CECO Separate Financial Statement 2015 EN

Joint Stock Company Separate financial statements for the year ended 31 December 2015... Statement of the Board of Directors The Board of Directors of Chemical Industry Engineering Joint

Joint Stock Company

Separate financial statements for the year ended 31 December 2015

Corporate Information

Business Registration

The Company’s Business Registration Certificate has been amended 13 times, the most recent of

which is by Business Registration Certificate No 0100103520 dated 13 June 2015 The Business

Registration Certificate was issued by Hanoi Department of Planning and Investment

Chemical Industry Engineering Joint Stock Company is formerly a state-owned enterprise member

of Vietnam National Chemical Corporation (currently known as Vietnam National Chemical Group)

The Company has been converted from a state-owned enterprise to a joint stock company in

accordance with Decision No 3493/QD-BCN dated 24 October 2005 of the Minister of Industry

(currently known as Ministry of Industry and Trade) and operates under the initial Business

Registration Certificate No 0103010996 issued by Hanoi Department of Planning and Investment on

24 February 2006

Board of Management Mr Do Hien Ngang Chairman

Mr Nguyen Manh Hung Member

Mr Nguyen Cong Thang Member

Ms Nguyen Hong Hanh Member

Board of Directors Mr Nguyen Manh Hung General Director

Mr Van Due Thang Deputy General Director

Mr Tran Dang Thai Deputy General Director

Mr Nguyen Cong Thang Deputy General Director

Supervisory Board Mr Nguyen Van Bang Head of the Board

Ms Nguyen Thi Bich Member

Ms Nguyen Thi Kim Lien Member

Registered Office No, 21A, Cat Linh Street

Cat Linh Ward

Statement of the Board of Directors

The Board of Directors of Chemical Industry Engineering Joint Stock Company (“the Company”)

presents this statement and the accompanying separate financial statements of the Company for the

year ended 31 December 2015

The Board of Directors is responsible for the preparation and fair presentation of the separate financial

statements in accordance with Vietnamese Accounting Standards, the Vietnamese Accounting

System for Enterprises and the relevant statutory requirements applicable to financial reporting In

the opinion of the Board of Directors:

(a) the separate financial statements set out on pages 5 to 34 give a true and fair view of the

unconsolidated financial position of the Company as at 31 December 2015, and of the

unconsolidated results of operations and the unconsolidated cash flows of the Company for the

year then ended in accordance with Vietnamese Accounting Standards, the Vietnamese

Accounting System for Enterprises and the relevant statutory requirements applicable to financial

reporting; and

(b) at the date of this statement, there are no reasons to believe that the Company will not be able to

pay its debts as and when they fall due

The Board of Directors has, on the date of this statement, authorized the accompanying separate

financial statements for issue

46" Floor, Keangnam Hanoi Landmark Tower Telephone +84 (4) 3946 1600

72 Building, Plot E6, Pham Hung Street Fax +84 (4) 3946 1601

Me Tri, Tu Liem, Hanoi city Internet www.kpmg.com.vn The Socialist Republic of Vietnam

INDEPENDENT AUDITOR’S REPORT

To the Shareholders

Chemical Industry Engineering Joint Stock Company

We have audited the accompanying separate financial statements of Chemical Industry

Engineering Joint Stock Company (“the Company”), which comprise the separate balance sheet

as at 31 December 2015, the separate statements of income and cash flows for the year then ended

and the explanatory notes thereto which were authorised for issue by the Company’s Board of

Directors on 25 March 2016, as set out on pages 5 to 34

Management’s Responsibility

The Company’s Board of Directors is responsible for the preparation and fair presentation of these

separate financial statements in accordance with Vietnamese Accounting Standards, the

Vietnamese Accounting System for Enterprises and the relevant statutory requirements applicable

to financial reporting, and for such internal control as the Board of Directors determines is

necessary to enable the preparation of separate financial statements that are free from material

misstatement, whether due to fraud or error

Auditor’s Responsibility

Our responsibility is to express an opinion on these separate financial statements based on our

audit We conducted our audit in accordance with Vietnamese Standards on Auditing Those

standards require that we comply with ethical requirements and plan and perform the audit to

obtain reasonable assurance about whether the separate financial statements are free of material

misstatement

An audit involves performing procedures to obtain audit evidence about the amounts and

disclosures in the financial statements The procedures selected depend on the auditor’s

judgement, including the assessment of the risks of material misstatement of the financial

statements, whether due to fraud or error In making those risk assessments, the auditor considers

internal control relevant to the Company’s preparation and fair presentation of the financial

statements in order to design audit procedures that are appropriate in the circumstances, but not

for the purpose of expressing an opinion on the effectiveness of the Company’s internal control

