vinh son song hinh hydro power joint stock company audited consolidated financial statements for the year ended 31 december 2012

Vietnam STATEMENT OF THE BOARDS OF MANAGEMENT AND DIRECTORS The Boards of Management and Directors of Vinh Son - Song Hinh Hydro-power Joint Stock Company “the Company” presents this rep

For the year ended 31 December 2012

Binh Dinh Province, $.R Vietnam

TABLE OF CONTENTS

STATEMENT OF THE BOARDS OF MANAGEMENT AND DIRECTORS 1-2

VINH SON - SONG HINH HYDRO-POWER JOINT STOCK COMPANY

21 Nguyen Hue Street, Quy Nhon City

Binh Dinh Province, S.R Vietnam

STATEMENT OF THE BOARDS OF MANAGEMENT AND DIRECTORS

The Boards of Management and Directors of Vinh Son - Song Hinh Hydro-power Joint Stock Company (“the Company”) presents this report together with the Company’s consolidated financial statements for the year ended

31 December 2012

THE BOARDS OF MANAGEMENT AND DIRECTORS

The members of the Boards of Management and Directors of the Company who held office during the year and at the date of this report are as follows:

Board of Management

Mr Nguyen Van Thanh Chairman

Mr Vo Thanh Trung Member

Mr Nguyen Viet Thang Member

Mr Nguyen Duc Doi Member (resigned on 30 November 2012)

Mr Phan Hong Quan Member

Mr Nguyen Hong Son Member (appointed on 30 November 2012)

Board of Directors

Mr Vo Thanh Trung General Director

Mr Hoang Anh Tuan Deputy General Director

Mr Duong Tan Tuong Deputy General Director

Mr Pham Van Dung Deputy General Director (resigned on 01 October 2012)

THE BOARDS OF MANAGEMENT AND DIRECTORS’ STATEMENT OF RESPONSIBILITY

The Board of Management is entitled to the ultimate power to exercise all rights and obligations on behalf of the Company, except for the rights relating to the Board of Shareholders

The Board of Directors of the Company is responsible for preparing the consolidated financial statements of each year, which give a true and fair view of the financial position of the Company and of its results and cash flows for the year In preparing these consolidated financial statements, the Board of Directors is required to:

« Select suitable accounting policies and then apply them consistently;

* Make judgments and estimates that are reasonable and prudent;

© State whether applicable accounting principles have been followed, subject to any material departures

disclosed and explained in the consolidated financial statements;

* Prepare the consolidated financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business; and

e Design and implement an effective internal control system for the purpose of properly preparing and presenting the consolidated financial statements so as to minimise errors and frauds

The Board of Directors is responsible for ensuring that proper accounting records are kept, which disclose, with reasonable accuracy at any time, the financial position of the Company and that the consolidated financial statements comply with Vietnamese Accounting Standards, Vietnamese Accounting System and prevailing relevant regulations in Vietnam The Board of Directors is also responsible for safeguarding the assets of the Company and for taking reasonable steps for the prevention and detection of fraud and other irregularities

Binh Dinh Province, 8.R Vietnam

STATEMENT OF THE BOARDS OF MANAGEMENT AND DIRECTORS (Continued)

The Board of Directors confirms that the Company has complied with the above requirements in preparing these

consolidated financial statements

The Board of Management confirms that they have read and approved the Company’s consolidated financial

statements for the year ended 31 December 2012

For and on behalf of the Boards of Management and Directors,

a

Chairman of the Board of Management General Director

21 March 2013

Deloitte Deloitte Viet Nam Company Ltd

12A Floor, Vinaconex Tower

34 Lang Ha Street, Dong Da District

INDEPENDENT AUDITORS’ REPORT

To: The Shareholders, The Boards of Management and Directors of

Vinh Son-Song Hinh Hydro-power Joint Stock Company

We have audited the accompanying consolidated balance sheet of Vinh Son - Song Hinh Hydro-power Joint Stock

