GEC Annual Report 2018 - Điện Gia Lai Báo cáo thường niên 2018 by Valueplus Communications

2018 ANNUAL REPORT

ABBREVIATIONS

AGM BOD BOM CAGR CEO COD CG CIT COGS EBIT EBITDA

: : : : : : : : : : :

EGM EHSS EPC EVN FiT FS GEC HR JSC LNG M&A MOIT NPAT SG&A PATMI PBT PPA R&D ROAA ROAE YOY

: : : : : : : : : : : : : : : : : : : : :

Annual General Meeting Board Of Directors Board Of Management Compounded Annual Growth Rate Chief Executive Officer Commercial Operation Date Corporate Governance Corporate Income Tax Cost Of Goods Sold Earnings Before Interest and Taxes Earnings Before Interest, Taxes, Depreciation And Amortization Extraordinary General Meeting Enviroment - Health - Social Policy - Safety Engineering Procurement and Construction Viet Nam Electricity Feed In Tariff Financial Statement Gia Lai Electricity Joint Stock Company Human Resources Joint Stock Company Liquefied Natural Gas Mergers and Acquisitions Ministry Of Industry and Trade Net Profit After Taxes Selling, General And Administration Profit After Tax and Minority Interests Profit Before Tax Power Purchase Agreement Research and Development Return On Average Assets Return On Average Equity Year On Year

GEC's Head Office

2018 ANNUAL REPORT

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TABLE OF CONTENTS 02 ABBREVIATIONS 04 TABLE OF CONTENTS 06 REMARKABLE FIGURES

10 COMMITMENTS AND RESPONSIBILITIES 12 13 18 20 24 28 32 36

Vision - Mission - Core value 17 sustainable development goals of United Nations Commitments to the truth and fairness the 2018 Annual Report Interview with Chairman of the Board Profile of the Board of Directors Letter to Shareholders from the CEO Profile of the Board of Management Financial highlights of 2015-2018

40 CORPORATE GOVERNNANCE 42

Applying ASEAN Corporate Governance Scorecard Efforts towards new standards 56 Code of Conducts 58 Board of Directors’ Reports and Corporate Governance activities 72 Renewable Energy trend A view from Southeast Asia and Vietnam 84 Board of Directors’ Strategic vision 90 Report of the Independent Board Member 92 Report of the Audit Committee 96 Main risks and risk management activities 104 Compliance with Vietnam Laws, approaching international standards 110 Investor relations and Capital market activities

122 BOARD OF MANAGEMENT - YEAR IN REVIEW 124 130 138 146 158

Remarkable milestones in a year of operation Project portfolio & Services Positioning GEC on the Renewable Energy market Business activities analysis based on Business Model Investment, operation and production activities of each major Energy Segment 164 R&D activities - Optimal Energy solutions 166 Investment in technology development to increase the operation efficiency 170 Human resource and training - Lever of growth

182 SUBSTAINABLE DEVELOPMENT 184 190 200 206 214 215 216 218 220

Stakeholders engagement Commitment on economic - Sustainable economic growth Commitment on environment - Sustainability from the ecosystem Commitment on the community Community and society engagement Sharing from Foreign Shareholders Sharing from Contractors Sharing from Customers Sharing from Employees Contact Information for Stakeholders

222 VIEW ON FINANCE 224 Summary on 2018 Audited Separate Financial Statements 229 2018 Audited Consolidated Financial Statements 286 MILESTONES OF DEVELOPMENT - WHO WE ARE

2018 ANNUAL REPORT

CĂ&#x201D;NG TY CP Ä?I N GIA LAI

PROMOTING INVESTMENT

STRENGTHENING DEVELOPMENT

Started as an equitized State - Owned Enterprise, focusing only on small and medium Hydroelectricity, GEC has now kept abreast of Renewable Energy trends with its Solar, Wind projects, etc. With determined strategic direction from the leadership and the enthusiastic support from international Shareholders - IFC and Armstrong, GEC is making solid steps in dynamic Renewable Energy in Vietnam, ensuring compliance with the highest environmental and social standards.

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REMARKABLE FIGURES IN 2018 HYDRO, SOLAR, WIND POWER

395

22 plants By 2020

VND

9,000

billion

VND

Total investment cost of 22 plants

7,400

billion

Investment in economically-difficult areas

VND

billion

Investment in technology

310

Million tons

Reduction of CO2 emissions

1,136

By 2022

2018 ANNUAL REPORT

NO.1

100%

Pioneer in Vietnam

Market share

SOLAR POWER

50,000

Tons/year

Reduction of CO2 emissions

VND

350

billion/year

Revenue VND

7,400

818

billion

Total investment cost of 8 plants

MWp

17 plants by 2022

355,000

Solar panels

163

Million kWh/year

Commercial electricity

440

61%

Total land area of 8 plants

Gross Profit Margin

392

MWp

In-operation before 2020

117

MWp

National grid connection

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REMARKABLE FIGURES IN 2018 MEDIUM AND SMALL - SCALE HYDROPOWER PLANTS

84.1

356

~ MW

Million kWh

Commercial electricity

14 plants

24% Gia Lai Market share

60% 2018 Gross Profit Margin

18% Hue Market share

14% Lam Dong Market share

2018 ANNUAL REPORT

BUSINESS PERFORMANCE & CORPORATE GOVERNANCE VND

559

billion

Net Revenue

12,800

Beneficiaries

VND

207

billion

Profit Before Tax

35%

IFC, ARMSTRONG

35% VND

Increase of Market price of GEG share 2018/2017

IFC

billion

Social, Community activities

Governance Advisor

PWC Independent Auditors

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Nhà máy Thủy điện Nhà máy

Ayun Ha Hydropower Plant - Gia Lai

COMMITMENTS AND RESPONSIBILITIES 12 13 18 20 24 28 32 36

SOLID INTEGRATION CONTRIBUTING TO THE FUTURE STARTING FROM SMALL HYDROPOWER PLANTS, AFTER 30 YEARS OF ENERGIZING FROM THE CENTRAL HIGHLANDS, GEC CONSTANTLY DEVELOPING, INTEGRATING INTERNATIONALLY, WITH MULTILATERAL COOPERATION, FOCUSING ON INVESTMENT IN RENEWABLE ENERGY SOURCES, GETTING READY FOR CONTRIBUTION TO THE FUTURE JOURNEY.

VISION - MISSION - CORE VALUE

VISION

By 2025, GEC becomes the leading private organization in Vietnam’s Renewable Energy sector.

To optimize the resources of Hydro, Solar, Wind and Biomass.

MISSION

To meet the Energy demand by clean Energy solutions, to serve the community and to protect the social environment.

CORE VALUE

GEC pioneers in developing sustainable Renewable Energy sources, meeting the Energy demand in all weather conditions, providing a wide range of Energy types connecting to the national grid, and optimizing Energy solution with investment efficiency - quality of execution - and a commitment of “Trust - Responsibility”.

SLOGAN

2018 ANNUAL REPORT

SYNCHRONOUSLY DEVELOPING DIFFERENT TYPES OF ENERGY

SUSTAINABLE DEVELOPMENT GOALS OF THE UNITED NATIONS

17 MỤC TIÊU PHÁT TRIỂN BỀN VỮNG CỦA LIÊN HỢP QUỐC BASED ON 17 SUSTAINABLE DEVELOPMENT GOALS OF UNITED NATIONS, GEC HAS ANALYZED AND SELECTED THE OBJECTIVES TO BE INCLUDED IN THE SUSTAINABLE DEVELOPMENT ORIENTATION UNTIL 2020

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17 SUSTAINABLE DEVELOPMENT GOALS OF THE UNITED NATIONS

1. NO POVERTY VND

3.2 billion

Supporting the campaigns for the poor in Gia Lai, Binh Thuan and Long An

780 million

Supporting production development, diversifying livelihoods for local people

18 Million kWh 7,300 Beneficiaries

Power supply for remote areas in Chu Prong District

2. ZERO HUNGER VND

VND

1.6 billion

Supporting and donating to disadvantaged areas in Gia Lai, Binh Thuan and Long An

3. GOOD HEALTH AND WELL-BEING

349 Beneficiaries 2

VND

14.6 billion

119 60 million 2 Times/year

Health care and insurance are provided to employees Beneficiaries Periodical health examination Supporting for treatment costs VND Blood donation / Leisure trips

Labor safety training for employees

4. QUALITY EDUCATION

450 Beneficiaries 2

VND

39 Training courses 1.4

Training programs to develop successors, internal training, outsourced training

billion

5. GENDER EQUALITY

16% Female employees

Ensuring gender equality in promotion, successor training for management positions Benefits and policies for women, pregnant women, and women raising children under 12 months old

23% Female middle

Middle and senior manager Female CEO

and senior level employees 14

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6. CLEAN WATER AND SANITATION

