Board of Directors is responsible for the preparation and fair presentation of these consolidated
financial statements in accordance with Vietnamese Accounting Standards, the Vietnamese Accounting System
for Enterprises and the relevant statutory requirements applicable to financial reporting, and for such internal
control as the Board of Directors determines is necessary to enable the preparation of the consolidated financial
statements that are free from material misstatement, whether due to fraud or error.

AUDITOR’S RESPONSIBILITY

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 to obtain reasonable assurance about
whether the consolidated financial statements are free of material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of
the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the Company’s preparation and fair presentation
of the 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 Company’s internal control. An audit
also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting
estimates made by the Company’s Board of Directors, as well as evaluating the overall presentation of the
financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.

85
AUDITOR’S OPINION

In our opinion, the consolidated financial statements give a true and fair view, in all material respects, of the
consolidated financial position of Hoa Phat Group Joint Stock Company and its subsidiaries as at 31 December
2020 and of their consolidated results of operations and their consolidated cash flows for the year then ended
in accordance with Vietnamese Accounting Standards, the Vietnamese Accounting System for Enterprises and
the relevant statutory requirements applicable to financial reporting.

KPMG LIMITED
Vietnam
AUDIT REPORT NO. 19-02-00184-21-2

WANG TOON KIM DOAN THANH TOAN

Practicing Auditor Registration Practicing Auditor Registration
Certificate No. 0557-2018-007-1 Certificate No. 3073-2019-007-1
Deputy General Director

Hanoi, 16 March 2021

86
HOA PHAT GROUP JOINT STOCK COMPANY
CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2020

Form B 01 – DN/HN
(Issued under Circular No. 202/2014/TT-BTC
dated 22 December 2014 of the Ministry of Finance)

Code Note 31/12/2020 1/1/2020

VND VND
ASSETS

Current assets
(100 = 110 + 120 + 130 + 140 + 150) 100 56,747,258,197,010 30,436,936,909,894

Cash and cash equivalents 110 5 13,696,099,298,228 4,544,900,252,204

Cash 111 2,094,314,298,228 1,678,314,252,204
Cash equivalents 112 11,601,785,000,000 2,866,586,000,000

Short-term financial investments 120 8,126,992,675,380 1,374,340,352,910

Held-to-maturity investments 123 6.1 8,126,992,675,380 1,374,340,352,910

Accounts receivable – short-term 130 6,124,790,460,291 3,561,397,190,688

Accounts receivable from customers 131 3,949,486,943,250 2,699,937,350,329
Prepayments to suppliers 132 7 1,303,037,835,829 757,832,561,191
Other receivables 136 8.1 910,365,502,671 139,273,246,353
Allowance for doubtful debts (39,336,197,606) (37,145,790,132)
Shortage of assets awaiting 137
resolution 139 1,236,376,147 1,499,822,947

Inventories 140 9 26,286,822,229,202 19,411,922,748,095

Inventories 141 26,373,360,826,788 19,480,666,530,260
Allowance for inventories 149 (86,538,597,586) (68,743,782,165)

Other current assets 150 2,512,553,533,909 1,544,376,365,997

Short-term prepaid expenses 151 16.1 141,398,046,799 118,551,289,085
Deductible value added tax 152 2,357,338,685,110 1,400,159,900,793
Taxes and others receivable from
State Treasury 153 13,816,802,000 25,665,176,119

The accompanying notes are an integral part of these consolidated financial statements

87
HOA PHAT GROUP JOINT STOCK COMPANY
CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2020 (CONTINUED)

Form B 01 – DN/HN
(Issued under Circular No. 202/2014/TT-BTC
dated 22 December 2014 of the Ministry of Finance)

Code Note 31/12/2020 1/1/2020

VND VND
LONG-TERM ASSETS
(200 = 210 + 220 + 230 + 240 + 250 + 260) 200 74,764,176,191,827 71,339,093,190,006

Accounts receivable – long-term 210 305,165,547,431 27,717,594,984

Loans receivable – long-term 215 10 96,007,238,800 4,910,346,000
Other long-term receivables 216 8.2 209,158,308,631 22,807,248,984

Fixed assets 220 65,561,657,180,137 31,249,493,917,960

Tangible fixed assets 221 11 65,307,819,877,543 30,980,122,434,704
Cost 222 82,616,601,097,978 43,804,940,121,895
Accumulated depreciation 223 (17,308,781,220,435) (12,824,817,687,191)
Intangible fixed assets 227 12 253,837,302,594 269,371,483,256
Cost 228 342,995,279,178 339,570,963,463
Accumulated amortisation 229 (89,157,976,584) (70,199,480,207)

Investment property 230 13 564,296,973,801 576,616,510,917

Cost 231 681,931,844,756 663,239,742,390
Accumulated depreciation 232 (117,634,870,955) (86,623,231,473)

Long-term work in progress 240 6,247,213,506,994 37,435,320,467,014

Long-term work in progress 241 14 918,470,731,946 750,146,398,723
Construction in progress 242 15 5,328,742,775,048 36,685,174,068,291

Long-term financial investments 250 171,085,206,311 45,794,216,642

Investments in associates 252 385,206,311 (1,431,313,615)
Equity investments in other entities 253 6.2 700,000,000 700,000,000
Held-to-maturity investments 255 6.1 170,000,000,000 46,525,530,257

Other long-term assets 260 1,914,757,777,153 2,004,150,482,489

Long-term prepaid expenses 261 16.2 1,646,094,518,464 1,650,738,623,090
Deferred tax assets 262 17 225,553,308,024 292,226,687,882
Goodwill 269 18 43,109,950,665 61,185,171,517

TOTAL ASSETS (270 = 100 + 200) 270 131,511,434,388,837 101,776,030,099,900

The accompanying notes are an integral part of these consolidated financial statements

88
HOA PHAT GROUP JOINT STOCK COMPANY
CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2020 (CONTINUED)

Form B 01 – DN/HN
(Issued under Circular No. 202/2014/TT-BTC
dated 22 December 2014 of the Ministry of Finance)

Code Note 31/12/2020 1/1/2020

VND VND
RESOURCES

LIABILITIES (300 = 310 + 330) 300 72,291,648,082,726 53,989,393,956,205

Current liabilities 310 51,975,217,447,498 26,984,198,187,977

Accounts payable to suppliers 311 10,915,752,723,952 7,507,198,913,115
Advances from customers 312 19 1,257,272,765,123 408,691,837,688
Taxes and others payable to
State Treasury 313 20 548,579,261,453 478,426,384,718
Payables to employees 314 313,099,678,402 247,936,926,136
Accrued expenses 315 21.1 640,129,684,182 429,777,297,411
Unearned revenue – short-term 318 34,564,307,818 27,406,111,996
Other payables – short-term 319 22.1 328,061,400,351 237,391,747,239
Short-term borrowings 320 23.1 36,798,465,672,104 16,837,653,470,387
Provisions – short-term 321 24 5,846,534,626 3,111,122,885
Bonus and welfare fund 322 25 1,133,445,419,487 806,604,376,402

Long-term liabilities 330 20,316,430,635,228 27,005,195,768,228

Long-term accounts payable to 331
suppliers 333 21.2 2,637,987,658,239 6,652,492,138,554
Long-term accrued expenses 336 223,664,493,846 427,328,992,030
Long-term unearned revenue 337 22.2 16,127,650,192 3,369,818,100
Other payables – long-term 338 23.2 68,736,086,170 58,387,110,781
Long-term borrowings 341 17,343,247,551,512 19,842,099,219,720
Deferred tax liabilities 342 24 666,262,529 1,104,751,459
Provisions – long-term 26,000,932,740 20,413,737,584

The accompanying notes are an integral part of these consolidated financial statements

89
HOA PHAT GROUP JOINT STOCK COMPANY
CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2020 (CONTINUED)

Form B 01 – DN/HN
(Issued under Circular No. 202/2014/TT-BTC
dated 22 December 2014 of the Ministry of Finance)

Code Note 31/12/2020 1/1/2020

VND VND
EQUITY (400 = 410) 400 59,219,786,306,111 47,786,636,143,695

Owners’ equity 410 26 59,219,786,306,111 47,786,636,143,695

Share capital 411 27 33,132,826,590,000 27,610,741,150,000
- Ordinary shares with voting
rights 411a 33,132,826,590,000 27,610,741,150,000
Share premium 412 3,211,560,416,270 3,211,560,416,270
Foreign exchange differences 417 5,568,369,072 565,534,994
Investment and development
fund 418 928,641,612,156 923,641,612,156
Retained profits 421 21,792,442,633,285 15,876,913,750,948
- Retained profits brought
forward 421a 8,342,142,580,473 8,349,470,883,074
- Retained profits for the current
year 421b 13,450,300,052,812 7,527,442,867,874
Non-controlling interest 429 148,746,685,328 163,213,679,327

TOTAL RESOURCES
(440 = 300 + 400) 440 131,511,434,388,837 101,776,030,099,900

16 March 2021

Prepared by: Approved by:

Tran Xuan Mai Pham Thi Kim Oanh Tran Tuan Duong
General Accountant Chief Accountant General Director

The accompanying notes are an integral part of these consolidated financial statements

90
HOA PHAT GROUP JOINT STOCK COMPANY
CONSOLIDATED STATEMENT OF INCOME FOR THE YEAR ENDED 31 DECEMBER 2020

Form B 02 – DN/HN
(Issued under Circular No. 202/2014/TT-BTC
dated 22 December 2014 of the Ministry of Finance)

Code Note 2020 2019

VND VND
Revenue from sales of goods and
provision of services 01 30 91,279,041,771,826 64,677,906,575,644

Revenue deductions 02 30 1,160,538,345,109 1,019,713,901,853

Net revenue (10 = 01 - 02) 10 30 90,118,503,426,717 63,658,192,673,791

Cost of sales 11 31 71,214,453,522,563 52,472,820,451,654

Gross profit (20 = 10 - 11) 20 18,904,049,904,154 11,185,372,222,137

Financial income 21 32 1,004,789,766,270 471,053,832,011
Financial expenses 22 33 2,837,406,430,588 1,181,675,710,916
In which: Interest expense 23 2,191,680,923,417 936,710,218,359
Share of profit/(loss) in associates 24 1,964,631,764 (1,431,313,615)
Selling expenses 25 34 1,090,795,558,423 873,333,584,688
General and administration
expenses 26 35 690,298,504,185 569,005,805,722

Net operating profit

{30 = 20 + (21 - 22) + 24 - (25 + 26)} 30 15,292,303,808,992 9,030,979,639,207
Other income 31 36 654,081,334,225 657,680,931,477
Other expenses 32 37 589,418,351,516 591,998,447,298

Results of other activities

(40 = 31 - 32) 40 64,662,982,709 65,682,484,179

Accounting profit before tax

(50 = 30 + 40) 50 15,356,966,791,701 9,096,662,123,386

Income tax expense – current 51 39 1,784,567,843,866 1,603,307,926,680

Income tax expense/(benefit)–

deferred 52 39 66,234,890,928 (84,894,039,523)

Net profit after tax

(carried forward to next page)
(60 = 50 - 51 - 52) 60 13,506,164,056,907 7,578,248,236,229

The accompanying notes are an integral part of these consolidated financial statements

91
HOA PHAT GROUP JOINT STOCK COMPANY
CONSOLIDATED STATEMENT OF INCOME FOR THE YEAR ENDED 31 DECEMBER 2020
(CONTINUED)

Form B 02 – DN/HN
(Issued under Circular No. 202/2014/TT-BTC
dated 22 December 2014 of the Ministry of Finance)

Code Note 2020 2019

VND VND
Net profit after tax
(brought forward from previous
page) (60 = 50 - 51 - 52) 60 13,506,164,056,907 7,578,248,236,229

Attributable to:
Shareholders of the parent company 61 13,450,300,052,812 7,527,442,867,874
Non-controlling interest 62 55,864,004,095 50,805,368,355

Restated

Basic earnings per share 70 40 3,846 2,074

16 March 2021

Prepared by: Approved by:

Tran Xuan Mai Pham Thi Kim Oanh Tran Tuan Duong
General Accountant Chief Accountant General Director

The accompanying notes are an integral part of these consolidated financial statements

92
HOA PHAT GROUP JOINT STOCK COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2020
(INDIRECT METHOD)

Form B 03 – DN/HN
(Issued under Circular No. 202/2014/TT-BTC
dated 22 December 2014 of the Ministry of Finance)

Mã
Code
số Thuyết
Note 2020 2019
minh VND VND
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax 01 15,356,966,791,701 9,096,662,123,386
Adjustments for
Depreciation and amortisation 02 4,775,781,721,269 2,566,183,420,309
Amortisation of goodwill 02 18,075,220,852 27,049,152,720
Allowances and provisions 03 28,314,185,442 (5,772,614,376)
Exchange losses arising from
revaluation of monetary items
denominated in foreign
currencies 04 52,078,870,772 24,183,514,856
Profits from investing activities 05 (490,559,694,590) (286,185,193,464)
Interest expense 06 2,191,680,923,417 936,710,218,359

Operating profit before changes in

working capital 08 21,932,338,018,863 12,358,830,621,790

Change in receivables 09 (3,374,026,162,649) (288,519,564,021)

Change in inventories 10 (7,061,024,985,401) (5,132,237,172,021)
Change in payables and other
liabilities 11 4,251,742,399,296 3,556,649,268,254
Change in prepaid expenses 12 (89,041,139,127) (8,476,974,345)

15,659,988,130,982 10,486,246,179,657
Interest paid 14
Income tax paid 15 (2,027,572,222,288) (867,276,241,172)
Other payments for operating (1,716,802,619,015) (1,551,743,688,539)
activities 17 (328,363,376,705) (352,057,555,830)

Net cash flows from operating

activities 20 11,587,249,912,974 7,715,168,694,116

The accompanying notes are an integral part of these consolidated financial statements

93
HOA PHAT GROUP JOINT STOCK COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2020
(INDIRECT METHOD - CONTINUED)

Form B 03 – DN/HN
(Issued under Circular No. 202/2014/TT-BTC
dated 22 December 2014 of the Ministry of Finance)

Code Note 2020 2019

VND VND
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for additions to fixed
assets and other long-term assets 21 (11,915,645,555,048) (20,825,371,574,660)
Proceeds from disposals of fixed
assets and other long-term assets 22 34,418,355,881 26,937,572,033
Payments for purchase of debt
instruments of other entities 23 (11,971,173,251,594) (4,467,553,072,509)
Receipts from collecting loans,
sales of debt instruments of other
entities 24 5,003,441,426,581 6,832,224,480,334
Receipts of interests on term
deposits and loans 27 353,560,779,277 369,546,551,545

Net cash flows from investing

activities 30 (18,495,398,244,903) (18,064,216,043,257)

The accompanying notes are an integral part of these consolidated financial statements

94
HOA PHAT GROUP JOINT STOCK COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2020
(INDIRECT METHOD - CONTINUED)

Form B 03 – DN/HN
(Issued under Circular No. 202/2014/TT-BTC
dated 22 December 2014 of the Ministry of Finance)

Code Note 2020 2019

VND VND
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from equity issued,
capital contributed by non-
controlling shareholders 31 2,700,000,000 85,000,000
Proceeds from borrowings 33 83,074,115,401,537 67,944,184,644,118
Payments to settle loan principals 34 (65,603,640,057,528) (55,553,681,828,677)
Payments of dividends 36 (1,419,473,748,756) (12,646,859,136)

Net cash flows from financing

activities 40 16,053,701,595,253 12,377,940,956,305
Net cash flows during the year
(50 = 20 + 30 + 40) 50 9,145,553,263,324 2,028,893,607,164
Cash and cash equivalents at the
beginning of the year 60 4,544,900,252,204 2,515,617,135,457
Effect of exchange rate fluctuations
on cash and cash equivalents 61 5,645,782,700 389,509,583
Cash and cash equivalents at the
end of the year (70 = 50 + 60 + 61) 70 5 13,696,099,298,228 4,544,900,252,204

16 March 2021

Prepared by: Approved by:

Tran Xuan Mai Pham Thi Kim Oanh Tran Tuan Duong
General Accountant Chief Accountant General Director

The accompanying notes are an integral part of these consolidated financial statements

95
HOA PHAT GROUP JOINT STOCK COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020

Form B 09 – DN/HN
(Issued under Circular No. 202/2014/TT-BTC
dated 22 December 2014 of the Ministry of Finance)
These notes form an integral part of and should be read in conjunction with the accompanying consolidated
financial statements.

