4 Preliminary restatement of primary consolidated financial statements (IFRS)

4 Preliminary restatement of primary consolidated financial statements (IFRS) tài liệu, giáo án, bài giảng , luận văn, l...

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Bao Viet Holdings

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CONTENTS

Special purpose review report

Consolidated income statement

Consolidated statement of comprehensive income Consolidated statement of financial position Consolidated statement of changes in equity

Consolidated statement of cash flows

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Ernst & Young Vietnam Limited " " 15th Floor, 360 Kirn Ma Street Hanoi, S.R, of Vietnam Tel: +84 4 3831 5100 Fax: +84 4 3831 5090 www.ey.com Reference: 607555 12/14183693

SPECIAL PURPOSE REVIEW REPORT

To: The Board of Directors of Bao Viet Holdings

We have reviewed the accompanying special purpose primary consolidated financial statements of Bao Viet Holdings and its subsidiaries (the Group”), which comprise the consolidated statement of financial position as at 31 December 2009 and consolidated income statement, consolidated statement of

comprehensive income, consolidated statement of changes in equity and the consolidated statement of

cash flows for the year then ended, together with the related explanatory notes attached as set out on pages 2 to 26, prepared in accordance with the Group’s accounting policies described in notes 2, 3 and 5 (‘the consolidated financial statements”) which apply the recognition and measurement principles of the International Financial Reporting Standards (“IFRS”) Management is responsible for the preparation of the consolidated financial statements, which have been prepared solely for management use Our responsibility is to issue a review report on special purpose primary consolidated financial statements based on our review

We conducted our review in accordance with the International Standard on Review Engagements 2400 This Standard requires that we plan and perform the review to obtain moderate assurance as to whether the consolidated primary financial statements are free from material misstatement based on the agreed materiality of US$ 5 million A review is limited primarily to inquiries of the Group’s personnel and analytical procedures applied to financial data and thus provide less assurance than an audit We have not performed an audit and, accordingly, we do not express an audit Opinion

Based on our review, nothing has come to our attention that causes us to believe that the special purpose primary consolidated financial statements as at 31 December 2009 of the Group have not been prepared in accordance with the Group accounting policies described in notes 2, 3 and 5 which apply the recognition and measurement principles of the International Financial Reporting Standards except as described below

fa Emphasis of a matter

These primary consolidated financial statements are the primary financial statements prepared for the + special purpose as explained above and therefore have not been prepared to meet full requirements of q IFRS 1 “First time adoption of International Financial Reporting Standards”, and do not include \9

comparative information of prior years and full disclosures required for them to be recognized as “Full `

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SS bhief Executive Officer

CONSOLIDATED INCOME STATEMENT for the year ended 31 December 2009

Gross written premiums Reinsurance premium assumed

Less: Premium ceded to reinsurers, deduction and return Net written premiums

Change in unearned premium reserves Net earned premiums

Commission income on reinsurance ceded Other income

Income on reinsurance assumed Income on reinsurance ceded

Income from other activities

Total revenue from insurance business

Interest income of banking operations

Investment income

Share of profits of associates and joint ventures Other income

Total income

Claims and maturity payment expenses Claims expenses for reinsurance assumed

Less: Recoveries from reinsurance ceded

Subrogation recoveries

Salvages

Increase in claim reserve

Net claims and benefits incurred

Commission and underwriting expenses of insurance operations

Other reinsurance assumed expenses

Expenses of reinsurance ceded

Interest expenses of banking operations

Selling expenses

General and administrative expenses Financial expenses

Other expenses

Total commission and expenses

Profit before tax for the year

Enterprise income tax for the year Profit after tax for the year

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Bao Viet Holdings

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME for the year ended 31 December 2009

Profit after tax for the year

Other comprehensive income for the year Available-for-sale investments:

Net movement in the fair value reserve Total comprehensive income for the year ⁄ fe l XÀ ~ U02) 2⁄4 ~Zatproved by _ What 2009 VND 1,086,462,175,797 269,116,670,572 1,355,578,846,369

Ngũy i Phuc Lam Le Hai Phong

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION at 31 December 2009 Assets Property, plant and equipment Investment properties Intangible assets

Investments in associates and joint ventures Fixed maturity investments Available-for-sale Loans and receivables Equity investments Available-for-sale Fair value through income statement Account receivables

Loans and advances to customers

Loans and trusted loans

Policy loans

Deferred tax assets

Unearned premium on reinsurance ceded Other assets and prepayments

Cash and cash equivalents Total assets

Liabilities

Insurance contract liabilities

Amount due to customers

Due to banks and other financial institutions

Advances from customers

Income tax payable Deferred tax liabilities Other liabilities Total liabilities Owners’ equity Contributed legal capital Share premium Retained profits

Other comprehensive income Foreign exchange differences

Investment and development fund Finance reserve fund Statutory reserve Owners’ equity Minority interests Total equity Total equity and liabilities 2009 VND 873,384,210,750 23,448,947,000 477,971 ,962,067 313,559,572,889 9,087 ,752,582,986 11,613,403,839,346 2,704,247,963,009 765,373,585,900 1,663,666,295,665 2,654,601,948,902 1,030,002,323 903,945,810,246 87,118,494,281 513,940,344,104 413,912,474,104 2,532,644 ,263,412 34,630,002,296,984 18,157,148,006,470 3,786,961,866,864 420,948,732,663 29,603,706,539 93,170,087,183 80,873,752,349 1,963,455,411,911 24,532,161,563,979 5,730,266,050,000 1,838,314,624,015 530,295,560,629 554.210,008,693 18,387,227,948 10,222,384,015 11,699,111,508 43,521,050,471 8,736,916,017,279 _—— 1,360,924,718,726 10,097,840,733,005 34,630,002,296,984 N30 20 8 fo be f x

7 (TAP DOAN BAO VE"