An audit also includes evaluating the appropriateness of accounting policies used and the

reasonableness of accounting estimates made by the Company’s Board of Directors, as well as

evaluating the overall presentation of the financial statements

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a

basis for our audit opinion

ity company member fir

In our opinion, the separate financial statements give a true and fair view, in all material respects,

of the unconsolidated financial position of Chemical Industry Engineering Joint Stock Company

as at 31 December 2015 and of its unconsolidated results of operations and its unconsolidated cash

flows for the year then ended in accordance with Vietnamese Accounting Standards, the

Vietnamese Accounting System for Enterprises and the relevant statutory requirements applicable

to financial reporting

Other Matter

The separate financial statements of the Company for the year ended 31 December 2014 were

audited by another firm of auditors whose report dated 10 March 2015 expressed an unqualified

opinion on those statements

KPMG Limited

Vietnam

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Le Viet Hung

ei Auditor Registration Practicing Auditor Registration

‘ertificate No 0861-2013-007-1 Certificate No 0296-2013-007-1

Deputy General Director

Hanoi, 25 March 2016

Separate balance sheet as at 31 December 2015

Accounts receivable — short-term

Accounts receivable from customers

Other current assets

Deductible value added tax

Taxes and other receivables from

State Treasury

Long-term assets

(200 = 210 + 220 + 250 + 260)

Accounts receivable — long-term

Other long-term receivables

Equity investments in other entities

Other long-term assets

Long-term prepaid expenses

dated 22 December 2014 of the Ministry of Finance)

98,306,393,670 6(a) 88.514.918.260

5.882.486.104 7(a) 5.794.745.860

8 (1,885,756,554)

9 43,125,747,271

43.125.747.271 5,925,593,944 5,496,089,940 429,504,004 28,023,902,053

6,870,145,487 7(b) 6.870.145.487

5,937,171,509

10 4.243.089.797

18.930.232.667 (14.687.142.870)

11 1,694,081,712

3,312,050,000 (1,617,968,288)

12 14,046,500,000

12,408,500,000 1,638,000,000 1,170,085,057 1,170,085,057

288,152,528,740

1/1/2015 VND

Reclassified

201,898,828,090

79,091,489,368 79,09 1,489,368

77,187,009,862 60,957,138,040 6.680.072.965 11,235,987,774 (1,686, 188,917)

37,101,686,573 37.101.686.573 8,518,642,287 8,518,642,287

26,185,015,922 6,401,525,607 6,401,525,607 8,103,358,241 5,820,946,553 19,204,075,489 (13,383,128,936) 2,282,411,688 3,422,050,000 (1,139,638,312) 11,183,000,000 9,545,000,000 1,638,000,000

497,132,074 497,132,074

228,083,844,012

The accompanying notes are an integral part of these separate financial statements

“ns

Separate balance sheet as at 31 December 2015 (continued)

LIABILITIES (300 = 310 + 330) 300 233,937,541,445 172,941,436,685

Accounts payable to suppliers 311 13 39.843.309.942 54.118.321.592

Taxes payable to State Treasury 313 14 1.762.953.520 5,081,148,181

- Ordinary shares with voting rights 4lla 29,885, 180,000 29,885, 180,000

- Retained profits brought forward 42la 3,940,533, 145 2,211,899, 342

- Retained profit for the current year 421b 6,683,894,268 13,342, 783,004

TOTAL RESOURCES (440 = 300 + 400) 440 288,152,528,740 228.083.844,012

25 March 2016 Prepared by:

General Accountant Chief Accountant

The accompanying notes are an integral part of these separate financial statements

Separate statement of income for the year ended 31 December 2015

Results of other activities (40 = 31 - 32) 40 5,206,289,512 1,607,213,716

Accounting profit before tax

Net profit after tax

25 March 2016 Prepared by:

The accompanying notes are an integral part of these separate financial statements

Separate statement of cash flows for the year ended 31 December 2015

(Indirect method)

Form B 03 - DN (Issued under Circular No 200/2014/TT-BTC dated 22 December 2014 of the Ministry of Finance)

CASH FLOWS FROM OPERATING ACTIVITIES

Adjustments for

Depreciation and amortisation 02 2,269, 186,732 2,971,885,990

Exchange gains arising from

revaluation of monetary items

Profits from investing activities 05 (1.725.290.838) (1,053,227,841)