Company ("the Company") as at 31 December 2012, the related consolidated statements of income and cash flows

for the year then ended, and the notes thereto (collectively referred to as “the consolidated financial statements"),

prepared on 21 March 2013, as set out from page 4 to page 26 The accompanying consolidated financial

statements are not intended to present the financial position, results of operations and cash flows in accordance

with accounting principles and practices generally accepted in countries and jurisdictions other than Vietnam

Respective Responsibilities of the Board of Directors and Auditors

As stated in the Statement of the Boards of Management and Directors on pages 1 and 2, these consolidated

financial statements are the responsibility of the Company's Board of Directors Our responsibility is to express an

opinion on these consolidated financial statements based on our audit

Basis of Opinion

Except for the limitation of audit scope presented in the following paragraph, we have conducted our audit in

accordance with Vietnamese Standards on Auditing Those standards require that we plan and perform the audit to

obtain reasonable assurance that the consolidated financial statements are free of material misstatements 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 accounting principles used and significant estimates made by

management, as well as evaluating the overall consolidated financial statement presentation We believe that our

audit provides a reasonable basis for our opinion

Limitation of audit scope:

As presented in Note 17 of the Notes to the consolidated financial statements, up to the reporting date, the

Company and Electricity of Vietnam (EVN) had not reached a final agreement on the electricity prices for the

years 2010, 2011 and 2012 The Company’s electricity revenue for these years has been recognized on a

temporary basis and will be adjusted when the Company and Electricity of Vietnam (EVN) have final agreement

on electricity prices

Qualified opinion

In our opinion, except for the effects of the above-mentioned limitation of audit scope, the accompanying

consolidated financial statements give a true and fair view of, in all material respects, the financial position of the

Company as at 31 December 2012 and the results of its operations and its cash flows for the year then ended in

aoca e with Vietnamese Accountipg Standards, Vietnamese Accounting System and prevailing relevant

Nguyen Quang Trung

CPA Certificate No D.0030/KTV CPA Certificate No 0733/KTV

For and on behalf of

DELOITTE VIETNAM COMPANY LIMITED

21 March 2013

Hanoi, S.R Vietnam

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by

guarantee, and its network of member firms, each of which is a legally separate and independent entity

Please see www.deloitte.com/my/about for a detailed description of the legal structure of Deloitte

Touche Tohmatsu Limited and its member firms 3

Binh Dinh Province, S.R Vietnam

CONSOLIDATED BALANCE SHEET

I Cash and cash equivalents 110 5 640,342,507,484 482,797,391,011

IIL Short-term receivables 130 598,779,150,626 603,244,857,655

1, Trade accounts receivable 131 143,309,993,065 218,400,591,186

2 Advances to suppliers 132 7 431,970,413,857 358,806,658,584

3 Other receivables 135 23,498,743,704 26,037,607,885

2 Provision for devaluation of inventories 149 (7,965,689,510) (7,965 689,510)

1 Short-term prepayments 151 41,320,000

3 Other short-term assets 158 351,497,734 86,000,000

B NON-CURRENT ASSETS 200 1,914,895,846,476 1,534,601,224,067 (200 = 220+250+260)

VINH SON - SONG HINH HYDRO-POWER JOINT STOCK COMPANY

21 Nguyen Hue Street, Quy Nhon City Consolidated financial statements

Binh Dinh Province, 8.R Vietnam For the year ended 31 December 2012

CONSOLIDATED BALANCE SHEET (Continued)

1 Short-term loans and liabilities 311 12 591,015,250,928 522,019,557,378

2 Trade accounts payable 312 11,058,429,001 25,116,453,314

3 Advances from customers 313 1,155,829,000 985,354,000

4, Taxes and amounts payable to the State budget 314 13 67,928,339,121 58,290,820,405