1. REPORTING ENTITY
1.1 Ownership structure
Hoa Phat Group Joint Stock Company (“the Company”) is incorporated as a joint stock company in
Vietnam. The consolidated financial statements of the Company for the year ended 31 December 2020
comprise the Company and its subsidiaries (together referred to as “the Group”) and the Group’s
interest in associates.

1.2 Principal activities

The principal activities of the Group are as follows:

• Office leasing;
• Financial investments;
• Integrated investment and construction of infrastructures, industrial zones and urban zones;
• Manufacturing of furniture for offices, households and schools;
• Timber production and processing;
• Manufacturing of mechanical products (mainly construction machinery, office desks, chairs and
cabinets);
• Leasing machines, equipment and motor vehicles;
• Dealing in automobiles, motorbikes, equipment, parts for transport and mining sectors, trans
port vehicles;
• Production and trading of construction and mining machineries;
• Dealing in electrical, electronic appliances, optical and medical equipment;
• Production, trading, assembly, installation, repair and maintenance of electrical, electronic,
electrical refrigeration and civil electrical appliances and air-conditioners;
• Production and trading of raw materials and plastic products;
• Advertisement;
• Civil and industrial construction;
• Exploitation of sand, stones and gravel;
• Production, trading and assembly of furniture products and construction equipment;
• Real estate trading (excluding land price consultancy);
• Domestic and foreign investment advisory (excluding law advisory);
• Production and trading of non-ferrous metal and non-ferrous metal scraps;
• Trading and export and import of steel and supplies for steel making and rolling;
• Production of rolled steel products and roofing sheets;
• Exploitation of metal ores;
• Trading metals, metal ores, iron and steel scraps;
• Making cast iron and steel, and casting cast iron, iron and steel;
• Production of plated and non-plated steel pipes and inox pipes;
• Production and trading of galvanized steel sheet, color coated steel sheet and galvalum steel
sheet;

96
HOA PHAT GROUP JOINT STOCK COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020 (CONTINUED)

Form B 09 – DN/HN
(Issued under Circular No. 202/2014/TT-BTC
dated 22 December 2014 of the Ministry of Finance)

• Rendering sports and gymnastics services (training, competition organisation, athlete transfer);
• Building and renting sports practice ground and competition ground;
• Entrusted export-import activities;
• Raising pigs;
• Raising cows;
• Raising poultry;
• Raising other animals;
• Provision of raising services;
• Processing and preserving meat and meat products;
• Producing feeds for cattle, poultry and aquaculture sector;
• Producing fertilizer and nitrogen compounds;
• Trading agricultural equipment, machineries and accessories.
• Coastal, inland waterway and ocean transportation;
• Export, import, trading and distribution of goods not included in the list of goods prohibited
from trading in accordance with provisions of law.

1.3 Normal operating cycle

The normal operating cycle of the Group is generally within 12 months.

97
98
HOA PHAT GROUP JOINT STOCK COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 (CONTINUED)

Form B 09 – DN/HN
(Issued under Circular No. 202/2014/TT-BTC
dated 22 December 2014 of the Ministry of Finance)
1.4 Group structure
As at 31 December 2020, the Group’s subsidiaries are as follows:

Percentage of ownership and

Tier-1 subsidiaries Principal activities voting rights of the Group
31/12/2020 1/1/2020

1 An Thong Mineral Investment JSC Exploring, exploiting, processing, importing and exporting minerals (mainly iron ores). 99.96% 99.96%
2 Hoa Phat Hai Duong Steel JSC Producing steel, iron, exploiting iron ores, exploiting and collecting lignite; wholesaling 99.998% 99.998%
metals and metal ores; producing, trading coke coal.
3 Hoa Phat Dung Quat Steel JSC Producing steel, iron, exploiting iron ores; wholesaling metals and metal ores; producing 99.999% 99.999%
and wholesaling coke coal and other related business activities.
4 Hoa Phat Hung Yen Steel Co., Ltd. Producing steel, iron, wholesaling metals and metal ores. 100% 100%
5 Hoa Phat Steel Pipe Co., Ltd. Producing and trading various kinds of steel pipes. 99.967% 99.967%
6 Hoa Phat Steel Sheet Co., Ltd. Production and trading of galvanized steel sheet, color coated steel sheet and galvalum 100% 100%
steel sheet.
7 Hoa Phat Metal Producing Co., Ltd. Producing construction equipment, trading construction machinery and equipment, 99.875% 99.875%
exploiting small and medium-sized minerals.
8 Hoa Phat Furniture JSC Producing and trading various kinds of furniture. 99.60% 99.60%
9 Hoa Phat Refrigeration Engineering Co., Ltd. Producing and trading various kinds of refrigerant equipment. 99.67% 99.67%
10 Hoa Phat Urban Development and Civil and industrial construction, development of real estate for sales and lease, leasing
Construction JSC houses and offices, investing in and building technical infrastructure. 99.85% 99.85%
11 Hoa Phat Agriculture Development JSC Raising livestock and poultry; farming; providing plantation, raising, post-harvest services;
producing feeds for cattle, poultry and aquaculture sector. 99.999% 99.999%
12 Hoa Phat Iron And Steel JSC (i) Investment, production and trading of construction steel and auxiliary activities. 99.998% -
13 Hoa Phat Steel Pipe and Steel Sheet JSC (i) Investment, production and trading of steel pipes, steel sheet and auxiliary activities. 99.99% -
14 Hoa Phat Real Estate Development JSC (i) Investment, construction and trading of real estates and auxiliary activities. 99.90% -
 HOA PHAT GROUP JOINT STOCK COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 (CONTINUED)

Form B 09 – DN/HN
(Issued under Circular No. 202/2014/TT-BTC
dated 22 December 2014 of the Ministry of Finance)

Percentage of direct Percentage of ownership of

Tier-2 subsidiaries Principal activities ownership of tier-1 subsidiaries the Group
31/12/2020 1/1/2020 31/12/2020 1/1/2020

SUBSIDIARIES OF AN THONG MINERAL INVESTMENT JSC

1 Binh Vang One Member Co., Ltd. Exploiting iron ore, non-ferrous metal, producing non-ferrous 100% 100% 99.96% 99.96%
metal and precious metal, exploiting precious and rare metal
ore.
2 Hoa Phat Mitraco Mining JSC Exploring and production of iron, bauxite and other rare ores; 98.42% 98.42% 98.38% 98.38%
trading metal and metal ores.
SUBSIDIARIES OF HOA PHAT HAI DUONG STEEL JSC
3 Hoa Phat Energy JSC Producing and wholesaling coke coal, exploiting and collecting 99.89% 99.89% 99.888% 99.888%
coal; producing refined petroleum products; wholesaling
metals and metal ores; and trading various kinds of coal.
4 Hoa Phat Shipping JSC Coastal, inland waterway and ocean transportation. 95.20% 100% 95.198% 99.998%
5 Northern Australia Mineral JSC (ii) Exploiting iron ore and non-ferrous metal ore; and producing 99.972% - 99.971% -
non-ferrous metal and precious metal.
SUBSIDIARIES OF HOA PHAT DUNG QUAT STEEL JSC
6 Hoa Phat Dung Quat Ferro Alloy JSC Production of iron, steel and cast iron products. 89.99% 89.99% 99.99% 99.99%
7 Hoa Phat Dung Quat Steel Pipe JSC Production of iron, steel and cast iron products. 89.99% 89.99% 99.987% 99.987%
8 Hoa Phat Dung Quat Steel Sheet JSC Production of iron, steel and cast iron products. 89.99% 89.99% 99.99% 99.99%
9 Hoa Phat Trading International Pte Ltd., Trading of iron, steel and cast iron products. 100% 100% 99.999% 99.999%
10 Hoa Phat Multi-Purpose Port JSC Direct support services for waterway transportation. 98% 98% 99.999% 99.999%
11 Harmonia Co., Ltd. Hospitality services. 100% 100% 99.999% 99.999%

99
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HOA PHAT GROUP JOINT STOCK COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 (CONTINUED)

Form B 09 – DN/HN
(Issued under Circular No. 202/2014/TT-BTC
dated 22 December 2014 of the Ministry of Finance)

Percentage of direct Percentage of ownership of

Tier-2 subsidiaries Principal activities ownership of tier-1 subsidiaries the Group
31/12/2020 1/1/2020 31/12/2020 1/1/2020

SUBSIDIARIES OF HOA PHAT HUNG YEN STEEL CO., LTD.

12 Hoa Phat - Binh Dinh One Member Co., Producing steel, iron, wholesaling metals and metal ores. 100% 100% 100% 100%
Ltd.
13 Nhon Trach Service Trading Co., Ltd. Provision of warehouses, storage yards for rent; and storing, 99.97% 99.97% 99.97% 99.97%
loading/unloading of goods.

SUBSIDIARIES OF HOA PHAT STEEL PIPE CO., LTD.

14 Hoa Phat Cold Rolled Steel Co., Ltd. Producing of cold rolled steel products. 100% 100% 99.967% 99.967%
15 Hoa Phat Binh Duong Steel Pipe One Producing and trading various kinds of steel pipes. 100% 100% 99.967% 99.967%
Member Co., Ltd.
16 Hoa Phat Da Nang Steel Pipe Co., Ltd. Producing and trading various kinds of steel pipes. 99.98% 99.98% 99.944% 99.944%
17 Hoa Phat Long An Steel Pipe One Producing and trading various kinds of steel pipes. 100% 100% 99.967% 99.967%
Member Co., Ltd.

SUBSIDIARIES OF HOA PHAT METAL PRODUCING CO., LTD

18 Hoa Phat Steel Wire Co., Ltd. Producing and trading construction and mining machines; 100% 100% 99.875% 99.875%
producing engines and turbines.
19 Hoa Phat Mechanical Manufacturing Co., Repairing and producing mechanical products; leasing 99.95% 99.95% 99.83% 99.83%
Ltd. machines, equipment and vehicles.
20 Hoa Phat Prestressed Concrete Steel Production of iron, steel and cast iron products. 100% 100% 99.875% 99.875%
Co., Ltd.
SUBSIDIARIES OF HOA PHAT URBAN DEVELOPMENT AND CONSTRUCTION JSC
21 Hoa Phat Hung Yen Industrial Parks Civil and industrial construction, freehold or leasehold real 100% 100% 99.85% 99.85%
Infrastructure Development Co., Ltd. estate trading, workshop and office leasing, integrated
 HOA PHAT GROUP JOINT STOCK COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 (CONTINUED)

Form B 09 – DN/HN
(Issued under Circular No. 202/2014/TT-BTC
dated 22 December 2014 of the Ministry of Finance)

Percentage of direct Percentage of ownership of

Tier-2 subsidiaries Principal activities ownership of tier-1 subsidiaries the Group
31/12/2020 1/1/2020 31/12/2020 1/1/2020
(previously known as Pho Noi A Industrial investment and construction of infrastructure, clean water
Zone Management and Operation trading, waste collection, exploitation, treatment and supply of
Company) water and operation of restaurants
22 Hoa Mac Industrial Zone Management Civil and industrial construction, freehold or leasehold real 100% 100% 99.85% 99.85%
and Operation Co., Ltd. estate trading, workshop and office leasing, integrated
investment and construction of infrastructure, clean water
trading, waste collection, exploitation, treatment and supply of
water.
23 Hoa Phat Hung Yen Urban Development Trading of real estate, land use rights of landowners, land users 100% 100% 99.85% 99.85%
and Construction Co., Ltd. or land lessees.
24 Golden Gain Vietnam JSC Real estate trading. 99.99% 99.99% 99.84% 99.84%
25 Long Viet Construction JSC Real estate trading. 99.80% 99.80% 99.65% 99.65%
SUBSIDIARIES OF HOA PHAT AGRICULTURE DEVELOPMENT JSC
26 Hoa Phat Trading Co., Ltd. Raising buffalos, cows; providing plantation, raising, post- 99.90% 99.90% 99.899% 99.899%
harvest services.
27 Hoa Phat Development of Livestock JSC Raising and providing breeding and market pigs. 99.975% 99.975% 99.974% 99.974%
28 Hoa Phat Hung Yen Feeds Co., Ltd. Producing and trading feeds and materials for producing feeds 100% 100% 99.999% 99.999%
for cattle, poultry and aquaculture sector.
29 Hoa Phat Dong Nai Feeds Co., Ltd. Producing and processing feeds for cattle, poultry and 100% 100% 99.999% 99.999%
aquaculture sector.
30 Hoa Phat Poultry Co., Ltd. Raising poultry. 100% 100% 99.999% 99.999%

SUBSIDIARY OF HOA PHAT REAL ESTATE DEVELOPMENT JSC

31 Hoa Phat Sai Gon Real Estate Trading of real estate, land use rights of landowners, land users 99.9% - 99.8% -
Development JSC (ii) or land lessees.

101
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HOA PHAT GROUP JOINT STOCK COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 (CONTINUED)

Form B 09 – DN/HN
(Issued under Circular No. 202/2014/TT-BTC
dated 22 December 2014 of the Ministry of Finance)

Percentage of direct Percentage of ownership of

Tier-3 subsidiaries Principal activities ownership of tier-2 subsidiaries the Group
31/12/2020 1/1/2020 31/12/2020 1/1/2020

SUBSIDIARIES OF NORTHERN AUSTRALIA MINERAL JSC

1 Dragon Resource Investment Pty Ltd. (iii) Import, export, trading and distribution of goods; 100% - 99.971% -
transportation operator and agent.

SUBSIDIARIES OF GOLDEN GAIN VIETNAM JSC

2 Hanoi Investment and Services JSC Sports, entertainment activities, including tennis, badminton, 95.27% 95.27% 95.111% 95.111%
billiards, swimming, body-building, games and real estate
trading. 99,90% 99.90% 99.736% 99.736%
3 Hanoi Transportation and Goods transport by automobiles, inter-provincial passenger
Trading Services JSC transport by automobiles, machinery and equipment repair,
domestic travel, petrol and oil trading agency, transport
agency services and automobiles keeping services, office,
warehouse and storage yard services and real estate trading.

SUBSIDIARIES OF HOA PHAT TRADING CO., LTD.