100% of the plants 14 Hydropower plants 2 Solar power Plants VND

VND

Environmental management system meets the requirements by Law

1.7

VND

billion

349 Beneficiaries

120 million 4 Times/year 100% of the plants 30 million 190 Beneficiaries

Monitoring and supervising water quality for each plant

Water purifier, to ensure water quality meets sanitation standard for the employees

7. AFFORDABLE AND CLEAN ENERGY

VND

84.1 MW

14 small and medium Hydropower plants operating

50,000 Tons of CO

1,522

Total investment cost

163 Million kWh/year

billion

NO. 1

VND

Vietnamâ&#x20AC;&#x2122;s pioneer Solar power

Reducing CO2 emissions

117 MWp

2 in-operation Solar power Plants

2,137

Total investment cost

354,660

Solar panels

Power generation

348 billion

Annual Solar Revenue

275 MWp

6 under-development Solar power Plants

VND

5,276 billion

Total investment cost

VND

8,922 billion

Total investment cost of 22 plants

Average income of employees

5,442

Direct and indirect jobs

12%

CAGR of Profit

VND

billion

8. DECENT WORK AND ECONOMIC GROWTH VND

VND

559 billion

Net Revenue in 2018

207 billion

Profit After Tax in 2018

16%

CAGR of Revenue

VND

million/month

Workers

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17 SUSTAINABLE DEVELOPMENT GOALS OF THE UNITED NATIONS (continued) 9. INDUSTRY, INNOVATION AND INFRASTRUCTURE VND

17 billion

Increasing the capacity of the plant by modernization, efficiently using natural resources and environmental friendliness

Increasing the capacity of Dak Pi Hao 2 plant to 9.5 MW Applying information technology in management to measure and reduce losses, with SCADA

VND

21 billion

Renovation cost of the plant in 2018-2019

10. REDUCED INEQUALITY VND

7,400

Building plants in areas with difficult economic conditions, Thua Thien Hue, Gia Lai, Binh Thuan, Long An and Binh Dinh

6 million

Average income of local employees in Thua Thien Hue, Gia Lai, Binh Thuan and Long An

500 Employees

Local employees from Thua Thien Hue, Gia Lai, Binh Thuan and Long An

billion

VND

8 Plants 392 MWp

Phong Dien - Hue, Krong Pa - Gia Lai, Ham Phu 1, 2 - Binh Thuan, Duc Hue 1,2 - Long An, Tay Son 1,2 - Binh Dinh are operating and under-construction Solar's total capacity

11. SUSTAINABLE CITIES AND COMMUNITIES

16 Plants VND

3.6 billion

Growing trees around the plants

190 Beneficiaries

Plants’ employees

Inspecting and handling community impacts in a timely manner Assessing environmental and social impacts Assessment of biodiversity Protected areas Other impacts to be considered for project’s feasibility study

12. RESPONSIBLE CONSUMPTION AND PRODUCTION VND

36 billion 16 Plants 1Time/year

2018 ANNUAL REPORT

Annual water resource fee

2 Foreign

contractors Hazardous waste management team monitors collection, transportation, etc. Selecting PCB-free oils for the transformers Avoiding incidents that contaminate the project area

Periodically collecting hazardous waste

Sharp, JGC – Japan, one of the most reputable contractors in the world waste

generation,

storage,

13. CLIMATE ACTION

14 Hydropower

Improving productivity to increase Energy-use efficiency

84.1 MW

Forecasting the impacts of El Nino to develop the appropriate response plans

plants

2/8

In-operation Solar power Plants

VND

implemented

392 MWp

Diversifying Energy sources to adapt to climate change

7,400

Total investment of 8 Solar power Plants

billion

14. LIFE BELOW WATER

8 New projects were

Using Renewable Energy Solar power, not fossil fuels

Assessing the environmental impacts, biodiversity, protected areas, biosphere reserves, etc. Solar power Plants including Phong Dien, Krong Pa, Ham Phu 1, 2, Duc Hue 1, 2, Tay Son 1, 2

15. LIFE ON LAND

VND

16 billion

Forest environmental service fee Assessing environmental impacts, biodiversity, protected areas, etc. Using ineffective farming land to develop Solar power system, increasing land use efficiency

16. PEACE AND JUSTICE, STRONG INSTITUTIONS

100% of employees

Equality in work, welfare, competition and reward

8% of employees

Excellent ranking

349

Employees have right to approach the information and execute their basic rights as regulation

1 Time/year

Organizing workers’ conferences

Employees

Discussion on employee’s welfare and salary policy

17. PARTNERSHIPS FOR THE GOAL

3 Domestic and

The Next Generation Industrial PV Solution - Huawei Renewable Integration: overseas Challenges and Technologies Conference on - ABB and Ministry of Industry Power and Energy and Trade Guidance on environmental impact assessment for Wind power projects in Vietnam Ministry of Industry and Trade, Federal Ministry for Economic Cooperation and Development (BMZ) and GIZ

16 Renewable Power plants

Promoting the development of environmentally friendly technology

2 Foreign strategic Shareholders

2 Years 35%

IFC, Armstrong - The World's prestigious organizations for sustainable development

Accompanying with GEC’s development

GEC’s shares

168 MW

Hydropower and Solar power Plants are operating

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COMMITMENT TO THE TRUTH & FAIRNESS OF THE 2018 ANNUAL REPORT

In 2018, GEC officially became one of a few listed Companies on the Vietnam stock market to apply the advanced international corporate governance model in which the Supervisory Board was replaced by Audit Committee directly under the Board of Directors. One of the Audit Committeeâ&#x20AC;&#x2122;s responsibilities is to review all information mentioned in GEC 2018 Annual Report to ensure the truth and fairness of information presented to the Related Parties.

2018 ANNUAL REPORT

In the responsibilities of the Audit Committee, we commit that: • The contents presented in the GEC 2018 Annual Report fully satisfy the Information Disclosure regulations in accordance with Vietnamese Law: »» Circular 155/2015/TT-BTC on Information Disclosure on the stock market; »» Decision 606/QD-SGDHN on Information Disclosure on the Hanoi Stock Exchange. • Additionally, with the spiritual responsibility of the BOD to the Related Parties, GEC tries its best to meet the international standards, including: »» »» »» »»

International Integrated Reporting Frameworks (IIRC); ASEAN Corporate Governance Scorecard; OECD Principles of Corporate Governance; GRI Standards for Sustainable Development Report.

• All of the information and data presented in the GEC 2018 Annual Report are consistent with the 2018 FS audited by PwC Vietnam. • The Audit Committee has rigorously reviewed the Report in order to ensure the truth and fairness of information, statistics, figures which were selected and presented in the 2018 Annual Report. In the opinion of the Audit Committee, the 2018 Annual Report of Gia Lai Electricity JSC has been presented truly and fairly, reflecting the overview of business activities, investment projects and the financial status during the fiscal year; in accordance with the objectives of GEC’s BOD to make information transparent, protect the rights of Shareholders, Investors and the other Related Parties. AUDIT COMMITTEE HEAD OF AUDIT COMMITTEE

NGUYEN THUY VAN

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INTERVIEW WITH CHAIRMAN OF THE BOARD

Mr. Tan Xuan Hien - Chairman of the Board

2018 ANNUAL REPORT

The Board of Directors also fostered long-term strategies for maximizing the value chain in Electricity, including Waste-to-Energy, Gas-to-Energy new categories which are not easily deployed in Vietnam, as they require expertise, technology, experience and finance. If successful, GEC will contribute positively to economic development, to the community and society. This will make GEC a leading private enterprise in Renewable Energy in Vietnam by 2025, as set in GEC Vision.

In 2018, GEC was a prominent brand with impressive initial steps on Renewable Energy categories in Vietnam. Could you share about the strategy to diversify the categories that GEC is pursuing, how did GEC come up with the opportunities at the first place, and how did the journey start? In the current situation, the development of traditional power generation sources as Thermoelectricity and Hydroelectricity is becoming increasingly difficult due to limited potential and resources; domestic fossil fuel sources have reached the limit and have been forecasted to decline shortly; the selling price of oil, coal, gas increased and would be mainly imported, etc. Climate changes due to burning fossil-based fuels, along with extreme weather phenomena, has always been in the news. According to Electricity Industry experts, in 2010-2030, electricity demand in Vietnam is forecasted to grow by 10% annually. However, the limited capacity in power supply does not facilitate the growth rate, resulting in an imminent risk of power shortage. Since 2015, Vietnam has shifted from a net exporter to a net importer with imports accounting for 3% of the whole system. This rate is expected to increase steadily to 24% by 2030. Development of more clean Energy sources besides Biomass will help meet the electricity demand for economic growth, projected to be 6.5-7.5% per year. Facing existing challenges, Governments around the world, including Vietnam, have advocated Green and Renewable Energy to ensure adequate supply for economic development, minimize dependency on traditional sources, in line with international efforts towards carbon emission reduction in the context of climate change.

