Deloitte W NORTHERN POWER CORPORATION W DISTRIBUTION EFFICIENCY PROJECT Financing Agreement No. Cr.5156-VN Loan Agreement No. TFO13468-VN Grant Agreement No. TF013456-VN AUDITED FINANCIAL STATEMENTS, ASSURANCE REPORTS AND MANAGEMENT LETTER For the year ended 31 December 2018 209-6 NORTHERN POWER CORPORATION Distribution Efficiency Project Financing Agreement No. Cr.5156-VN Loan Agreement No. TF013468-VN Grant Agreement No. TF013456-VN g TABLE OF CONTENTS CONTENTS PAGE(S) PARTI FINANCIAL STATEMENTS Statement of the Board of Management 2 Independent Auditor's Report 3 - 4 Balance Sheet 5 Statement of Designated Accounts 6- 7 Statement of Sources and Uses of Funds 8 Statement of Withdrawals 9 -10 Notes to the Financial Statements 11-16 PART II INDEPENDENT AUDITOR'S ASSURANCE REPORT ON 17 - 18 INTERNAL CONTROL PART III INDEPENDENT AUDITOR'S ASSURANCE REPORT ON COMPLIANCE Statement of the Board of Management on Compliance 19 Independent Auditor's Assurance Report on Compliance 20 - 21 PARTIV MANAGEMENT LETTER 22-23 ANNEXI PROJECT IMPLEMENTATION PROGRESS AND WITHDRAWAL 24-27 PROGRESS U1 · ■ ■ ■ . . . ■ . . . ■ PA묘I工 . FINANcIAL sTATEMENTs . . · ■ . . . . · . . · · . . · . . . . . NORTHERN POWER CORPORATION Distribution Efficiency Project Financing Agreement No. Cr.5156-VN Loan Agreement No. TF013468-VN Grant Agreement No. TF013456-VN STATEMENT OF THE BOARD OF MANAGEMENT The Board of Management of Northern Power Corporation ("NPC") presents this report together with the financial statements of the Distribution Efficiency Project - Financing Agreement No.Cr.5156-VN, Loan Agreement No. TF013468-VN and Grant Agreement No. TF013456-VN - Portion implemented by NPC (the "Project") for the year ended 31 December 2018. The Chairman and the Board of Management The Chairman and the members of the Board of Management of NPC who held office during the year and to the date of this report are as follows: Mr. Thieu Kim Quynh Chairman cum General Director Mr. Du Cao Minh Executive Officer Ms. Do Nguyet Anh Executive Officer Mr. Le Minh Tuan Executive Officer Mr. Ho Manh Tuan Executive Officer Mr. Le Quang Thai Executive Officer Board of Management's Statement of Responsibility The Board of Management is responsible for preparing the financial statements of the Project, which comprise the balance sheet as at 31 December 2018, the statements of designated accounts, statement of sources and uses of funds, 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, 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 and the covenants contained in Financing Agreement No.Cr.5156-VN, Loan Agreement No.TF013468-VN and Grant Agreement No. TF013456-VN. In preparing these financial statements, the Board of Management is required to: select suitable accounting policies and then apply them consistently; make judgments and estimates that are reasonable and prudent; state whether applicable accounting principles have been followed, subject to any material departures disclosed and explained in the financial statements; prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Project will continue in operation; and 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. The Board of Management is responsible for ensuring that proper accounting records are kept, whvch 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 Board of Management is responsible for using the Project's funds as intended for the Project and for complying with Financing Agreement No.Cr.5156-VN, Loan Agreement No. TF013468-VN and Grant Agreement No. TF013456-VN as well as laws and regulations applicable to the Project. The Board of 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 Board of Management confirms that they have complied with the above requirements in preparing these financial statements. For and on behalf,of the Board of Management, Th'eu Kim QLI*nh General Viiector Hanoi, 27 lune 2019 2 Deloitte Vietnam Company Ltd. 15thFloor, Vinaconex Tower, SD l t34 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.: 00 /VN1A-HN-BC INDEPENDENT AUDITOR'S REPORT To: The Board of Management of Northern Power Corporation Opinion We have audited the financial statements of the Distribution Efficiency Project - Financing Agreement No. Cr.5156-VN, Loan Agreement No. TF013468-VN and Grant Agreement No. TF013456-VN - Portion implemented by Northern Power Corporation (the "Project), which comprise the balance sheet as at 31 December 2018, the statements of designated accounts, statement of sources and uses of funds, 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 Auditor's 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 23,536,798,437 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 23,536,798,437). Responsibilities of Management and the Chairman 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 ne realistic alternative but to do so. The Chairman are responsible for overseeing the Project's financial reporting process. 