4 Hoa Phat Quang Binh Breeding Co., Ltd. Raising livestock and poultry: providing plantation services. 72.72% 72.72% 72.647% 72.647%
5 Viet Hung Breeding One-member Co., Ltd. Raising livestock and poultry: providing plantation services. 100% 100% 99.899% 99.899%
6 Dong Phat Breeding One-member Co., Ltd. Raising livestock and poultry: providing plantation services. 100% 100% 99.899% 99.899%
7 Dragon Trading and Investment Pty Ltd. Import, export, trading and distribution of livestock, poultry, 100% 100% 99.899% 99.899%
agricultural products, ore, coal, iron and steel.
8 Hoa Phat Dong Nai Poultry One Member Raising poultry, raising other animals. 100% - 99.899% -
Co., Ltd. (iv)
 HOA PHAT GROUP JOINT STOCK COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 (CONTINUED)

Form B 09 – DN/HN
(Issued under Circular No. 202/2014/TT-BTC
dated 22 December 2014 of the Ministry of Finance)

Percentage of direct Percentage of ownership of

Tier-3 subsidiaries Principal activities ownership of tier-2 subsidiaries the Group
31/12/2020 1/1/2020 31/12/2020 1/1/2020

SUBSIDIARIES OF HOA PHAT DEVELOPMENT OF LIVESTOCK JSC

9 Thai Thuy Breeding Co., Ltd. Raising pigs, raising poultry, raising other animals. 100% 100% 99.974% 99.974%
10 Lac Thuy Breeding Co., Ltd. Raising poultry, raising other animals. 100% 100% 99.974% 99.974%
11 Hoa Yen Breeding One Member Co., Ltd. Raising pigs, raising other animals. 100% 100% 99.974% 99.974%
12 Son Dong Breeding Co., Ltd. (previously Raising pigs, raising poultry, raising other animals. 100% 100% 99.974% 99.974%
known as Hoa Phat Bac Giang Breeding
One-member Co., Ltd.)
13 Hoa Phat Lang Son Breeding Raising pigs, raising poultry, raising other animals. 100% 100% 99.974% 99.974%
One-member Co., Ltd.
14 Hoa Phuoc Breeding Co., Ltd. Raising breeding and market pigs. 99.998% 99.998% 99.972% 99.972%

SUBSIDIARIES OF HOA PHAT POULTRY CO., LTD.

15 Hoa Phat Phu Tho Poultry One Member Raising poultry, raising other animals. 100% 100% 99.999% 99.999%
Co., Ltd.
16 Hoa Phat Dong Nai Poultry One Member Raising poultry, raising other animals. - 100% - 99.999%
Co., Ltd. (iv)
17 Van Thang Phu Tho JSC Raising livestock and poultry, providing plantation services. 99.8% 100% 99.799% 99.999%

103
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HOA PHAT GROUP JOINT STOCK COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 (CONTINUED)

Form B 09 – DN/HN
(Issued under Circular No. 202/2014/TT-BTC
dated 22 December 2014 of the Ministry of Finance)

Percentage of direct Percentage of ownership of

Tier-4 subsidiaries Principal activities ownership of tier-3 subsidiaries the Group
31/12/2020 1/1/2020 31/12/2020 1/1/2020

SUBSIDIARIES OF HANOI INVESTMENT AND SERVICES JOINT STOCK COMPANY

1 Ha Noi Security Services Business Co., Security Services. 100% 100% 95.111% 95.111%
Ltd

(i) These are tier-1 subsidiaries that were established during the year.

(ii) These are tier-2 subsidiaries that were established during the year.

(iii) These are tier-3 subsidiaries that were established during the year.

(iv) During the year, this tier-3 subsidiary was internally transferred from Hoa Phat Poultry Co., Ltd. to Hoa Phat Trading Co., Ltd.

The Group’s subsidiaries are incorporated in Vietnam, except Hoa Phat Trading International Pte Ltd., which is incorporated in Singapore, and Dragon Resource Investment
Pty Ltd. and Dragon Trading and Investment Pty Ltd. which are incorporated in Australia.

As at 31 December 2020, the Group had 25,428 employees (1/1/2020: 22,300 employees).
HOA PHAT GROUP JOINT STOCK COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020 (CONTINUED)

Form B 09 – DN/HN
(Issued under Circular No. 202/2014/TT-BTC
dated 22 December 2014 of the Ministry of Finance)
2. BASIS OF PREPARATION
2.1 Statement of compliance
These consolidated financial statements have been prepared in accordance with Vietnamese Accounting
Standards, the Vietnamese Accounting System for Enterprises and the relevant statutory requirements
applicable to financial reporting.

2.2 Basis of measurement

The consolidated financial statements, except for the consolidated statement of cash flows, are
prepared on the accrual basis using the historical cost concept. The consolidated statement of cash
flows is prepared using the indirect method.

2.3 Annual accounting period

The annual accounting period of the Group is from 1 January to 31 December.

2.4 Accounting and presentation currency

The Group’s accounting currency is Vietnam Dong (“VND”), which is also the currency used for
consolidated financial statement presentation purpose.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The following significant accounting policies have been adopted by the Group in the preparation of
these consolidated financial statements.

The accounting policies that have been adopted by the Group in the preparation of these consolidated
financial statements are consistent with those adopted in the preparation of the latest consolidated
annual financial statements.

3.1 Basis of consolidation

(a) Subsidiaries
Subsidiaries are entities controlled by the Group. The financial statements of the subsidiaries are
included in the consolidated financial statements from the date that control commences until the date
that control ceases.

(b) Non-controlling interests

Non-controlling interests are measured at their proportionate share of the acquiree’s identifiable net
assets at date of acquisition.

Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted
for as transactions with owners. The difference between the change in the Group’s share of net assets
of the subsidiary and any consideration paid or received is recorded directly in retained profits under
equity.

(c) Loss of control

When the Group losses control over a subsidiary, it derecognises the assets and liabilities of the
subsidiary, and any related non-controlling interest and other components of equity. Any resulting

105
HOA PHAT GROUP JOINT STOCK COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020 (CONTINUED)

Form B 09 – DN/HN
(Issued under Circular No. 202/2014/TT-BTC
dated 22 December 2014 of the Ministry of Finance)
gain or loss is recognised in the consolidated income statement. Any interest retained in the former
subsidiary when control is lost is stated at the carrying amount of the retained investment in the
consolidated financial statements adjusted for appropriate shares of changes in equity of the investee
since the acquisition date, if significant influence in the investee is maintained, or otherwise stated at
cost.
(d) Associates
Associates are those entities in which the Group has significant influence, but not control, over the
financial and operating policies. Associates are accounted for using the equity method. They are initially
recognised at cost, which includes transaction costs. Subsequent to initial recognition, the consolidated
financial statements include the Group’s share of the profit or loss of the associates, after adjustments
to align the accounting policies with those of the Group, from the date that significant influence
commences until the date that significant influence ceases. The carrying amount of investments in
associates is also adjusted for the alterations in the investor’s proportionate interest in the investees
arising from changes in the investee’s equity that have not been included in the income statement
(such as revaluation of fixed assets, or foreign exchange translation differences, etc.).

When the Group’s share of losses exceeds its interest in associates, the carrying amount of that
interest (including any long-term investments) is reduced to nil and the recognition of further losses is
discontinued except to the extent that the Group has an obligation or has made payments on behalf
of the associates.

(e) Transactions eliminated on consolidation

Intra-group balances and transactions, and any unrealised income and expenses arising from intra-
group transactions, are eliminated in preparing the consolidated financial statements. Unrealised
gains and losses arising from transactions with equity accounted associates are eliminated against the
investment to the extent of the Group’s interest in the associates.

(f) Business combination

Business combinations are accounted for using the acquisition method as at the acquisition date, which
is the date on which control is transferred to the Group. Control exists when the Group has the power
to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In
assessing control, potential voting rights that presently are exercisable are taken into account.

3.2 Foreign currency

(a) Foreign currency transactions
Transactions in currencies other than VND during the year have been translated into VND at rates
approximating actual rates of exchange ruling at the transaction dates.

Monetary assets and liabilities denominated in currencies other than VND are translated into VND at
the account transfer buying rates (for assets) and account transfer selling rates (for liabilities) at the end
of the accounting period quoted by the commercial bank where the Group most frequently conducts
transactions.

All foreign exchange differences are recorded in the consolidated statement of income.

106
HOA PHAT GROUP JOINT STOCK COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020 (CONTINUED)

Form B 09 – DN/HN
(Issued under Circular No. 202/2014/TT-BTC
dated 22 December 2014 of the Ministry of Finance)
(b) Foreign operations
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising
on acquisition, are translated to VND at exchange rates as at 31 December 2020. The income and
expenses of foreign operations are translated to VND at exchange rates at the dates of transactions.
Foreign currency differences arising from the translation of foreign operations are recognised in the
consolidated balance sheet under the caption “Foreign exchange differences” in equity.

3.3 Cash and cash equivalents

Cash comprises cash balances and call deposits. Cash equivalents are short-term highly liquid
investments that are readily convertible to known amounts of cash, are subject to an insignificant risk
of changes in value, and are held for the purpose of meeting short-term cash commitments rather than
for investment or other purposes.

3.4 Investments
(a) Held-to-maturity investments
Held-to-maturity investments are those that the Company’s and its subsidiaries’ management has the
intention and ability to hold until maturity. Held-to-maturity investments represent term deposits at
bank and bonds. These investments are stated at costs less allowance for doubtful debts.

(b) Investments in equity instruments of other entities

Investments in equity instruments of other entities are initially recognised at cost which include
purchase price plus any directly attributable transaction costs. Subsequent to initial recognition,
these investments are stated at cost less allowance for diminution in value. An allowance is made
for diminution in investment values if the investee has suffered a loss, except where such loss was
anticipated by the Group’s management before making the investment. The allowance is reversed if
the investee subsequently made a profit that offsets the previous loss for which the allowance had been
made. An allowance is reversed only to the extent that the investment’s carrying amount does not
exceed the carrying amount that would have been determined if no allowance had been recognised.

3.5 Accounts receivable

Trade and other receivables are stated at cost less allowance for doubtful debts.

Allowance for doubtful debts is established for amount of outstanding receivables at the balance sheet
date which are overdue more than 6 months or are doubtful of recovery. Increases and decreases to
the allowance for doubtful debts balance are recorded as general and administration expense in the
consolidated statement of income.

3.6 Inventories
Inventories are stated at the lower of cost and net realisable value.

Cost is determined on a weighted average basis and includes all costs incurred in bringing the
inventories to their present location and condition.

Net realisable value is the estimated selling price of inventory items, less the estimated costs of

107
HOA PHAT GROUP JOINT STOCK COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020 (CONTINUED)

Form B 09 – DN/HN
(Issued under Circular No. 202/2014/TT-BTC
dated 22 December 2014 of the Ministry of Finance)
completion and direct selling expenses.

Allowance for inventories is established for the estimated losses arising due to the impairment of
value (through diminution, damage or obsolescence) of inventories owned by the Group, based on
appropriate evidences of impairment available at the balance sheet date. Increases and decreases to
the allowances for inventories balance are recorded in cost of goods sold account in the consolidated
statement of income.

Manufacturing, trading and production of goods

Cost in the case of finished goods and manufactured work in progress includes raw materials, direct
labour and attributable production overheads.
The Group applies the perpetual method of accounting for inventories.

Real estate development for future sales

Cost is determined on a specific identification basis and includes land costs and other related
development and infrastructure costs, other direct costs and attributable manufacturing overheads.

3.7 Tangible fixed assets

(a) Cost
Tangible fixed assets are stated at cost less accumulated depreciation. The initial cost of a tangible
fixed asset comprises its purchase price, including import duties, non-refundable purchase taxes and
any directly attributable costs of bringing the asset to its working condition for its intended use.
Expenditure incurred after tangible fixed assets have been put into operation, such as repair and
maintenance cost, except overhaul and major maintenance expenses recognised in long-term prepaid
expenses (Note 3.11(b)), is charged to the consolidated statement of income in the year in which the
cost is incurred. In situations where it can be clearly demonstrated that the expenditure has resulted
in an increase in the future economic benefits expected to be obtained from the use of tangible fixed
assets beyond their originally assessed standard of performance, the expenditure is capitalised as an
additional cost of tangible fixed assets.

(b) Depreciation
Depreciation is computed on a straight-line basis over the estimated useful lives of tangible fixed
assets. The estimated useful lives are as follows:
• buildings 5 – 50 years
• machinery and equipment 1 – 25 years
• motor vehicles 1 – 30 years
• office equipment 2 – 12 years
• livestock 3 – 5 years
• others 2 – 12 years

3.8 Intangible fixed assets
(a) Land use rights
Land use rights comprise:
• those granted by the State for which land use payments are collected;

108
HOA PHAT GROUP JOINT STOCK COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020 (CONTINUED)

Form B 09 – DN/HN
(Issued under Circular No. 202/2014/TT-BTC
dated 22 December 2014 of the Ministry of Finance)
• those acquired in a legitimate transfer; and
• rights to use leased land obtained before the effective date of Land Law (2003) for which
payments have been made in advance for more than 5 years and supported by land use rights certificate
issued by competent authority.
Land use rights are stated at cost less accumulated amortisation. The initial cost of land use rights
comprise the purchase price and any directly attributable costs incurred in conjunction with securing
the land use rights. For land use rights with definite useful lives, amortisation is computed on a
straight-line basis over 10 to 50 years. No amortisation is provided for land use rights with indefinite
useful lives.

(b) Software
Cost of acquiring new software, which is not an integral part of the related hardware, is capitalised
and treated as an intangible asset. Software cost is amortised on a straight-line basis over 3 to 8 years.

3.9 Investment property held to earn rental

(a) Cost
Investment property held to earn rental is stated at cost less accumulated depreciation. The initial cost
of an investment property held to earn rental comprises its purchase price, cost of land use rights and
any directly attributable expenditures of bringing the property to the condition necessary for it to be
capable of operating in the manner intended by management. Expenditure incurred after the investment
property held to earn rental has been put into operation, such as repairs and maintenance, is charged
to the consolidated statement of income in the year in which the expenditure is incurred. In situations
where it can be clearly demonstrated that the expenditure has resulted in future economic benefits in
excess of the originally assessed standard of performance of the existing investment property held to
earn rental, the expenditure is capitalised as an additional cost of the investment property.

(b) Depreciation
Depreciation is computed on a straight-line basis over the estimated useful lives of investment property
held to earn rental. The estimated useful lives are as follows:
• buildings 3 – 49 years

For land use rights with indefinite useful live, depreciation is not required.

3.10 CONSTRUCTION IN PROGRESS

Construction in progress represents (i) the costs of construction and machinery which have not been
fully completed or installed and (ii) the costs directly attributable to raising breeding pigs which are
growing and not mature enough for producing piglets. No depreciation is provided for construction in
progress during the period of construction, installation and the period in which breeding pigs are not
mature enough for producing piglets.

3.11 LONG-TERM PREPAID EXPENSES

(a) Tools and instruments
Tools and instruments include assets held for use by the Group in the normal course of business. Tools
and instruments are labour materials not satisfying requirements pertaining to value and useful life

109
HOA PHAT GROUP JOINT STOCK COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020 (CONTINUED)

Form B 09 – DN/HN
(Issued under Circular No. 202/2014/TT-BTC
dated 22 December 2014 of the Ministry of Finance)
prescribed in regulations of fixed assets. Cost of tools and instruments are amortised on a straight-line
basis over a maximum period of 3 years.

(b) Overhaul and major maintenance expenses

These comprise major overhaul and maintenance expenses incurred on a periodical basis during the use
of assets. These expenses are initially stated at cost and are amortised to the consolidated statement
of income on a straight line basis over 2 to 3 years.

(c) Prepaid land costs

Prepaid land costs comprise prepaid land lease rentals, including those for which the Group obtained
land use rights certificate but are not qualified as intangible fixed assets under prevailing regulations
and other costs incurred in conjunction with securing the use of leased land. These costs are recognised
in the consolidated statement of income on a straight-line basis over the term of the lease.

(d) Site clearance costs

Site clearance costs comprise compensation and clearance fee paid by the Group. These expenses are
initially stated at cost and amortised on a straight-line basis over the useful lives of land lease period.

(e) Pre-operating expenses

Pre-operating expenses are recorded in the statement of income, except for establishment costs and
expenditures on training, advertising and promotional activities incurred from the incorporation date
to the commercial operation date. These expenses are recognised as long-term prepaid expenses,
initially stated at cost, and are amortised on a straight-line basis over a period of no more than three
years.

3.12 Goodwill
Goodwill arises on the acquisition of subsidiaries. Goodwill is measured at cost less accumulated
amortisation. Cost of goodwill represents the excess of the cost of the acquisition over the Group’s
interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of the
acquiree. When the excess is negative (gain from bargain purchase), it is recognised immediately in
the consolidated statement of income.

Goodwill arising on acquisition of a subsidiary is amortised on a straight-line basis over 10 years.

