imexpharm pharmaceutical joint stock...

-- Deloitte .

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IMEXPHARM PHARMACEUTICALJOINT STOCK COMPANY

(Incorporated in Socialist Republic of Vietnam)

AUDITED FINANCIAL STATEMENTS

- For the year ended 31 December 2016

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-

IMEXPHARM PHARMACEUTICAL JOINT STOCK COMPANYNo.4 Street 30/4, Cao Lanh CityDong Thap Province, Vietnam

TABLE OF CONTENTS

CONTENTS pAGE(S)

STATEMENT OF THE BOARD OF GENERAL DIRECTORS

INDEPENDENT AUDITORS' REPORT

BALANCE SHEET 3-4

INCOME STATEMENT

CASH FLOW STATEMENT

NOTES TO THE FINANCIAL STATEMENTS 7 - 27

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IMEXPHARM PHARMACEUTICAL JOINT STOCK COMPANYNo.4 Street 30/4, Cao Lanh CityDong Thap Province, Vietnam

STATEMENT OF THE BOARD OF GENERAL DIRECTORS

,...... The Board of General Directors of Imexpharm Pharmaceutical Joint Stock Company (the"Company") presents this report together with the Company's financial statements for the yearended 31 December 2016.

THE BOARDS OF MANAGEMENT AND GENERAL DIRECTORS

The members of the Boards of Management and General Directors of the Company who heldoffice during the year and to the date of this report are as follows:

Board of Management

Mr. Nguyen Quoc DinhMs. Tran Thi DaoMr. Vo Huu TuanMr. Huynh Van NhungMr. Nguyen Quy SonMr. Tran Anh TuanMr. Ngo Minh TuanMr. Truong Viet Vu

Board of General Directors

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Ms. Tran Thi DaoMr. Nguyen Quoc DinhMr. Huynh Van NhungMr. Ngo Minh TuanMr. Le Van Nha PhuongMr. Tran Hoai Hanh

ChairmanVice ChairmanMemberMemberMemberMemberMemberMember

General DirectorDeputy General DirectorDeputy General DirectorDeputy General DirectorDeputy General Director (appointed on 04 January 2017)Chief Accountant

BOARD OF GENERAL DIRECTORS' STATEMENT OF RESPONSIBILITY

The Board of General Directors of the Company is responsible for preparing the financialstatements, which give a true and fair view of the financial position of the Company as at 31December 2016, and its financial performance and its cash flows for the year, then ended inaccordance with Vietnamese Accounting Standards, accounting regime for enterprises and legalregulations relating to financial reporting. In preparing these financial statements, the Board ofGeneral Directors is required to:

• Select suitable accounting policies and then apply them consistently;• Make judgments and estimates that are reasonable and prudent;• State whether applicable accounting principles have been followed, subject to any material

departures disclosed and explained in the financial statements;• Prepare the financial statements on the going concern basis unless it is inappropriate to

presume that the Company will continue in business; and• Design and implement an effective internal control system for the purpose of properly

preparing and presenting the financial statements so as to minimise errors and frauds.

The Board of General Directors is responsible for ensuring that proper accounting records arekept, which disclose, with reasonable accuracy at any time, the financial position of the Companyand that the financial statements comply with Vietnamese Accounting Standards, accountingregime for enterprises and legal regulations relating to financial reporting. The Board of GeneralDirectors is also responsible for safeguarding the assets of the Company and hence for takingreasonable steps for the prevention and detection of frauds and other irregularities.

has complied with the above

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Oeloitte Vietnam Company Ltd.18th Floor, Times Square Building,57-69F Dong Khoi Street, Ben Nghe Ward,District 1, Ho Chi Minh City, VietnamTel:+848 3910 0751Fax:+848 3910 0750www.deloitte.com/vn

Oeloitte.

INDEPENDENT AUDITORS' REPORT

To: The ShareholdersThe Boards of Management and General DirectorsImexpharm Pharmaceutical Joint Stock Company

We have audited the accompanying financial statements of Imexpharm Pharmaceutical JointStock Company (the "Company"), prepared on 15 March 2017 as set out from page 03 to page27, which comprise the balance sheet as at 31 December 2016, and the statement of income andstatement of cash flows for the year then ended, and a summary of significant accountingpolicies and other explanatory information.-Board of Directors' Responsibility for the Financial Statements

The Board of Directors of the Company is responsible for the preparation and fair presentation ofthese financial statements in accordance with Vietnamese Accounting Standards, accountingregime for enterprises and legal regulations relating to financial reporting and for such internalcontrol as the Board of Directors determines is necessary to enable the preparation of financialstatements that are free from material misstatement, whether due to fraud or error.

Auditors' Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. Weconducted our audit in accordance with Vietnamese Standards on Auditing. Those standardsrequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether the financial statements are free from materialmisstatement.

An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the financial statements. The procedures selected depend on the auditors'judgment, including the assessment of the risks of material misstatement of the financialstatements, whether due to fraud or error. In making those risk assessments, the auditorsconsider internal control relevant to the Company's preparation and fair presentation of thefinancial statements in order to design audit procedures that are appropriate in thecircumstances, but not for the purpose of expressing an opinion on the effectiveness of theCompany's internal control. An audit also includes evaluating the appropriateness of accountingpolicies used and the reasonableness of accounting estimates made by the Board of Directors aswell as evaluating the overall presentation of the financial statements.

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

Opinion

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Tran Kim Long HaiAuditorAudit Practising Registration CertificateNo. 1503-2013-001-1

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee("DTTL"), its network of member firms, and their related entities. DTTL and each of its member firms are legallyseparate and independent entities. DTTL (also referred to as "Deloitte Global") does not provide services to clients.Please see www.deloitte.com/about for a more detailed descriP~on of DTTL and its member firms.

IMEXPHARM PHARMACEUTICAL JOINT STOCK COMPANY FORM B 02-0NNo.4 Street 30/4, Cao Lanh City Issued under Circular No.200/2014/TT-BTCDong Thap Province, Vietnam dated 22 December 2014 of the Ministry of Finance

.-- BALANCE SHEETAs at 31 December 2016

Unit: VND..-- ASSETS Codes Notes Closing balance Opening balance

A. CURRENTASSETS 100 721,079,359,147 744,701,467,114

I. Cash and cash equivalents 110 5 100,127,453,686 87,841,659,4601. Cash 111 100,127,453,686 42,841,659,4602. Cashequivalents 112 45,000,000,000

II. Short-term financial investments 120 15,392,915,260 103,568,325,2601. Trading securities 121 6 6,235,578,160 6,619,485,680.- 2. Provisionfor impairment

of trading securities 122 6 (2,842,662,900) (3,051,160,420)3. Held-to-maturity investments 123 7 12,000,000,000 100,000,000,000

III. Short-term receivables 130 367,177,121,542 302,541,396,6501. Short-term trade receivables 131 8 226,338,284,023 228,893,207,1432. Short-term advancesto suppliers 132 9 121,056,182,137 54,729,704,6533. Other short-term receivables 136 10 35,082,573,351 33,626,931,1814. Provisionfor short-term doubtful

debts 137 11 (15,299,917,969) (14,708,446,327),.--IV. Inventories 140 12 234,563,410,070 245,718,867,225

,.-. 1. Inventories 141 235,661,420,036 246,410,602,9482. Provisionfor devaluation of

inventories 149 (1,098,009,966) (691,735,723)

V. Other short-term assets 150 3,818,458,589 5,031,218,5191. Short-term prepayments 151 13 449,584,191 519,468,1222. Valueadded tax deductibles 152 2,495,941,189 3,707,500,7983. Taxesand other receivables

~from the State budget 153 14 872,933,209 804,249,599 ./'

,.... B. NON-CURRENTASSETS 200 434,765,676,610 348,013,281,318 '1JI. Long-term receivables 210 80,244,740 76,244,740

/~r- 1. Other long-term receivables 216 80,244,740 76,244,740II. Fixed assets 220 270,023,540,401 263,381,208,167 .~~ .

