VINAMILK

INSPECTION COMMITTEE

1

HCM City, dated 22 March 2010


REPORT TO THE ANNUAL GENERAL MEETING


Dears Shareholders of Vinamilk,

Pursuant to:
- Laws of Enterprise of Vietnam,
- Charter (contents which relating to rights and responsibilities of the Inspection
Committee),
- AGM s Resolution of Vinamilk dated march 20009, and
- Status and action plan 2009 of the Inspection Committee,
In the third year of the Inspection Committees term of 2007-2011, from April 2009 to March
2010, Inspection Committee consists of 3 independent members, continue to inspect, supervise
and give necessary recommendations for changes at Vinamilk in the following important areas:

I. Objectives and scope of key work 2009

1. Strategic supervision: for medium and long-term business plan, action plan for factory
expansion projects, or big fixed assets used for main operations in 2009.

2. Operational supervision: for setting up and applying processes and procedures in risk
management, including internal transactions, in order to control and improve the disaster
risk and risk management of the companys operations.

3. Financial supervision: inspect the quarterly financial reports to ensure that the reports are
true and fair; to work with external auditors during their audit work to view the effects of
significant matters on the financial reports and to inspect the compliance of policies for the
financial investment;

II. Inspection methodology, inspection results and recommendations

Inspection methodology:

a. The Inspection Committee attended all quarterly BOM meetings and as when requested to
understand Vinamilks daily activities and give suggestions to BOM and the Executive
Board in order to achieve the targets for 2009 as well as in building medium and long term
business plans at Vinamilk.

b. Together with BOM, Executive Board, Internal Audit Department and consultant
specialists, the inspection has been conducted directly through the interview with
functional departments, visit the factories and indirect review through periodical reports
from Executive Board and from discussion with external auditors, KPMG Vietnam Ltd.
VINAMILK
INSPECTION COMMITTEE

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Inspection results

Inspection Committee kindly reports to the AGM the inspection results for the strategies,
operations and finance for the year ended 31 December 2009 as follows:

1. Supervise the operational plan and investment- medium and long-term development
strategies

a. Vinamilk discloses the adequate medium business plan with full and persuasive details:
Strategic business plan for 3 years 2010 2012 has been prepared and to be submitted
to AGM for approval this year as recommended by Inspection Committee in AGM
2008.
Strategic business plan have been developed basing on the assumptions and statistic
figures, macro-economic figures from independent and prestigious organizations such
as World bank, IMF and industrial reports.
All business plans have their supporting details, based on the market surveys conducted
by functional departments and professional which are summarized and reviewed from
the bottom up and cross check to ensure their feasibilities.

b. Key business plans are focusing on Vinamilks main business lines of diary and have high
feasibilities:
Some of projects not in the diary industry has been carefully reviewed and liquidated
with a reasonable return, to contribute to the cash flow for the main business operations
in 2009 and its medium term, such as liquidation of beer joint venture, Sabmiller.
Most big projects have been managing well in term of capital expenditure and timeline
in order to increase the companys production capacity to meet the market demand
which is fast growing and to improve the companys competitiveness. For instant, Tien
Sn factory, cow farm developments and beverage factory.
Mega factory project, in Binh Duong Province, is in its design phase. Its current
timeline is late as compared to its original timeline because we need to consider
carefully the fast growth of the business.

c. The Inspection Committee continue to recommend the BOM to instruct the functional
departments to do better the market surveys and forecasts, produce some optional
projections in the fast growing and changing markets in order to improve its accuracy, pro-
activeness and fast reaction with the changes of the market.

2. Supervise the operational procedures and risk management

a. Risk and disaster management system at the corporate level has been developing at
Vinamilk:
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INSPECTION COMMITTEE

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The Inspection Committee has a great positive contribution in reviewing the selecting
one (E&Y) from three international ERM consultants.
ERM system, including policies, processes, and supervision mechanism have been
developing during the last 6 months of 2009 with the attendance of the Executive
Board, key personnel from many departments and the Inspection Committee as guided
by the consultants.
The internal inspection department helps the Inspection Committee in its Risk
management will be set up in 2010.
The Inspection Committee has contributed opinions in setting up system and
procedures in control the related party transactions and internal transactions in order to
minimize the conflict of interest. In 2010, the Inspection Committee will review the
compliance of this system and procedures at Vinamilk.

b. The compliance of the processes issued by the Executive Board is strictly implemented by
all staff at all levels in 2009:
Recommendations in the management letter 2008 from the companys external auditors
have been done and reviewed seriously from Vinamilk in order to adapt into its current
business strategies. The Inspection Committee conducted the audit work at head office
and Ha Noi branch and see that the process of evaluation and selection Distributor,
grating sales credit term and account receivables, sales promotions is under good-
control.
The legal department has been established in 2009 (as suggested by the Inspection
Committee and Internal audit department) under the supervision of the internal audit
Director, in order to formalize the legal documents and improve Vinamilks
compliance to the laws.
Official documentation system, internal procedures of Vinamilk is improving, such as
the Code of Conducts has just been issued to all staff.

3. Supervise Finance

a. Based on the periodical reports from BOM at the BOM meeting during the year and
audited financial statements from external auditors, KPMG, the Inspection Committee
views that Vinamilks financial reports are true and fair.
The basic financial ratios such as account receivable, accounts payable, borrowings,
liquidation ratios, fixed asset ratios, provisions and equity capital are of good use.
The financial results achieved the targets which h were set by the AGM at the
beginning of the year 2009.
The investment and its provision is adequate in compliance with the internal policy
approved by the BOM for the year.

b. The Inspection Committee has worked with KPMG during the preparation of the financial
reports 2009 and being confirmed that the financial statements and its consolidated
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financial statements for the year ended 31 December 2009 give a true and fair view
(complied with Vietnamese accounting system).

c. Vinamilk has a significant cash surplus and stable, which is generating from its business
operations. Therefore, the debts/equity ratio is low. The Inspection Committee views that
this is in line with Vinamilks objective to minimize the financial risk for its business
especially in the strictly credit control market by Vietnam government.


III. Change of the Inspection Committee in the period 2007-2011

According to the Status, 1/3 of the inspection committee members will be re-elected at the
annual general meeting. Ms Nguyn Th Tuyt Mai head of the Inspection Committee will
be re-elected at the AGM this year.


IV. Conclusion and Recommendations
The Inspection Committee sees that with the improvement and formalization of ERM and other
internal procedures, Vinamilk goes a great step in applying the corporate governance which is
similar to the international standards and best practices in the world.

In addition, Vinamilk pro-actively and timely disclose its accurate financial results and product
quality to the public and improve the investors confidence to Vinamilk and its transparency,
and by doing this, Vinamilk is constantly improving its image/brand to be one of the leading
companies in Vietnam as well as big companies in the region.

The Inspection Committee, as a representative of the shareholders, truly believe in the BOMs,
Executive Boards and all staffs capabilities in developing and growing the business. We
commit that we will stay closely with Vinamilk to grow more and more strongly. However, we
also recommend that BOM and Executive Board consider to review the current capital
structure in order to optimize it so as to maximize the return on equity without effecting the
Companys stable growth.

We would like to give sincere thank to all of you for your trust and support to us in 2009.

Best regards,

The Inspection Committee