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. 3 Deloitte INDEPENDENT AUDITOR'S REPORT (Continued) Auditors' Responsibility 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 auditor's 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 auditor's 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 auditor's 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 and related disclosures made by management. We communicate with the Chairman and the Board of Management regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies iniLernal contfol that we identify during our audit. Dang ChiOung Nguyen Thanh Huong Deputy General Director Auditor Audit Practising Registration Certificate Audit Practising Registration Certificate No. 0030-2018-001-1 No. 1415-2018-001-1 DELOITTE VIETNAM COMPANY LIMITED 27 June 2019 Hanoi, S.R. Vietnam 4 NORTHERN POWER CORPORATION Distribution Efficiency Project Financing Agreement No. Cr.5156-VN Financial statements Loan Agreement No. TF013468-VN For the year ended Grant Agreement No. TF013456-VN 31 December 2018 BALANCE SHEET As at 31 December 2018 31/12/2018 31/12/2017 Notes VND VND ASSETS Expenditures 4,173,471,320,200 3,928,930,928,962 Project implementing expenditures 5 4,173,471,320,200 3,928,930,928,962 Current assets 29,445,432,221 210,385,169,049 Prepayments to suppliers 6 4,834,505,172 21,804,408,875 Cash 7 24,610,927,049 188,580,760,174 TOTAL ASSETS 4,202,916,752,421 4,139,316,098,011 RESOURCES Funds 4,161,712,677,759 3,903,046,492,953 IDA fund 8 3,170,862,500,000 3,170,862,500,000 CTF fund 9 152,313,000,000 152,313,000,000 Counterpart fund 824,986,798,515 568,685,268,114 Foreign exchange reserve 10 13,550,379,244 11,185,724,839 Current liabilities 41,204,074,662 236,269,605,058 Payables to suppliers 11 41,204,074,662 236,269,605,058 TOTAL RESOURCES 4,202,916,752,421 4,139,316,098,011 OFF BALANCE SHEET ITEMS 31/12/2018 31/12/2017 Foreign currencies -USD 1,062,877 8,320,351 Tong Bao Ngoc Le Trong Cuong Thieu Kim Quynh Preparer Project Chief Accountant GeneralDirector 27 June 2019 U The accompanying notes are an integral part of these financial statements 5 W NORTHERN POWER CORPORATION Distribution Efficiency Project Financing Agreement No. Cr.5156-VN Financial statements Loan Agreement No. TF013468-VN For the year ended Grant Agreement No. TF013456-VN 31 December 2018 STATEMENT OF DESIGNATED ACCOUNT (IDA 5156 Fund) Period From 01/01/2018 to 31/12/2018 Account No. :0681370000230 Depository Bank : Joint Stock Commercial Bank for Foreign Trade of Vietnam - Operation Center Address : 198 Tran Quang Khai, Hoan Kiem District, Hanoi City, Vietnam Currency unit : USD Amount PART A: ACCOUNT ACTIVITY Opening balance (01/01/2018) 7,332,358 Add: - Total amount deposited by the World Bank to the designated account in the year - Deduct: - Total amount withdrawn in the year 6,357,817 Closing balance (as at 31/12/2018) 974,541 PART B: ACCOUNT RECONCILIATION 1. Opening advance balance by the World Bank 9,656,373 2. Add: Total amount advanced by the World Bank in the year - 3. Deduct: Total amount claimed and accepted for advance clearance 5,402,327 4. Present outstanding amount advanced to the designated account as at 31 December 2018 4,254,046 5. Closing balance of the designated account as at 31/12/2018 974,541 6. Add: Amount withdrawn but not yet claimed for advance clearance 3,279,505 7. Present outstanding amount advanced to the designated account as at 31 December 2018 4,254,046 Tong Bao Ngoc Le Trong Cuong Thieu Kim, Quynh Preparer Project Chief Accountant Gtnral Dfrector 27 June 2019 The accompanying notes are an integral part of these financial statements 6 W W NORTHERN POWER CORPORATION Distribution Efficiency Project Financing Agreement No. Cr.5156-VN Financial statements Loan Agreement No. TF013468-VN For the year ended Grant Agreement No. TF013456-VN 31 December 2018 STATEMENT OF DESIGNATED ACCOUNT (TF013468 Fund) Period : From 01/01/2018 to 31/12/2018 Account No. :0681370000231 Depository Bank : Joint Stock Commercial Bank for Foreign Trade of Vietnam - Operation Center Address : 198 Tran Quang Khai, Hoan Kiem District, Hanoi City, Vietnam Currency unit : USD Amount PART A: ACCOUNT