annual report cmc 08

REPORT ON ANNUAL OPERATION RESULTS The Chairman' s Report The CEO' s report Audited financial statements 4 6 1 2 BUSINESS LINES Group structure by area Affiliates Other investment activ

CMC CORPORATION

Annual Report 2008

REPORT ON ANNUAL OPERATION RESULTS

The Chairman' s Report

The CEO' s report

Audited financial statements

4 6 1 2

BUSINESS LINES

Group structure by area

Affiliates

Other investment activities

CMC System Integration Company ( CMC SI)

CMC Software Solutions Company ( CMC Soft)

CMS Computers Company ( CMS)

CMC Distribution Company ( CMC Distribution)

CMC Telecommunications Service Company ( CMC Telecom)

Segmenta CMC Joint Venture ( CMCSE)

CMC Information Security Company ( CMC InfoSec)

CMC Telecommunications Infrastructure Company ( CMC TI)

Technical infrastructure

Strategic partnership

Education

4 5 5

6

55556666

666

CORPORATE GOVERNANCE

Activities of the Board of Directors

Activities of the Board of Supervision

Organizational structure

Shareholder information

7 7 7 7 7 Contents

ANNUAL REPORT 2008

It is indeed a pleasure for me to act on behalf of the Board of Directors to announce that we have attained the business targets

for 208 with a sales figure of 2,5 billion VND, equal to 10% of the planned amount, up by 53 against the previous

year, and profits before tax of 11.4 billion VND, equal to 92 of the planned figure, up by 24 against the previous year.This success is even more significant considering the economic and financial volatility which has adversely impacted the ICT

market as well as the corporate expenditure structure

In 208 CMC Corp achieved strong growth of corporate proportion and market share in Information Technology and

Telecommunications The strategy set in 207 with a focus of resources on the core businesses has proved to be well justified

We have just managed to avoid difficulties as a result of the financial, stock and real estate markets

CMC's IT segment has been developing rapidly and steadfastly with the growth rates of integration service and software

service being 30 and 12%, respectively This fast and sustainable development is based on professional services and

products with increasingly high content of intecllect With the advent of CMC Telecommunications Infrastructure which is

granted a license to carry out business in telecommunications infrastructure by the prime Minister and the Ministry of

Information and Communications, CMC Corp has made a secure preparation for its development strategy of

telecmmmunications and internet services in the future In the electronics business, CMC is still in the process of identifying the

edges This decision of ours is based on positive forecast of the local IT, telecommunications and Internet market

The strategic plan for 209 presents a challenge to the Board of Directors and Board of Management It, however, will bring

great opportunities for major development and create an impetus for the year 200 as well as subsequent years when the

global economy recovers and the country experiences stronger growth

On behalf of the Board of Directors, I would like to extend my sincerest thanks to the distinguished shareholders, customers,partners and employees who have made their contributions to the present success of CMC

CHAIRMAN'S MESSAGE

CHAIRMAN OF THE BOARD OF DIRECTORS - HA THE MINH

The Chairman's Report

The CEO's report

Audited financial statements

REPORT ON ANNUAL OPERATION RESULTS

CMC Corp enjoyed a stable and secure development in 2 0 0 8 , paving the way for the successful implementation of the

satisfactorily achieved while strategic and key products and

enormous determination and concentration of the leaders,

we are fully convinced of the fulfillment of the targets set for

REPORT BY

THE CHAIRMAN OF THE BOARD OF DIRECTORS

REPORT ON ANNUAL OPERATION RESULTS ‘2008

MACRO ENVIRONMENT AND BUSINESS OPPORTUNITIES

Socio- economic situation in 2 0 8

The local economy in 208 saw a great deal of complicated and unforeseeable developments,the major cause of which was the global financial crisis and economic downturn, coupled with

local problems including high inflation, variable exchange rates, and declining stock market.These led to a dramatic fall in finance for local businesses, followed by slumping exports,increasing unemployment, etc

The local IT & Telecom industry in 2 0 8

All the factors stated above resulted in reductions in investments by businesses, slashing of public investments and limited consumption All these affected the IT & telecom market remarkably.According to a report by the Minsitry of Industry and Trade, the export value of electronics,computers and accessories as of December 208 was 2 bn USD, up by 255 against 207ranking seventh out of the 8 commodity groups/commodity category with an export value of

over 2 bn USD; import value was 3 bn USD, up by 258 against 207The local telecom market has been growing rapidly thanks to the rigorous development of the

mobile and telecom sector The number of new subscribers in 208 was estimated at 276million, raising the total number of subscribers of the country to 794 million by the end of

December 208 (1 million of which were fixed phone subscribers), up by 531 against the

45 billion USD with a growth rate of the whole industry amounting to over 20 Contrary to the forecast released in the later half of 207 and early 208 of the consumption trend for high-class

IT products, it was standard products that attracted consumers the most The government market was adversely affected by the delays in the implementation of the government's key programs.The corporate market still secured growth as a result of businesses' demand for improvement of

competitiveness by IT tools

MAJOR PERFOMANCE INDICATORS AND CMC currently has 4 affiliates operating in software services

A C O MP A R IS O N W IT H P L A N N E D including CMC Soft, CMC InfoSec, CMC Segmenta, and CMC SI

TARGETS FOR 2 0 0 8The capacity of software development has been enhanced to

meet international standards This is supported by the obtaining

Revenues and profits in 2 0 8of the internation certificates for software quality assurance

CMMi 3 and ISO 270, which are an important passport for Depsite the economic turmoil that resulted in negative impacts on cooperation with major international partners. The staff sizing in

the ICT market as well as the corporate expenditure structure, the this field was 40, up by 40 and revenues were 25 billion well-oriented and timely of the Board of Directors, the flexiable VND, almost twice as much as that of 207 Multiple software

but drastic administration of the Board of Management and the processing contracts have been signed together with long-term untiring efforts of the employees, CMC has managed to go strategic partnership agreements.

through the year 208 with outstanding results

The year 208 was a challenging one for the computer All the affiliates recorded dramatic growth of revenues and manufacturing business of local players. As part of the effort to

profits compared with 207 and fulfilled the targets set at the maintain sales and profits, CMC promoted the sale of laptops,beginning of the year to an encouraging extent: especially for individual users, in addition to the traditional

desktops

The total revenues of the Group were 2,5 billion VND,

attaining 10% of the year's planned figure, an increase of 53The year 208 was one of success for CMC Distribution with total

against 207 Out of which, the growth of traditional areas revenues of 60 billion VND, thanks to which CMC Distribution

nd

including System Integration, Software and Computer established itself as the 2best performing affiliate of the Group

Manufacturing and Assembly was 30, 12% and 13,in terms of revenues.

respectively

Investment in the telecom service is being carried out as per the

In parallel with the growth of revenues, CMC's pre-tax profits in adopted schedule with Blue~ services being completed