“SE Nguyatt Thi Phuc Lam

Chief Executive Officer

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CONSOLIDATED STATEMENT OF CASH FLOWS

for the year ended 31 December 2009 2009 VND CASH FLOWS FROM OPERATING ACTIVITIES

Premium received and interest income received 22,500,820,998,471

Payment to suppliers (20,334,051 ,434,103)

Payment to employees (598,405, 193,505)

Enterprise income tax paid (195,956,053,210)

Other cash inflows from operating activities 546,958, 763,628

Other cash outflows from operating activities (1,222,643,083,457)

Net cash inflows from operating activities 696,723,997,824 CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of fixed assets (315,189,853, 739)

Proceeds from disposals of fixed asset 7,458,226,915

Loans to other entities and payments for purchased of debt instruments

of other entities (7,296 464,781,636)

Repayments from borrowers and proceeds from sales of debt

instruments of other entities 1,287,210,525,579

Payments for investments in other entities (2,703,482,862,334)

Proceeds from sales of investments in other entities 3,662,607,719,333

Interest received, coupon and distributed profits 497 054,068,939 Cash transfer under trusted investment arrangement (517,900,000,000)

Cash receipt from trusted investment arrangement 495,101,000,000

Net cash outflows from investing activities (4,883,605,956,943) CASH FLOWS FROM FINANCING ACTIVITIES

Cash receipts from issuing shares 720,000,000,000

Cash receipts from short and long term loans 5,646, 136,030,318

Dividends paid to minority interests (128,728,400,000)

Net cash inflows from financing activities 6,237,407,630,318 Net cash infiows during the year 2,050,525,671,199

Cash and cash equivalents at the beginning of the year 480,836,990,174 `

Impact of exchange rate fluctuation 1,281,602,039 q

_ Cash and cash equivalents at the end of the year 2,532,644,263,412 ;

he App roved\by: 1

`}yNgúÿenZhi Phuc Lam ‘Le Hai Phong Nguyen Thanh Hai

SChief Executive Officer Chief Financial Officer Chief Accountant 31 March 2010

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Bao Viet Holdings `

SELECTED NOTES TO THE PRIMARY CONSOLIDATED FINANCIAL STATEMENTS as at and for the year ended 31 December 2009

2.1

2.2

CORPORATE INFORMATION

Bao Viet Holdings (the “Company’) is a joint stock Company pursuant to Business License No 0103020065 approved by the Hanoi Authority for Planning and Investment dated 15 October 2007, The Company was listed on Ho Chi Minh Stock Exchange on 25 June 2009 and the principal activity of the Company is investment holding

The registered address of the Company is No.8, Le Thai To Street, Hoan Kiem, Hanoi, Vietnam, The Company and its subsidiaries (together forming the “Group”) provide a wide range of financial products and services to individual and corporate customers in Vietnam

The principal activities of the subsidiaries are stated in note 2.2

SIGNIFICANT ACCOUNTING POLICIES

Basis of preparation of the consolidated primary financial statements

The consolidated primary financial statements comprise the income statement, statement of comprehensive income, statement of financial position, statement of changes in equity, statement of cash flows and selected notes to the primary consolidated financial statements

of Bao Viet Holdings, the parent company, and its subsidiaries for the year ended 31 December 2009

These consolidated primary financial statements have been prepared to comply with the requirements of the Subscription Agreement between HSBC Insurance (Asia -Pacific)

Holdings Limited (‘HSBC") and Bao Viet Holdings and in accordance with the accounting

policies stated below The accounting policies apply the recognition and measurement principles of the International Financial Reporting Standards (“IFRS”) to restate the Group's Vietnamese Accounting System ("VAS") records for the year ended 31 December 2009

(“Restated”)

In order to restate the VAS records, the principles contained in IFRS 1, ‘First-time Adoption of International Financial Reporting Standards’ have been applied The general principle that should be applied on first-time adoption of IFRS is that standards in force at the first

reporting date (which for the Group would be 31 December 2010) should be applied retrospectively There is uncertainty about which standards will be effective as at 31 December 2010, and therefore in preparing the restated primary consolidated financial

statements as at 31 December 2009 the recognition and measurement principles contained in the IFRS in force as at 31 December 2009 have been applied If the first time IFRS financial statements for the Group are prepared as at 31 December 2010 as planned, the restatements for the year ended 31 December 2009 may change if there are updates and

changes in IFRS that are in force as at 31 December 2010 for the first time

In addition, IFRS 1 contains a number of exemptions which companies are permitted to apply The Group has elected to apply the exemption related to insurance contracts, which restricts the changes in accounting policies required for insurance contracts and exempts the Group from retrospective application for insurance contracts when restating

Basis of consolidation

The subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains control, and continues to be consolidated unti! the date that such control ceases Control exists when the Group has the power, directly or indirectly, to govern the financial and operating policies of a company so as to obtain benefits from its activities The financial statements of the subsidiaries are prepared for the same reporting period as the parent entity, using consistent accounting policies Adjustments have been made to bring into line any dissimilar accounting policies that may exist

U lá:

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SELECTED NOTES TO THE PRIMARY CONSOLIDATED FINANCIAL STATEMENTS (continued)

as at and for the year ended 31 December 2009

2.3

SIGNIFICANT ACCOUNTING POLICIES (continued)

Basis of consolidation (continued)

All inter-company balances and transactions, including unrealized profits arising from intra- group transactions, have been eliminated in full Unrealized losses are eliminated unless the transactions provide evidence of impairment of the asset transferred

Minority interests represent the portion of profit or loss and net assets of the subsidiaries not held by the Group and are presented separately in the income statement and within equity in

the consolidated balance sheet, separately from parent's shareholders equity

The principal activities and other particulars of the subsidiaries as at 31 December 2009 were as follows: Proportion of ownership interest Percentage held directly by