ACTIVITY Opening balance (01/01/2018) 987,993 Add: - Total amount deposited by the World Bank to the designated account in the year - Deduct: - Total amount withdrawn in the year 899,657 Closing balance (as at 31/12/2018) 88,336 PART B: ACCOUNT RECONCILIATION 1. Opening advance balance by the World Bank 5,552,792 2. Add: Total amount advanced by the World Bank in the year - 3. Deduct: Total amount claimed and accepted for advance clearance 5,464,456 4. Present outstanding amount advanced to the designated account as at 31 December 2018 88,336 5. Closing balance of the designated account as at 31/12/2018 88,336 6. Add: Amount withdrawn but not yet claimed for advance clearance - 7. 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GENERALINFORMATION Distribution Efficiency Project operates under Financing Agreement No.Cr.5156-VN, Loan Agreement No.TF013468-VN and Grant Agreement No.TF013456-VN dated 08 November 2012 signed between the Government of Socialist Republic of Vietnam and International Development Association/International Bank for Reconstruction and Development. The objective of Distribution Efficiency Project is 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. Description of main components of Distribution Efficiency Project: Part A: System expansion and reinforcement Construction and reinforcement of 110KV, 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 system, of electricity distribution network operations of and data collection by the Power Corporations. Introduction of advanced metering infrastructure systems, including two-way communication systems, as electricity 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 Regulatory Authority of Vietnam for improvement of efficiency in electricity tariffs, enhancement of efficiency of and incorporation of smart grid technologies in the grid and distribution codes, integration of renewable energy in the grid and distribution codes, development of demand response and smart grid programs, and project management, monitoring and evaluation. Provision of technical assistance to the Power Corporations for: (i) Effective and timely Project implementation, capacity building in relation to financial modeling and planning, and 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. The Distribution Efficiency Project - Financing Agreement No.Cr.5156-VN, Loan Agreement No.TF013468-VN and Grant Agreement No.TF013456-VN - Portion implemented by Northern Power Corporation (the "Project") implemented under sub-loan/sub-grant agreements signed between Northern Power Corporation ("NPU) and the Ministry of Finance on 07 February 2013. Accordingly, NPC is granted a loan and a grant with respective amounts of USD 161,000,000 and USD 300,000 to implement the Project. Funds of the Distribution Efficiency Project include IDA fund, Clean Technology fund ("CTF fund") and grant from Australia Trust Fund with the respective amounts of SDR 297,700,000, USD 30,000,000 and AUD 7,600,000 and counterpart fund. The IDA loan, CTF loan and Grant from Australia Trust Fund for the portion implemented by NPC are within USD 153,000,000, USD 8,000,000 and USD 300,000, respectively. According to the Financing Agreement No. Cr.5156-VN, the Loan Closing Date was 31 December 2018. Disbursement deadline date of the IDA and CTF funds was 30 April 2019. Disbursements under the counterpart fund will be made until the Project fulfils its liabilities and obligations. 11 NORTHERN POWER CORPORATION Distribution Efficiency Project Financing Agreement No. Cr.5156-VN Financial statements Loan Agreement No. TF013468-VN For the year ended Grant Agreement No. TF013456-VN 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 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 statements of designated accounts and statement of withdrawals which are expressed in original currencies. The financial statements are prepared on the going concern basic of accounting, in accordance with requirements of the World Bank and the accounting policies set out in Note 3 of the notes to the financial statements which are set up in conformity with the 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 The Project's funds are recognised when received 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 buying rate and selling rate of Joint Stock Commercial Bank for Foreign Trade of Vietnam at the balance sheet date. Foreign exchange differences are neither receipts nor disbursements. However, foreign exchange G differences are presented in a separate item in the statement of sources and