Carrying value of goodwill arising on acquisition of a subsidiary is written down to recoverable amount
as management determines that it is not fully recoverable.

3.13 Trade and other payables

Trade and other payables are stated at their cost.

3.14 Provisions
A provision is recognised if, as a result of a past event, the Group has a present legal or constructive
obligation that can be estimated reliably and it is probable that an outflow of economic benefits will
be required to settle the obligation. Provisions are determined by discounting the expected future
cash flows at a pre-tax rate that reflects current market assessments of the time value of money and

110
HOA PHAT GROUP JOINT STOCK COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020 (CONTINUED)

Form B 09 – DN/HN
(Issued under Circular No. 202/2014/TT-BTC
dated 22 December 2014 of the Ministry of Finance)
the risks specific to the liability.

Warranties
The provision for warranties relates mainly to goods sold and services rendered during the year. The
provision is based on estimates derived from historical warranty data associated with similar products
and services.

3.15 Share capital

Ordinary shares
Ordinary shares are recognised at par value. The excess of proceeds from share issuance over the par
value of shares issued is recorded as share premium. Incremental costs directly attributable to the issue
of shares, net of tax effects, are recognized as a deduction from share premium.

3.16 Classification of financial instruments

Solely for the purpose of providing disclosures about the significance of financial instruments to the
Group’s consolidated financial position and consolidated results of operations and the nature and
extent of risk arising from financial instruments, the Group classifies its financial instruments as follows:

(a) Financial assets

Financial assets at fair value through profit or loss
A financial asset at fair value through profit or loss is a financial asset that meets either of the following
conditions:
• It is considered by the Board of Directors as held for trading. A financial asset is considered as
held for trading if:
- it is acquired principally for the purpose of selling it in the near term;
- there is evidence of a recent pattern of short-term profit-taking; or
- a derivative (except for a derivative that is financial guarantee contract or a designated
and effective hedging instrument).
• Upon initial recognition, it is designated by the Group as at fair value through profit or loss.

Held-to-maturity investments
Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments
and a fixed maturity that the Group has the positive intention and ability to hold to maturity, other
than:
• Those that the Group upon initial recognition designates as at fair value through profit or loss;
• Those that the Group designates as available-for-sale; and
• Those that meet the definition of loans and receivables.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are
not quoted in an active market, other than those:
• That the Group intends to sell immediately or in the near term, which are classified as held for
trading, and those that the Group on initial recognition designates as at fair value through
profit or loss;

111
HOA PHAT GROUP JOINT STOCK COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020 (CONTINUED)

Form B 09 – DN/HN
(Issued under Circular No. 202/2014/TT-BTC
dated 22 December 2014 of the Ministry of Finance)
• That the Group upon initial recognition designates as available-for-sale; or
• For which the Group may not recover substantially all of its initial investment, other than because
of credit deterioration, which are classified as available-for-sale.

Available-for-sale financial assets

Available-for-sale financial assets are non-derivative financial assets that are designated as available for
sale or that are not classified as:
• Financial assets at fair value through profit or loss;
• Held-to-maturity investments; or
• Loans and receivables.

(b) Financial liabilities

Financial liabilities at fair value through profit or loss
A financial liability at fair value through profit or loss is a financial liability that meets either of the
following conditions:
• It is considered by the Board of Directors as held for trading. A financial liability is considered
as held for trading if:
- it is incurred principally for the purpose of repurchasing it in the near term;
- there is evidence of a recent pattern of short-term profit-taking; or
- a derivative (except for a derivative that is financial guarantee contract or a designated
and effective hedging instrument).
• Upon initial recognition, it is designated by the Group as at fair value through profit or loss.

Financial liabilities carried at amortised cost

Financial liabilities which are not classified as financial liabilities at fair value through profit or loss are
classified as financial liabilities carried at amortised cost.

The above described classification of financial instruments is solely for presentation and disclosure
purpose and is not intended to be a description of how the instruments are measured. Accounting
policies for measurement of financial instruments are disclosed in other relevant notes.

3.17 Income tax

Income tax on the consolidated profit or loss for the year comprises current and deferred tax. Income
tax is recognised in the consolidated statement of income except to the extent that it relates to items
recognised directly to equity, in which case it is recognised in equity.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted
at the end of the accounting period, and any adjustment to tax payable in respect of previous years.

Deferred tax is provided using the balance sheet method, providing for temporary differences between
the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used
for taxation purposes. The amount of deferred tax provided is based on the expected manner of
realisation or settlement of the carrying amounts of assets and liabilities using the tax rates enacted or
substantively enacted at the end of the accounting period.

112
HOA PHAT GROUP JOINT STOCK COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020 (CONTINUED)

Form B 09 – DN/HN
(Issued under Circular No. 202/2014/TT-BTC
dated 22 December 2014 of the Ministry of Finance)

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will
be available against which the temporary difference can be utilised. Deferred tax assets are reduced to
the extent that it is no longer probable that the related tax benefit will be realised.

3.18 Revenue and other income

(a) Goods sold
Revenue from the sale of goods is recognised in the consolidated statement of income 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 possible return
of goods. Revenue on sales of goods is recognised at the net amount after deducting sales discounts.

(b) Services rendered

Revenue from services rendered is recognised in the consolidated statement of income in proportion
to the stage of completion of the transaction. The stage of completion is assessed by reference to
surveys of work performed. No revenue is recognised if there are significant uncertainties regarding
recovery of the consideration due.

(c) Revenue from sublease of leasehold land

Revenue from sublease of leasehold land is recognised in the consolidated statement of income when
the following conditions are met:
• Sub-lease period is more than 90% of useful life of the land use rights;
• The lessee is not entitled to cancel the lease contract and the lessor has no obligation to repay
the amount received in advance in any cases and in any forms;
• The amount received in advance for the lease is not less than 90% of the total lease payments
expected to receive under the contract during the lease term and the lessee must pay the entire
amount of lease payments within 12 months from the beginning of the lease;
• Substantially all the risks and benefits associated with ownership of the land use rights are
transferred to the lessee; and
• The costs incurred or to be incurred in respect of the lease must be reliably estimated by the
Group.

(d) Rental income

Except from those described in Item 3.18(c), rental income from leased property is recognised in the
consolidated statement of income on a straight-line basis over the term of the lease. Lease incentives
granted are recognised as an integral part of the total rental income.

(e) Sales of apartments

Revenue from the sale of apartments is recognised in the consolidated statement of income 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. The
transfer of significant risks and rewards is determined to be at the time of completion and hand over
of the apartments.

113
HOA PHAT GROUP JOINT STOCK COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020 (CONTINUED)

Form B 09 – DN/HN
(Issued under Circular No. 202/2014/TT-BTC
dated 22 December 2014 of the Ministry of Finance)
(f) Interest income
Interest income is recognised on a time basis with reference to the principal outstanding and the
applicable interest rate. Interest income from deposits during the period of construction is set off with
borrowing costs relating to borrowings in respect of the construction of qualifying assets, net of the
remaining difference from adjustment to decrease the value of investment.

(g) Dividend income

Dividend income is recognised when the right to receive dividend is established.

3.19 Lease
Lease payments
Payments made under operating leases are recognised in the consolidated statement of income
on a straight-line basis over the term of the lease. Lease incentives received are recognised in the
consolidated statement of income as an integral part of the total lease expense, over the term of the
lease.

3.20 Borrowing costs

Borrowing costs are recognised as an expense in the year in which they are incurred, except where the
borrowing costs relate to borrowings in respect of the construction of qualifying assets, in which case
the borrowing costs incurred during the period of construction are capitalized as part of the cost of
the assets concerned.

3.21 Earnings per share

The Group presents basic earnings per share for its ordinary shares. Basic earnings per share is
calculated by dividing the profit or loss attributable to the ordinary shareholders of the Company
(after deducting any amounts appropriated to bonus and welfare funds for the accounting period) by
the weighted average number of ordinary shares outstanding during the year. At the reporting date,
the Group did not have any dilutive potential ordinary shares. Therefore, the presentation of diluted
earnings per share is not applicable.

3.22 Related parties

Parties are considered to be related to the Group if one party has the ability, directly or indirectly,
to control the other party or exercise significant influence over the other party in making financial
and operating decisions, or where the Group and the other party are subject to common control or
significant influence.

Related parties may be individuals, directly or indirectly, having voting rights that give them significant
influence over the Group, the Group’s key management personnel, close family members of any
individual considered to be a related party.

3.23 Comparative information

Comparative information in these financial statements is presented as corresponding figures. Under
this method, comparative information for the prior year are included as an integral part of the current
year financial statements and are intended to be read only in relation to the amounts and other

114
HOA PHAT GROUP JOINT STOCK COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020 (CONTINUED)

Form B 09 – DN/HN
(Issued under Circular No. 202/2014/TT-BTC
dated 22 December 2014 of the Ministry of Finance)
disclosures relating to the current year. Accordingly, the comparative information included in these
financial statements is not intended to present the Company’s financial position, results of operation
or cash flows for the prior year.

4. SEGMENT REPORTING
A segment is a distinguishable component of the Group that is engaged either in providing related
products or services (business segment) or in providing products or services within a particular economic
environment (geographical segment), which is subject to risks and rewards that are different from those
of other segments. The Group’s primary format for segment reporting is based on business segments.
The Group comprises the following main business segments:

• Production and trading of steel: refining steel; casting steel, iron; trading and import-export
of steel, steel-producing machinery and equipment; production of industrial steel including
steel sheet, hot rolled steel, cold rolled steel, steel pipe, steel scrap; production and trading of
steel pipes; production of steel string machinery;
• Agriculture: raising pigs, cows, poultry; provision of raising services; processing and preserving
meat and meat products; producing feeds for cattle, poultry and aquaculture sector; producing
fertilizer and nitrogen compounds; trading agricultural equipment, machineries and accessories;
and other relevant auxiliary sectors;
• Other industrial production: production and trading of construction equipment; producing and
trading various kinds of interior furniture and refrigerant products; and
• Construction and development of real estate: civil construction, industrial construction,
trading of real estate under its ownership or lease from others; leasing houses, offices and
investing in construction of infrastructure;

The Group did not present geographical segment because the Board of Directors determines that the
Group currently operates in a sole geographical segment which is Vietnam territory.

115
116
HOA PHAT GROUP JOINT STOCK COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 (CONTINUED)

Form B 09 – DN/HN
(Issued under Circular No. 202/2014/TT-BTC
dated 22 December 2014 of the Ministry of Finance)

Production and Other industrial

trading of steels Agriculture production Real estates Elimination Consolidated
VND VND VND VND VND VND

FOR THE YEAR ENDED 31 DECEMBER 2020

Net external revenue 76,334,474,996,918 10,552,656,907,339 2,504,998,384,841 726,373,137,619 - 90,118,503,426,717
Net inter-segment revenue 42,544,569,455,245 1,284,031,840 153,719,133,088 70,106,130,158 (42,769,678,750,331) -

Total segment revenue 118,879,044,452,163 10,553,940,939,179 2,658,717,517,929 796,479,267,777 (42,769,678,750,331) 90,118,503,426,717

Segment net operating profits 28,657,042,061,931 1,822,906,054,607 399,332,628,236 497,988,020,815 (16,086,929,588,361) 15,290,339,177,228

Other income 644,294,025,919 4,676,396,177 3,427,810,867 4,180,309,411 (2,497,208,149) 654,081,334,225

Other expenses (548,515,585,353) (35,909,688,381) (3,863,882,182) (2,252,866,517) 1,123,670,917 (589,418,351,516)
Share of profit in associates - 1,964,631,764 - - - 1,964,631,764
Income tax expenses – current (1,515,190,441,976) (123,438,628,112) (86,027,103,992) (59,911,669,786) - (1,784,567,843,866)
Income tax (expenses)/benefit
– deferred 1,292,727,824 6,675,417,414 4,053,235,681 (39,020,450,326) (39,235,821,521) (66,234,890,928)

Net profit after tax 27,238,922,788,345 1,676,874,183,469 316,922,688,610 400,983,343,597 (16,127,538,947,114) 13,506,164,056,907
 HOA PHAT GROUP JOINT STOCK COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 (CONTINUED)

Form B 09 – DN/HN
(Issued under Circular No. 202/2014/TT-BTC
dated 22 December 2014 of the Ministry of Finance)

Production and Other industrial

trading of steels Agriculture production Real estates Elimination Consolidated
VND VND VND VND VND VND

AS AT 31 DECEMBER 2020
Segment assets 137,591,518,586,036 7,182,405,136,476 1.464.515.369.989 3,753,721,908,201 (18,480,726,611,865) 131,511,434,388,837

Total assets 137,591,518,586,036 7,182,405,136,476 1.464.515.369.989 3,753,721,908,201 (18,480,726,611,865) 131,511,434,388,837

Segment liabilities 83,392,904,434,271 3,040,173,481,198 914.515.369.989 2,440,408,591,833 (17,496,353,794,565) 72,291,648,082,726

Total liabilities 83,392,904,434,271 3,040,173,481,198 914.515.369.989 2,440,408,591,833 (17,496,353,794,565) 72,291,648,082,726

FOR THE YEAR ENDED 31 DECEMBER 2020

Capital expenditure 11,458,247,219,708 457,819,591,787 41,962,248,521 11,406,857,366 (53,790,362,334) 11,915,645,555,048
Depreciation of tangible
fixed assets and investment
properties 4,113,610,616,426 498,228,571,269 100,805,990,097 69,983,930,617 (42,748,467,800) 4,739,880,640,609
Amortisation of intangible
fixed assets 17,252,704,951 830,833,886 1,943,942,533 136,415,237 (12,212,230) 20,151,684,377
Amortisation of long-term land
prepaid expenses 13,623,836,208 6,884,072,387 1,922,056,122 - (729,190,280) 21,700,774,437

117
118
HOA PHAT GROUP JOINT STOCK COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 (CONTINUED)

Form B 09 – DN/HN
(Issued under Circular No. 202/2014/TT-BTC
dated 22 December 2014 of the Ministry of Finance)

Production and Other industrial

trading of steels Agriculture production Real estates Elimination Consolidated
VND VND VND VND VND VND

FOR THE YEAR ENDED 2019

Net external revenue 51,233,120,178,424 7,985,316,066,488 2,817,712,434,540 1,622,043,994,339 - 63,658,192,673,791
Net inter-segment revenue 34,507,078,536,582 2,095,876,750 108,085,621,241 36,560,304,199 (34,653,820,338,772) -

Total segment revenue 85,740,198,715,006 7,987,411,943,238 2,925,798,055,781 1,658,604,298,538 (34,653,820,338,772) 63,658,192,673,791

Segment net operating profits 18,349,735,019,472 606,035,403,717 433,838,415,313 578,705,175,478 (10,935,903,061,158) 9,032,410,952,822

Other income 751,180,909,150 2,836,887,646 4,965,484,603 4,300,049,645 (105,602,399,567) 657,680,931,477

Other expenses (582,603,733,733) (5,402,833,606) (601,653,980) (7,400,744,172) 4,010,518,193 (591,998,447,298)
Share of loss in associates - (1,431,313,615) - - - (1,431,313,615)
Income tax expenses – current (1,339,481,995,523) (42,474,252,047) (85,209,957,087) (136,141,722,023) - (1,603,307,926,680)
Income tax (expenses)/benefit
– deferred 5,289,924,979 (1,019,358,304) 4,456,555,534 5,175,725,890 70,991,191,424 84,894,039,523

Net profit after tax 17,184,120,124,345 558,544,533,791 357,448,844,383 444,638,484,818 (10,966,503,751,108) 7,578,248,236,229
 HOA PHAT GROUP JOINT STOCK COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 (CONTINUED)

Form B 09 – DN/HN
(Issued under Circular No. 202/2014/TT-BTC
dated 22 December 2014 of the Ministry of Finance)