Other receipts from operating activities 16 - 30.087.852.073 Other payments for operating activities 17 (2.893.507.666) (18.038.947.945)

Net cash flows from operating activities 20 127,226,727,527 21,215,116,878

CASH FLOWS FROM INVESTING ACTIVITIES

Payments for additions to fixed assets

Receipts of interests and dividends 27 1,702,881,747 1,053,227,841

Net cash flows from investing activities 30 (1,241,209,162) (772,499,431)

The accompanying notes are an integral part of these separate financial statements

Separate statement of cash flows for the year ended 31 December 2015

(Indirect method - continued)

Form B 03—- DN (Issued under Circular No 200/2014/TT-BTC dated 22 December 2014 of the Ministry of Finance)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from borrowings 33 145,236,149,693 260.797,253,782

Payments to settle loan principals 34 (231,633,755,604) (207.650.718.154)

(50 = 20 + 30 + 40)

Cash and cash equivalents at

the beginning of the year

Effect of exchange rate fluctuations on 61 110,028,544 7,362,013

cash and cash equivalents

The accompanying notes are an integral part of these separate financial statements

separate financial statements

Reporting entity

Ownership structure

Chemical Industry Engineering Joint Stock Company (“the Company”) is incorporated as a joint

stock company in Vietnam

Principal activities

The principal activities of the Company are:

® Construction of assorted houses;

® Construction of railway works and road works;

¢ Construction of public utility works;

¢ Construction of other civil works: construction of small and medium sized works for chemical

industry, petrochemical industry and relevant industries (including overhaul, repair,

reinforcement, corrosion resistant painting for structures and equipment; and supplying of

materials, equipment; performing installation, calibration and technology transfer in electrical,

automatic and measurement and control areas for industrial and civil works; construction of

power works, power transmission lines and transformer stations);

e Trading real estate, land use rights of land owners, land users or land lessees;

¢ Manufacturing metal structures;

e Manufacturing barrels, storage tanks and other storage tools made of metal;

e Mechanical fabrication, metal surface preparation and coating:

e Other manufacturing activities not elsewhere classified, details: production of chemical products

(except for chemicals prohibited by the Government);

© Construction demolition services;

« Site preparation;

¢ Installation of water supply and drainage systems, heating systems, and air conditioning systems;

© Completion of construction works:

®© Management consultancy;

(c)

Notes to the separate financial statements for the year ended 31 December 2015

(continued)

Form B 09- DN (Issued under Circular No 200/2014/TT-BTC dated 22 December 2014 of the Ministry of Finance)

e Architecture and architecture related consultancy services Details: designing power transmission

lines and transformer stations up to 110K V; supervision for installation of electrical equipment,

power transmission lines and transformer stations up to 500KV; construction designing and planning; designing and installation of construction equipment, petrochemical equipment for industrial works; designing ventilation, heating and air conditioning systems for industrial works;

designing firefighting systems; designing and manufacturing equipment for chemical industry:

surveying and designing works for chemical industry, and industrial and civil works; consulting,

supervision and execution of construction works (only applicable when all capacity conditions

prescribed by law are met); consulting, supervision and execution of power transmission lines and transformer stations up to 35K V; consulting on preparation of investment projects, designing

of power transmission lines and transformer stations up to 35KV; appraisal of investment projects, technical documents, total cost-estimation (in accordance with professional practice certificate), environmental impact assessment reports in chemical industry and relevant industries: consulting on construction investment and consulting, supervision and execution of power transmission lines and transformer stations (within the extent permitted under the professional practice certificate); consulting on warranty and maintenance for equipment in

chemical industry, petrochemical industry and other industries; inspecting, verifying and certifying quality of construction works in chemical industry, petrochemical industry and relevant

industries; management of construction investment projects:

e Research and experimental development on natural sciences and engineering Details:

conducting research and development on inventions, useful solutions, services and technology

transfer in chemical industry and environmental protection; research on application of advanced technology and equipment in designing works for chemical industry and environmental protection;

« Leasing out machines, equipment and other tangible tools;

¢ Other business supporting activities not elsewhere classified Details: investment and trade promotion; supplying of materials and equipment for industrial works; import-export the commodities that the Company is trading:

¢ Finance supporting activities not elsewhere classified Details: investment consultancy;

® Education supporting services; and

* Technical inspection and analysis Details: inspection and measurement of environmental indexes (air pollution, water pollution, etc.)

