ANNUAL REPORT 2019

CREATING SPACES

ENHANCING LIVES

CONTENTS

04 Vision - Mission - Core values - Competitive advantage 06 Message from Chairwoman

CHAPTER I: GENERAL INFORMATION

CHAPTER 4:SUSTAINABILITY REPORT

CHAPTER 5:FINANCIAL STATEMENTS

CHAPTER 3:CORPORATE GOVERNANCEPREFACE 

101214162030 36 40 44 48 50 52 54 56 58 62 64 66

70 72 78 88

9698 100 102 104

112 114 116 118 120 124 126

133 134 135 137 139 140 142

Sustainability messageOverview of Sustainability ReportStakeholders engagementMaterial factorsThinking and acting progressivelyUsing and consuming responsiblyFocusing on the people

General informationReport of ManagementIndependent Auditors’ Report Consolidated balance sheet Consolidated income statement Consolidated cash flow statement Notes to the consolidated financial statements

Overview of real estate market in 2019Report and assessment by Board of DirectorsReport by General Director TeamReport by Inspection Committee

Structure and activities of Board of DirectorsStructure and activities of Inspection CommitteeRemunerations of Board of Directors and Inspection CommitteeShare transactions of internal shareholders and related personsRisks and risk management

CHAPTER 2: PERFORMANCE REPORT

LIST OF ABBREVIATIONS

The Company/ Khang Dien : Khang Dien House Trading and Investment Joint Stock Company

GSM : General Shareholder Meeting

BOD : Board of Directors

GDT : General Director Team

IC : Inspection Committee

IR : Investor relations

JSC : Joint Stock Company

Co., Ltd. : Company Limited

HCMC : Ho Chi Minh City

OverviewKey milestonesCore business and market placeProjects location mapList of projectsTypical projects2019 Major events2019 Awards and recognitionsShareholder informationInvestor relationSubsidiaries Business direction SWOT Governance modelBoard of DirectorsGeneral Director TeamInspection CommitteeHuman Resource Report

VISION – MISSION – CORE VALUES – COMPETITIVE ADVANTAGE

VISION

MISSION

CORE VALUES

COMPETITIVE ADVANTAGE

To become one of the top enterprises in real estate investment, operation and management.

To develop functional, high-quality projects with integrated amenities and environmental friendliness.

To create modern urban areas, green-clean living spaces and civilized communities.

To bring to every family modern and comfortable living conditions and dedicated services.

Transparency

Transparent in business operations and in relationships with shareholders and stakeholders.

Quality

Delivering committed quality and customer satisfaction.

Sustainability

Business is built on product quality, dedicated service, community responsibility, environmental friendliness and solid legal footing.

BRAND REPUTATION

After 20 years on the market Khang Dien has become a strong

brand customers love and trust.

EXPERIENCE

Understanding of the market and experience in land assembly and project development since 2001 are valuable know-how.

LAND BANK

Having large land bank in Ho Chi Minh City and the ability to grow land bank effectively in the future.

FINANCE

Financially strong and transparent with Ernst & Young auditing the books since 2007.

Having the trust and support from the key shareholders, especially the foreign

shareholders (such as Dragon Capital, VinaCapital, PYN Elite Fund and Vietnam

Holding), who maintain shareholding around 45% cumulative.

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MESSAGE FROM CHAIRWOMAN

With our direction of practicing sustainability, upholding reputation, and building brand based on our dedication and best efforts, the Company believes that the Khang Dien brand will develop further, bringing sustainable values to the customers and practical benefits to the Shareholders.

Dear valued Shareholders, Customers, Partners and fellow employees.

The year 2019 continues to be a successful year for business of Khang Dien House Trading and Investment Joint Stock Company (“Khang Dien”). In 2019, in addition to making new investments and launching new projects meeting full legal requirements, Khang Dien continued to grow its land bank, improve process and procedures, and increase management quality in order to prepare for a new journey pursuing the vision to build large-scale urban areas.

The sustainability strategy that Khang Dien always follows is that our business is legally compliant, transparent and bringing to the market quality products at reasonable prices and attractive design, which will create customers’ trust and the most practical benefit for the shareholders. Besides, Khang Dien always upholds the responsibility to support the communities, practice charitable activities, participate in anti-poverty programs, build gratitude houses, charity houses, fund scholarships across the regions as well as actively contribute to the national social security fund.

With the determination to become a professional developer in the field of real estate investment, commerce and management, the Board of Directors, General Director Team and employees always work with their best capacities, enthusiasms, devotions, knowledges and experiences in order to build large-scale residential properties and urban areas ideal for comfortable living spaces engineered by complete planning and designs; Together with each customer, we create peaceful and happy homes.

On the behalf of the Board of Directors of Khang Dien, I would like to express the most sincere thanks to our Customers and Shareholders who have accompanied Khang Dien over the years. With our direction of practicing sustainability, upholding reputation, and building brand based on our dedication and best efforts, the Company believes that the Khang Dien brand will develop further, bringing sustainable values to the customers and practical benefits to the Shareholders.

Yours sincerely,

Chairwoman

MAI TRAN THANH TRANG

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GENERAL INFORMATION CHAPTER I

OVERVIEW

KHANG DIEN HOUSE TRADING AND INVESTMENT JOINT STOCK COMPANY

CÔNG TY CỔ PHẦN ĐẦU TƯ VÀ KINH DOANH NHÀ KHANG ĐIỀN

Stock symbol: KDH

Abbreviation: KHADIHOUSE JSC

Business name: Khang Dien

Business registration: No. 0302588596 initially granted on 02 May 2007 and amended for twenty-second time on 17 October 2018 by Department of Planning and Investment in Ho Chi Minh City.

Charter capital: VND 5,444,291,090,000

Head Office: Suite 1 and 2, 11th Floor Saigon Center, 67 Le Loi, Ben Nghe Ward, District 1, Ho Chi Minh City, Vietnam

Tel: +(84.28) 3820 8858 - Fax: +(84.28) 3820 8859

Email: info@khangdien.com.vn

Website: www.khangdien.com.vn

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Company was founded as a private business

KEY MILESTONES

Grew charter capital, scaled up and IPO

Continued to scale up through investment in Khang Phuc House and enhancing Khang Dien brand by high-end projects - Lucasta, The Venica

Khang Dien increased charter capital to VND 1,800 billion and launched the high-end townhouse and villa projects - Lucasta and The Venica - in District 9 near District 2 and on the key streets in the East of HCMC such as Vo Chi Cong (Ring Road 2), Lien Phuong and Do Xuan Hop.

These projects are high-end properties in compound settings elegantly designed in harmony with the environment and integrated amenities, offering the best living space to every family.

The Company increased land bank through a strategic investment into Khang Phuc House.

Khang Dien increased charter capital to more than VND 4,140 billion and completed the merge of Khang Phuc House, marking a key milestone of the sustainability preparation.

Continued to scale; launched Verosa Park - high-end townhouses & villas and Lovera Vista condo

Shares listed on Ho Chi Minh City Stock Exchange (HSX)

Khang Dien increased charter capital to VND 439 billion and listed 43.9 million common shares (stock code KDH) on Ho Chi Minh City Stock Exchange (HSX).

Scaled up and positioned Khang Dien brand through the Mega projects - garden townhouses Khang Dien increased charter capital to VND 750 billion and welcomed Dragon Capital as strategic shareholder.

The Mega projects - garden townhouses in District 9 - attracted many homebuyers and scored great success.

2001 2018

2019

2007

2010

2014

2015

Khang Dien continued to increase charter capital to more than VND 5,444 billion and launched Verosa Park – the high-end townhouse & villa compound in the East of HCMC and Lovera Vista condo in the Southwest of HCMC.

Verosa Park has 296 townhouses and villas in a compound in the center of District 9 at Lien Phuong street and Vo Chi Cong intersection, bordering District 2. It is designed with the quintessence of classical European architecture, in harmony with natural landscape. Verosa Park is a peaceful green heaven where emotions meet memorableness & fulfillment.

Lovera Vista – Khang Dien’s newest condo project in the Southwest area – consists of 1,310 condos on 1.8 hectares of land. Lovera Vista is professionally designed with

integrated amenities, meeting the demands of a variety of consumers, from young single people, young families to extended families. In addition to internal amenities, residents can access available external amenities such as green parks, supermarkets, schools, fitness centers, and medical centers, etc. all in walking distances.

Khang Dien scaled up and IPO at VND 332 billion charter capital. VinaCapital and Prudential contributed equity and became shareholders.

Continued to scale; completed the merger of Khang Phuc House and launched two large condo projects – Jamila and Safira

The Company launched Jamila and Safira in District 9 directly connecting to District 2, Thu Thiem via Vo Chi Cong Street (Ring Road 2), HCMC - Long Thanh - Dau Giay Expressway.

On 1.7 hectares of land, Jamila has 867 condos and 16 shophouses designed in modern style and completed with integrated amenities  in a green and environmental friendly living space.

Likewise, with 1,570 condos and 23 shophouses an 2.7 hectares of land, Safira offers a modern, comfortable, close-to-nature and safe living space, perfectly suitable for young families.

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CORE BUSINESS AND MARKET PLACE

MARKET PLACE The business operation is in Ho Chi Minh City metropolitan areas.

CORE BUSINESS

Thu DucDist.

Binh ThanhDist.

Dist.1Dist. 3

Dist. 4Dist. 5

Dist. 8

Nha BeDist.

Dist. 6

Dist. 11

Dist.10

Dist. 7

Phu NhuanDist.

Tan BinhDist.

Go VapDist.

Dist.12

Tan PhuDist.

Dist. 9

Dist. 2

Binh TanDist.

Binh ChanhDist.

Lease and trade houses, land acquisition and transfer for property development, infrastructure investment;

Civil engineering and industrial construction works;

Real estate consulting service;

Land development;

Housing design and construction;

Real estate business.

Develop and operate industrial parks;

Develop and operate urban areas;

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THU THIEM

THAO DIEN

VO CHI CONG

(INNER RIN

G ROAD)

MAI CHI THO

HA NOI HIGHWAY

DISTRICT 7PHU MY HUNG

DISTRICT 1

DISTRICT 2 DISTRICT 9

CAT LAI FERRY

Lien Phuong

Duong Dinh Hoi

DO XUAN HOP

Melosa Garden

Mega Village

The Venica

Jamila

Feliza

Verosa Park

Hoja Villa

Mega Ruby

LucastaSa�ra

Mega Sapphire

Mega Residence

MeritaTopia Garden

HO CHI MINH - LONG THANH - DAU GIAY EXPRESSWAY

Hi - Tech ParkDistrict 9

THU DUCGolf Course

SAMSUNG CEComplex

BEN THANH Market

AN PHUGolf Course

Phu My Bridge

THU THIEM Tunnel

THU THIEM Bridge

SAI GON Bridge

Direction to Long ThanhInternational Airport

PROJECTS LOCATION MAP

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RING R

OAD 3

RING ROAD 3

XANG NGANG CANAL

PROVINCIAL

HIGHWAY 10B

TAN

TAO

- CH

O D

EM

TRAN DAI NGHIA

CHO DEM RIVER

NAT

ION

AL H

IGH

WAY

50

DOI C

ANAL

NGUYEN HUU THO

SAIGON RIVER

DIA CANAL

KINH DUONG VUONG

3/2

TRUONG CHINH

AU CO

CONG HOA

HCMC - TRUNG LUONG HIGHWAY

PROVINCIAL HIGHWAY 10

QU

ỐC

LỘ 1

A

NATIONAL HIG

HWAY 1A

QUỐC LỘ 1A

20km

Le Minh Xuan Industrial Area (Expansion area)

Tan TaoResidential Center

Area

Binh HungResidential Area

Phong Phu 5Residential Area

11AResidential Area

Le Minh XuanIndustrial Area (Existing area)

Handicraft Industrial Area (Existing area)

BINH CHANHDISTRICT

NHA BEDISTRICT

BINH TANDISTRICT

DISTRICT 1

TAN SON NHATINTERNATIONAL AIRPORT

BEN THANHMARKET

THU THIEM

DISTRICT 8

DISTRICT 5

DISTRICT 7

DISTRICT 4TE CANAL

TRINH QUANG NGHI

ĐẠI LỘ NGUYỄN VĂN LINH

ĐẠI LỘ NGUYỄN VĂN LINH

VO VAN KIET

Lovera Vista

DISTRICT 6

CRESCENT MALL

PHU MY HUNG URBAN AREA

LOTTE MART

CHO RAYHOSPITAL

SAIGONUNIVERSITY

AEON CITIMART PARKSON

SC VIVO CITY

PROJECTS LOCATION MAP (continued)

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LIST OF PROJECTS

COMPLETED PROJECTS

Location: Duong Dinh Hoi Street, Phuoc Long B Ward, District 9, HCMC Area: 10.4 hectares

Products: 247 detached villas, duplex villas, garden townhouses and condominium buildings Status and progress: Obtained Certificates of land use rights; continues to hand over the Title Certificates after the buyers have built the houses

Location: Bung Ong Thoan Street, Phu Huu Ward, District 9, HCMC Area: 6 hectares

Products: 225 detached villas, duplex villas and townhouses

Status and progress: Obtained Certificates of land use right; continues to hand over the Title Certificates after the buyers have built the houses

Location: Phu Huu Ward, District 9, HCMC Area: 5 hectares

Products: 222 townhouses

Status and progress: Handed over and put the project into use in 2014; fully handed over the houses and Title Certificates to the buyers

Location: Phu Huu Ward, District 9, HCMC Area: 5.7 hectares

Products: 323 garden townhouses

Status and progress: Handed over and put the project into use in 2015; fully handed over the houses and Title Certificates to the buyers

Location: Phu Huu Ward, District 9, HCMC Area: 3.2 hectares

Products: 158 townhouses

Status and progress: Handed over and put the project into use in 2014; fully handed over the houses and Title Certificates to the buyers

Location: Phuoc Long B Ward, District 9, HCMC Area: 7.1 hectares

Products: 197 detached villas, duplex villas and townhouses Status and progress: Obtained Certificates of land use right; continues to hand over the Title Certificates after the buyers have built the houses

KHANG DIEN - PHUOC LONG B MEGA RESIDENCE

MEGA RUBY

MEGA VILLAGE

TOPIA GARDEN

RIVER TOWN

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COMPLETED PROJECTS (continued)

Location: Phu Huu Ward, District 9, HCMC Area: 17.23 hectares

Products: 567 villas and garden townhouses

Status and progress: Handed over and put the project into use in 2015; fully handed over the houses and Title Certificates to the buyer

Location: Phu Huu Ward, District 9, HCMC Area: 8.2 hectares

Products: 140 high-end villas

Status and progress: Handed over and put the project into use in 2016; fully handed over the houses and Title Certificates to the buyers

MELOSA GARDEN

LUCASTA

Location: Phuoc Long B Ward, District 9, HCMC Area: 3.1 hectares

Products: 131 garden townhouses

Status and progress: Handed over and put the project into use in 2017; fully handed over the houses and Title Certificates to the buyers

MERITA

Location: Phu Huu Ward, District 9, HCMC Area: 3.1 hectares

Products: 43 high-end villas

Status and progress: Handed over and put the project into use in 2016; fully handed over the houses and Title Certificates to the buyers

THE VENICA

LIST OF PROJECTS (continued)

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Location: Le Minh Xuan Commune, Binh Chanh District, HCMC Area: 116 hectares

Status and progress: The project has been commissioned; 100% leased out with more than 200 enterprises leasing or purchasing lots and factories

LE MINH XUAN INDUSTRIAL AND SMALL BUSINESS PARK

Location: Phu Huu Ward, District 9, HCMC Area: 3.1 hectares Products: 118 garden townhouses

Status and progress: Handed over and put the project into use in 2017; fully handed over the houses and Title Certificates to the buyers

Location: Phu Huu Ward, District 9, HCMC Area: 1.7 hectares

Products: 867 condos and 16 shophouses

Status and progress: Handed over and put the project into use in 2018; fully handed over the condos; handing over Title Certificates to the buyers; expect to complete Title Certificates handover in 2020

ROSITA GARDEN

JAMILA

COMPLETED PROJECTS (continued)

LIST OF PROJECTS (continued)

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ON-GOING PROJECTS

Location: Phu Huu Ward, District 9, HCMC Area: 2.7 hectares Products: 1,570 condos and 23 shophouses Status and progress: Expect to begin handing over and put the project into use in the second quarter of 2020

Location: District 9, HCMC Area: 8.1 hectares Products: 293 townhouses and 3 villas Status and progress: Ongoing sales. Expect to complete handover and put the project into use in 2020.

Location: Phong Phu 4 Residential Area, Binh Chanh District, HCMC Area: 1.8 hectares

Products: 1,310 condos

Status and progress: Ongoing sales and under construction; expect to begin handing over in the second quarter of 2021

Products: Garden townhouses and villas Status and progress: Obtained project’s Certificates of land use right; is completing legal procedures of the project

SAFIRA VEROSA PARK PROJECT

LOVERA VISTA ARMENA

Location: District 9, HCMC Area: 4.3 hectares

LIST OF PROJECTS (continued)

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Location: Binh Hung Commune, Binh Chanh District, HCMC Area: 16.4 hectares Products: Townhouses and condominium buildings Status and progress: On-going project legal work

11A RESIDENCE

Location: Le Minh Xuan Commune, Binh Chanh District, HCMC Area: 109.9 hectares

Estimated scale: 10,000 laborers Status and progress: On-going project legal work

LE MINH XUAN INDUSTRIAL PARK (EXPANSION)

Products: Garden townhouses and villas

Status and progress: On-going project legal work

CLARITA

Location: District 2, HCMC

Area: 5.8 hectares with expected expansion

In addition, the Company is completing the legal procedures for the project Central Tan Tao Residential Area in Binh Tan District, Ho Chi Minh City.

FUTURE PROJECTS

LIST OF PROJECTS (continued)

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CONDOMINIUM

TYPICAL PROJECTS

The condo projects developed by Khang Dien always optimize resident densities and building footprints, giving priority to lands for green landscape and internal amenities in order to meet the increasing demand for quality housing in Ho Chi Minh City. These projects meet all legal requirements, are modernly designed, constructed with quality, well connected to traffic networks, fully supported by infrastructure and external amenities. Each building, each condo are designed and built in modern style, built to quality and harmonizing with the nature.

Products: 867 condos and 16 shophouses

Jamila is located in the Eastern gateway of Ho Chi Minh City and offer a dynamic and modern living space with full amenities and romantic landscape.

Location: Song Hanh road - HCMC - Long Thanh - Dau Giay Expressway (Do Xuan Hop Intersection), District 9, Ho Chi Minh City; 15 minutes driving to CBD and 5 minutes driving to Thu Thiem

Status & Progress: Handed over the condos and put the project into use in 2018; expect completion handover of Title Certificates to the buyers in 2020

JAMILA – FOR A BETTER LIFEINSPIRING ENERGY, FULFILLING HAPPINESS

Products: 1,570 condos and 23 shophouses

Status & Progress: Expect to begin handing over the condos and put the project into use in the second quarter of 2020

Location: Vo Chi Cong street (Ring road 2), intersected with Ho Chi Minh - Long Thanh - Dau Giay Expressway, District 9, Ho Chi Minh City; 20-minute drive from the city center

Located at the Eastern gateway of HCMC, Safira enjoys every moment of sunrise - energy for every new day. Safira has many outstanding values, from location, property right, amenities, close-to-nature life style and safety for young, modern families. Putting a lot of mind and heart to work, Khang Dien has created this quality living space with full amenities, enabling the residents to enjoy peaceful, fulfilled lives.

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VILLAS

TYPICAL PROJECTS (continued)

The villa projects developed by Khang Dien in the past 20 years offer a limited number of luxury houses in secured compounds located at carefully selected sites, elegantly designed and built, highly regarded for its close-to-nature environment.

EXCLUSIVE LIFESTYLE ENJOY THE QUINTESSENCE OF LIFE

Products: 43 luxury villas

The Venica is located in a private peninsula, hidden in the nature isolated from the busy urban life, surrounded by river on three sides and guarded by two secured gates. With the semi-classical architectural style emulating the splendor and magnificence of the Italian Venice villas, The Venica deserves to be dubbed as the living places for the upper class at home and abroad.

Location: Song Hanh road of the HCMC - Long Thanh - Dau Giay Expressway and Do Xuan Hop Street, District 9, Ho Chi Minh City; 15 minutes driving to CBD and 5 minutes driving to Thu Thiem

Status & Progress: Handed over and put the project into use in 2016; fully handed over the villas and Title Certificates to the buyers.

Products: 140 high-end detached villas and deluxe villa

Lucasta is an outstanding luxury eco-villa in the East of Ho Chi Minh City and the living space for the intellectual community and senior managers. Lucasta villa compound is surrounded by 1 hectare of man-made lake and harmonious natural landscape, offering green living space to the delicate residents.

Location: Lien Phuong Street at the center of District 9, Ho Chi Minh City; 20 minutes driving to CBD and 10 minutes to Thu Thiem

Status & Progress: Handed over and put the project into use in 2016; fully handed over the villas and Title Certificates to the buyers

NEO-CLASSICAL VILLA COMPOUND SURROUNDED BY RIVER

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TOWNHOUSE

Garden townhouse and street house are the major and traditional product lines creating Khang Dien’s reputation and brand for the past two decades since the Company’s establishment. Townhouse complex are developed aiming to meet the demand of the middle class and families who prefer landed houses with gardens.

Melosa Garden’s outstanding feature is its greenery, wide and quiet living space with 4-hectare central park and 9-level waterfall swimming pool built to Singaporean style. In addition, reasonable prices are also the factor that Melosa Garden be selected by middle-class families.Location: Vo Chi Cong street (Ring road 2),

intersected with Ho Chi Minh - Long Thanh - Dau Giay Expressway, District 9, Ho Chi Minh City; take 20-minute drive from the city center

Status & Progress: Handed over and put the project into use in 2015; fully handed over houses and Title Certificates to the buyers

Products: 567 garden townhouses and villas

THE JOURNEY TO HAPPINESS

Verosa Park is a complex of 296 high-end townhouses and villas located at a carefully selected site in the center of District 9, at Lien Phuong - Vo Chi Cong intersection, bordering District 2. The houses are designed with the quintessence of classical European architecture, in harmony with the natural landscape. Verosa Park is a peaceful green heaven where emotions meet memorableness and fulfillment.

Products: 293 high-end garden townhouses and 3 villas

Status & Progress: Ongoing sales; expect to complete handover of the houses and put the project into use in 2020

Location: District 9 next to District 2, Ho Chi Minh City

CREATE THE SOUND OF HAPPINESS

TYPICAL PROJECTS (continued)

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2019 MAJOR EVENTS

The year 2019 recorded many significant events that were very meaningful to the sustainable development of Khang Dien, in particular the construction and sale of Lovera Vista and Verosa Park projects besides Safira gratitude event and the first phase of Pink Book handover to Jamila residents.