uses of funds for the X purpose of reconciling balances of assets and liabilities in the balance 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, NPC shall open three designated accounts to receive and manage funds from IDA, CTF and grant from Australia trust fund. Up to 31 December 2018, the three designated accounts for funds from IDA, CTF and grant from Australia trust fund have been opened but grant from Australia trust fund have not been disbursed yet. Designated accounts under Financing Agreement No. Cr. 5156-VN and Loan Agreement No. TF013468-VN are deposit accounts in USD opened at Joint Stock Commercial Bank for Foreign Trade of Vietnam - Operation Center 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 and Loan Agreement No.TF013468 and relevant regulations established by the World Bank. On 13 May 2019, the Corporation closed the designated account to receive/manage the IDA, CTF and grant from Australia trust fund because the Project portion using IDA, CTF and grant from Australia trust fund was completed. 12 NORTHERN POWER CORPORATION Distribution Efficiency Project Financing Agreement No. Cr.5156-VN Financial statements Loan Agreement No. TF013468-VN For the year ended Grant Agreement No. TF013456-VN 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 5. PROJECT IMPLEMENTING EXPENDITURES Accumulated to In 2018 31/12/2018 VND VND Construction 135,385,488,002 1,909,887,044,249 Equipment 52,250,500,574 1,642,577,284,837 Other expenses 56,904,402,662 621,006,991,114 244,540,391,238 4,173,471,320,200 Reconcilation between Project implementing expenditures presented in the Balance sheet and the Statement of sources and uses of funds is as follow: Closing balance In 2018 Opening balance VND VND VND Balance sheet Project implementing 4,173,471,320,200 244,540,391,238 3,928,930,928,962 expenditures [1] Statement of Sources and uses of Funds Disbursements [2] 4,126,410,464,312 420,792,173,492 3,705,618,290,820 Differences [3] = [1] - [2] 47,060,855,888 (176,251,782,254) 223,312,638,142 Represented by 47,060,855,888 (176,251,782,254) 223,312,638,142 [4] = [6]+[7]-[5]-[8] Balance sheets: Advances to suppliers [5] 4,834,505,172 (16,969,903,703) 21,804,408,875 Foreign exchange reserve [6] 13,550,379,244 2,364,654,405 11,185,724,839 Payables to suppliers [7] 41,204,074,662 (195,065,530,396) 236,269,605,058 Unrealised foreign exchange difference from revaluation 2,859,092,846 520,809,966 2,338,282,880 of cash balance denominated in foreign currencies at the year end [8] 6. PREPAYMENTS TO SUPPLIERS 31/12/2018 31/12/2017 VND VND Duyen Ha Co., Ltd. 3,572,000,000 Industrial Electrical Construction Joint Stock 670,705,239 Company Northern Electrical Testing One Member Company 549,358,000 Limited Installation and Electric Construction Joint Stock - 6,175,808,395 Company Hoang Tien Phat Investment and Construction JSC - 4,083,411,134 AIT Development and Application of Technology - 3,060,559,400 Corporation Cam Pha Electric Equipment Joint Stock Company - 2,882,200,000 Energy Technology Join Stock Company - ENTEC - 2,019,838,000 JSC Others 42,441,933 3,582,591,946 4,834,505,172 21,804,408,875 Prepayments to suppliers as at 31 December 2018 included balances with suppliers implementing contracts, which are financed out of counterpart fund and had not been completed as at 31 December 2018. NPC planned to use the counterpart fund to continue to implement such contracts. 13 NORTHERN POWER CORPORATION Distribution Efficiency Project Financing Agreement No. Cr.5156-VN Financial statements Loan Agreement No. TF013468-VN For the year ended Grant Agreement No. TF013456-VN 31 December 2018 NOTES TO THE FINANCIAL STATEMENTS 7. CASH 31/12/2018 31/12/2017 VND VND USD Equivalent USD E q u i v a l e n t Designated account - IDA fund 974,541 22,565,508,822 7,332,358 166,187,885,910 Designated account - CTF fund 88,336 2,045,418,227 987,993 22,392,874,264 1,062,877 24,610,927,049 8,320,351 188,580,760,174 8. IDA FUND 2018 Accumulated to 31/12/2018 Original Original currency VND currency VND (USD) equivalent (USD) equivalent Designated account - 147,300,000 3,170,862,500,000 - 147,300,000 3,170,862,500,000 9. CTF FUND 2018 Accumulated to 31/12/2018 Original Original currency VND currency VND (USD) equivalent (USD) equivalent Designated account - 6,700,000 152,313,000,000 - 6,700,000 152,313,000,000 10. FOREIGN EXCHANGE RESERVE 31/12/2018 31/12/2017 VND VND Foreign exchange difference in payment 10,691,286,398 8,979,146,743 Foreign exchange difference from revaluation of cash balance denominated in foreign currencies