Normal operating cycle

The normal operating cycle of the Company is generally within 12 months

dated 22 December 2014 of the Ministry of Finance) Company structure

As at 31 December 2015, the Company had | subsidiary (1/1/2015: | subsidiary) as listed in Note

12, | representative office in the Lao People's Democratic Republic and the following branches:

© Chemical Industry Engineering Joint Stock Company Hanoi, Vietnam

Hanoi Branch

© Chemical Industry Engineering Joint Stock Company Hai Phong, Vietnam

Hai Phong Branch

© Chemical Industry Engineering Joint Stock Company Ho Chi Minh City, Vietnam

Ho Chi Minh City Branch

* Chemical Industry Engineering Joint Stock Company Phu Tho, Vietnam

Phu Tho Branch

¢ Chemical Industry Engineering Joint Stock Company Quang Ngai, Vietnam

Quang Ngai Branch

As at 31 December 2015, the Company had 251 employees (1/1/2015: 243 employees)

Basis of preparation

Statement of compliance

These separate financial statements have been prepared in accordance with Vietnamese Accounting

Standards, the Vietnamese Accounting System for Enterprises and the relevant statutory requirements applicable to financial reporting The Company prepares and issues its consolidated financial

statements separately For a comprehensive understanding of the Company’s consolidated financial

position, its consolidated results of operations and its consolidated cash flows, these separate financial statements should be read in conjunction with the consolidated financial statements

Basis of measurement

The separate financial statements, except for the separate statement of cash flows, are prepared on the accrual basis using the historical cost concept The separate statement of cash flows is prepared

using the indirect method

Annual accounting period

The annual accounting period of the Company is from | January to 31 December

Accounting and presentation currency

The Company’s accounting currency is Vietnam Dong (“VND”), which is also the currency used for financial statement presentation purpose

(a)

Notes to the separate financial statements for the year ended 31 December 2015

(continued)

Form B 09 - DN (Issued under Circular No 200/2014/TT-BTC

dated 22 December 2014 of the Ministry of Finance)

Adoption of new guidance on accounting system for enterprises

On 22 December 2014, the Ministry of Finance issued Circular No 200/2014/TT-BTC providing guidance on Vietnamese Accounting System for Enterprises (“Circular 200”) Circular 200 replaces previous guidance on Vietnamese Accounting System for Enterprises under Decision No 15/2006- QD/BTC dated 20 March 2006 and Circular No 244/2009/TT-BTC dated 31 December 2009 Circular 200 is effective after 45 days from the signing date and applicable for annual accounting periods beginning on or after | January 2015

The Company has adopted the applicable requirements of Circular 200 effective from | January 2015

on a prospective basis The significant changes to the Company’s accounting policies are disclosed

in Note 4(a) — Foreign currency transactions

Summary of significant accounting policies

The following significant accounting policies have been adopted by the Company in the preparation

of these separate financial statements

Foreign currency transactions

Transactions in currencies other than VND during the year have been translated into VND at actual rates of exchange ruling at the transaction dates The actual rates of exchange applied to account for foreign currency transaction are determined as follows:

= Exchange rate applied to buying or selling foreign currency is the exchange rate stipulated in the currency exchange contract between the Company and the bank

= Exchange rate applied to recognize trade and other receivables is the foreign currency buying rate at the transaction date quoted by the bank through which the Company receives money from the customer or counterparty

= Exchange rate applied to recognize trade and other payables is the foreign currency selling rate

at the transaction date quoted by the bank through which the Company intends to make payment for the liability

= For asset acquisitions or expenses that are settled with immediate payment, the exchange rate

applied is the foreign currency buying rate at the transaction date quoted by the bank through which the Company makes payment

Monetary assets and liabilities denominated in currencies other than VND are translated into VND

at actual rates of exchange ruling at the balance sheet date The actual rates of exchange applied to retranslate monetary items denominated in foreign currency at reporting date are determined as follows:

= For monetary assets (cash on hand and receivables): the foreign currency buying rate at the

reporting date quoted by the commercial bank where the Company most frequently conducts transactions Cash at bank and bank deposits are retranslated using the foreign currency buying rate of the bank where the Company deposits the money or maintains those bank accounts