20 were 11.4 billion VND, achieving 92 of the year's Blue~Net, Blue~Data services and the country's most modern

target, up by 24 compared with the same period of the data center were commissioned in the year. Investments in CMC

previous year, and the average EPS was 2,6 VND.TI's future telecom infrastructure and cooperation with Vietnam's

leading infrastructure suppliers will ensure the supply of CMC paid 26 billion VND in taxes and other contributions to the

broad-band, high-quality package telecom services to clients Although State Budget

the telecom service has not yielded substantial profits in the short term, its is expected to assure a long-term competitive edge in the

An overall assessment of CMC' s business performance

future

in various fields

A number of other ongoing investments which have not brought

In traditional business fields such as system integration, software

in profits for the Group include the corporate office building service, computer manufacturing and distribution of IT products,

(expected to be commissioned by July 209 and Bao Viet Bank.CMC enjoyed extraordinary growth in terms of market share and

scale and solidified its standing in the industry

CMC's system integration business continued to launch many

professional products and services with high technological

content in the financial, banking and telecom market beside the

maintenance of a satisfactory development in the government,

big corporation and education segments In particular, revenues

and market share in the southern region and in the financial and

banking market saw an impressive growth Relations with

strategic partners for technology and products have been

MAJOR STRATEGIC ACTIVITIES BY THE OTHER GOVERNING ACTIVITIES OF THE

The Board of Directors, Board of Management and functional Held the Annual General Meeting, the extraordinary

committees of the Group and those of the affiliates continued Shareholders' Meeting and permanent activities of the Board of

their strategic planning and explored opportunities to develop Directors in 208 Organized governing activities of affiliates in

new products and services in both existing and new fields of which CMC holds the controlling stake: CMC Telecom, CMC TI,

operation in accordance with the development orientations CMC InfoSec, and CMC Segmenta Participated in governing

reportedto the Shareholders' Meeting in early 208: activities of other affiliates such as Bao Viet Bank, Bac Ha

University

January 2 0 8 : Formation of Segmenta CMC joint venture

with the Dennish Segmenta The joint venture's duties are to Carried out 2 share issues to CMC Corp.'s existing shareholders

supply coporate governance advisory personnel to the including:

European market By entering into this joint venture, CMC

Issue 5,0,0 shares as distribution of dividends for 207 to shows its determination to embark on the high-quality

existing shareholders at a ratio of 6:1.outsourcing market in which systematic skill training is provided

by European partners

Issue 238577 bonus shares to existing shareholders,backed by share premium, at a ratio of 10:6

May 2 0 8 : Formation of CMC InfoSec, specialized in network

security and information security products and services After a

th Carried out one issue of preferred shares for employees of CMC period of successful trial run, on October 28 208 CMC

Corp with a total number of 71,9.InfoSec officially introduced its new antivirus software in two

versions: CMC Antivirus (free-of-charge for individual users)

Formulated and issued by-laws for the Group and affiliates,and CMC Internet Security (chargeable, intended for corporate

including:

By-laws on Finance, Investment, KPI policy, and employees'

September 2 0 8 : Formation of CMC Telecom Infrastructure

income;

Joint Stock (CMC TI) with the State Corporation for Invesment of

Capital (SCIC) as partner CMC Telecom contributed 49 of Program of Preferred Share Issue (optional) for employees.

the charter capital

Appointed senior executies for affiliates

th

December 1 1 2 0 8 Bao Viet Joint Stock Commercial Bank

was licensed and commenced operation with charter capital of Formulated the Prospectus and documents necessary for listing

150 billion VND CMC was one of the three founding in 209

shareholders, contributing 9.% of the charter capital

The Shareholders' Meeting in 207 approved the contribution

of funds for formation of the CMC Financial Information Joint Market

Stock Company (Systex) and Hanel High-tech Electronics

The year 209 is certainly one of challenges for the local Production Joint Stock Company Under the authorization of the

economy in general and the IT market in particular The Shareholders' meeting, the Board of Directors carried out tasks

economic downturn and financial crisis will exert a significant related to the project including feasibility study, discussions and

impact on the Vietnamese economy In 209 by adopting negotiations with the partner During this process, however,

stimulus policies as well as other measures to curb the negative both parties failed to agree on the detailed business scheme as

impacts of inflation; the Government will be able to minimize the well as the efficiency of investment The Board of Directors, in

risks resulting from unexpected fluctuations of the local currency the interest of the Group and shareholders, decided to drop

and unanticipated regulatory policies as it was the case in these investments

Early 209 the Prime Minister issued an official letter

REPORT BY THE CHAIRMAN OF THE BOARD OF DIRECTORS

Besides, at a meeting for implementation of the plan for 209Budget control

Mr Le Doan Hop, Minister of Information and Communication,

In the context of economic volatility, it is of great importance to said the Government would commit itself to the development of IT

adopt strict budget control so as to maximize profits and mitigate with a targeted growth rate of over 40 Therefore, we are

risks Investments in projects and areas with high risks, low convinced that the local IT and telecommunication market still has

efficiency and unsatisifactory income scheme are to be limited.substantial room for further growth

Improvement of organization capacity

CMC's growth is expected to be higher than the market average

due to the increase of its market share and the scheduled

The productivity-based HR administration system will be expansion into new areas

fine-tuned in order to enhance the efficiency and productivity of each employee in the organization as well as of the entire system using

Orientations for market, product and service

service quality in view of current harsh competition

IT infrastructure and applications in such fields as finance,

banking, insurance, taxation, customs, telecommunication, and

An internal service supply system will be organized and the education Besides, attention will be paid to the development of

efficiency of each section, including back-offices, will be software services for medium and large-sized businesses,

promoted

focusing on manufacturing and distribution ones

Growth plan for 2 0 9

CMC will work to improve the software development capacity by

further completing the quality assurance system and

Tentative table of income and pjrojit for 209 and a comparison implementing internal staff training We expect to sharply

increase revenues from outsourcing software for strategic

partners from Japan and Europe

We will complete the implementation of CMC TI's

telecommunication infrastructure and commission the same in the

fourth quarter of 209 thus creating telecommunication platform

for CMC Telecom's services The market for Blue~Net and

Blue~Data services will be expanded by launching a wider

variety of services

CMC will continue with outsourcing services for technical

infrastructure of IT and telecommunication and launch the BPO

service strategy

We will work to improve the quality of CMS computers and

expand distribution channels aiming at businesses and

households

We will increase revenues from distribution by raising the market

share of existing products and broadening the portfolio of

distributed products in the fields of IT and telecom

And, CMC will complete and commission the Corporation's

Office Building, thus saving costs and increasing revenues from

Cooperation with strategic investors and the plan of listing

- To seek cooperation with strategic investors as approved by the resolution of the Shareholders' Meeting held in late 208 for the sake of financial capacity enhancement, market expansion and

joint investment in IT, telecom and BPO

- Prepare for listing by the end of 209 as approved by the resolution of the Shareholders' Meeting held in early 208

ANNUAL REPORT 2008

( ) Gross income consists of both sales revenues and internal service supply.