Construction kick-off for Lovera Vista On the morning of 10 May 2019, Khang Phuc House Trading Investment Company Limited coordinated with An Phong Construction Joint Stock Company to organize the ground breaking ceremony of Lovera Vista project in the Residential Area No. 4, Phong Phu Commune, Binh Chanh District, Ho Chi Minh City.

The project consists of 5 blocks of 20 stories with 1,310 condos on 1.8 hectares of land. Lovera Vista is expected to be completed and handed over to residents at the beginning of quarter II of 2021.

More than 1,500 customers attending Safira gratitude event

Just a few months after the official introduction, Safira impressed the market when 1,570 condos were sold. To show gratitude to the customers, on 15 September 2019, Khang Dien organized the gratitude event “Owning Safira – Receiving Toyota Camry 2.5Q” with great success when more than 1,500 homebuyers attended. With Safira, Khang Dien once again earned the trust from customers. All products developed by the Company are always ensured in quality, progress and property rights.

01

Successful launch of sale training workshop for Lovera Vista and Verosa Park projectsKhang Dien successfully organized a training workshop for sales agents of Lovera Vista and Verosa Park projects on 23 July and 08 October, 2019 respectively, attracting thousands of participants. The sale team were fully provided with information about the project, legality and selling policy. With the philosophy of always doing more than what we are committed and with all our heart, Khang Dien has marked one more breakthrough with Lovera Vista and Verosa Park as ensuring the transparency of project legality and the investment into construction of infrastructure, amenities and landscape.

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2019 MAJOR EVENTS (continued)

Successful sale of Lovera Vista projectIn 2019, Khang Dien expanded business to the South of HCMC with Lovera Vista project.

On 20 October and 22 December 2019, Khang Dien launched sales and successfully sold 801 condos. Lovera Vista inherits every core value built through 20 years of development, including legal transparency, good location, satisfactory construction progress, full amenities, green living space and modern designs. The project has become particularly attractive to customers thanks to reasonable selling price and flexible financial support policy.

Hand-over the 1st batch of Pink Books to Jamila residents On 23 November, 2019, Khang Dien handed over the first batch of Pink Books to the residents. Jamila began construction in May 2017 with 4 blocks of 25 stories. At present, nearly 80% of the households have moved in. The Company is currently obtaining and handing over the Title Certificates to the residents.

Launched Verosa Park model unitsOn 15 December 2019, Verosa Park model units were officially launched to welcome customers. The model units are located on the most beautiful road of the project, overlooking airy Symphony Park with greenery that is meticulously cared for. Especially, customers can admire an ideal living space and touch all delicate designs, and feel the true beauty of the future home.

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2019 AWARDS AND RECOGNITIONS

As one of the prestigious real estate brands in Vietnam, Khang Dien is not only highly regarded in sustainable business orientation, developing projects that prosperous living value to customers, but also leaves a good impression with many honorable awards.

Particularly 2019 is the year Khang Dien affirms its position when being named in Vietnam Property Awards and Asia Property Awards with Verosa Park, Jamila, Safira. Besides, Khang Dien brand was also honored as Top 50 Best Vietnamese listed companies for the 4th consecutive year by Forbes, Top 50 best-performing companies in Vietnam 2018 by Nhip Cau Dau Tu  Magazine. This shows the Company’s belief in the long journey of development, creating positive social impacts and contributing more to the country’s economic development.

Best-performing companies in Vietnam

Most prestigious listed companies in 2019

Best Vietnamese listed companies

On 27 June 2019, Khang Dien was named in “Top 50 best-performing companies in Vietnam 2018” for the fourth consecutive time. This is a valuable and prestige rank annually co-organized by Nhip Cau Dau Tu Magazine and Thien Viet Securities JSC (TVS) under the advice of the leading economic and business experts from Harvard and the reference to the prestigious rankings in the world such as Bloomberg Businessweek, Fortune, and Global Forbes to seek and honor the best-performing companies in Vietnam’s stock market.

On 08 August 2019, at the ceremony of Top 10 prestigious listed companies in Banking - Insurance - Technology 2019, Khang Dien was honored to be in the “Top 10 most prestigious listed companies” along with other leading prestigious large companies.

This result is independently built by Vietnam Report based on objective and scientific principles. The reputation of listed companies is determined based on the researches on the influence of financial factors, company image on the media and evaluation of finance and securities experts, specifically: Financial capacity shown in the latest financial statements (total assets, total revenue, profit after tax, capital efficiency, revenue growth, profits, etc.); Media reputation is assessed by Media Coding - coding of articles about companies on influential media channels; Survey on evaluation of typical shares for investment by experts; Survey on enterprises in June regarding business operations and 2019 investment plan.

On 15 August 2019, Khang Dien was named in the “Top 50 best Vietnamese listed companies” for the 4th consecutive year by Forbes Vietnam. This is a prestigious award by Forbes, aiming to honor the companies with best business performance with the capitalization up to billions of dollars through the published financial indicators on Ho Chi Minh City Stock Exchange (HSX) and Hanoi Exchange (HNX).

50 10 50 50 10 5050 10 50

TOP 50 TOP 10 TOP 50

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2019 AWARDS AND RECOGNITIONS (continued)

Both Jamila and Safira were named in the “Best Mid- End Condo Development” (HCMC) - Vietnam Property Awards 2019

Verosa Park won the Best Housing Landscape Architectural Design at Vietnam Property Awards and Asia Property Awards 2019; became a nominee for the contenter for Best Housing Development (HCMC)

Since 2017, Khang Dien has focused on developing mid-end condos in the East (Jamila, Safira) that leave behind a good impression in the market. Currently, residents have moved in, creating a civilized and modern community. Safira is expected to be handed over in the second quarter of 2020.

The Best Mid End Condo Development (HCMC) award achieved at Vietnam Property Awards 2019 motivates Khang Dien to continue developing better projects in the future, becoming more reputable as a brand in real estate market and being the first choice of customers who look for an ideal place to settle down.

With impressive and unique architectural design with quintessence of neoclassical European architecture, in harmony with pure and natural landscape, developed by Khang Dien and talented architects of Ong&Ong – a leading landscape architecture design company in Singapore, Verosa Park townhouses and villas won the highest award in Best Housing Landscape Architectural Design category and was nominated for Best Housing Development (HCMC) in Vietnam on 23 August 2019. Verosa Park continued to be nominated to join top projects in Asia and was honored at the prestigious Asia Property Awards 2019 in Thailand on 22 November 2019.

Typical Real Estate Developer 2019

Top 50 best Vietnamese enterprises

On 09 January 2020, Khang Dien was honorably awarded Vietnam Property Awards 2020 for the content “Typical Real Estate Developer 2019” by Nhip Cau Dau Tu Magazine. In 2019, Khang Dien deployed Lovera Vista project and Verosa Park luxury townhouse and villa project that attracted great attention from customers and real estate experts. Khang Dien brand built customer trust with quality, solid legal footing of housing products.

On 09 January 2020, Khang Dien was named in the Top 50 best enterprises 2019 for the first time. This is a rank for top 50 enterprises in the rank of 500 largest enterprises in Vietnam (VNR500) built by Vietnam Report in cooperation with Vietnamnet Newspaper to evaluate, honor and award enterprises that have made great contributions to the development of Vietnam economy. Main criteria of this rank are actual revenue of enterprise in recent year, current situation and prospects of revenue growth in previous years, total assets, total labors, profit after tax, return on assets (ROA), return on equity (ROE) and business reputation on the media.

TOP 50

50 10 50

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SHAREHOLDER INFORMATION

SHARE INFORMATION

Charter capital

VND 5,444,291,090,000

Number of outstanding share

544,429,109 shares

Par value per share

VND 10,000

Number of treasury share

0 shares

Market capitalization as of 31 Dec 2019

VND 14,645,143,032,100

NO. SHAREHOLDERDOMESTIC SHAREHOLDER FOREIGN

SHAREHOLDERTOTAL NUMBER OF SHARES

Number of shares

Percentage/ Charter capital

Number of shares

Percentage/ Charter capital

Number of shares

Percentage/ Charter capital

1 Government - - - - - -

2Shareholders holding 5% or above

160,662,816 29.51% 40,025,097 7.35% 200,687,913 36.86%

3Shareholders holding from 1% to less than 5%

39,992,015 7.35% 151,655,790 27.85% 191,647,805 35.20%

4Shareholders holding less than 1%

101,316,765 18.61% 50,776,626 9.33% 152,093,391 27.93%

5 Treasury shares - - - - - -

TOTAL 301,971,596 55.47% 242,457,513 44.53% 544,429,109 100%

SHARE OWNERSHIPAccording to the list of share owners closed on 31 Dec 2019 provided by Vietnam Securities Depository (VSD).

Share market price

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SHAREHOLDER INFORMATION (continued)

SHAREHOLDER STRUCTURE According to the list of share owners closed on 31 Dec 2019 provided by Vietnam Securities Depository (VSD).

No. Shareholder structure Number of shares Ownership percentage (%)

1 Treasury shares - -

2 Domestic shareholders 301,971,596 55.47%

Individuals 90,856,561 16.69%

Institutions 211,115,035 38.78%

3 Foreign shareholders 242,457,513 44.53%

Individuals 597,050 0.11%

Institutions 241,860,463 44.42%

TOTAL 544,429,109 100,00%

MAJOR SHAREHOLDERSAccording to the list of share owners closed on 31 Dec 2019 provided by Vietnam Securities Depository (VSD).

No. Shareholder name Number of shares Ownership percentage (%)

1 Tien Loc Investment Company Limited 61,950,490 11.38%

2 Gam Ma Investment Company Limited 50,632,514 9.30%

4 A Au Trading Investment Company Limited 48,079,812 8.83%

4 Vietnam Enterprise Limited 40,025,097 7.35%

TOTAL 200,687,913 36.86%

Note:

� Total ownership of Dragon Capital is around 18%.

� Total ownership of VinaCapital is around 13%.

TREASURY STOCK In 2019 the Company has no transaction related to treasury stock.

SHARES OWNED BY INTERNAL SHAREHOLDERS

Shareholders No. Name Position Total Ownership (%)

Board of Directors 1 Mai Tran Thanh Trang Chairwoman of BOD 4,937,046 0.91%

2 Ly Dien Son Deputy Chairman of BOD 6,126,100 1.13%

3 Nguyen Thi Dieu Phuong Member of BOD - -

4 Nguyen Thi Cam Van Member of BOD 1,735,500 0.32%

5 Ngo Thi Mai Chi Member of BOD cum General Director

3,497,244 0.64%

General Director Team 1 Ngo Thi Mai Chi Member of BOD cum General Director

- -

2 Bui Quang Huy Deputy General Director 65,000 0.01%

3 Truong Minh Duy Deputy General Director 288,250 0.05%

Inspection Committee 1 Pham Kim Thoa Head of Inspection Committee - -

2 Vuong Hoang Thao Linh Member of IC 3,824 0.0007%

3 Luu Thi Xuan Lai Member of IC - -

Chief Accountant 1 Nguyen Tran Cam Hien Chief Accountant 327,950 0.06%

Chief Financial Officer 1 Nguyen Thuy Trang Chief Financial Officer 499,500 0.09%

TOTAL 17,480,414 3.21%

CHANGES OF OWNER’S INVESTED CAPITALIn June 2019, the Company issued 124,205,756 shares to existing shareholders, including:

� 20,700,484 shares to pay dividends;

� 103,505,272 shares to increase charter capital from owner’s equity.

In July 2019, the Company issued 6,200,000 shares for Employee Stock Ownership Plan (ESOP).

55.47%

44.53%

DOMESTIC SHAREHOLDERS

FOREIGN SHAREHOLDERS

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INVESTOR RELATION

Khang Dien always maintains policies of engaging with stakeholders to facilitate investors and the media to understand the Company and the related matters. In 2019, the Company maintained dialogues and engagements with the shareholders, investors, securities companies and etc. to convey Company’s vision, goals, core values, business model, competitive advantages and growth potentials.

The Company announced and reported business results quarterly, every 6 months and annually as required to Ho Chi Minh Stock Exchange (HOSE), State Securities Commission of Vietnam (SSC), and posted the information on the Company's websites at URL: www.khangdien.com.vn and other communication channels as well. The Company’s

website is a source of information for everyone to learn about Khang Dien. In particular, the website has dedicated sections for shareholders’ information, news and important events including all public reports, announcements, press release and a link for KDH stock information.

To be flexible in engaging and exchanging information with the stakeholders, the Company is facilitating a number of engagement channels such as direct meetings, business result calls, emails and calls discussing the Company potentials, project tours and investor events. In 2019, the Company held meetings with the large investment funds from Europe, America, Japan, Hong Kong, Singapore, South Korea, Thailand and etc.

Top securities companies issuing reports on Khang Dien

Main events of investor relations in 2019 Awards in 2019

� Ho Chi Minh City Securities Corporation (HSC)

� Viet Capital Securities (VCSC)

� SSI Securities Corporation (SSI - HOSE)

� RongViet Securities Corporation (VDSC)

� VNDirect Securities Corporation (VNDS)

� In April 2019:

The 2019 General Annual Shareholder Meeting

Dragon Capital Investor Conference

� In May 2019: Viet Capital Vietnam Access Day

� In August 2019: Meeting securities companies

� In December 2019: Meeting investment funds

� Top 50 most effective business companies in Vietnam voted by Thien Viet Securities JSC (TVS) and Investment Bridge Journal

� Top 10 reputable listed companies in 2019 voted by Vietnam Report

� Top 50 best listed companies in Vietnam voted by Forbes Vietnam

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SUBSIDIARIES

LIST OF SUBSIDIARIES

Khang Dien has 23 subsidiaries, including:

Name of subsidiaries Head office Core business Operating status Ownership percentage (%)

(1) Thanh Phuc Real Estate Investment Ltd. Ho Chi Minh City Real estate trading In operation 99.90%

(2) Tri Minh Real Estate Investment and Trading JSC Ho Chi Minh City Real estate trading In operation 99.80%

(3) Gia Phuoc Real Estate Investment and Trading Co., Ltd. Ho Chi Minh City Real estate construction consulting and trading In operation 99.90%

(4) Saigon Spring Real Estate Trading JSC Ho Chi Minh City Real estate trading In operation 99.80%

(5) International Consulting Co., Ltd. Ho Chi Minh City Real estate construction consulting and trading In operation 99.90%

(6) Long Phuoc Dien House Development and Infrastructure Building Co., Ltd. Ho Chi Minh City Real estate trading In operation 99.95%

(7) Hao Khang Co., Ltd. Ho Chi Minh City Real estate construction and trading In operation 100.00%

(8) Saphire Real Estate Investment and Trading Co., Ltd. Ho Chi Minh City Real estate trading In operation 99.90%

(9) Lien Minh Real Estate Investment and Trading Co., Ltd. Ho Chi Minh City Real estate trading In operation 99.70%

(10) Song Lap Real Estate Investment and Trading Co., Ltd. Ho Chi Minh City Real estate trading In operation 99.70%

(11) Tri Kiet Real Estate Investment and Trading Co., Ltd. Ho Chi Minh City Real estate trading In operation 99.90%

(12) Mega City Co., Ltd. Ho Chi Minh City Real estate trading In operation 99.85%

(13) Vi La JSC Ho Chi Minh City Real estate trading In operation 99.00%

(14) Thap Muoi Real Estate Trading and Construction Co., Ltd. Ho Chi Minh City Real estate trading In operation 99.80%

(15) Viet Huu Phu JSC Ho Chi Minh City Real estate trading In operation 99.00%

(16) Green Space Real Estate Trading and Investment Co., Ltd. Ho Chi Minh City Real estate trading In operation 98.01%

(17) Binh Trung Real Estate Investment Trading Co., Ltd. Ho Chi Minh City Real estate trading In operation 99.80%

(18) Khang Phuc House Trading Investment Co., Ltd. Ho Chi Minh CityTrade real estate properties; House construction; Investment into construction and operations of industrial park infrastructure

In operation 100.00%

(19) BCCI Development Investment Co., Ltd Ho Chi Minh City Real estate trading In operation 100.00%

(20) Minh Phat Real Estate Investment Co., Ltd. Ho Chi Minh City Real estate trading In operation 51.00%

(21) Kim Phat Real Estate Investment Trading Co., Ltd. Ho Chi Minh City Real estate trading In operation 99.90%

(22) Nam Phu Property Development Co., Ltd. Ho Chi Minh City Real estate trading In operation 51.00%

(23) Thuy Sinh Real Estate JSC Ho Chi Minh City Real estate trading In operation 98.90%

The Company has neither associates nor joint ventures.

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BUSINESS DIRECTION

KEY GOALS

Completing on-going projects fast and

efficiently.

Completing legal procedures for the projects launched

in the coming years.

Maintaining earnings growth for

the shareholders.

GOALS FOR THE ENVIRONMENT, SOCIETY AND COMMUNITY � Saving energy, materials and water to reduce environmental footprint and business costs;

� Maintaining a dynamic, fair working environment with career development opportunities, as well as caring about the spiritual and material life of employees, thereby enhancing productivity and attracting talents;

� Developing real estate projects having full property rights and good quality to serve the society, thereby promoting business development and revenue growth;

� Always complying with laws, regulations and shareholders’ resolution, thereby reinforcing brand reputation and maintaining the trust of customers and partners.

MEDIUM-TERM AND LONG-TERM DEVELOPMENT STRATEGIES � Consolidating, building and training human resources, especially management team together with applying modern

management technology.

� Pursuing goals about environment, society and community in production and business, specifically in land bank development, project development and operation of residential properties and other properties;

� Diversifying real estate products that meet customers needs and the cycle of real estate market; continuing to develop land bank and improve production and business efficiency;

� Expanding cooperation with suitable strategic partners.

Completing the organization,

management and procedures for operation and management of residential

properties and the Company’s other

properties.

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S O TW

SWOT

KNOWLEDGE AND EXPERIENCE

With 20 years of real estate development and investment in Ho Chi Minh City, Khang Dien has accumulated comprehensive knowledge and experience in land assembly, legal procedures, property development and business operations.

STRONG FINANCIAL CAPACITY

Khang Dien maintains a solid financial foundation based on a safe financial structure, effective management of costs, cash flows and capital use. In addition, the Company is supported by the major shareholders, who are the leading investment funds in Vietnam such as Dragon Capital, VinaCapital and the largest banks in Vietnam such as VietinBank, VietcomBank , OCB, etc.

LAND BANK AND ABILITY TO REPLICATE

Khang Dien owns a large-scale land bank in potential areas of Ho Chi Minh City and always seeks to replicate the land being used. The Company has 20 years of hands-on experience in developing quality land bank.

KHANG DIEN BRAND

Khang Dien brand is strongly recognized in Ho Chi Minh City market place. Having put legal compliance and reputation at the top of business, Khang Dien is proud to be the brand that earns customer trust. The Company continues to diversify products and expands business to make Khang Dien brand stronger every day.

Khang Dien’s current business is focusing on Ho Chi Minh City area without expansion to the other areas, which impacts on revenue growth.

POTENTIAL MARKET

Housing demand in HCMC remains high and grows steadily every year due to biological and mechanical population growth while supply has been lagging. Additionally, the ability to supply in the market place is under pressure because the authorities are raising the requirements and standards for inputs and outputs as well as tightening licensing appraisal process for new projects. This is an opportunity for real estate companies having scale, financial capacity and good records of compliance.

FAVORABLE MACRO-ECONOMIC ENVIRONMENT

Vietnam continues to benefit from strong economic growth and political-social stability in 2019 with GDP growth rate above 7% and inflation below 4%. Besides, Vietnam’s urbanization is experiencing the fastest growth rate in Southeast Asia due to population and economic growth. In 2020, Vietnam is forecasted to maintain economic growth on the basis of political-social stability supported by the Government’s growth policy, especially for the private sector, consumption, tourism and FDI.

INCREASING COMPETITION

Other property developers are launching new projects with diverse products at better quality and competitive sale prices, which increases competition in the market place.

ECONOMIC RISKS OUTSIDE VIETNAM

Although the emerging economies like Vietnam continue to maintain high growth rate due to young population and competitive labor costs, in case of global economic growth slows down, uncertainties may have impacts on FDI and FII capital flows to Vietnam, thereby putting pressure on VND/USD exchange rate, money supply and interest rates. This will limit consumers’ ability to buy properties and affect consumer psychology.

STRENGTHS OPPORTUNITIESWEAKNESSES THREATS

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GOVERNANCE MODEL ORGANIZATIONAL CHART

Khang Dien operates in the form of a joint stock company. Besides complying with the laws, the Company strictly follows the charter that has been approved by General Shareholder Meetings.

GENERAL SHAREHOLDER MEETING According to the Law on Enterprises and the Company’s Charter, the General Shareholder Meeting is the highest governing body of the Company. GSM holds annual meetings to approve policies, orientations and business plans for the year. In addition, GSM may hold extraordinary meetings in accordance with the law and the Charter.

BOARD OF DIRECTORS BOD is the management body elected by GSM. BOD has full rights to make decisions on all important issues related to purposes and interests of the Company, except for issues under GSM control. The incumbent BOD of Khang Dien consists of the Chairwoman and 04 other members, appointed for five-year terms, in which 02 are independent non-executive, 02 are non-executive and 01 is executive.

INSPECTION COMMITTEEThe incumbent Inspection Committee includes 03 members, including 01 Chief Supervisor and 02 supervisors. Inspection Committee operates under 5-year term. IC is elected by GSM to be responsible for supervising activities of BOD and GDT in managing and running the Company, verifying business reports and financial statements and reviewing accounting books and management works. IC operates independently from BOD and GDT.

GENERAL DIRECTOR TEAM The incumbent General Director Team consists of 01 General Director and 02 Deputy General Directors. General Director is the person who is authorized by BOD to be the Company’s legal representative in charge of managing all daily activities of the Company and is responsible to BOD for the implementation of the rights and duties assigned. Deputy General Directors directly manage business operations and give advices to the General Director in making strategic decisions for the Company.

Khan

g D

ien’

s Org

aniz

atio

nal S

truc

ture

GENERAL SHAREHOLDERS’ MEETING

BOARD OF DIRECTORS

GENERAL DIRECTOR

DEPUTY GENERAL DIRECTOR

INSPECTION COMMITTEE

INTERNAL INSPECTION TEAM

PROJECT OPERATION

AND INVESTMENT

DIVISION

COST AND QUALITY

MANAGEMENT DIVISION

PROJECT MANAGEMENT

DIVISION

PROJECT LEGAL

DIVISION

CORPORATE LEGAL

DIVISION

CUSTOMER CARE AND

OPERATION MANAGEMENT

DIVISION

SALES MARKETING

& PUBLIC RELATION DIVISION

ACCOUNTING & FINANCIAL

DIVISION

HR & ADMINISTRATION

DIVSION

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BOARD OF DIRECTORS

Mrs. MAI TRAN THANH TRANGChairwoman of BODYear of birth: 1976 Qualification: Bachelor Degree in Laws, Land Management Engineer

Mr. LY DIEN SONDeputy Chairman of BOD Year of birth: 1966 Qualification: Bachelor Degree from the University of Culture

Experience: Prior to his current role as Deputy Chairman of BOD, Mr. Son held the role of Chairman of BOD cum General Director and directly managed the Company since its establishment day. With passion, dedication, and experience, he has led the Company to overcome challenges and achieve breakthrough success, developing Khang Dien to become one of the leading real estate developers in HCMC. At present, Mr. Ly Dien Son undertakes the position of Deputy Chairman of BOD, assisting the Chairwoman in strategic management and supervising General Director Team.

