Deloitte CENTRAL POWER CORPORATION DISTRIBUTION EFFICIENCY PROJECT Financing Agreement No. Cr. 5156-VN Grant Agreement No. TF013456-VN AUDITED FINANCIAL STATEMENTS, ASSURANCE REPORTS AND MANAGEMENT LETTER For the year ended 31 December 2018 U09-6 CENTRAL POWER CORPORATION Distribution Efficiency Project Financing Agreement No. Cr. 5156-VN Grant Agreement No. TF013456-VN TABLE OF CONTENTS CONTENTS PAGE(S) PART I FINANCIAL STATEMENTS Statement of the Executive Management 2-3 Independent Auditor's Report 4-6 Balance Sheet 7 Statement of Sources and Uses of Funds 8 Statement of Designated Account 9 Statement of Withdrawals 10 Notes to the Financial Statements 11 - 16 PART II INDEPENDENT AUDITOR'S ASSURANCE REPORT ON 17 - 18 INTERNAL CONTROL DE * DE PART III INDEPENDENT AUDITOR'S ASSURANCE REPORT ON VI COMPLIANCE Statement of the Executive Management on Compliance 19 Independent Auditor's Assurance Report on Compliance 20 - 21 PART IV MANAGEMENT LETTER 22- 23 ANNEX I PROJECT IMPLEMENTATION PROGRESS AND WITHDRAWAL 24 PROGRESS WU U W W U W U U -1- W ■ ■ . . . ■ . ■ . ■ ■ ■ ■ ■PART 1 . P-.. -.．一－.. 内一血一－..－→一内 rl円JA円しIIAL blJ41にF日L円Ib ■ . ■花 . IN! NHI[ ■LO ー：T ■ に ■な . . . ■ ■ . ■ ■ . . . . CENTRAL POWER CORPORATION Distribution Efficiency Project Financing Agreement No. Cr. 5156-VN Grant Agreement No. TF013456-VN STATEMENT OF THE EXECUTIVE MANAGEMENT The Executive Management of Central Power Corporation ("CPC") presents this report together with the financial statements of the Distribution Efficiency Project - Financing Agreement No. Cr. 5156-VN and Grant Agreement No. TF013456-VN - Portion implemented by CPC (the "Project") for the year ended 31 December 2018. THE MEMBERS'COUNCIL and EXECUTIVE MANAGEMENT The members of the Members' Council and the Executive Management of the Corporation who held office during the year and to the date of this report are as follows: Members'Council Mr. Vo Quang Lam Chairman (appointed on 16 April 2019) Mr. Ngo Tan Cu Member (appointed on 16 April 2019) Mr. Nguyen Thanh Member (appointed on 16 April 2019) Mr. Trinh Trung Phuong Member (appointed on 16 April 2019) Mr. Nguyen Duc Member (appointed on 16 April 2019) Executive Manaaement Mr. Ngo Tan Cu Chief Executive Officer (appointed on 16 April 2019) Mr. Tran Dinh Nhan Chief Executive Officer (resigned from 28 December 2018) Mr. Vo Quang Lam Chief Executive Officer (appointed on 28 December 2018 and resigned from 16 April 2019) Mr. Le Nam Hai Executive Officer 5( Mr. Nguyen Thanh Executive Officer Mr. Pham Sy Hung Executive Officer Mr. Nguyen Duc Executive Officer (resigned on 16 April 2019) The Executive Management's Statement of Responsibility N The Executive Management of CPC is responsible for preparing the financial statements of the Project, which comprise the balance sheet as at 31 December 2018, statement of sources and uses of funds, statement of designated account and statement of withdrawals for the year then ended and the notes to the financial statements, including a summary of significant accounting policies, which give a true and fair view of the financial position of the Project and its designated account balances as at 31 December 2018 as well as its receipts, disbursements and expenditures, the designated account movements and fund withdrawal for the year then ended, in accordance with the accounting convention and the accounting policies set out in Note 2 and Note 3 of the notes to the financial statements and the covenants contained in Financing Agreement No. Cr. 5156-VN and Grant Agreement No. TF013456-VN. In preparing these financial statements, the Executive Management is required to: 0 Select suitable accounting policies and then apply them consistently; 0 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 financial statements; 0 Prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Project will continue in operation; and 0 Design and maintain effective internal control over compliance with requirements that could have a direct and material financial effect on the financial statements as well as over financial reporting for the purpose of properly preparing and presenting the financial statements so as to minimise errors and frauds; and take responsibility for its assertions as to the effectiveness of such internal control. -2 - CENTRAL POWER CORPORATION Distribution Efficiency Project Financing Agreement No. Cr. 5156-VN Grant Agreement No. TF013456-VN REPORT OF THE EXECUTIVE MANAGEMENT (Continued) The Executive Management is responsible for ensuring that proper accounting records are kept, which disclose, with reasonable accuracy at any time, the financial position of the Project and that the financial statements comply with the accounting convention and the accounting policies set out in Note 2 and Note 3 of the notes to the financial statements. The Executive Management is responsible for using the Project's funds as intended for the Project and for complying with the covenants of Financing Agreement No. Cr. 5156-VN and Grant Agreement No. TF013456-VN as well as laws and regulations applicable to