Name of company company Principal activities

Bao Viet Life Corporation 100% Life insurance and reinsurance

Bao Viet Insurance 100% General insurance and reinsurance

Bao Viet Fund Management 100% Fund management and investment

Company |

Bao Viet Securities Joint 59.92% Securities trading, brokerage, Stock Company portfolio management, underwriting,

consulting and securities placement

Bao Viet Commercial Joint 52% Banking

Stock Bank

Bao Viet Investment Joint 55% Real estate investment and

Stock Company construction _|

Bao Viet — Au Lac Limited 60% Vocational driving training services

| Company

Investments in associates

The Group's investments in associates are accounted for using the equity method An associate is an entity in which the Group has significant influence

Under the equity method, investments in associates are carried in the statement of financial

position at cost plus post acquisition changes in the Group's share of net assets of

associates Goodwill relating to an associate is included in the carrying amount of the investment and is neither amortised nor individually tested for impairment

The income statement reflects the share of the results of operations of associates Where there has been a change recognised directly in the equity of an associate, the Group recognises its share of any changes and discloses this, when applicable, in the statement of changes in equity Unrealised gains and losses resulting from transactions between the Group and an associate are eliminated to the extent of the interest In an associate

The share of profit of associates is shown on the face of the consolidated income statement This is the profit attributable to equity holders of an associate and therefore Is profit after tax and non-controlling interests in the subsidiaries of an associate

The financial statements of associates are prepared for the same reporting period as the parent company Where necessary, adjustments are made to bring the accounting policies in line with those of the Group

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Bao Viet Holdings

2.3

24

2.5

(i)

Investments in associates (continued)

After application of the equity method, the Group determines whether it is necessary to

recognise an additional impairment loss on the Group's investment in its associates The

Group determines at each reporting date whether there is any objective evidence that the

investment in an associate is impaired If this is the case the Group calculates the amount of impairment as the difference between the recoverable amount of an associate and its carrying value and recognises the amount in the income statement

Upon toss of significant influence over an associate, the Group measures and recognises

any retaining investment at its fair value Any difference between the carrying amount of an associate upon loss of significant influence and the fair value of the retaining investment and

proceeds from disposal are recognised in profit or loss

Foreign currency translation

The Group's consolidated primary financial statements are presented in Vietnamese Dong,

which is also the parent company’s functional currency Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are

measured using that functional currency

Transactions in foreign currencies are initially recorded by the Group entities at their respective functional currency rates prevailing at the date of the transaction

Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency spot rate of exchange ruling at the reporting date All differences are taken to the income statement

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at

the date when the fair value is determined

Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to

the Group and the revenue can be reliably measured The following specific recognition criteria must also be met before revenue is recognised:

Premiums

Gross recurring premiums on life insurance business are recognised as revenue when payable by the policyholder For universal life business, revenue is recognised on the date on which the policy is effective

Premiums for direct and facultative business in general insurance are accounted for in the period in which the amount is determined, which is generally the period in which the risk

commences Premiums include any adjustments arising in the accounting period for premiums receivable in respect of business written in prior accounting periods The effects

of cancellations of premium renewals and of premiums from new business and premium

adjustments which are not accounted for in the period in which the risk commences, are not material

Unearned premiums are those proportions of premiums written in a year that relate to

periods of risk after the balance sheet date Unearned premiums are calculated on a daily pro rata basis The proportion attributable to subsequent periods is deferred as a provision for unearned premiums

Premiums received, commission and claims paid or payable on reinsurance treaty inward business are accounted for when notified by the ceding company or agent concerned

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as at and for the year ended 31 December 2009 2.5 (ii) (iii) (iv) (v) 2.6 (i) (ii)

SIGNIFICANT ACCOUNTING POLICIES (continued) Revenue recognition (continued)

Interest income from banking activities

Interest income is recognised in the consolidated income statement on an accrual basis, using effective interest rate method

Fees from rendering of services

Fees from rendering of services comprise fund management fees, placement fees, incentive fees, brokerage, underwriting activities, which are recognized when services are performed and the revenue can be reliably measured

Gains from securities trading

Gains from securities are the excess of selling prices over the weighted average cost of securities sold Dividends Income is recognised when the Group's entitlement as an investor to receive the dividend is established Taxes

Current income tax

Current income tax assets and liabilities for the current and prior periods are measured at

the amount expected to be recovered from or paid to the taxation authorities The tax rates

and tax laws used to compute the amount are those that are enacted or substantively enacted, by the reporting date

Current income tax relating to items recognised directly in equity is recognised in equity and not in the income statement Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to

interpretation and establishes provisions where appropriate Deferred tax

Deferred tax is provided using the liability method on temporary differences at the reporting

date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes

Deferred tax liabilities are recognised for all taxable temporary differences, except:

« Where the deferred tax liability arises from the initial recognition of goodwill or of an

asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss

s In respect of taxable temporary differences associated with investments in subsidiaries,

associates and interests in joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences

will not reverse in the foreseeable future

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Bao Viet Holdings

as at and for the year ended 31 December 2009 2.6 (ii) 2.7 SIGNIFICANT ACCOUNTING POLICIES (continued) Taxes (continued) Deferred tax (continued)

Deferred tax assets are recognised for all deductible temporary differences, carry forward of

unused tax credits and unused tax losses, to the extent that it is probable that taxable profit

will be available against which the deductible temporary differences, and the carry forward of

unused tax credits and unused tax losses can be utilised except:

e Where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business

combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss

e in respect of deductible temporary differences associated with investments in

subsidiaries, associates and interests in joint ventures, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will

reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow

all or part of the deferred tax asset to be utilised Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become

probable that future taxable profits will allow the deferred tax asset to be recovered

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date

Deferred tax relating to items recognised outside profit or loss is recognised outside profit or

loss Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current income tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority

Financial instruments — initial recognition and subsequent measurement

Financial assets

Initial recognition and measurement

Financial assets within the scope of IAS 39 are classified as financial assets at fair value

through profit or loss, loans and receivables, held-to-maturity investments or available-for- sale financial assets, as appropriate The Group determines the classification of its financia!