Production and Other industrial

trading of steels Agriculture production Real estates Elimination Consolidated
VND VND VND VND VND VND
AS AT 1 JANUARY 2020
Segment assets 97,305,517,934,909 5,962,449,415,148 1,710,025,863,879 3,139,152,865,264 (6,341,115,979,300) 101,776,030,099,900

Total assets 97,305,517,934,909 5,962,449,415,148 1,710,025,863,879 3,139,152,865,264 (6,341,115,979,300) 101,776,030,099,900

Segment liabilities 55,469,885,069,405 2,059,970,080,875 920,714,227,148 899,017,552,839 (5,360,192,974,062) 53,989,393,956,205

Total liabilities 55,469,885,069,405 2,059,970,080,875 920,714,227,148 899,017,552,839 (5,360,192,974,062) 53,989,393,956,205

FOR THE YEAR ENDED 31 DECEMBER 2019

Capital expenditure 19,993,459,899,558 644,812,426,291 36,481,789,960 494,067,552,518 (343,450,093,667) 20,825,371,574,660
Depreciation of tangible
fixed assets and investment
properties 2,082,192,603,443 314,171,386,862 105,097,946,084 58,605,925,717 1,343,588,304 2,561,411,450,410
Amortisation of intangible
fixed assets 15,503,594,663 1,048,564,387 2,068,077,862 396,737,776 (12,212,229) 19,004,762,459
Amortisation of long-term land
prepaid expenses 23,192,855,261 7,620,698,407 1,922,056,121 - (729,190,280) 32,006,419,509

119
HOA PHAT GROUP JOINT STOCK COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020 (CONTINUED)

Form B 09 – DN/HN
(Issued under Circular No. 202/2014/TT-BTC
dated 22 December 2014 of the Ministry of Finance)
5. CASH AND CASH EQUIVALENTS

31/12/2020 1/1/2020
VND VND
Cash on hand 12,919,745,291 16,566,142,092
Cash in banks 2,081,394,552,937 1,661,725,195,112
Cash in transit - 22,915,000
Cash equivalents 11,601,785,000,000 2,866,586,000,000

13,696,099,298,228 4,544,900,252,204

120
 HOA PHAT GROUP JOINT STOCK COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 (CONTINUED)

Form B 09 – DN/HN
(Issued under Circular No. 202/2014/TT-BTC
dated 22 December 2014 of the Ministry of Finance)

6. INVESTMENTS
6.1 Held-to-maturity investments

31/12/2020 1/1/2020
Quantity Cost Fair value Quantity Cost Fair value
VND VND VND VND

Held-to-maturity investments - short-term 8,126,992,675,380 8,126,992,675,380 1,374,340,352,910 1,374,340,352,910
• Term deposits (i)

Held-to-maturity investments - long-term

• Term deposits (ii) 150,000,000,000 (*) 26,525,530,257 (*)
• Bonds (iii) 2,000 20,000,000,000 (*) 2,000 20,000,000,000 (*)

170,000,000,000 (*) 46,525,530,257 (*)

(i) These represent term deposits with a remaining term of no more than 12 months placed at financial institutions and with interest rates ranging from 3.30% to 7.40%
(2019: from 3.80% to 7.80%) per annum.

As at 31 December 2020, deposits with remaining terms of no more than 12 months comprise VND196,700 million which were pledged with banks as security for
L/C contracts of Hoa Phat Dung Quat Steel Joint Stock Company, a tier-1 subsidiary of the Group (1/1/2020: Nil).

As at 31 December 2020, deposits with remaining terms of no more than 12 months comprise VND46,100 million which were pledged with banks as security for
loans granted to the Group (1/1/2020: Nil).

(ii) These represent term deposits with a remaining term of more than 12 months placed at financial institutions and with interest rates 6.00% (2019: from 7.40% to
7.80%) per annum.

As at 31 December 2020, deposits with remaining terms of more than 12 months comprise VND136,000 million which were pledged with banks as security for L/C

121
contracts of Hoa Phat Dung Quat Steel Joint Stock Company, a tier-1 subsidiary of the Group (1/1/2020: Nil).
122
HOA PHAT GROUP JOINT STOCK COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 (CONTINUED)

Form B 09 – DN/HN
(Issued under Circular No. 202/2014/TT-BTC
dated 22 December 2014 of the Ministry of Finance)

(iii) These represent the bonds issued by Vietnam Joint Stock Commercial Bank for Industry and Trade, maturing in 2026 and earning annual interest rate at the reference
interest rate plus 1%. The reference interest rate is the average of interest rates of individual 12-month saving deposits with interests paid at maturity announced on
the websites of 4 banks: Vietnam Joint Stock Commercial Bank for Industry and Trade, Joint Stock Commercial Bank For Foreign Trade of Viet Nam, Joint Stock
Commercial Bank for Investment and Development of Vietnam, and Bank for Agriculture and Rural Development.

(*) The Group has not determined fair values of these financial instruments for disclosure in the consolidated financial statements because information about their
market prices is not available and there is currently no guidance on determination of fair value using valuation techniques under Vietnamese Accounting Standards or
the Vietnamese Accounting System for Enterprises. The fair values of these financial instruments may differ from their carrying amounts.

6.2 Long-term financial investments

31/12/2020 1/1/2020
Address % of equity % of voting Carrying amount Fair value % of equity % of voting Carrying amount Fair value
owned rights VND VND owned rights VND VND

Equity investments in other

entities
• Bac Ha Noi Urban Hanoi, Viet-
Development JSC nam 7.00% 7.99% 700,000,000 (*) 7.00% 7.99% 700,000,000 (*)

(*) The Group has not determined fair values of these financial instruments for disclosure in the consolidated financial statements because information about their
maket prices is not available and there is currently no guidance on determination of fair value using valuation techniques under Vietnamese Accounting Standards or
the Vietnamese Accounting System for Enterprises. The fair values of these financial instruments may differ from their carrying amounts.
HOA PHAT GROUP JOINT STOCK COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020 (CONTINUED)

Form B 09 – DN/HN
(Issued under Circular No. 202/2014/TT-BTC
dated 22 December 2014 of the Ministry of Finance)
7. PREPAYMENTS TO SUPPLIERS

31/12/2020 1/1/2020
VND VND

Other parties
Guangxi Pingxiang Futai Import & Export Trade Co., Ltd. 181,811,396,791 -
WISDRI Engineering & Research Incorporation Limited 110,979,849,600 -
Pingxiang City Holly Import & Export Trade Co., Ltd. 110,888,776,594 -
Cisdi Thermal & Environmental Engineering Co., Ltd. - 76,483,806,000
Thien Truong Trading and Production Co., Ltd. - 70,417,790,130
Other suppliers 899,357,812,844 610,930,965,061

1,303,037,835,829 757,832,561,191

8. OTHER RECEIVABLES
8.1 Other receivables – short-term

31/12/2020 1/1/2020
VND VND

Interest income 198,851,101,719 33,200,395,079

Short-term deposits 582,845,456,264 30,757,172,310
Export tax paid 55,934,698,294 29,169,457,446
Materials lent to third parties 819,522,227 2,937,478,865
Materials issued for outside processing 397,211,760 460,791,004
Other receivables 71,517,512,407 42,747,951,649

910,365,502,671 139,273,246,353

8.2 Other receivables – long-term

31/12/2020 1/1/2020
VND VND

Long-term deposits 208,726,314,243 22,700,090,991

Other receivables 431,994,388 107,157,993

209,158,308,631 22,807,248,984

123
HOA PHAT GROUP JOINT STOCK COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020 (CONTINUED)

Form B 09 – DN/HN
(Issued under Circular No. 202/2014/TT-BTC
dated 22 December 2014 of the Ministry of Finance)
9. INVENTORIES
31/12/2020 1/1/2020
Cost Allowance Cost Allowance
VND VND VND VND

Goods in transit 4,175,588,558,243 - 2,871,139,551,905 -

Raw materials 11,876,280,307,410 (2,937,448,687) 7,381,248,359,674 (3,877,969,713)
Tools and supplies 1,768,683,803,585 (1,330,489,342) 2,101,425,673,044 (5,840,805,888)
Work in progress 2,355,242,940,255 (66,002,922,445) 1,573,282,308,451 (28,311,250,423)
Finished goods 5,509,190,782,455 (12,250,780,039) 4,489,362,757,309 (13,381,769,149)
Merchandise inventories 496,154,920,463 (4,016,957,073) 741,358,297,568 (17,331,986,992)
Goods sent for processing - - 1,777,303,715 -
Goods on consignment 192,219,514,377 - 321,072,278,594 -

26,373,360,826,788 (86,538,597,586) 19,480,666,530,260 (68,743,782,165)

Included in inventories as at 31 December 2020 was VND361,690 million (1/1/2020: VND708,398 million) of inventories
carried at net realisable value.

As at 31 December 2020, inventories with a carrying value of VND7,677,165 million (1/1/2020: VND4,220,685 million)
were pledged with banks as security for loans granted to the Group.

124
 HOA PHAT GROUP JOINT STOCK COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020 (CONTINUED)

Form B 09 – DN/HN
(Issued under Circular No. 202/2014/TT-BTC
dated 22 December 2014 of the Ministry of Finance)
10. LOANS RECEIVABLE – LONG-TERM

Annual 31/12/2020 1/1/2020

Currency interest rate VND VND

Related parties
Australian Cattle Enterprises (NT) Pty. Ltd. AUD 6.00% 5,418,486,000 4,910,346,000

Other parties (*)

Nguyen Thi To Hoai (i) VND 5.50% 89,463,752,800 -
Others (ii) VND 6.00% 1,125,000,000 -

96,007,238,800 4,910,346,000

(*) These long-term loans receivable represent loans granted to individuals for investment in breeding facilities,
infrastructure and premises to meet the requirements of the Group. Accordingly, loan principals and interests
will be offset with the breeding facilities rental over the lease term. After the end of the lease term, the Group
is required to transfer the leased properties after the individuals have fully repaid principals and paid interests
incurred.

(i) The loan was unsecured.

(ii) The loan was secured over the land use right certificate of the landowner for the land lot of 43m2 in La Tien
Hamlet, Nguyen Hoa Commune, Phu Cu District, Hung Yen Province.

125
HOA PHAT GROUP JOINT STOCK COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020 (CONTINUED)

Form B 09 – DN/HN
(Issued under Circular No. 202/2014/TT-BTC
dated 22 December 2014 of the Ministry of Finance)
11. TANGIBLE FIXED ASSETS

Buildings Machinery and equipment Motor vehicles

VND VND VND

Cost
Opening balance 13,113,467,453,926 29,212,039,947,941 1,021,786,574,335
Additions 18,650,762,220 216,311,326,561 173,119,419,198
Transfer from construction
in progress 17,870,386,689,502 19,963,600,763,250 712,237,370,040
Transfer from long-term
prepaid expenses - 64,115,268,797 -
Transfer to investment
property (8,844,849,328) - -
Disposals and written off (16,071,611,081) (141,504,128,389) (12,194,999,810)
Reclassifications 71,343,489,820 (72,440,145,976) 11,270,000
Other movements (532,615,843) 2,919,295,645 -

Closing balance 31,048,399,319,216 49,245,042,327,829 1,894,959,633,763

Accumulated depreciation
Opening balance 2,206,469,797,570 9,836,701,860,494 532,872,440,295
Charge for the year 1,212,905,477,908 3,213,196,770,096 163,342,521,443
Transfer to investment
property (2,021,220,404) - -
Disposals and written off (15,514,625,189) (110,890,974,662) (10,303,833,034)
Reclassifications 71,040,914,409 (72,324,325,030) -
Other movements (168,134,482) - -

Closing balance 3,472,712,209,812 12,866,683,330,898 685,911,128,704

Net book value

Opening balance 10,906,997,656,356 19,375,338,087,447 488,914,134,040
Closing balance 27,575,687,109,404 36,378,358,996,931 1,209,048,505,059

Included in tangible fixed assets were assets costing VND4,390,516 million which were fully depreciated as at 31
December 2020 (1/1/2020: VND2,499,266 million) but still in active use.

As at 31 December 2020, tangible fixed assets with a carrying value of VND55,980,946 million (1/1/2020:
VND22,097,737million) were pledged with banks as security for loans granted to the Group.

126
HOA PHAT GROUP JOINT STOCK COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020 (CONTINUED)

Form B 09 – DN/HN
(Issued under Circular No. 202/2014/TT-BTC
dated 22 December 2014 of the Ministry of Finance)

Office equipment Livestock Others Total

VND VND VND VND

98,437,534,168 353,066,259,598 6,142,351,927 43,804,940,121,895

16,696,203,670 - 796,079,999 425,573,791,648

37,658,498,217 32,484,511,005 1,701,086,596 38,618,068,918,610

- 64,115,268,797
- -

- - - (8,844,849,328)
(433,784,771) (119,280,188,140) (154,121,255) (289,638,833,446)
1,085,386,156 - - -
- - - 2,386,679,802

153,443,837,440 266,270,582,463 8,485,397,267 82,616,601,097,978

56,353,664,813 190,247,486,974 2,172,437,045 12,824,817,687,191

30,823,360,250 89,565,503,355 1,056,588,479 4,710,890,221,531

- - - (2,021,220,404)
(401,641,284) (87,472,137,977) (154,121,255) (224,737,333,401)
1,283,410,621 - - -
- - - (168,134,482)

88,058,794,400 192,340,852,352 3,074,904,269 17,308,781,220,435

42,083,869,355 162,818,772,624 3,969,914,882 30,980,122,434,704

65,385,043,040 73,929,730,111 5,410,492,998 65,307,819,877,543

127
HOA PHAT GROUP JOINT STOCK COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020 (CONTINUED)

Form B 09 – DN/HN
(Issued under Circular No. 202/2014/TT-BTC
dated 22 December 2014 of the Ministry of Finance)
12. INTANGIBLE FIXED ASSETS

Land use rights Software Others Total

VND VND VND VND

Cost
Opening balance 267,408,028,099 70,662,025,700 1,500,909,664 339,570,963,463
Additions - 2,312,010,500 - 2,312,010,500
Transfer from construction
in progress - 2,305,493,215 - 2,305,493,215
Write-off - - (1,193,188,000) (1,193,188,000)
Reclassification (5,888,788,763) - 5,888,788,763 -

Closing balance 261,519,239,336 75,279,529,415 6,196,510,427 342,995,279,178

Accumulated amortisation
Opening balance 41,683,157,547 27,015,412,996 1,500,909,664 70,199,480,207
Charge for the year 4,490,134,946 15,505,642,834 155,906,597 20,151,684,377
Write-off - - (1,193,188,000) (1,193,188,000)
Reclassification (3,280,896,654) - 3,280,896,654 -

Closing balance 42,892,395,839 42,521,055,830 3,744,524,915 89,157,976,584

Net book value

Opening balance 225,724,870,552 43,646,612,704 - 269,371,483,256
Closing balance 218,626,843,497 32,758,473,585 2,451,985,512 253,837,302,594

Included in intangible fixed assets were assets costing VND15,826 million which were fully amortised as of 31
December 2020 (1/1/2020: VND10,145 million), but which are still in active use.

At 31 December 2020, intangible fixed assets with a carrying value of VND87,757 million (1/1/2020: VND72,655
million) were pledged with banks as security for loans granted to the Group.