FORECAST TOTAL CAPACITY IN 2019

395

ENERGY PORTPOLIO 2022

HYDROPOWER

16%

WIND POWER

SOLAR POWER

22%

62%

Grasping the Government's policy, the potential of developing Renewable Energy sources, along with world-renowned strategic players, GEC has boldly and confidently studied and skillfully made synergies to accelerate Renewable Energy investment. By the end of 2019, GEC will own a portfolio of Energy projects with a total capacity of 395 MW, including 84.1 MW Hydropower and 311 MW Solar power. We are also structuring in GEC's portfolio so that by 2022, Hydropower shall account for 16%, Wind 22% and the Solar - core business - will be 62%. Solar power was the facilitator for GEC's initial successes in 2018. In addition, BOD also fostered long-term strategies for maximizing the value chain in Electricity, including Wasteto-Energy, Gas-to-Energy - new categories which are not easily deployed in Vietnam, as they require expertise, technology, experience and finance. If successful, GEC will contribute positively to economic development, to the community and society. This will make GEC a leading private enterprise in Renewable Energy in Vietnam by 2025, as set in GEC Vision. With the initiative and determination from BOD, GEC advocates to Renewable Energy in 2018 by launching the first Solar outcomes. By end of 2018, the Country had seen 10,000 MW of Solar power being registered, 8,100 MW

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INTERVIEW WITH CHAIRMAN OF THE BOARD (continuted)

The team of engineers at GEC constantly cultivates and accumulates experiences in implementing Solar power projects

The difficulties have not make us falter, but make us more determined as one Company. By now we are proud of the achievements, however small they may seem, which are encouraging and are the foundation for further effort in 2019. of which belong to 121 projects. However, GEC is truly the pioneer endeavoring in Renewable Energy, with the first 117 MWp being supplied to the grid, bringing the total generation capacity of GEC to 168 MW, 2 times the capacity of 2017. As you mentioned, Solar Energy will be the first GEC's endeavor in Renewable Energy types. Operating the first 2 Solar Energy Plants in a row, have there been any difficulties or challenges upon deploying these projects? The difficulty that we encountered in the development of Solar projects is the pioneer's hardship. From doing research, making investment decisions, carrying out construction to operation, everything was new full of risks. At the time of deployment, it was a completely new field in Vietnam, so there had not been any prior

2018 ANNUAL REPORT

operational work for us to learn from. Financially, as you know, grid-connected Solar involves multi-million-dollar projects. Therefore, for the project to be successful, there was a need for synergies of many factors, the consensus of strategic Investors, cooperation from financial institutions as well as weighty preparation of internal forces, especially while GEC has been implementing many projects simultaneously. In terms of technology back then, no domestic manufacturer could provide the main equipment for the Solar system. We had to select foreign contractors, import equipment and assemble the system, transfer technology for the system in stable and high performance. Therefore, considering and selecting suppliers with full capacity and experience was crucial, which was decisive to the project success. In addition, our HR then did not have much experiences in implementing Solar projects, so it was also a big challenge. We, officials as well as construction workers, studied on the work requirements and managed to get out of the bottlenecks. The responsibility and pressure that each person had to shoulder was huge while Solar project implementing time being much shorter than that of the Hydroelectricity.

Thus, we had to roll out the jobs at the same time, with attachment to the plan. On the macro level, the transmission of the national grid in some provinces has not met the demand for capacity of planned Solar projects. This is also one problem when Solar farms enters operation. However, the above difficulties have not make us falter, but made us more determined as one company. By now we are proud of the achievements, however small they may seem, which are encouraging and are the foundation for further effort in 2019. It is known that GEC has the companion of two strategic players, IFC and Armstrong, both of which are world-renowned Financial Players and Clean Energy Investors. Was GEC's 2018 success a synergy from act-local partners like GEC, financially-strong as IFC and experienced like Armstrong? In 2016, IFC - World Bank Group and Armstrong South East Asia Clean Energy Fund, Singapore officially became GEC's foreign strategic Shareholders with 36% ownership. Until now, this remains the first investment in Vietnam's Energy by both organizations. Strategic cooperation with IFC and Armstrong shows GEC's prestige and capacity while fully meeting international requirements. In line with strategic cooperation, during the transformation, bold investment in Renewable Energy, providing sustainable Energy sources, GEC has received support and agreement in all fields from foreign strategic Shareholders. Armstrong is a private investment fund from Singapore, focusing on developing clean Energy in Emerging markets in Southeast Asia. Operated by a multinational management team with experience accumulated from development and investment in over 50 Renewable Energy projects around the world, Armstrong has been a bridge to help GEC approach many technology partners in global Renewable Energy. Meanwhile, IFC, Member of the World Bank, the global development organization engaging with private enterprises in Emerging economies, supports 2,000 private enterprises with capacity in finance, with its expertise and influence. Strategic cooperation with IFC is an opportunity not only to access the World's capital and technology markets, but also to leverage on IFC's of global Energy Industry expertise. This also creates multiple opportunities for GEC to become a role-model in Vietnam through the application of the Industry's best practices.

In 2018, GEC made key decisions in increasing the scale of its operations, by doubling the charter capital, expanding the portfolio of Clean Energy projects, and especially proposals of moving from UPCOM to HOSE. How will these strategies support realization of GEC's sustainable development? In 2018, the Company completed the 1: 1 Charter capital increase to VND 1,942 billion by issuing more than 97 million shares to current Shareholders. Increasing the capital was a testimonial to GEC's development in scale and financial resources to ensure implementation of Renewable Energy projects under the Company's strategy. By doubling the size of the Company, along with the successes in investing into Solar projects, BOD realized it was the right time to bring GEC to a new position in the financial community, both at home and abroad. The BOD proposed for adoption by General Meeting of Shareholders to move the listing to HOSE. Building, preserving and affirming the Vietnamese brand is also one of the ambitions of the BOM. Moving to HOSE not only affirms GEC's prestige and potential but also serves as an opportunity to approach capital in a diverse and timely manner. This is also an important channel to promote the brand, an opportunity for GEC to further improve CG according to international standards, enhance publicity and transparency with Stakeholders, to respond to stricter standards when Vietnam's stock market is expecting an upward move in ranking in 2020. Along with GEC's potentials, I believe HOSE listing definitely promotes GEC's share value, which, in turn brings practical benefits to long-term Shareholders and Investors who have been accompanied with the Company. Thank you very much and wish you the best of health!

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PROFILE OF THE BOARD OF DIRECTORS

Mr. TAN XUAN HIEN Chairman of the Board

Ms. DO THU NGAN BOD Member

Nationality: Vietnamese Year of Birth: 1961

Nationality: Vietnamese Year of Birth: 1971

Appointment history

Date of appointment as Chairman of the Board: January 1st, 2015

Date of appointment as BOD Member: September 18th, 2018

Duration of service as Chairman of the Board: 3 years

Duration of service as BOD Member: 4 months

Qualifications

Electrical Engineer

Master of Business Administration

Bachelor of Finance and Accounting Professional experience

Professional experience

March 2018 - Present: Chairman of the Board - Gia Lai Electricity JSC

August 2018 - Present: BOD Member - Gia Lai Electricity JSC

March 2017 - February 2018: Vice Chairman of the Board - Gia Lai Electricity JSC

July 2018 - Present: Permanent Deputy CEO - Thanh Thanh Cong Investment JSC

January 2015 - March 2017: Chairman of the Board - Gia Lai Electricity JSC

June 2013 - June 2018: CFO, Senior National Sales Director

December 2013 - Present: Chairman of the Board - Truong Phu Hydropower JSC 2010 - 2014: BOD Member, CEO - Gia Lai Electricity JSC 1998 - 2010: Director - Gia Lai Electricity Company 1992 - 1998: Deputy Director - Gia Lai Electricity Company

- JP Morgan Chase Bank NA - Ho Chi Minh City branch 2011 - 2013: Chairwoman - NTF International Services - Financial Advisory Co., Ltd. 2010 - 2011: Permanent Deputy CEO, CFO - Saigon Thuong Tin Commercial Joint Stock Bank 2005 - 2010: CEO - Sacombank Leasing One Member Co., Ltd.