at 2,859,092,846 2,338,282,880 the year end Foreign exchange difference from revaluation of liabilities balances denominated in foreign - (131,704,784) currencies at the year end 13,550,379,244 11,185,724,839 14 U NORTHERN POWER CORPORATION Distribution Efficiency Project Financing Agreement No. Cr.5156-VN Financial statements Loan Agreement No. TF013468-VN For the year ended Grant Agreement No. TF013456-VN 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 11. PAYABLES TO SUPPLIERS 31/12/2018 31/12/2017 VND VND Electronic Investment and Construction Joint Stock 4,291,098,790 6,949,469,128 Company Duyen Ha Co., Ltd. 3,715,454,410 4,698,550,109 Hoang Tien Phat Investment and Construction JSC 3,299,090,158 Cam Pha Electric Equipment Company 2,624,550,000 9,259,300,000 Yen Lac Co., Ltd. 2,383,253,926 Northern Grid Company 2,007,602,705 4,065,150,108 Northern Electrical Testing One Member Company 1,987,827,654 14249487285 Limited Installation And Electric Construction Joint Stock Company1,932,970,652 2,710,213,874 Company Song Da 11 Joint Stock Company 1,811,547,839 2,957,837,526 Construction Trade 3SC - Thang Long Branch 1,796,660,130 3,895,189,514 AIT Information Technologies Application and 1,636,766,174 64,220,927,683 Development Co., Ltd Industrial Electrical Construction 3SC 1,467,124,454 LS-VINA Industrial System Co.,Ltd 1,363,837,350 5,874,497,053 Viet Nam Digital Convergence JSC 1,171,745,000 Vietnam Electricity Construction Joint Stock 1,086,784,620 1,412,219,516 Corporation Power Investigating and Designing Construction 4 1,062,143,655 2,480,589,850 Co., Ltd PNT International Auditing Limited Company 243,589,246 4,575,830,002 Huu Hong Machinery., JSC - 12,739,705,000 FPT Information System Co., Ltd. - 7,542,225,942 Informatics - Communications and Control - 6,735,200,000 Technology., JSC Licogi 16., 3SC - 5,239,516,252 Others 7,322,027,899 76,663,696,216 41,204,074,662 236,269,605,058 12. COMMITMENTS As at 31 December 2018, the outstanding value of significant contracts signed with contractors was approximately VND 45.8 billion (as at 31 December 2017: approximately VND 163 billion). U 15 U NORTHERN POWER CORPORATION Distribution Efficiency Project Financing Agreement No. Cr.5156-VN Financial statements Loan Agreement No. TF013468-VN For the year ended Grant Agreement No. TF013456-VN 31 December 2018 U NOTES TO THE FINANCIAL STATEMENTS 13. RELATED PARTY TRANSACTIONS AND BALANCES Related party transactions and balances only relate to activities which were financed by the counterpart fund. List of related parties: Related parties Relationship Northern Power Consulting One Member Company Limited Subsidiary Northern Electrical Testing One Member Company Limited Subsidiary Northern Grid Company Subsidiary In the year, the Project entered into the following significant transactions with its related parties: 2018 2017 VND VND Purchases Northern Electrical Testing One Member Company Limited 1,309,398,705 12,715,726,664 Northern Grid Company 328,884,000 9,613,206,813 Northern Power Consulting One Member Company Limited - 168,850,896 Significant related parties balances as at 31 December 2018 were as follows: 31/12/2018 31/12/2017 VND VND Payable to suppliers Northern Electrical Testing One Member Company Limited 1,987,827,654 14,249,487,285 Northern Grid Company 2,007,602,705 4,065,150,108 Northern Power Consulting One Member Company Limited 30,865,463 70,433,215 Prepayments to suppliers Northern Electrical Testing One Member Company Limited 549,358,000 - Northern Grid Company - 290,134,067 14. SUBSEQUENT EVENTS The withdrawal applications No. 21-NPC with the amount of USD 3,614,446.64 was submitted by the Corporation on 25 April 2019 and accepted for advance clearance by the World Bank on 26 April 2019. On 13 May 2019, the Corporation made a refund of the remaining balances of designated account to the World Bank with the amount of USD 727,935.31. 