128
 HOA PHAT GROUP JOINT STOCK COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020 (CONTINUED)

Form B 09 – DN/HN
(Issued under Circular No. 202/2014/TT-BTC
dated 22 December 2014 of the Ministry of Finance)
13. INVESTMENT PROPERTY

Buildings Land use rights Total

VND VND VND

Cost
Opening balance 607,537,041,425 55,702,700,965 663,239,742,390
Transfer from construction in progress 9,847,253,038 - 9,847,253,038
Transfer from tangible fixed assets 8,844,849,328 - 8,844,849,328

Closing balance 626,229,143,791 55,702,700,965 681,931,844,756

Accumulated depreciation
Opening balance 86,623,231,473 - 86,623,231,473
Charge for the year 28,990,419,078 - 28,990,419,078
Transfer from tangible fixed assets 2,021,220,404 - 2,021,220,404

Closing balance 117,634,870,955 - 117,634,870,955

Net book value

Opening balance 520,913,809,952 55,702,700,965 576,616,510,917
Closing balance 508,594,272,836 55,702,700,965 564,296,973,801

Investment property of the Group and its subsidiaries includes:

• Land use rights and factories for rent in Pho Noi A Industrial Park, Giai Pham Commune, Yen My District,
Hung Yen Province, Vietnam, some floors for rent of the building at 257 Giai Phong Street, Hai Ba Trung
District, Hanoi, Vietnam.
• Land use rights and areas for commercial lease at Mandarin Garden Complex 1 at South-East Tran Duy Hung
Urban Area, Trung Hoa Ward, Cau Giay District, Hanoi, Vietnam; Mandarin Garden Complex 2 at 493 Truong
Dinh, Hoang Mai District, Hanoi, Vietnam and Apartment buildings at 70 Nguyen Duc Canh Street, Hoang
Mai District, Hanoi, Vietnam.

As the investment property being land use right has an indefinite term, the Group did not depreciate it.

At the reporting date, the Group has not determined the fair value of its investment property as there was no active
market for such property for reliable determination of the fair value.

129
HOA PHAT GROUP JOINT STOCK COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020 (CONTINUED)

Form B 09 – DN/HN
(Issued under Circular No. 202/2014/TT-BTC
dated 22 December 2014 of the Ministry of Finance)
14. LONG-TERM WORK IN PROGRESS

Cost and recoverable amount

31/12/2020 1/1/2020
VND VND
The Urban Area and Industrial Park Project in Hung Yen 913,306,321,947 730,370,717,352
Other projects 5,164,409,999 19,775,681,371

918,470,731,946 750,146,398,723

At 31 December 2020, long-term work in progress with a carrying value of VND195,435 million (1/1/2020: nil)
were pledged with banks as security for loans granted to the Group.

15. CONSTRUCTION IN PROGRESS

2020 2019
VND VND

Opening balance 36,685,174,068,291 37,196,900,023,418

Additions during the year 7,031,499,613,678 19,398,227,780,457
Interest expenses capitalised during the year 527,071,296,569 1,371,477,036,921
Transfer to tangible fixed assets (38,618,068,918,610) (20,696,904,584,940)
Transfer to intangible fixed assets (2,305,493,215) (29,351,367,152)
Transfer to investment properties (9,847,253,038) (416,472,681,847)
Transfer to long-term prepaid expenses (247,972,063,577) (126,351,414,583)
Transfer to short-term prepaid expenses (36,810,573,249) (5,248,613,116)
Disposals - (490,150,000)
Others 2,098,199 (6,611,960,867)

Closing balance 5,328,742,775,048 36,685,174,068,291

Major constructions in progress were as follows:

31/12/2020 1/1/2020
VND VND
Iron and Steel Production Complex Project in Dung Quat 3,487,288,552,867 33,097,995,330,249
Iron and Steel Production Complex Project in Hai Duong 1,327,612,767,875 244,430,685,541
Color Coating Steel Sheet Factory Project 9,838,075,445 2,471,423,149,154
Steel pipe Factory expansion Project 5,107,652,238 123,602,944,657
Agriculture projects 249,453,653,883 434,027,505,133
Other projects 249,442,072,740 313,694,453,557

5,328,742,775,048 36,685,174,068,291

At 31 December 2020 constructions in progress with a carrying value of VND2,422,965 million

(1/1/2020: VND 34,763,405 million) were pledged with banks as security for loans granted to the Group.

130
 HOA PHAT GROUP JOINT STOCK COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 (CONTINUED)

Form B 09 – DN/HN
(Issued under Circular No. 202/2014/TT-BTC
dated 22 December 2014 of the Ministry of Finance)

16. PREPAID EXPENSES

16.1 Short-term prepaid expenses

31/12/2020 1/1/2020
VND VND

Tools and instruments 55,169,511,816 57,692,551,361

Maintenance and repair of assets 13,672,648,361 27,582,504,748
Other expenses 72,555,886,622 33,276,232,976

141,398,046,799 118,551,289,085

16.2 Long-term prepaid expenses

Overhaul and
Tools and major maintenance Prepaid Site clearance Pre-operating
supplies expenses land costs costs expenses Others Total
VND VND VND VND VND VND VND
Opening balance 125,987,492,909 279,843,134,786 774,566,962,748 231,816,052,559 113,611,568,905 124,913,411,183 1,650,738,623,090
Additions 82,997,332,571 112,642,168,108 - 4,464,093,500 1,959,660,404 118,003,238,573 320,066,493,156
Transfer from construction in progress 20,533,309,213 68,665,082,327 23,747,408,457 81,306,811,244 14,920,072,008 38,799,380,328 247,972,063,577
Transfer to tangible fixed assets - (64,115,268,797) - - - - (64,115,268,797)
Transfer to short-term prepaid expenses - - - - - (30,540,046,953) (30,540,046,953)
Amortization for the year (96,295,460,391) (210,484,887,940) (21,700,774,437) (14,570,172,962) (48,771,912,853) (85,915,914,526) (477,739,123,109)
Disposals and written off (53,707,500) - - - - - (53,707,500)
Reclassifications 199,869,331 1,118,537,940 - (456,163,837) 59,984,295 (922,227,729) -
Other movements - - - (234,515,000) - - (234,515,000)

Closing balance 133,368,836,133 187,668,766,424 776,613,596,768 302,326,105,504 81,779,372,759 164,337,840,876 1,646,094,518,464

131
At 31 December 2020, long-term prepaid expenses with net book value of VND45,171 million (1/1/2020: VND29,361 million) were pledged with banks as security for
loans granted to the Group.
HOA PHAT GROUP JOINT STOCK COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020 (CONTINUED)

Form B 09 – DN/HN
(Issued under Circular No. 202/2014/TT-BTC
dated 22 December 2014 of the Ministry of Finance)
17. DEFERRED TAX ASSETS
Deferred tax assets were recognised in respect of the following items:

31/12/2020 1/1/2020
VND VND

Accrued expenses 35,663,686,775 79,459,218,187

Unrealised profits arising on the intra-group transactions 172,947,080,907 204,750,091,406
Depreciation charges excluded from taxable expenses 9,436,260,938 6,088,998,955
Other deferred tax assets 7,506,279,404 1,928,379,334

225,553,308,024 292,226,687,882

18. GOODWILL

Lac Thuy Nhon Trach

Hoa Phat Breeding Co., Service Trading Long Viet
Energy JSC Ltd. Co., Ltd. Construction JSC Total
VND VND VND VND VND

Cost
Opening and closing
balance 206,244,396,684 4,367,130,430 195,950,665 59,880,000,000 270,687,477,779

Accumulated
amortisation
Opening balance 197,650,880,166 873,426,096 - 10,978,000,000 209,502,306,262
Amortisation for the
year 8,593,516,518 3,493,704,334 - 5,988,000,000 18,075,220,852

Closing balance 206,244,396,684 4,367,130,430 - 16,966,000,000 227,577,527,114

Net book value

Opening balance 8,593,516,518 3,493,704,334 195,950,665 48,902,000,000 61,185,171,517
Closing balance - - 195,950,665 42,914,000,000 43,109,950,665

132
HOA PHAT GROUP JOINT STOCK COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020 (CONTINUED)

Form B 09 – DN/HN
(Issued under Circular No. 202/2014/TT-BTC
dated 22 December 2014 of the Ministry of Finance)
19. ADVANCES FROM CUSTOMERS

31/12/2020 1/1/2020
VND VND

Other parties
Industrial Development and Investment Joint Stock 219,854,708,867 -
Company 194,924,947,088 18,291,336,740
SMC Trading Investment Joint Stock Company 129,369,625,000 2,835,711,657
Marubeni-Itochu Steel Vietnam Company Limited 713,123,484,168 387,564,789,291
Others
1,257,272,765,123 408,691,837,688

20. TAXES AND OTHERS PAYABLE TO STATE TREASURY

1/1/2020 Incurred/offset Paid 31/12/2020

VND VND VND VND

Value added tax 32,434,143,295 4,923,274,854,741 (4,909,619,009,370) 46,089,988,666

Special consumption tax 296,335,504 46,931,486,840 (46,959,962,624) 267,859,720
Import-export tax 199,457,118 228,161,269,541 (228,360,726,659) -
Corporate income tax 425,268,805,190 1,780,835,355,717 (1,716,802,619,015) 489,301,541,892
Withholding tax 12,293,673,978 89,165,783,014 (94,357,887,401) 7,101,569,591
Personal income tax 5,225,653,352 83,453,211,471 (86,708,508,829) 1,970,355,994
Natural resource taxes 1,801,923,565 107,187,421,518 (106,165,991,617) 2,823,353,466
Land rental - 14,363,441,154 (14,363,441,154) -
Other taxes 906,392,716 113,448,625,510 (113,330,426,102) 1,024,592,124

478,426,384,718 7,386,821,449,506 (7,316,668,572,771) 548,579,261,453

133
HOA PHAT GROUP JOINT STOCK COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020 (CONTINUED)

Form B 09 – DN/HN
(Issued under Circular No. 202/2014/TT-BTC
dated 22 December 2014 of the Ministry of Finance)
21. ACCRUED EXPENSES
21.1 Accrued expenses – short-term

31/12/2020 1/1/2020
VND VND

Interest expense 239,100,118,793 247,399,009,822

Electricity expense 55,903,336,843 53,493,139,586
Promotion expense 74,706,969,823 44,055,822,912
Expenses payable to contractors 246,297,733,548 57,456,841,999
Transportation cost 9,606,306,522 13,083,272,180
Salaries and bonuses 3,452,366,915 4,082,998,879
Others 11,062,851,738 10,206,212,033

640,129,684,182 429,777,297,411

21.2 Accrued expenses – long-term

31/12/2020 1/1/2020
VND VND

Accruals for cost of industrial zone land 193,664,493,846 403,328,992,030

Accruals for infrastructure maintenance 30,000,000,000 24,000,000,000

223,664,493,846 427,328,992,030

134
 HOA PHAT GROUP JOINT STOCK COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020 (CONTINUED)

Form B 09 – DN/HN
(Issued under Circular No. 202/2014/TT-BTC
dated 22 December 2014 of the Ministry of Finance)
22. OTHER PAYABLES
22.1 Other payables – short-term

31/12/2020 1/1/2020
VND VND

Sales discounts 32,985,349,083 32,161,933,755

Trade union fee, social and health insurance 48,686,819,279 37,005,877,757
Deposits received for contract performance 179,282,884,000 45,531,873,259
Surplus of assets awaiting resolution 1,197,112,178 1,571,432,489
Dividends payable 12,377,200,123 8,222,744,202
Others 53,532,035,688 112,897,885,777

328,061,400,351 237,391,747,239

22.2 Other payables – long-term

31/12/2020 1/1/2020
VND VND

Apartment maintenance fund 41,989,925,396 38,791,080,145

Others 26,746,160,774 19,596,030,636

68,736,086,170 58,387,110,781

135
136
HOA PHAT GROUP JOINT STOCK COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 (CONTINUED)

Form B 09 – DN/HN
(Issued under Circular No. 202/2014/TT-BTC
dated 22 December 2014 of the Ministry of Finance)

23. BORROWINGS
23.1 Short-term borrowings

1/1/2020 Movement during the year 31/12/2020

Amount within Amount within
Carrying amount repayment capacity Addition Decrease Carrying amount repayment capacity
VND VND VND VND VND VND

Short-term borrowings 14,151,319,202,024 14,151,319,202,024 79,686,576,403,332 (62,283,963,477,218) 31,553,932,128,138 31,553,932,128,138

Current portion of long-term borrowings 2,686,334,268,363 2,686,334,268,363 5,059,007,646,372 (2,500,808,370,769) 5,244,533,543,966 5,244,533,543,966
(Note 23.2)
16,837,653,470,387 16,837,653,470,387 84,745,584,049,704 (64,784,771,847,987) 36,798,465,672,104 36,798,465,672,104

At 31 December 2020, short-term borrowings included borrowings in VND and USD with carrying amounts of VND24,396,515 million and VND7,157,417 million (1/1/2020:
VND12,403,659 million and VND1,747,660 million), respectively.

At 31 December 2020, short-term borrowings in VND and USD with the carrying amounts of VND20,131,841 million and VND2,364,426 (1/1/2020: VND8,515,119 million
and VND1,463,079 million), respectively, are secured by cash equivalents (Note 5), deposits with remaining terms of no more than 12 months (Note 6), inventories (Note
9), tangible and intangible fixed assets (Notes 11 and 12), construction in progress of some projects of the Group and assets to be constructed in the future from some
projects of the Groups (Note 15), long-term prepaid expenses (Note 16.2), the right to the receivables and a number of Hoa Phat Group Joint Stock Company shares
(“HPG share”) owned by a number of the members of the Board of Management of the Company (related parties).

The remaining short-term borrowings were unsecured.

The borrowings denominated in VND bore interest at rates ranging from 1.80% to 9.10% (2019: 2.80% to 6.20%) per annum. The borrowings denominated in USD bore
interest at rates ranging from 1.59% to 3.6% (2019: from 3.19% to 5.50%) per annum.
HOA PHAT GROUP JOINT STOCK COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020 (CONTINUED)

Form B 09 – DN/HN
(Issued under Circular No. 202/2014/TT-BTC
dated 22 December 2014 of the Ministry of Finance)
23.2 Long-term borrowings

31/12/2020 1/1/2020
VND VND

Long-term borrowings 22,587,781,095,478 22,528,433,488,083

Repayable within twelve months (Note 23.1) (5,244,533,543,966) (2,686,334,268,363)

Repayable after twelve months 17,343,247,551,512 19,842,099,219,720

Terms and conditions of outstanding long-term borrowings were as follows:

Year of 31/12/2020 1/1/2020

Currency maturity VND VND

Vietnam Joint Stock Commercial Bank for

Industry and Trade – Hanoi Branch (*) VND 2025 8,732,028,283,135 8,732,692,162,550
Joint Stock Commercial Bank For Foreign
Trade of Viet Nam – Thanh Cong Branch (*) VND 2025 8,340,698,246,111 7,806,883,295,815
BNP Parisbas Bank (**) USD 2023 4,285,846,153,954 4,640,000,000,000
HSBC Bank (Vietnam) Ltd. (*) VND 2024 639,378,589,648 137,731,806,000
HSBC Bank (Vietnam) Ltd. (***) VND 2022 466,886,822,630 736,327,292,253
Joint Stock Commercial Bank For Foreign
Trade of Viet Nam – Thang Long Branch (*) VND 2025 99,201,000,000 -
Environmental Protection Fund (*) VND 2025 18,142,000,000 23,154,000,000
Vietnam Joint Stock Commercial Bank for
Industry and Trade – Hoang Mai Branch VND 2022 5,600,000,000 22,412,209,541
ANZ Bank (Vietnam) Ltd. VND 2020 - 169,970,721,924
Vietnam Joint Stock Commercial Bank for
Industry and Trade – Dong Da Branch VND 2020 - 2,162,000,000
Borrowings from individuals VND 2025 - 257,100,000,000

22,587,781,095,478 22,528,433,488,083
(*) These long-term borrowings are secured by certain deposits with remaining terms of more than 12
months (Note 6), inventories (Note 9), tangible and intangible fixed assets (Notes 11 and 12), long-term
work in progress (Note 14) and construction in progress of some projects of the Group (Note 15).

(**) This loan has a limit of USD200 million from BNP Paribas Bank– Singapore Branch that acts as the
representative of the lenders. This loan is secured over the debt payment account at BNP Paribas Bank –
Hanoi Branch and is guaranteed by two companies within the Group.