Outstanding achievements With nearly 30 years of management and administration experience in Energy sector, he plays an important role in making the right strategic plans and gradually building GEC into one of the few companies that foster green, clean and environmentally friendly Renewable Energy in Vietnam. In addition, he and his staffs offered optimal solutions for rational use of electricity, strived with GEC to become the leading private organization in Renewable Energy in Vietnam by 2025. He has accompanied with the development of GEC since the Company was still a State-Owned Enterprise that managed and operated only Ia Drang 2 Hydropower Plant with a capacity of 1.2 MW. Up to now, GEC directly and indirectly owns 14 small and medium Power Plants, 2 Solar power Plants with a total capacity of 168 MW and Chartered capital of nearly VND 2,000 billion. Current positions in organizations (excepting for Parent company - Subsidiary)

Outstanding achievements With more than 15-year experience in senior management in finance, retail banking and investment banking, she joined GEC as an Independent BOD Member to assist the BOD in advising and supervising Governance and Management activities with an independent approach; to advise on short-term and long-term financial investment; as well as to build strategies for joint ventures and associates; and to make decisions about M&A activities. She also advised the Chairman of the Board on issues related to planning and management of the core team as well as policies for GEC senior management. Current positions in organizations (excepting for Parent company - Subsidiary) Permanent Deputy CEO - Thanh Thanh Cong Investment JSC

Chairman of the Board - Truong Phu Hydropower JSC Ownership of voting shares at the Company 536,058 shares; 0.276%

2018 ANNUAL REPORT

Ownership of voting shares at the Company 0%

Mr. DEEPAK CHAND KHANNA Non-Executive BOD Member

Mr. ANDREW MARK AFFLECK BOD Member

Nationality: Indian Year of Birth: 1957

Nationality: British Year of Birth: 1966

Appointment history

Date of appointment as BOD Member: November 3rd, 2016

Date of appointment as BOD Member: September 18th, 2018

Duration of service as BOD Member: 2 years 1 month

Duration services as BOD Member: 4 months

Qualifications

Master of Business Administration - George Washington University, USA

Master of Business Administration - Leicester University, England

Master of Economics - Delhi University, India

Postgraduate Certificate in Education (PGCE) Climate Change and Sustainable Development - De Montfort University, England

Professional experience November 2016 - Present: BOD Member - Gia Lai Electricity JSC 2005 - Present: Regional Director - Middle East and North Africa Region - IFC, Dubai 2001 - 2005: Mekong Regional Director - IFC, Vietnam 1998 - 2001: Country Director - IFC, Korea 1987 - 1998: Investment Specialist - IFC, Washington DC Outstanding achievements With over 30 years of experience in investment and finance, as a BOD Member who has been with GEC for more than 2 years, he has contributed to improve CG structure according to current international standards and best practices. In addition, he also consults on the roadmap of synchronous development of GECâ&#x20AC;&#x2122;s types of Renewable Energy in a reasonable and sustainable manner in accordance with the investment standards for environment, community and society proposed by IFC. Current positions in organizations (excepting for Parent company - Subsidiary) Regional Director, Middle East and North Africa - IFC, Dubai Ownership of voting shares at the Company 0%

Professional experience September 2018 - Present: BOD Member - Gia Lai Electricity JSC January 2011 - Present: Executive Director - Armstrong Asset Management Pte. Ltd. October 2008 - December 2010: Executive Director cum Chairman Low Carbon Investors Ltd. October 2006 - September 2007: Executive Director - Infinity Energy Outstanding achievements With 12-year experience in senior management and governance at Investment Funds, he participated in GEC with the role of consultant, orientation of CG in accordance with international standards, planning and implementing M&A activities to expand Renewable Energy portfolio, making GEC become one of the leading companies in Vietnamâ&#x20AC;&#x2122;s Renewable Energy Industry. Additionally, he also plays an important role in advising the development strategy and realizing the annual business and production goals of the Company. Current positions in organizations (excepting for Parent company - Subsidiary) Executive Director - Armstrong Asset Management Pte. Ltd. Ownership of voting shares at the Company 0% Representative of Armstrong Asset Management Pte. Ltd.: 39,057,174 shares; accounting for 20.11%

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PROFILE OF THE BOARD OF DIRECTORS (continued)

Ms. NGUYEN THUY VAN Independent BOD Member

Ms. PHAM NGOC THANH MAI Non-Executive BOD Member

Nationality: Vietnamese Year of Birth: 1980

Nationality: Vietnamese Year of Birth: 1982

Appointment history

Date of appointment as BOD Member: September 18th, 2018

Duration of service as BOD Member: 4 months

Qualifications

Master of Business Administration Certificate of Master of Auditing Board - Vietnam Institute of Directors Professional experience September 2018 - Present: BOD Member - Gia Lai Electricity JSC, Chairwoman of Audit Committee - Gia Lai Electricity JSC May 2018 - Present: Head of Audit Subcommittee - Thanh Thanh Cong - Bien Hoa JSC November 2017 - Present: BOD Member - Thanh Thanh Cong - Bien Hoa JSC 2012 - 2017: Head of Supervisory Board - Thanh Thanh Cong - Tay Ninh JSC 2012 - 2015: Head of Supervisory Board - Thanh Thanh Cong Investment JSC 2011 - 2012: Deputy CEO - Thien Son Logistics JSC 2009 - 2011: Deputy Director - Son Tin Commodity Exchange JSC 2008 - 2009: Head of Derivatives Exchange Department - Tin Viet Investment JSC 2007 - 2008: Head of Investment Department at Branch - Dak Lak Rubber Company 2004 - 2007: Head of Finance Department - Vinamit JSC Outstanding achievements With nearly 15 years of experience in finance, investment and especially accounting and auditing, she is gradually improving and perfecting an effective internal control system for GEC as an Independent BOD Member and Chairwoman of Audit Committee, to ensure the highest compliance with OECD CG standards and ASEAN SCORECARD. She 's in charge of protecting the rights of Stakeholders, especially Shareholders and Investors, including small Shareholders. Current positions in organizations (excepting for Parent company - Subsidiary) • BOD Member - Thanh Thanh Cong - Bien Hoa JSC • Head of Audit Subcommittee - Thanh Thanh Cong - Bien Hoa JSC Ownership of voting shares at the Company 0%

2018 ANNUAL REPORT

Bachelor of Economics Tax and Audit Practice Certificate, (CPA) Professional experience September 2018 - Present: BOD Member - Gia Lai Electricity JSC March 2018 - August, 2018: Head of Supervisory Board Gia Lai Electricity JSC May 2018 - Present: Head of Supervisory Board - Truong Phu Hydropower JSC April 2018 - Present: Head of Supervisory Board - TTC Energy JSC April 2013 - Present: Member of Supervisory Board - Thanh Thanh Cong Trading JSC May 2011 - March 2018: Head of Internal Audit - Thanh Thanh Cong Investment JSC September 2008 - May 2011: Audit Assistant - Mazars Vietnam Co., Ltd. Outstanding achievements With over 10 years of experience in Internal Audit, as a Member of GEC’s Audit Committee, she advises on building the Company's medium and long-term Internal Audit strategy; training and organizing the Internal Audit Team to ensure effectiveness of the internal control system, applying control and auditing method according to the standards of domestic and international law. The goal that she as well as the Audit Committee aim at is to ensure the transparency in CG, fair treatment for Shareholders and Investors, especially protecting interests of minority Shareholders. Current positions in organizations (excepting for Parent company - Subsidiary) • Member of Supervisory Board - Thanh Thanh Cong Trading JSC • Head of Supervisory Board - TTC Energy JSC • Head of Supervisory Board - Truong Phu Hydropower JSC Ownership of voting shares at the Company 15,000 shares; 0.007%

PROFESSIONAL, DYNAMIC, CREATIVE & DARING TO COPE WITH ALL CHALLENGES

GEC - TAKING PRIDE IN BEING THE FIRST ENTERPRISE TO OPERATE A SOLAR POWER PLANT IN VIETNAM

Solar battery panels of TTC Krong Pa - Gia Lai

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LETTER TO SHAREHOLDERS & INVESTORS FROM CEO

Ms. Nguyen Thai Ha - Chief Executive Officer

2018 ANNUAL REPORT

With continuously high economic growth rate in recent years which peaked at 7.08% in 2018 - the highest growth in recent 10 years, the demand of Energy for economic development is considered as a key factor; average power growth reaches approximately 10% per year. 2018 NET REVENUE

VND

559

Billion

2018 TOTAL ASSETS

VND

4,361

Billion

Dear Esteemed Shareholders and Investors,

n 2019, we witnessed the most exciting period of Vietnam Energy market, especially the participation of private sector in Renewable Energy Industry. With continuously high economic growth rate in recent years which peaked at 7.08% in 2018 - the highest growth in recent 10 years, the demand of Energy for economic development is considered as a key factor; average power growth reaches approximately 10% per year. According to the VII Adjusted Power Development Master Plan to 2020, although the Renewable Energy accounts for a small proportion in the total power capacity - the proportion of Renewable Energy production only accounts for 6.5%. The Government’s incentive mechanisms for Renewable Energy development effectively stimulated this Sector last year: • Decision No. 11/2017/QD-TTg dated April 11th, 2017 on the mechanism for encouraging the development of Solar power in Vietnam with the FiT of 9.35 cents/kWh;

• Decision No. 39/2018/QD-TTg dated September 10th, 2018 on the support mechanism for the development of Wind power projects in Vietnam. The FiT was set at 8.5 cents/kWh for on-shore Wind power projects and 9.8 cents/kWh for off-shore ones; • Decision No. 02/2019/QD-TTg dated January 8th, 2019 on changing mechanism on trading Solar rooftop power. The sell side pays for the amount of electricity received at the price in accordance with current regulations; the buy side shall pay for the amount of electricity transmitted to the grid at the selling price of grid-connected Solar power projects.