the Project. The Executive Management is also responsible for safeguarding the assets of the Project and hence for taking reasonable steps for the prevention and detection of frauds and other irregularities. The Executive Management confirms that they have complied with the above requirements in preparing these financial statements. on behalf of the Executive Management, I Ngo Tan Cu Chief Executive Officer 25 June 2019 -3-N *t TTUN -HU NgoTnC CheUxctv fie 25Jne21 U0 U-- -3 - Deloitte Vietnam Company Ltd. 15thFloor, Vinaconex Tower, 34 Lang Ha Street, Lang Ha Ward, Dong Da District, Hanoi, Vietnam Tel :+84 24 6288 3568 Fax:+84 24 6288 5678 Website: www.deloitte.com/vn No.: 0Q /VN1A-HN-BC INDEPENDENT AUDITORS' REPORT To: The Chairman and Executive Management of Central Power Corporation Opinion We have audited the financial statements of the Distribution Efficiency Project - Financing Agreement No. Cr. 5156-VN and Grant Agreement No. TF013456-VN - Portion implemented by Central Power Corporation (the "Project"), which comprise the balance sheet as at 31 December 2018, the statement of sources and uses of funds, statement of designated account, statement of withdrawals for the year then ended and the notes to the financial statements, including a summary of significant accounting policies. In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Project and its designated account balances as at 31 December 2018, and of its receipts, disbursements and expenditures, the designated account movements and fund withdrawals for the year then ended, in accordance with the accounting convention and the accounting policies set out in Note 2 and Note 3 of the Notes to the financial statements. Basis for Opinion We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Project in accordance with the ethical requirements that are relevant to our audit of the financial statements, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Basis of Accounting We draw attention to Note 2 and Note 3 of the Notes to the financial statements, which describes the accounting convention and the summary of the significant accounting policies. The financial statements are prepared in accordance with the accounting convention and the accounting policies set out in Note 2 and Note 3 of the Notes to the financial statements and the requirements of the World Bank. Other matter The "Project implementing expenditures" item in the balance sheet as at 31 December 2018 and "Others" item under "Disbursements" section in the statement of sources and uses of funds for the year then ended included some expenditures amounting to VND 33,415,084,245 incurred by the Project before the effective date of the Financing Agreement which have been financed by the counterpart fund (as at 31 December 2017: VND 33,415,084,245). Our opinion is not modified in respect of this matter. Deloitte refers to one or more of Deloitte Touche Tohmatsu Ltd., a UK private company limited by guarantee ("DTTL"), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as "Deloitte Global") does not provide services to clients. Please see www.deloitte.com/about for a more detailed description of DTTL and its member firms. -4- INDEPENDENT AUDITORS' REPORT (Continued) Responsibilities of the Members' Council and Executive Management for the Financial Statements Management is responsible for the preparation of the financial statements in accordance with the accounting convention and the accounting policies set out in Note 2 and Note 3 of the Notes to the financial statements, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is responsible for assessing the Project's ability to continue as a going concern, disclosing, as applicable, matters relating to going concern and using the going concern basis of accounting unless management either intends to liquidate the Project or to cease operations, or has no realistic alternative but to do so. The Members' Council is responsible for overseeing the Project's financial reporting process. Auditors' Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an Auditors' report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with International Standards on Auditing (ISAs) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: * Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. * Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. * Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Project's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our Auditors' report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our Auditors' report. However, future events or conditions may cause the Project to cease to continue as a going concern. * Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates, if any, and related disclosures made by management. U -5- Deloitte. INDEPENDENT AUDITORS' REPORT (Continued) Auditors' Responsibilities for the Audit of the Financial Statements (Continued) We communicate with the Members' Council and the Executive Management regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including an ant deficiencies in internal