REPORT BY THE CHAIRMAN OF THE BOARD OF DIRECTORS

CONCLUSION

CMC Corp enjoyed a stable and secure development in 208 paving the way for the successful implementation of the strategy for

21 Targets of revenues and profits were satisfactorily achieved while strategic and key products and services were launched

according to plan Supported by a well-known trademark, powerful financial capacity, sophisticated infrastructure, highly qualified staff and the enormous determination and concentration of the leaders, we are fully convinced of the fulfillment of the targets set for

20 as well as the strategy until 200

REPORT BY

THE CHAIRMAN OF THE BOARD

EVALUATION OF BUSINESS RESULTS

In view of difficulties in 208 such as hiking inflation, rocketing interest rate, variable exchange rate and FOREX, etc., the Board of

Management adopted many solutions to minimize the impacts of the macro environment on the Group's business such as intensification of

budget control, re-structuring of human resources in a number of business areas, improvement of productivity, increase of capital over, tracking of developments on the FOREX market, introduction of tools to curb the impacts of exchange rate, maintenance of financial

turn-capacity and credit funds from financial institutions, implementation of periodical forecasting and evaluation as well as other measures in

business It can be stated that the Board of Management did a good job of administration to fulfill the business plan of the Group in a

greatly challenging year

which contributed significantly to the business performance in 208

REPORT BY THE CHAIRMAN OF THE BOARD

Together with the increase in scale, a hike was recorded in the The year 208 also saw CMS's promotion of the

proportion of solutions and services in the total revenues,manufacturing and assembly of laptops as well as its “go which was the result of an indepth investment in service South” attempt This helped bring significant achievements in

quality This will create a competitive edge as well as a secure 20 and created a good platform fot the Group's growth in

prerequisite for CMC SI's integration service in the years to the years to come

come

In 208 CMS maintained its status as the largest local

In order to enhance competitiveness, in 208 CMC SI computer company and won several important awards of the

introduced new specialized solutions of the integration Government, the Ministry of Information and Communication

service such as solutions for the financial, banking and and associations

telecom sectors, etc

In order to diversify the product portfolio based on clients'

Software services demandin 208 CMS introduced the CMS-branded laptop

(Z black, ICbook), Desktop JetSlim, etc., which have all Software services recorded a growth rate almost twice as received good feedback as a preparation for future growth.much as that of 207 thus considerably increasing the

proportion of their revenues in the Group's total income Both Distribution of IT and telecom equipment

package software and software services saw satisfactory

ICT distribution, which is a relatively new business that CMC grwoth

started conducting in late 207 recorded a spectacular The success of the software business in 208 resulted from a growth Revenues from this filed contributed 26 (the second

process of build-up of manufacturing capacity on the basis of largets) to the Group's total income

the qualification of employees The indept investment in core

This success results from the combination of the advantages of qualifications created a solid foundation for the development

the client network, CMC's current technological partner, the

of the software business In 208 CMC Soft obtained the

Group's financial capacity and the well-justified investment in CMMi3 certificate and is now working to upgrade the

the professional distribution and governance system.certification to CMMi4 in the time to come

CMC Distribution became the leading partner of several

In 208 CMC Soft was granted ICT Awards by the Ministry

global leaders in ICT manufacturing such as HP, Acer,

Sony-of Information and Communication for the business with the

Ericsson, etc ICT distribution has been the business that largest growth rate

generates big financial gains that serve the Group's long-term Continuin to invest in research and development, in 208strategic businesses

CMC InfoSec introduced the CMC Internet Security anti-virus

Telecom service

product which was well receibed by users as well as the

professional circle The service integrated a number of

Lewly introduced telecom services such as Blue~Net,previously successful software programs such as filenet, etc

Blue~Data, Blue~Life and Blue~Care have yielded encouraging revenues The system of target customers has

Computer manufacturing and assembly

been identified, which sets the stage for growth plans in the The manufacturing and assembly of computers, which years to come

maintained a growth rate of 13, continued to be one of the

The growth of income from telecom services will help create major contributors to the Group's revenues (2%)

sustainability for the Group's revenue development and The computer range branded CMS continued to solidify its justify the Group's strategy and orientation of investing in the

standing on the market by maintaining a satisfactory growth promising local telecom market

rate in a higly challenging year This can be ascribed to a

well-considered investment in the local trademark, the

improvement of product quality according to international

SUMMARY OF PROFITS BY BUSINESS LINE

- System integration remained the largest contributor of profits Besides the growth rate, the rate of return of this field was improved as a

result of the increase of the content of solutions and services in the sales structure

- The software business recorded a high growth rate in terms of profits (15 times the profits of 207, making it the third largest profit

contributor of the Group

The Earning per Share (EPS) was 2,6 VND (compared with the 3,4 VND in 207 This reduction was mostly due to the increase of

charter capital by 87 in the year and the allocation of share premium and the distribution of dividends for the year 207 in the form of stocks Besides, a number of activities such as the CMC Tower and telecom projects were still in the investment process nad has not

generated profits

ANNUAL REPORT 2008

A

B

A

1

2

B

1

2

3 4

5

C

1.334.977

333.705

1.668.682

988.095

915.962

72.133

671.934

635.363

14.774

21.502

295

8.653

1.668.682

–

935.239 34.513

969.752 303.497

302.807 690

662.841

340.000 248.000 71.108

3.896

3.414 969.752

(163)

Current assets Long term assets

TOTAL ASSETS Liabilities

Current liabilities Long-term liabilities

Charter capital Share premium Undistributed earnings Treasury stocks Other capital and funds

Minority interests TOTAL LIABILITIES AND OWNERS' EQUITY

(Unit: million VND)

Together with a high growth of revenues, the proportion of total liabilities and owner's equity increased from 97 billion VND in 207

to 1,6 billion VND in 208 up by 72

Assets

- The increase of assets in the period was chiefly due to the increase in current assets for business activities

- Current assets increased from 93 billion VND to 1,3 billion VND, up by 43 This was due to the increase of revenues in the

year

- Fixed assets increased from 34 billion VND to 33 billion VND as a result of the investments in the CMC Building, telecom infrastructure and Bao Viet Bank

Total liabilities and owner' s equity

The increase of these items was mostly due to the increase of loans to finance current assets

- Borrowings and current liabilities increased from 30 bn VND to 91 bn VND, most of which was financed by bank loans and

suppliers' credit facilities With its reputation, financial capacity and well-established relations with credit institutions, CMC Corp managed to maintain sufficient financial resources for business development in a difficult year for the financial market

- Owner's equity increased from 66 bn VND to 67 bn VND, chiefly as a result of retained earnings in the year The increase of

charter capital in the year was mostly enabled by the allocation of bonus shares, the availability of share premium and the distribution

of dividends for the year 207 in the form of stocks, which means that the change in owner's equity was not considerable

FINANCIAL STATUS

STRUCTURE OF CAPITAL AND ASSETS

REPORT BY THE CHAIRMAN OF THE BOARD

Capital and asset structure

The debt/asset structure saw an increase in the debt/total asset ratio This shift is consistent with the growth of working capital and

enhances the efficiency of financial leverage for the Group The objective of the financial strategy is to increase short-term loans to finance

current assets and to use owner's equity to finance long-term assets and part of working capital to a minimum extent The debt proportion is

currently in a good balance

LIQUIDITY

0

N Item 2008 2007

59%

41%

I

II

80%

20%

31% 69% 96% 4% Structure Liabilities/Total owners' equity and liabilities Owners' equity/Total owners' equity and liabilities Asset structure Current assets/Total assets Long-term assets/Total assets (Unit: million VND) 0 N Item 2008 2007