These were, in fact, the signals in favor of Renewable Energy last year, and GEC - with the advantage in developing small and medium Hydro power plants, pro-actively caught up with this trend. Being well prepared, especially with the clean land bank 4 years ago, GEC inaugurated the 2 first Solar power Plants in Vietnam including Phong Dien - Hue with the capacity of 48 MWp and Krong Pa - Gia Lai with the capacity of 69 MWp in 4Q 2018; Duc Hue 1 - Long An and Ham Phu 2 - Binh Thuan Plants with the same capacity of 49 MWp are going to be put into operation in 2Q 2019. The capacity of these projects meets approximately 20% of GEC’s strategic objectives for Solar and Wind power development in the coming years. Even more remarkable than the strategic objectives are the fact that the deployment - with pioneering steps - has brought various experience during the project implementation to the Management Board and the employees; from meeting the Electrical legal requirements to technical work, or the selection of technology and contractors. This is really a valuable experience for the GEC’s BOD to be able to go further in the coming years and right in 2019 it could “decode” the issue on how to achieve an effective investment rate when the FiT would no longer be at 9.35 cents/kWh after June 30th, 2019. 2019 is also the 30th year of GEC’s development history since being started as an equitized State-Owned Enterprise that focused on small and medium Hydropower plants, GEC is now on the trend of developing Renewable Energy with Solar and Wind power projects, etc. GEC also serves as TTC’s pillar in Energy Sector - which is currently leading the market in Solar rooftop power, research and development of Waste-to-Energy, besides other TTC‘s traditional Energy types such as Biomass from bagasse. With the direction of TTC Group and the support from international Shareholders such as IFC and Armstrong, GEC is taking firm and solid steps in the role of an effective Renewable Energy development unit. This can be seen through its pioneering vision, effective implementation, technical/ technological strengths, legal experience in Electricity Industry, to comply with the highest environmental/social standards

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LETTER TO SHAREHOLDERS & INVESTORS FROM CEO (continued) GEC’s Management Board believes that every Members will gradually and effectively fulfill their roles, Profit growth is expected to be growing at 40% compared to 2018, 5 Solar power Plants will be put in operation in 2019, M&A of Hydropower/Solar power Plants needs to be carried out, legal procedures for Wind power projects need to be focused on in order to accelerate from 2020 on. set by IFC, etc. All of the above is incorporated in GEC’s commitment on sustainable development, with the vision “By 2025, GEC becomes the leading private organization in Vietnam’s Renewable Energy Sector”.

in the Industry’s planning/development direction, locally transmission overload in some areas and the risk of “releasing capacity” as forecasted by authorities and experts, etc. In the enforcement role, GEC’s Management Board is quantifying the factors affecting GEC’s 5-year strategic objectives and annual plan.

To balance between the rapid growth and investment efficiency;

To consider the shift of project development method from working with international EPC general contractors to self-implementation - depending on the required conditions of each project/terrain/progress;

To harmonize project development/construction with M&A in both Solar power and Hydropower;

To seek opportunities for project development as well as to collaborate with potential partners in Laos and Cambodia, and even;

To streamline GEC’s Revenue from Hydropower and Solar Power activities despite the impact of weather;

To implement effectively O&M targets for GEC and towards services for external Solar power Plants, etc.

Dear Esteemed Shareholders and Investors, In the implementation role, GEC’s BOM is aware of the development opportunities in Energy Industry and how to grasp the opportunities to accelerate the capacity, and at the same time, how to identify the challenges in the “saga of Renewable Energy development”. Those are incentive mechanisms that are intertwined with changes

STANDARD GOVERNANCE

PROFESSIONAL MANAGEMENT

2018 ANNUAL REPORT

RESPONSIBLE CONTROL

“Standard governance - Professional management Responsible control” are the 3 pillars that GEC is aiming at. Specifically, GEC’s BOM is identifying the objectives, controlling project progress, promoting the functions of every Division/Department/Committee through its optimal organizational chart, legal and regulation document system and the appropriate decentralization system, creating the optimal mechanism and boost for the leading role of each Deputy CEO in charge, etc. In addition, GEC’s Management Board also focus on how to ensure that GEC’s Governance - Management standards approach the international practices as desired by major Shareholders; ensuring the rapid growth and be compatible with the flexible of Energy market at present. Above all, all effort is to consolidate and create a reliable foundation for GEC’s operation, to meet Shareholder’s expectation and Investor’s interest as GEC is being listed in the stock market, etc. From that point on, a strong boost to the future for GEC could be created.

Successful deployment of Wind power will be one of the Board of Management's targets

Vietnam Energy market development is a colorful picture, provided that we are aware of the opportunities to grasp, the issues to identify for optimal solutions; GECâ&#x20AC;&#x2122;s Management Board believes that every Members will gradually and effectively fulfill their roles to meet development targets and objectives/ tasks in 2019 which will be submitted to the 2019 AGM. Profit growth is expected to be growing at 40% yoy, 2 Solar power Plants will be put in operation in the first half of 2019, at least 3 Solar power Plants need to be developed in 2019, M&A of Hydropower/Solar power Plants needs to be carried out, legal procedures for Wind power projects need to be focused on in order to accelerate from 2020 on, effective coordination with local and global organizations need to be taken care of in developing Renewable Energy, etc.

where GEC has been developing its projects as well as the effective coordination of the BOD. GEC is moving forward with proactiveness and confidence, bringing practical values to its Stakeholders - Shareholders - Staff Community and Society, etc. Sincerely,

Ms. Nguyen Thai Ha Chief Executive Officer

GECâ&#x20AC;&#x2122;s Management Board sincerely appreciates the interest and support from Shareholders and Investors, who have been accompanying with GEC; the precious guidance and support from the agencies and localities

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INTRODUCTION OF THE BOARD OF MANAGEMENT

GEC Board of Management

2018 ANNUAL REPORT

Ms. NGUYEN THAI HA CEO

Mr. LE THANH VINH Permanent Deputy CEO

Nationality: Vietnamese Year of Birth: 1980

Nationality: Vietnamese Year of Birth: 1975

Appointment history

Date of appointment as CEO: October 10th, 2018

Date of appointment as Deputy CEO: October 3rd, 2017

Duration services as CEO: 3 months

Duration services as Deputy CEO: 1 year 10 months

Qualifications

Master in Economics

Master of Development Economics

Professional experience October 2018 - Present: CEO - Gia Lai Electricity JSC

Professional experience August 2017 - Present: Chairman of the Board - TTC Energy JSC

April 2016 - April 2017: Head of Supervisory Board - Gia Lai Electricity JSC

March 2017 - Present: Permanent Deputy CEO - Gia Lai Electricity JSC

2016 - Present: Vice Chairwoman - Thanh Thanh Cong Tourist JSC

2016 - 2017: Deputy CEO - KN Investment Group; CEO - LDG Investment JSC

2012 - Present: BOD Member, Chief of the Secretariat, Deputy CEO - Thanh Thanh Cong Investment JSC 2002 - 2012: Chief of the Secretariat, Deputy Internal Auditor - Saigon Thuong Tin Commercial Joint Stock Bank 2001 - 2002: Auditor - A&C Auditing & Consulting Company Outstanding achievements She has had more than 18 years of experience in various fields ranging from administration, controlling to CG of Public and Listed Companies. Being GEC’s Head of Supervisory Board in 2016-2017, she advised the BOD on strategies of supervision, operation control, accounting and financial systems. With experience in various positions at TTC Group and good insight into the Group’s management model, development strategy, especially in the Energy Industry, which is considered one of the Group’s key and strong businesses, she was officially appointed as the first female CEO in GEC’s history. In her new position, she continuously contributes to develop the diversification of Renewable Energy portfolio projects, including Solar and Wind power projects; supporting in the successful issuance and distribution of 97 million shares for the capital increase in 2018. In addition, through IR activities, she becomes an important bridge between the Company and local/global strategic Shareholders of GEC. Current positions in organizations (excepting for Parent company - Subsidiary) • Deputy Chairwoman - Thanh Thanh Cong Tourist JSC • BOD Member, Deputy CEO, Chief of the Secretariat Thanh Thanh Cong Investment JSC Ownership of voting shares at the Company