control that we identify during our audit. SO)NG TY * ThG~NVIE~HA Dang Chi Dung Nguyen Tien Quoc Deputy General Director Auditor Audit Practising Registration Certificate Audit Practising Registration Certificate No. 0030-2018-001-1 No. 3008-2019-001-1 DELOITTE VIETNAM COMPANY LIMITED 25 June 2019 Hanoi, S.R. Vietnam -6 W CENTRAL POWER CORPORATION Distribution Efficiency Project Financing Agreement No. Cr. 5156-VN Financial statements Grant Agreement No. TF013456-VN For the year ended 31 December 2018 BALANCE SHEET As at 31 December 2018 31/12/2018 31/12/2017 VND VND ASSETS Expenditures 1,950,596,579,698 1,913,319,446,540 Project implementing expenditures 5 1,950,596,579,698 1,913,319,446,540 Current assets 14,660,127,972 71,519,407,497 Prepayments to suppliers 6 1,378,283,757 6,466,966,167 Cash 7 13,281,844,215 65,052,441,330 TOTAL ASSETS 1,965,256,707,670 1,984,838,854,037 RESOURCES Funds 1,957,123,793,200 1,949,463,586,867 IDA fund 8 1,477,070,000,000 1,477,070,000,000 Counterpart fund 458,569,443,740 451,651,424,604 Grant fund 9 5,521,861,105 5,521,861,105 Other funds 795,926,841 795,926,841 Foreign exchange reserve 10 15,166,561,514 14,424,374,317 Current liabilities 8,132,914,470 35,375,267,170 Payables to suppliers 11 8,132,914,470 35,375,267,170 TOTAL RESOURCES 1,965,256,707,670 1,984,838,854,037 OFF BALANCE SHEET ITEMS 31/12/2018 31/12/2017 Foreign currencies -USD 2,873,976 TONG CONG TY DItN LVfC 9MA mRUN Vu Thi Kim Thoa Ho Thang Thu Ngo Tan Cu Preparer Chief Accountant Chief Executive Officer 25 June 2019 The accompanying notes are an integral part of these financial statements -7- � w и� �� О О 7 � С N W N р н � ,�иу н ■ С� О а0 о н г� ,у п rn v о n и N г� О Н о м ni о со ° v £ N м°о � v �.о п й м � v � � � L _ .-, _ Ф� н� гv й О� v W и О �т .-i � Л-� tp о и и �р ао N� О г� 00 N L �'� "� г� й со "'� о � й� О N м Gi . {� � '� v � и й о м�, ai гл U а _ e�l н н � rn rn -+ w Ф � н н О � •_ � ц О � � о о и и о � � � � � � �р rI =� v а м г� т � С м1 � n � n о N v ++ � � tL 'G 'L' а � � й п`ri й (�j V О � н ш� й ш `�т v � i �( N G7 N � и й и й й с Е"' � С . i ,�-� о й v й "' О Ф '1 � м с� v v ��'� U Gf t И ■ ы �а и � ио � и � � � о � � � � �'�д �� • t� N � с о ,� о о о � �р � н н а �t�, 'i н: ш`у й "'� пиi м м "� у/ � 'Q � *' �° _ `° �, `° � � о х L � � и и,� � .- ��о o�w �� � LL � С7 гнv й n и ОО �' U Q �'`� и "' и "' � . . й й й �• а 'p��,Q,S � � и с О °о � � й о °о � � р -`"-� � ,.и.� -и-� � � о о N г� .п ° n iл N гv �i о oi м .-� v ■ � оо° й°O � а д- � °� 1L "" о ° oi ° rn о о � н со IL О,7 О° О N� � О N N N � �-з � � v м� � м м `у' � р n � �о �^ °' н н и N а .� v ш L н .-i � � � � г � га м' ' м м v.ич �т N о � го� .и-� � ��у �.ч и О+ О V� О ^� М N г� aQ � � N�; �� � � и '� � о N с v rn� � й � С � i ш м о� г� о г� � н й лi � �т (� � н rn V N й й т м v и а� г� 0� w� � и й "'� т о й� н О N м д�+ м. � �О й v'� ry ш .м+ ~ ip i ■ = И 0 � s = ш � � И °' � , , ~ � � �4. 1L �, = м � н м т о� � � � � V � / � Ш � н н�,.�, ? 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CENTRAL POWER CORPORATION Distribution Efficiency Project Financing Agreement No. Cr. 5156-VN Financial statements Grant Agreement No. TF013456-VN For the year ended 31 December 2018 STATEMENT OF DESIGNATED ACCOUNT Period : From 01 January 2018 to 31 December 2018 Account No. : 004.1370.164.270 Depository Bank : Joint Stock Commercial Bank for Foreign Trade of Vietnam - Da Nang Branch Address : No. 140-142 Le Loi, Hai Chau District, Da Nang City, Vietnam Financing Agreement : Cr. 5156-VN Currency unit : USD PART A: ACCOUNT ACTIVITY Amount Opening balance (as at 01/01/2018) 2,873,976 Add: Total amount deposited by the World Bank to the designated account in the year - Deduct: Total amount withdrawn from the designated account in the year 2,299,626 Closing balance (as at 31/12/2018) 574,350 PART B: ACCOUNT RECONCILIATION 1. Opening advance balance by the World Bank 3,920,010 2. Add: Total amount advanced by the World Bank for the year - 3. Deduct: Total amount claimed and accepted for advance clearance 2,392,408 4. Present outstanding amount advanced to the designated account as at 1,527,602 5. Closing balance of the designated account as at 31/12/2018 574,350 6. Add: Amount withdrawn but not yet claimed for advance clearance 953,252 7. Total present outstanding advance amount as at 31/12/2018 1,527,602 Q01013 N1 T 6ONG CONG Ty DIVN LISC T 0 MIEN TRUNG - 4 - U Vu Thi Kim Thoa Ho Thang Thu Ngo Tan Cu Preparer Chief Accountant Chief Executive Officer 25 June 2019 The accompanying notes are an integral part of these financial statements -9- CENTRAL POWER CORPORATION Distribution Efficiency Project Financing Agreement No. Cr. 5156-VN Financial statements Grant Agreement No. TF013456-VN For the year ended 31 December 2018 STATEMENT OF WITHDRAWALS (Financing Agreement No. Cr. 5156-VN) For the year ended 31 December 2018 W a Amount claimed for disbursement/advance Amount disbursed/accepted for advance U ~~~~Withdrawal applicationsclanecerne clearance clearance Amount accepted No. Date Currency Advance Advance Total Date Amount for advance