(***) This long-term borrowing is guaranteed by a company within the Group.

The remaining long-term borrowings are unsecured.

The long-term borrowings in VND bore interest rates ranging from 2.60% to 9.50% (2019: 2.60% to 11%) per
annum. The long-term borrowings in USD bore interest at LIBOR + 2.05% per annum.

137
HOA PHAT GROUP JOINT STOCK COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020 (CONTINUED)

Form B 09 – DN/HN
(Issued under Circular No. 202/2014/TT-BTC
dated 22 December 2014 of the Ministry of Finance)
24. PROVISIONS

Environmental
Warranties restoration Total
VND VND VND
Opening balance 12,820,044,478 10,704,815,991 23,524,860,469
Provision made during the year 10,366,260,052 509,299,922 10,875,559,974
Provision used during the year (6,355,650) - (6,355,650)
Provision reversed during the year (2,546,597,427) - (2,546,597,427)

Closing balance 20,633,351,453 11,214,115,913 31,847,467,366

Current 5,846,534,626 - 5,846,534,626

Non-current 14,786,816,827 11,214,115,913 26,000,932,740

25. BONUS AND WELFARE FUND

This fund is established by appropriating from net profit after tax as approved by shareholders at General
Meeting of Shareholders. This fund is used to pay bonus, welfare and allowance to the Company’s and
subsidiaries’ Board of Management, Board of Directors and employees in accordance with the Group’s
bonus and welfare policies. Movements of bonus and welfare fund during the year were as follows:

2020 2019
VND VND

Balance at the beginning of the year 806,604,376,402 761,403,536,738

Appropriation during the year 657,002,019,790 399,055,995,494
Utilisation during the year (330,160,976,705) (353,855,155,830)

Balance at the end of the year 1,133,445,419,487 806,604,376,402

138
 HOA PHAT GROUP JOINT STOCK COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 (CONTINUED)

Form B 09 – DN/HN
(Issued under Circular No. 202/2014/TT-BTC
dated 22 December 2014 of the Ministry of Finance)

26. CHANGES IN OWNERS’ EQUITY

Foreign exchange Investment and Non-controlling
Share capital Share premium differences development fund Retained profits interest Total
VND VND VND VND VND VND VND

Balance at 1/1/2019 21,239,071,660,000 3,211,560,416,270 276,819,257 918,641,612,156 15,126,437,863,905 126,961,469,222 40,622,949,840,810

Contributed capital - - - - - 85,000,000 85,000,000

Net profit for the year - - - - 7,527,442,867,874 50,805,368,355 7,578,248,236,229
Payment of dividends in the form of
shares (Note 28) 6,371,669,490,000 - - - (6,371,669,490,000) - -
Appropriation to bonus and welfare
fund - - - - (399,055,995,494) - (399,055,995,494)
Appropriation to investment and devel- - - - 5,000,000,000 (5,000,000,000) - -
opment fund
Dividends paid by subsidiaries to - - - - - (14,638,158,250) (14,638,158,250)
non-controlling shareholders
Effect of reporting currency translation - - 288,715,737 - - - 288,715,737
Other movements - - - - (1,241,495,337) - (1,241,495,337)

Balance at 31/12/2019 27,610,741,150,000 3,211,560,416,270 565,534,994 923,641,612,156 15,876,913,750,948 163,213,679,327 47,786,636,143,695

139
140
HOA PHAT GROUP JOINT STOCK COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 (CONTINUED)

Form B 09 – DN/HN
(Issued under Circular No. 202/2014/TT-BTC
dated 22 December 2014 of the Ministry of Finance)

Foreign exchange Investment and Non-controlling

Share capital Share premium differences development fund Retained profits interest Total
VND VND VND VND VND VND VND

Balance at 1/1/2020 27,610,741,150,000 3,211,560,416,270 565,534,994 923,641,612,156 15,876,913,750,948 163,213,679,327 47,786,636,143,695

Contributed capital - - - - - 2,700,000,000 2,700,000,000
Net profit for the year - - - - 13,450,300,052,812 55,864,004,095 13,506,164,056,907
Payment of dividends in the form of
shares (Note 28) 5,522,085,440,000 - - - (5,522,085,440,000) - -

Payment of dividends in cash

(Note 28) - - - - (1,380,537,057,500) - (1,380,537,057,500)

Appropriation to bonus and welfare

fund - - - - (656,005,712,957) (996,306,833) (657,002,019,790)
Appropriation to investment and
development fund - - - 5,000,000,000 (3,636,000,000) (1,364,000,000) -
Dividends paid by subsidiaries to non-
controlling shareholders - - - - - (43,091,147,177) (43,091,147,177)
Effect of reporting currency translation - - 5,002,834,078 - - - 5,002,834,078
Other movements - - - - 27,493,039,982 (27,579,544,084) (86,504,102)

Balance at 31/12/2020 33,132,826,590,000 3,211,560,416,270 5,568,369,072 928,641,612,156 21,792,442,633,285 148,746,685,328 59,219,786,306,111

 HOA PHAT GROUP JOINT STOCK COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020 (CONTINUED)

Form B 09 – DN/HN
(Issued under Circular No. 202/2014/TT-BTC
dated 22 December 2014 of the Ministry of Finance)
27. SHARE CAPITAL
The Company’s authorised and issued share capital are:

31/12/2020 1/1/2020
Number of VND Number of VND
shares shares

Authorised share capital 3,313,282,659 33,132,826,590,000 2,761,074,115 27,610,741,150,000

Issued share capital

Ordinary shares 3,313,282,659 33,132,826,590,000 2,761,074,115 27,610,741,150,000

Shares in circulation
Ordinary shares 3,313,282,659 33,132,826,590,000 2,761,074,115 27,610,741,150,000

All ordinary shares have a par value of VND10,000. Each share is entitled to one vote at meetings of
the Company. Shareholders are entitled to receive dividend as declared from time to time. All ordinary
shares are ranked equally with regard to the Company’s residual assets.

Movements of share capital during the year were as follows:

2020 2019
Number of Par value Number of Par value
shares VND shares VND

Opening balance 2,761,074,115 27,610,741,150,000 2,123,907,166 21,239,071,660,000

Payment of dividends in
the form of shares 552,208,544 5,522,085,440,000 637,166,949 6,371,669,490,000

Closing balance 3,313,282,659 33,132,826,590,000 2,761,074,115 27,610,741,150,000

28. DIVIDENDS
On 25 June 2020, the Company’s General Meeting of Shareholders passed the resolution on the
distribution of 2019 dividends to the shareholders at the rate of 25% including 20% in the form of
shares (shareholders will receive 2 additional shares for every 10 ordinary shares they own) and 5%
in cash (shareholders will receive VND500 for every ordinary share they own). This dividend payment
scheme was approved for execution by the Company’s Board of Management in the resolution dated
29 June 2020 and was implemented during the third quarter of 2020.

141
HOA PHAT GROUP JOINT STOCK COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020 (CONTINUED)

Form B 09 – DN/HN
(Issued under Circular No. 202/2014/TT-BTC
dated 22 December 2014 of the Ministry of Finance)
29. OFF BALANCE SHEET ITEMS
29.1 Foreign currencies

31/12/2020 1/1/2020
VND VND
Original currency equivalent Original currency equivalent

United State Dollars (“USD”) 15,264,410 351,615,684,350 19,286,141 445,702,718,510

Euro (“EUR”) 2,172 60,672,648 1,922 49,637,572
Japanese Yen (“JPY”) - - 3,465,300 727,713,000
Australian Dollar (“AUD”) 2,659,395 46,573,984,635 417,914 6,723,818,346

398,250,341,633 453,203,887,428

29.2 Capital expenditure commitments

At the reporting date, the Group had the following outstanding capital commitments approved but not
provided for in the consolidated balance sheet:

31/12/2020 1/1/2020
VND VND

Approved but not contracted 454,527,000,000 74,306,833,278

Approved and contracted 484,020,206,913 666,931,828,182

938,547,206,913 741,238,661,460

29.3 Lease
At the reporting date, the Group had the following future minimum lease payments under non-cancel-
lable operating leases:

31/12/2020 1/1/2020
VND VND

Within one year 36,794,422,430 32,007,469,097

Within two to five years 140,754,028,638 133,074,077,652
More than five years 182,935,303,458 269,888,924,130

360,483,754,526 434,970,470,879

142
 HOA PHAT GROUP JOINT STOCK COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020 (CONTINUED)

Form B 09 – DN/HN
(Issued under Circular No. 202/2014/TT-BTC
dated 22 December 2014 of the Ministry of Finance)
30. REVENUE FROM SALES OF GOODS AND PROVISION OF SERVICES
Total revenue represents the gross value of goods sold and services rendered exclusive of value added
tax. Net revenue comprised:

2020 2019
VND VND

Total revenue 90,003,588,760,001 62,523,707,011,126

• Sales 636,863,788,632 613,633,954,877
• Services 411,557,012,405 738,144,858,625
• Revenue from sublease of leasehold land 62,562,330,568 54,280,124,794
• Rental income from investment property 86,259,390,420 711,872,407,016
• Sales of real estate 78,210,489,800 36,268,219,206
• Others
91,279,041,771,826 64,677,906,575,644

Less revenue deductions

• Sales discounts (1,125,473,685,738) (957,210,485,501)
• Sales allowances (2,612,959,380) (2,425,393,504)
• Sales returns (32,451,699,991) (60,078,022,848)

(1,160,538,345,109) (1,019,713,901,853)

90,118,503,426,717 63,658,192,673,791

31. COST OF SALES

2020 2019
VND VND

Finished goods and merchandise goods sold 70,389,153,770,946 51,076,008,928,634

Services provided 453,867,941,195 486,688,612,434
Cost of leasehold land subleased 186,475,713,381 421,970,093,151
Cost of investment property held to earn rental 38,965,286,886 18,923,757,872
Cost of real estate sold 51,373,174,594 463,656,461,976
Other costs 76,822,820,140 10,025,936,248
Allowance for inventories 17,794,815,421 (4,453,338,661)

71,214,453,522,563 52,472,820,451,654

143
HOA PHAT GROUP JOINT STOCK COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020 (CONTINUED)

Form B 09 – DN/HN
(Issued under Circular No. 202/2014/TT-BTC
dated 22 December 2014 of the Ministry of Finance)
32. FINANCIAL INCOME

2020 2019
VND VND

Interest income from deposits 519,078,206,990 276,783,283,933

Realised foreign exchange gains 483,165,239,031 177,270,502,599
Unrealised foreign exchange gains 490,877,510 15,303,987,880
Other financial income 2,055,442,739 1,696,057,599

1,004,789,766,270 471,053,832,011

33. FINANCIAL EXPENSES

2020 2019
VND VND

Interest expense 2,191,680,923,417 936,710,218,359

Payment discounts 10,304,712,000 12,037,994,693
Realised foreign exchange losses 493,877,084,960 188,554,340,708
Unrealised foreign exchange losses 52,569,748,282 39,487,502,736
Other financial expenses 88,973,961,929 4,885,654,420

2,837,406,430,588 1,181,675,710,916

34. SELLING EXPENSES

2020 2019
VND VND

Staff costs 123,280,301,787 105,060,273,041

Depreciation 25,143,534,805 24,256,179,838
Warranty expenses 10,019,591,607 9,226,513,057
Transportation expenses 410,059,716,412 305,033,724,481
Advertising expenses 119,029,659,675 108,229,175,275
Promotion expenses - 1,807,663,244
Export expenses 246,620,482,296 133,011,396,233
Outside services and other selling expenses 156,642,271,841 186,708,659,519

1,090,795,558,423 873,333,584,688

144
 HOA PHAT GROUP JOINT STOCK COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020 (CONTINUED)

Form B 09 – DN/HN
(Issued under Circular No. 202/2014/TT-BTC
dated 22 December 2014 of the Ministry of Finance)
35. GENERAL AND ADMINISTRATION EXPENSES

2020 2019
VND VND

Goodwill amortisation 18,075,220,852 27,049,152,720

Staff costs 256,505,319,341 227,158,953,782
Depreciation expenses 74,627,935,358 53,200,254,814
Outside services and other general and administration
expenses 341,090,028,634 261,597,444,406

690,298,504,185 569,005,805,722

36. OTHER INCOME

2020 2019
VND VND

Gain from disposals of fixed assets and construction in progress 3,893,297,009 19,930,474,713
Income from sales of electricity, water and rendering services 533,513,067,644 563,556,916,803
Compensation received from other parties 51,552,815,560 25,307,799,110
Others 65,122,154,012 48,885,740,851

654,081,334,225 657,680,931,477

37. OTHER EXPENSES

2020 2019
VND VND

Loss on disposals of fixed assets and construction in progress 34,376,441,173 9,097,251,567

Costs of electricity, water sold and services rendered 533,638,326,246 560,414,088,234
Other expenses 21,403,584,097 22,487,107,497

589,418,351,516 591,998,447,298

145
HOA PHAT GROUP JOINT STOCK COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020 (CONTINUED)

Form B 09 – DN/HN
(Issued under Circular No. 202/2014/TT-BTC
dated 22 December 2014 of the Ministry of Finance)
38. PRODUCTION AND BUSINESS COSTS BY ELEMENT

2020 2019
VND VND

Raw material costs included in production costs and cost

of merchandise goods 56,143,613,676,276 43,216,883,256,386
Staff costs 2,952,413,913,069 1,857,975,662,793
Depreciation 4,775,781,721,269 2,566,183,420,309
Outside services 7,067,823,287,366 3,775,041,395,046
Other expenses 3,481,870,199,104 3,353,922,546,681

39. INCOME TAX

39.1 Recognised in the consolidated statement of income

2020 2019
VND VND

Current corporate income tax expense (“CIT”)

Current year 1,781,203,698,254 1,596,527,974,235
Additional CIT for prior year 3,364,145,612 6,779,952,445

1,784,567,843,866 1,603,307,926,680

Deferred tax expense/(benefit)

Origination and reversal of temporary differences 66,234,890,928 (84,894,039,523)

Income tax expense 1,850,802,734,794 1,518,413,887,157

146
HOA PHAT GROUP JOINT STOCK COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020 (CONTINUED)

Form B 09 – DN/HN
(Issued under Circular No. 202/2014/TT-BTC
dated 22 December 2014 of the Ministry of Finance)
39.2 Income tax expense

2020 2019
VND VND

Accounting profit before tax 15,356,966,791,701 9,096,662,123,386

Adjustments to increase/(decrease) accounting profit

Non-deductible expenses 86,326,338,539 52,217,309,060
Goodwill amortisation 18,075,220,852 27,049,152,720
(Reversal)/addition of allowance (99,583,404,242) 17,976,419,050
Unrealised foreign exchange differences 14,072,284 (4,734,516,843)
(Reversal)/accrual of cost of sales of real estate sold (41,034,357,556) 96,389,167,191
Reversal and origination of other temporary differences (95,169,619,065) 497,134,321,767
Share of (profit)/loss from associates (1,964,631,764) 1,431,313,615

15,223,630,410,749 9,784,125,289,946

Tax losses brought forward (144,111,796,097) (67,977,454,503)

Current year taxable profit 15,079,518,614,652 9,716,147,835,443

Income tax expense at the Company’s tax rate 3,015,903,722,930 1,943,229,567,089

Tax incentives in subsidiaries (1,217,379,384,501) (364,948,615,888)
Effect of different tax rates in subsidiaries (12,803,067,107) (5,444,236,159)
30% decrease in income tax under Resolution No. 116/2020/ (8,385,735,926) -
QH14
Unrealised deferred tax assets on tax losses of subsidiaries and
other unrecognised deferred tax assets 3,150,009,022 23,691,259,193
Deferred tax expense/(benefit) 66,234,890,928 (84,894,039,523)
Additional corporate income tax for prior year 3,364,145,612 6,779,952,445
Other movements 718,153,836 -

Income tax expense 1,850,802,734,794 1,518,413,887,157

39.3 Applicable tax rates

Under the terms of the prevailing Law on Corporate Income Tax, the Company has an obligation to pay
the Government income tax at the rate of 20% of taxable profits.