Quick ratio (times) Current ratio (times)

0.93 1.46

2.66 3.09

1

2

Enjoyn high growth, the group still managed to properly effect the management of the cash flow, thus being able to make timely payments

to credit institutions and suppliers and maintain good liquidity

CORPORATE GOVERNANCE

OPERATION

The Group's operating model continued to be solidifed and completed at Group and affiliate level by the standardization and enactment

of Standard Operating Procedures (SOP) along the line of enhancing initiative and activeness of affiliates while ensureing the compliance

with the overall strategy and business targets of the whole Group, improving risk management capacity on the basis of periodical

reporting and supervision Major governance activities that were conducted in the year:

- Successfully formulated and implemented the business plan of the year: based on targets and orientations set by the Shareholders' Meeting and the Board of Directors, the Board of Management formulated detailed business plans for each business line, accompanied

by periodical supervison and assessment as well as the timely support in terms of resources and decision-making, especially preventive

measures against risks of the business environment The Board of Management properly fulfilled the duties assigned by the Shareholders' Meeting and the Board of Directors

- Formulated and implemented investment plans: In addition to the implementation of the business plan, the Board of Management has

been constantly exploring and development business opportunities and new products/services by a R&D system at the Group and

affiliates The year 208 also marked the introduction of new products and services such as telecom services, software and hardware

products, new technological solutions, etc

- Formulated and implemented capacity development indicators: apart from business targets, the capacity development indicator system

has also been implemented so as to constantly enhance competitiveness for the Groups' affiliates and the Group itself

ANNUAL REPORT 2008

REPORT BY THE CHAIRMAN OF THE BOARD

- Formulated and implemented Operating by-laws Several the Group also continued to invest in trademark development in

SOP by-laws have been prepared and issued including: an attempt to make CMC a leading brand in IT, telecom and Human Resources By-laws, Financial Bt-laws, Investment commerce The Corporate Identity System has been standardized

e-Management By-laws, etc These have been implemented in the whole system and trademark development activities have

both within the Group and among affilates.been uniformly carried out from the Group to affiliate level

- Solidified and completed governance functions at Group The position and prestige of the CMC brand on the market has

level along the line of specialization in each field such as: been heightened as the leader in the IT field The CMC brand has

Financial Planning and Investment Division, HR Division,become more familiar and better known to customers and Communication Division, Legal Division which function to branded products and services have won the confidence of an

CMC-support affiliates and control risks.increasing number of customers

- Built a risk management system: this is the target that the In 208 CMC won plenty of prestigious awards such as ‘’Sao

Group has been working toward, especially in a volatile year Vaâng Àêët Viïåt’’ (Golden Star of Vietnam - Top 10 leading

like 208 That should serve as a basis to form an effective risk businesses),‘’Sao Vaâng Thuã Àö’’ (Golden Star of the Capital

warning and prevention system associated with the City), the National Trademark for CMS Computer, ICT Awards for

operations of professional units as well as the internal CMS and CMC Soft, Gold Medal for Vietnamese software

supervision system.products, Sao Khue Award, Top 5 software businesses, etc These

results will continue to promote CMC's image while facilitating its

HUMAN RESOURCES DEVELOPMENT business plan in the years to come.

st

As at December 31 208 the Group had nearly 1,0Together with trademark development, the market and market

employees, up by 58 against 207 Over 87 of the share of CMC saw satisfactory developments with traditional

employees hold university degrees and over 5% hold higher markets experiencing adequate growth both in terms of scale and

qualifications.number of customers. In addition, CMC has also penetrated new

markets such as telecom service, consumer customers and SMB

In 208 the Group issued and implemented the HR By-laws market, etc. In particular, the year 208 was also one in which

for the purpose of a close association with the individual KPI CMC developed dramatically in the Southern region in such fields

system through the Individual Job Objectives (IJO), and the as integration, distribution and software. A marketplace whose

contributions of each individual as assessed by IJO shall be size is twice as large as that of the Northern region is indeed a

closely linked to the Salary-Bonus system so as to encourage a promising source of success for the years to come.

performance-centered working environment This policy has

shown positive impacts and well received by employees.PARTNERSHIPs

Training of employees and improvement of their It is one of the strategic orientations of the Group to promote and

qualifications are one of the policies to which the Group paid expand relations with leading technological partners. This special attention so as to increase production capacity and enables CMC to provide customers with high-quality product and service quality During the year, the Group held technological products with many additional utilities.

many professional training courses for software engineers,

system engineers and technicians, etc and was granted CMC's partnerships, especially technological ones, CMC several prestigious certificates such as CMMi 3; ISO 270,continued to affirm its role as the leading technological partner in

ISO 901 200 Project Management with Whizible SEM,the local market

MCSA, MCDA, MCSE, MCSP, MCP, MCPSE, MCT, MCTS,

Strategic partnerships with technological leaders such as Intel MCTSS, CCNA, CCNP, CCIP, CSE2, CSE3, SMS 830

LLC, HP, IBM, Cisco (silver partner), Microsoft (gold partner),(Symantec), MMC2 (EMC), Linux, CEH, CopTIA, APC, OCA

Diebold (exclusive partner for SOCBs), Oracle, etc continued to (Oracle), Optera, Sony IP Network, AMP ACT I,II,III (AMP)…

be maintained and enhanced At the same time, CMC also

TRADEMARK AND MARKET DEVELOPMENT expanded relations with other partners such as Sun, Fujixerox,

SAP, Info, Acer, Sony Ericsson, Emerson, BPC, 3I, Integrosys,REPORT BY THE CHAIRMAN OF THE BOARD

INVESTMENT ACTIVITIES traditional markets with a high growth rate and technological

content Expand and develop the SMB and telecom market Implemented investment projects: segment, maintain the leading role in system integration by market

share and technological solutions

Technical infrastructure: CMC Building project which is in the

finishing stage and is expected to tbe commissioned by July Continue to secure high sales growth in the distribution of ICT

20.products through traditional products and products which have

been established and positioned on the market Enhance CMC's Telecom infrastructure: the Data Center Project phase 1 has standing in relation to manufacturers, striving to the the leading ICT

been completed and as commissined in late 208distributor in Vietnam.