Working history: � 2001 - 2012: Chairman of BOD cum General Director

of Khang Dien House Trading and Investment JSC.

� 2012 - 2013: Deputy Chairman of BOD cum General Director of Khang Dien House Trading and Investment JSC.

� 2013 - March 2017: Chairman of BOD cum General Director of Khang Dien House Trading and Investment JSC.

� April 2017 - present: Deputy Chairman of BOD of Khang Dien House Trading and Investment JSC.

Positions in other organizations: None.

Mrs. NGUYEN THI CAM VANMember of BOD Year of birth: 1960 Qualification: Master Degree in Land Management

Experience: With her intensive working experience in real estate project legal practice, Mrs. Van has contributed to the sustainable development and business direction of the Company in accordance with the laws.

Working history: � 1984 - 1997: HCMC Department of Land

Administration.

� 1998 - 2003: HCMC Department of Land Administration and Housing Land.

� 2003 - 2015: HCMC Department of Natural Resources and Environment; Retired in December 2015.

� April 2017 - present: Member of BOD of Khang Dien House Trading and Investment JSC.

Positions in other organizations: None.

Mrs. NGUYEN THI DIEU PHUONG Member of BOD Year of birth: 1980 Qualification: Bachelor Degree in Economic - Finance, FACCA Auditor

Experience: Having almost 21 years of experience in real estate project legal practice, Mrs. Trang has many important contributions to Khang Dien through a number of key positions: Assistant to Chairman of BOD, and Deputy General Director cum Member of BOD, respectively. At present, Mrs. Trang undertakes the position of Chairwoman of BOD in charge of strategic management, especially in project legal practice, which is the foundation for Khang Dien to grow its business on the basis of transparent and solid legal footing. Mrs. Trang is the key factor for this achievement.

Working history: � 2001 - 2005: Legal consultant - Law Office.

� October 2005 - July 2007: Administration Manager - Member of BOD of Khang Dien House Trading and Investment JSC.

� July 2007 - May 2008: Assistant to Chairman of BOD Khang Dien House Trading and Investment JSC.

� June 2008 - April 2017: Member of BOD cum Deputy General Director of Khang Dien House Trading and Investment JSC.

� April 2017 - present: Chairwoman of BOD of Khang Dien House Trading and Investment JSC.

Positions in other organizations: None.

Experience: With many years of experience and achievements in prestigious financial institutions, in October 2009, Mrs. Phuong was invited to join Khang Dien as a member of BOD. Since joining Khang Dien, she has had positive contributions to the Company’s development. In addition, Mrs. Phuong gives advices and supports functional departments to build financial strategies suitable to each development stage and general situation of the market.

Working history: � 2002 - 2005: Senior Auditor of KPMG.

� 2006 - 2010: In charge of the positions from Investment Specialist to Investment Manager of VinaCapital.

� July 2010 - December 2016: Investment Director - Head of Property Portfolio of Vietnam Opportunity Fund - a fund under VinaCapital.

� December 2016 - present: Deputy General Director of Vietnam Opportunity Fund.

� October 2009 - present: BOD member of Khang Dien House Trading and Investment JSC.

Positions in other organizations:

� BOD member of Ngoc Nghia Industry - Service - Trading JSC

� BOD member of Thai Hoa International Hospital JSC

� BOD member of Hung Vuong JSC

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Mr. LE HOANG SONMember of BOD (resigned in July 2019)Year of birth: 1977Qualification: Bachelor Degree in Laws, Bachelor Degree in Business Administration

Working history: � 2001 - 2003: Project Legal Specialist of Tan Binh

Investment and Construction JSC.

� 2004 - 2007: Project Legal Specialist of Cotec Housing Investment and Development JSC.

� October 2007 - April 2012: Deputy Head of Legal Department of Khang Dien House Trading and Investment JSC.

� April 2012 - April 2013: Member of BOD cum Deputy Head of Legal Department of Khang Dien House Trading and Investment JSC.

� October 2014 - March 2017: Head of Project Legal Department Khang Dien House Trading and Investment JSC.

� March 2017 - July 2019: Deputy General Director of Khang Dien House Trading and Investment JSC.

� September 2015 - July 2019: Member of BOD of Khang Dien House Trading and Investment JSC.

Positions in other organizations: None.

Mrs. Ngo Thi Mai ChiMember of the Board of Directors (appointed in July 2019)Year of birth: 1978Qualification: Bachelor Degree in Accounting Financial

Experience:Mrs. Ngo Thi Mai Chi has more than 21 years of experience in finance - accounting. She joined Khang Dien in 2007 and has made many contributions to the Company’s financial - accounting management. As a member of the Board of Directors, she continues to contribute to the Company’s successes and helps the Company continue to develop in the future.

Working history: � January 2001 - December 2004: Accountant, Chief of

Account - Finance of A&B Co., Ltd.

� May 2005 - October 2007: Deputy Head of Accounting - Finance Department of Truong Thanh Furniture Corporation.

� December 2007 - November 2015: Internal control experts, Chief Accountant, Chief Financial Officer of Khang Dien House Trading and Investment JSC.

� December 2015 to February 2017: Deputy General Director of Khang Dien House Trading and Investment JSC.

� March 2017 - present: General Director of Khang Dien House Trading and Investment JSC.

� July 2019 - present: BOD member of Khang Dien House Trading and Investment JSC.

Positions in other organizations: None.

BOARD OF DIRECTORS (continued)

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GENERAL DIRECTOR TEAM

Mr. LE HOANG SON

Deputy General Director (resigned in July 2019)Year of birth: 1977Qualification: Bachelor Degree in Laws, Bachelor Degree in Business Administration.

(See “Board of Directors” for details about Mr. Le Hoang Son.)

Mr. BUI QUANG HUYDeputy General DirectorYear of birth: 1984 Qualification: Master Degree in Project Management

Experience:Mr. Bui Quang Huy has more than 14 years of experience in real estate project investment and development at leading corporations in Vietnam and abroad. Currently, Mr. Huy has undertaken Deputy General Director position, in charge of project management and investment, to ensure the process of developing and managing projects  meet the highest quality standards, sustainability and high efficiency.

Working history: � 2007 - 2008: Project Management Specialist of Phuc

Yen Real Estate JSC.

� 2008 - 2011: Project Manager of CapitaLand (Vietnam) Holdings Pte. Ltd.

� 2011 - 2017: Project Executive Director, Investment & Development Director of Novaland Investment Group Corporation (Novaland Group)

� 2017 - 2019: Deputy General Director of An Gia Hung Investment Construction JSC.

� February 2019 - present: Deputy General Director of Khang Dien House Trading and Investment JSC.

Positions in other organizations: None

Mrs. NGO THI MAI CHI

General DirectorYear of birth: 1978Qualification: Bachelor Degree in Accounting FinancialMrs. Ngo Thi Mai Chi is a Member of the Board of Directors cum General Director.

(See “Board of Directors” for details about Mrs. Ngo Thi Mai Chi.)

Mr. TRUONG MINH DUY

Deputy General Director Year of birth: 1973 Qualification: Construction engineer

Experience: He has more than 25 years of experience in project management. Prior to joining Khang Dien, Mr. Duy used to hold senior positions at real estate trading and investment companies. He has made a lot of positive contributions in advising and operating the construction management at Khang Dien’s projects.

Working history: � 1997 - 2004: Design Engineer, Design Manager, and

Technical Manager at TH Hydraulics Construction Consultant Co., Ltd.

� 2005 - 2009: Head of Construction Center - Construction Technology & Building Material JSC (Cotec).

� 2009 - 2014: Head of Project Management Division - Sai Gon Thuong Tin Real Estate (Sacomreal).

� 2014 - 2016: Regional Managing Director of Nova Real Estate Investment Corporation (Novaland).

� April 2017 - present: Deputy General Director of Khang Dien House Trading and Investment JSC.

Positions in other organizations: None.

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Mrs. VUONG HOANG THAO LINHMember of Inspection CommitteeYear of birth: 1974Qualification: Bachelor Degree in Economics, Bachelor Degree in Laws, and Master Degree in Business Administration

Experience: Ms. Linh has more than 21 years of experience in accounting and auditing. She used to work as a Senior Auditor of Accounting and Consulting Co., Ltd. (A&C) and Chief Accountant at Air Energy Vietnam and Avon Comestics Vietnam. At present, she is the Deputy Investment Director of VinaCapital.

Working history: � 1996 - 2001: Senior Auditor at A&C.

� 2001 - 2003: General Accountant at New Toyo Tissue Paper Mill (Vietnam).

� 2003 - 2004: Chief Accountant of Air Energy Vietnam.

� 2004 - 2006: Chief Accountant of Avon Cosmetics Vietnam.

� 2006 - 2014: Investment Manager of VinaCapital Corporate Finance Vietnam.

� 2014 - present: Investment Director of VinaCapital Corporate Finance Vietnam.

� September 2017 - present: Member of IC at Khang Dien House Trading and Investment JSC.

Mrs. LUU THI XUAN LAI

Member of Inspection Committee Year of birth: 1978Qualification: Bachelor of Finance and Accounting

Experience: Mrs. Lai has more than 17 years of experience in accounting. She used to work as Manager of Accounting Department at the companies i.e. Traffic Work Construction Company No.507 and Thai Thinh Capital JSC and Chief Accountant for Song Lap Real Estate Investment and Trading Co., Ltd.

With her intensive working experience in large real estate enterprises, Mrs. Lai has made positive contributions in supporting to review and control construction costs, ensuring quality of the Company’s projects and compliance to law.

Working history: � 2000 - 2003: Accountant for the branch Traffic Work

Construction Company No.507.

� 2007 - 2009: Accountant for Thai Thinh Capital JSC.

� 2010 - 2011: Accountant for Eastern Real Estate Investment and Trading Co., Ltd.

� 2012 - 2013: General Accountant for Lam Vien Investment and Construction JSC.

� 2014 - April 2017: Chief Accountant for Song Lap Real Estate Investment and Trading Co., Ltd.

� April 2017 - present: Member of IC at Khang Dien House Trading and Investment JSC.

Positions in other organizations: None

Mrs. PHAM KIM THOA

Head of Inspection CommitteeYear of birth: 1975Qualification: Bachelor of Finance and Accounting

Experience: Mrs. Thoa has more than 20 years of experience in accounting. She used to work as an accountant for the companies such as Urban Development and Investment Company and Vuon Pho JSC (Vung Tau) and Chief Accountant for Tri Minh Real Estate Trading and Investment JSC. Mrs. Thoa manages Inspection Committee in evaluating business results and supervising all activities to ensure the Company’s compliance to law.

Working history: � 1998 - 2009: Deputy Manager of Accounting

Department at Urban Development and Investment Company.

� 2009 - 2010: Chief Accountant at Vuon Pho JSC.

� 2010 - April 2017: Chief Accountant at Tri Minh Real Estate Trading and Investment JSC.

� April 2017 - September 2017: Member of IC at Khang Dien House Trading and Investment JSC.

� September 2017 - present: Head of IC at Khang Dien House Trading and Investment JSC.

Positions in other organizations: None.

Positions in other organizations:

� Member of BOD of Vina Construction Machine JSC

� Head of IC of Hung Vuong Plaza JSC

� Head of IC of International Dairy Products 

� Member of IC of HUD.VN Social Housing Development JSC

INSPECTION COMMITTEE

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HUMAN RESOURCE REPORT

HUMAN RESOURCE STRUCTURE OF KHANG DIEN

As of 31 December 2019, Khang Dien had 327 employees (including employees of the Parent Company and the subsidiaries), 35 employees more than that of 2018. The increase in the number of employees in 2019 was driven by business expansion and new projects deployed at the same time.

PERSONNEL STRUCTURE BY QUALIFICATIONS

Post-Graduate 16

Graduate 206

College 105

PERSONNEL STRUCTURE BY AGE

Over 45 years old 56

31 to 45 years old 183

Under 30 years old 88

PERSONNEL STRUCTURE BY GENDER

Male 192

Female 135

Personnel structure by qualifications

Personnel structure by age

Personnel structure by gender

Post-Graduate: 16

Graduate: 206

College: 105

Over 45 years old: 56

31 to 45 years old: 183

Under 30 years old: 88

Male: 192

Female: 135 59%

17%

5%

56%

63%

27%

41%

32%

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PERFORMANCE REPORTCHAPTER II

OVERVIEW OF REAL ESTATE MARKET IN 2019

ECONOMIC GROWTHAccording to the General Statistics Office, GDP grew 7.02% in 2019, exceeding the government's target of 6.6% to 6.8%. In particular, GDP of four quarters increased by 6.82%, 6.73%, 7.48%, 6.97%, respectively. Since 2011, this year’s growth is the second consecutive year Vietnam achieves growth rate of over 7%.

Attracting foreign direct investment (FDI) is said to be a bright spot of 2019 economy. According to Foreign Investment Agency (Ministry of Planning and Investment) as of 20 December 2019, FDI into Vietnam reached USD38 billion, up 7.2% as compared to the same period of last year. This is also the highest number in the past 10 years. Specifically, newly registered capital was nearly USD17 billion, adjusted and additional capital reached USD5.8 billion, and capital contributed to share purchase reached USD15.47 billion. In 2019, foreign investors invested in 19 sectors. Real estate business operation ranked second with total investment capital of USD3.88 billion, accounting for 10.2% of total registered investment capital.

Both domestic and foreign economic experts stated that Vietnam has achieved remarkable successes in growth from 2016 up to now and is likely to continue to maintain strong growth momentum in the future. However, Vietnam is also facing some challenges such as global rapid changes, impacts of Industry 4.0, and climate change.

REAL ESTATE MARKET Looking back at 2019, the experts state that despite the challenges, Vietnam’s real estate market generally developed more stable and professional and less risky than the previous years. Real estate currently plays an increasingly important role as one of the drivers for economic growth through capital investment, job creation, consumption and tax paying.

According to the industry experts, Vietnam is having strong housing demand and potential market for hospitality and industrial real estate developments. Increasing FDI inflows into the real estate sector point to strong market potentials in the medium and long terms.

In 2019, real estate projects having transparent legal work done in Ho Chi Minh City metropolitan continued to affirm their positions in the market where home buyers have been increasingly required project legal clearance.

2019 GDP

Up 7.02%Exceeding the government's target of 6.6% to 6.8%

FDI into Vietnam

Reached USD 38 billion (as of 20 December 2019)Up 7.2% as compared to the same period of last year

FDI in real estate

Reached USD3.88 billionAccounting for 10.2% of total registered investment capital

Additionally, Ho Chi Minh City's government has implemented development policy aiming for “Smart Cities” and “A City Within A City” has stimulated infrastructure development connecting the new urban centers in the East, South and Southwest with the existing urban centers, which meets the needs of homebuyers and attracts real estate investors to develop new urban centers.

According to industry experts, real estate companies currently have to cope with various challenges such as inconsistent legal documents related to real estate market as well as difficult administrative procedures of licensing new projects. Nonetheless, these two factors also create opportunities for well-capitalized, well-run, and legally transparent real estate companies in Vietnam in general and in Ho Chi Minh City in particular to grow business and take up market shares.

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REPORT AND ASSESSMENT BY BOARD OF DIRECTORS

CORPORATE GOVERNANCEIn 2019 the Company correctly and fully implemented the regulations of corporate governance and submitted the governance reports for the first 06 months and the entire 2019. Such reports are submitted to State Security Commission of Vietnam, Ho Chi Minh City Stock Exchange and to the public via the Company’s website at www.khangdien.com.vn as required.

BOARD OF DIRECTOR’S ASSESSMENT ON BUSINESS OPERATIONS

EVALUATION OF 2019 BUSINESS PERFORMANCE

ACHIEVEMENTS

The year 2019 was another year of sustainable earnings growth. Particularly, the after-tax profits of the Mother company reached VND 915 billion, 2% higher than planned and grew by 13% since 2018.

In 2019, with the effective business strategy and appreciation for true values, Khang Dien progressed on the solid foundation created from previous years.

� The 1.7 hectare Jamila project consists of 867 condos and 16 shophouses built at the end of the second quarter of 2017. At the end of the first quarter of 2019, the Company completed construction of the entire project and handed over the condos to the buyers according to the committed schedule. The key highlight of Jamila was that right after handing over the condos, the Company immediately proceeded the application for Title Certificates (“Pink Book”). The Company expects to complete Pink Book handover to all Jamila residents in 2020.

� The Company also fully sold 1,593 condos from Safira project in 2019. The Company expects to hand over the condos and put the project into use beginning in the second quarter of 2020, earlier than the contracted schedule. After handing over condos, the Company will immediately proceed the applications for Pink Books for all residents in accordance with the laws.

� In 2019, the Company also deployed construction and launched sales of Lovera Vista project in the Southwest of HCMC. The 1.8 hectare Lovera Vista project consists of 1,310 condos. Construction began in May, 2019 and sale was launched in October, 2019, after completing all legal procedures as requested by the regulations. The Company has sold 801 condos, and the remaining condos are expected to be sold out in 2020. Currently, the project is built to the 18th floor and ready for roof casting in May, 2020. The Company is focusing on construction to ensure that the handover scheduled in the second quarter of 2021 will be met as committed to the buyers.

With the motto of doing better than commitment and upholding true values, full transparent legal documents, Khang Dien’s quality condos have made good impression on the market and thus gained the trust and satisfaction of the customers and investors.

THE CONDOS PRODUCT LINE CREATED GOOD IMPRESSION ON THE MARKETFrom 2017 to 2019 Khang Dien alternately deployed 3 condo projects: Jamila, Safira and Lovera Vista with nearly 4,000 condos. These condo projects created good impressions on the market and welcomed by customers.

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REPORT AND ASSESSMENT BY BOARD OF DIRECTORS (continued)

In 2019 the Company deployed Verosa Park villas - townhouses in the high-end low-rise market segment with 296 houses. Construction of Verosa Park was completed, and sales was launched in the third quarter of 2019, after fully completing legal procedures according to the regulations. Verosa Park was highly regarded on the real estate market with high-end design and transparent legal status. As of 31 December 2019, the Company has sold 150 houses. The remaining houses are expected to be sold out in 2020. The project made great contributions to the Company’s revenue and profits in 2019.

EVALUATION ON BOARD OF DIRECTORS’ MEETINGS

� In 2019, the BOD held regular, periodic and extraordinary meetings. The meetings of the BOD were held and implemented in accordance with the Enterprise Law, Corporate Charter and Internal Control Regulations.

� The matters of business development strategies and management systems were regularly reviewed and evaluated by the BOD in the periodic meetings.

� The BOD issued Resolutions for the Company’s operations; these resolutions followed the approved procedures and were complied with the provisions of the Enterprise Law and the Company’s Charter, and in alignment with the business strategies and business plans approved by the General Shareholder Meeting (GSM).

EVALUATION ON BOARD OF DIRECTORS’ ACTIVITIES

� According to the BOD’s operation plan, the works performed by the BOD in 2019 correctly follow the Resolutions of the General Shareholder Meeting and comply with the Charter and Internal Control Regulations.

� All members of the BOD showed high senses of responsibility, correctly performed their roles, proposed many solutions and made timely and good decisions in compliance with the laws.

� The BOD led and managed the Company achieved revenue and profits targets in 2019, fully performed business duty to the State budget and delivered benefits to the Company’s shareholders.

EVALUATION ON BOARD OF DIRECTORS’ SUPERVISION ON GENERAL DIRECTOR

� The BOD fully supervised the works performed by the GDT. As a result, the BOD understood the Company’s operations, on which the GDT and BOD cooperated effectively to make timely and good decisions, policies and to execute the proposed business plan, which delivers the best profits for the Company and its shareholders.

� Supervision on the GDT was regularly and closely maintained by the BOD to ensure that the Company’s operations remained stable and in accordance with the laws.

PROFITS GROWTH

MAINTAINING PRUDENT FINANCIAL STRUCTURE

The projects that were successfully deployed in the past years, such as Jamila, Safira, Lovera Vista and Verosa Park, have made significant contributions to revenue and profits of the Company from 2017 to 2019 and in the following years. In 2019, the Company’s after-tax profits grew by 13% compared to that of 2018.

In 2019 the Company’s owner equity reached VND 7,664 billion, increased by 11% over the same period last year, accounting for 58% of the total capital and becoming the main capital source to form the Company’s assets. This is shown that the Company is steered toward financial independence and ensured safe financial structure.

Currently, Khang Dien is successful in developing townhouses, luxury villas, condos and position itself on the real estate market in Ho Chi Minh City. In the forthcoming years, Khang Dien will consider to invest in and operate

SHORTCOMINGS

BOARD OF DIRECTORS’ EVALUATION ON GENERAL DIRECTOR TEAM’S ACTIVITIES

EVALUATION BY THE INDEPENDENT MEMBER OF BOARD OF DIRECTORS ON BOARD’S ACTIVITIES

offices for lease and speed up screening for investment opportunities in order to grow its land bank in potential areas in neighboring provinces of Ho Chi Minh city.

EVALUATION OF 2019 BUSINESS PERFORMANCE (continued)

The GDT had an effective working year according to the orientation and guideline by the BOD. In addition to fulfilling responsibilities for each field as assigned, members of the GDT worked closely to tackle issues for the Company’s common benefit in order to achieve the performance goals set forth by the GSM and optimize shareholder benefits.TOWNHOUSES AND HIGH-END VILLAS

CONTINUE TO HAVE GOOD POSITIONS IN THE MARKET

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SUPERVISION RESULT ON GENERAL DIRECTOR AND THE OTHER MANAGERS

PLANS AND DIRECTIONS BY BOARD OF DIRECTORS

� In their management and operation activities, the General Director and the other Managers followed the guidelines by the BOD and the General Shareholder Meeting; always well-coordinated with the BOD to make good and timely decisions to complete the proposed business plan; well executed project implementation, well prepared resources to ensure that house handover on schedule.

� In management and operations, the General Director and other Managers showed high senses of responsibility, correctly played their roles, proposed many solutions and made the right and timely decisions for the Company’s operations in compliance with the law.

� The General Director and other Managers also completed the Company’s development-oriented tasks, through planning, control and adjustment on strategic decisions and fulfilled obligation of information disclosure as regulated.

Diversifying products and expanding market geography based on market demand

Each project has its own characteristics, therefore the Company plans to develop the most suitable product line for each market segment, bringing benefits to the customers and ensuring success for the project.

Besides the projects in District 2 and District 9, Khang Dien is expanding business in the HCMC Southwest using the existing land bank while continuing the clearance and compensation to expand land areas.