clearance disbursed clearance Dfeec cDifference Designated Account 23-CPC 25/02/2018 USD - 1,046,034 1,046,034 06/3/2018 - 1,046,034 24-CPC 07/5/2018 USD - 1,346,374 1,346,374 24/5/2018 - 1,346,374 Total USD - 2,392,408 2,392,408 - 2,392,408 - TUUN Vu Thi Kim Thoa Ho Thang Thu Ngo Tan Cu Preparer Chief Accountant Chief Executive Officer 25 June 2019 ITTE NAM The accompanying notes are an integral part of these financial statements -10 - CENTRAL POWER CORPORATION Distribution Efficiency Project Financing Agreement No. Cr. 5156-VN Financial statements Grant Agreement No. TF013456-VN For the year ended 31 December 2018 NOTES TO THE FINANCIAL STATEMENTS These notes are an integral part of and should be read in conjunction with the accompanying financial statements 1. GENERAL INFORMATION Distribution Efficiency Project operates under Financing Agreement No. Cr. 5156-VN, Loan Agreement No.TF013468-VN and Grant Agreement No. TF013456-VN signed on 08 November 2012 between the Government of Socialist Republic of Vietnam and the International Development Association/International Bank for Reconstruction and Development. The objectives of the Distribution Efficiency Project are to improve the performance of the Recipient's Power Corporations in providing quality and reliable electricity services, and to reduce greenhouse gas emissions through demand-side response and efficiency gains. The Distribution Efficiency Project consists of the following parts: Part A: System Expansion and Reinforcement Construction and reinforcement of 110 kilovolt, medium voltage, and low voltage electricity distribution networks, including substations, of the Power Corporations. Part B: Introduction of Smart Grid Technologies in Distribution Automation, including through introduction of supervisory control and data acquisition systems, of electricity distribution network operations and of data collection by the Power Corporations. Introduction of advanced metering infrastructure systems, including two-way communication systems, as electricity distribution smart grid technologies for key substations and consumers of selected Power Corporations. Part C: Technical Assistance and Capacity Building Provision of technical assistance to and capacity building of the Electricity Regulat. Authority of Vietnam for improvement of efficiency in electricity tariffs, enhancement efficiency of and incorporation of smart grid technologies in the grid and distribution cod integration of renewable energy in the grid and distribution codes, development of dema c response and smart grid programs, and Project management and monitoring and evaluati. Provision of technical assistance to the Power Corporation for: (i) Effective and timely Project implementation, capacity building in relation to financial modeling and planning, carrying out of customer surveys and instituting of other such measures to improve customer satisfaction; and (ii) Implementation of advanced metering infrastructure systems, carrying out of programs promoting efficient electricity use such as a customer awareness campaign and demand response programs and Project monitoring and evaluation. Distribution Efficiency Project - Financing Agreement No. Cr. 5156-VN and Grant Agreement No. TF013456-VN - Portion implemented by Central Power Corporation (the "Project") under the sub-loan/sub-grant Agreement signed between Central Power Corporation (the "Corporation") and the Ministry of Finance dated 07 February 2013. Accordingly, the Corporation is granted a loan and a grant with the amount of USD 72,200,000 to implement the Project. Funds of Distribution Efficiency Project includes IDA fund, loan from Clean Technology Fund ("CTF"), grant from Australia trust fund ("AUSAID") with the amounts of SDR 297,700,000, USD 30,000,000 and AUD 7,600,000, respectively, and counterpart fund. The IDA fund and grant from Australia trust fund for the portion implemented by CPC are within USD 71,900,000 and USD 300,000, respectively. The Project was completed on 31 December 2018. - 11 - E CENTRAL POWER CORPORATION Distribution Efficiency Project Financing Agreement No. Cr. 5156-VN Financial statements Grant Agreement No. TFO13456-VN For the year ended 31 December 2018 NOTES TO THE FINANCIAL STATEMENTS (Continued) These notes are an integral part of and should be read in conjunction with the accompanying financial statements 2. ACCOUNTING CONVENTION AND FINANCIAL YEAR Accounting convention The accompanying financial statements, prepared under the historical cost convention, are expressed in Vietnam Dong (VND), except for the statement of designated account and statement of withdrawals which are expressed in original currencies. The financial statements are prepared on the going concern basis of accounting in accordance with the requirements of the World Bank and the accounting policies set out in Note 3 of the Notes to financial statements, which are set up in conformity with measurement and recognition criteria of Vietnamese Accounting Standards and accounting regime applicable to enterprises. Financial year The Project's financial year begins on 01 January and ends on 31 December. 