Investment cooperation: CMC contributed 9.% of the charter Build on the growth of the software business based on available

capital of Bao Viet Joint Stock Commercial Bank and embarked resources, improve business efficiency in this business, step further

on a strategic partnership with Bao Viet Bank in IT and e-into the software processing market through the customer networks

commerce projects.in Japan, America, Europe, etc. Continue to make indepth

investments so as constantly enhance manufacturing capacity.Education and Training: CMC contributed 10 of the charter

capital of Bac Ha International University in order to secure self-Maintain the growth of the computer assembly business at a

sufficiency of IT human resources for CMC in particular and the reasonable level, properly effect budget control and enhance

country's ID industry in general.operational efficiency. Continue to invest in R&D so as to launch

new products which may meet users' demands Promote the

distribution of computer parts accompanying CMS's products

In 209 the local economy is forecast to remain in difficulty as

Promote the commercial utilization of telecom investment projects

a result of the continued global economic downturn GDP

(Blue~Net, Blue~Data) via the development of market and the growth is forecast to drop against the year 208 to 5.%

expansion of the existing customer system, working toward Falling exports will affect the trade and payment balance and

profitability in 209may also impact the imports which are used for the Group's

SCHEME OF REVENUES AND PROFITS

business

Faced by such problems, the Govenrment has been adopting

stimulus measures including fiscal and monetary policies such

as relaxed monetary policy, in terest rate subsidies, extention

of application and reduction of taxesand incentives for

investment in key projects The maintenance and stabilization

of the economic growth rate depends greatly on the efficiency

of such stimulus packages

BUSINESS ORIENTATIONS FOR 2 0 9

Based on the evaluation of the business environment in 209

the forecast of the local IT market in 208 the competitiveness

of the Group and affiliates, the business performance in 208

of each sector, the business orientations for 209 are identified

CORPORATE GOVERNANCE

Operating

- Continue to formulate and complete the corporate governance by-laws so as to create a motive for business development and risk

management; build governance capacity for executive officers, improve forecasting capacity and make a good use of market

opportunities

- Supplement and complete an accurate, timely and continuous governance information system which properly serves the

management and decision-making by the corporate management

- Intensify the supervision, assistance and direction by the Group of the affiliats toward to proper implementation of the year's business plan

- Supplement and complete a Group-level governance apparatus along the line of advanced specialization

- Promote the development of trademark, maintain the status of one of the leading IT brands, promote the implementation of PR

activities in telecom and electronicis business

- Invest in trademark development for the Southern market so as to support the business in this region

- Expand communication channels outward and target multiple customers, assist the expansion of the Group's business activities

Partnerships

- Solidify and enhance the status of CMC in relations with strategic technological partners, formulate a schedule for performing

commitments with these partners, making CMC a leading technological partner in the local market

- Expand relations with new strategic partners in IT, telecom and electronics

REPORT BY THE CHAIRMAN OF THE BOARD

Audited Consolidated Financial Statements

Notes to the consolidated financial statements

Audited Consolidated Financial Statements

REPORT ON ANNUAL OPERATION RESULTS ‘2008

The Board of Management of CMC Corporation ( the “ company” ) presents its report and the Company' s consolidated financial statements for the year ended 3 1 December 2 0 8

According to Business license No 013184 dated on 26 March 207 principal activities of the Company is:

- Integrating system, investment consultancy, supply general solution and infrastructure services on informatics technology aspect,communication electronics and broadcasting;

- Producing software, supplying services and software solution, content, publishing; data processing service and activities relating

to data, processing and exporting software;

- Producing, assembling, trading, maintaining and hiring product, equipments for information technology, electronics and

broadcasting, communication and office equipments;

- Training services on information technology;

- Producing, trading healthy equipment;

- Trading productive and consumption documentation, equipments on production, technique science, technology transferring;

- Trading agency, goods consignment;

Head office at 2 9 Han Thuyen, Pham Dinh Ho, Hai Ba Trung, Hanoi

Address

2 Han Thuyen, Pham Dinh Ho, Hai Ba Trung Hanoi

Name

Address Name

CMC Corporation

CMS Computer Company Limited

CMC Software Solution Company Limited

CMC System Integration Company Limited

CMC Distribution Company Limited

CMC Telecommunication Services Corporation

CMC Information Security Corporation

Subsidiaries

23

Audited Consolidated Financial Statements ‘2008

REPORT OF THE BOARD OF MANAGEMENT

No 11 CT5, My Dinh apartment building, Hanoi

No 16 Ham Long, Hai Ba Trung, Hanoi

No 29 Han Thuyen, Hai Ba Trung, Hanoi

No 10 Plot 1B- Trung Hoa, Cau Giay, Hanoi

No 27, Doi Can, Ba Dinh, Hanoi

No 10A, Dam Trau ward , Hanoi

ANNUAL REPORT 2008

Segmanta CMC Joint Venture CorporationTechnology infrastructure Project

Joint Venture Companies

CMC Telecommunication Infrastructure Corporation 2 Han Thuyen, Pham Dinh Ho, Hai Ba Trung, Hanoi

Associate

THE BOARD OF DIRECTORS

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

1 Ha The Minh

2 Nguyen Trung Chinh

3 Nguyen Phuoc Hai

4 Nguyen Hong Son

5 Nguyen Kim Cuong

6 Nguyen Minh Duc

7 Hoang Ngoc Hung

8 Vu Van Tien

1 Nguyen Trung Chinh

2 Hoang Xuan Hieu

General DirectorVice General Director

1 Nguyen Duc Khuong

2 Ta Hoang Linh

3 Dao Manh Khang

THE BOARD OF MANAGEMENT

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

THE CONTROL COMMITEE

Members of the Control Commitee are

15D Minh Khai Street - Hai Ba Trung District, Hanoi CapitalSai Dong industrial B Park, Long Bien District, Hanoi Capital

Address Name

ChairmanVice ChairmanMemberMemberMemberMemberMemberMember

Appointed as at 270/07Appointed as at 270/07Appointed as at 180/07Appointed as at 180/07Appointed as at 180/07Appointed as at 210/07Appointed as at 020/07Appointed as at 020/07

Appointed as at 270/07Appointed as at 011/07

ManagerMemberMember

Appointed as at 180/07Appointed as at 180/07Appointed as at 020/07

The Board of Management is responsible for the financial statements of each financial year which give a true and fair view of the state of

affairs of the Company and of its operation results and cash flows for the year In preparing those financial statements, The Board of Management is required to:

Select suitable accounting policies and then apply them consistently;

Make judgments and estimates that are reasonable and prudent;

State whether applicable accounting standards have been followed, subject to any material departures disclosed and

explained in the financial statements; and

Prepare the financial statements on the basis of compliance with accounting standards and system and other related

regulations;

Prepare the financial statements on going concern basis unless it is inappropriate to presume that the Company will continue

in business

The Board of Management is responsible for ensuring that proper accounting records are kept which disclosed, with reasonable

accuracy at any time, the financial position of Company and to ensure that the accounting records comply with the registered

accounting system It is responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the

prevention and detection of fraud and other irregularities

We, The Board of Management, confirm that the financial statements for the fiscal year ended 31 December 208 prepared by us, give

a true and fair view of the financial position at 31 December 208 its operation results and cash flows in the year 208 of Company in

accordance with the Vietnamese Accounting System and comply with relevant statutory requirements

IN RESPECT OF THE FINANCIAL STATEMENTS

25

Approval of Financial Statements

We, CMC Corporation approve our consolidated Financial

Statements for the year ended 31 December 208

REPORT OF THE BOARD OF MANAGEMENT

ANNUAL REPORT 2008

AUDITORS' REPORT

On the Consolidated Financial Statements of CMC Corporation ( For the fiscal year ended 3 1 December 2 0 8