assets at initial recognition

All financial assets are recognised initially at fair value plus, in the case of investments not at

fair value through profit or loss, directly attributable transaction costs

Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the marketplace (regular way trades) are

recognised on the trade date, i.e the date that the Group commits to purchase or sell the asset

The Group’s financial assets include cash and short-term deposits, trade and other receivables, loan and other receivables, quoted and unquoted financial instruments, and derivative financial instruments

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SELECTED NOTES TO THE PRIMARY CONSOLIDATED FINANCIAL STATEMENTS (continued) as at and for the year ended 31 December 2009

2 SIGNIFICANT ACCOUNTING POLICIES (continued)

2.7 Financial instruments — initial recognition and subsequent measurement (continued)

i, Financial assets (continued)

Subsequent measurement

The subsequent measurement of financial assets depends on their classification as follows: (a) Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss include financial assets held for trading and financial assets designated upon initial recognition at fair value through profit or loss

Financial assets are classified as held for trading if they are acquired for the purpose of

selling or repurchasing in the near term This category includes derivative financial

instruments entered into by the Group that are not designated as hedging instruments in hedge relationships as defined by IAS 39 Financial assets at fair value through profit and

loss are carried in the statement of financial position at fair value with changes in fair value recognised in finance income or finance cost in the income statement

When the Group is unable to trade these financial assets due to inactive markets and management's intent to sell them in the foreseeable future significantly changes, the Group may elect to reclassify these financial assets in rare circumstances The reclassification to loans and receivables, available-for-sale or held to maturity depends on the nature of the

asset This evaluation does not affect any financial assets designated at fair value through profit or loss using the fair value option at designation

Derivatives embedded in host contracts are accounted for as separate derivatives and recorded at fair value if their economic characteristics and risks are not closely related to those of the host contracts and the host contracts are not held for trading or designated at

fair value though profit or loss These embedded derivatives are measured at fair value with changes in fair value recognised in the income statement Reassessment only occurs if

there is a change in the terms of the contract that significantly modifies the cash flows that would otherwise be required

(b) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable

payments that are not quoted in an active market

After initial measurement, such financial assets are subsequently measured at amortised

cost using the effective interest rate method (EIR), less impairment Amortised cost is

calculated by taking into account any discount or premium on acquisition and fee or costs =

that are an integral part of the EIR The EIR amortisation is included in finance income in the income statement The losses arising from impairment are recognised in the income statement in finance costs * , af * dG (c) Held-to-maturity investments

Non-derivative financial assets with fixed or determinable payments and fixed maturities are

classified as held-to-maturity when the Group has the positive intention and ability to hold it to maturity

After initial measurement held-to-maturity investments are measured at amortised cost using

the effective interest method, less impairment Amortised cost is calculated by taking into account any discount or premium on acquisition and fee or costs that are an integral part of the EIR The EIR amortisation is included in finance income in the income statement The losses arising from impairment are recognised in the income statement in finance costs The

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Bao Viet Holdings

2.7

Financial instruments — initial recognition and subsequent measurement (continued) Financial assets (continued)

Subsequent measurement (continued) (d} Available-for-sale financial investments

Available-for-sale financial investments include equity and debt securities Equity

investments classified as available-for sale are those, which are neither classified as held for

trading nor designated at fair value through profit or loss Debt securities in this category are those which are intended to be held for an indefinite period of time and which may be sold in

response to needs for liquidity or in response to changes in the market conditions

After initial measurement, available-for-sale financial investments are subsequently measured at fair value with unrealised gains or losses recognised as other comprehensive income in the available-for-sale reserve until the investment is derecognised, at which time the cumulative gain or loss is recognised in other operating income, or determined to be

impaired, at which time the cumulative loss is recognised in the income statement in finance costs and removed from the available-for-sale reserve The Group evaluated its available- for-sale financial assets to determine whether the ability and intention to sell them in the near term is still appropriate When the Group is unable to trade these financial assets due to inactive markets and managements intent significantly changes to do so in the foreseeable future, the Group may elect to reclassify these financial assets in rare circumstances Reclassification to loans and receivables is permitted when the financial asset meets the

definition of loans and receivables and has the intent and ability to hold these assets for the foreseeable future or maturity The reclassification to held to maturity is permitted only when the entity has the ability and intent to hold until the financial asset accordingly

For a financial asset reclassified out of the available-for-sale category, any previous gain or

loss on that asset that has been recognised in equity is amortised to profit or loss over the remaining life of the investment using the EIR Any difference between the new amortised cost and the expected cash flows is also amortised over the remaining life of the asset using

the EIR If the asset is subsequently determined to be impaired then the amount recorded in

equity is reclassified to the income statement

Derecognition

A financial asset is derecognised when the rights to receive cash flows from the asset have

expired

Impairment of financial assets

The Group assesses at each reporting date whether there is any objective evidence that a

financial asset or a group of financial assets is impaired A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of

the asset (an incurred ‘loss event’) and that loss event has an impact on the estimated future

cash flows of the financial asset or the group of financial assets that can be reliably

estimated Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults

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27

Financial instruments — initial recognition and subsequent measurement (continued)

Financial assets (continued)

Impairment of financial assets (continued)

(a) Financial assets carried at amortised cost

For financial assets carried at amortised cost the Group first assesses individually whether objective evidence of impairment exists individually for financial assets that are individually significant, or collectively for financial assets that are not individually significant If the Group determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets

with similar credit risk characteristics and collectively assesses them for impairment Assets

that are individually assessed for impairment and for which an impairment loss is, or

continues to be, recognised are not included in a collective assessment of impairment