2013 - 2015: Deputy CEO, Managing Real Estate Projects - Hoa Lam JSC 2009 - 2012: Deputy CEO - Sai Gon Thuong Tin Real Estate JSC (Sacomreal) 2007 - 2009: CEO - Lien Minh Real Estate JSC and Ingate Capital Investment Fund 2005 - 2007: Investment and Business Development Director Phat Dat Real Estate Development JSC and NAI Vietnam 2002 - 2005: Deputy Sales Director - Nam Long Co., Ltd. 2000 - 2003: Lecturer of Finance Department - College of Finance and Accounting IV - Ho Chi Minh City Outstanding achievements With 18-year experience of management and administration in largescale enterprises from various industries including Real Estate, Finance, Energy. He participated in GEC and made important contributions to the implementation of Solar power projects in accordance with the direction set by the BOD, especially the success in operating 2 Solar power projects in 2018 including Phong Dien - Hue and Krong Pa - Gia Lai. Thanks to his contributions, GEC became the pioneer of Energy Industry by commissioning the first Solar Energy Projects in Vietnam. Current positions in organizations (excepting for Parent company - Subsidiary) Chairman - TTC Energy JSC Ownership of voting shares at the Company 37,300 shares; 0.019%

30,700 shares; 0.02%

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INTRODUCTION OF THE BOARD OF MANAGEMENT (continued)

Mr. NGUYEN DINH TUAN Deputy CEO

Mr. PHAN THANH LAC Deputy CEO

Nationality: Vietnamese Year of Birth: 1963

Nationality: Vietnamese Year of Birth: 1960

Appointment history

Date of appointment as Deputy CEO: April 1st, 2011

Date of appointment as Deputy CEO: January 1st, 2011

Duration services as Deputy CEO: 7 years 9 months

Duration services as Deputy CEO: 8 years

Qualification Electrical Engineer

Qualification Bachelor of Economics

Professional experience

March 2016 - Present: Chairman - Thuong Lo Hydropower One Member Limited Co., Ltd.

2012 - Present: Chairman - Kenh Bac - Ayun Ha Hydro Power JSC

December 2013 - Present: BOD Member - Truong Phu Hydropower JSC

2011 - 2017: Chairman - Tay Nguyen Electricity Investment JSC

May 2018 - December 2018: Vice Chairman - Truong Phu Hydropower JSC 2011 - Present: Deputy CEO - Gia Lai Hydropower JSC April 2011 - Present: BOD Member - Gia Lai Hydropower JSC 2008 - 2011: Director - Gia Lai Hydropower JSC 2002 - 2008: Director - Gia Lai Investment and Power Development Co., Ltd. 1999 - 2001: Head of Planning Department - Gia Lai Electricity Company 1994 - 1998: Head of Technical Department - Gia Lai Electricity Company Outstanding achievements With more than 24 years of experience in investment management, construction and operation of power plant projects, he has accompanied with GEC for more than 7 years and successfully managed many projects that bring high economic efficiency for the Company as Ayun Ha, H’Chan, H’Mun and Ayun Thuong Hydropower Plants. In addition, he also contributed ideas to Energy Management Authorities to support the development of investment, management and operation of power plants policies in accordance with regulation and brings the highest business efficiency to both the Government and the Company. Current positions in organizations (excepting for Parent company - Subsidiary) • Chairman - Thuong Lo Hydropower One Member Limited Liability Company • BOD Member - Truong Phu Hydropower JSC • Deputy CEO - Gia Lai Hydropower JSC Ownership of voting shares at the Company 187,606 shares; 0.096%

2018 ANNUAL REPORT

2011 - Present: Deputy CEO - Gia Lai Electricity JSC 1995 - 2010: Chief Accountant, Head of Planning Department - Gia Lai Electricity Company

Outstanding achievements With over 23 years of experience in financial management and CG of public companies and listed companies, he is deeply involved in GEC’s development, especially in the transition of its operational model from State- Owned Company to JSC. In addition, he is one of the BOM members who participated throughout the merger process of Subsidiaries as GAC, GRC into GEC in 2016, TIC into GEC in 2017 and the GEC's 1: 1 share issuance in 2018 to increase the Charter capital and the scale of operation, aiming to the long-term sustainable development goals. With many years of experience in Energy Industry, he also supported GEC in successfully building and developing Hydropower Projects namely Ayun Ha, H’Chan, H’Mun, Ayun Thuong. Current positions in organizations (excepting for Parent company - Subsidiary) Chairman - Kenh Bac - Ayun Ha Hydropower JSC Ownership of voting shares at the Company 366,524 shares; 0.188%

Mr. HA NGUYEN HOANG Deputy CEO

Ms. TRAN THI HONG THAM Chief Accountant

Nationality: Vietnamese Year of Birth: 1983

Appointment history

Date of appointment as Deputy CEO: January 2nd, 2019

Date of appointment as Chief Accountant: November 2016

Qualification Master of Automation

Duration services as Chief Accountant: 2 years 2 months Qualification Bachelor of Economics

Professional experience January 2019 - Present: Deputy CEO - Gia Lai Electricity JSC

Professional experience

January 2019 - Present: BOD Member - Truong Phu Hydropower JSC

November 2016 - Present: Chief Accountant cum Finance Manager Gia Lai Electricity JSC

January 2019 - Present: Chairman - Gia Lai Construction & Electric Mechanical One Member Co., Ltd.

May 2014 - October 2016: Chief Accountant - Gia Lai Construction & Electric Mechanical Company Limited

July 2017 - Present: Director of Energy Division - Thanh Thanh Cong Investment JSC

August 2007 - April 2014 : Chief Accountant - Ayun Thuong JSC September 2006 - July 2007: Accountant - Ayun Thuong JSC

2014 - Present: BOD Member - Gia Lai Hydropower JSC 2015 - June 2017: Director of Technical Division - Gia Lai Electricity JSC 2013 - 2015: Deputy Director - Director of Technology Development Center - Gia Lai Electricity JSC 2009 - 2013: Assistant Manager of Technical Department Gia Lai Electricity JSC Outstanding achievements With more than 10 years of experience in the field of Electrical Engineering, he participated in GEC and was responsible for technical and technological issues. In 2018, he played an important role in deploying the first 2 Solar power projects in Vietnam in accordance with the roadmap approved by the BOD. According the plan of the next coming years and the valuable experience from the Energy Market, he will be one of the important members in the diversification of GEC’s Renewable Energy, including developing Wind power Plants, as well as managing and operating the next Solar power Plants.

Outstanding achievements With more than 12 years of working with GEC, she contributed to build and organize a strong accounting system, suitable to the operation situation of the Company. She advised the BOD on changes in accounting regimes for each period in line with the trend of international capital market integration, as well as ensuring compliance with the Law. Current positions in organizations (excepting for Parent company - Subsidiary) No Ownership of voting shares at the Company 27,600 shares; 0.014%

Current positions in organizations (excepting for Parent company - Subsidiary) • BOD Member - Truong Phu Hydropower JSC • Director - Energy Division - Thanh Thanh Cong Investment JSC Ownership of voting shares at the Company 16,200 shares; 0.007%

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FINANCIAL HIGHLIGHTS 2015-2018 KEY FINANCIAL INDEX Liquidity Radios: Good Times 5

4.7

4.4

NET REVENUE

VND

559 Billion

2.5

2.4 2.3

2.3 2.3

2.4

1 0 2015

2016

Current ratio

2017

2018

Quick ratio

Current ratio and Quick ratio are 2 times higher, exceeding the Industry average at 1.7 times and 1.6 times respectively Capital structure Ratios: Safe Times 0.80 0.60

EBITDA

VND

345 Billion

0.63 0.53

0.40 0.20

0.27 0.33 0.20

0 2015

2016

Debt/ Total assets

0.18

0.35

0.14 2017

2018

Debt/ Equity

The Debt/Equity and Debt/Total assets ratios are still lower than the Industry average at 0.88 times and 0.38 times; although GEC issued bonds and took loans in 2018 to invest in a series of Solar power projects Profitability Ratios: Very good Times 80% 60%

TOTAL ASSETS

VND

4,361 Billion

40%

75% 62%

62%

54%

51%

58% 47%

38%

44%

56%

20%

39%

62% 55% 44% 33%

31%

0% 2015

Gross margin

2016

Net margin

2017

EBIT margin

2018

EBITDA margin

Gross profit margin and Net profit margin have been stable for years and remained higher than 50% and 30% respectively; especially these are higher than the Industry average of 48% and 29% correspondently

2018 ANNUAL REPORT

BUSINESS PERFORMANCE

ASSETS STRUCTURE

Net Revenue: CAGR in 2015-2018 reached 16%

Total assets: Increasing by 2.6 times yoy since GEC expanded its investment in Renewable Energy, especially Solar power projects