Besides, the Company continues to explore, study and seek opportunities to participate in the other potential housing opportunities in HCMC and the neighboring provinces.

Maintain healthy financial capacity

Maintaining healthy financial capacity with a large amount of cash, a proper debt to equity ratio, a balanced capital structure, effectively utilizing owner capital and low cost equity injections. As such, the Company not only utilizes the existing resources but also can effectively access external capital resources.

Optimize costs and maximize profits

Determining the key goal in project investment through selecting suitable plan and scale, the Company actively pushes project progress and thereby, enhancing profit margin of each project.

Creating perfect products

Not stopping at offering interior bare shell finish houses, Khang Dien is pushing to launch interior fully finished houses together with available Title certificates - “turnkey” products. At the same time, Khang Dien continues to focus on project amenities so that the customers can enjoy the best utilities, worthy of “Where you put your trust - Where you make your home”.

Strategic direction on corporate governance and human resource development

Setting up governance in the direction of standardizing processes and standards to strengthen labor productivity and quality.

Developing high quality and dedicated human resources. The Company is striving to create the best working environment so that the employees are assured and will stay with the Company in the long-term, which helps to create the best homes for the customers. Khang Dien is working hard to become an attractive place to work.

The BOD determines that the Company’s business must be built on the basis of customers’ trust. With the advantage of our solid legal practice and effective business strategy, Khang Dien affirms its mission to bring to the customers products having completed legal procedures, reasonable prices and good quality. Looking ahead, the BOD sets forth the following directions:

REPORT AND ASSESSMENT BY BOARD OF DIRECTORS (continued)

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REPORT BY GENERAL DIRECTOR TEAM

REPORT AND ASSESSMENT ON BUSINESS OPERATION

Unit: VND Billion

Items Plan Actual Actual vs Plan

Net Revenue 3,000 2,813 94%

Profit after tax of Parent Company 900 915 102%

Unit: VND Billion

Items 2017 2018 2019Compared to 2018

Change %

Net Revenue 3,055 2,917 2,813 (104) -4%

Profits before tax 729 1,075 1,190 115 11%

Profits after tax 502 808 915 107 13%

REVENUE

The 2019 revenue reached VND 2,813 billion, slightly declined compared to 2018. The revenue is mainly from product sales and recorded significant contributions from Verosa Park and Jamila projects.

500

1000

1500

2000

2500

3000

3500

502

3,055

808

2,917

915

2,813

PROFITS

The 2019 after-tax profits was VND 915 billion, exceeding the planned profits by 2% and increased by 13% compared to 2018, equivalent to the increase of VND 107 billion. Such profits are resulted from good cost controls and sales.

� Safira condo: Up to 31 December 2019, the Company sold out 1,593 condos. Currently, construction of Safira condo is on schedule, and it is expected that the Company will hand over condos to the customers beginning in the second quarter of 2020;

� Lovera Vista condo: Sales were opened in October, 2019 after fully approved by the authorities. In 2019 the Company sold 801 condos out of total 1,310 condos of the project. The remaining condos are expected to be sold out in 2020. Currently, construction progress is at the 18th floor and ready for roof casting in May, 2020.

Business performance 2019

Performance of business plan REVENUE PROFITS

At the end of 2019, net revenue and after-tax profits reached 94% and 102% of the plan approved by the General Shareholder Meeting. Though the real estate market has been facing headwinds, the Company still exceeds the planned profits by 2%, showing the Company’s efforts, growth and sustainability ability.

In general, Khang Dien continued to deliver good business result in 2019. In the year, in addition to focusing on the construction of Safira condo to ensure handover of the condos on time, the Company also launched two new projects - Verosa Park and Lovera Vista condo - and continued to receive customers supports for these two projects.

Unit: VND Billion

2017 2018 2019

In 2019 Company’s sales mainly focused on three projects: Safira condo, Lovera Vista condo, and Verosa Park villas - townhouses. The sales volumes of the above projects shown below:

The Company is focusing on construction to ensure that the condo handover will be ready in the second quarter of 2021 as committed with the customers;

� Verosa Park: The project consists of town houses and villas having high-end designs. Sales were launched in the third quarter of 2019 and up to 31 December 2019, 150 out of 296 houses of entire project have been sold. The remaining houses are expected to be sold out in 2020. This project makes great contribution to the Company’s revenue and profits in 2019.

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REPORT AND EVALUATION ON FINANCIAL ACTIVITIES

Assets

Total assets at the end of 2019 reached VND 13,237 billion, increased by 29% compared to the same period last year and steadily increased each year. Details of assets and asset structure shown below:

Unit: VND Billion

Items 2017 Proportion 2018 Proportion 2019 ProportionCompare to 2018

Change %

Cash and cash equivalents

2,592 27% 1,837 18% 1,175 9% (662) -36%

Receivables 1,548 16% 1,760 17% 3,778 29% 2,018 115%

Inventories 4,858 50% 5,817 57% 7,037 53% 1,220 21%

Long-term assets 606 6% 658 6% 910 7% 252 38%

Other assets 114 1% 156 2% 337 2% 181 116%

Total assets 9,718 100% 10,228 100% 13,237 100% 3,009 29%

2019 TOTAL ASSETS 29%

Cash and cash equivalents Receivables Inventories Long-term assets Other assets

9%

27%

18% 17% 57% 6%

16% 50% 6%

53% 7% 2%

1%2017

2018

2019

2%

� Cash and Cash equivalents: at the end of 2019, this item decreased and accounted for 9% of total assets. The reason for the decrease is that the Company spend cash to acquire lands and develop infrastructures as well as pays for constructions as required by ongoing business.

� Receivables: at the end of 2019, the receivables significantly increased over the same period last year and accounted for 29%, the large proportion of the total assets. This is mostly driven by the receivables of Verosa Park project because the project was on sale at the end of 2019 and payments have been collected on installment.

� Inventory: this item accounted for the highest proportion of total assets at 53%, equivalent to VND 7,037 billion, increased by 21% compared to the same period last year. The reason for such increase is that the Company has pushed land compensation and focused on projects that are under constructions. Inventory is mainly from Safira condo, Verosa Park, Lovera Vista condo, Tan Tao project, Thuy Sinh project, Binh Trung project, 11A project and etc.

� Overall, asset structure of 2019 does not have significant change when compared to 2018 when 3 major items: Cash and cash equivalents, Receivables, Inventory are still accounted for the largest proportion, 91% of total assets. The structure is appropriate with the characteristics of the real estate industry and demonstrates financial prudence supporting business growth in the near future.

2,000

4,000

6,000

8,000

10,000

12,000

14,000

9,718 10,228

13,237

Unit: VND Billion

2017 2018 2019

TOTAL ASSETS

ASSET STRUCTURE

29%

REPORT BY GENERAL DIRECTOR TEAM (continued)

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Capital

Along with the increase in total assets, capital also grew respectively. In particular, the owner’s equity increased and accounted for a major proportion of capital at 58%. Details of capital structure shown below:

Unit: VND Billion

Items 2017 Proportion 2018 Proportion 2019 ProportionCompare to 2018

Change Ratio %

Current liabilities 1,818 19% 2,776 27% 4,572 34% 1,796 65%

Long-term liabilities 1,709 17% 553 6% 1,001 8% 448 81%

Owner's equity 6,191 64% 6,899 67% 7,664 58% 765 11%

Total capital 9,718 100% 10,228 100% 13,237 100% 3,009 29%

2019 TOTAL CAPITAL 29%

2000,0

4000,0

6000,0

8000,0

10000,0

12000,0

14000,0

9,718 10,228

13,237

Unit: VND Billion

2017 2018 2019

TOTAL CAPITAL

Current liabilities Long-term liabilities Owner's equity

34%

19%

27% 6% 67%

17% 64%

8% 58%

2017

2018

2019

CAPITAL STRUCTURE

� Current liabilities: reached VND 4,572 billion and increased by VND 1,796 billion or by 65%, compared to the same period last year. The majority of this item is Customer Prepaids that are the contracted installment payments from the projects under constructions such as Safira condo, Lovera Vista condo. This item will decrease when the Company finished construction and hand over the condos to the customers and recognize revenue and profits.

� Long-term liabilities: mostly were bank loans and bonds to fund the development of projects and land compensation, which also increased inventory. Compared to the same period last year, debts increased by VND 448 billion, lower than the increase in inventory of VND 1,220 billion, which is 3 times higher than the debt growth. This demonstrates that the Company still focuses on using owners’ equity to fund assets and reduce the dependence on loans.

� Owner's equity: reached VND 7,664 billion, an increase of VND 765 billion, or 11% growth compared to the same period last year. This increase were mainly from the net profits together with the capital increase from ESOP in 2019. With a proportion of 58% of total capital, owner’s equity becomes the main source making up the Company's assets. This shows that the Company is oriented to financial autonomy and ensure a safe capital structure.

REPORT BY GENERAL DIRECTOR TEAM (continued)

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REPORT ON IMPROVEMENTS IN ORGANIZATIONAL STRUCTURE AND MANAGEMENT POLICIES In 2019, the Board of Directors was restructured towards independent governance, and the General Director Team continued to implement improvements about organizational structure, policies and governance of the Company.

PROJECT MANAGEMENT IMPROVEMENT SALES STRATEGY IMPROVEMENT

HUMAN RESOURCE DEVELOPMENT TRAINING

FOCUSING ON DEVELOPING THE LEGAL DEPARTMENT

DEVELOPING CUSTOMER CARE TEAM

� Knowing the importance of project management function in ongoing business of the Company, the General Director Team focused on developing the human resources for project management both in quantity and quality; Project management was regularly reviewed and consolidated towards centralized management in order to provide timely and effective support and assistance;

� The workload of each project was systematized, and at the same time, the personnel structure was rearranged. Staffs were assigned in work segments and projects in order to ensure the project progress on schedule, to quality and at reasonable cost;

� Expanded sales networks of professional real estate trading floors in Ho Chi Minh City and across the country.

� More financial support programs: in addition to the quick payment discount program, the Company connected with major banks offering preferential mortgage rates to provide suitable financial support packages for many customer segments.

� Recognizing the importance of human resources for the long-term development of Khang Dien, the Company has strengthened the training to improve professional skills through internal training and guidance from the direct management levels.

� At the same time, the Company focused on improving multidisciplinary knowledge for the employees. Staffs from the department were encouraged to participate in projects, to learn from each other's experiences.

� Knowing the central role of project legal practice to the Company's development by ensuring safety and bringing added value to the projects, the Company intensified on the job training to improve the qualifications and skills of the project legal department while in the process of performing the work;

� Determining legal compliance in the Company's operations one of the top requirements in running the Company, the legal department regularly updates knowledge and relevant legal changes, and at the same time having internal, intensive and advanced trainings.

� Customer care team represents the Company expresses caring to the customers. Therefore, regular trainings were organized to improve professionalism at work.

� In the upcoming time, the Company will continue to develop customers care team in a professional way to retain customers trust in accordance with the Company’s motto “Khang Dien - Where you put your trust - Where you make yourhome".

Financial indicators

ITEMS 2017 2018 2019

SOLVENCY RATIOS

Current ratio 5.0 3.4 2.7

Quick ratio 2.3 1.4 1.2

CAPITAL STRUCTURE

Total liabilities/Total assets 0.36 0.33 0.42

Total liabilities/Total equity 0.68 0.48 0.73

OPERATING RATIOS

Inventory turnover 0.4 0.3 0.2

Receivables turnover 2.0 1.7 0.7

Net income ⁄ Total assets 0.3 0.3 0.2

PROFITABILITY RATIOS

Return on sales (ROS) 18% 28% 33%

Return on Assets (ROA) 6% 8% 7%

Return on Equity (ROE) 11% 12% 12%

� Quick ratio: decreased from 1.4 to 1.2 times due to the shift from Cash and Cash equivalents to Inventory, which was due to land compensation and infrastructure development, and construction during the year in preparation for business activities in the upcoming years. However, the Company maintained high and ready liquidity to meet debt payment dues by keeping a relatively high amount of Cash and Cash equivalents of VND 1,175 billion at the end of the year;

� Capital structure: shown by the Debt/Owner's Equity ratio that increased from 0.48 to 0.73; the reason for this increase was due to a sharp increase in current liabilities. As analyzed previously, the increase in current liabilities is mainly due to contractual prepaids (installment payments) from the customers, so this increase does not mean that the Company is increasing its financial leverage. The ratio remains below 1, which means owner's equity is still greater than debt, indicating that the Company still focuses on financial autonomy so that it is not affected when the business environment changes;

� Operating ratios: decreased compared to the same period last year. This does not mean that the Company's asset turnover is not effective. However it is due to the impact of fractions where the denominator - inventory and receivables - increases, and the numerator - revenue and cost - decreases. As analyzed above, the inventory growth is due to the Company increases its land bank and speed up the construction progress; The receivables growth is due to the installment sales from Verosa Park products at the end of the year, and the cost falls due to effective management. Therefore, the fluctuation of the above ratios shows that the Company's operations are developing in a good way;

� Return on sales: ROS increased sharply from 28% to 33% due to strong growth in profits after tax as a result of strong sales during the year and effective cost management; ROA decreases slightly from 8% to 7% due to the increase in total assets as analyzed above; ROE still achieved 12% despite the increase in owner's equity because the company achieved profit growth.

In general, the Company has a large amount of cash ready for the expansion of land bank, a small amount of bank debt, and the capital consists primarily of owner’s equity. This capital structure represents a prudential financial structure to ensure safety and sustainability in business operations. The Company continues to grow the existing land bank at reasonable costs to ensure resources for generating stable revenue and profits, and a sustainable growth in the coming years in order to optimize benefits for the shareholders.

REPORT BY GENERAL DIRECTOR TEAM (continued)

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� Complete sales, construction, handover, procedure for Title Certificate (Pink Book) for the projects that are active such as: Jamila condo, Safira condo, Lovera Vista condo, Verosa Park luxury townhouses - villas.

� Continue the ongoing land clearance and gradually complete legal procedures for the projects in District 2, District 9, Binh Chanh and Binh Tan; Prepare for business activities in 2020 and the following years. In particular, in 2020 the Company expects to deploy constructions for two low-rise housing projects:

» District 2 Project: 5.7 hectares located in Binh Trung Dong Ward, District 2, Ho Chi Minh City with 159 townhouses and villas;

» District 9 Project: 4.3 hectares located in Phu Huu Ward, District 9, Ho Chi Minh City with 122 townhouses and villas;

No. Items 2020 Growth compared to 2019

1 Revenue VND 3,500 billion

2 Profits after tax VND 1,100 billion 20%

3 Expected dividend 10%

2020 Business planWith the business plan, the construction and handover of the above projects, the Company’s plan for revenue, profits and dividends in 2020 as follows:

� Continue to restructure the investment portfolio toward optimizing benefits for shareholders. Searching for partners who are reputable investors and financial resources for joint ventures and cooperation to implement big projects of the Company;

� Expand investments in new projects according to the following criteria: transparent legal status, reasonable price and prime location, which increases the land bank for the purpose of long-term business plan and sustainable development in the future;

� Continue to improve and complete policies, procedures as well as the structure and personnel apparatus of the Company. At the same time, strengthening supervision activities, improving the role of governance and risk controling in the following sections: finance - accounting, project management, legal and other parts of the Company.

2020 BUSINESS PLAN

General direction

REPORT BY GENERAL DIRECTOR TEAM (continued)

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REPORT BY INSPECTION COMMITTEE

RESULT OF INSPECTION ON BOARD OF DIRECTORS’ AND GENERAL DIRECTOR TEAM’S ACTIVITIES Inspection Committee performed its functions and duties according to the laws, the Company’s Charter and internal governance regulations. Members of the IC implemented the activities in 2019, including: supervising the BOD and GDT and coordinated with the BOD and GDT in monitoring the business operations and financial situation of the Company.

Result on Board of Directors � Within its scope, responsibilities and powers, the BOD issued many Resolutions and Decisions

related to the Company's operations. The Resolutions and Decisions of the BOD were issued in the correct order and in compliance with the Enterprise Law, the Securities Law, the Company's Charter, and the Internal Regulations on Corporate Governance. Activities of the BOD met the requirements on management and business operations of the Company during the year.

Result on General Director Team � The year 2019 is considered the market year which has much influence from new policies

and regulations. However, these policies are aimed at establishing a stable, sustainable and healthy competitive market. The GDT worked hard to build trust with the customers purchasing Khang Dien's products that are not only committed to quality and beautiful design, but also the explicit and transparent legal status.

� In 2019 the GDT and managers made every effort in organizing the implementation for business of the Company, and at the same time, performed well internal management duty, minimized many risks, and promptly provided suitable plans and decisions for the business situations and in compliance with the Resolutions of the GSM.

� The GDT of the Company also implemented audit works and information disclosure in accordance with the regulations.

� Reports to the shareholders on the supervision of business activities in 2018 and the 2019 operation plan by the IC.

� Supervising the use of the new capital raised from the common share offering on 06 September, 2017 approved by the GSM on 12 April, 2019.

� Supervising the implementation of cash dividend, issuing 20,700,484 shares to pay dividends to the existing shareholders, and issuing 103,505,272 shares to increase equity capital from owner’s equity, and issuing 6,200,000 shares under ESOP according to Resolution No. 01/2019/NQ_DHDCD dated 12 April, 2019 of the GSM.

� Coordinating with the independent auditor to verify the semi-annual and annual financial statements in order to assess the truthfulness and rationality

of financial data in accordance with the applicable accounting regime and standards of Vietnam.

� Checking the compliance with the Charter, the resolutions of the GSM and the BOD, internal regulations of the Company and proposing amendments to some regulations and procedures.

� Supervising the signing of the contract with Ernst & Young Vietnam Co., Ltd. on the audit of Financial statements in 2019.

� Completion of the working procedures as well as the inspection and supervision through direct activities of the IC members and the Independent Auditors to ensure compliance of the BOD and GDT.

� Monitoring the disclosure of information and ensuring transparency in accordance with the laws.

SUPERVISION ACTIVITIES BY THE INSPECTION COMMITTEE In 2019 the IC performed its functions, duties in accordance with the Company's Charter. IC inspected and supervised all activities of the Company, ensuring compliance with the laws, the Charter and the strategic goals approved by the GSM, contributing to improving the business efficiency of the Company, specifically as follows:

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SUPERVISION AND EVALUATION ACTIVITIES OF THE INSPECTION COMMITTEE ON THE OPERATION AND FINANCIAL SITUATION

� The IC agreed with the contents of the report on the business performance in 2019 with the main following criteria:

ITEMS 2019COMPARED TO 2018

$ CHANGE % CHANGE

Revenue 2,813 -104 -4%

Profits before tax 1,190 115 11%

Profits after tax of Parent Company 915 107 13%

� Until the end of 2019, the IC did not detect any unusual activities in the Company's production and business activities. The Company's business operations complied with the internal management systems and the provisions of the applicable laws.

� In addition to recognizing the performance, the IC highly appreciated the efforts that the BOD and GDT made during the year, contributing to the preparation for future development of the Company.

REPORT BY INSPECTION COMMITTEE (continued)

RESULT OF SUPERVISION AND EVALUATION ON FINANCIAL STATEMENTSAfter receiving the 2019 audited financial statements of the Company, the IC verified that the documents supporting the figures on the financial statements were presented reasonably and honestly according to the current accounting standards and regime. Based on its appraisal, the IC agreed on the following contents:

Major financial indicators:

ITEMS 2017 2018 2019

SOLVENCY RATIOS

Current ratio 5.0 3.4 2.7

Quick ratio 2.3 1.4 1.2

CAPITAL STRUCTURE

Debt/Total asset ratio 0.36 0.33 0.42

Debt/Owners’ equity ratio 0.68 0.48 0.73

OPERATING RATIOS

Inventory turnover 0.4 0.3 0.2

Account receivables turnover 2.0 1.7 0.7

Net revenue/Total asset 0.3 0.3 0.2

PROFITABILITY

Return on Sales (ROS) 18% 28% 33%

Return on Asset (ROA) 6% 8% 7%

Return on Equity (ROE) 11% 12% 12%

01

02

03

04

RESULTS OF SUPERVISION AND EVALUATION OF THE BUSINESS PERFORMANCE

Unit: VND Billion

About the accounting regime applied at the Company: The company is and has been implementing the accounting regime in accordance with the applicable law.

Making and circulating financial papers to ensure the legality and validity; the recording, opening, using and preserving of accounting books in a timely and complete manner in accordance with the prescribed forms of the current accounting regime.

The financial statement of the Company was made on 31 December, 2019 fully reflected the business and financial results of the Company and was presented in accordance with the reporting forms set forth by the relevant regulations.

The financial statements honestly and reasonably showed the important aspects and financial situation of the Company as of 31 December, 2019.

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SUGGESTIONS OF INSPECTION COMMITTEE

� IC suggests the Company to continue to consolidate, train and complete the human resources with high qualifications and experience to meet the Company’s development requirement.

� Issue additional procedures to strictly control construction costs and management expense in the Company.

� Complete regulations, internal control systems; Supplement regulations and processes of business operations to ensure efficiency and supporting the development of the Company.

� Review and balance investment activities, innovate marketing and brand promotion to develop projects to increase the Company’s competitive advantage in the market.

01

02

03

04

05

06

07

RESULT OF THE SUPERVISION AND EVALUATION ON ASSESSMENT REPORTS ABOUT THE MANAGEMENT AND ADMINISTRATION

The IC agreed with the contents in the report on the management and administration of the Company in 2019 issued by the BOD.

� The members of the BOD, GDT and other managers have performed their assigned rights and duties in accordance with the provisions of the Enterprise Law, relevant laws, the Company's Charter and the Resolutions of the GSM, ensuring the legal interests of the Company and its shareholders.

� BOD showed strategic leadership with long-term planning goals, and at the same time directs closely in each accounting period.

� In 2019, the BOD built a working program and plan, a quarterly working program and specific tasks assignment to each member, conducting quarterly BOD meetings to check and evaluate the tasks’ performance of each member and business results of the Company.

� With urgent tasks, the BOD held urgent meetings to promptly issue Resolutions for the GDT to implement.

� The Resolutions of the BOD achieved high consensus of the members of the GDT. The issued Resolutions were in compliance with the provisions of laws and the Company's Charter. The Resolutions and Decisions by the BOD were strictly and timely implemented by the GDT.

REPORT BY INSPECTION COMMITTEE (continued)

DIRECTION FOR INSPECTION COMMITTEE FOR 2020

� In 2020 IC will continue to do the tasks assigned by the GSM within the rights and duties of the IC as regulated in the Company’s Charter and bear the responsibility to the GSM.

� Supervise the operation and the activities of the BOD and GDT in accordance with the Resolutions of the GSM, the Resolutions of BOD, the Charter of the Company, and the internal management regulations of the Company.

� Strictly control all business management and administration activities of the Company through strengthening the inspection of accounting books and financial statements of the Company.