5 Payables to employees 315 5,395,728, 189 5,755,068,146

6 Accrued expenses 316 3,516,009,993 3,779,33 1,868

7, Other current payables 319 14 38,304,930,339 126,696,572,833

8 Bonus and welfare funds 323 1,710,643,536 305,821,519

IL Long-term liabilities 330 211,876,534,857 258,026,896,202

1, Long-term loans and liabilities 334 15 211,876,534,857 257,844,485,957

2 Provision for severance allowance 336 - 182,410,245 À

4 Foreign exchange reserve 416 (7,338,762,414) (7,752,006,653)

3 Investment and development fund 417 21,500,000,000 21,500,000,000

4 Financial reserve fund 418 26,880,000,000 26,880,000,000

5, Retained earnings 420 16 392,867,363,452 287,174,823,440

Il Other resources and funds 430 1,247,251,456 1,659,436,228

1 Funds for fixed assets acquisition 433 1,247,251,456 1,659,436,228

TOTAL RESOURCES (440 = 300+ 400) 440 3,382,412,475,496 _ 3,345,733,056,718

General Director Chief Accountant Preparer

21 March 2013

The notes set out on pages 9 to 26 are an integral part of these consolidated financial statements

5

Binh Dinh Province, S.R Vietnam

CONSOLIDATED INCOME STATEMENT

For the year ended 31 December 2012

- Inwhich: Interest expense 23 4,223,388, 736 4,126,964,228

6 General and administration expenses 25 17,091,969,237 18,578,126,091

11 Share of profit in the associate 45 1,741,613,876 6,553,287,830

12 Accounting profit before tax 50 265,533,099,820 363,691,287,624

(50=30+40+45)

13 Current corporate income tax expense 51 21 31,535,026,822 34,655,328,021

14 Net profit after corporate income tax 60 233,998,072,998 329,035,959,603

General Director Chief Accountant Preparer

21 March 2013

The notes set out on pages 9 to 26 are an integral part of these consolidated financial statements

6

VINH SON - SONG HINH HYDRO-POWER JOINT STOCK COMPANY Consolidated financial statements

For the year ended 31 December 2012

21 Nguyen Hue Street, Quy Nhon City

Binh Dinh Province, $.R Vietnam

CONSOLIDATED CASH FLOW STATEMENT

For the year ended 31 December 2012

ITEMS

I CASH FLOWS FROM OPERATING ACTIVITIES

1 Profit before tax

2 Adjustments for:

- Depreciation and amortisation

- Provisions

- Unrealized foreign exchange loss

- Gain from investing activities

- Interest expense

3 Operating profit before movements in working capital

- Change in receivables

- Change in inventories

- Change in accounts payable (not including accrued

interest and corporate income tax payable)

- Change in prepaid expenses

- Interest paid

- Corporate income tax paid

- Other cash inflows

- Other cash outflows

Net cash from operating activities

IL CASH FLOWS FROM INVESTING ACTIVITIES

1 Acquisition and construction of fixed assets

2 Cash outflow for lending to other entities

3 Cash recovered from lending to other entities

4, Interest earned, dividends and profit received

Net cash used in investing activities

HL CASH FLOWS FROM FINANCING ACTIVITIES

1 Proceeds from borrowings

2 Repayments of borrowings

3 Dividends paid and profit received

Net cash from used in financing activities

Net increase/(decrease) in cash

Cash and cash equivalents at the beginning of the year

Cash and cash equivalents at the end of the year

- 20,354,746,470

(99,499,880,188) (138,203,880,107) 4,223,388,736 4,126,964,228 246,408,027,588 376,559,833,024 53,587,955,481 (66,938,426,607) (5,506,915,480) 16,736,247,042 2,746,207,989 21,208,554,352 (33,774,849) 17,776,382 (4,710,887,63 1) (35,723,667,833) (35,814,190,909) (22,724,88 1,266)

“ 67,196,981

- (3,861,958,763) 256,676,422,189 285,340,673,312

(547,652,649,082) (428,120,842,893)

- (233,500,000,000) 402,067,000,000 75,000,000,000 106,459,806,277 151,907,157,838