We have audited the Consolidated Financial Statements of CMC Corporation prepared on 250/09 including: Consolidated

Balance Sheet as at 31 December 208 Consolidated Income Statement, Consolidated Cash Flow Statement and Notes to

Consolidated Financial Statements for the fiscal year ended 31 December 208 as set out on pages 06 to 24

These Consolidated Financial Statements are the responsibility of the Company's Board of Management Our responsibility is to

express an opinion on these Consolidated Financial Statements based on our audit

Basis of opinion

We conducted our audit in accordance with Vietnamese Standards on Auditing Those standards require that we plan and perform

the audit to obtain reasonable assurance about whether the Consolidated Financial Statements are free of material misstatement An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the Consolidated Financial Statements

An audit also includes assessing the compliance with current accounting standards and system and the accounting principles used

and significant estimates made by management, as well as evaluating the overall Consolidated Financial Statements presentation

We believe that our audit provides a reasonable basis for our opinion

In our opinion, the Consolidated Financial Statements of CMC Corporation give a true and fair view, in all material respects, of the financial position of the Company as at 31 December 208 and of the results of its operations and its cash flows for the year then

ended in accordance with the Vietnamese Accounting Standards and System and comply with relevant statutory requirements and

accompanied accounting policies

To: The Board of Management and Board of Directors of CMC Corporation

REPORT ON ANNUAL OPERATION RESULTS ‘2008

1.334.977.183.381 935.239.378.359 177.375.396.960 93.125.904.662

485.707.860.563 129.668.136.876

488.170.110.525 131.306.594.525(2.462.249.962) (1.638.457.649)

50.522.961.021 15.773.731.990

919.419.350 32.522.366.136 3.348.651.023316.823.122 32.246.00016.764.352.413 12.392.834.967

-333.704.842.380 34.512.653.847 132.191.228.484 20.112.295.316

44.167.301.070 5.017.497.014

55.902.344.767 12.911.528.717(11.735.043.697) (7.894.031.703)

570.211.892 32.083.107

608.934.320 39.081.307(38.722.428) (6.998.200)

87.453.715.522 15.062.715.195

173.941.206.092 2.877.044.400

22.764.161.692151.177.044.400 2.877.044.400

27.572.407.804 11.523.314.131

25.203.349.523 10.369.816.7992.369.058.281 1.153.497.332

II Short-term investments

1 Short - term investments

2 Provision for devaluation of inventory (*)

V Other current assets

1 Short-term prepaid expenses

2 VAT deductibles

3 Taxes and other receivables from State

4 Other current assets

B NON- CURRENT ASSETS

II Fixed assets

1 Tangible fixed assets

IV Long-term investments

2 Investments in joint - ventures, associates

3 Other long - term investments

V Other long-term assets

1 Long - term prepaid expenses

3 Other long - term assets

988.095.421.816 915.962.388.255

607.351.172.990 199.854.933.348 34.098.804.525 39.921.766.047 17.060.238.230 10.075.377.984 7.425.145.131 174.950.000-

72.133.033.561

68.975.670.626 818.675.464

2.338.687.471-671.933.741.468 671.639.204.529

635.362.670.000 14.774.304.339 21.502.230.190

294.536.939

294.536.939

8.652.862.477 1.668.682.025.761

303.497.129.829 302.806.584.170

104.866.329.697124.703.734.30915.404.334.45626.177.055.3012.657.131.07017.177.435.06711.820.564.270

690.545.659

319.200.000371.345.659

662.841.280.672 658.944.519.910

340.000.000.000248.000.000.000-(163.020.000)71.107.539.910

3.896.760.762

3.896.760.762

3.413.621.705 969.752.032.206

3 Advances from customers

4 Tax payables and statutory obligations

5 Payables to employees

6 Accrued expenses

7 Other payables

8 Provision for short - term payables

II Long- term liabilities

1 Other long - term payables

2 Long - term loans and debts

3 Provision for unemployment allowances

1 Contributed legal capital

2 Share capital surplus

3 Treasury stocks (*)

4 Retained earnings

II Other capital and funds

1 Bonus and welfare fund

Items

2.697.143,83 701,99 169,51 86,04

316.137,78 705,67 168,0380,16

CONSOLIDATED BALANCE SHEET

As at 3 1 December 2 0 8

As at 3 1 December 2 0 8

111.407.584.539 88.262.685.860

4.201.813.784 5.715.528.0393.335.338.873 3.961.394.257

60

60.1 60.2

70 2.564 3.246

1 Revenue from sale of goods and rendering of services

2 Deductible items

3 Net revenue from sale of goods

and rendering of services

4 Cost of goods sold

5 Gross profit from sale of goods

and rendering of services

6 Revenue from financial activities

14 Profit (loss) in associates/joint ventures

15 Total profit before tax

16 Current corporate income tax expenses

17 Deferred corporate income tax expenses

18 Profit after tax

18.1 Profit after tax of minority shareholders

18.2 Profit after tax of holding

company's shareholders

19 Earnings per Share

Note: Total sales including internal sales

VND

VND

-

-Hanoi, 25 February 209

Verified by

Le Thanh Son Financial Director

CASH FLOWS STATEMENT

Hanoi, 25 February 209

Verified by Prepared by Approved by

VND

VND

I Cash flows from operating activities

Revenue from sale of goods and rendering services and other revenue

Cash paid to suppliers

Cash paid to employees

Interest paid

Corporate income tax paid

Other receipts from operating activities

Other expenses on operating activities

Net cash flows from operating activities

II Cash flow from investing activities

Purchase of fixed assets and other long - term assets

Proceeds from disposals of fixed assets and other long - term assets

Loans to other entities and purchase of debt instruments of other entities

Repayment from borrowers and proceeds from sales of

debt instruments of other entities

Investments in other entities

Investment returns from other entities

Interest, dividends and profit received

Net cash flows from investing activities

III, Cash flows from financing activities

Receipts from stocks issuing and capital contribution from equity owners

Fund returned to equity owners, issued stock redemption

Long - term and short - term borrowings received

Loan repayment

Dividends, profit paid to equity owners

Net cash flows from financing activities

Net cash flows within the period

Cash and cash equivalents at the beginning of year

Impact of foreign exchange fluctuation

Cash and cash equivalents at the end of year

CMS Computer Company Limited

CMC Software Solution Company Limited

CMC System Integration Company Limited

CMC Distribution Company Limited

CMC Telecommunication Services Corporation

CMC Information Security Corporation

Address

No, 11 CT5, My Dinh apartment building, Hanoi

No, 16 Ham Long, Hai Ba Trung, Hanoi

No, 29 Han Thuyen, Hai Ba Trung, HN

No 10 Plot 1B, Trung Hoa, Cau Giay Hanoi

No 27, Doi Can, Ba Dinh Hanoi

No 10A, Dam Trau ward, Hanoi

Rate of voting rights

Integrating system, investment consultancy, supply general solution and infrastructure services on informatics technology

aspect, communication electronics and broadcasting;