� Conduct regular and irregular inspection as requested by GSM to ensure the interests of shareholders and benefits of employees.

� Monitor the performance of business plan in 2020 which was approved by GSM.

� Appraisal of the Company's business results, financial statements and reports on management and administration of the Company in 2020.

� Continuing to deploy the revision and completion works of the internal regulations of the Company in accordance with applicable regulations, in order to improve the internal management system of the Company.

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CORPORATE GOVERNANCECHAPTER III

MEMBERSHIP AND STRUCTURE OF THE BOARD OF DIRECTORS

As of the date of 31 December, 2019, the BOD of the Company has 05 members, including 02 independent non-executive, 02 non-executive and 01 executive, and there is no change in the number of the BOD members.

The list of BOD members as follows:

No. Member of BOD Position Number of shares held

Number of share held by related

persons

Violation of law

Conflict of interest with the

Company

Benefits related to the

Company

1 Mrs. Mai Tran Thanh Trang Chairwoman 4,937,046 0 None None None

2 Mr. Ly Dien SonDeputy

Chairman6,126,100 153,028 None None None

3 Mrs. Nguyen Thi Cam VanMember

(Independent)1,735,500 0 None None None

4 Mrs. Nguyen Thi Dieu PhuongMember

(Independent)0 73,084,436 None None None

5 Mrs. Ngo Thi Mai ChiMember (General Director)

3,497,244 0 None None None

STRUCTURE AND OPERATION OF BOARD OF DIRECTORS

ACTIVITIES OF BOARD OF DIRECTORSIn 2019 the BOD held 24 meetings with the participation of all members and issued Resolutions on key issues of the Company. At the same time, the BOD timely gave instructions to resolve challenging issues and impediments in actual business operations. The BOD quickly made strategic decisions and effectively fulfilled its duties in maintaining stable and safe operations for the Company.

The Directors unanimously approved all Resolutions of the 24 meetings, among which are:

� Approving the buy-back of the pre-matured KDH_BOND2017 bonds issued in 2017 for Vietnam Debt Fund SPC and Vietnam Debt Fund SPC - A Class Segregated Portfolio with a total value of VND 150 billion;

� Approving the implementation of the plan to issue shares to pay the 2018 dividends at the rate of 5%, issuing shares to increase charter capital from owner’s equity at 25% ratio, and issuing 6,200,000 stocks under the ESOP;

� Approval for the underwriting of the unsecured credit for Khang Phuc House Trading Investment Co., Ltd. to take on debts loaned by the Orient Commercial Joint Stock Bank in order to issue guarantee certificate for condo handover to the buyers for the high-rise housing project at Phong Phu Commune, Binh Chanh District, Ho Chi Minh City;

� Approval for the underwriting of unsecured credits for Thanh Phuc Investment Co. Ltd. and Kim Phat Real Estate Investment Trading Co., Ltd. to take on debts loaned by Orient Commercial Joint Stock Bank in order to issue guarantee certificate for house handover to the buyers of the housing project at Phu Huu Ward, District 9, Ho Chi Minh City;

� Approval for the extraction of 10% of the net profits above the 2018 planned net profits as the bonus for the BOD and GDT of Khang Dien according to the meeting minute of the GSM No. 02/2018/BBH_DHDCD on 26 April, 2018;

� And some other important contents have been published in the 2019 corporate governance report posted on the Company’s website (www. khangdien.com.vn ) and Ho Chi Minh Stock Exchange (www.hsx.vn).

BOARD OF DIRECTORS’S SUPERVISION ON GENERAL DIRECTOR TEAM

� The BOD assessed business peformance in 2018, and at the same time assigned the 2019 business plan to the GDT.

� The BOD supervised and monitored the GDT in order to improve the efficiency of business operations and reaching the set targets.

� Organizing the 2019 annual GSM meeting according to regulations of laws.

� Supervising the implementation of projects and preparing resources to ensure the handover progress to the customers in accordance with the regulations.

� The BOD supervised and gave directions for the implementation of information disclosure in accordance with the regulations.

� Implementing the 2018 dividend payment, issuing shares to increase charter capital from owner’s equity and issuing shares under ESOP, which was approved by the 2019 annual GSM.

� Collecting shareholders' votings by writing on the dismiss and addition of one (01) member of the BOD for the remaining period of the 2017-2022 term.

� Completing the plan to increase charter capital in 2019, supervising the implementation according to the issued Resolution of the GSM and the Resolution of the BOD.

� Reviewing and evaluating quarterly business results in of 2019.

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STRUCTURE AND ACTIVITIES OF INSPECTION COMMITTEE

MEMBERS AND STRUCTURE OF THE INSPECTION COMMITTEEThe IC is elected by the GSM in order to conduct supervision activities in accordance with the laws and the Company's Charter; the IC consists of 03 members:

No. Member of IC Position Number of shares

held

Number of share held by related

persons

Violation of laws

Conflict of interest with the

Company

Benefits related to the

Company

1 Mrs. Pham Kim Thoa Head of IC - - None None None

2 Mrs. Vuong Hoang Thao LinhMember/

Supervisor3,824 73,084,436 None None None

3 Mrs. Luu Thi Xuan LaiMember/

Supervisor- - None None None

SUMMARY OF THE INSPECTION COMMITTEE’S ACTIVITIESIn 2019, the IC held quarterly meetings with the participation of all members/supervisors to summarize the results of the tasks performed during the period and prepare the working plan for the next period. Details of the meetings as follows:

No. Minutes of Meeting No.

Day Subject Content Attendees

1 01/2019/BBH_BKS 28/03/2019

Discussing and considering the implementation of the Resolution of the BOD in the quarter I/2019; Reviewing the implementation of information disclosure regime, examining the 2018 FS figures and preparing for the 2019 annual GSM meeting.

100%

2 02/2019/BBH_BKS 29/06/2019

Considering the implementation of the Resolution of the 2019 annual GSM and the Resolution of the BOD in the quarter II; Reviewing the implementation of information disclosure regime, supervising the notification of a signed audit contract with Ersnt & Young Co., Ltd., examining privately the FS and consolidating quarter I/2019.

100%

3 03/2019/BBH_BKS 20/08/2019

Assessing and considering the implementation of the Resolution of the 2019 annual GSM and the Resolution of the BOD in the quarter III; Reviewing the implementation of information disclosure regime, examining the FS figures for the first 6 months of 2019.

100%

4 04/2019/BBH_BKS 09/12/2019

Assessing and considering the implementation of the Resolution of the BOD in the quarter IV; Reviewing the implementation of information disclosure regime, examining the FS figures for quater III of 2019.

100%

In addition to the official meetings, the IC members/supervisors often held discussions via email, phone to complete the assigned tasks.

COORDINATION BETWEEN INSPECTION COMMITTEE AND BOARD OF DIRECTORS, GENERAL DIRECTOR TEAM, THE OTHER MANAGERS

� The IC, BOD and GDT maintained working relationships and cooperation on the principle of common interests of the Company, of the shareholders, and compliance with the provisions of laws and the Company's Charter.

� The IC worked closely with the Management of the Company to follow the targets and plans approved by the 2019 annual GSM.

� The IC attended BOD meetings and contributed ideas according to the functions and duties of the IC. The IC was facilitated by the BOD and GDT in providing sufficient information for the business and financial situation of the Company as well as meeting documents, Resolutions and Decisions of the BOD.

� In 2019, the BOD and GDT provided all necessary information and documents for the inspection and supervision work performed by the IC.

� The IC, BOD and the GDT cooperated to deal promptly with issues in the process of inspection and control in order to improve the efficiency in the management and operation of the Company.

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REMUNERATIONS OF BOARD OF DIRECTORS AND INSPECTION COMMITTEE

REMUNERATIONS OF BOARD OF DIRECTORS

REMUNERATIONS OF INSPECTION COMMITTEE

In 2019, the total remuneration to the BOD members and BOD Secretary was VND 520,000,000 (in word: Five hundred and twenty million Vietnam Dong).

According to the 2019 audited financial statements, the reported net profits exceed the profit target, therefore the BOD and GDT will receive a bonus of 3% of the net profits after tax, or VND 27,456,985,350 (according to the approved Resolution No. 01/2019/NQ_DHDCD dated 12 April, 2019 of the General Shareholder Meeting). The BOD and GDT agreed to allocate VND 26,000,000,000 from the bonus to contribute to the Fatherland Front Committee and other organizations to prevent Covid-19 and to prevent drought and saltwater intrusion in the Western provinces. The remaining amount will be decided for payment by the BOD at a suitable time.

Apart from the above-mentioned remunerations, the Company has no other payment to the BOD members.

The IC receives remuneration according to the Resolution of the 2019 Annual General Shareholder Meeting, details are as follows:

Head of IC: VND 10 million per month.

IC member: VND 5 million per month.

Apart from the above-mentioned remunerations, the Company has no other payment to the IC members.

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No.Transactions conducted by

Relationships with internal shareholders

Beginning number of shares Ending number of shares Reasons for increase/ decrease (purchasing, selling, transferring, bonus,

etc.)Number of sharesPercentage

(*)Number of shares

Percentage (**)

1Vietnam Ventures Limited

Related person

27,219,704 6.57% 26,885,615 4.94%

� Receiving share dividend and additional shares issued from owner equity.

� Investment portfolio restructuring

2Vietnam

Enterprise Limited

Related person

30,788,537 7.44% 40,025,097 7.35%

� Receiving share dividend and additional shares issued from owner equity.

� Investment portfolio restructuring

3

Vietnam Investment

Property Limited

Related person

4,318,095 1.04% 5,613,522 1.03%

� Receiving share dividend and additional shares issued from owner equity.

� Investment portfolio restructuring

4

Kiwoom Vietnam

Tomorrow Securities Master

Fund [Equity]

Related person

0 0% 170,000 0.03% � Investment portfolio

restructuring

5Viet Nam

Equity Special Access Fund

Related person

0 0% 370,000 0.07% � Investment portfolio

restructuring

6 Mai Tran Thanh Trang

Chairwoman 3,105,420 0.75% 4,937,046 0.91%

� Receiving share dividend and additional shares issued from owner equity.

� Purchasing ESOP

7 Ly Dien SonDeputy

Chairman4,097,000 0.99% 6,126,100 1.13%

� Receiving share dividend and additional shares issued from owner equity.

� Purchasing ESOP

8 Le Hoang Son

Member of BOD cum Deputy General

Director (to July 2019)

1,712,310 0.41% 2,178,002 0.40%

� Receiving share dividend and additional shares issued from owner equity.

� Purchasing ESOP and selling shares.

Notes:

* Based on the beginning charter capital of VND 4,140,233,530,000

** Based on the ending charter capital of VND 5,444,291,090,000

Investment funds: Vietnam Investment Limited, Vietnam Investment Property Limited, Vietnam Enterprise Limited, Vietnam Ventures Limited, Kiwoom Vietnam Tomorrow Securities Master Fund [Equity], Vietnam Equity Special Access Fund (VESAF) under management of VinaCapital Corporate Finance Vietnam Co., Ltd are related to 02 key officers: Nguyen Thi Dieu Phuong – Member of BOD and Vuong Hoang Thao Linh – Member of IC of Khang Dien House Trading and Investment JSC.

SHARE TRANSACTIONS OF INTERNAL SHAREHOLDERS AND RELATED PERSONS

The beginning charter capital

The ending charter capital

VND 4,140,233,530,000

VND 5,444,291,090,000

No.Transactions conducted by

Relationships with internal shareholders

Beginning number of shares Ending number of shares Reasons for increase/ decrease (purchasing, selling,

transferring, bonus, etc.)Number of sharesPercentage

(*)Number of shares

Percentage (**)

9 Ngo Thi Mai Chi

General Director

1,997,880 0.48% 3,497,244 0.64%

� Receiving share dividend and additional shares issued from owner equity.

� Purchasing ESOP

10 Truong Minh Duy

Deputy General Director

152,500 0.04% 288,250 0.05%

� Receiving share dividend and additional shares issued from owner equity.

� Purchasing ESOP

11 Nguyen Tran Cam Hien

Chief Accountant

91,500 0.02% 327,950 0.06%

� Receiving share dividend and additional shares issued from owner equity.

� Purchasing ESOP

12 Nguyen Thuy Trang

CFO 115,000 0.03% 499,500 0.09%

� Receiving share dividend and additional shares issued from owner equity.

� Purchasing ESOP

13 Bui Quang Huy

Deputy General Director 0 0% 65,000 0.01% � Purchasing ESOP

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RISKS AND RISK MANAGEMENT

In 2019, Khang Dien continued to enhance the efficiency of risk management by risk identification, analysis and assessment. Based on that, the Company designed risk control response and took advantages of attractive opportunities.

RISK MANAGEMENT SYSTEMRisk management procedures of Khang Dien focus on analysis and assessment of risks in a systematic way to control, prevent and minimize damages, losses, and negative effects of risks to the Company’s effective business operation.

Process

Organization

The Company’s Management is responsible for issuing and implementing the policies and procedures for risk management and providing resources for risk management activities. The business group (including the Parent company and its subsidiaries) separately manage risks by building their own risk management strategies and policies in line with the Company’s risk management strategies and policies.

Participant Roles

The heads of the function divisions in the parent company, directors of subsidiaries and department heads play key roles in risk management of their functions, business scope or relating works. The manager of each department, division, or project is accountable for determining, analyzing and evaluating potential risks, proposing solutions to prevent within her scope, and reporting to General Director Team. The report is made weekly or at any time when the manager finds that possible risks and their effects to the Company’s daily business activities exceeds her management ability.

General Director Team summarizes the reports and subsequently reports the key risks and preventive measures to General Director. General Director reviews and evaluates the reports weekly or at any time as required and makes decisions to accept the risks or not, choses preventive measures, and approves budget for those solutions. General Director will report to the Board of Directors for final decisions about risk-related issues and their potential business opportunities and the impacts on business objectives and results in the current fiscal year as well as the risks causing impacts on the Company’s medium-term and long-term development strategy.

Identify the risks Measure and evaluate the risks

Recognize and monitor the risks

Risk mitigationRisk management

report

Monitor and review risk

management procedure

CONTROL AND REVIEW

Parent Company

Subsidiaries

Functional Division/

Department

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RISK MANAGEMENT (Continued)

COMMON RISKS AND MANAGEMENT SOLUTIONS

BUSINESS AND FINANCIAL RISKS

� Business risks are mainly related to the Company’s mistakes regarding the time of sale launch, product structure, sale speed, selling price and volume.

� Interest rate risks are related to that the Company uses loans, and the tightening of credit supplies or the increase in interest rates has great impacts on business efficiency of the Company.

� Liquidity risk is related to that the Company’s cash flow may not be able to meet payment requirements in business activities given the Company maintains bank loans and liabilities with partners and customers.

MARKET RISKS � Khang Dien’s business performance has a close

relationship with the credit cycle of the economy. Fluctuations or trend changes have significant impacts on the demand, sales figures, profit, and land bank value of the Company.

� Khang Dien faces the risks of market share loss and that fluctuations in the real estate market have adverse impacts on buyers’ psychology.

� Khang Dien also subjects to the risks of mistakes in brand positioning at company and project levels, thus affecting on its revenue.

Mitigation

� Focusing on developing projects, products that meet the housing demand of the majority of home buyers or that are least affected by credit cycles.

� Closely monitoring the macroeconomic situation, the cycle of the real estate market, housing market, and the adjustment in economic policies.

� Continuously monitoring, considering and evaluating the market, balancing product investment so as to be suitable to the demand of almost home buyers and the market.

� Be willing to re-evaluate and adjust business strategies and plans according to the reality in the market place.

Mitigation

� Maintaining enough cash for business operations and securing credit lines for project finance from the largest and safest banks.

� Proactive in managing cash flows, prioritizes loan interest payments, settling loans before maturity and restructuring loans to lower interest rates and or using fixed interest rates.

� Continues mobilizing capital from the shareholders and strategic investors in order to maintain stable, low risk capital structure.

� Strictly prudent, transparent in project legal practice and land entitlement, and full infrastructure development before sale launch to earn high credit worthiness to the banks.

� Acting with prudence and care in prefeasibility study.

MARKET RISKS

BUSINESS AND FINANCIAL

RISKS

LEGAL, PROJECT EXECUTION, AND REPUTATIONAL

RISKS

RISK RELATED TO ENVIRONMENT, OCCUPATIONAL

HEALTH AND SAFETY

KEY RISKS

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Mitigation

� Strictly complying with construction standards, codes and legal regulations on labor safety and firefighting during the development process of project.

� Always take the initiative to guide, affect and encourage the contractors to put safety above all, maintain health of employees and pay special attention to fire prevention and firefighting.

� Avoid interfering with natural geography, taking advantage of available geographic conditions to develop housing, maintaining land area for green space and lake, limiting land area covered with concrete, partially helping to reduce flooding and increasing the quality of living environment.

LEGAL, PROJECT EXECUTION, AND REPUTATIONAL RISKS � The ongoing changes and lacks of consistency among the legal documents on land development and real

estate business often put the Company in situations facing the risks of noncompliance and mistakes.

� The Company’s lack of updates of rules and regulations can lead to risks of disputes with customers and partners.

� Land clearance and compensation can face delay risk due to objective reasons, leading to delay in project implementation and increasing cost of capital.

� In purchasing land and property projects, the Company faces unknown factors relating to legal status, potential obligations and disputes.

� Khang Dien’s reputation depends on the quality of the products and after-sales services. Errors and slow processing in resolving issues can also affect the Company’s reputation.

RISK RELATED TO ENVIRONMENT, OCCUPATIONAL HEALTH AND SAFETY

� Construction and operation of residential areas may cause surrounding environmental pollution.

� Environment, condition and working time in the field of land development and construction always hide risks of occupational accidents and health.

Mitigation

� The Company carefully reviews internal processes in project legal practice and requires absolute compliance.

� Frequently update for changes in legal requirements relating to real estate and laws on project investment to timely develop suitable plans and ensure compliance with the law.

� Strictly implement, and always comply with, the relevant laws and actively fulfil the obligations on finance, tax and the others to ensure complete compliance.

� Selecting reputable consultants and contractors in combination with cross-checking and independent supervision.

� Applies strict standards in measuring the experience and reputation of the selected personnel and service providers for operation and maintenance together with a strong supervision team to ensure project quality.

� Customer Care Center (CSC) hires professional property managers such as Savills, CBRE, etc. directly manage the operations and maintenance after the residents have moved in the projects. The operational team coordinates with CSC team and the project’s technical team to resolve all issues in the best way.

� When an issue attracts the attention of the media industry, Marketing and PR Department will take responsibility to share the correct and fair information and to maintain fair and open dialogue with the media, the press and the community.

RISK MANAGEMENT (Continued)

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SUSTAINABILITY REPORTCHAPTER IV

SUSTAINABILITY MESSAGE

Khang Dien has the cohesion between the labor force and the management to pursue the mission of making Khang Dien “Where you put your trust - Where you make your home”. We are committed to creating values and harmonizing the interests of stakeholders and the communities.

In 2019 Khang Dien continued to conduct business operations in consideration of sustainability key factors. The Company paid more attention to its corporate reputation and relationships with the stakeholders, including the communities, employees, partners and investors.

TRANSPARENCY - HARMONY - SUSTAINABILITY

As a public company, Khang Dien is fully aware that it is important to contribute to the building of civilized communities and quality living spaces for the society. Given that awareness, Management always uphold corporate responsibilities to the community and stakeholders.

It is Management’s main responsibility to conduct corporate governance in view of sustainable development, maintain long-term business relationships with the communities as well as stakeholders, and care for the natural environment. Given that responsibility, Management always takes the initiative in putting sustainable development factors into the Company's development strategies and business operations. This principle also makes a significant contribution to creating long-term benefits for the stakeholders and investors.

SUSTAINABILITY ROOTED IN KHANG DIEN’S CORE VALUESThe Company also allocated more resources to monitor the impacts upon the environment resulted from ongoing business operations and put forth mitigating solutions accordingly.

Today the corporate’s role and social responsibility are increasingly important and face more challenges. Khang Dien sincerely thanks its valued customers, partners, the communities and society for their supports in the past years and commits to maintaining sustainability values, striving for more advance and sustainable development each year in order to perform its social responsibility better.

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OVERVIEW OF SUSTAINABILITY REPORT

Sustainability report for 2019 is the fourth consecutive report since 2016. This report is made based on Instructions for Information Disclosure about Environment & Society by Vietnam Annual Report Awards (ARA) 2017, Vietnam Corporate Governance Code of Best Practice by SSC and IFC 2019, Handbook of Vietnam’s Sustainable Development Goals by the Ministry of Planning and Investment and Circular 155/2015/TT-BTC by the Ministry of Finance on information disclosure in the securities market.

The report is prepared in Vietnam for real estate development business, financial sector of the economy.

Information in this report is updated for the fiscal year 2019, from 01 January 2019 to 31 December 2019.

This sustainability report includes Khang Dien’s business operations (The Company: including the parent company and its subsidiaries), and it is a part of the Annual Report 2019 issued to provide information to the shareholders and stakeholders. We continue to review and evaluate sustainability factors in relation to our current business operation, identifying material issues to review and improve as well as reporting better in the sustainability reports in the following years.

CONTACT INFORMATION

We welcome feedback and suggestion to improve our practice of sustainability. Please reach out, write or call us at :

Website: www.khangdien.com.vn Tel: +84 28 3820 8858 - Ext. 634 Fax: +84 28 3820 8859 Head office: Suite 1&2, 11th Floor, Saigon Center, 67 Le Loi, Ben Nghe Ward, District 1, Ho Chi Minh City, Vietnam

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STAKEHOLDER ENGAGEMENT

Stakeholders Ways of engagement Main topics 2019

Distributors, Contractors, and

Suppliers

� Bilateral dialogue � Regular meetings � Project site visits and

inspections � Exchange information via

phone and email

� Quality of products and services

� Performance efficiency � Job safety, worker

health, and environmental protection

� Holding meetings and making reports on daily, weekly, monthly basis at the job site on labor safety.

Customers, Residents

� Bilateral dialogue � Customer Care Center � Customer care events and

model house visits � Interview and collecting

feedback � Consult and answer questions

via phone and email

� Quality of products and services

� Customer satisfaction � Assessment on the

efficiency and work attitude of employees

� Serving around 20,000 customers and residents

Employees

� Performance evaluation � Internal training and guidance

for new employees � Sport, team building activities � Year-end party � Gift giving on holidays � Out-door team building

� Efficiency and skills � Company policy � Occupational safety and

health � Solidarity � Coworker relationship

� 100% staffs went through regular health check and covered by health insurance

Shareholders and Investors

� Quarterly meetings for business performance

� Annual General Shareholder Meeting, Extraordinary General Shareholder Meeting

� Investor meetings � Bilateral dialogues � Project visits � Exchange information via

phone and email

� Business result � Operation status and

operational efficiency � Development direction

and strategy

� Welcoming shareholders in Annual general meeting of shareholders

� Holding meetings and dialogs with investment funds in 02 annual large investment events

� Welcoming securities companies and investment funds for visits and information exchange

Authorities

� Report and request for instructions and guidance for implementation

� Participation in Real Estate Associations

� Professional networking events � Other exchange events

� Topics about laws and state administration

� Market trend � Challenges for

enterprises

� Working with inspection delegations by the Ministry of Construction and State Securities Commission of Vietnam (SSC)

� Working with the agency of taxation

In 2019, Khang Dien maintained dialogues and interactions with its stakeholders over a number of important topics. Through meetings and communications, the Company collected and summarized the feedbacks and comments from the stakeholders. Based upon the information Management could assess the importance and necessity of each sustainability factor, and accordingly modified and made optimized resource allocation.