The Group’s subsidiaries have obligations to pay the Government income tax at the rate as defined in
the enacted tax regulations.

147
 HOA PHAT GROUP JOINT STOCK COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020 (CONTINUED)

Form B 09 – DN/HN
(Issued under Circular No. 202/2014/TT-BTC
dated 22 December 2014 of the Ministry of Finance)
40. BASIC EARNINGS PER SHARE
The calculation of basic earnings per share for the year ended 31 December 2020 was based on
the profit attributable to ordinary shareholders and a weighted average number of ordinary shares
outstanding during the year, calculated as follows:

40.1 Weighted average number of ordinary shares

2019
2020 (Number of shares)
(Number of shares) Restated
Issued ordinary shares at the beginning of the year 2,761,074,115 2,123,907,166
Effect of dividends paid in the form of shares
(Note 28) 552,208,544 1,189,375,493

Weighted average number of ordinary shares

outstanding during the year 3,313,282,659 3,313,282,659

40.2 Basic earnings per share

2019
2020 VND
VND Restated
Net profit attributable to ordinary shareholders (VND) 13,450,300,052,812 7,527,442,867,874
Appropriation to Bonus and welfare funds (VND) (*) (706,725,804,542) (656,005,712,957)

12,743,574,248,270 6,871,437,154,917
Weighted average number of ordinary shares
outstanding during the year (Number of shares) 3,313,282,659 3,313,282,659

Basic earnings per share (VND) 3,846 2,074

(*) At the reporting date, the Group has not determined the accurate amount of consolidated net
profit of 2020 to be appropriated to the Bonus and welfare funds. The Group has estimated an
amount of VND706,725,804,542 to be appropriated to the Bonus and welfare funds for 2020.

148
 HOA PHAT GROUP JOINT STOCK COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020 (CONTINUED)

Form B 09 – DN/HN
(Issued under Circular No. 202/2014/TT-BTC
dated 22 December 2014 of the Ministry of Finance)
40.3 Restatement for the weighted average number of ordinary shares and basic earnings per share for the year
ended 31 December 2019
Due to the effect of dividends paid in the form of shares (Note 28) and the appropriation of net profit
to the Bonus and welfare funds (Note 26), the weighted average number of ordinary shares and basic
earnings per share for the year ended 31 December 2019 were restated as follows:

Basic earnings
Weighted average number per share
of ordinary shares VND

As previously reported 2,761,074,115 2,726

Effect of dividends paid in the form of shares 552,208,544 (454)
Effect of appropriation of net profit to Bonus and
welfare funds - (198)

As restated 3,313,282,659 2,074

41. FINANCIAL INSTRUMENTS

41.1 Financial risk management
(a) Overview
The Group has exposure to the following risks from its use of financial instruments:
• credit risk;
• liquidity risk; and
• market risk.

This note presents information about the Group’s exposure to each of the above risks, the Group’s
objectives, policies and processes for measuring and managing risk.

The Company’s Board of Management oversees how the Board of Directors monitors compliance with
the Group’s risk management policies and procedures and reviews the adequacy of the risk management
framework in relation to the risks faced by the Group.

(b) Risk management framework

The Company’s and its subsidiaries’ Board of Directors has overall responsibility for the establishment
and oversight of the Group’s risk management framework. The Company’s and its subsidiaries’ Board
of Directors are responsible for developing and monitoring the Group’s risk management policies.

The Group’s risk management policies are established to identify and analyse the risks faced by the
Group, to set 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 Group’s activities. The Group, through its training and management standards and procedures,
aims to develop a disciplined and constructive control environment in which all employees understand
their roles and obligations.

149
HOA PHAT GROUP JOINT STOCK COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020 (CONTINUED)

Form B 09 – DN/HN
(Issued under Circular No. 202/2014/TT-BTC
dated 22 December 2014 of the Ministry of Finance)

41.2 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 Group’s receivables and cash
placed at financial institutions.

Exposure to credit risk

The total of carrying amounts of financial assets represents the maximum credit exposure. The maximum
exposure to credit risk at the reporting date was as follows:

Note 31/12/2020 1/1/2020

VND million VND million

Cash at banks and cash equivalents (a) 13,683,180 4,528,334

Held-to-maturity investments – short-term and long-term (b) 8,296,993 1,420,866
Accounts receivable from customers – short-term, loans
receivable – long-term and other short-term and long-
term receivables (c) 4,363,749 2,829,322

26,343,922 8,778,522

(a) Cash at bank and cash equivalents

Cash at bank and cash equivalents of the Group is mainly held with well-known financial institutions.
The Board of Directors does not foresee any significant credit risks from these deposits and does not
expect that these financial institutions may default and cause losses to the Group.

(b) Held-to-maturity investments

Held-to-maturity investments of the Group represent time deposits and bonds with well-known financial
institutions. The Board of Directors does not foresee any significant credit risks from these deposits
and does not expect that these financial institutions may default and cause losses to the Group.

(c) Accounts receivable from customers short-term, loans receivable - long-term and other short-term and long
term receivables
The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each
customer. In response to the risk, the Board of Directors of the Company and its subsidiaries has
established a credit policy under which each new customer is analysed individually for creditworthiness
before the Group’s standard payment and delivery terms and conditions are offered. Credit purchase
limit is established for each customer, which represents the maximum open amount without requiring
approval from the Board of Directors of the Company and its subsidiaries. The limit is reviewed annually.
No collateral is collected from the customers.

Based on historic default rates, the Board of Directors believes that apart from the amount provided
for as per below, no further allowance for doubtful debts is necessary in respect of the outstanding
trade and other receivables at the reporting date.

150
HOA PHAT GROUP JOINT STOCK COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020 (CONTINUED)

Form B 09 – DN/HN
(Issued under Circular No. 202/2014/TT-BTC
dated 22 December 2014 of the Ministry of Finance)
The aging of trade and other receivables not impaired at the year end is as follows:

31/12/2020 1/1/2020
VND million VND million

Not past due 4,200,992 2,702,958

Past due 0 - 30 days 89,666 73,704
Past due 31 - 180 days 29,507 17,469
Past due more than 180 days 43,584 35,191

4,363,749 2,829,322

Movements in the allowance for doubtful debts during the year were as follows:

2020 2019
VND VND

Opening balance 37,145,790,132 37,693,842,866

Increase in allowance during the year 2,957,664,650 2,696,967,351
Written back and used during the year (767,257,176) (3,245,020,085)

39,336,197,606 37,145,790,132

41.3 Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due.
The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have
sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without
incurring unacceptable losses or risking damage to the Group’s reputation.

At the reporting date, the financial liabilities with fixed or determinable payments have the following
contractual maturities including the estimated interest payments:

151
HOA PHAT GROUP JOINT STOCK COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020 (CONTINUED)

Form B 09 – DN/HN
(Issued under Circular No. 202/2014/TT-BTC
dated 22 December 2014 of the Ministry of Finance)

Carrying Contractual Within

amount cash flows 1 year 1 – 2 years 2 – 5 years
VND million VND million VND million VND million VND million

31 DECEMBER 2020
Accounts payable to suppliers and 14,319,102 14,319,102 11,654,368 2,664,734 -
other payables 54,141,713 61,206,131 41,823,469 7,133,906 12,248,756
Borrowings
68,460,815 75,525,233 53,477,837 9,798,640 12,248,756

1 JANUARY 2020
Accounts payable to suppliers and 14,762,347 14,762,347 8,090,259 6,672,088 -
other payables 36,679,753 43,515,430 20,655,992 6,820,442 16,038,996
Borrowings
51,442,100 58,277,777 28,746,251 13,492,530 16,038,996

The Group manages its ability to meet the expected operational expenses and servicing its debts by
investing its cash surpluses in term deposits and maintaining several bank facilities from some domestic
banks.

41.4 Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates
will affect the Group’s results of operations or the value of its holdings of financial instruments. The
objective of market risk management is to manage and control market risk exposures within acceptable
parameters, while optimising the return.

(a) Currency risk

The Group is exposed to currency risk on sales, purchases and borrowings that are denominated in a
currency other than VND, the accounting currency of the Group. The currency in which these transactions
primarily are denominated are United States Dollar (“USD”), Euro (“EUR”).

The Group’s exposure to currency risk is managed by keeping the exposure to an acceptable level by
buying or selling foreign currencies at spot rates when necessary.

Exposure to currency risk

At the reporting date, the Group had the following net monetary asset/(liability) position exposed to
currency risk:

152
 HOA PHAT GROUP JOINT STOCK COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 (CONTINUED)

Form B 09 – DN/HN
(Issued under Circular No. 202/2014/TT-BTC
dated 22 December 2014 of the Ministry of Finance)

31/12/2020

USD EUR AUD

Cash and cash equivalents 15,264,410 2,172 2,659,395

Accounts receivable from customers 32,881,352 - 65,238
Other long-term receivables - - 23,918
Loans receivable – long-term - - 300,000
Accounts payable to suppliers (350,339,542) (21,323,019) -
Short-term borrowings (308,310,002) - -
Long-term borrowings (184,615,385) - -

(795,119,167) (21,320,847) 3,048,551

1/1/2020

USD EUR AUD JPY CNY

Cash and cash equivalents 19,286,141 1,922 417,914 3,465,300 -

Accounts receivable from customers 13,335,794 - 5,868 - -
Accounts payable to suppliers (253,611,805) (38,585,799) - - (411,442)
Short-term borrowings (72,892,904) - - - -
Long-term borrowings (200,000,000) - - - -

(493,882,774) (38,583,877) 423,782 3,465,300 (411,442)

153
HOA PHAT GROUP JOINT STOCK COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020 (CONTINUED)

Form B 09 – DN/HN
(Issued under Circular No. 202/2014/TT-BTC
dated 22 December 2014 of the Ministry of Finance)
The followings are the significant exchange rates applied by the Group:

Exchange rate as at
31/12/2020 1/1/2020

Buying exchange rate of USD/VND 23,035 23,110

Selling exchange rate of USD/VND 23,215 23,230
Buying exchange rate of EUR/VND 27,934 25,826
Selling exchange rate of EUR/VND 29,065 26,601
Buying exchange rate of JPY/VND 219 210
Selling exchange rate of JPY/VND 228 216
Buying exchange rate of AUD/VND 17,513 16,089
Selling exchange rate of AUD/VND 18,062 16,363
Buying exchange rate of CNY/VND 3,496 3,332

(b) Interest rate risk

At the reporting date, the interest rate profile of the Group’s interest-bearing financial instruments
was:

Carrying amount
31/12/2020 1/1/2020
VND million VND million

Fixed rate financial instruments

Financial assets 19,974,785 4,267,452
Financial liabilities (49,855,867) (32,039,753)

(29,881,082) (27,772,301)

Variable rate financial instruments

Financial assets 20,000 20,000
Financial liabilities (4,285,846) (4,640,000)

(4,265,846) (4,620,000)

A change of 100 basis points in interest rates would have increased or decreased the consolidated net
profit of the Group by VND34,127 million (2019: VND37,120 million). This analysis assumes that all other
variables, in particular foreign currency rates, remain constant.

154
HOA PHAT GROUP JOINT STOCK COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020 (CONTINUED)

Form B 09 – DN/HN
(Issued under Circular No. 202/2014/TT-BTC
dated 22 December 2014 of the Ministry of Finance)
41.5 Fair values
(a) Fair values versus carrying amounts
The fair values of financial assets and liabilities, together with the carrying amounts shown in the
consolidated balance sheet, are as follows:

31/12/2020 1/1/2020
Carrying amount Fair value Carrying amount Fair value
VND million VND million VND million VND million

Categorised as held-to-maturity
investments:
- Held-to-maturity investments
– short-term 8,126,993 8,126,993 1,374,340 1,374,340
- Held-to-maturity investments
– long-term 170,000 (*) 46,526 (*)

Categorised as loans and

receivables:
- Cash and cash equivalents 13,696,099 13,696,099 4,544,900 4,544,900
- Accounts receivable from
customers and other receivables
– short-term 4,267,310 4,267,310 2,801,604 2,801,604
- Loans receivable – long-term
and other long-term receivable 96,439 (*) 27,718 (*)

Categorised as financial assets

available-for-sale:
- Equity investments in other
entities 700 (*) 700 (*)

Categorised as financial liabilities at

amortised cost:
- Accounts payable to suppliers
and other payables – short-term (11,654,368) (11,654,368) (8,090,259) (8,090,259)
- Accounts payable to suppliers,
accrued expenses and other
payables – long-term (2,664,734) (*) (6,672,088) (*)
- Borrowings (54,141,713) (*) (36,679,753) (*)

(42,103,274) (42,646,312)

155
HOA PHAT GROUP JOINT STOCK COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020 (CONTINUED)

Form B 09 – DN/HN
(Issued under Circular No. 202/2014/TT-BTC
dated 22 December 2014 of the Ministry of Finance)
(b) Basis for determining fair values
Cash and cash equivalents, held-to-maturity investments – short-term, accounts receivable from customers
– short-term and other short-term receivables and short-term non-derivative financial liabilities

The fair value of cash and cash equivalents, held-to-maturity investments – short-term, accounts receivable
from customers – short-term and other short-term receivables and short-term non-derivative financial
liabilities approximates the carrying value due to the short-term nature of these financial instruments.
The fair value of these instruments is determined for disclosure purpose only.

(*) The Group has not determined fair values of these financial instruments for disclosure in the
consolidated financial statements because information about their market prices is not available
and there is currently no guidance on determination of fair value using valuation techniques
under Vietnamese Accounting Standards or the Vietnamese Accounting System for Enterprises.
The fair values of these financial instruments may differ from their carrying amounts.

(c) Hedging
The Group adopts a policy to ensure that a certain percentage of its exposure to changes in interest
rates on borrowings is on a fixed rate basis. Interest rate swaps have been entered into to achieve an
appropriate mix of fixed and floating rate exposure within the Group’s policy. At 31 December 2020,
the Group had interest rate swaps with a notional contract amount of VND4,285,846 million (1/1/2020:
VND4,640,000 million). The Group does not apply hedge accounting.

42. SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES

In addition to related party balances disclosed in other notes to the consolidated financial statements,
the Group had the following significant transactions with related parties during the year:

Transaction value
2020 2019
VND VND

Members of Board of Management

Allowances 25,240,000,000 27,280,000,000

Members of Board of Directors

Salary and bonus 2,320,000,000 2,540,000,000

Members of Supervisory Board

Allowances, salary and bonus 842,438,612 780,964,457

156
HOA PHAT GROUP JOINT STOCK COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020 (CONTINUED)

Form B 09 – DN/HN
(Issued under Circular No. 202/2014/TT-BTC
dated 22 December 2014 of the Ministry of Finance)
43. NON-CASH INVESTING AND FINANCING ACTIVITIES

2020 2019
VND VND

Payment of dividends in the form of shares 5,522,085,440,000 6,371,669,490,000

44. POST BALANCE SHEET EVENT

As part of the restructuring strategy for organization and operation, on 4 January 2021, the Board
of Management of the Company approved the transfer of all shares of Hoa Phat Group Joint Stock
Company in Hoa Phat Furniture Joint Stock Company under the Board of Management’s Resolution No.
01/NQHP-2021.

45. COMPARATIVE INFORMATION

Comparative information as at 1 January 2020 were derived from the balances and amounts reported
in the Company’s consolidated financial statements as at and for the year ended 31 December 2019.

16 March 2021

Prepared by: Approved by:

Tran Xuan Mai Pham Thi Kim Oanh Tran Tuan Duong
General Accountant Chief Accountant General Director

157