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The significant accounting policies, which have been adopted by the management in the preparation of these financial statements, are as follows: Recognition of funds and expenditures Project's funds and expenditures are recognized when incurred. Foreign currency translation Transactions in foreign currencies are translated into Vietnam Dong (VND) at the exchange rate ruling at the transaction date. Closing balances of assets and liabilities denominated in foreign currencies are retranslated at the rate of commercial bank at the balance sheet date. C Foreign exchange differences are neither receipts nor disbursements. However, foreign Acl exchange differences are presented in a separate item on the statement of sources and uses of funds for the purpose of reconciling assets and liabilities balances in the balance v sheet. 4. DESIGNATED ACCOUNTS Designated accounts are deposit accounts opened at commercial banks for implementation of the Project's activities. Under the Project Appraisal Document, the Corporation opened two designated accounts to receive/manage funds from IDA and grant from Australian Trust Fund. Designated accounts are deposit accounts in USD opened at Joint Stock Commercial Bank for Foreign Trade of Vietnam - Da Nang Branch for implementation of the Project's activities. Payments out of the designated accounts are for expenditures in accordance with the relevant covenants of Financing Agreement No. Cr. 5156-VN, Grant Agreement No. TF013456-VN and relevant regulations established by the World Bank. In 2016, the Corporation closed the designated account to receive/manage grant fund drom Australia Trust Fund because the Project portion using the grant fund was completed. On 03 June 2019, the Corporation closed the designated account to receive/manage the IDA fund because the Project portion using IDA fund was completed. - 12 - CENTRAL POWER CORPORATION Distribution Efficiency Project Financing Agreement No. Cr. 5156-VN Financial statements Grant Agreement No. TFO13456-VN For the year ended 31 December 2018 NOTES TO THE FINANCIAL STATEMENTS (Continued) These notes are an integral part of and should be read in conjunction with the accompanying financial statements 5. PROJECT IMPLEMENTING EXPENDITURES Accumulated to 2018 31/12/2018 VND VND Construction 31,776,739,099 591,263,849,728 Equipment 71,720,153 1,011,400,263,133 Other expenses 5,428,673,906 347,932,466,837 37,277,133,158 1,950,596,579,698 6. PREPAYMENTS TO SUPPLIERS 31/12/2018 31/12/2017 VND VND Quang Ngai Power Company 855,481,016 3,941,398,000 AAC Auditing and Accounting Company Limited 198,346,364 - Ba Don Land Development Center 5,618,192 5,618,192 Others 318,838,185 2,519,949,975 1,378,283,757 6,466,966,167 7. CASH 31/12/2018 3 1 /1 2 /2 0 1 7 VND VND USD equivalent USD equivalent Designated accounts 574,350 13,281,844,215 2,873,976 65,052,441,330 574,350 13,281,844,215 2,873,976 65,052,441,330 8. IDA FUND 2018 Accumulated to 31/12/2018 Original VND Original VND currency equivalent currency equivalent (USD) (USD) Designated account - 68,700,000 1,477,070,000,000 - 1,477,070,000,000 9. GRANT FUND 2018 Accumulated to 31/12/2018 Original VND Original VND currency equivalent currency equivalent (USD) (USD) Designated account - 247,877 5,521,861,105 -_ 5,521,861,105 - 13 - CENTRAL POWER CORPORATION Distribution Efficiency Project Financing Agreement No. Cr. 5156-VN Financial statements Grant Agreement No. TF013456-VN For the year ended 31 December 2018 NOTES TO THE FINANCIAL STATEMENTS (Continued) These notes are an integral part of and should be read in conjunction with the accompanying financial statements 10. FOREIGN EXCHANGE RESERVE 31/12/2018 31/12/2017 VND VND Realised foreign exchange difference 14,885,130,002 14,595,542,090 Unrealised foreign exchange from revaluation of 281,431,512 (171,167,773) cash balance denominated in foreign currencies 15,166,561,514 14,424,374,317 11. PAYABLES TO SUPPLIERS 31/12/2018 31/12/2017 VND VND FPT Information System Corporation 3,997,588,671 14,510,398,744 Central Power Engineering Consulting Company Limited 843,419,278 900,720,218 Central Electrical Testing Company Limited 873,456,479 - Tien Dat Construction Joint Stock Company 858,266,919 Thuan An Construction company - 3,094,132,162 Da Nang Electric Construction Joint Stock Company - 3,797,228,532 Quang Ngai Industrial Electric Construction JSC - 2,519,093,440 Binh Ha Joint Stock Company - 2,114,495,959 Others 1,560,183,123 8,439,198,115 8,132,914,470 35,375,267,170 The balances of payables to suppliers as at 31 December 2018 include those relating IDA fund with the amount of VND 5,208,794,624. As at 30 April 2019, these balances were settled by the Corporation. 25( 12. COMMIMENTS JG As at 31 December 2018, the outstanding amount of significant contracts signed with Oil suppliers was approximately VND 8 billion (as at 31 December 2017: approximately VND r N 83 billion). 