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IMPACT SCOPE OF MATERIAL FACTORS

Sustainability Pilar Material Factors Signification to

Khang Dien Material Factors GRI Indicator Stakeholders

Thinking and acting

progressively

Responsible business and investment

Taking into consideration sustainability factors in planning and assessment of business and investments

� Business performance � GRI 201 Khang Dien

Focusing on risk management

Integrating risk management in environment protection, labor safety, health and social responsibility into business operations

� Compliance with environmental protection laws

� Control of corruptions and conflicts of interests

� Marketing and sale responsibly

� GRI 307 � GRI 205 � GRI 417

Khang Dien, Partners, Contractors, Suppliers

Improvement and innovation

Innovating enables the Company to catch on with new social trends and meet the stakeholders’ expectation

� Business performance � GRI 201Khang Dien, Partners, Contractors, Suppliers

Using and consuming responsibly

Energy consumption and use

The level of energy consumption impacts the living conditions of the communities and contributes to climate changes

� Energy � Emissions

� GRI 302 � GRI 305

Khang Dien, Contractors, Residents

Water consumption and use

Water is a limited resource the Company should contribute to preserve

� Water � GRI 303Khang Dien, Contractors, Residents

Creating and discharging waste

Increasing recycling, reducing waste, contributing to environmental protection

� Waste � GRI 304Khang Dien, Contractors, Residents

Impact on supply chain

The project investor can influence its supply chain in consuming, using materials responsibly

� Materials � GRI 301Khang Dien, Partners, Contractors, Suppliers

Focusing on the people

Labor diversityEncouraging diversity in age, gender, appearance, ethnic group, religion, etc.

� Relations with employees � Diversity and equality

� GRI 402 � GRI 405

Khang Dien

Labor safety and occupational health

Business operations can be affected by labor accidents and employees’ health

� Labor safety and occupational health

� GRI 403Khang Dien, Partners, Contractors, Suppliers

Community support Supporting the local communities

can enhance company’s reputation � Local communities � GRI 413

Khang Dien Local communities

MATERIAL FACTORS

In 2019, Khang Dien reviewed and assessed and accordingly restructured the 10 key material factors of the Company’s sustainable development in the subsequent years and the future. These factors were put into three sustainability pillars with reference to the sustainability factors under the GRI Standards:

Khang Dien regularly reviews and evaluates its sustainability material factors. The consideration and assessment of those material issues are based on the Company's core values with reference to the following documents: GRI Standards by GlobalReporting.org, Handbook of Vietnam's Sustainable Development Goals by the Ministry of Planning and Investment and Circular 155/2015/TT-BTC by the Ministry of Finance giving guidance on information disclosure in the securities market.

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THINKING AND ACTING PROGRESSIVELY

Forward-looking in thinking and actions is the foundation that enables the Company to innovate in business. This, in turns, brings to the customers and communities better experiences, which makes the Company adaptable and able to grow in ever changing business conditions.

CONDUCT BUSINESS AND INVESTMENTS RESPONSIBLY

Each strategic decision on investments and business operations by Management is taken into account the impacts on the environment and the Company’s reputation to the communities and society. From land bank development to the planning, design - construction and marketing - sales, the Company focuses on limiting the impacts on the natural environment and lives of the local

When integrating risk management into strategic decisions and business operations, Management takes initiatives in precaution and preparation for possible problems affecting on the Company's going concern and efficiency, especially the risks relating to the environment, labor safety and occupational health and reputation. Given the that mindset, Management issues company policies to control corruption and conflict of interests, to comply with the environmental laws and to be responsible for products and marketing - sales. The Board of Directors and General Director Team conduct regularly project site tours as well as chair weekly meetings with the managers to monitor policy implementation.

In corporate governance, Management applies the highest standards of governance as required by the laws (Enterprise law, Circular 155/2015/TT-BTC by the Ministry of Finance giving guidance on information disclosure in the securities market, Government's Decree No.71/2017/NĐCP on governance of public corporations and Circular No.95/2017/TT-BTC by the Ministry of Finance on governance of public corporations). Accordingly, Management issues management policies, processes, procedures including monitoring policies and processes for internal transactions, transactions by stakeholders and risk management. (Please refer to Chapter III: Corporate Governance for more details).

FOCUSING ON RISK MANAGEMENT

communities, choosing the most reasonable methods and solutions to optimize costs, prices for the customers.

The 2019 business operations and performance show that customers and the communities continue to support the Company.

(Please refer to Chapter II: Performance Report for more details).

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APICRM����������������������������

IMPROVEMENT AND INNOVATIONKhang Dien always believes that improvements and innovation enable the Company to come up with better solutions to increase operation efficiency, productivity, which in turn enables the provision of higher quality services to customers and residents. As a result, during the course of business, Khang Dien always listens to feedbacks, comments from customers, residents, the communities, partners, etc., and combines about 20 years of hands-on experience in order to find improvements and new solutions.

Likewise, the successful application of new technical solutions in the development and management of high-rise apartment buildings enables the Company to shorten construction schedules, cut costs while ensuring quality requirements. In 2019, the Company continued to work with the contractors in applying wall sliding formwork in combination with in on-site assembly of pre-casted concrete walls, which helps shortening the construction time and also eliminating the risk of wall surface cracking due to shrinkage when the project is put into use.

In 2019, the Company successful launched API integration between the CRM system (commencing in 2018) and T-Soft enterprise accounting system, and at the moment are considering to upgrade the systems to ERP in the following year. Based on hands-on experience and the present, future requirements for business operations, this system integration reduces administrative workload and shares real time information, which enables the managers to make quicker and more effective decisions.

Deposit receivables

Collection of deposit

Contract installment payment receivables

Collection of installment payments

Penalty interest receivables

Collection of penalty interests

The accounting software receives receivable information from CRMThe accounting software returns receipt/collection information to CRM

Property management fee receivables

Collection of property management fees

Note:

THINKING AND ACTING PROGRESSIVELY (continued)

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USING AND CONSUMING RESPONSIBLY

Construction and property management always impact the environment through the uses of energy, water resource and waste creation. Particularly, energy consumption generates greenhouse gas emission and carbon - one of main drivers of climate changes, of which the world in general and Vietnam in particular are experiencing in recent years. Water is an indispensable resource for life, but water resource in Vietnam is limited and increasingly subjected to the impacts of climate changes. In addition, speedy urbanization across Vietnam in recent years has made the environment worsen when the growing population is proportionate to the increasing waste volume. Currently, waste treatments are the urgent problems in many economic centers and the cities that have high population densities such as Hanoi and Ho Chi Minh City.

To pursue the mission of making the Company "Where you put your trust - Where you make your home” for the communities and society, Khang Dien is actively contributing to the reduction of impacts on the environment. At present, the Company’s portfolio does not include any commercial properties (which consume the most resources than the other types), and all properties managed by the Company are high-rise and low-rise residential properties. Accordingly, the key factors on which Khang Dien is focusing on are the consumption of resources in project development (before projects are put into use) and waste management after projects are put into use.

ENERGY CONSUMPTION

CREATING AND DISCHARGING WASTE

IMPACT ON SUPPLY CHAIN

For each project development plan in 2019, the Company allocated at least 50% of the land for green area and water surface, thus to minimize the concrete surface absorbing and releasing heat energy. The Company’s design team continues to apply environment friendly options including natural lighting and ventilation, setback and buffer space to reduce direct sunshine contact and covering the roof with green trees. High-rise buildings developed by Khang Dien use eco-friendly bricks (unbaked, unfired, no carbon and greenhouse effect generated) in accordance with current regulations. In addition, exterior paints with high thermal insulation are used in combination with opening spaces in high-rise buildings and green spaces to reduce heat absorption. These solutions are intended to reduce the amount of heat absorbed by the buildings, thereby reducing power consumption from air conditioning systems.

Khang Dien is focusing on waste management to minimize the impacts on the environment when the projects are put into use, mainly to prevent air and water pollutions around the project sites and the communities. After the projects are put into use, the property management teams implement waste sorting at sources (dangerous waste, domestic waste, recyclable waste) and call on the residents to optimize the use of packages, plastic containers in order to reduce plastic waste. All projects have waste water sorting and treatment systems as regulated by the authorities before waste waters are discharged into the urban discharge systems.

Clean water is a limited resource and water cost is increasing. Therefore, the Company strikes to minimize the consumption of clean water in gradings and construction. For examples, we use natural water at the construction sites to clean construction equipment, roads and job sites. In addition, the site steering committees inspect daily and stop water leakage at the projects. In order to save water, the Company also focuses on growing grasses, drought-tolerant trees, and keeps the construction sites, roads and grounds clean to reduce water consumption for cleaning.

Khang Dien acknowledges that sustainable development practices require the participation of not only the Company itself but also its supply chain. Given that awareness, the Company's design team is working hard in selecting the materials, equipment that have less impacts on the environment and less effect on the communities’ health. We also apply risk management in choosing contractors, suppliers etc. in order to protect our reputation from problems related to contractors’ or vendors’ reputations.

WATER CONSUMPTION

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FOCUSING ON THE PEOPLE

Human is always the main factor for Khang Dien’s growth. Therefore, the Company maintains policies to create a dynamic, diversified and equal-opportunity working environment so that the employees can improve in the long term.

EMPLOYEE DIVERSITY

LABOR SAFETY AND OCCUPATIONAL HEALTH

At Khang Dien each employee is an integral part ensuring the smooth operation of the bigger team, and all employees are interconnected with the corporate culture, the general operations of the Company (the parent company, subsidiaries). Management highly values experiences, broad views and multi-cultural environment created from its employee diversity because this diversity stimulates improvements and innovations, which enables the Company to well adapt with the ever changing business environment.

Khang Dien always treats its employees in an equal manner and appreciates the long-term relations between the company and employees. The Company highly values “kindness” in treating its employees and accordingly, facilitating the employees to improve and get recognized

Like the previous years, the Company continued to maintain the occupational health and safety policies and monitor the compliance. In project development, the Company strictly adhered to the required standards on occupational safety and fire protection throughout the development life cycle. To be specific, Khang Dien carefully reviewed safety, health and fire prevention factors in all steps, from architectural and structural design, MEP to landscape. During construction, the Company actively guided and encouraged the contractors to put labor safety above all, keeping workers healthy and especially, paying high attention to fire prevention in high-rise projects. In order to strengthen the efficiency, Khang Dien held monthly meetings with the contractors about occupational safety and fire protection.

based on their personal capacities, business performance and especially the “kindness” of their peers. The Company tolerates differences in age, gender, religion, ethnicity and appearance, etc. To facilitate employee integration, the Company regularly organizes teamwork activities that coordinates personnel from all departments with different gender, age, cultural background and living experiences, which facilitates workers to exchange experiences and accumulate work and life knowledge.

In 2019, Khang Dien continued to pursue the policy of improving average income for the employees through the annual review and adjustment of annual income to match with the labor market and the performance of the Company. In order to motivate employees, the Company continued to issue ESOP to all employees.

(Please refer to Human Resource Report for more details).

To protect employees’ health, Khang Dien continued to provide social insurance - health insurance and periodic health checks. In 2019, the Company continued to maintain a private health insurance package for all employees. For spiritual health, the Company maintained the friendly, open working environment, welfare programs, cares in national holidays and the New Year. Management actively took care of the spiritual lives of employees through collective activities such as organizing birthday parties for employees, giving gifts to female employees on Woman Days and supporting employees when they are sick.

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COMMUNITY SUPPORTIn 2019 Khang Dien continued to maintain the tradition of supporting the communities, contributing to the long-term sustainability of the Vietnamese society, and preserving the inherently culture of the Company. This also enhances the notable values in each member of Khang Dien, driving towards building and preserving the Company's image and reputation.

Given the value “Life is not just about receiving”, like many past years, in 2019, Khang Dien’s employees joined Management in nonprofit activities such as:

� Visiting and presenting 500 gifts to the people in Da Tong commune, Dam Rong district, Lam Dong province;

� Presenting 346 gifts to the poor in Chu Se district, Gia Lai province;

� Building water wells in highland provinces such as: Kontum, DakLak and etc., where always lack water in dry seasons;

FOCUSING ON THE PEOPLE (continued)

� Presenting 1,000 gifts on the end-year occasion in order to make the most favorable conditions to the people in communes, wards in Binh Chanh District, Binh Tan District, District 9 so as to give them a happy and meaningful new year together with their family;

� Visiting and sponsoring 500 gifts and scholarships to pupils in all levels with poor condition in Tien Giang and Kien Giang provinces;

� Sponsoring fatal disease cases with poor condition in Ho Chi Minh hospitals.

In the future, Khang Dien will continue community-support activities regularly and improve in both quality and quantity for a better, more civilized society.

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FINANCIAL STATEMENTSCHAPTER V

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KHANG DIEN HOUSE TRADING AND INVESTMENT

JOINT STOCK COMPANY

Consolidated financial statements

For the year ended 31 December 2019

CONTENTS

Pages

General information 133

Report of management 134

Independent auditors’ report 135 - 136

Consolidated balance sheet 137 - 138

Consolidated income statement 139

Consolidated cash flow statement 140 - 141

Notes to the consolidated financial statements 142 - 170

THE COMPANY

Khang Dien House Trading and Investment Joint Stock Company (“the Company”) is a shareholding company incorporated under the Law on Enterprise of Vietnam pursuant to the Business Registration Certificate No. 4103006559 issued by the Department of Planning and Investment (“DPI”) of Ho Chi Minh City on 2 May 2007, as amended.

The Company’s shares were listed on the Ho Chi Minh City Stock Exchange (“HOSE”) with code KDH in accordance with Decision No. 11/QD-SGDHCM issued by HOSE on 21 January 2010.

The current principal activities of the Company and its subsidiaries (“the Group”) are to trade and lease houses, receive land use rights to construct houses for sale and lease, invest in construction of infrastructure in compliance with residential construction scheme to transfer land use rights, undertake engineering and industrial construction works, to provide real-estate consulting services.

The Company’s registered head office is located at Room 1 and 2, 11th Floor, Saigon Centre, 67 Le Loi Street, Ben Nghe Ward, District 1, Ho Chi Minh City, Vietnam.

BOARD OF DIRECTORS

Members of the Board of Directors during the year and at the date of this report are:

Ms Mai Tran Thanh Trang Chairwoman

Mr Ly Dien Son Deputy Chairman

Ms Nguyen Thi Dieu Phuong Member

Ms Nguyen Thi Cam Van Member

Ms Ngo Thi Mai Chi Member appointed on 12 July 2019

Mr Le Hoang Son Member resigned on 12 July 2019

BOARD OF SUPERVISION

Members of the Board of Supervision during the year and at the date of this report are:

Ms Pham Kim Thoa Head

Ms Vuong Hoang Thao Linh Member

Ms Luu Thi Xuan Lai Member

MANAGEMENT

Members of the Management during the year and at the date of this report are:

Ms Ngo Thi Mai Chi General Director

Mr Truong Minh Duy Deputy General Director

Mr Bui Quang Huy Deputy General Director appointed on 19 April 2019

Mr Le Hoang Son Deputy General Director resigned on 12 July 2019

LEGAL REPRESENTATIVE

The legal representative of the Company during the year and at the date of this report is Ms Ngo Thi Mai Chi.

AUDITORS

The auditor of the Company is Ernst & Young Vietnam Limited.

GENERAL INFORMATION

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Management of Khang Dien House Trading and Investment Joint Stock Company (“the Company”) is pleased to present this report and the consolidated financial statements of the Company and its subsidiaries (“the Group”) for the year ended 31 December 2019.

MANAGEMENT’S RESPONSIBILITY IN RESPECT OF THE CONSOLIDATED FINANCIAL STATEMENTS

Management is responsible for the consolidated financial statements of each financial year which give a true and fair view of the consolidated financial position of the Group and of the consolidated results of its operations and its consolidated cash flows for the year. In preparing those consolidated financial statements, management is required to:

» select suitable accounting policies and then apply them consistently;

» make judgements and estimates that are reasonable and prudent;

» state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the consolidated financial statements; and

» prepare the consolidated financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue its business.

Management is responsible for ensuring that proper accounting records are kept which disclose, with reasonable accuracy at any time, the consolidated financial position of the Group and to ensure that the accounting records comply with the applied accounting system. It is also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Management confirmed that it has complied with the above requirements in preparing the accompanying consolidated financial statements.

STATEMENT BY MANAGEMENT

Management does hereby state that, in its opinion, the accompanying consolidated financial statements give a true and fair view of the consolidated financial position of the Group as at 31 December 2019 and of the consolidated results of its operations and its consolidated cash flows for the year then ended in accordance with Vietnamese Accounting Standards, Vietnamese Enterprise Accounting System and the statutory requirements relevant to the preparation and presentation of the consolidated financial statements.

For and on behalf of management:

Ngo Thi Mai ChiGeneral Director

Ho Chi Minh City, Vietnam25 March 2020

TO: THE SHAREHOLDERS OF KHANG DIEN HOUSE TRADING AND INVESTMENT JOINT STOCK COMPANY

We have audited the accompanying consolidated financial statements of Khang Dien House Trading and Investment Joint Stock Company (“the Company”) and its subsidiaries (“the Group”) as prepared on 25 March 2020 and set out on pages 137 to 170, which comprise the consolidated balance sheet as at 31 December 2019, and the consolidated income statement and the consolidated cash flow statement for the year then ended and the notes thereto.

MANAGEMENT'S RESPONSIBILITY

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

AUDITORS’ RESPONSIBILITY

Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with Vietnamese Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the Group's preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

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

REPORT OF MANAGEMENT INDEPENDENT AUDITORS’ REPORTReference: 60766189/21094873-HN

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OPINION

In our opinion, the consolidated financial statements give a true and fair view, in all material respects, of the consolidated financial position of the Group as at 31 December 2019, and of the consolidated results of its operations and its consolidated cash flows for the year then ended in accordance with Vietnamese Accounting Standards, Vietnamese Enterprise Accounting System and the statutory requirements relevant to the preparation and presentation of the consolidated financial statements.

ERNST & YOUNG VIETNAM LIMITED

Duong Le Anthony Deputy General DirectorAudit Practicing Registration CertificateNo. 2223-2018-004-1

Ho Chi Minh City, Vietnam

25 March 2020

Ly Hong MyAuditorAudit Practicing Registration Certificate No. 4175-2017-004-1

VND’000Code ASSETS Notes Ending balance Beginning balance

100 A CURRENT ASSETS 12,326,995,869 9,570,063,085

110 I. Cash and cash equivalents 4 1,174,994,416 1,835,706,312

111 1. Cash 430,646,149 443,546,419

112 2. Cash equivalents 744,348,267 1,392,159,893

120 II. Short-term investment 5 32,490,641 -

123 1. Held-to-maturity investments 32,490,641 -

130 III. Current accounts receivable 3,777,835,110 1,760,315,570

131 1. Short-term trade receivables 6 1,614,477,111 828,283,414

132 2. Short-term advances to suppliers 7 1,700,470,697 700,570,628

136 3. Other short-term receivables 8 463,768,688 234,410,909

137 4. Provision for doubtful short-term receivables 6 (881,386) (2,949,381)

140 IV. Inventory 9 7,037,108,743 5,817,380,412

141 1. Inventories 7,037,108,743 5,817,380,412

150 V. Other current assets 304,566,959 156,660,791

151 1. Short-term prepaid expenses 10 250,231,916 95,407,524

152 2. Value-added tax deductible 54,259,655 61,177,845

153 3. Tax and other receivables from the State 75,388 75,422

200 B. NON-CURRENT ASSETS 910,329,204 657,831,596

210 I. Long-term receivables 95,819,247 122,872,740

211 1. Long-term trade receivables 6 77,954,214 64,683,136

212 2. Long-term advances to suppliers 7 1,728,585 46,961,085

216 3. Other long-term receivables 8 18,136,448 13,228,519

219 4. Provision for doubtful long-term receivables 6 (2,000,000) (2,000,000)

220 II. Fixed assets 47,761,628 34,460,515

221 1. Tangible fixed assets 11 47,761,628 34,460,515

222 Cost 109,142,032 91,489,116

223 Accumulated depreciation (61,380,404) (57,028,601)

227 2. Intangible fixed assets - -

228 Cost 339,700 339,700

229 Accumulated amortisation (339,700) (339,700)

230 III. Investment properties 12 99,666,817 5,170,373

231 1. Cost 104,566,383 17,441,610

232 2. Accumulated depreciation (4,899,566) (12,271,237)

240 IV. Long-term asset in progress 629,487,717 465,990,890

242 1. Construction in progress 13 629,487,717 465,990,890

250 V. Long-term investments 14 14,300,000 14,300,000

253 1. Investment in other entity 14,000,000 14,000,000

255 2. Held-to-maturity investments 300,000 300,000

260 VI. Other long-term assets 23,293,795 15,037,078

261 1. Long-term prepaid expenses 10 10,957,661 6,186,801

262 2. Deferred tax assets 31.3 9,563,044 4,565,973

269 3. Goodwill 15 2,773,090 4,284,304

270 TOTAL ASSETS 13,237,325,073 10,227,894,681

INDEPENDENT AUDITORS’ REPORT (continued)Reference: 60766189/21094873-HN

CONSOLIDATED BALANCE SHEETas at 31 December 2019B01-DN/HN

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VND’000

Code RESOURCES Notes Ending balance Beginning balance

300 C. LIABILITIES 5,572,964,711 3,328,395,397

310 I. Current liabilities 4,571,654,220 2,775,104,328

311 1. Short-term trade payables 16 695,698,468 284,445,768

312 2. Short-term advances from customers 17 2,772,929,571 1,366,862,318

313 3. Statutory obligations 18 294,417,957 239,336,951

315 4. Short-term accrued expenses 19 75,424,337 50,898,854

318 5. Short-term unearned revenues 20 1,330,504 2,039,502

319 6. Other short-term payables 21 319,815,817 168,189,771

320 7. Short-term loans 23 377,291,025 631,774,123

322 8. Bonus and welfare fund 22 34,746,541 31,557,041

330 II. Non-current liabilities 1,001,310,491 553,291,069

332 1. Long-term advances from customers 17 26,526,233 60,874

333 2. Long-term accrued expenses 19 69,227,791 84,266,104

336 3. Long-term unearned revenues 20 10,159,880 25,014,730

337 4. Other long-term liabilities 21 436,260,677 47,376,709

338 5. Long-term loans 23 405,200,418 336,509,323

341 6. Deferred tax liabilities 31.3 52,500,279 58,708,180

342 7. Long-term provisions 1,435,213 1,355,149

400 D. OWNERS’ EQUITY 7,664,360,362 6,899,499,284

410 I. Capital 7,664,360,362 6,899,499,284

411 1. Share capital 24.1 5,444,291,090 4,140,233,530

411a - Shares with voting rights 5,444,291,090 4,140,233,530

412 2. Share premium 24.1 720,153,163 1,724,205,883

418 3. Investment and development fund 24.1 133,577,863 93,173,953

421 4. Undistributed earnings 24.1 1,327,039,024 906,630,515

421a - Undistributed earnings by the end of prior year 411,806,179 98,552,322

421b - Undistributed earnings of current year 915,232,845 808,078,193

429 5. Non-controlling interests 25 39,299,222 35,255,403

440 TOTAL LIABILITIES AND OWNERS’ EQUITY 13,237,325,073 10,227,894,681

VND’000

Code ITEMS Notes Current year Previous year

01 1. Revenue from sale of goods and rendering of services 26.1 2,844,774,366 2,920,026,535