Producing software, supplying services and software solution, content, publishing; data processing service and activities

relating to data, processing and exporting software;

Producing, assembling, trading, maintaining and hiring product, equipments for information technology, electronics and broadcasting, communication and office equipments;

Training services on information technology;

Producing, trading healthy equipment;

Trading productive and consumption documentation, equipments on production, technique science, technology

transferring;

Trading agency, goods consignment;

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Year 2008

ANNUAL REPORT 2008

REPORT ON ANNUAL OPERATION RESULTS ‘2008

15D Minh Khai Street, Hai Ba Trung District, Hanoi CapitalSai Dong industrial B Park, Long Bien District, Hanoi

Segmanta CMC Joint Venture Corporation

Technology infrastructure Project

2 ACCOUNTING SYSTEM AND ACCOUNTING POLICY

ACCOUNTING PERIOD AND ACCOUNTING MONETARY UNIT

st stAnnual accounting period commences from 1 January and ends on 31 December

The Company maintains its accounting records in VND

ACCOUNTING STANDARDS AND ACCOUNTING SYSTEM

Accounting System

The company applies Enterprise Accounting System issued under Decision No.1/06QĐ-BTC dated 20 March, 206 by Minister of Finance

Announcement on compliance with Vietnamese standards and accounting system

The company applies Vietnamese Accounting Standards and supplement documents issued by the State Consolidated Financial

Statements are prepared in accordance with regulations of each standard and supplement documents as well as with current

accounting system

Form of accounting record

The company is applying a form of records of General Journal processing in a computer

BASIS FOR CONSOLIDATION OF FINANCIAL STATEMENTS

Consolidated financial statements are prepared based upon consolidating separate financial statements of the Company and

subsidiaries under its control as at 31 December annually Control rights is in practice when the company has power to govern the

financial and operating policies of invested companies to obtain benefits from their activities

Financial statements of subsidiaries are prepared for the same fiscal year with that of parent companies If necessary, financial statements of subsidiaries may be adjusted to ensure the consistence between accounting policies applied at the company and its

subsidiaries

Operation results of subsidiaries which were purchased or liquidated in the period are presented on consolidated financial

statements since the purchasing or liquidated dates

Balance, main income and expense, including unrealized profits from intra-group transactions are eliminated in full from

consolidated financial statements

Minority interest reflecting profits or losses and net assets which are not held by shareholders of the company will be presented in

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Machine, equipment 3 – 6 yearTransportation equipment 5 – 6 yearOffice equipment and furniture 3 – 5 year

INVESTMENT INTO AN ASSOCIATE

An associate is an enterprise in which the investor has significant influence and which is neither a subsidiary nor a joint venture of

the investor In consolidated Financial Statements, the investments in associates are recorded under equity method

JOINT VENTURE CONTRIBUTION

The joint venture contributions agreement related to the establishment of an independent business in which the parties involved

raising capital is called the joint control entity In consolidated Financial Statements, investments in joint venture have to recognize

under equity method

RECOGNITION OF 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

RECOGNITION OF PROVISION FOR BAD DEBTS

The provision for bad debts has been made for receivables that were outstanding for 3 months and over from the Consolidated

Balance Sheet date or were difficult to be paid due to the debtors were in liquidation, insolvency or other similar difficulties

RECOGNITION OF INVENTORY

Inventories are stated at original cost, Where the net realizable value is lower than cost, inventories should be measured at the

net realizable value The cost of inventories should comprise all costs of purchase, costs of conversion and other costs incurred in

bringing the inventories to their present location and condition Inventory is recorded by perpetual method

Provisions for devaluation of inventories made at the end of the year are the excess of original cost of inventory over their net

realizable value

Inventories are valued in groups based on suitability of characteristics and performances of each business entities, details are as

follows:

- Inventories mainly computers, electronic components stored at CMS Computer Company Limited and CMC Distribution

Company Limited Which are used to assemble or retail and phone card or machines serving in buying cards at CMC

Telecommunication Services Corporation and CMC Information Security Corporation are calculated at First in First out method

- Inventories mainly electronic components, computer hardware stored at CMC System Integration Company Limited and CMC

Software Solution Company Limited and at the Corporation office which are ordered are calculated at actual cost

Works in process are cost actually incurred and are continued finishing, including:

- Cost incurred to produce packing software and program new software at Software Solution Company Limited Packing software is

the software completed in previous years need upgraded to meet current customers' demand New software is the software in

programming process and has not been completed to provide to customers Both their cost are moved to items cost of goods sold at the

time of being provided to customers and revenue recorded

- Cost incurred in developing security software for computers at CMC Information Security Corporation

- Cost incurred during implementing system integration services at CMC System Integration Company Limited They are moved to cost

of goods sold item at the time of services completed and revenue recognized

RECOGNITION AND DEPRECIATION OF FIXED ASSETS

Fixed assets (tangible and intangible) are stated at the historical cost During the useful life, fixed assets (tangible and intangible) are recorded at cost, accumulated depreciation and net book value

Depreciation is provided on a straight-line basis Annual rates calculated to write off the cost of each asset evenly over its expected

useful life as follows:

ANNUAL REPORT 2008

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

RECOGNITION OF SECURITIES INVESTMENT

Securities investment at the Consolidated Balance Sheet date, if:

- Having maturity not over than 3 months from the date of acquisition are recognised as “cash equivalents”

- Having maturity less than 1 year/1 operating cycle are recognised as short-term assets

- Having maturity over than 1 year/1 operating cycle are recognised as long-term assets

Provisions for devaluation of investments are made based on the excess of original cost in accounting books over their market value at

year-end The provision for short term security investment is recorded to directly reduce cost of investment and is not presented separately

on Provision for Short term Investment items on the Balance sheet

RECOGNITION AND CAPITALIZATION OF BORROWING COSTS

Borrowing costs are recognized into operating costs during the period, except for which directly attributable to the acquisition,construction or production of a qualifying asset included (capitalized) in the cost of that asset, when gather sufficient conditions as

regulated in SAV No 16 “Borrowing costs”

Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset should be included

(capitalized) in the cost of that asset, includes interest on borrowings, amortization of discounts or premiums relating to issuing bonds and

ancillary costs incurred in connection with the arrangement of borrowings

Recognition and allocation of prepaid expenses

Prepaid expenses only related to present fiscal year are recognised as short-term prepaid expenses and are recorded into operating costs

The following types of expenses incurred during the year are recorded as long-term prepaid expenses, and are amortised to the

Consolidated Income Statement in several years:

- Establishment expenses;

- Operating lease expenses;

- Tools and consumables with large value issued into production;

- Pre operating cost;

- Repairing expenses with large value issued into production;

- Other cost

The calculation and allocation of long-term prepaid expenses to profit and loss account in the period should be based on nature of those

expenses to choose reasonable method and allocated factors Prepaid expenses are allocated partly into operating expenses on a

straight-line basis

RECOGNITION OF ACCRUED EXPENSES

Accrued expenses are expenses incurred but without adequate supporting documents, may be charged in advance into production and

operating costs in the period to ensure the basic of matching between revenue and cost