13. RELATED PARTY TRANSACTIONS AND BALANCES Related party transactions and balances only relate to activities which were financed by the counterpart funds. List of related parties Relationship Central Electrical Testing Company Limited Under CPC's management Central Power Engineering Consulting Company Limited Under CPC's management Central Load Dispatch Centre Unit in EVN Group Quang Ngai Power Company Under CPC's management Dak Lak Power Company Under CPC's management Dak Nong Power Company Under CPC's management Quang Binh Power Company Under CPC's management Quang Nam Power Company Under CPC's management Quang Tri Power Company Under CPC's management Phu Yen Power Company Under CPC's management Binh Dinh Power Company Under CPC's management - 14 - CENTRAL POWER CORPORATION Distribution Efficiency Project Financing Agreement No. Cr. 5156-VN Financial statements Grant Agreement No. TFO13456-VN For the year ended 31 December 2018 NOTES TO THE FINANCIAL STATEMENTS (Continued) These notes are an integral part of and should be read in conjunction with the accompanying financial statements During the year, the Project entered into the following significant transactions with related parties: 2018 2017 VND VND Purchasing of services Central Electrical Testing Company Limited 2,309,102,937 3,539,017,273 Quang Ngai Power Company 3,757,063,163 Central Load Dispatch Centre 479,446,857 Quang Nam Power Company 448,817,961 1,621,927,408 Quang Binh Power Company - 3,441,296,200 Quang Tri Power Company - 1,354,549,533 Phu Yen Power Company 342,134,607 Significant related party balances as at the balance sheet date were as follows: 31/12/2018 31/12/2017 Payables to suppliers VND VND Central Electrical Testing Company Limited 873,456,479 - Central Power Engineering Consulting Company 843,419,278 900,720,218 Limited Quang Binh Power Company 307,058,981 1,076,147,841 Quang Ngai Power Company 94,919,547 - Dak Nong Power Company 34,098,344 34,098,344 Quang Tri Power Company 7,914,447 310,249,083 Dak Lak Power Company - 140,827,492 31/12/2018 31/12/2017 0 VND VND Advances to suppliers TV Quang Ngai Power Company 855,481,016 3,941,398,000 Dak Lak Power Company 125,578,966 125,578,966 Binh Dinh Power Company 35,999,395 - Quang Nam Power Company - 160,828,049 AR Dak Nong Power Company - 69,169,000 Quang Binh Power Company - 16,049,308 Quang Tri Power Company - 10,196,148 U 5 CENTRAL POWER CORPORATION Distribution Efficiency Project Financing Agreement No. Cr. 5156-VN Financial statements Grant Agreement No. TF013456-VN For the year ended 31 December 2018 NOTES TO THE FINANCIAL STATEMENTS (Continued) These notes are an integral part of and should be read in conjunction with the accompanying financial statements 14. COMPARATIVE FIGURES Comparative figures are figures of the Project's audited financial statements for year ended 31 December 2017. 15. SUBSEQUENT EVENTS The withdrawal applications No. 26-CPC with the amount of USD 1,179,007.81 was submitted by the Corporation on 23 April 2019 and accepted for advance clearance by the World Bank on 06 May 2019. On 23 May 2019, the Corporation made a refund to the World Bank with the amount of USD 348,593 010139 TONG Vu Thi Kim Thoa Ho Thang Thu Ngo Tan Cu Preparer Chief Accountant Chief Executive Officer 25 June 2019 -1 HAN 2 * 4 >N* -16 U U U U U U U U U U U U * PART II * INDEPENDENT AUDITOR'S ASSURANCE REPORT ON INTERNAL CONTROL U U U U U U U U U U U U U U U U U U U Deloitte Vietnam Company Ltd. 1thFloor, Vinaconex Tower, I Dt 34 Lang Ha Street, Lang Ha Ward, Dong Da District, Hanoi, Vietnam Tel :+84 24 6288 3568 Fax:+84 24 6288 5678 Website: www.deloitte.com/vn INDEPENDENT AUDITOR'S ASSURANCE REPORT ON INTERNAL CONTROL To: The Members' Council and Executive Management of Central Power Corporation Report on internal control We have audited, in accordance with International Standards on Auditing, the financial statements of Distribution Efficiency Project - Financing Agreement No. Cr. 5156-VN and Grant Agreement No. TF013456-VN - Portion implemented by Central Power Corporation (the "Project") for the year ended 31 December 2018 and issued the independent auditor's report thereon dated 25 June 2019 expressing an unmodified opinion on those financial statements. In connection with our audit of the Project's financial statements, we also examined the effectiveness of internal control over compliance with requirements that could have a direct and material financial effect on the financial statements as well as of internal control over financial reporting, and issue the Report of Independent Auditor on internal control. Responsibilities of the Excutive Management As stated in the Statement of the Excutive Management on page 2, the Executive Management is responsible for designing and maintaining effective internal control over compliance with requirements that could have a direct and material financial effect on the financial statements as well as over financial reporting for the purpose of properly preparing and presenting the financial statements so as to minimise errors and frauds; and take responsibility for its assertions as to