~ 1. Tangible fixed assets 221 15 199,269,755,019 192,041,437,356..j7

- Cost 222 484,505,024,840 443,128,772,252- Accumulated depreciation 223 (285,235,269,821) (251,087,334,896)

2. Intangible assets 227 16 70,753,785,382 71,339,770,811.-- - Cost 228 88,196,453,094 87,127,046,094- Accumulated amortisation 229 (17,442,667,712) (15,787,275,283)

r- Ill. Long-term assets in progress 240 76,033,490,844 15,229,088,635I 1. Long-term construction in

progress 242 17 76,033,490,844 15,229,088,635~IV. Long-term financial investments 250 60,916,689,150 48,601,654,700

r-- 1. Investments in associates 252 18 49,581,576,700 39,956,986,7002. Equity investments in other

entities 253 19 11,526,668,000 8,826,668,000

r 3. Provisionfor impairment oflong-term financial investments 254 (191,555,550) (182,000,000)

r- V. Other long-term assets 260 27,711,711,475 20,725,085,0761. Long-term prepayments 261 13 27,711,711,475 20,725,085,076

r-I TOTAL ASSETS(270=100+200) 270 1.155,845,035,757 1,092,714,748,432

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

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IMEXPHARM PHARMACEUTICAL JOINT STOCK COMPANY FORM B 02-DNNo.4 Street 30/4, Cao Lanh City Issued under Circular No.200/2014[1T-BTCDong Thap Province, Vietnam dated 22 December 2014 of the Ministry of Finance

BALANCE SHEET (Continued)As at 31 Decemebr 2016

,..-- Unit: VND

RESOURCES Codes Notes Closing balance Opening balancer-

C. LIABILITIES 300 219,928,625,146 185,883,740,216

I. Current liabilities 310 198,130,931,228 156,439,039,6401. Short-term trade payables 311 20 88,702,890,996 56,005,703,2282. Short-term advances from

customers 312 669,447,370 1,982,940,5613. Taxes and amounts payable to

the State budget 313 14 14,452,346,308 13,002,004,785

r-- 4. Payables to employees 314 18,858,730,187 21,957,790,4535. Short-term accrued expenses 315 21 68,530,614,372 41,823,288,5706. Short-term unearned revenue 318 22 12,053,818,688,...-7. Other short-term payables 319 23 2,478,972,181 1,747,203,7108. Bonus and welfare funds 322 4,437,929,814 7,866,289,645

II. long-term liabilities 330 21,797,693,918 29,444,700,5761. Other long-term payables 337 77,000,000 127,000,0002. Scientific and technological

development fund 343 24 21,720,693,918 29,317,700,576

D. EQUITY 400 935,916,410,611 906,831,008,216~ I. Owners' equity 410 25 935,916,410,611 906,831,008,216

1. Owners' contributed capital 411 289,426,460,000 289,426,460,000- Ordinary shares carrying votingrights 411a 289,426,460,000 289,426,460,000

2. Share premium 412 297,713,719,049 297,733,719,0493. Other owners' capital 414 2,420,789,142 2,420,789,1424. Treasury shares 415 (123,600,000)

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5. Investment and development fund 418 254,924,234,920 232,200,344,4676. Retained earnings 421 91,554,807,500 85,049,695,558- Retained earnings accumulated

to the prior year end 421a 395,462,853 140,179,117,.-- "J.- Retained earnings of the currentperiod 421b 91,159,344,647 84,909,516,441,--

TOTALRESOURCES(440 = 300 + 400) 440 1,155,845,035,757 1,092,714,748,432

guyen QUOC DinhDeputy General Director15 March 2017

Duong Hoang VuPreparer

Tran Hoai HanhChief Accountant

The accompanying notes are an integral part of these financial statements4

IMEXPHARM PHARMACEUTICAL JOINT STOCK COMPANY FORM B 02-DNNo.4 Street 30/4, Cao Lanh City Issued under Circular No.200/2014/TT-BTCDong Thap Province, Vietnam dated 22 December 2014 of the Ministry of Finance

roo- INCOME STATEMENTFor the year ended 31 December 2016

Unit: VND,.....

ITEMS Codes Notes Current year Prior year,.....

1. Gross revenue from goods sold andservices rendered 01 28 1,058,636,217,384 1,012,732,462,485

2. Deductions 02 28 48,290,039,079 48,413,617,9693. Net revenue (10=01-02) 10 28 1,010,346,178,305 964,318,844,5164. Cost of sales 11 29 605,293,119,156 581,059,144,4975. Gross profit (20=10-11) 20 405,053,059,149 383,259,700,019,..- 6. FinancialIncome 21 31 9,095,901,535 17,837,370,5437. Financialexpenses 22 32 12,235,695,127 15,230,727,129

- In which: Interest expense 23 55,154,439 605,820,6928. Sellingexpenses 25 33 203,874,154,194 193,149,502,7509. General and administration expenses 26 33 71,262,508,964 72,788,824,68810. Operating profit

(30=20+(21-22)-(25+26) ) 30 126,776,602,399 119,928,015,99511. Other Income 31 34 1,600,144,255 932,830,347

r+- 12. Other expenses 32 35 1,860,688,559 2,182,318,73013. Lossfrom other activities (40=31-32) 40 (260,544,304) (1,249,488,383)14. Accountingprofit before tax

(50=30+40) 50 126,516,058,095 118,678,527,61215. Current corporate income tax expense 51 36 25,356,713,448 25,769,011,17116. Net profit after corporate income tax 60 101,159,344,647 92,909,516,44117. Basicearnings per share 70 37 3,076 2,825



yen Quoc Dinh~=='f eputy General Director

15 March 2017


IMEXPHARM PHARMACEUTICALJOINT STOCKCOMPANY FORM B 03-DNNo.4 Street 30/4, Cao Lanh City Issued under Circular No.200/2014/TT-BTCDong Thap Province, Vietnam dated 22 December 2014 of the Ministry of Finance

CASH FLOW STATEMENTFor the year ended 31 December 2016

ITEMS

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I. CASH FLOWS FROM OPERATING ACTIVITIES1..Profit before tax2. Adjustments for:Depreciation and amortisationProvisionsForeign exchange loss/(gain)Gain from investing activitiesInterest expense for advances from customersScientific and technological development fund3. Operating profit before movements in workingcapitalIncrease in receivablesDecrease in InventoriesDecrease in accounts payableIncrease in prepaid expensesDecrease, increase in trading securitiesInterest paidCorporate income tax paidOutflows for Scientific and technological developmentfundOther cash outflows

Net cash generated by operating activities

II. CASH FLOWS FROM INVESTING ACTIVITIES1. Acquisition of fixed assets and Investment in

construction in progress2. Proceeds from sale, disposal of fixed assets3. Cash outflow for lending4. Cash recovered from lending5. Investments in other entities6. Interest earned, dividends and profits receivedNet cash used in investing activities

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III. CASH FLOWS FROM FINANCING ACTIVITIES1. Proceeds from owners' contributed capital2. Buy-back of Issued shares3. Dividends and profits paidNet cash (used in)/generated by financingactivities

Net decrease in cash during the year(50=20+30+40)Cash and cash equivalents at the beginning ofthe year

Effects of changes in foreign exchange ratesCash and cash equivalents at the end of the year(70=50+60+61)



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Codes

01.

020304050607

0809101112131415

161720

21

222324252730

313236

40

50

60

70

Current year

1.26,51.6,058,095

37,320,990,534798,803,915966,230,615

(7,950,716,023)55,154,439

14,000,000,000

1.71.,706,521.,575

(8,928,274,802)10,749,182,912

(25,111,605,021)(6,916,742,468)

383,907,520(55,154,439)

(22,380,008,319)

(14,000,000,000)(20,797,176,903)84,650,650,055

(103,904,028,053)

1,351,000,000(12,000,000,000)100,000,000,000(12,324,590,000)

12,536,832,829(1.4,340,785,224)

(123,600,000)(57,885,292,000)

(58,008,892,000)

12,300,972,831

87,841,659,460

61 (15,178,605)

Unit: VND

Prior year

1.1.8,678,527,61.2

38,402,557,0935,909,837,945(255,283,736)

(13,966,939,106)605,820,692

13,000,000,000

1.62,374,520,500

(67,603,937,266)49,188,296,195

(36,890,804,770)(8,856,776,311)

(18,750,000)(605,820,692)

(26,090,729,363)

(13,000,000,000)(13,696,525,838)44,799,472,455

(75,389,386,749)

584,545,454(100,000,000,000)

III NICONGHNHI~aollET I~~--=

100,127,453,686

(2,373,500,000)8,679,738,858

(1.68,498,602,437)

85,087,485,440

(52,096,762,800)

32,990,722,640

(90,708,407,342)

178,550,050,326

16,476

87,841,659,460

Nguyen Quoc DinhDeputy General Director15 March 2017


IMEXPHARM PHARMACEUTICAL JOINT STOCK COMPANY FORM B 09-DNNO.4 Street 30/4, Cao Lanh City Issued under Circular No.200/2014/TT-BTCDong Thap Province, S.R Vietnam dated 22 December 2014 of the Ministry of Finance

NOTES TO THE FINANCIAL STATEMENTSThese notes are an integral part of and should be read in conjunction with the accompanying financial statements

1. GENERAL INFORMATIONStructure of ownership

Imexpharm Pharmaceutical Joint Stock Company (the "Company"), formerly known asDong Thap Pharmaceautical Union incorporated under Decision No. 284/TCCQ dated 28September 1983 issued by the Health Department of Dong Thap Province, wastransformed from a state enterprise into a joint stock company under BusinessRegistration Certificate No. 1400384433 dated 01 August 2001 first issued by theDepartment of Planning and Investment of Dong Thap Province and subsequentamendments certificates thereafter with the latest amendment (the twenty-fourthamendment) dated 06 March 2017. The Company's stocks are listed in Ho Chi Minh StockExchange under Decision No. 76/UBCK-GPNYdated 04 December 2006 with code IMP.