FOREIGN CURRENCY TRANSACTIONS

Transactions in currencies other than accounting unit of the Company (VND/USD) are recorded at the rate of exchange ruling at the dates

of transactions or at the inter-bank exchange rate Monetary assets denominated in foreign currencies are revalued at the inter-bank exchange rate issued by the State Bank of Vietnam at the Consolidated Balance Sheet date All exchange differences arising on settlement

or revaluation at the year end will be recorded into the financial income or expense in the fiscal year

For subsidiaries, associates and joint ventures under construction period, foreign exchange difference in the period and difference from

revaluation of balance denominated in foreign currencies at period end are presented on consolidated balance sheet At the construction

period end, all foreign exchange rate difference in the period and difference from revaluation of monetary assets denominated in foreign

currencies at the first date of operation period are recorded into prepaid expenses account and will be allocated into financial income or

financial expense over maximum 5 years

PRINCIPLES AND METHOD OF RECOGNIZING REVENUE

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Revenue from sale of goods should be recognised when all the following conditions have been satisfied:

- The significant risks and rewards of ownership of the goods have been transferred to the buyer;

- The Company retains neither continuing managerial involvement as a neither owner nor effective control over the goods sold;

- The amount of revenue can be measured reliably;

- The economic benefits associated with the transaction of goods sold have flown or will flow to the Company;

- The costs incurred or to be incurred in respect of the transaction of goods sold can be measured reliably

Revenue from rendering of services is recognised when the outcome of that transaction can be measured reliably, Where a transaction involving the rendering of services is attributable to several periods, each period's revenue should be recognised by reference to the stage

of completion at the Consolidated Balance Sheet date The outcome of a transaction can be estimated reliably when all the following

conditions are satisfied:

- The amount of revenue can be measured reliably;

- It is probable that the economic benefits associated with the transaction will flow to the Company;

- The stage of completion of the transaction at the Consolidated Balance Sheet date can be measured reliably;

- The costs incurred for the transaction and the costs to complete the transaction can be measured reliably

- The stage of completion of a transaction may be determined by surveys of work completed method

Income from interest, royalties and dividends and other financial income earned by the Company should be recognised when these two

conditions are satisfied:

- It is probable that the economic benefits associated with the transaction will flow to the Company;

- The amount of the income can be measured reliably

Dividends should be recognised when the Company's right to receive payment is established

RECOGNITION OF FINANCIAL EXPENSES

Items recorded into financial expenses consist of:

- Expenses or losses relating to financial investment activities;

- Expenses of capital lending and borrowing;

- Loss due to foreign exchange differences arising from transactions relating to foreign currencies;

- Provision for devaluation of securities investment

Financial expenses are recorded without compensation with financial income except that loss due to foreign exchange differences arising

from transactions relating to foreign currencies are compensated with profit due to foreign exchange differences arising from transactions

relating to foreign currencies

PRINCIPLES AND METHOD OF RECORDING TAX

Current 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 by the Consolidated Balance Sheet

date

Deferred tax is provided using the Consolidated Balance Sheet liability method on temporary differences at the Consolidated Balance

Sheet date between the tax base of assets and liabilities and their carrying amount for financial reporting purpose Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset realised or the liability is settled

based on tax rates and tax laws that have been enacted at the Consolidated Balance Sheet date

Revenue from rendering of services

7 TAX RECEIVABLES FROM THE STATE BUDGET

Import - Export Tax (Debit balance)

Total

01/01/2008VND6.842.176.241 86.283.728.421

93.125.904.662

01/01/2008VND139.500.000.000105.000.000.000

244.500.000.000

01/01/2008VND12.906.634.529126.546.831

13.033.181.360

01/01/2008VND782.001.61440.816.204.311261.332.31613.113.556.069 21.139.988.20649.735.945.7115.457.566.298(1.638.457.649)

129.668.136.876

01/01/2008VND32.246.000

32.246.000

-

31/12/2008 VND

9.233.030.201 168.142.366.759

177.375.396.960

31/12/2008 VND

2.903.700.000

1.104.000.000-4.007.700.000

VND

17.151.215.820279.166.874

17.430.382.694

31/12/2008 VND

29.189.268.423 39.883.631.354 2.112.046.947 21.902.453.267 25.052.635.467 361.683.870.804 8.346.204.263 (2.462.249.962)

485.707.860.563

31/12/2008 VND

8 TANGIBLE FIXED ASSETS

6.586.332.966 1.687.553.315 2.778.254.808- 11.052.141.08931.903.471.246 98.230.375 32.452.517.437

1.381.213.104- 1.381.213.104249.405.607- 249.405.607

1.413.734.272 - 730.726.915 2.144.461.187

468.321.370- 468.321.3701.381.213.104 1.381.213.10432.521.168 -262.405.545 -294.926.713

42.481.732.693 4.381.601.908 8.489.963.975 98.230.375 55.902.344.767

2.760.972.945 2.295.887.527 2.837.171.231 - 7.894.031.703 2.095.944.685 292.889.349 2.811.273.250 5.200.107.284

2.095.944.685 292.889.349 1.603.914.956- 3.992.748.990

1.103.302.424- 1.103.302.424104.055.870- 104.055.870

1.110.564.928 - 248.530.362 - 1.359.095.290

243.205.752- 243.205.7521.103.302.424 1.103.302.4247.262.504- 5.324.610- 12.587.114

3.746.352.702 2.588.776.876 5.399.914.119 - 11.735.043.697

2.644.689.808 398.161.066 1.974.646.140- 5.017.497.01438.735.379.991 1.792.825.032 3.090.049.856 98.230.375 44.167.301.070

Office Equipment

Other Total

ANNUAL REPORT 2008

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1 CONSTRUCTION IN PROGRESS

Intelligent Building

CMS computer manufacturing factory

Customer service centre at Sai Dong ward

Data centre at Sai Dong ward

Customer service centre in Ho Chi Minh city

Blue net Project

Project Inspection cost

Total

11 LONG TERM FINANCIAL INVESTMENTS

Investments in associates and Joint Ventures

Other investments

- Vijasgate Company

- Bond

- Bac Ha international university

- Bao Viet Bank

31/12/2008 VND

76.286.530.307 268.925.813 6.846.761.975 324.367.120 3.665.504.502 25.262.169 36.363.636-

87.453.715.522

01/01/2008VND15.062.715.195

– – – – – –

15.062.715.195

31/12/2008 VND

151.177.044.400 627.044.400 50.000.000 2.000.000.000 148.500.000.000

22.764.161.692-01/01/2008VND

2.877.044.400 627.044.400 50.000.000 2.000.000.000 200.000.000

–

1 Opening balance

2 Closing balance

1 Openning balance

2 Depreciation in the year

3 Decrease in the year

4 Closing balance

Items

I ORIGINAL COST

II, ACCUMULATED DEPRECIATION

III NET BOOK VALUE

39.081.307 569.853.013

569.853.013

608.934.320

6.998.200 31.724.228 38.722.428

32.083.107 570.211.892

138.376.468

177.457.775

6.998.200 13.243.494

20.241.694

32.083.107 157.216.081