the effectiveness of such internal control. Our Independence and Quality Control We have complied with the independence and other ethical requirements of the Code of Ethics for Professional Accountants issued by the International Ethics Standards Board for Accountants, which is founded on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality, and professional behavior. We apply International Standard on Quality Control 1 and accordingly maintain a comprehensive system of quality control including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements. Auditor's Responsibilities Our responsibility is to express an opinion on the effectiveness of internal control over compliance with requirements that could have a direct and material financial effect on the financial statements as well as internal control over financial reporting based on our examination based on the evidence we have obtained. We conducted our reasonable assurance engagement in accordance with International Standard on Assurance Engagements 3000, Assurance Engagements other than Audits and Reviews of Historical Financial Information ("ISAE 3000"), issued by the International Auditing and Assurance Standards Board. That standard requires that we plan and perform this engagement to obtain reasonable assurance about whether, in all material respects, the management has maintained effective internal control over compliance with the requirements that could have a direct and material financial effect on the financial statements as well as internal control over financial reporting. Deloitte refers to one or more of Deloitte Touche Tohmatsu Ltd., a UK private company limited by guarantee ("DTTL"), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as "Deloitte Global") does not provide services to clients. Please see www.deloitte.com/about for a more detailed description of DTTL and its member firms. -17- W * Deloitte, INDEPENDENT AUDITOR'S ASSURANCE REPORT ON INTERNAL CONTROL (Continued) Our examination included obtaining an understanding of internal control over compliance with requirements that could have a direct and material financial effect on the financial statements as well as of internal control over financial reporting, testing, and evaluating the design and operating effectiveness of the internal control, and performing such other procedures as we considered necessary in the circumstances to obtain sufficient appropriate evidence on which to base our opinion. Because of inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not to be detected. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Opinion In our opinion, the Executive Management has maintained, in all material respects, effective internal control over compliance with requirements that could have a direct and material financial effect on the Project's financial statements as well as over financial reporting for the year ended 31 Dece 18. * al2500. DAL X T Dang Chi Dung Nguyen Tien Quoc Deputy General Director Auditor Audit Practising Registration Certificate Audit Practising Registration Certificate In No. 0030-2018-001-1 No. 3008-2019-001-1 0 DELOITTE VIETNAM COMPANY LIMITED 25 June 2019 Hanoi, S.R. Vietnam - 18 - . • ■ ■ • ■ . • . ■ . . .PARTzii . 一INDEPENDENT AuDIToR&5 AssuRANcE REPORT 一ON COMPLIANCE . . • ．瘁 口ON 磧nHI .EU ,！色鬥 .&1熙〕 ．馴＇ ■浩 豐一 ．一 . 甲」 甲1 ■1 豐」 ．〕 .l 甲l .1 STATEMENT OF THE EXECUTIVE MANAGEMENT ON COMPLIANCE The Executive Management is responsible for complying with Financing Agreement No. Cr. 5156- VN and Grant Agreement No. TF013456-VN, laws and regulations applicable to the Project. The Executive Management confirms the following: 0 An effective internal control has been designed and maintained over compliance with Financing Agreement No. Cr. 5156-VN and Grant Agreement No. TF013456-VN, laws and regulations applicable to the Project; 0 The Project has complied with Financing Agreement No. Cr. 5156-VN and Grant Agreement No. TF013456-VN, laws and regulations that could have a direct and material financial effect on the Project's financial statements for the year ended 31 December 2018; & The Project's receipts and disbursements via the designated account for the year ended 31 December 2018 are in accordance with the relevant covenants of Financing Agreement No. Cr. 5156-VN and Grant Agreement No. TF013456-VN and prevailing relevant regulations established by the World Bank; 0 The withdrawal applications were adequately reconciled to the statements of expenditures (SOEs) prepared by the Executive Management for the year ended 31 December 2018 and those SOEs were adequately supported; 0 The proceeds of the loan/grant were used only for the purposes of the Project; 0 Central Power Corporation has complied with the financial covenants of the Agreements. n behalf of the Executive Management, Z500 G T T6% tM CON NO fN A?. an Cu hief Executive Officer 25 June 2019 19- Deloitte Vietnam Company Ltd. 15thFloor, Vinaconex Tower, SD elo itte . 