The number of employees of the Company as at 31 December 2016 was 1,020 (as at 31December 2015: 1,012).

Principal activities

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The principal activities of the Company are manufacturing pharmaceutical products,processing pharmaceutical materials, trading, importing and exporting pharmaceuticalproducts, medical equipment and supplies, chemicals, materials for medicinemanufacturing and packaging, chemicals used for sterilization or disinfection in humans(except for those listed under Point A, Part II, Appendix No. 04 accompanying DecisionNo. 10/2007/QD-BTM dated 21 May 2007 issued by Ministry of Trade, currently known asMinistry of Industry and Trade); other activities include trading cosmetics; growingtraditional medicines; trading foods, functional foods, beverages, alcoholic drinks, fizzydrinks; manufacturing milks; financial activities; producing functional foods, nutritionalfood; providing storage system services for medicine, pharmaceutical materials; retailingmedicines, medical equipment, cosmetics and hygiene products in specialized stores.

Normal production and business cycle

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The Company's normal production and business cycle is carried out for a time period of12 months or less.

Disclosure of information comparability in the financial statements

Comparative figures are the figures of the audited financial statements for the year ended31 December 2015.

2. ACCOUNTING CONVENTION AND FINANCIAL YEAR.--Accounting convention

The accompanying financial statements, expressed in Vietnam Dong ("VND"), areprepared under the historical cost convention and in accordance with VietnameseAccounting Standards, accounting regime for enterprises and legal regulations relating tofinancial reporting.

The accompanying financial statements are not intended to present the financial position,results of operations and cash flows in accordance with accounting principles andpractices generally accepted in countries and jurisdictions other than Vietnam.

Financial year

The Company's financial year begins on 01 January and ends on 31 December.

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IMEXPHARM PHARMACEUTICAL JOINT STOCK COMPANYNOTES TO THE FINANCIAL STATEMENTS (Continued)

3. ADOPTION OF NEW ACCOUNTING GUIDANCE

FORM B 09-DN

On 21 March 2016, the Ministry of Finance issued Circular No. 53/2016/TT-BTC ("Circular53/1) amending and supplementing certain articles of Circular 200/2014/TT-BTC dated 22December 2014 of the Ministry of Finance guiding the accounting regime for enterprises.Circular 53 is effective forthe financial years beginning on or after 1 January 2016.Accordingly, the Company has applied Circular 53 in the preparation and presentation ofthe Company's financial statements for the Company's accounting period from 1 January2016 to 31 December 2016. However, the adoption of Circular 53 does not havesignificant impact on the comparability of the figures in the Company's financialstatements.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies, which have been adopted by the Company in thepreparation of these financial statements, are as follows:

Estimates

The preparation of financial statements in conformity with Vietnamese AccountingStandards, accounting regime for enterprises and legal regulations relating to financialreporting requires the Board of General Directors to make estimates and assumptionsthat affect the reported amounts of assets, liabilities and disclosures of contingent assetsand liabilities at the date of the financial statements and the reported amounts ofrevenues and expenses during the financial year. Although these accounting estimatesare based on the Board of General Directors' best knowledge, actual results may differfrom those estimates.

Financial instruments

Initial recognition

Financial assets: At the date of initial recognition, financial assets are recognized at costplus transaction costs that are directly attributable to the acquisition of the financialassets. Financial assets of the Company comprise cash and cash equivalents, trade andother receivables and short-term financial investments.

Financial liabilities: At the date of initial recognition, financial liabilities are recognized atcost plus transaction costs that are directly attributable to the issue of the financialliabilities. Financial liabilities of the Company comprise trade and other payables andaccrued expenses.

Subsequent measurement after initial recognition

Currently, there are no requirements for the subsequent measurement of the financialinstruments after initial recognition.

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand, demand deposits and short-term,highly liquid investments that are readily convertible to known amounts of cash andwhich are subject to an insignificant risk of changes in value.

Financial investments

Trading securities

Trading securities are those the Company holds for trading purpose. Trading securitiesare recognized from the date the Company obtains the ownership of those securities andinitially measured at the fair value of payments made at the transaction date plus directlyattributable transaction costs.

In subsequent periods, investments in trading securities are measured at cost lessprovision for impairment of such investments.

Provision for impairment of investments in trading securities is made in accordance withprevailing accounting regulations.

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IMEXPHARM PHARMACEUTICAL JOINT STOCK COMPANYNOTES TO THE FINANCIAL STATEMENTS (Continued) FORM B 09-0N

Held-to-maturity investments

Held-to-maturity investments comprise investments that the Company has the positiveintent or ability to hold to maturity, including term deposits with the terms over 3months. Post-acquisition interest income from held-to-maturity investments is recognizedin the income statement on accrual basis.

Investments in associates

An associate is an entity over which the Company has significant influence and that isneither a subsidiary nor an interest in joint venture. Significant influence is the power toparticipate in the financial and operating policy decisions of the investee but not controlor joint control over those policies.

Interests in associates are initially recognized at cost including acquisition price and directtransaction cost (if any). The Company's share of the net profit of the investee afteracquisition is recognized in the income statement. Other distributions received other thansuch profit share are deducted from the cost of the investments as recoverable amounts.

Investments in associates are carried in the balance sheet at cost less provision forimpairment of such investments (if any). Provisions for impairment of investments inassociates are made in accordance with Circular No. 228j2009m-BTC dated 7 December2009 issued by the Ministry of Finance on "Guiding the appropriation and use ofprovisions for devaluation of inventories, loss of financial investments, bad debts andwarranty for products, goods and construction works at enterprises", Circular No.89j2013m-BTC dated 28 June 2013 by the Ministry of Finance amending andsupplementing Circular No. 228j2009m-BTC and prevailing accounting regulations.

Equity investments in other entities

Equity investments in other entities represent the Company's investments to the entitieswhich the Company has no control, joint control or significant influence.

Equity investments in other entities are carried at cost less provision for impairment.Provisions for impairment of investments in other entities are made in accordance withCircular No. 228j2009m-BTC dated 7 December 2009 issued by the Ministry of Financeon "Guiding the appropriation and use of provisions for devaluation of inventories, loss offinancial investments, bad debts and warranty for products, goods and constructionworks at enterprises", Circular No. 89j2013m-BTC dated 28 June 2013 by the Ministryof Finance amending and supplementing Circular No. 228j2009m-BTC and prevailingaccounting regulations.

Receivables

Receivables represent the amounts recoverable from customers or other debtors and arestated at book value less provision for doubtful debts.

Provision for doubtful debts is made for receivables that are overdue for six months ormore, or when the debtor is in dissolution, in bankruptcy, or is experiencing similardifficulties and so may be unable to repay the debt.

Inventories

Inventories are stated at the lower of cost and net realisable value. Cost comprises directmaterials and where applicable, direct labour costs and those overheads that have beenincurred in bringing the inventories to their present location and condition. Cost iscalculated using the weighted average method. Net realisable value represents theestimated selling price less all estimated costs to completion and costs to be incurred inmarketing, selling and distribution.

The evaluation of necessary provision for inventory obsolescence follows currentprevailing accounting regulations which allow provisions to be made for obsolete,damaged, or sub-standard inventories and for those which have costs higher than netrealisable values as at the balance sheet date.

9


Tangible fixed assets and depreciation

Tangible fixed assets are stated at cost less accumulated depreciation. The costs ofpurchased tangible fixed assets comprise their purchase prices and any directlyattributable costs of bringing the assets to their working condition and location for theirintended use.

Tangible fixed assets are depreciated using the straight-line method over the followingestimated useful lives:

Buildings and structuresMachinery and equipmentMotor vehiclesOffice equipment

10 - 256 - 156 - 10

3-8

Loss or gain resulting from sales and disposals of tangible fixed assets is the differencebetween profit from sales or disposals of assets and their residual values and isrecognised in the income statement.