15. COMPARATIVE FIGURES Comparative figures are figures of the Project's audited financial statements for the year ended 31 December 2017. Tong Bao Ngoc Le Trong Cuong Thieu Kim Quynh Preparer Project Chief Accountant General Director 27 June 2019 16 ■ ■ . ■ ■ ■ ■ . ■ ■ ■PART 11 ■iNoEPENoENT AuoiToR・5 AssuRANcE REPoRT oN . INTERNAL CONTROL ■ ■ ■ ■ ■ ■ ■ . ■ ■与． ■色熱 ■ . ■ ■ ■ . ■ ■ ■ ■ Delloitte 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 INDEPENDENT AUDITOR'S ASSURANCE REPORT ON INTERNAL CONTROL TO. The Board of Management of Northern Power Corporation Report on internal control We have audited, in accordance with International Standards on Auditing, the financial statements of the Distribution Efficiency Project - Financing Agreement No.Cr.5156-VN, Loan Agreement No.TF013468-VN and Grant Agreement No. TF013456-VN - Portion implemented by Northern Power Corporation (the "Project") for the year ended 31 December 2018 and issued the independent auditors' report thereon dated 27 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 Board of Management As stated in the Statement of the Board of Management on page 2, the Board of 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. ZZ Auditor's Responsibilities Our responsibility is to express an opinion on the effectiveness of internal control over compliance with M 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 IT obtained. We conducted our reasonable assurance engagement in accordance with International Standard N 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. 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. 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) Opinion In our opinion, the Board of 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 December 2018. Dag i Dung Nguyen Thanh Huong Deputy General Director Auditor Audit Practising Registration Certificate Audit Practising Registration Certificate No. 0030-2018-001-1 No. 1415-2018-001-1 DELOITTE VIETNAM COMPANY LIMITED 27 June 2019 Hanoi, S.R. Vietnam 18 U U U U U U U U U U N PART III U AUDITOR'S ASSURANCE REPORT ON INDEPENDENT COMPLIANCE U U U U U U U U U * U U U U U U U U W NORTHERN POWER CORPORATION Distribution Efficiency Project Financing Agreement No. Cr.5156-VN Loan Agreement No. TFO13468-VN Grant Agreement No. TF013456-VN STATEMENT OF THE BOARD OF MANAGEMENT ON COMPLIANCE The Board of Management is responsible for complying with Financing Agreement No. Cr.51516-VN, Loan Agreement No.TF013468-VN and Grant Agreement No.TF013456-VN, laws and regulations applicable to the Project. The Board of Management confirms the following: * An effective internal control has been designed and maintained over compliance with Financing Agreement No. Cr.51516-VN, Loan Agreement No.TF013468-VN and Grant Agreement No.TF013456- VN, laws and regulations applicable to the Project; * The Project has complied with Financing Agreement No. Cr.51516-VN, Loan Agreement No.TF013468- 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.51516-VN, Loan Agreement No.TF013468-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 Board of 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 purposes of the Project; * Northern Power Corporation has complied with the financial covenants of the Agreements. For and on behalf of the Board of Management, eu Kim Quynh General Director Hanoi, 27 June 2019 19 I 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 INDEPENDENT AUDITOR'S ASSURANCE REPORT ON COMPLIANCE To: The Board of Management of Northern 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, Loan Agreement No.TF013468-VN and Grant Agreement No. TF013456-VN - Portion implemented by Northern Power Corporation (the "Project") for the year ended 31 December 2018 and issued the independent auditor's report thereon dated 27 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 U compliance with Financing Agreement No. Cr.51516-VN, Loan Agreement No.TF013468-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 Board of Directors The Board of Directors is responsible for complying with Financing Agreement No. Cr.51516-VN, Loan Agreement No.TF013468VN 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. 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 Sof 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. We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. 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 U INDEPENDENT AUDITOR'S ASSURANCE REPORT ON COMPLIANCE (Continued) I Opinion In our opinion: * The Project has complied, in all material respects, with Financing Agreement No. Cr.51516-VN, Loan Agreement No.TF013468-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.51516-VN, Loan Agreement No.TF013468-VN and Grant Agreement No.TF013456-VN and prevailing relevant regulations established by the World Bank; T 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; * Northern Power Corporation has complied with the financial covenants of the Agreements. DagMh Dn Nguyen Thanh Huong Deputy General DirectorAuio Audit Practising Registration Certificate Audit Practising Registration Certificate No. 0030-2018-001-1 No. 1415-2018-001-1 DELOITTE VIETNAM COMPANY LIMITED 27)lune 2019 Hanoi, S.R. Vietnam 21