= For monetary liabilities (payables and borrowings): the foreign currency selling rate at reporting date quoted by the commercial bank where the Company most frequently conducts transactions All foreign exchange differences are recorded in the separate statement of income

dated 22 December 2014 of the Ministry of Finance) Cash and cash equivalents

Cash comprises cash balances and call deposits Cash equivalents are short-term highly liquid

investments that are readily convertible to known amounts of cash, are subject to an insignificant risk

of changes in value, and are held for the purpose of meeting short-term cash commitments rather than

for investment or other purposes

Investments

Investments in subsidiaries

For the purpose of these separate financial statements, investments in subsidiaries are initially

recognized at cost which includes purchase price plus any directly attributable transaction costs

Subsequent to initial recognition, these investments are stated at cost less allowance for diminution

in value An allowance is made for diminution in investment value if the investee has suffered a loss,

except where such a loss was anticipated by the Company’s management before making the

investment The allowance is reversed if the investee subsequently made a profit that offsets the

previous loss for which the allowance had been made An allowance is reversed only to the extent

that the investment’s carrying amount does not exceed the carrying amount that would have been

determined if no allowance had been recognised

Investments in equity instruments of other entities

Investments in equity instruments of other entities are initially recognized at cost which include

purchase price plus any directly attributable transaction costs, Subsequent to initial recognition, these

investment are stated at cost less allowance for diminution in value An allowance is made for

diminution in investment values if the investee has suffered a loss, except where such a loss was

anticipated by the Company’s management before making the investment The allowance is reversed

if the investee subsequently made a profit that offsets the previous loss for which the allowance had

been made An allowance is reversed only to the extent that the investment’s carrying amount does

not exceed the carrying amount that would have been determined if no allowance had been

recognised

Accounts receivable

Trade and other receivables are stated at cost less allowance for doubtful debts

Inventories

Inventories are stated at the lower of cost and net realisable value Cost is determined on a weighted

average basis and includes all costs incurred in bringing the inventories to their present location and

condition Cost in the case of finished goods and work in progress includes raw materials, direct

labour and attributable manufacturing overheads Net realisable value is the estimated selling price

of inventory items, less the estimated costs of completion and selling expenses

The Company applies the perpetual method of accounting for inventories

—p

dated 22 December 2014 of the Ministry of Finance) Tangible fixed assets

Cost

Tangible fixed assets are stated at cost less accumulated depreciation The initial cost of a tangible

fixed asset comprises its purchase price, including import duties, non-refundable purchase taxes and

any directly attributable costs of bringing the asset to its working condition for its intended use

Expenditure incurred after tangible fixed assets have been put into operation, such as repair,

maintenance and overhaul cost, is charged to the statement of income in the year in which the cost is

incurred In situations where it can be clearly demonstrated that the expenditure has resulted in an

increase in the future economic benefits expected to be obtained from the use of tangible fixed assets

beyond their originally assessed standard of performance, the expenditure is capitalised as an

additional cost of tangible fixed assets

Depreciation

Depreciation is computed on a straight-line basis over the estimated useful lives of tangible fixed

assets The estimated useful lives are as follows:

= buildings and structures 5 —40 years

= machinery and equipment 3 — 5 years

Intangible fixed assets

Land use rights

Land use rights are those granted by the State The initial cost of a land use rights comprises the value

of the right and any directly attributable costs incurred in conjunction with securing the land use

rights Indefinite land use rights are not amortised

Software

Cost of acquiring new software, which is not an integral part of the related hardware, is capitalised

and treated as an intangible asset Software cost is amortised on a straight-line basis over 3 to 5 years

Long-term prepaid expenses

Tools and instruments

Tools and instruments include assets held for use by the Company in the normal course of business

whose costs of individual items are less than VND30 million and therefore not qualified for

recognition as fixed assets Cost of tools and instruments are amortised on a straight-line basis over

Trade and other payables

Trade and other payables are stated at their cost

The provision for warranties relates mainly to goods sold and services rendered during the accounting

period The provision is based on estimates derived from historical warranty data associated with similar products and services

Share capital

Ordinary shares

Incremental costs directly attributable to the issue of shares, net of tax effects, are recognized as a

deduction from share premium

Taxation

Income tax on the separate profit or loss for the year comprises current and deferred tax Income tax

is recognised in the separate statement of income except to the extent that it relates to items recognised

directly to equity, in which case it is recognised in equity

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years

Deferred tax is provided using the balance sheet method, providing for temporary differences

between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes The amount of deferred tax provided is based on the expected

manner of realisation or settlement of the carrying amounts of assets and liabilities using the tax rates enacted or substantively enacted at the balance sheet date

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will

be available against which the temporary difference can be utilised Deferred tax assets are reduced

to the extent that it is no longer probable that the related tax benefit will be realised