Leasing

Leases where substantially all the rewards and risks of ownership of assets remain withthe leasing company are accounted for as operating leases. Rentals payable underoperating leases are charged to the income statement on a straight-line basis over theterm of the relevant lease.

Intangible assets and amortization

Intangible assets represent land use rights, copyright and computer software that arestated at cost less accumulated amortization. Indefinite land use rights are not amortizedin accordance with prevailing regulations. Definite land use rights are amortized using thestraight-line method over the duration specified in the land use right certificate. Copyrightand computer software are amortized using the straight-line method over 3 years.

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Construction in progress

Properties in the course of construction or production for administrative purposes arecarried at cost. Cost includes professional fees, and for qualifying assets and other costsdealt with in accordance with the Company's accounting policy. Depreciation of theseassets, on the same basis as other assets, commences when the assets are ready fortheir intended use.

Prepayments

Prepayments are expenses which have already been paid but relate to results ofoperations of multiple accounting periods, including land rentals, store rental and othertypes of prepayments.

Prepaid land rentals are charged to the income statement using the straight-line methodover the lease term.

Other types of long-term prepayments comprising store rental are allocated to theincome statement using the straight-line method over the lease term.

Payable provisions

Payable provisions are recognized when the Company has a present obligation as a resultof a past event, and it is probable that the Company will be required to settle thatobligation. Provisions are measured at the Board of General Directors' best estimate ofthe expenditure required to settle the obligation as at the balance sheet date.

Unearned revenue

Unearned revenue is the revenue corresponding to the value of goods and services to beprovided free of charge or subject to sales discount under the traditional customerprogram. The Company recognizes unearned revenue in accordance with the portion ofits liabilities that might be incurred in the future.

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IMEXPHARM PHARMACEUTICAL JOINT STOCK COMPANYNOTES TO THE FINANCIAL STATEMENTS (Continued) FORM B 09-DN

Revenue recognition

Revenue from the sale of goods is recognized when all five (5) following conditions aresatisfied:

(a) the Company has transferred to the buyer the significant risks and rewards ofownership of the goods;

(b) the Company retains neither continuing managerial involvement to the degree usuallyassociated with ownership nor effective control over the goods sold;

(c) the amount of revenue can be measured reliably;(d) it is probable that the economic benefits associated with the transaction will flow to

the Company; and(e) the costs incurred or to be incurred in respect of the transaction can be measured

reliably.

Revenue of a transaction involving the rendering of services is recognized when theoutcome of such transactions can be measured reliably. Where a transaction involving therendering of services is attributable to several periods, revenue is recognized in eachperiod by reference to the percentage of completion of the transaction at the balancesheet date of that period. The outcome of a transaction can be measured reliably when allfour (4) following conditions are satisfied:

(a) the amount of revenue can be measured reliably;(b) it is probable that the economic benefits associated with the transaction will flow to

the Company;(c) the percentage of completion of the transaction at the balance sheet date can be

measured reliably; and(d) the costs incurred for the transaction and the costs to complete the transaction can

be measured reliably.

Interest income is accrued on a time basis, by reference to the principal outstanding andat the applicable interest rate.

Dividend income from investments is recognized when the Company's right to receivepayment has been established.

Revenue arising from the traditional customer program is recognized as the total amountreceivable or collected minus the fair value of the goods or services to be provided free ofcharge or subject to sales discount. The value of the goods or services to be provided freeof charge or subject to sales discount is recognized as unearned revenue. Upon theprogram end, if the customers fail to meet the prescribed conditions and are not entitledto free goods or services of charge or sales discount, the unearned revenue shall betransferred to the revenue from goods sold and services rendered in the year.

When a customer meets the prescribed conditions under the program and in case theCompany directly provides goods or services free of charge or at a discount to thecustomer: the unearned revenue corresponding to the fair value of the goods or servicesto be provided free of charge or a discount to the customer is recognized as revenue fromgoods sold and services rendered when the customer has received the goods or servicesfree of charge or at a discount as prescribed.

When a customer meets the prescribed conditions under the program and in case thethird party is obliged to provide goods or services free of charge or at a discount to thecustomer: if there is no agency agreement between the Company and the third party,when the third party provides goods or services free of charge or at a discount to thecustomer, the unearned revenue is transferred to the revenue goods sold and servicesrendered. If if there is an agency agreement between the Company and the third party,only the difference between the relevant unearned revenue recorded and the amountpayable to the third party is recognized as revenue. The amount payable to the thirdparty is treated as a payable.

Foreign currencies

Transactions arising in foreign currencies are translated at exchange rates ruling at thetransaction date. The balances of monetary items denominated in foreign currencies as atthe balance sheet date are retranslated at the exchange rates on the same date.Exchange differences arising from the translation of these accounts are recognized in theincome statement.

11

HI NHAONG 1HHIEIIH.!-OIT~T NA


Scientific and technological development fund

Scientific and technological development fund is appropriated to generate fund forscientific and technological development activities of the Company. The fund is set up onthe basis of maximum 10% of taxable income before corporate income tax calculationand recognized in operation cost during the year.

Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differsfrom profit before tax as reported in the income statement because it excludes items ofincome or expense that are taxable or deductible in other periods (including loss carriedforward, if any) and it further excludes items that are never taxable or deductible.

Deferred tax is recognized on significant differences between carrying amounts of assetsand liabilities in the financial statements and the corresponding tax bases used in thecomputation of taxable profit and is accounted for using balance sheet liability method.Deferred tax liabilities are generally recognized for all temporary differences and deferredtax assets are recognized to the extent that it is probable that taxable profit will beavailable against which deductible temporary differences can be utilized.Deferred tax is calculated at the tax rates that are expected to apply in the period whenthe liability is settled or the asset realized. Deferred tax is charged or credited to profit orloss, except when it relates to items charged or credited directly to equity, in which casethe deferred tax is also dealt with in equity.

Deferred tax assets and liabilities are offset when there is a legally enforceable right toset off current tax assets against current tax liabilities and when they relate to incometaxes levied by the same tax authority and the Company intends to settle its current taxassets and liabilities on a net basis.

The determination of the tax currently payable is based on the current interpretation oftax regulations. However, these regulations are subject to periodic variation and theirultimate determination depends on the results of the tax authorities' examinations.

Other taxes are paid in accordance with the prevailing tax laws in Vietnam.

Funds approriation

Investment and development fund

Investment and development fund is appropriated from the profit after tax of theCompany as proposed by the Board of Management and approved by shareholders at theGeneral Meeting of Shareholders. This fund is approriated for expansion or investmentactivities of the Company.

Bonus and welfare funds

Bonus and welfare funds are appropriated from the profit after tax of the Company asproposed by the Board of Management and approved by shareholders at the GeneralMeeting of Shareholders. This fund is approriated for reward and incentives, benefits andraising general welfare for the Company's management and public employees.

12


5. CASH AND CASH EQUIVALENTSClosing balance

~

Cash on handCash in bankCash equivalents

2,879,967,66697,247,486,020

100,127,453,686

6. TRADING SECURITIESClosing balance

FORM B 09-DN

Opening balance~

1,584,162,66341,257,496,79745,000,000,000

87,841,659,460

Opening balanceCost Fair ValueVND VND

ProvisionVND

ProvisionVND

Cost Fair ValueVND VND

Mekophar Chemical Pharmaceutical 5,589,637,900 2,986,440,000 2,603,197,900 5,589,637,900 2,850,600,000 2,739,037,900Joint-Stock CompanyBach Tuyet Cotton Corporation 239,465,000 239,465,000 239,465,000 239,465,000DHG Pharma Corporation 239,510,000 239,510,000 239,510,000 239,510,000Domesco Mediad Import·Export

383,907,520 311,250,000 72,657,520Joint'stock CorporationOPC Pharmaceutial Joint Stock 166,965,260 166,965,260 166,965,260 166,965,260

6,235,578,160 3,392,915,260 2,842,662,900 6,619,485,680 3,568,325,260 3,051,160,420

7. HELD-TO-MATURITY INVESTMENTS.--

Held-to-maturity investments at 31 December 2016 comprise term deposits with theterms 12 months at Sacombank Dong Thap Branch, of which interest rate is 6.9%annually (as 31 December 2015: 6% - 7% annually).