\f there is objective evidence that an impairment loss has incurred, the amount of the loss is

measured as the difference between the asset's carrying amount and the present value of estimated future cash flows (excluding future expected credit losses that have not yet been

incurred) The present value of the estimated future cash flows is discounted at the financial

assets original effective interest rate If a loan has a variable interest rate, the discount rate

for measuring any impairment loss is the current effective interest rate

The carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is recognised in the income statement Interest income continues to

be accrued on the reduced carrying amount and is accrued using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss The

interest income is recorded as part of finance income in the income statement Loans together with the associated allowance are written off when there is no realistic prospect of

future recovery and all collateral has been realised or has been transferred to the Group If, in a subsequent year, the amount of the estimated impairment loss increases or decreases because of an event occurring after the impairment was recognised, the previously recognised impairment loss is increased or reduced by adjusting the allowance account If a

future write-off is later recovered, the recovery is credited to finance costs in the income statement

(b) Available-for-sale financial investments

For available-for-sale financial investments, the Group assesses at each reporting date

whether there is objective evidence that an investment or a group of investments is impaired

In the case of equity investments classified as available-for-sale, objective evidence would

include a significant or prolonged decline in the fair value of the investment below its cost ‘Significant’ is to be evaluated against the original cost of the investment and ‘prolonged’ against the period in which the fair value has been below its original cost Where there is evidence of impairment, the cumulative loss - measured as the difference between the

acquisition cost and the current fair value, less any impairment loss on that investment previously recognised in the income statement — is removed from other comprehensive

income and recognised in the income statement Impairment losses on equity investments

are not reversed through the income statement, increases in their fair value after impairment are recognised directly in other comprehensive income

In the case of debt instruments classified as available-for-sale, impairment is assessed based on the same criteria as financial assets carried at amortised cost However, the amount recorded for impairment is the cumulative loss measured as the difference between the amortised cost and the current fair value, less any impairment loss on that investment

previously recognised in the income statement

14

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Bao Viet Holdings

2.7

Financial assets (continued)

Impairment of financial assets (continued)

Future interest income continues to be accrued based on the reduced carrying amount of the asset and is accrued using the rate of interest used to discount the future cash flows for

the purpose of measuring the impairment loss The interest income is recorded as part of finance income If, in a subsequent year, the fair value of a debt instrument increases and

the increase can be objectively related to an event occurring after the impairment loss was recognised in the income statement, the impairment loss is reversed through the income

statement

Financial liabilities

Initial recognition and measurement

Financial liabilities within the scope of IAS 39 are classified as financial liabilities at fair value through profit or loss or loans and borrowings The Group determines the classification of its financial liabilities at initial recognition

All financial liabilities are recognised initially at fair value and in the case of loans and borrowings, plus directly attributable transaction costs

The Group's financial liabilities include trade and other payables, bank overdraft, loans and borrowings and derivative financial instruments

Subsequent measurement

The measurement of financial liabilities depends on their classification as follows: (a) Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss includes financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through

profit or loss

Financial liabilities are classified as held for trading if they are acquired for the purpose of selling in the near term This category includes derivative financial instruments entered into

by the Group that are not designated as hedging instruments in hedge relationships as

defined by IAS 39 Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments

Gains or losses on liabilities held for trading are recognised in the income statement

(b) Loans and borrowings

After initia! recognition, interest bearing loans and borrowings are subsequently measured at

amortised cost using the effective interest rate method Gains and losses are recognised in the income statement when the liabilities are derecognised as well as through the effective

interest rate method (EIR) amortisation process

Amortised cost is calculated by taking into account any discount or premium on acquisition

and fee or costs that are an integral part of the EIR The EIR amortisation is included in

finance cost in the income statement

15

“ws

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27

2.8

SIGNIFIGANT ACCOUNTING POLICIES (continued)

Financial liabilities (continued) Derecognition

A financial liability is derecognised when the obligation under the liability is discharged or

cancelled or expires When an existing financial liability is replaced by another from the

same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the

original liability and the recognition of a new liability, and the difference in the respective

carrying amounts is recognised in the income statement Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount reported in the consolidated statement of financial position if, and only if, there is a currently enforceable

legal right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously

Fair value of financial instruments

The fair value of financial instruments that are traded in active markets at each reporting

date is determined by reference to quoted market prices or dealer price quotations (bid price for long positions and ask price for short positions), without any deduction for transaction

costs

For financial instruments not traded in an active market, the fair value is determined using appropriate valuation techniques Such techniques may include using recent arm's length

market transactions; reference to the current fair value of another instrument that is substantially the same; discounted cash flow analysis or other valuation models

Property, plant and equipment

Property, plant and equipment is stated at cost, net of accumulated depreciation and/or

accumulated impairment losses, if any Such cost includes the cost of replacing part of the

plant and equipment and borrowing costs for long-term construction projects if the recognition criteria are met When significant parts of property, plant and equipment are required to be replaced in intervals, the Group recognises such parts as individual assets with specific useful lives and depreciation, respectively Likewise, when a major inspection is

performed, its cost is recognised in the carrying amount of the plant and equipment as a

replacement if the recognition criteria are satisfied All other repair and maintenance costs

are recognised in the income statement as incurred

The present value of the expected cost for the decommissioning of the asset after its use is

included in the cost of the respective asset if the recognition criteria for a provision are met

Depreciation is calculated on a straight-line basis over the estimated useful life of the asset as follows:

Buildings 6 - 25 years Machinery 3-7 years Vehicles 6-8 years Office equipment 3-6 years

Other fixed assets 4 years

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a

et

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Bao Viet Holdings

2.8

2.9

2.10

SIGNIFICANT ACCOUNTING POLICIES (continued) Property, plant and equipment (cont’d)

