CECO Consol Financial statement 2015 EN

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

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Chemical Industry Engineering Joint Stock Company

Consolidated financial statements for the year ended 31 December 2015

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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

Mr Nguyen Manh Hung Member

Ms Nguyen Thi Bich Member

Ms Nguyen Thi Kim Lien Member

Cat Linh Ward Dong Da District Hanoi

Vietnam

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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 consolidated 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 consolidated 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 consolidated financial statements set out on pages 5 to 39 give a true and fair view of the consolidated financial position of the Company as at 31 December 2015, and of the consolidated results of operations and the consolidated 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

will not be able to pay their debts as and when they fall due

financial statements for issue

Directors

Hanoi, 25 March 2016

op

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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 consolidated financial statements of Chemical Industry

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

as at 31 December 2015, the consolidated 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 39

Management’s Responsibility

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

consolidated 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 consolidated 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 consolidated 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 consolidated 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

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

for our audit opinion

`

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

of the consolidated financial position of Chemical Industry Engineering Joint Stock Company as at

31 December 2015 and of its consolidated results of operations and its consolidated 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 consolidated 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 consolidated statements

KPMG Limited

yu

Deputy General Director

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Consolidated balance sheet as at 31 December 2015

Form B 01 - DN/HN (Issued under Circular No 202/2014/TT-BTC dated 22 December 2014 of the Ministry of Finance)

Reelassified ASSETS

Accounts receivable from customers 131 6 97.697.310.332 62.273.213.844

Taxes and other receivables from

Long-term assets

(200 = 210 + 220 + 240 + 250 + 260) 200 29,852,988,965 31,119,324,781

TOTAL ASSETS (270 = 100 + 200) 270 306,483,294,092 241,591,339,391

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

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Consolidated balance sheet as at 31 December 2015 (continued)

Form B 01 — DN/HN (Issued under Circular No 202/2014/TT-BTC dated 22 December 2014 of the Ministry of Finance)

Reclassified RESOURCES

- Retained profit for the current year 421b 6,508, 763,275 14,383, 167,145

25 March 2016 Prepared by:

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Consolidated statement of income for the year ended 31 December 2015

Revenue from sales of goods and

In which: Interest expense

General and administration expenses

Net operating profit

(30 = 20 + 21 - 22 - 26)

Other income

Other expenses

Results of other activities (40 = 31 - 32)

Accounting profit before tax

(50 = 30 + 40)

Income tax expense — current

Net profit after tax (60 = 50 - 51)

(carried forward to next page)

7.759.591.309 7,600,199,707 29.208.804.032

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Consolidated statement of income for the year ended 31 December 2015 (continued)

Net profit after tax (60 = 50 - 51)

Attributable to:

Equity holders of the Parent company 61 7,304,174,275 14.383.167.145

Earnings per share

25 March 2016 Prepared by:

Ae

—T

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

(Indirect method)

2015

CASH FLOWS FROM OPERATING ACTIVITIES

Adjustments for

Exchange gains arising from revaluation

of monetary items denominated in

Change in payables and other liabilities ll 148,450,332,742

139,814,118,162

CASH FLOWS FROM INVESTING ACTIVITIES

Payments for additions to fixed assets

2014 VND

20,260,701,108 4.588.918.754 279.400.000

(9.893.061) (1.058.205.812) 7,600,199,707

31,661,120,696

41,626,802,308 1,459,632,038 (50,818,202,241) (343,846,290)

23,585,506,511

(7,624,599,165) (4,494,150,156) 30,087,852,073 (16,475,446,864)

25,079,162,399

(4,868,378,896) 106,189,761

(4,762,189,135)

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

(Indirect method - continued)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from borrowings

Payments to settle loan principals

Payments of dividends

Net cash flows from financing activities

Net cash flows during the year

(50 = 20 + 30 + 40)

Cash and cash equivalents at

the beginning of the year

Effect of exchange rate fluctuations on

cash and cash equivalents

Cash and cash equivalents at the end of

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(a)

(b)

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

Form B 09 - DN/HN (Issued under Circular No 202/2014/TT-BTC dated 22 December 2014 of the Ministry of Finance) These notes form an integral part of and should be read in conjunction with the accompanying

consolidated financial statements

Reporting entity

Ownership structure

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

stock company in Vietnam The consolidated financial statements of the Company for the year ended

31 December 2015 comprise the Company and its subsidiary

Principal activities

The principal activities of the Company and its subsidiary are:

¢ Construction of assorted houses;

® Construction of railway works and road works:

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);

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

e Manufacturing metal structures;