02 2. Deductions 26.1 (31,420,938) (3,431,112)

10 3. Net revenue from sale of goods and rendering of services 26.1 2,813,353,428 2,916,595,423

11 4. Cost of goods sold and services rendered 27 (1,312,924,322) (1,677,391,701)

20 5. Gross profit from sale of goods and rendering of services 1,500,429,106 1,239,203,722

21 6. Finance income 26.2 41,460,133 199,814,534

22 7. Finance expenses 28 (41,617,734) (88,660,889)

23 - In which: Interest expense (1,519,427) (31,709,502)

24 8. Share of profit of associates - 3,999,718

25 9. Selling expenses 29 (115,390,554) (99,262,050)

26 10. General and administrative expenses 29 (162,284,584) (158,135,349)

30 11. Operating profit 1,222,596,367 1,096,959,686

31 12. Other income 30 32,910,340 36,938,967

32 13. Other expenses 30 (65,666,550) (58,397,094)

40 14. Other loss 30 (32,756,210) (21,458,127)

50 15. Accounting profit before tax 1,189,840,157 1,075,501,559

51 16. Current corporate income tax expense 31.1 (284,168,467) (267,438,458)

52 17. Deferred tax income 31.3 11,204,972 1,530,139

60 18. Net profit after tax 916,876,662 809,593,240

61 19. Net profit after tax attributable to shareholders of the parent 915,232,845 808,078,193

62 20. Net profit after tax attributable to non-controlling interests 1,643,817 1,515,047

70 21. Basic earnings per share (VND’000/share) 33 1.69 1.46

71 22. Diluted earnings per share (VND’000/share) 33 1.69 1.46

CONSOLIDATED BALANCE SHEET (continued)as at 31 December 2019

CONSOLIDATED INCOME STATEMENT for the year ended 31 December 2019B01-DN/HN B02-DN/HN

Luu Thi Minh HieuPreparer

25 March 2020

Nguyen Tran Cam HienChief Accountant

Ngo Thi Mai ChiGeneral Director

Luu Thi Minh HieuPreparer

25 March 2020

Nguyen Tran Cam HienChief Accountant

Ngo Thi Mai ChiGeneral Director

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VND’000

Code ITEMS Notes Current year Previous year

I. CASH FLOWS FROM OPERATING ACTIVITIES

01 Accounting profit before tax 1,189,840,157 1,075,501,559

Adjustments for:

02Depreciation and amortisation (including amortisation of goodwill)

11, 12, 15 9,344,289 7,796,198

03 Reversal of provision (2,067,995) (7,889,682)

05 Profits from investing activities (41,460,133) (199,555,050)

06 Interest expenses 28 1,588,101 31,709,502

08 Operating profit before changes in working capital 1,157,244,419 907,562,527

09 Increase in receivables (2,006,442,350) (829,602,706)

10 Increase in inventories (1,268,707,451) (896,541,404)

11 Increase in payables 2,470,492,144 505,086,105

12 Increase in prepaid expenses (159,595,252) (14,829,520)

14 Interest paid (89,909,787) (114,489,485)

15 Corporate income tax paid 18 (229,395,213) (255,916,699)

17 Other cash outflows from operating activities 22 (37,214,410) (20,219,113)

20 Net cash flows used in operating activities (163,527,900) (718,950,295)

II. CASH FLOWS FROM INVESTING ACTIVITIES

21Purchase and construction of fixed assets and other long-term assets

(234,743,660) (161,298,238)

22 Proceeds from disposal of fixed assets - 500,909

23 Payment of term deposits (92,490,641) (44,300,000)

24 Collection of term deposits 60,000,000 44,000,000

26 Proceeds from sale of investments in other entities - 599,722,000

27 Interest and dividends received 66,422,658 80,873,709

30 Net cash flows (used in) from investing activities (200,811,643) 519,498,380

III. CASH FLOWS FROM FINANCING ACTIVITIES

31Capital contribution from non-controlling interest and issuance of shares

96,500,000 326,910,109

33 Drawdown of borrowings 534,764,080 344,815,743

34 Repayment of borrowings (720,624,757) (1,034,223,366)

36 Dividend paid 24.2 (207,011,676) (193,917,029)

40 Net cash flows used in financing activities (296,372,353) (556,414,543)

VND’000

Code ITEMS Notes Current year Previous year

50 Net decrease in cash and cash equivalents (660,711,896) (755,866,458)

60 Cash and cash equivalents at beginning of year 1,835,706,312 2,591,572,770

70 Cash and cash equivalents at end of year 4 1,174,994,416 1,835,706,312

CONSOLIDATED CASH FLOW STATEMENT for the year ended 31 December 2019

CONSOLIDATED CASH FLOW STATEMENT (continued)for the year ended 31 December 2019B03-DN/HN B03-DN/HN

Luu Thi Minh HieuPreparer

25 March 2020

Nguyen Tran Cam HienChief Accountant

Ngo Thi Mai ChiGeneral Director

BÁ

O C

ÁO

THƯ

ỜN

G N

IÊN

2019

142

143

AN

NUA

L RE

PO

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142

143

1. CORPORATE INFORMATION

Khang Dien House Trading and Investment Joint Stock Company (“the Company”) is a shareholding company incorporated under the Law on Enterprise of Vietnam pursuant to the Business Registration Certificate No. 4103006559 issued by the Department of Planning and Investment (“DPI”) of Ho Chi Minh City on 2 May 2007, as amended.

The Company’s shares were listed on the Ho Chi Minh City Stock Exchange (“HOSE”) with code KDH in accordance with Decision No. 11/QD-SGDHCM issued by HOSE on 21 January 2010.

The current principal activities of the Company and its subsidiaries (“the Group”) are to trade and lease houses, receive land use rights to construct houses for sale and lease, invest in construction of infrastructure in compliance with residential construction scheme to transfer land use rights, undertake engineering and industrial construction works, to provide real-estate consulting services.

The Company’s registered head office is located at Room 1 and 2, 11th Floor, Saigon Centre, 67 Le Loi Street, Ben Nghe Ward, District 1, Ho Chi Minh City, Vietnam.

The number of Group’s employees as at 31 December 2019 was 327 (31 December 2018: 292).

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G N

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2019

144

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144

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BÁ

O C

ÁO

THƯ

ỜN

G N

IÊN

2019

146

147

AN

NUA

L RE

PO

RT 2019

146

147

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)as at 31 December 2019 and for the year then endedB09-DN/HN B09-DN/HN

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)as at 31 December 2019 and for the year then ended

2. BASIS OF PREPARATION

2.1 Accounting standards and system

The consolidated financial statements of the Group expressed in thousands of Vietnam dong (“VND’000”), are prepared in accordance with Vietnamese Enterprise Accounting System and Vietnamese Accounting Standards issued by the Ministry of Finance as per:

» Decision No. 149/2001/QD-BTC dated 31 December 2001 on the Issuance and Promulgation of Four Vietnamese Accounting Standards (Series 1);

» Decision No. 165/2002/QD-BTC dated 31 December 2002 on the Issuance and Promulgation of Six Vietnamese Accounting Standards (Series 2);

» Decision No. 234/2003/QD-BTC dated 30 December 2003 on the Issuance and Promulgation of Six Vietnamese Accounting Standards (Series 3);

» Decision No. 12/2005/QD-BTC dated 15 February 2005 on the Issuance and Promulgation of Six Vietnamese Accounting Standards (Series 4); and

» Decision No. 100/2005/QD-BTC dated 28 December 2005 on the Issuance and Promulgation of Four Vietnamese Accounting Standards (Series 5).

Accordingly, the accompanying consolidated financial statements, including their utilisation are not designed for those who are not informed about Vietnam’s accounting principles, procedures and practices and furthermore are not intended to present the consolidated financial position and consolidated results of operations and consolidated cash flows in accordance with accounting principles and practices generally accepted in countries other than Vietnam.

2.2 Applied accounting documentation system

The Group’s applied accounting documentation system is the Voucher Journal and the General Journal system.

2.3 Fiscal year

The Group’s fiscal year applicable for the preparation of its consolidated financial statements starts on 1 January and ends on 31 December.

2.4 Accounting currency

The consolidated financial statements are prepared in VND which is also the Group’s accounting currency.

2.5 Basis of consolidation

The consolidated financial statements comprise the financial statements of the Company and its subsidiaries for the year ended 31 December 2019.

Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains control, and continued to be consolidated until the date that such control ceases.

The financial statements of the subsidiaries are prepared for the same reporting year as the Company, using consistent accounting policies.

All intra-company balances, income and expenses and unrealised gains or losses result from intra-company transactions are eliminated in full.

Non-controlling interests represent the portion of profit or loss and net assets not held by the Company’s shareholders and are presented separately in the consolidated income statement and within equity in the consolidated balance sheet.

Impact of change in the ownership interest of a subsidiary, without a loss of control, is recorded in retained earnings.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3.1 Cash and cash equivalents

Cash and cash equivalents comprise cash on hand, cash in banks and short-term, highly-liquid investments with an original maturity of less than three months that are readily convertible into known amounts of cash and that are subject to an insignificant risk of change in value.

3.2 Inventories

Inventory property

Property acquired or being constructed for sale in the ordinary course of business, rather than to be held for rental or capital appreciation, is held as inventory property and is measured at the lower of cost and net realisable value (“NRV”).

Cost includes:

» Freehold and leasehold rights for land;

» Amounts paid to contractors for construction; and

» Borrowing costs, planning and design costs, costs of site preparation, professional fees for legal services, property transfer taxes, construction overheads and other related costs.

NRV is the estimated selling price in the ordinary course of the business, based on market prices at the reporting date and discounted for the time value of money if material, less costs to completion and the estimated costs of sale.

The cost of inventory property recognised in the consolidated income statement on disposal is determined with reference to the specific costs incurred on the property sold and an allocation of any non-specific costs based on the relative size of the property sold.

Other inventories

Inventories are stated at the lower of cost incurred in bringing each product to its present location and condition, and NRV.

NRV represents the estimated selling price in the ordinary course of business less the estimated costs to complete and the estimated costs necessary to make the sale.

The perpetual method is used to record inventories, which are valued as follows:

Raw materials - cost of purchase on a weighted average basis.

Provision for obsolete inventories

An inventory provision is created for the estimated loss arising due to the impairment of value (through diminution, damage, obsolescence, etc.) of inventories owned by the Group, based on appropriate evidence of impairment available at the balance sheet date.

Increases or decreases to the provision balance are recorded into the cost of goods sold account in the consolidated income statement.

3.3 Receivables

Receivables are presented in the consolidated financial statements at the carrying amounts due from customers and other debtors, after provision for doubtful debts.

The provision for doubtful debts represents amounts of outstanding receivables at the balance sheet date which are doubtful of being recovered. Increases or decreases to the provision balance are recorded as general and administrative expenses in the consolidated income statement.

BÁ

O C

ÁO

THƯ

ỜN

G N

IÊN

2019

148

149

AN

NUA

L RE

PO

RT 2019

148

149

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)as at 31 December 2019 and for the year then endedB09-DN/HN B09-DN/HN

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)as at 31 December 2019 and for the year then ended

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

3.4 Fixed assets

Fixed assets are stated at cost less accumulated depreciation and amortisation.

The cost of a fixed asset comprises its purchase price and any directly attributable costs of bringing the fixed asset to working condition for its intended use.

Expenditures for additions, improvements and renewals are added to the carrying amount of the fixed assets and expenditures for maintenance and repairs are charged to the consolidated income statement as incurred.

When fixed assets are sold or retired, any gain or loss resulting from their disposal (the difference between the net disposal proceeds and the carrying amount) is included in the consolidated income statement.

3.5 Leased assets

The determination of whether an arrangement is, or contains a lease is based on the substance of the arrangement at inception date and requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset and the arrangement conveys a right to use the asset.

Where the Group is the lessee

Rentals under operating leases are charged to the consolidated income statement on a straight-line basis over the lease term.

Where the Group is the lessor

Assets subject to operating leases are included as the Group’s investment properties in the consolidated balance sheet. Initial direct costs incurred in negotiating an operating lease are recognised in the consolidated income statement as incurred.

Lease income is recognised in the consolidated income statement on a straight-line basis over the lease term.

3.6 Depreciation and amortisation

Depreciation of tangible fixed assets and amortisation of intangible fixed assets are calculated on a straight-line basis over the estimated useful life of each asset as follows:

Building and structures 10 - 20 years

Machinery and equipment 3 - 10 years

Means of transportation 6 - 10 years

Office equipment 3 years

ISO certificate 3 - 10 years

Computer software 3 - 10 years

3.7 Investment properties

Investment properties are stated at cost including transaction costs less accumulated depreciation.

Subsequent expenditure relating to an investment property that has already been recognised is added to the net book value of the investment property when it is probable that future economic benefits, in excess of the originally assessed standard of performance of the existing investment property, will flow to the Group.

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

Infrastructure 25 – 46 years

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

3.7 Investment properties (continued)

Investment properties are derecognised when either they have been disposed of or when the investment properties are permanently withdrawn from use and no future economic benefit is expected from its disposal. The difference between the net disposal proceeds and the carrying amount of the assets is recognised in the consolidated income statement in the year of retirement or disposal.

Transfers are made to investment properties when, and only when, there is a change in use, evidenced by ending of owner-occupation, commencement of an operating lease to another party or ending of construction or development. Transfers are made from investment properties when, and only when, there is change in use, evidenced by commencement of owner-occupation or commencement of development with a view to sale. The transfer from investment property to owner-occupied property or inventories does not change the cost or the carrying value of the property for subsequent accounting at the date of change in use.

3.8 Borrowing costs

Borrowing costs consist of interest and other costs that the Group incurs in connection with the borrowing of funds.

Borrowing costs are recorded as expense during the year in which they are incurred, except to the extent that they are capitalised as explained in the following paragraph.

Borrowing costs that are directly attributable to the acquisition, construction or production of an asset that necessarily take a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the respective asset.

3.9 Prepaid expenses

Prepaid expenses are reported as short-term or long-term prepaid expenses on the consolidated balance sheet and amortised over the period for which the amounts are paid or the period in which economic benefits are generated in relation to these expenses.

The following types of expenses are recorded as prepaid expense and are amortised or recognised consistently with revenue to the consolidated income statement:

» Prepaid rental;

» Tools and supplies;

» Commission fees;

» Discounts; and

» Industrial park’s renovation costs.

3.10 Business combinations and goodwill

Business combinations are accounted for using the purchase method. The cost of a business combination is measured as the fair value of assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange plus any costs directly attributable to the business combination. Identifiable assets and liabilities and contingent liabilities assumed in a business combination are measured initially at fair values at the date of business combination.

BÁ

O C

ÁO

THƯ

ỜN

G N

IÊN

2019

150

151

AN

NUA

L RE

PO

RT 2019

150

151

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)as at 31 December 2019 and for the year then endedB09-DN/HN B09-DN/HN

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)as at 31 December 2019 and for the year then ended

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

3.10 Business combinations and goodwill (continued)

Goodwill acquired in a business combination is initially measured at cost being the excess of the cost the business combination over the Group’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities. If the cost of a business combination is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the consolidated income statement. After initial recognition, goodwill is measured at cost less any accumulated amortisation. Goodwill is amortized over 10-year period on a straight-line basis. The parent company conducts the periodical review for impairment of goodwill of investment in subsidiaries. If there are indicators of impairment loss incurred is higher than the yearly allocated amount of goodwill on the straight-line basis, the higher amount will be recorded in the consolidated income statement.

When the acquisition of subsidiaries does not represent a business combination, it is accounted for as an acquisition of a group of assets and liabilities. The cost of the acquisition is allocated to the assets and liabilities acquired based upon their relative fair values, and no goodwill or deferred tax is recognised.

3.11 Investments

Investment in other entity

Investment in other entity is stated at its acquisition cost.

Held-to-maturity investments

Held-to-maturity investments are stated at their acquisition costs. After initial recognition, held-to-maturity investments are measured at recoverable amount. Any impairment loss incurred is recognised as expense in the consolidated financial statements and deducted against the value of such investments.

Provision for diminution in value of investments

Provision of the investment is made when there are reliable evidences of the diminution in value of those investments at the balance sheet date. Increases or decreases to the provision balance are recorded as finance expense in the consolidated income statement.

3.12 Payables and accruals

Payables and accruals are recognised for amounts to be paid in the future for goods and services received, whether or not billed to the Group.

3.13 Accrual for severance pay

The severance pay to employee is accrued at the end of each reporting year for all employees who have been in service for more than 12 months up to 31 December 2008 at the rate of one-half of the average monthly salary for each year of service up to 31 December 2008 in accordance with the Labour Code and related implementing guidance. The average monthly salary used in this calculation is revised at the end of each reporting year following the average monthly salary of the 6-month period up to the reporting date. Increases or decreases to the accrued amount other than actual payment to employee will be taken to the consolidated income statement.

This accrued severance pay is used to settle the termination allowance to be paid to employee upon termination of their labour contract following Article 48 of the Labour Code.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

3.14 Appropriation of net profits

Net profit after tax (excluding negative goodwill arising from a bargain purchase) is available for appropriation to shareholders after approval by shareholders at the annual general meeting, and after making appropriation to reserve funds in accordance with the Group’s Charter and Vietnam’s regulatory requirements.

The Group maintains the following reserve funds which are appropriated from the Group’s net profit as proposed by the Board of Directors and subject to approval by shareholders at the annual general meeting:

Investment and development fund

This fund is set aside for use in the Group’s expansion of its operation or of in-depth investment.

Bonus and welfare fund

This fund is set aside for the purpose of pecuniary rewarding and encouraging, common benefits and improvement of the employees’ benefits, and presented as a liability on the consolidated balance sheet.

3.15 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. Revenue is measured at the fair value of the consideration received or receivable, excluding trade discount, rebate and sales return. The following specific recognition criteria must also be met before revenue is recognised:

Sale of completed properties

Revenue is recorded when the significant risks and returns have been transferred to the buyer, which is normally on unconditional exchange of contracts. For conditional exchanges, sales are recognised only when all the significant conditions are satisfied.

Sale of land lots and related infrastructure

The Group applies the revenue recognition method as guided in the Official Letter No. 17239/BTC-CDKT dated 20 December 2017 of Ministry of Finance. Accordingly, sublease rentals are recognised on a straight-line basis over the lease terms when the Group progressively receives less than 90% of total rentals. The remaining rentals will be recognised in full upon cumulative receipt of 90% of total rentals.

Rental income

Rental income arising from operating leases is recorded to the consolidated income statement and accounted for on a straight-line basis over the terms of the lease.

Rendering of services

Revenue is recognised upon completion of the services provided.

Interest income

Interest income is recognised as the interest accrues (taking into account the effective yield on the asset) unless collectability is in doubt.

Dividend income

Dividend income is recognised when the Group’s entitlement as an investor to receive the dividend is established.

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153

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152

153

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)as at 31 December 2019 and for the year then endedB09-DN/HN B09-DN/HN

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)as at 31 December 2019 and for the year then ended

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

3.16 Taxation

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 as at the balance sheet date.

Current income tax is charged or credited to the consolidated income statement, except when it relates to items recognised directly to equity, in which case the current income tax is also dealt with in equity.

Current income tax assets and liabilities are offset when there is a legally enforceable right for the Group to offset current tax assets against current tax liabilities and when the Group intends to settle its current tax assets and liabilities on a net basis.

Deferred tax

Deferred tax is provided using the liability method on temporary differences at the balance sheet date between the tax base of assets and liabilities and their carrying amount for financial reporting purposes.

Deferred tax liabilities are recognised for all taxable temporary differences.

Deferred tax assets are recognised for all deductible temporary differences, carried forward unused tax credit and unused tax losses, to the extent that it is probable that taxable profit will be available against which deductible temporary differences, carried forward unused tax credit and unused tax losses can be utilised.

The carrying amount of deferred tax assets is reviewed at each balance sheet 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. Previously unrecognised deferred income tax assets are re-assessed at each balance sheet date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax assets to be recovered.

Deferred income 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 at the balance sheet date.

Deferred tax is charged or credited to the consolidated income statement, except when it relates to items recognised directly to equity, in which case the deferred tax is also dealt with in the equity account.

Deferred tax assets and liabilities are offset when there is a legally enforceable right for the Group to offset current tax assets against current tax liabilities and when they relate to income taxes levied on the same taxable entity by the same taxation authority.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

3.17 Earnings per share

Basic earnings per share amount is computed by dividing net profit for the year attributable to ordinary shareholders of the Company (after adjusting for the bonus and welfare fund) by the weighted average number of ordinary shares outstanding during the year.

Diluted earnings per share amounts are calculated by dividing the net profit after tax attributable to ordinary equity holders of the Company (after adjusting for interest on the convertible preference shares) by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.

3.18 Segment information

A segment is a component determined separately by the Group which is engaged in providing products or related services (business segment), or providing products or services in a particular economic environment (geographical segment), that is subject to risks and returns that are different from those of other segments.

As the Group’s revenue and profit are derived mainly from real estate business in Vietnam while other sources of revenue are not material as a whole, the management accordingly believed that the Group operates in a sole business segment of real estate. Geographical segment of the Group is in Vietnam only. Accordingly, segment information is not presented.

3.19 Related parties

Parties are considered to be related parties of the Group if one party has the ability to control the other party or exercise significant influence over the other party in making financial and operating decisions, or when the Group and other party are under common control or under common significant influence. Related parties can be enterprise or individual, including close members of the family of any such individual.

4. CASH AND CASH EQUIVALENTSVND’000

Ending balance Beginning balance

Cash on hand 12,751,358 8,394,057

Cash in banks 417,894,791 435,152,362

Cash equivalents (*) 744,348,267 1,392,159,893

TOTAL 1,174,994,416 1,835,706,312

(*) Cash equivalents represent bank deposits with maturity less than 3 months and earning interest at the rates ranging from 4.5% to 5.5% per annum.