VND billion 600

539

500 400

559

VND billion

4,361

5,000

431

4,000

354

300

3,000

200

2,000

100

1,000

1,885

1,659

1,552

0 2015

2016

2017

2015

2018

2016

2017

2018

EBITDA: Increasing steadily over the years because many plants have

Cash and cash equivalents: Making a record at the end of 2018, 2015-2018 CAGR

mostly depreciated

reached an impressive growth rate of 90%

VND billion

400

700

350

600

300

334 264

345

268

609

500

250

400

150

300

100

200

100

223 89

2015

2016

0 2015

2016

2017

2018

2017

2018

Ownerâ&#x20AC;&#x2122;s Equity: An increase of 83% yoy with the number of shares as of December 31st, 2018 reaching 194,182,550

VND billion 3,000

2,408

2,500

EBITDA MARGIN

62%

2,000 1,000

1,162

1,151

2015

2016

1,318

500 0 2017

2018

Source: 2015-2018 Audited Consolidated FS

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FINANCIAL HIGHLIGHTS 2015-2018 (continued) SUMMARY OF FINANCIAL STATEMENT 2015-2018 INDICATOR (VND Billion)

2015

2016

2017

Increase/ Decrease yoy

2018

CAGR 2015-2018

BALANCE SHEET

ASSETS Short-term assets Cash and cash equivalent assets Short-term financial investment Short-term receivables Inventory Other short-term assets Long-term assets Long-term receivables Fixed assets Long-term work-in-progress assets

1,885 484 89 381 9 5 1,401 1,224 135

1,552 342 68 257 16 1 1,210 2 1,168 6

1,659 486 223 8 228 26 1 1,173 11 1,114 18

4,361 1,230 609 252 246 25 98 3,131 1 2,878 216

163% 153% 173% 3,050% 8% -5% 9,700% 167% -91% 158% 1,100%

32% 36% 90% -14% 41% 170% 31% 33% 17%

Long-term financial investments

20%

-4%

CAPITAL SOURCES

Other long-term assets

1,885

1,552

1,659

4,361

163%

32%

Total liabilities Short-term liabilities Short-term debt Long-term liabilities Long-term debt

723 205 103 518 517

401 135 45 266 265

341 104 6 237 232

1,953 528 106 1,425 1,420

473% 408% 1,667% 501% 512%

39% 37% 1% 40% 40%

1,162

1,151

1,318

2,408

83%

27%

Ownerâ&#x20AC;&#x2122;s Equity

INDICATOR (VND Billion)

2015

2016

2017

2018

Increase/ Decrease yoy

CAGR 2015-2018

BUSINESS PERFORMANCE

Net Revenue Costs of goods sold Gross profit Interest expense Net Revenue from financial activities SG&A expenses Profit from business activities Other costs and income Earning before tax CIT NPAT EBIT EBITDA PATMI

2018 ANNUAL REPORT

354 157 197 41 -8 41 148 1 149 16 133 190 264 93

431 213 218 39 -19 51 148 1 149 15 134 188 268 95

539 227 312 24 -7 66 239 -9 230 21 209 255 334 154

559 253 306 40 -22 77 207 207 20 187 247 345 145

4% 11% -2% 67% 17% -13% -10% -5% -11% -3% 3% -6%

16% 17% 16% -1% 22% 12% 12% 8% 12% 9% 9% 16%

INDICATORS

2015

2016

2017

Increase/ Decrease yoy

2018

CASH FLOW

Cash flow from business activities

149

230

207

-10%

168

244

141

-42%

-122

-1,946

-280

-93

2,191

Net cash flow in the period

-9

-21

155

387

150%

Ending cash and cash equivalents

223

610

174%

Earnings before tax Net cash flow from business activities Cash flow from investment activities Net cash flow from investment activities Cash flow from financial activities Net cash flow from financial activities

FUNDAMENTAL FINANCIAL RATIOS FINANCIAL RATIOS

UNIT

2015

2016

2017

Increase/ Decrease yoy

2018

LIQUIDITY RATIOS

Current ratio

Times

2.4

2.5

4.7

2.3

-51%

Quick ratio

Times

2.3

2.4

4.4

2.3

-48%

Cash ratio

Times

0.4

0.5

2.2

1.6

-27%

Liabilities / Total assets

Times

0.38

0.26

0.21

0.45

114%

Debt/ Total assets

Times

0.33

0.20

0.14

0.35

150%

Liabilities / Equity

Times

0.62

0.35

0.26

0.81

212%

Debt/ Equity

Times

0.53

0.27

0.18

0.63

250%

Account receivable turnover

Times

4.9

3.8

5.5

6.1

11%

Account receivable turnover

Days

96.9

66.4

60.1

-9%

Account payables turnover

Times

10.6

17.7

19.1

1.3

-93%

Account payables turnover

Days

34.4

20.6

19.1

278.2

1,357%

CAPITAL STRUCTURE RATIOS

OPERATING RATIOS

PROFITABILITY RATIOS

EBITDA Margin

Gross Profit Margin

-5%

EBIT Margin

-6%

Operating Margin

-16%

Net Profit Margin

-15%

Source: 2015-2018 Audited Consolidated FS

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A view of Phong Dien Solar power Plant - Thua Thien Hue

CORPORATE GOVERNANCE 42 56 58 72 84 90 92 96 104 110

Applying ASEAN Corporate Governance Scorecard Efforts towards new standards Code of Conducts Board of Directorsâ&#x20AC;&#x2122; Reports and Corporate Governance activities Renewable Energy trend - A view from Southeast Asia and Vietnam Board of Directorsâ&#x20AC;&#x2122; Strategic vision Report of the Independent Board Member Report of the Audit Committee Main risks and risk management activities Compliance with Vietnam's Laws, approaching international standards Investor Relations and Capital Market activities

VND

8,900

BILLION

TOTAL INVESTMENT OF 22 PLANTS

FLEXIBLE DEVELOPMENT WELCOMING OPPORTUNITIES WITH A LONG-TERM STRATEGIC VISION, GEC'S LEADERS DECIDE TO DIVERSIFY INVESTMENTS, MAKE USE OF RENEWABLE SOURCES, AND EMBRACE THE TREND, AIM FOR "GREEN ENERGY"; IN CONSISTENCY WITH THE NATIONAL SUSTAINABLE DEVELOPMENT STRATEGY.

APPLYING ASEAN CORPORATE GOVERNANCE SCORECARD EFFORT TOWARDS NEW STANDARDS

he ASEAN CG Scorecard was piloted in 2010 and has officially applied in valuation for ASEAN stock exchange markets since 2011. The scorecard is a CG initiative of Association of Southeast Asian Nations under the Master Plan by ASEAN Capital Market Forum (ACMF) with the support and cooperation of Asian Development Bank (ADB) in order to build ASEAN image and brand as an investment asset of the international capital market. The scorecard is expected to improve CG standards of listed companies in ASEAN region and provide Investors a comprehensive view of businesses that will be the direction for their investment portfolio. The set of criteria is based on good CG principles developed by G20/OECD to evaluate CG quality on 2 levels:

Although GEC's stock code is only registered on Upcom, the Company is improving towards best practices on the market and ready for being listed on HOSE in the future. Standard - Bonus - Penalty question by improvement plan Short term Medium term 92%

89%

100%

69%

80% 60%

â&#x20AC;˘ The level of compliance with Vietnam's applicable legal regulations on CG for public companies; â&#x20AC;˘ The level of implementing good CG practices based on G20/OECD CG principles. The set of criteria is not mandatory; it only encourages companies to improve their CG practices according to international standards towards upgrading Vietnam stock market from Frontier Market to Emerging Market. Currently, not many listed companies in Vietnam actively apply the

Standard - Bonus - Penalty question by Descriptors

31%

40% 20%

11% Standard

8% Bonus

Penalty Source: GEC

Scorecard to assess their CG compliance. Although GEC's stock code is only registered on Upcom, the Company is improving towards best practices on the market and ready for being listed on HOSE in the future.

Improvement in medium term Improvement in short term Good Very good

2018 ANNUAL REPORT

8 5

1 A.Rights of Shareholders

B. Equitable treatment to Shareholders

C. Roles of Stakeholders

GEC (Good - Very good) Item

Number of Questions

Descriptor

Questions

Ratio

Improvement plan

Shortterm Ratio (<=1 year)

MidPercentage term Ratio (1-3 Percentage years)

Standard questions

146

63%

130

89%

11%

79%

Rights of Shareholders

62%

95%

12%

Equitable treatment of Shareholders

73%

93%

Role of Stakeholders

100%

Disclosure and transparency

81%

88%

12%

17%

Responsibilities of the BOD

45%

85%

15%

35%

Bonus questions

54%

69%

31%

III

Penalty questions

84%

92%

14%

184

120

65%

162

88%

12%

100%

Total

28 23 19

17 14 9

5 2

D. Disclosure and transparency

E.Responsibility of the BOD

Bonus

2 Penalty Source: GEC

www.geccom.vn

STANDARD QUESTIONS Item

62%

Sort by performance

Good (13 Qs)

Sort by improvement degree

RIGHTS OF SHAREHOLDERS

A.2.1

Do Shareholders have the right to participate in amendment to the Company's constitution?