8. SHORT-TERM TRADE RECEIVABLESClosinq balance

~

..- Agimexpharm PharmaceuticalJoint StockCompanyS.Pharm PharmaceuticalJoint StockCompanyReceivablesfrom other customers

11,485,487,108

1,925,733,834212,927,063,081

226,338,284,023

Openinc balanceVND

10,905,006,141

1,884,767,829216,103,433,173

228,893,207,143

Provision for doubtful debts are made in accordance with Circular 228j2009(TT-BTC andare presented in Note 11.

9. SHORT-TERM ADVANCES TO SUPPLIERSClosing balance

VND

Trenwell LLCDong Thap Hydraulic JSCHoa Viet Mechanical RefrigerationElectrical Co, Ltd.Romaco Pharmatechnik GmbhGreensol Co, Ltd.APS Electrical Engineering Co, Ltd.Novacat Farma SAT&T Trading Co, Ltd.Rieckermann GmbhJoy-Maitreya Int'I Ltd.Dong Thap Hydraulic construction JSCNhat Hoa Industrial Construction& Trading Co,Ltd.Thien Long Dien Co, Ltd.Others

1,791,350,0007,500,000,000

4,036,734,800

2,548,207,200

6,029,317,5002,105,015,000

46,738,971,78521,356,168,625

28,950,417,227121,056,182,137

13

Opening balanceVND

9,220,750,000

7,322,378,4003,723,408,0001,592,629,5001,534,500,000

642,840,000

17,100,000,000

2,402,992,0001,525,691,4369,664,515,317

54,729,704;653


10. OTHER SHORT-TERM RECEIVABLES

-Advances to employeesDeposits and mortgagesOthersOutside personal income tax receivables

Closing balanceVND

12,672,021,22990,000,000

22,320,552,122

35,082,573,351

11. PROVISION FOR SHORT-TERM DOUBTFUL DEBTSClosing balance Opening balance

Cost Provision Recoverable amount Cost Provision Recoverable amount

'it:lQ '&'lL '&'lL 'it:lQ '&'lL 'mI2.

Cal Nuoc Hospital 674,890,843 518,992,139 155,898,704Thuan Hea Store 924,204,255 644,430,419 279,773,836 924,204,255 459,589,568 464,614,687Binh Tan Hospital 169,412,040 38,916,612 130,495,428Ministry of Health 889,560,000 889,560,000 889,560,000 889,560,000DTN Pharma Co., Ltd. 744,042,572 372,021,286 372,021,286 844,042,572 253,212,772 590,829,800Thien Kim II Store 728,917,996 364,458,998 364,458,998 951,271,243 249,155,314 702,115,929Store No. 64 1,167,648,507 817,353,955 350,294,552 1,167,648,507 583,824,254 583,824,253Khanh Son Health Center(Khanh Heal 1,915,188,437 1,522,383,709 392,804,728 1,765,547,419 1,061,198,523 704,348,896Others 26,828,200,525 10,689,709,602 16,138,490,923 72,362,314,618 10,653,997,145 61,708,317,473

33,758,244,732 15,299,917,969 18,458,326,763 79,787,447.497 14,708,446,327 65,079,001.170

12. INVENTORIES

-.....

-Closing balance

FORM B 09-DN

Opening balanceVND

11,479,901,549567,789,401

21,332,173,921247,066,310

33,626,931,181

Cost~

Provision~

Opening balanceCost Provision~ ~

.--Goods in transitRaw materialsWork in progressFinished coedsMerchandisesShort-term spare parts

23,200,408,491110,381,978,623 (1,098,009,966)19,133,768,11670,599,456,51310,090,513,6172,255,294,676

4,713,418,995121,611,409,123 (691,735,723)15,759,932,96299,261,151,0853,628,676,3621.436,014.421

13. PREPAYMENTS

235,661,420,036 (1,098,009,966)

a. Short-term prepaymentsAdvertisinq expenseHouse rentalOthers

b. Long-term prepaymentsLand rentalOffice furnitureBranch 2 - Ho Chi Minh City renovation expenseInsurance premium for fight, explosionand risksPMU3 Project Binh Duonq FactoryTools and suppliersRenovation expense of Non workshop's coolingsystemVinh Loc Hlqh-tech FactoryMaintenance fee of xuono Non BetalactamConsulting fee for setting up the payroll systemBinh Duong High-Tech Factory ProjectFees for monitoring and speeding updocumentation verificationInsurance fee for CEFA Factory in Binh DuongOthers

-

246,410,602,948 (691,735,723)

Closing balanceVND

449,584,191449,584,191

12,689,559,5915,034,373,422

655,426,316

117,680,6332,648,179,120

740,564,757

558,223,5551,080,000,000

289,443,589380,444,444

2,220,000,000

366,161,617149,267,324782,387 ,107

27,711,711,475

14

Opening balanceVND

115,135,62272,000,000

332,332,500519,468,122

13,005,710,4693,536,429,3701,370,436,841

349,723,9161,605,094,150

665,690,330

192,000,00020,725,085,076


r-'TAXES AND OTHER RECEIVABLES FROM/PAYABLES TO THE STATE BUDGET14.

- Payable PaidOpening balance during the year during the year Closing balance

VND VND VND VND

a. ReceivablesPersonal income tax 289,034,099 5,662,861,618 6,246,760,728 872,933,209Others 515,215,500 3,571,748,798 3,056,533,298

804,249,599 9,234,610,416 9,303,294,026 872,933,209b. PayablesValue added tax 5,680,683,487 18,660,426,369 20,231,423,855 4,109,686,001Corporate income tax 6,629,015,360 25,356,713,448 22,380,008,319 9,605,720,489Personal income tax 692,305,938 5,756,699,263 5,742,425,421 706,579,780Import-export tax 5,089,752,021 5,089,752,021Others 486,355,624 455,995,586 30,360,038

13,002,004,785 55,349,946,725 53,899,605,202 14,452,346,308

15. INCREASES, DECREASES TANGIBLE FIXED ASSETS

Buildings and Machinery and Motor Officestructures equipment vehicles equipment Total

VND VND VND VND VND

COSTOpening balance 171,184,838,095 201,157,818,496 61,523,628,659 9,262,487,002 443,128,772,252Purchases 13,451,311,001 13,159,347,568 7,574,446,673 34,185,105,242Transfer from CIP 9,877,172,534 9,877,172,534Disposals (2,686,025,188) (2,686,025,188)Closing balance 181,062,010,629 214,609,129,497 71,996,951,039 16,836,933,675 484,505,024,840- ACCUMULATED DEPRECIATIONOpening balance 77,821,458,515 130,533,728,987 37,299,582,360 5,432,565,034 251,087,334,896- Charge for the year 8,461,094,447 17,009,117,804 9,113,472,946 2,059,235,419 36,642,920,616Disposals (2,494,985,691) (2,494,985,691)Closing balance 86,282,552,962 147,542,846)91 43,918,069,615 7,491,800,453 285,235,269,821

NET BOOK VALUEClosing balance 94,779.457,667 67,066,282,706 28,078,881.424 9,345,133,222 199.269,755,019

Opening balance 93,363,379.580 70,624.089,509 24,224,046,299 3,829,921,968 192,041.437,356

)~

~IUHANrsM'- {!YJ

The cost of the Company's tangible fixed assets as at 31 December 2016 includes VND ~111,260,219,611 (as at 31 December 2015: VND 110,734,209,529) of assets that havebeen fully depreciated but are still in use.

16. INCREASES, DECREASES INTANGIBLE ASSETS

Land use rights Copyright Computer software TotalVND VND VND VND

COSTOpening balance 74,049,435,195 744,712,823 12,332,898,076 87,127,046,094Purchases 1,069,407,000 1,069,407,000Closing balance 74,049,435,195 744,712,823 13,402,305,076 88,196,453,094

ACCUMULATED AMORTISATIONOpening balance 3,963,997,465 744,712,823 11,078,564,995 15,787,275,283Charge for the year 528,533,000 1,126,859,429 1,655,392,429Closing balance 4,492,530,465 744,712,823 12,205,424,424 17,442,667,712

NET BOOK VALUEClosing balance 69,556,904,730 1,196,880,652 70,753,785,382

Opening balance 70,085,437,730 1,254,333,081 71,339,770,811

15

IMEXPHARM PHARMACEUTICAL JOINT STOCK COMPANYNOTESTO THE FINANCIAL STATEMENTS(Continued)

17. LONG-TERM CONSTRUCTION IN PROGRESS

FORM B 09-0N

---(

Closing balance'iNQ

Opening balance'iNQ

1 •

Sa Ria - Vunq Tau branch's officeCan Tho branch's officePurchase of fixed assetsSinh Dinh branch's officeSinh Duong high-tech pharmaceutical factoryOthers