5. SHORT-TERM INVESTMENT

Short-term investment includes held-to-maturity investments, which represent bank deposits with maturity of six months and earning interest at the rate ranging from 5.8% to 7.2% per annum.

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154

155

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)as at 31 December 2019 and for the year then endedB09-DN/HN B09-DN/HN

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)as at 31 December 2019 and for the year then ended

6. TRADE RECEIVABLES VND’000

Ending balance Beginning balance

Short-term 1,614,477,111 828,283,414

Receivables from sales of residential land properties 1,614,477,111 828,283,414

- Phu An Real Estate Business Investment Co., Ltd. 189,865,957 -

- Others 1,424,611,154 828,283,414

Long-term 77,954,214 64,683,136

Receivables from sales of residential land properties 77,954,214 64,683,136

TOTAL 1,692,431,325 892,966,550

Provision for doubtful receivables (2,881,386) (4,949,381)

In which:

Short-term (881,386) (2,949,381)

Long-term (2,000,000) (2,000,000)

NET 1,689,549,939 888,017,169

7. ADVANCES TO SUPPLIERS VND’000

Ending balance Beginning balance

Short-term 1,700,470,697 700,570,628

Advances for transfer of land use right 1,244,320,795 585,270,768

Advances for construction services 448,064,465 71,237,908

Advances for consulting services - 40,000,000

Others 8,085,437 4,061,952

Long-term 1,728,585 46,961,085

Advances for construction services 1,728,585 1,961,085

Advances for transfer of land use right - 45,000,000

TOTAL 1,702,199,282 747,531,713

8. OTHER RECEIVABLESVND’000

Ending balance Beginning balance

Short-term 463,768,688 234,410,909

Advances for projects compensation 390,657,926 153,702,026

Provisional corporate income tax (i) 55,713,905 50,250,581

Others 17,396,857 30,458,302

Long-term 18,136,448 13,228,519

Overpaid land use fee 6,399,496 6,399,496

Deposits 5,048,500 3,248,571

Others 6,688,452 3,580,452

TOTAL 481,905,136 247,639,428

8. OTHER RECEIVABLES (continued)

(i) In accordance with Circular No. 96/2015/TT-BTC issued by the Ministry of Finance on 22 June 2015 which provides guidelines for implementation of the Law on Corporate Income Tax, the Group is entitled to provisionally pay tax at the rate of 20% on turnover received by cash from its customers less corresponding expenses or at the rate of 1% on cash collections from its customers.

9. INVENTORIESVND’000

Ending balance Beginning balance

Properties under development (*) 6,828,333,749 5,601,254,871

Real estate properties 208,321,111 215,929,549

Raw materials 453,883 195,992

TOTAL 7,037,108,743 5,817,380,412

(*) Properties under development comprise on-going projects to develop the following residential land properties:VND’000

Ending balance Beginning balance

Khang Phuc - Tan Tao Residential Zone 2,428,853,680 1,784,874,162

Saphire Phu Huu 1,280,602,155 444,960,370

Khang Phuc - Binh Hung 11A Residential Zone 470,472,151 449,866,363

Thuy Sinh Phu Huu (**) 422,791,129 403,082,852

Binh Trung - Binh Trung Dong (**) 380,864,855 334,240,034

Others (**) 1,844,749,779 2,184,231,090

TOTAL 6,828,333,749 5,601,254,871

(**) Parts of these projects were pledged to obtain loans from banks (Note 23).

The Group capitalised borrowing costs for the year ended 31 December 2019 amounting to VND’000 85,074,932 (for the year ended 31 December 2018: VND’000 74,055,706). These costs relate to borrowings obtained to finance the development and construction of the Group’s property projects.

10. PREPAID EXPENSESVND’000

Ending balance Beginning balance

Short-term 250,231,916 95,407,524

Commission fees 161,921,346 45,441,206

Discounts 63,660,875 25,401,616

Others 24,649,695 24,564,702

Long-term 10,957,661 6,186,801

Le Minh Xuan Expansion Industrial Park’s renovation costs 5,932,455 2,216,475

Others 5,025,206 3,970,326

TOTAL 261,189,577 101,594,325

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156

157

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)as at 31 December 2019 and for the year then endedB09-DN/HN

11.

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VND’000

Infrastructure

Cost

Beginning balance 17,441,610

Transfer from inventory 57,855,814

Transfer from construction in progress 55,439,830

Sold, disposed (26,170,871)

Ending balance 104,566,383

Accumulated depreciation

Beginning balance (12,271,237)

Depreciation for the year (1,024,747)

Sold, disposed 8,396,418

Ending balance (4,899,566)

Net carrying amount

Beginning balance 5,170,373

Ending balance 99,666,817

The fair values of investment properties at the balance sheet date had not yet been formally assessed and determined, but the management believed that it was much higher than properties’ carrying values considering that investment properties have been almost fully rented out at the balance sheet date.

13. CONSTRUCTION IN PROGRESSVND’000

Ending balance Beginning balance

Le Minh Xuan Expansion Industrial Park 629,487,717 465,990,890

14. LONG-TERM INVESTMENTS VND’000

Ending balance Beginning balance

Investment in other entity (Note 14.1) 14,000,000 14,000,000

Held-to-maturity investment (Note 14.2) 300,000 300,000

TOTAL 14,300,000 14,300,000

B09-

DN

/HN

NO

TES

TO T

HE

CON

SOLI

DA

TED

FIN

AN

CIA

L ST

ATE

MEN

TS (c

ontin

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yea

r the

n en

ded

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159

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159

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)as at 31 December 2019 and for the year then endedB09-DN/HN B09-DN/HN

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)as at 31 December 2019 and for the year then ended

14. LONG-TERM INVESTMENTS (continued)

14.1 Investment in other entity

Ending balance Beginning balance

Amount VND’000

% of interest

Amount VND’000

% of interest

CVH Spring Company Limited 14,000,000 5 14,000,000 5

14.2 Held-to-maturity investments

These represent 30 bonds at par value of VND’000 10,000/bond with an original maturity of 10 years and earning interest at the reference saving account rate plus 0.8% per annum issued by Vietnam Joint Stock Commercial Bank for Industry and Trade – Hanoi Branch.

15. GOODWILL The movements in goodwill during the year are as follows:

VND’000

Cost

Beginning and ending balances 34,008,874

Accumulated amortisation

Beginning balance (29,724,570)

Amortisation for the year (1,511,214)

Ending balance (31,235,784)

Net carrying amount

Beginning balance 4,284,304

Ending balance 2,773,090

16. SHORT-TERM TRADE PAYABLES VND’000

Ending balance Beginning balance

RICONS Construction Investment Joint Stock Company 258,715,812 -

An Phong Construction Co., Ltd. 236,133,913 -

Hoa Binh Construction Group Joint Stock Company 120,061,256 173,057,094

Others 80,787,487 111,388,674

TOTAL 695,698,468 284,445,768

17. ADVANCES FROM CUSTOMERSVND’000

Ending balance Beginning balance

Short-term 2,772,929,571 1,366,862,318

Advances received for transfer of houses and apartments (*) 2,611,735,095 1,204,918,193

Advance received for transfer of project (**) 161,000,000 161,000,000

Others 194,476 944,125

Long-term 26,526,233 60,874

Advances received for transfer of houses and apartments (*) 26,526,233 60,874

TOTAL 2,799,455,804 1,366,923,192

(*) These represent advances based on agreed progress billings from customers who buy houses and apartments of the Group’s projects which are under construction. The Group will hand over houses and apartments to customers upon completion of construction and recognise revenue correspondingly.

(**) This represents advance received from Minh An Trading Investment Joint Stock Company for transfer An Duong Vuong project in accordance with the Contract No. 99/2017/HDK/BCCI-MA dated 11 May 2017 and appendixes.

18. STATUTORY OBLIGATIONS

VND’000

Beginning balance

Payable for the year

Payment made in the year Ending balance

Corporate income tax 215,561,269 294,275,580 (229,395,213) 280,441,636

Value-added tax 22,607,379 76,712,588 (86,814,135) 12,505,832

Personal income tax 975,064 13,038,060 (12,564,081) 1,449,043

Others 193,239 2,817,302 (2,989,095) 21,446

TOTAL 239,336,951 386,843,530 (331,762,524) 294,417,957

19. ACCRUED EXPENSESVND’000

Ending balance Beginning balance

Short-term 75,424,337 50,898,854

Project development costs 35,885,011 37,045,254

Commission fees 18,448,934 -

Interest expense 6,638,220 9,953,647

Others 14,452,172 3,899,953

Long-term 69,227,791 84,266,104

Project development costs 69,227,791 84,266,104

TOTAL 144,652,128 135,164,958

BÁ

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2019

160

161

AN

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160

161

B09-DN/HNNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)as at 31 December 2019 and for the year then ended

20. UNEARNED REVENUESVND’000

Ending balance Beginning balance

Short-term 1,330,504 2,039,502

Advances received for land leases of Le Minh Xuan Industrial Park 1,330,504 2,039,502

Long-term 10,159,880 25,014,730

Advances received for land leases of Le Minh Xuan Industrial Park 10,159,880 25,014,730

TOTAL 11,490,384 27,054,232

21. OTHER PAYABLESVND’000

Ending balance Beginning balance

Short-term 319,815,817 168,189,771

Maintenance fund 152,764,996 120,280,767

Deposits received 149,020,738 38,332,469

Others 18,030,083 9,576,535

Long-term 436,260,677 47,376,709

Capital received from Investment Cooperation Contracts (“ICCs”) (i) 362,000,000 -

Deposits received 46,343,967 16,808,063

Land compensation payables (ii) 21,115,860 23,205,857

Others 6,800,850 7,362,789

TOTAL 756,076,494 215,566,480

(II) There are capital received from Phuc Dat Real Estate Joint Stock Company and Nam Hung Real Estate Investment and Development Limited Company under ICCs amounting to VND’000 252,000,000 and VND’000 110,000,000, respectively, with the term of 18 months from 9 December 2019, to develop Residential project with area of 164,226 m2 in Binh Hung Ward, Binh Chanh District, Ho Chi Minh City.

(ii) This represents land compensation payables to owners of raw land where the Group is going to develop Hamlet 2 Tan Tao Residential project. This payable will be subsequently paid out of the developed land lots from the said project.

22. BONUS AND WELFARE FUNDVND’000

Current year Previous year

Beginning balance 31,557,041 26,663,602

Increase 40,403,910 25,112,552

Decrease (37,214,410) 20,219,113

Ending balance 34,746,541 31,557,041

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THƯ

ỜN

G N

IÊN

2019

162

163

AN

NUA

L RE

PO

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162

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DN

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NO

TES

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HE

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TED

FIN

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L ST

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NO

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BÁ

O C

ÁO

THƯ

ỜN

G N

IÊN

2019

164

165

AN

NUA

L RE

PO

RT 2019

164

165

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)as at 31 December 2019 and for the year then endedB09-DN/HN B09-DN/HN

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)as at 31 December 2019 and for the year then ended

24. OWNERS’ EQUITY (continued)

24.1 Movements in owners’ equity (continued)

(i) On 17 June 2019, the Company completed the issuance of 103,505,272 bonus shares from share premium and 20,700,484 ordinary shares to paid dividends to existing shareholders at par value of VND 10,000/share in accordance with the Resolution No. 01/2019/NQ-DHDCD dated 12 April 2019. On 1 July 2019, the Company received the 23rd amended Enterprise Registration Certificate issued by the DPI of Ho Chi Minh City, approving the increase in charter capital from VND’000 4,140,233,530 to VND’000 5,382,291,090.

On 2 July 2019, the Company completed the issuance of 6,200,000 ordinary shares to employees under ESOP with the price of VND 15,000/share in accordance with Resolution No. 01/2019/NQ-DHDCD dated 12 April 2019. On 11 July 2019, the Company received the 24nd amended Enterprise Registration Certificate issued by the DPI of Ho Chi Minh City, approving the increase in charter capital from VND’000 5,382,291,090 to VND’000 5,444,291,090.

24.2 Capital transactions with owners and distribution of dividendsVND’000

Current year Previous year

Contributed share capital

Beginning balance 4,140,233,530 3,360,000,000

Increase 1,304,057,560 780,233,530

Ending balance 5,444,291,090 4,140,233,530

Dividends

Dividend declared 414,016,516 387,827,389

Dividend paid 414,016,516 387,827,389

24.3 Share capital

Quantity

Ending balance Beginning balance

Authorised shares 544,429,109 414,023,353

Issued and paid-up shares

Ordinary shares 544,429,109 414,023,353

Shares in circulation

Ordinary shares 544,429,109 414,023,353

Pair value of outstanding share: VND 10,000/share (2018: VND 10,000 share).

25. NON-CONTROLLING INTERESTSVND’000

Ending balance Beginning balance

Contributed charter capital 35,977,444 32,477,444

Undistributed earnings 3,055,792 2,511,973

Increase from asset acquisitions 265,568 265,568

Investment and development fund 418 418

TOTAL 39,299,222 35,255,403

26. REVENUES

26.1 Revenue from sale of goods and rendering of servicesVND’000

Current year Previous year

Gross revenue 2,844,774,366 2,920,026,535

Of which:

Sale of residential land properties 2,745,247,150 2,864,133,739

Sale of land use right and related infrastructure (*) 52,829,156 13,220,893

Rendering of services 42,628,314 39,809,570

Operating lease 4,069,746 2,862,333

Less (31,420,938) (3,431,112)

Sale returns (29,528,487) (1,921,455)

Trade discounts (1,892,451) (1,509,657)

Net revenue 2,813,353,428 2,916,595,423

Of which:

Sale of residential land properties 2,713,826,212 2,860,702,627

Sale of land use right and related infrastructure (*) 52,829,156 13,220,893

Rendering of services 42,628,314 39,809,570

Operating lease 4,069,746 2,862,333

(*) During the year, the Group recognised revenue from industrial land and related infrastructure in accordance with accounting policy as described in Note 3.15. If this revenue is recognised on a straight-line basis over the lease terms, the impact of revenue, cost of sales and gross profit of the Group for the current year are presented below:

VND’000

Outright revenue recognition

Revenue recognition on a straight-line basis

Revenue 52,829,156 1,330,643

Cost of sales (17,524,899) (386,815)

Gross profit 35,304,257 943,828

BÁ

O C

ÁO

THƯ

ỜN

G N

IÊN

2019

166

167

AN

NUA

L RE

PO

RT 2019

166

167

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)as at 31 December 2019 and for the year then endedB09-DN/HN B09-DN/HN

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)as at 31 December 2019 and for the year then ended

26. REVENUES (continued)

26.2 Finance incomeVND’000

Current year Previous year

Interest income 38,460,133 62,713,074

Gains on disposal of investments - 137,065,083

Others 3,000,000 36,377

TOTAL 41,460,133 199,814,534

27. COSTS OF GOODS SOLD AND SERVICES RENDERED VND’000

Current year Previous year

Cost of residential land properties sold 1,243,255,306 1,642,795,277

Cost of services rendered 51,448,373 30,289,573

Cost of land use right and related infrastructure 17,524,899 3,843,282

Cost of operating lease 695,744 463,569

TOTAL 1,312,924,322 1,677,391,701

28. FINANCE EXPENSES VND’000

Current year Previous year

Discounts for early payments 28,684,068 44,258,521

Loan interest 1,519,427 31,709,502

Finance support for customers 11,345,565 6,062,436

Loss from disposal of investments - 4,773,681

Others 68,674 1,856,749

TOTAL 41,617,734 88,660,889

29. SELLING EXPENSES AND GENERAL AND ADMINISTRATIVE EXPENSES VND’000

Current year Previous year

Selling expenses 115,390,554 99,262,050

Commission fees 59,966,545 47,657,092

Advertising expenses 23,948,009 14,089,009

Sale supporting fees 10,519,529 16,899,172

Labour costs 7,540,701 6,532,013

Others 13,415,770 14,084,764

General and administrative expenses 162,284,584 158,135,349

Labour costs 92,074,429 71,668,457

Expenses for external services 45,731,559 54,668,984

Depreciation expenses 4,994,990 4,229,750

Others 19,483,606 27,568,158

TOTAL 277,675,138 257,397,399

30. OTHER INCOME AND EXPENSES VND’000

Current year Previous year

Other income 32,910,340 36,938,967

Income from management services 22,971,811 11,839,112

Penalties on violation of contracts 6,794,869 21,060,637

Others 3,143,660 4,039,218

Other expenses (65,666,550) (58,397,094)

Expenses for management services (47,129,757) (19,993,906)

Penalties on violation of contracts (14,197,140) (10,593,634)

Support expenses for land revocation - (11,222,560)

Others (4,339,653) (16,586,994)

OTHER LOSS (32,756,210) (21,458,127)

BÁ

O C

ÁO

THƯ

ỜN

G N

IÊN

2019

168

169

AN

NUA

L RE

PO

RT 2019

168

169

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)as at 31 December 2019 and for the year then endedB09-DN/HN B09-DN/HN

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)as at 31 December 2019 and for the year then ended

31. CORPORATE INCOME TAX

The statutory corporate income tax ("CIT") rate applicable to the Company and its subsidiaries is 20% of taxable profits.

The Company and its subsidiaries tax returns are subject to examination by the tax authorities. As the application of tax laws and regulations are susceptible to varying interpretations, amounts reported in the consolidated financial statements could be changed at a later date upon final determination by the tax authorities.

31.1 CIT expenseVND’000

Current year Previous year

Current CIT expense 269,296,721 254,128,261

Adjustment for under accrual of tax from prior years 14,871,746 13,310,197

Deferred tax income (11,204,972) (1,530,139)

TOTAL 272,963,495 265,908,319

Reconciliation between CIT expense and the accounting profit before tax multiplied by CIT rate is presented below:

VND’000

Current year Previous year

Accounting profit before tax 1,189,840,157 1,075,501,559

At CIT rate of 20% 237,968,029 215,100,312

Adjustments:

Non-deductible expenses 4,288,178 3,988,130

Losses in subsidiaries not yet recognised as deferred tax asset 13,654,507 23,039,927

Non-taxable income - 2,525,622

Share of profit in associates - (799,944)

Consolidation adjustments (3,784,567) 10,722,853

Tax losses carried forward (517,919) (1,978,778)

Adjustment for under accrual of tax from prior years 14,871,746 13,310,197

Adjustment of tax loss under tax authorities’ decision 6,483,521 -

CIT expense 272,963,495 265,908,319

31.2 Current tax

The current CIT payable is based on taxable profit for the current year. The taxable profit of the Group for the year differs from the profit as reported in the consolidated income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are not taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted by the balance sheet date.

31. CORPORATE INCOME TAX (continued)

31.3 Deferred tax

The following are the deferred tax assets and liabilities recognised by the Group and the movements thereon, during the current year and previous year:

VND’000

Consolidated balance sheet

Consolidated income statement

Ending balance Beginning balance Current year Previous year

Deferred tax assets

Accrued interest expenses 8,805,871 3,777,766 5,028,105 (3,295,551)

Provisions for doubtful debts 400,000 400,000 - 400,000

Accrual for severance pay 173,029 157,016 16,013 148,230

Tax loss - - - (17,469,782)

Unrealised profit - - - (68,632)

Accrued expenses - - - (7,274)

Accrued interest income (155,668) (136,763) (18,905) (62,096)

Adjustment due to consolidation of subsidiaries

339,812 367,954 (28,142) 367,954

TOTAL 9,563,044 4,565,973 4,997,071 (19,987,151)

Deferred tax liabilities

Tax loss 25,966,594 24,436,895 1,529,699 11,857,981

Accrual for severance pay 111,200 111,200 - (165,839)

Accrued expenses 358,502 - 358,502 (10,541,844)

Provisions for doubtful debts - - - (400,000)

Unrealised profit - - (216,192)

Accrued interest income (10,588,847) (3,500,986) (7,087,861) 18,281,177

Profit from sale of land properties but not yet taxable

(33,235,179) (33,235,179) - (779)

Adjustment due to consolidation of subsidiaries

(35,112,549) (46,520,110) 11,407,561 2,702,786

TOTAL (52,500,279) (58,708,180) 6,207,901 21,517,290

Net deferred tax income 11,204,972 1,530,139

32. TRANSACTIONS WITH RELATED PARTIES

Remuneration to members of the Board of Directors, Management and the Board of Supervision: VND’000

Current year Previous year

Salaries and bonus of Board of Directors and Management 10,183,446 7,745,630

Allowance of Board of Supervision 240,000 240,000

TOTAL 10,423,446 7,985,630

B09-DN/HNNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)as at 31 December 2019 and for the year then endedNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSas at 31 December 2019 and for the year then ended (continued) B09-DN/HN

33. EARNINGS PER SHARE

The Group used following data to calculate the basic and diluted earnings per share:VND’000

Current yearPrevious year

(adjusted)

Net profit after tax attributable to ordinary equity holders of the Company 915,232,845 808,078,193

Less bonus and welfare fund (*) - (40,403,910)

Net profit attributable to ordinary equity holders of the Company 915,232,845 767,674,283

Weighted average number of ordinary shares (**) 541,320,616 524,503,883

Earnings per share

- Basic (VND’000/share) 1.69 1.46

- Diluted (VND’000/share) 1.69 1.46

(*) Profit used to compute earnings per share for the year ended 31 December 2018 have been restated to the amounts reported in the consolidated financial statements for the year ended 31 December 2018 to reflect the actual appropriation of bonus and welfare fund from undistributed net income of 2018 in accordance with the Resolution of Shareholders at annual general meeting dated 12 April 2019.

Bonus and welfare fund for the year ended 31 December 2019 is not approved by Shareholders as at the date of these consolidated financial statements.

(**) The weighted average number of ordinary shares for the year ended 31 December 2018 has been retrospectively adjusted for the bonus and dividend shares issued on 17 June 2019.

There have been no dilutive potential ordinary shares during the year and up to the dates of these consolidated financial statements.

34. OPERATING LEASE COMMITMENTS

The Group leases office premises under operating lease arrangements. Future minimum lease payables at the balance sheet dates were as follows:

VND’000

Ending balance Beginning balance

Less than 1 year 11,457,995 13,045,611

From 1 to 5 years - 14,950,871

TOTAL 11,457,995 13,045,611

35. EVENT AFTER THE BALANCE SHEET DATE

There is no matter or circumstance that has arisen since the balance sheet date that requires adjustment or disclosure in the consolidated financial statements of the Group.

Luu Thi Minh HieuPreparer

25 March 2020

Nguyen Tran Cam HienChief Accountant

Ngo Thi Mai ChiGeneral Director

Suite 1 and 2, 11th Floor Saigon Center,67 Le Loi, Ben Nghe Ward, District 1, Ho Chi Minh City, Vietnam(84.28) 3820 8858 (84.28) 3820 8859info@ khangdien.com.vn www.khangdien.com.vn

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KHANG DIEN HOUSE TRADING AND INVESTMENT JOINT STOCK COMPANY