(39,125,842,805) (434,713,685,055)

1,001,172,528,499 (977,731,541 ,810) (83,446,449,600) (60,005,462,911)

157,545,116,473 482,797,391,011 640,342,507,484

551,643,031,328 (318,441,821,494) (278,448,596,000) (45,247,386,166) (194,620,397,909) 677,417,788,920 482,797,391,011

ET

=

Binh Dinh Province, S.R Vietnam

CONSOLIDATED CASH FLOW STATEMENT (Continued)

For the year ended 3] December 2012

Supplemental non-cash disclosures

Cash recovered from lending to other entities excludes an amount of VND 126 billion, representing dividends

payable to Electricity of Vietnam (EVN) which were offset against the loan to EVN in accordance with Official

Letter No BT36/EVN-TCKT dated 29 March 2012

Cash outflow for paying dividends during the year excludes an amount of VND 37,898,298,000 presenting

dividends declared in the year but not yet paid to shareholders

Cash outflows for purchases and construction of fixed assets during the year include an amount of VND

73,258,826,362, representing advances to contractors while the volume of completed works have not yet been

inspected and exclude an amount of VND 8,878,081,094, representing an addition in fixed assets and

constructions in progress during the year that has not yet been paid

Consequently, changes in accounts receivable and accounts payable have been adjusted by the same amounts

v4

VINH SON - SONG HINH HYDRO-POWER JOINT STOCK COMPANY

21 Nguyen Hue Street, Quy Nhon City Consolidated financial statements

Binh Dinh Province, S.R Vietnam For the year ended 31 December 2012

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FORM B 09-DN/HN

These notes are an integral part of and should be read in conjunction with the accompanying consolidated

financial statements

3

GENERAL INFORMATION

Structure of ownership

Vinh Son - Song Hinh Hydro-power Joint Stock Company is incorporated in Vietnam as a joint stock

company which was converted from Vinh Son - Song Hinh Hydro Power Plant, a State-owned enterprise

(“the Plant”) Previously, the Plant was a dependent accounting unit of Electricity of Vietnam (“EVN”)

According to Decision No 219/QD-TTg dated 28 October 2003 issued by the Prime Minister approving

the general plan for renovation of State-owned Enterprises under Electricity of Vietnam in the period

from 2003 to 2005 and Decision No 2992/QD-TCCB of the Ministry of Industry on equitization of Vinh

Son - Song Hinh Hydro-Power Plant The Plant is responsible for proceeding equitisation in 2004 On 2

December 2004, the Ministry of Industry issued Decision No 151/2004/QD-BCN on converting Vinh

Son - Song Hinh Hydro Power Plant into Vinh Son - Song Hinh Hydro-power Joint Stock Company

On 4 May 2005, the Plant officially started operating under the model of a joint stock company and under

the name of Vinh Son - Song Hinh Hydro-power Joint Stock Company The Company’s Business

Certificate No 3503000058 was issued by the Department of Planning and Investment of Binh Dinh

Province on 4 May 2005, as amended

The Company was granted certificate to trade securities in Hanoi Stock Trading Center in accordance

with Decision No 01/QD-TTGDHN On 28 June 2006, the Company was officially granted certificate to

listed in Ho Chi Minh Stock Exchange in accordance with Decision No 54/UBCK-GDNY issued by the

State Securities Committee

The Company has a 100% owned subsidiary namely VSH Consulting and Technical Service One

Member Company Limited and an associate namely Binh Dinh Tourist Joint Stock Company

The number of employees as at 31 December 2012 was 158 (31 December 2011: 127)

Operating industry and principal activities

The principal activities of the Company are to produce electricity; provide operation management

services and hydroelectric power plant maintenance; provide consulting and management service for

projects and supervise the construction of hydropower plant projects; provide consulting services for the

designs of irrigation, transportation and hydropower projects; provide consulting and supervising services

for the construction of irrigation and transport projects; test power; trade materials and equipment in

hydroelectricity industry; invest in construction of power projects; and trade properties