An item of property, plant and equipment and any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use

or disposal Any gain or loss arising on derecognition of the asset (calculated as the

difference between the net disposal proceeds and the carrying amount of the asset) is

included in the income statement when the asset is derecognised

The assets’ residual values, useful lives and methods of depreciation are reviewed at each

financial year end, and adjusted prospectively, if appropriate

Leases

The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at inception date: whether fulfilment of the arrangement is

dependent on the use of a specific asset or assets or the arrangement conveys a right to

use the asset

Group as a lessee

Finance leases, which transfer to the Group substantially all the risks and benefits incidental to ownership of the leased item, are capitalised at the commencement of the lease at the fair value of the leased property or, if lower, at the present value of the minimum lease

payments Lease payments are apportioned between finance charges and reduction of the

lease liability so as to achieve a constant rate of interest on the remaining balance of the

liability Finance charges are recognised in the income statement

Leased assets are depreciated over the useful life of the asset However, if there is no reasonable certainty that the Group will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and the lease

term

Operating lease payments are recognised as an expense in the income statement on a

straight line basis over the lease term Group as a lessor

Leases where the Group does not transfer substantially all the risks and benefits of ownership of the asset are classified as operating leases Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same bases as rental income Contingent rents are

recognised as revenue in the period in which they are earned Intangible assets

Intangible assets acquired separately are measured on initial recognition at cost Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses

Internally generated intangible assets, excluding capitalised development costs, are not

capitalised and expenditure is reflected in the income statement in the year in which the expenditure is incurred

The useful lives of intangible assets are assessed as either finite or indefinite

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2.10

2.11

Intangible assets (continued)

Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired

The amortisation period and the amortisation method for an intangible asset with a finite useful life is reviewed at least at each financial year end Changes in the expected useful life

or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortisation period or method, as appropriate, and are

treated as changes in accounting estimates The amortisation expense on intangible assets with finite lives is recognised in the income statement in the expense category consistent with the function of the intangible asset

Intangible assets with indefinite useful lives are not amortised, but are tested for impairment

annually, either individually or at the cash generating unit level The assessment of indefinite

life is reviewed annually to determine whether the indefinite life continues to be supportable

If not, the change in useful life from indefinite to finite is made on a prospective basis Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are

recognised in the income statement when the asset is derecognised Impairment of non-financial assets

The Group assesses at each reporting date whether there is an indication that an asset may be impaired If any indication exists, or when annual impairment testing for an asset is

required, the Group estimates the asset's recoverable amount

An asset’s recoverable amount is the higher of an asset's or cash-generating unit's (CGU)

fair value less costs to sell and its value in use and is determined for an individual asset,

unless the asset does not generate cash inflows that are largely independent of those from

other assets or groups of assets Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount In assessing value in use, the estimated future cash flows are

discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset In determining

fair value less costs to sell, an appropriate valuation model is used These calculations are corroborated by valuation multiples, quoted share prices for publicly traded subsidiaries or

other available fair value indicators

Impairment losses of continuing operations are recognised in the consolidated income statement in those expense categories consistent with the function of the impaired asset, except for property previously revalued where the revaluation was taken to other

comprehensive income In this case, the impairment is also recognised in other comprehensive income up to the amount of any previous revaluation

For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or

may have decreased If such indication exists, the Group estimates the asset's or cash- generating unit’s recoverable amount A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset's recoverable amount since the last impairment loss was recognised The reversal is limited

so that the carrying amount of the asset does not exceed its recoverable amount, nor

exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years Such reversal is recognised in the income statement unless the asset is carried at a revalued amount, in which case the reversal is treated as a revaluation increase

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Bao Viet Holdings

2.11

212

2.13

2.14

Impairment of non-financial assets (continued)

The following criteria are also applied in assessing impairment of specific assets:

Intangible assets

Intangible assets with indefinite useful lives are tested for impairment annually as at 31 December either individually or at the cash generating unit level, as appropriate and when

circumstances indicate that the carrying value may be impaired

Cash and cash equivalents

Cash and cash equivalents comprise of cash on hand, cash at banks, demand deposits and

short-term, highly liquid investments with an original maturity of three months or less which are readily convertible into known amounts of cash and that are subject to an insignificant tisk of change in value

Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as

a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the

amount of the obligation Where the Group expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a

separate asset but only when the reimbursement is virtually certain The expense relating to

any provision is presented in the income statement net of any reimbursement If the effect of

the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost

Reinsurance

The Group cedes insurance risk in the normal course of business for all of its businesses Reinsurance assets represent balances due from reinsurance companies Amounts

recoverable from reinsurers are estimated in a manner consistent with the outstanding claims provision or settled claims associated with the reinsurer’s policies and are in accordance with the related reinsurance contract

Reinsurance assets are reviewed for impairment at each reporting date or more frequently

when an indication of impairment arises during the reporting year Impairment occurs when there is objective evidence as a result of an event that occurred after initial recognition of the reinsurance asset that the Group may not receive all outstanding amounts due under the terms of the contract and the event has a reliably measurable impact on the amounts that the Group will receive from the reinsurer The impairment loss is recorded in the income

statement

Gains or losses on buying reinsurance are recognised in the income statement immediately at the date of purchase and are not amortised Ceded reinsurance arrangements do not relieve the Group from its obligations to policyholders Premiums and claims are presented

on a gross basis for ceded reinsurance Reinsurance assets are derecognised when the contractual rights are extinguished or expire

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as at and for the year ended 31 December 2009 2 2.15 2.16 (a) (b) SIGNIFICANT ACCOUNTING POLICIES (continued) Insurance receivables

Insurance receivables are recognised when due and measured on initial recognition at the fair value of the consideration received or receivable Subsequent to initial recognition,

insurance receivables are measured at amortised cost, using the effective interest rate

method The carrying value of insurance receivables is reviewed for impairment whenever events or circumstances indicate that the carrying amount may not be recoverable, with the

impairment loss recorded in the income statement

Insurance receivables are derecognised when the derecognition criteria for financial assets

have been met

Insurance contract liabilities Life insurance reserves

Insurance contract liabilities for traditional products which include mathematical reserve, unearned premium reserves, outstanding claim reserves and dividend reserves are established in accordance with the provisions and instructions issued by the Ministry of