34 Lang Ha Street, Lang Ha Ward, Dong Da District, Hanoi, Vietnam Tel :+84 24 6288 3568 Fax:+84 24 6288 5678 Website: www.deloitte.com/vn INDEPENDENT AUDITOR'S ASSURANCE REPORT ON COMPLIANCE To: The Members' Council and Executive Management of Central Power Corporation Report on compliance We have audited, in accordance with International Standards on Auditing, the financial statements of the Distribution Efficiency Project - Financing Agreement No. Cr. 5156-VN and Grant Agreement No. TF013456-VN - Portion implemented by Central Power Corporation (the "Project") for the year ended 31 December 2018 and issued the independent auditor's report thereon dated 25 June 2019 expressing an unmodified opinion on those financial statements. In connection with the audit of the financial statements, we also performed procedures on the Project's compliance with Financing Agreement No. Cr. 5156-VN and Grant Agreement No. TF013456-VN, laws and regulations that have a direct and material financial effect on the Project's financial statements for the year ended 31 December 2018 (the "requirements"). Responsibilities of the Executive Management The Executive Management is responsible for complying with Financing Agreement No. Cr. 5156- VN and Grant Agreement No. TF013456-VN, laws and regulations applicable to the Project. Our Independence and Quality Control We have complied with the independence and other ethical requirements of the Code of Ethics for Professional Accountants issued by the International Ethics Standards Board for Accountants, which is founded on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality, and professional behavior. We apply International Standard on Quality Control 1 and accordingly maintains a comprehensive system of quality control including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements. UI Auditor's Responsibilities Our responsibility is to express an opinion on Project's compliance based on the evidence we have obtained. We limited our tests of compliance to the requirements, and we did not test compliance with all laws and regulations applicable to the Project. We conducted our reasonable assurance engagement in accordance with International Standard on Assurance Engagements 3000, Assurance Engagements other than Audits and Reviews of Historical Financial Information ("ISAE 3000"), issued by the International Auditing and Assurance Standards Board. That standard requires that we plan and perform this engagement to obtain reasonable assurance about whether, in all material respects, the Project has complied with the requirements. An reasonable assurance engagement in accordance with ISAE 3000 to report on the Project's compliance with the requirements involves performing procedures to obtain evidence about whether the Project's activities are free of material noncompliance with the requirements, including obtaining an understanding of the internal control relevant to the Project's compliance with the requirements. The procedures selected depend on the auditor's judgment, including the assessment of risks that the Project does not comply with the requirements and whether such noncompliance could have a direct and material financial effect on the Project's financial statements. Our procedures included testing the compliance with the requirements that we consider necessary to provide reasonable assurance that the requirements are complied by the Project. Deloitte refers to one or more of Deloitte Touche Tohmatsu Ltd., a UK private company limited by guarantee ("DTTL"), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as "Deloitte Global") does not provide services to clients. Please see www.deloitte.com/about for a more detailed description of DTTL and its member firms. -20- Deloitte, INDEPENDENT AUDITOR'S ASSURANCE REPORT ON COMPLIANCE (Continued) We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion, as well as our findings as presented in the Management Letter on page 23. Opinion In our opinion: * The Project has complied, in all material respects, with Financing Agreement No. Cr. 5156-VN and Grant Agreement No. TF013456-VN, laws and regulations that could have a direct and material financial effect on the Project's financial statements for the year ended 31 December 2018; * The Project's receipts and disbursements via the designated account for the year ended 31 December 2018 are in accordance with the relevant covenants of Financing Agreement No. Cr. 5156-VN and Grant Agreement No. TF013456-VN and prevailing relevant regulations established by the World Bank; * The withdrawal applications were adequately reconciled to the statements of expenditures (SOEs) prepared by the Executive Management for the year ended 31 December 2018 and those SOEs were adequately supported; * The proceeds of the loan/grant were used only for the purpose(s) of the Project; Corporation has complied with the financial covenants of the Agreement(s). Dang Chi Dung Nguyen Tien Quoc Deputy General Director Auditor Audit Practising Registration Certificate Audit Practising Registration Certificat- No. 0030-2018-001-1 No. 3008-2019-001-1 * DELOITTE VIETNAM COMPANY LIMITED 25 June 2019 Hanoi, S.R. Vietnam U2