1,563,795,45441,190,469,937

731,272,7271,563,795,4545,951,535,000

102,374,5456,880,110,90933,096,709,090

182,516,36376,033.490,844 15,229,088,635

18. INVESTMENTS IN ASSOCIATES

Closing balance Opening balanceCost ProvisionVND VND

Cost ProvisionVND VND

Gia Dai PharmaceuticalCompany LimitedAgimexpharm PharmaceuticalJoint Stock CompanySpharm Pharmaceutical JointStock Compay

Dong Thap Muoi ConservationResearch and Development ofMedicinal

(182,000,000) 182,000,000 (182,000,000)182,000,000

36,044,396,700 26,419,806,700

11,015,180,000 11,015,180,000

2,340,000,000 2,340,000,000

39,956,986,700 (182,000,000)49,581,576,700 (182,000,000)

Name of associates

Place ofIncorporationand operation

Proportion ofownership Proportion of voting

interest power held Principal activity- Gia Dal Pharmaceutical CompanyLimited

Agimexpharm Pharmaceutical JointStock Company

Spharm Pharmaceutical Joint StockCompany

Dong Thap Muoi ResearchConservation and DevelopmentPharmaceutical Joint Stock Company

20.00%

Ho Chi Minh 26.00% 26.00% Manufacturing and tradingpharmaceutical products

33.99% 33.99% Manufacturing and tradingpharmaceutical products

An Giang

Soc Trang 29.48% 29.48% Manufacturing and tradingpharmaceutical products

20.00% Researching, conservingand developing traditionalmedicine

Dong Thap..-

19. EQUITY INVESTMENTS IN OTHER ENTITIES

Closing balance~

Opening balance~

- 114,550,000581,428,000503,000,000127,690,000

114,550,000581,428,000503,000,000127,690,000

Central Pharmaceutical Joint Stock Company - No.25lV.Pharm Pharmaceutical Joint Stock CompanyVldlpha Central Pharmaceutical Joint Stock CompanySaigon Thuong Tin Commercial Joint Stock BankDanang Pharmaceutical Medical Equipment Joint StockCompany 7,500,000,00010,200,000,000

11,526,668,000 8,826,668,000-

--16--


20. SHORT-TERM TRADE PAYABLES- Closing balanceVND

a) Short-term trade payables:Novartis (Singapore) PTEAlcapharm B.VOther suppliers

37,446,394,83314,344,682,40036,621,175,23388.412,252.466

b) Trade payables to related partiesAgimexpharm Pharmaceutical Joint Stock CompanyS.pharm Pharmaceutical Joint Stock Company 290,638,530

290.638,530

88,702,890,996

FORM B 09-DN

Opening balanceVND

18,954,189,2102,020,653,800

34,463,795,86855.438,638,878

567,064,350

567 ,064,350

56,005,703,228

All short-term trade payable balances were able to be paid off as at 31 December 2016and 31 December 2015.

21. SHORT-TERM ACCRUED EXPENSES

Closlnc balance~

Royalty feeAccrued selllnq expensesOthers

14,918,613,99843,794,265,351

9,817,735,02368,530,614,372

22. SHORT-TERM UNEARNED REVENUE

Ooenino balance~

12,427,561,29026,200,101,455

3,195,625,82541,823,288,570

Short-term unearned revenue is the revenue corresponding to the value of goods andservices subjected to discounts for customers in the traditional customer programs thatthe Company has not carried out at the end of the financial year.

23. OTHER SHORT-TERM PAYABLES

- Closinq balance~

Payables to the State budqetShort-term deposits receivedOthers

856,381,254100,000,000

1.522,590,9272,478,972,181

24. SCIENTIFIC AND TECHNOLOGICAL DEVELOPMENT FUND

Current year~

Openlno balanceAdditionsUtilisationClosing balance

29,317,700,57614,000,000,000

(21.597·006,658)21,720,693,918

---

17

Openlnq balance~

479,868,59450,000,000

1.217,335.1161,747,203,710

Prior year~

27,497,786,95613,000,000,000

(11.180,086,380)29,317,700,576

~;~CHI!cO~

',CHNHDelVIE'~/ - T~

rr IMEXPHARM PHARMACEUTICAL JOINT STOCK COMPANY

NOTES TO THE FINANCIAL STATEMENTS (Continued)

25. OWNER'S EQUITY

FORM B 09-0N

rr

Details of the Company's par value and shares are as folows:

Closing balance __ ...;;O;.,l;p;..;e;.;..n;.;.;in.;.Jgo:..,;;.b,;;;,aI;.;;;a;.;.;n..;.ce,;;;..

Number of authorized sharesNumber of issued and fullypaid sharesNumber of outstanding sharesin circulationTreasury sharesPar value (VND)

28,942,646

28,942,646

28,942,646

28,942,646

28,932,346

10,300

===========1=0'=0=00============1=0='0=0=0

28,942,646

r The Company has one class of ordinary share which carries no right to fixed income withpar value of VND 10,000/share. The shareholders of ordinary shares are entitled toreceive dividends as declared from time to time and are entitled to one vote per share atthe Company's shareholders' meetings. All shares rank equally with regard to theCompany's residual assets.r

r Actual charter capital contributed by the shareholders as at 31 December 2016 and 31December 2015 was as follows:

Closing balance Opening balanceShare % Capital Share % Capital

VND VND

Vietnam Pharmaceutial Corpoaration 6,874,447 23.75% 68,744,470,000 6,874,447 23.75% 68,744,470,000 ==:::::::

Balestrand Limited 2,631,160 9.09% 26,311,600,000 2,631,160 9.09% 26,311,600,000 JO-oo--.;::;Franklin Templeton Investment - lHANITempleton Frontier Markets Fund 2,456,820 8.49% 24,568,200,000 2,456,820 8.49% 24,568,200,000 :G TYKwe Beteiligungen AG 2,382,130 8.23% 23,821,300,000 2,117,000 7.31% 21,170,000,000 ;EMHil'Pha No Pharmaceutical Joint Stock DinCompany 1,764,029 6.09% 17,640,290,000 1,764,029 6.09% 17,640,290,000others 12.834.060 44.34% 128.340.600.000 13.099.190 45.26% 130.991,900.000 r HAl

----<28,942,646 100% 289.426,460.000 28.942.646 100% 289.426.460,000

~=--According to Resolution No. 20/DHQT-IMEX dated 26 April 2016 by Annual GeneralShareholder's meeting of Imexpharm Pharmaceutical Joint Stock Company, the Generalshareholders approved the issuance of 10,129,793 shares with the par value is 10,000VND/ share to increase the capital contribution of the owner. In which,

r-,

-a) 1,447,000 shares were issued under the Employee Stock Option Program ("ESOP")

and the Company has been approved by the State Securities Commission of Vietnamin the Official Letter No. 946/UBCK-QLPH on 23 February 2017. The Company hascompleted the issuance of 1,447,000 shares in accordance with the Official Letter No.71/IMEX on the Report of share issuance to the company's employees on 15 March2017.

b) 8,882,793 shares were issued in the form of shares to existing shareholders at a ratioof 10:3 and the Company has been approved by the State Securities Commission ofVietnam in the Official Letter No. 79/GCN-UBCK on 01 December 2016. The Companyhas completed the issuance of 8,662,793 shares in accordance with the Official LetterNo. 44/IMEX on the Report of share issuance to increase share capital on 28 February2017.

18


Details of major shareholders of the Company and the contribution of those shareholdersas of 15 March 2017:

Proportionr--

0/0

,.-... Vietnam Pharmaceutial 22.87Corpoaration

,..-. Pha No Pharmaceutical Joint 8.75Stock Company,-- Franklin Templeton Investment

-Templeton Frontier Markets 8.17.-- FundKWE Beteiligungen AG 7.93- Balestrand Limited 5.87

,-- Others 46.41

Total 100.00..--r-

,......