Finance ("MOF") in Vietnam

Technical Reserve is the difference between present value of total insurance payable in the

future and the actuarially adjusted present value of insurance premiums receivable in the future Mathematical reserve is calculated for all products with specific actuarial formulae and factors for each type of products as registered and approved by the MOF Technical reserves for universal life products include the greater of unearned premium reserve method or the cash-flow reserve method that covers all future expenses arising,

compensation reserve, reserve for the universal life fund component and an additional solvency reserve The Group estimates these universal life reserves in accordance with actuarial principles and methods which are widely recognised in international practice

Unearned premium reserve is the provision for unearned revenue out of already-paid premium as at the balance sheet date, and is calculated for all outstanding policies as at the reporting date

Claim Reserve is the provision for claims submitted but still in the course of settlement as at the balance sheet date

Dividend Reserve is the provision for accumulated unpaid dividends for participating

policies, which is established on the variances of actual rate of return announced for participating policies and the respective nominal interest rate

General insurance reserves

Unearned premium reserve is established as a percentage of total retained premium or in

accordance with a coefficient of the insurance contracts’ terms for different business lines

Claim reserve includes the reserve for outstanding claims and for claims incurred but not reported Outstanding claim reserve is established based on the estimated claim payments

for each claim for which the insurer is liable, which is either notified to the insurer or

requested for payment but is still unresolved at the end of the fiscal year Provision is also

made for the estimated cost of servicing claims notified but not settled at the end of the reporting period and to meet expenses on claims incurred but not reported at the end of the reporting period

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Bao Viet Holdings

2.16

(c)

Insurance contract liabilities (continued)

Liability adequacy test

At each reporting date the Group performs a liability adequacy test to determine whether its recognised insurance liabilities are adequate This calculation uses current estimates of

future contractual cash flows arising under the insurance contracts, including claims

handling costs If these estimates show that the carrying amount of the insurance liability is inadequate, the deficiency is recognised in the income statement by setting up a provision for liability adequacy

Further accounting policies applicable to these primary financial statements are summarised

in note 5 (column “Restated”) on the selected notes to the consolidated financial staternents

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(ii)

(iii)

CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

The Group makes estimates and assumptions that affect the reported amounts of assets and liabilities within the next financial year Estimates and judgements are continually

evaluated and based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances

Provision for outstanding claims under general insurance

Full provision is made for the estimated cost of claims notified but not settled at the end of the reporting period and for the incurred but not reported for by that date Provision is also

made for the estimated cost of servicing claims notified but not settled at the end of the

reporting period and to meet expenses on claims incurred but not reported at the end of the reporting period

Estimates liabilities under life insurance

The Group makes estimates of future deaths, and investment returns for life insurance

contracts These estimates form the assumptions used to calculate the liabilities arising from these contracts Estimates are made in order to establish life insurance contract liabilities, which are consistent with the requirements issued by the Ministry of Finance of Vietnam (“MOF”)

The Group estimates these universal life reserves in accordance with actuarial principles

and methods which are widely recognised in international practice Furthermore the methodology and actuarial principles used to estimate these universal life reserves have been registered and approved by the MOF

Impairment of financial assets

Judgment is required in determining whether or not a decline in fair value of an available-for- sale financial investment and loans and receivables below its original cost or amortised costs is of such a nature as to constitute impairment, and thus whether an impairment loss needs to be recognised

When fair values of certain financial assets are determined by using valuation techniques

which refer to observable market data because independent prices are not available, management will consider the following when applying a valuation model:

¢ The likelinood and expected timing of future cash flows on the instrument These cash

flows are usually governed by the terms of the instrument, although management

judgment may be required when the ability of the counterparty to service the instrument in accordance with the contractual terms is in doubt,

e Anappropriate discount rate for the instrument Management determines this rate based

on its assessment of the appropriate spread of the rate for the instrument over the risk- free rate; and

e Judgement to determine what model to use to calculate fair value in areas where the

choice of valuation model is particularly subjective, for example, when valuing complex derivative models

When valuing instruments by reference to comparable instruments, management takes into account the maturity, structure and rating of the instrument with which the position held is being compared When valuing instruments on a model basis using the fair value of

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Bao Viet Holdings

4, RECONCILIATION OF GAAP DIFFERENCES FOR NET PROFIT AND EQUITY

The material GAAP differences between VAS and the Restated amounts in preparing the primary consolidated financial statements of the Group are as follows:

i) Consolidated net profit attributable to shareholders of the Group

2009 VND

Prepared in accordance with VAS

Net investment income: 891,754,255,672

ii)

Fixed maturity investments valuation 9,846,720,068

Equity investment valuation 39,743,632,916

Inventories written back to income statement 4,380,159,817

Bonus and welfare fund written off (35,048,205,891)

Reversal on loan and receivables provision 22,405,692,895 Impairment of account receivable and loans and receivables (20,992,377,447)

Decrease of prepayment expense amortisation 1,775,713,893

Tangible assets impairment (2,827,865,992)

Insurance reserves adjustment Removal of catastrophe reserve Removal of equalisation reserve

Deferred tax Minority interests

Prepared in accordance with these accounting policies

Consolidated equity of the Group

Equity investment valuation

Impairment adjustment on loans and receivables (44,569,870,509) 98,132,466,119 4,556,421,030 (2,440,451,410) - (8,105,612,945) 958,610,678,216 2009 VND Prepared in accordance with VAS 9,937,587,877,608

Fixed maturity investments valuation (159,637,020,547) 619,187,134,657 (19,154,259,412)

Inventories written off (20,239, 993,262)

Bonus and welfare fund reclassification (49,856,498, 121)

Impairment of account receivable (32,723,890,616)

Intangible assets impairment (61,433,525,431)

Tangible assets impairment (12,668,016,516)

Insurance reserves adjustment (313,597,759,806)