ACCOUNTING CONVENTION AND FINANCIAL YEAR

Accounting convention

The accompanying consolidated financial statements, expressed in Vietnam Dong (VND), are prepared

under the historical cost convention and in accordance with Vietnamese Accounting Standards,

Vietnamese Accounting System and prevailing relevant regulations in Vietnam

Financial year

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

ADOPTION OF NEW ACCOUNTING GUIDANCE

On 24 October 2012, the Ministry of Finance issued Circular No 179/2012/TT-BTC (“Circular 179”)

providing guidance on recognition, measurement and treatment of foreign exchange differences in

enterprises Circular 179 came into effect from 10 December 2012 and is applied from financial year

2012 Circular 179 provides detailed guidance on the exchange rates applicable to payment and

revaluation of monetary items denominated in foreign currencies According to the Board of Directors’

assessment, Circular 179 has immaterial effect on the Company’s consolidated financial statements for

the year ended 31 December 2012

OF

ip =

Binh Dinh Province, S.R Vietnam

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued) FORM B 09-DN/HN

These notes are an integral part of and should be read in conjunction with the accompanying consolidated

financial statements

4, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies, which have been adopted by the Company in the preparation of these

consolidated financial statements, are as follows:

Estimates

The preparation of consolidated financial statements in conformity with Vietnamese Accounting

Standards, Vietnamese Accounting System and prevailing relevant regulations in Vietnam requires

management to make estimates and assumptions that affect the reported amounts of assets, liabilities and

disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the

reported amounts of revenues and expenses during the financial year, Although these accounting

estimates are based on the management’s best knowledge, actual results may differ from those estimates

Financial instruments

Initial recognition

Financial assets

At the date of initial recognition, financial assets are recognized at cost plus transaction costs that are

directly attributable to the acquisition of the financial assets Financial assets of the Company comprise

cash and cash equivalents, trade receivables and other receivables and financial investments

Financial liabilities

At the date of initial recognition, financial liabilities are recognized at cost net of transaction costs that

are directly attributable to the issue of the financial liabilities Financial liabilities of the Company

comprise trade payables and other payables, accruals and borrowings

Re-measurement after initial recognition

Currently, there are no requirements for the re-measurement of the financial instruments after initial

recognition

Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and

enterprises controlled by the Company (its subsidiaries) up to the balance sheet date Control is achieved

where the Company has the power to govern the financial and operating policies of an investee enterprise

so as to obtain benefits from its activities

The results of subsidiaries acquired or disposed of during the year are included in the consolidated

income statement from the effective date of acquisition or up to the effective date of disposal, as

appropriate

Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting

policies used in line with those used by the Company

All inter-company transactions and balances between group enterprises are eliminated on consolidation

Minority interests in the net assets of consolidated subsidiaries are identified separately from the

Company’s equity therein Minority interests consist of the amount of those interests at the date of the

original business combination and the minority’s share of changes in equity since the date of the

combination Losses applicable to the minority in excess of the minority’s interest in the subsidiary’s

equity are allocated against the interests of the Company except to the extent that the minority has a

binding obligation and is able to make an additional investment to cover the losses

10

VINH SON - SONG HINH HYDRO-POWER JOINT STOCK COMPANY

21 Nguyen Hue Street, Quy Nhon City Consolidated financial statements

Binh Dinh Province, 8.R Vietnam For the year ended 31 December 2012

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued) FORM B 09-DN/HN

These notes are an integral part of and should be read in conjunction with the accompanying consolidated

financial statements

4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Investments in associates

An associate is an entity over which the Company has significant influence and that is neither a

subsidiary nor an interest in joint venture Significant influence is the power to participate in the financial

and operating policy decisions of the investee but not control or joint control over those policies

The results and assets and liabilities of associates are incorporated in these financial statements using the

equity method of accounting Interests in associates are carried in the balance sheet at cost as adjusted by

post-acquisition changes in the Company’s share of the net assets of the associate Losses of an associate

in excess of the Company's interest in that associate (which includes any long-term interests that, in

substance, form part of the Company's net investment in the associate) are not recognised