19

Shares

8,936,781

3,420,508

3,193,866

3,096,769

2,293,237

18,131,278

39,072,439

CapitalVND

89,367,810,000

34,205,080,000

31,938,660,000

30,967,690,000

22,932,370,000

181,312,780,000

390,724,390,000


Movement in owners equity:

Prior year's opening balanceShare issuanceProfit for the yearDividends declaredFund appropriationFund utilizationRemuneration to the Board of ManagementDividend of treasury shareCurrent year's opening balance

Profit for the yearDividends declaredFund appropriationBuy-back of treasury sharesRemuneration to the Board of ManagementOtherCurrent year's closing balance

Owner's contributed Other owner's Investment andcapital Share premium capital Treasury shares development fund

~ VND VND VND ~

263,114,860,000 238,957,833,609 2,420,789,142 211,913,764,388

26,311,600,000 58,775,885,440

19,839,575,511(3,523,432)

450,528,000289,426,460,000 297,733,719,049 2,420,789,142 232,200,344,467

22,723,890,453(123,600,000)

(20,000,000)

FORM B 09-0N

Retained earnings TotalVND ~

80,229,205,106 796,636,452,24585,087,485,440

92,909,516,441 92,909,516,441(52,096,762,800) (52,096,762,800)(34,685,350,209) (14,845,774,698)

(3,523,432)(856,384,980) (856,384,980)(450,528,000)

85,049,695,558 906,831,008,216

101,159,344,647 101,159,344,647(57,885,292,000) (57,885,292,000)(35,842,398,378) (13,118,507,925)

(123,600,000)(926,542,327) (926,542,327)

(20,000,000)91,554,807,500 935,916,410,611

According to Resolution No. 20/NQ-IMEX approved on 26 April 2016 at the General Shareholder's Meeting of Imexpharm Pharmaceutical Joint Stock Company, the2015 profit after tax distribution has been approved as follows:

2,420,789,142 (123,600,000) 254,924,234,920

a) Distribution to the Bonus and welfare fund with the amount of VND 11,118,507,925 (including the temporary distribution of VND 8,000,000,000 in 2015 and theadditional distribution of VND 3,118,507,925 in 2016 as officially approved);

b) Distribution to the Investment and development fund with the amount ofVND 22,723,890,453;c) Remuneration of the Boards of Management and Supervisory due to the achievement of profit target according to Article 11 Clause 25 of the Company Charter

with the amount of VND 926,542,327;d) Declaration of cash dividends with the amount of VND 57,885,292,000 which has been fully paid to shareholders in the year.

289,426,460,000 297,713,719,049

Besides, the temporary distribution of VND 10,000,000,000 from 2016 profit after tax to the Bonus and welfare fund was also approved.

IMEXPHARM PHARMACEUTICAL JOINT STOCK COMPANYNOTES TO THE FINANCIAL STATEMENTS (Continued) FORM B 09-DN...-26. OFF BALANCE SHEET ITEMS

Foreign currency:- Closingbalance OpeningbalanceUnitedStates Dollar (USD) 71,731 2,027Euro(EUR) 485.48 483.53

Bad debts written off:-Closingbalance Openingbalance

~ ~Baddebts written oft 7,722,165.440 7,699.465,202

27. BUSINESS AND GEOGRAPHICAL SEGMENTS

Business segments

The Company's principal activities are to manufacture and purchase materials used forprocessing pharmaceutical products and other products by the Company. Other businessactivities make up minor ratio in total revenue and operating result of Company in thisperiod as well as the previous ones. Hence, the financial information presented in balancesheet as at 31 December 2016 and 31 December 2015 as well as revenues, expensespresented in the income statement for the period from 1 January 2016 to 31 December2016 and previous periods are relevant to principal activities. Consequently, theCompany did not prepare the report by business segment.

28. REVENUECurrent year Prior year

VND VNDSales of goodsSales of exported goods 17,191,991,786 3,706,760,020Sales of manufactured goods 932,039,106,516 829,352,962,453Sales of franchised goods 73,557,498,403 148,263,699,610Other revenues 35,847,620,679 31,409,040,402

1,058,636,217,384 1,012,732,462,485DeductionsSales return (11,470,968,525) (7,147,905,279)Sales discount (36,819,070,554) (41.265,712,690)

(48,290,039,079) (48,413,617,969)1,010,346,178,305 964,318,844,516

29. COST OF SALES- Current year Prior yearVND VND

Cost of exported goods 7,682,541,359 1,792,135,320- Cost of manufactured goods 513,037,598,308 445,373,326,264Cost of franchised goods 52,761,027,276 105,954,897,978- Cost of other sales 31,811,952,213 27,938,784,935

605,293,119,156 581,059,144,497--"'"

21

Geographical segments

The Company's revenue are generated by consumption the finished goods in domestic ~whereas the revenue generated by exporting makes up minor ratio in total revenue and ~operating result of Company for the period from 01 Jannuary 2015 to 31 December 2016 CHINand the previous periods. Consequently, the Company did not prepare the report by CONgeographical segment. 'HNHliHe

lIET'--'~--=

...- IMEXPHARM PHARMACEUTICAL JOINT STOCK COMPANYNOTES TO THE FINANCIAL STATEMENTS (Continued) FORM B 09-DN..-30. OPERATING COST BY NATURE

Current year Prior year- VND VND

Raw materials and consumables 425,711,764,416 529,327,178,927Labour 160,852,359,226 152,473,740,018- Depreciation and amortization 37,320,990,534 38,402,557,093Out-sourced services 72,568,329,577 40,801,227,737.-- Other expenses 183,976,338,561 149,047,807,699

880.429,782,314 910,052,511.474,..-

31. FINANCIAL INCOME

Current year Prior year,.-. Y.NQ Y.NQ

Bank interest 2,785,538,198 9,008,477,569- Foreign exchange gain 1,750,063,026 4,219,245,574Dividend income 4,319,075,000 4,609,647,400...-Others 241,225,311

,..- 9,095,901,535 17,837,370,543

32. FINANCIAL EXPENSES

Current year Prior year~ ~ ~

')O-OGInterest expense 55,154,439 605,820,692 ~Foreign exchange loss 1,584,052,466 3,749,985,083 HANI

!TYReversal of provision for impairment (198,941,970) (266,394,240) ·IIHVtof financial investments ITTPayment discount 10,706,990,114 10,984,402,934Others 88,440,078 156,912,660 NAN

12,235,695,127 15.230.727.129 ----!~:::;;;-

33. SELLING EXPENSES AND GENERALAND ADMINISTRATION EXPENSES

Current year Prior yearY.NQ YNQ

a) General and administration expensesManagement staff expense 17,499,467,305 15,733,053,106Depreciation expenses 5,100,194,946 5,120,187,990Outsourced service expenses 13,455,265,426 10,396,761,059Scientific and technological fund distribution 14,000,000,000 13,000,000,000Other monetary expenses 4,650,789,086 10,997,105,824Others 16,556.792,201 17,541.716.709

71,262,508,964 72,788,824,688

- b) Selling expensesStaff expense 68,948,033,534 68,427,390,992Promotion expenses 6,029,614,098Market research and development expenses 40,546,931,493 32,086,291,067- Others 88,349,575,069 92,635,820,691

203,874,154,194 193,149,502,750--

22

IMEXPHARM PHARMACEUTICAL JOINT STOCK COMPANYNOTESTO THE FINANCIAL STATEMENTS (Continued)- FORM B 09-0N

Basic earnings per share for the year ended 31 December 2016 are calculated based onthe profit attributable to the Company's shareholder for the above fiscal year andestimated figures of bonus and welfare fund will be deducted from profit after tax withthe same rate with year 2015 at the rate 12%. The purpose of this calculation is for thecomparability between figures of two periods because the Company has not had any planfor bonus and welfare fund appropriation from profit after tax of 2016.

-38. OPERATING LEASECOMMITMENTS

Current year~

Minimum lease payments under operatingleases recognized in the income statementfor the year

Prior year~

=========44=4=,9=0=0=,0=00========5=0~0,=38=0=,4=5=5

- At the balance sheet date, the Company had outstanding commitments under non-cancelable operating leases, which fall due as follows:

Current year~

On demand or within one yearIn the second to fifth year inclusiveAfter five years

65,000,00065,000,000

130,000,000 ===~54~7~,~3~0~0,~0~0~0

Prior year~

387,300,000155,000,000

5,000,000

Operating lease payments represent the total rentals payable by the Company for rentingpremises to organize drug stores of some branches in the country.

39. FINANCIAL INSTRUMENTS

Capital risk management

The Company manages its capital to ensure that the Company will be able to continue asa going concern while maximising the return to the owner through the optimization of thedebt and equity balance.

--.-- The capital structure of the Company consists of net debts and equity of shareholders

(comprising owner's contributed captital, share premium, other owner's capital,investment and development fund and retained earnings).

Significant accounting policies

Details of the significant accounting policies and methods adopted (including the criteriafor recognition, the bases of measurement, and the bases for recognition of income andexpenses) for each class of financial asset and financial liability are disclosed in Note 4.

