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Published on Friday, 14 November 2008

REPORT ON OPERATIONS

REPORT ON OPERATIONS

A.C.N. 063 656 333
A.B.N. 64 063 656 333
V I E T NAM INDUS T R IAL INV E S TME NT S L IMI T E D
 
14 November 2008
 
Company Announcements Office
ASX Limited
Exchange Plaza
2 The Esplanade
PERTH WA 6000
 
Dear Sirs
 
REPORT ON OPERATIONS
 
In the nine months to 30 September 2008, the unaudited Group operating profit attributable to members was A$8.4 million on revenues of A$281 million. Whilst this result is a significant increase on the result for the full year ended 31 December 2007 (Operating profit A$1.4 million on revenues of A$250 million) it is largely due to the result for the half year ended 30 June 2008 (Operating profit A$7.9 million on revenues A$215 million). Exchange rates at 30 September 2008 were US$0.7996/A$ and VND16,515/US$ (30 June 2008: US$0.9626/A$ and VND16,514/US$; 31 December 2007: US$0.8816/A$ and VND16,114/US$).
 
As forewarned in the half year report for the period ended 30 June 2008 released on 27 August 2008, there has been a sharp decline in sales and profitability since the first half of the year. The Group only achieved an operating profit of A$0.5 million on revenues of A$66 million for the third quarter ended 30 September 2008. There has been no indication that market conditions will improve significantly in the fourth quarter of 2008.
 
The results are substantially attributable to the profitability of the Vinausteel and SSESTEEL operations. Austnam and VRC Weldmesh were also able to maintain a small profit for the third quarter of 2008. However, the TBS operation has reported an unaudited loss to 30 September 2008 of VND16 billion (A$1.1 million) (Full year loss for 2007: VND11 billion (A$0.8 million)). VII has provided additional working capital funding of US$650,000 to TBS in the current financial year and it is expected that TBS will require additional financial support from VII in the fourth quarter of 2008.
 
The Board is conducting an ongoing operational review of TBS to consider various options for the future of this operation.
 
SSESTEEL is continuing discussions with equipment suppliers and considering financing options with local banking institutions and potential equity partners regarding the billet plant to be constructed in Haiphong, adjacent to the rolling mill operations. It is now expected that the costs of commissioning the billet plant will be in the order of US$75 million.
 
Yours faithfully
 
 
 
HENRY LAM
Managing Director
(Vietnam Operations)
 
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