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

¢ Mechanical fabrication, metal surface preparation and coating:

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

(except for chemicals prohibited by the Government);

® Site preparation;

® _ Installation ofelectrical systems;

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

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(continued)

® 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 SOOKV; 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 35KV; 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;

* 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;

e Other professional, science and technology activities not elsewhere classified Details:

environmental impact assessment reports in chemical industry and relevant industries; treatment

of industrial wastes, environmental impact assessment; geographical survey, water resources

survey; developing prevention and response plan for events of chemical hazards; preparation of

environmental protection plans; preparation of environmental protection commitment forms:

environment monitoring services; environment consultancy;

¢ Leasing out machines, equipment and other tangible tools;

promotion; supplying of materials and equipment for industrial works; import-export the

commodities that the Company is trading:

e 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 and its subsidiary is generally within 12 months

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

As at 31 December 2015, the Company had 1 subsidiary (1/1/2015: | subsidiary), | representative

office in the Lao People's Democratic Republic and the following branches:

¢ Chemical Industry Engineering Joint Stock Company Hanoi, Vietnam

Hanoi Branch

Hai Phong Branch

Ho Chi Minh City Branch

Phu Tho Branch

* Chemical Industry Engineering Joint Stock Company Quang Ngai, Vietnam

Quang Ngai Branch

31/12/2015 1/1/2015 Mechanical processing

chemical industry

Vietnam Machinery and Equipment

for Chemical Industry JSC

These consolidated 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

Basis of measurement

The consolidated financial statements, except for the consolidated statement of cash flows, are

prepared on the accrual basis using the historical cost concept The consolidated statement of cash

flows is prepared using the indirect method

Annual accounting period

The annual accounting period of the Company and its subsidiary is from 1 January to 31 December

13

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Accounting and presentation currency

The Company’s and its subsidiary’s accounting currency is Vietnam Dong (“VND”), which is also

the currency used for consolidated financial statement presentation purpose

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

On the same date of 22 December 2014, the Ministry of Finance also issued Circular No

202/2014/TT-BTC providing guidance on preparation and presentation of consolidated financial

statements (“Circular 202”) Circular 202 replaces previous guidance on preparation and presentation

of consolidated financial statements provided in Part XIII of Circular No 161/2007/TT-BTC dated

31 December 2007 of the Ministry of Finance Circular 202 is also effective after 45 days from the

signing date and applicable for annual accounting periods beginning on or after 1 January 2015

The Company and its subsidiary have adopted the applicable requirements of Circular 200 and

Circular 202 effective from | January 2015 on a prospective basis The significant changes to the

Company’s and its subsidiary’s accounting policies and the effects on the Company’s consolidated

financial statements are disclosed in the following notes to the financial statements:

Summary of significant accounting policies

The following significant accounting policies have been adopted by the Company and its subsidiary

in the preparation of these consolidated financial statements

Basis of consolidation

Subsidiaries

Subsidiaries are entities controlled by the Company The financial statements of the subsidiaries are

included in the consolidated financial statements from the date that control commences until the date

that control ceases

Non-controlling interests

Non-controlling interests are measured at their proportionate share of the acquiree’s identifiable net

assets at date of acquisition

np

MANN

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Transactions eliminated on consolidation

Intra-group balances, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements Unrealised gains and losses arising from transactions with equity accounted investees are eliminated against the investment to the extent

of the Company’s interest in the investee

Foreign currency transactions

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

currency exchange contract between the Company or its subsidiary 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 or its subsidiary receives money from the customer or counterparty

at the transaction date quoted by the bank through which the Company or its subsidiary 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 or its subsidiary 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:

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

or maintain 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 or its subsidiary most frequently conducts transactions

All foreign exchange differences are recorded in the consolidated statement of income

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

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Investments

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 and its subsidiary apply the perpetual method of accounting for inventories

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

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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

Intangible fixed assets

Land use rights

Land use rights granted by the State with indefinite terms are not amortised

Land use rights granted by the State for which land use payments are collected are stated at cost less accumulated amortisation The initial cost of a land use rights comprises its purchase price and any directly attributable costs incurred in conjunction with securing the land use rights Amortisation is computed on a straight-line basis over 41 years

Long-term prepaid expenses

Tools and instruments

Tools and instruments include assets held for use by the Company and its subsidiary 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 2 years

Trade and other payables

Trade and other payables are stated at their cost

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Provisions

legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of

economic benefits will be required to settle the obligation Provisions are determined by discounting

the expected future cash flows at a pre-tax rate that reflects current market assessments of the time

value of money and the risks specific to the liability

Warranties

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

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