- Categories of financial instrumentsCarrying amount

Closing balance Opening balanceY.NQ VND

Financial assetsCash and cash equivalentsShort-term financial investmentsTrade and other receivablesLong-term financial investments

100,127,453,68615,392,915,260

233,529,162,91660,916,689,150

409,966,221,012

-Financial liabilitiesTrade and other payablesAccrued expenses

91,181,863,17768,530,614,372

159,712,477,549

.--24

87,841,659,460103,568,325,260236,408,035,18848,601,654,700

476,419,674,608

57,752,906,93841,823,288,570

99,576,195,508

,-- IMEXPHARM PHARMACEUTICAL JOINT STOCK COMPANYNOTES TO THE FINANCIAL STATEMENTS (Continued) FORM B 09-0N

- The Company has not assessed fair value of its financial assets and liabilities as at thebalance sheet date since there are no comprehensive guidance under Circular No.210/2009/TT-BTC issued by the Ministry of Finance on 6 November 2009 ("Circular 210")and other relevant prevailing regulations to determine fair value of these financial assetsand liabilities. While Circular 210 refers to the application of International FinancialReporting Standards (IFRS) on presentation and disclosures of financial instruments, itdid not adopt the equivalent guidance for the measurement and recognition of financialinstruments, including application of fair value, in accordance with IFRS.

-Financial risk management objectives

The Company has set up risk management system to identify and assess the risksexposed by the Company and designed control policies and procedures to manage thoserisks at an acceptable level. Risk management system is reviewed on a regular basis toreflect changes in market conditions and the Company's operations.

Financial risks include market risk (including foreign currency risk and price risk), creditrisk and liquidity risk.

Market risk

The Company's activities expose it primarily to the financial risks of changes in foreigncurrency exchange rates and prices. The Company does not hedge these risk exposuresbecause the Board of General Directors assessed that the costs to be incurred to hedgethese risks may exceed the inherent cost due to the fluctuation of the foreign exchangerates and interest rates of these financial instruments.

Foreign currency risk management

The Company undertakes certain transactions denominated in foreign currencies;consequently, exposures to exchange rate fluctuations arise.

The carrying amounts of the Company's foreign currency denominated monetary assetsand monetary liabilities at the end of the period/year are as follows:

Opening balanceVND

36,936,157,4811,194,620,000

Closlnq balanceVND

60,462,317,2231,040,765,739

United States Dollar (USD)Euro (EUR)

Opening balanceVND

45,610,13211,832,463

Closing balanceVND

2,593,574,63911,463,154

LiabilitiesAssets-

-Foreign currency sensitivity analysis

The Company is mainly exposed to the United States Dollar.

The following analysis details the Company's sensitivity to a 3% (2015: 3%) increase anddecrease in Vietnam Dong against United States Dollar. As rate 3% (2015: 3%) is thesensitivity rate used when reporting foreign currency risk internally to the Board ofGeneral Directors and represents the Board of General Directors' assessment of thereasonably possible change in foreign exchange rates. The sensitivity analysis includesonly outstanding foreign currency denominated monetary items and adjusts theirtranslation at the period end for a 3% (2015: 3%) change in foreign currency rates. For a3% (2015: 3%) increase/decrease in United States Dollar against Vietnam Dong, theprofit before tax in the year would decrease/increase by VND 1,736,062,278 (2015: VND1,106,716,420).

-Commodity price risk management

The Company purchases materials, commodities from local and foreign suppliers forbusiness purpose. Therefore, the Company is exposed to the risk of changes in sellingprices of materials, commodities.

Share price risk management

Shares held by the Company are affected by market risks arising from the uncertaintyabout future prices of such shares. The Company manages this risk exposure by settingup investment limits. The Company's Board of Management also assesses and approvesdecisions on share investments such as operating industry, investees, etc. The Companyassesses the share price risk to be immaterial.

-

25


Credit risk-FORM B 09-0N

Credit risk refers to the risk that counterparty will default on its contractual obligationsresulting in financial loss to the Company. The Company has a credit policy in place andthe exposure to credit risk is monitored on an ongoing basis. The Company does not haveany significant credit risk exposure to any counterparty because receivables consist of alarge number of customers, spread across diverse industries and geographical areas.

--Liquidity risk management

The purpose of liquidity risk management is to ensure the availability of funds to meetpresent and future financial obligations. Liquidity is also managed by ensuring that theexcess of maturing liabilities over maturing assets in any year is kept to manageablelevels relative to the amount of funds that the Company believes can generate within thatyear. The Company's policy is to regularly monitor current and expected liquidityrequirements to ensure that the Company maintains sufficient reserves of cash,borrowings and adequate committed funding from its shareholders to meet its liquidityrequirements in the short and longer term.- The following tables detail the Company's remaining contractual maturity for its non-derivative financial assets and financial liabilities with agreed repayment periods. Thetables have been drawn up based on the undiscounted cash flows of financial assets andundiscounted cash flows of financial liabilities based on the earliest date on which theCompany can be required to pay. The inclusion of information on non-derivativefinancial assets is necessary in order to understand the Company's liquidity riskmanagement as the liquidity is managed on a net asset and liability basis.

-

Less than 1 yearYNQ

Closing balanceCash and cash equivalentsShort-term financial investmentsTrade and other receivablesLong-term financial investments

100,127,453,68615,392,915,260

233,448,918,176

- 348,969,287,122

Less than 1 yearVND

Opening balanceTrade and other payablesAccrued expenses

91,104,863,17768,530,614,372

159,635,477,549

Net liquidity gap 189,333,809,573

Less than 1 yearYNQ

Opening balanceCash and cash equivalentsShort-term financial investmentsTrade and other receivablesLong-term financial investments

87,841,659,460103,568,325,260236,331,790,448

427,741,775,168

Less than 1 yearYNQ

Opening balanceTrade and other payablesAccrued expenses

More than 1 yearYNQ

TotalVND

80,244,74060,916,689,150

100,127,453,68615,392,915,260

233,529,162,91660,916,689,150

~~<"'HAHH~.1TYIIHVUHAITTE'

~~

60,996,933,890 409,966,221,012

More than 1 yearYNQ

TotalYHQ

77,000,000 91,181,863,17768,530,614,372

159,712,477,54977,000,000

60,919,933,890 250,253,743,463

More than 1 yearYNQ

TotalYNQ

76,244,74048,601,654,700

87,841,659,460103,568,325,260236,408,035,18848,601,654,700

476,419,674,60848,677 ,899,440

More than 1 yearYNQ

TotalYNQ

57,625,906,938 127,000,000 57,752,906,93841,823,288,570 ......;4.;;.11.::,8.;;.2;;.!3,..=.28;;.;8;.L,,5;;.;7~0

99,449,195,508 127,000,000 99,576,195,508

- Net liquidity gap 328,292,579,660 376,843.479,10048,550,899.440

The Board of General Directors assessed the liquidity risk at low level, The Board ofGeneral Directors believes that the Company will be able to generate sufficient fundsto meet its financial obligations as and when they fall due,

26

- IMEXPHARM PHARMACEUTICAL JOINT STOCK COMPANYNOTES TO THE FINANCIAL STATEMENTS (Continued) FORM B 09-DN

40. RELATED PARTY TRANSACTIONS AND BALANCES-- List of related parties

..- Related parties Relationship

,.- Gia Dai Pharmaceutical Company Limited AssociateAgimexpharm Pharmaceutical Joint Stock Company AssociateS.pharm Pharmaceutical Joint Stock Company Associater-Related party balances at the balance sheet date were as follows:

r-Closing balance Opening balance

~ ~,...... Trade receivables

-- Aglmexpharm Pharmaceutical Joint Stock Company 11,485,487,108 10,905,006,141

,...- S.pharm Pharmaceutical Joint Stock Compay 1.925,733,834 1.884,767,829

- Trade payablesAglmexpharm Pharmaceutical Joint Stock Company 567,064,350- S.pharm Pharmaceutical Joint Stock Compay 290,638,530

During the period, the Company entered into the following significant transactions withits related parties:

Current year Prior year~ ~

SalesAgimexpharm Pharmaceutical Joint Stock Company 27,659,256,311 21,673,623,811

S.pharm Pharmaceutical Joint Stock Compay 4,484,068,516 4,375,497,199,....PurchaseAgimexpharm Pharmaceutical Joint Stock Company 14,100,124,080 8,975,676,074

S.pharm Pharmaceutical Joint Stock Compay 1,876,025,550 1,191,871,800

Remuneration of the Board of Management and Board of General Directors

Remuneration paid to members of the Board of Management and Board of GeneralDirectors of the Company during the year was as follows:

r-Current year Prior year

~ ~ ~

Salaries, bonus and benefits in kind 10,613,601,800 11,071,662,450

,-- 41. SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

-Duong Hoang VuPreparer


----27

imexpharm pharmaceutical joint stock...

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