Removal of catastrophe reserve 193,572,226,768

Removal of equalisation reserve 16,737 ,624,949

Deferred tax 66,832,734

Prepared in accordance with these accounting policies

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5 NARRATIVE DESCRIPTION OF MATERIAL MEASUREMENT AND

RECOGNITION DIFFERENCES BETWEEN VAS AND THE ACCOUNTING POLICIES USED TO PREPARE THESE PRIMARY CONSOLIDATED FINANCIAL STATEMENTS ITEM VAS INCOME Restated Financial assets Investments in securities and

other investments are stated

at their acquisition cost

Short term investments comprise holdings of listed shares and _ other liquid

securities, which are readily realisable and are intended to

be held for not more than one year

Long term investments include listed and over-the-counter shares, government bonds, loans and trusted loans, and term deposits at banks, which are intended to be held for

more than one year

Allowance for devaluation in value of all shares is created representing the excess of the

acquisition cost over the

market value at the reporting

date

i) Financial assets designated at fair value through profit or loss is financial assets which on initial recognition are designated by the Group for measurement at fair value through profit or loss

ii) Investments intended to be held on a

continuing basis are classified as available-

for-sale (“AFS") securities, and are initially

measured at fair value plus direct and

incremental transaction costs At each balance sheet date the fair value is re- measured, with any resultant gain or loss being recognised in other comprehensive

income and accumulated separately in equity in the fair value reserve until the

investments are either sold or become

impaired When AFS investments are

sold, cumulative gains or losses previously recognised in equity are recognised in the income statement

ii) Loans and receivables are non-derivative financial assets with fixed determinable

payments that are not quoted in an active market These investments are_ initially recognised at cost, being the fair value of the consideration paid for the acquisition of

the investment All transaction costs

directly attributable to the acquisition are

also included in the cost of the investment After initial measurement, loans and teceivables are measured at amortised cost, using the effective interest rate method Gains and losses are recognised in the income statement when the

investments are derecognised or impaired,

as well as through the amortisation process

Impairment

Allowance for the diminution in value of all shares is created

representing the excess of the

acquisition cost over the market value at the reporting

date

24

Impairment is recognised on financial assets

that are carried at amortised cost and on AFS financial assets whose fair value changes are recognised in other comprehensive income Past impairment losses on AFS debt

instruments (monetary assets) are reversed

through income when fair value increases For AFS equity instruments (non-monetary

assets), past impairment losses are reversed

through equity _) ont

oh

Se

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Bao Viet Holdings

NARRATIVE DESCRIPTION OF MATERIAL MEASUREMENT AND INCOME RECOGNITION DIFFERENCES BETWEEN VAS AND THE ACCOUNTING POLICIES USED TO PREPARE THESE PRIMARY CONSOLIDATED FINANCIAL STATEMENTS (continued) ITEM VAS Restated Associate Investment in an associate is not

subject to impairment testing under VAS 7

An investment in an associate is stated initially at cost and is thereafter

adjusted for the post-acquisition

change in the Group’s share of the

assets of the investee This carrying value is reduced where there is objective evidence of impairment

Receivables Receivables are presented at the

carrying amount due from customers and other debtors, along with the allowance for doubtful debts The allowance for doubtful debts

represents the estimated loss due to non-payment arising on receivables that were outstanding at the balance

sheet date, is calculated based on different ratio relating to the aging of the receivables

Receivables are carried at cost less

any accumulated impairment losses

Property, plant

and equipment Fixed asset is carried at its cost less accumulated depreciation Revaluation

or write down for impairment is not

allowed, unless a specific approval is received from the Ministry of Finance

Fixed asset is carried at its cost less

accumulated depreciation and any accumulated impairment losses

Intangible

assets Intangible assets are stated at cost less accumulated amortisation Revaluation or write down for impairment is not allowed

Intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses Where the useful life of an intangible asset is assessed as indefinite, IAS 38 requires that the asset should not be amortised

Life insurance

reserves on net after tax profit of Bao Viet Life Equalisation reserve is accrued based

Corporation

IFRS 4 does not permit provisions for claims on contracts that are not in existence at the end of the reporting period (such as equalisation and

catastrophe provisions),

General insurance

reserves The reserve for incurred but not reported claims in Bao Viet Insurance

is calculated based on a _ specific

formula agreed by the Ministry of

Finance

Catastrophe reserve is accrued based

on retained premiums and

management judgement Full provision is made for the

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5 NARRATIVE DESCRIPTION OF MATERIAL MEASUREMENT AND INCOME RECOGNITION DIFFERENCES BETWEEN VAS AND THE ACCOUNTING POLICIES (conti TO PREPARE THESE PRIMARY CONSOLIDATED FINANCIAL STATEMENTS

continued)

ITEM VAS Restated

Presentation UPR liability is presented net of | IFRS 4 does not allow offset of related reinsurance asset reinsurance assets against related

insurance liabilities, or of income or expense from reinsurance contracts against the expense or income from

the related insurance contracts Therefore, the UPR assets and liability are presented gross on the balance sheet and the income

statement impact is similarly

presented gross

Income tax VAS 17 does not address | Deferred tax assets and liabilities

temporary differences and the | arise from deductible and taxable

deferred tax recognition in respect | temporary differences respectively, of business combinations, goodwill, | being the differences between the assets carried at fair value and carrying amounts of assets and government grants liabilities for financial reporting

purposes and their tax bases

Deferred tax assets also arise from

unused tax losses and unused tax

credits, if any The amount of deferred tax recognised is measured based on the expected manner of realisation or settlement of the

carrying amount of assets and

liabilities, using tax rates enacted or substantively enacted at the balance sheet date ⁄ Approved by cesar L upp tii _ Z ti» “—

ER Nguyen Thi Phuc Lam Le Hai Phong Nguyen Thanh Hai )

~~ Chief Executive Officer Chief Financial Officer Chief Accountant

31 March 2010

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