Where a group entity transacts with an associate of the Company, unrealised profits and losses are

eliminated to the extent of the Company’s interest in the relevant associate

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand, demand deposits and short-term, highly liquid

investments that are readily convertible to known amounts of cash and which are subject to an

insignificant risk of changes in value

Inventories

Inventories are stated at the lower of cost and net realisable value Cost comprises direct materials and

where applicable, direct labour costs and those overheads that have been incurred in bringing the

inventories to their present location and condition Cost is calculated using the weighted average method

Net realisable value represents the estimated selling price less all estimated costs to completion and costs

to be incurred in marketing, selling and distribution

The evaluation of necessary provision for inventory obsolescence follows current prevailing accounting

regulations of which allow provisions to be made for obsolete, damaged, or sub-standard inventories and

for those which have costs higher than net realisable values as at the balance sheet date

The Company’s inventories mainly include materials and spare parts for two electricity generators in

Vinh Son hydro-power plant and Song Hinh hydro-power plant These specialised materials and spare

parts are used to replace synchronous generators and have been stored since the installation of these

generators (in Vinh Son hydro-power plant since 1995 and in Song Hinh hydro-power plant since 2000)

Tangible fixed assets and depreciation

Tangible fixed assets are stated at cost less accumulated depreciation

The cost of purchased tangible fixed assets comprises its purchase price and any directly attributable

costs of bringing the assets to its working condition and location for its intended use

Tangible fixed assets are depreciated using the straight-line method over their estimated useful lives as

11

Binh Dinh Province, S.R Vietnam

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued) FORM B 09-DN/HN

These notes are an integral part of and should be read in conjunction with the accompanying consolidated

financial statements

4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Construction in progress

Properties in the course of construction for production, rental or administrative purposes, or for the

purposes not yet determined, are carried at cost Cost includes professional fees, and for qualifying

assets, borrowing costs dealt with in accordance with the Company’s accounting policy Depreciation of

these assets, on the same basis as other property assets, commences when the assets are ready for their

intended use

Investments in securities

Investments in securities are recognised on transaction dates and are initially measured at cost including

directly attributable transaction costs

At the subsequent reporting dates, investments in securities are measured at cost, less diminution in value

of investments in securities

Provision for diminution in value of investments in securities is made in accordance with current

prevailing accounting regulations which allow provision to be made for freely traded securities whose

book value is higher than market price as at the balance sheet date

Long-term prepayments

Other types of long-term prepayments comprise small tools, supplies and spare parts issued for

consumption which are expected to provide future economic benefits to the Company for more than one

year These expenditures have been capitalised as long-term prepayments, and are allocated to the

consolidated income statement using the straight-line method over the period of two years in accordance

with the current prevailing accounting regulations

Provisions

Provisions are recognised when the Company has a present obligation as a result of a past event, and it is

probable that the Company will be required to settle that obligation Provisions are measured at the

management's best estimate of the expenditure required to settle the obligation at the balance sheet date

Revenue recognition

Revenue from the sale of goods is recognised when all five (5) following conditions are satisfied:

(a) The Company has transferred to the buyer the significant risks and rewards of ownership of the

goods;

(b) The Company retains neither continuing managerial involvement to the degree usually associated

with ownership nor effective control over the goods sold;

(c) The amount of revenue can be measured reliably;

(d) It is probable that the economic benefits associated with the transaction will flow to the Company;

and

(e) The costs incurred or to be incurred in respect of the transaction can be measured reliably

Revenue from the sale of electricity is recognised monthly upon certification by EVN on the volume of

electricity transmitted via the national electricity grid regardless of whether cash is received or not

Interest income is accrued on a time basis, by reference to the principal outstanding and at the interest

applicable rate Income from investments is recognised when the Company’s right to receive payments

has been established

12