A.2.2

The authorization for issuing additional shares?

A.2.3

The transfer of all or substantially all assets, which in effect results in the sale of the Company?

A.3.1

Do Shareholders have the opportunity to approve remuneration for the Non-Executive Members of the BOD?

A.3.2

Does the Company provide non-controlling Shareholders a right to nominate candidates for the BOD?

A.3.3

Does the Company allow Shareholders to elect Directors individually?

A.3.4

Does the Company disclose the voting procedures used before the start of meeting?

A.3.6

Does the Company disclose the voting results for all resolutions/each agenda item for the most recent AGM?

A.3.9

Does the Company allow voting in absence?

A.3.10 Does the Company vote by poll for all resolutions at the most recent AGM? A.3.12

95%

Does the Company make publicly available by the next working day (within 24 hours) the result of the votes taken during the most recent AGM for all resolutions?

A.3.15 Does Company give opportunity for Shareholders to place items on the agenda of AGM? Short term (20 Qs)

Medium term (1 Qs) Source: GEC

A.4.1

In cases of mergers, acquisitions and/or takeovers requiring Shareholdersâ&#x20AC;&#x2122; approval, do the BOD/ Commissioners of the Company appoint an independent party to evaluate the fairness of the transaction price?

Item

Sort by performance 73%

Good (11 Qs)

Sort by improvement degree 93%

Short term (14 Qs)

B.1.2

Where the Company has more than one class of shares, does the Company publicize the voting rights attached to each class of shares?

B.2.1

Does each resolution in the most recent AGM deal with only one item?

B.2.3

Are the profiles of BOD Members/Commissioners in seeking election/reelection included?

B.2.5

Are the proxy documents made easily available?

B.3.1

Does the Company have policies and/or rules prohibiting Directors and employees to benefit from insider trading?

B.3.2

Are the Directors required to report their dealings in Company shares within 3 business days?

B.4.1

Does the Company have a policy requiring Directors to disclose their interest in transactions and any other conflicts of interest?

B.4.2

Does the Company have a policy requiring a Committee including Independent BOD Members to review material Related Parties to determine whether they are in the best interests of the Company and Shareholders?

B.4.3

Does the Company have a policy requiring Board Members (Directors/Commissioners) to abstain from participating in the Board discussion on a particular agenda when they are conflicted?

B.4.4

Does the Company have policies on loans to the BOD Members and Commissioners either forbidding this practice or ensuring that they are being conducted at arm's length basis and at market rates?

B.5.2

In case of related party require approval from Shareholders, are such approval made by Shareholders without related interests?

Medium term (1 Qs) Source: GEC

2018 ANNUAL REPORT

EQUITABLE TREATMENT OF SHAREHOLDERS

Documents 2018 Annual Report

Current compliance



Company Charter

Code of CG



2017 - 2018 AGM



Assessment

Good

Documents Company Charter

Code of Code of CG Information Disclosure

Code of conducts

Website

2017-2018 AGM



1 class



 

Current compliance



2018 Annual Report



Assessment

Good

www.geccom.vn

STANDARD QUESTIONS Item

ROLE OF Stakeholders

C.1.1

Do the existence and scope of the Company's efforts to address customersâ&#x20AC;&#x2122; welfare?

C.1.2

Any supplier/contractor selection procedures?

C.1.3

Do the Company's efforts ensure that its value chain is environmentally friendly or is consistent with promoting sustainable development?

C.1.4

Do the Company's efforts interact with the communities in which they operate?

C.1.5

Do the Company announce the anti-corruption programs and procedures?

C.1.6

How creditors' rights are safeguarded?

C.1.7

Does the Company have a separate report/section that discusses its efforts on environment, economy and social issues?

C.2.1

Does the Company provide contact details via the Company's Website or Annual Report which Stakeholders can use to voice their concerns and/or complaints for possible violation of their rights?

C.3.1

Does the Company explicitly disclose the policies and practices on health, safety, and welfare policy for its employees?

C.3.2

Does the Company explicitly disclose the policies and practices on training and development programs for its employees?

C.3.3

Does the Company have a reward/compensation policy that accounts for the performance of the Company beyond short-term financial measures?

C.4.1

Does the Company have a whistle blowing policy which includes procedures for complaints by employees and other Stakeholders concerning alleged illegal and unethical behavior and provide contact details via the Company's Website or Annual Report?

C.4.2

Does the Company have a policy or procedures to protect an employee/person who reveals alleged illegal/unethical behavior from retaliation?

38% Sort by performance 62%

Very Good (8 Qs)

Good (5 Qs)

Sort by improvement degree

100% Short term (13 Qs)

Source: GEC

2018 ANNUAL REPORT

Document Code of conducts

Website

2018 Annual Report

Current compliance



Assessment

Good 



 Very good



 Good



 Very good



Good

Very good 



www.geccom.vn

STANDARD QUESTIONS Item

53%

Sort by performance 28%

Good (9 Qs)

Very Good (17 Qs)

12%

Sort by improvement degree 88%

Short term (28 Qs)

Medium term (4 Qs)

Source: GEC

2018 ANNUAL REPORT

DISCLOSURE AND TRANSPARENCY

D.1.1

Does the information on shareholdings reveal the identity of beneficial owners, holding 5% shareholding or more?

D.1.5

Does the Company disclose details of the parent/holding company, Subsidiaries, associates, joint ventures and special purpose enterprises/ vehicles (SPEs)/(SPVs)?

D.2.1

Annual Report: Corporate objectives

D.2.2

Annual Report: Financial performance indicators

D.2.3

Annual Report: Non-financial performance indicators

D.2.4

Annual Report: Dividend policy

D.2.5

Annual Report: Biographical details of all Directors/Commissioners

D.2.6

Annual Report: Attendance details of each Director/Commissioner in all Directors/ Commissioners meetings held

D.2.7

Total remuneration of each member of the BOD/Commissioner

D.2.8

Does the Annual Report contain a statement confirming the Company's full compliance with the code of CG and where there is non-compliance, identify and explain reasons for each such issue?

D.3.1

Does the Company disclose its policy covering the review and approval of material Related Parties?

D.3.2

Does the Company disclose the name relationship and value for each material Related Parties?

D.4.1

Does the Company disclose trading in the Company's shares by insiders?

D.5.1

Are audit and non-audit fees disclosed?

D.5.2

Does the non-audit fees exceed the audit fees?

D.6.2

Medium of communications: Company Website

D.6.4

Medium of communications: Media briefings /press conferences

D.7.1

Are the audited Annual Financial Report/ statement released within 120 days from the financial year end?

D.7.2

Is the Annual Report released within 120 days from the financial year end?

D.7.3

Is the true and fairness/fair representation of the annual FS affirmed by the BOD and/or the relevant officers of the Company?

D.8.1

Company Website: FSs (latest quarter)

D.8.3

Company Website: Downloadable Annual Report

D.8.4

Company Website: Notice and document of AGM and/or EGM

D.8.5

Company Website: Meeting minutes of AGM and/or EGM

D.8.6

Company Website: Downloadable Company Charter

D.9.1

Investor relations: Does the Company disclose the contact details of the officer/office responsible for Investor relations?

Document Company Charter

Code of CG

Current compliance



Very good



Good



Good



Very good



Assessment

2018 Annual Report

Website

2018 FS



Very good

Good

 



 



Very good

Good

Very good

Good

Very good

www.geccom.vn

STANDARD QUESTIONS Item

E E.1.1

Does the Company disclose its CG policy/Board Charter?

E.1.2

Are the types of decisions requiring the BOD/Commissioners' approval disclosed?

E.1.3

Are the roles and responsibilities of the BOD/Commissioners clearly stated?

E.2.2 E.2.3 E.2.7

22% Sort by performance 23%

Very Good (15 Qs)

Good (14 Qs)

Does the Company have an Audit Committee?

E.2.19

Is the Audit Committee comprised entirely of Non-Executive BOD Members/Commissioners with a majority of Independent BOD Members/Commissioners?

E.2.20

Is the Chairman of the Audit Committee an Independent BOD Member/Commissioner?

E.2.21

Does the Company disclose the terms of reference/governance structure/charter of the Audit Committee?

E.2.22

Does at least one of the Independent BOD Members/Commissioners have accounting expertise?

E.2.24

Sort by improvement degree 85%

Short term (55 Qs)

Medium term (10 Qs)

Does the Company require a minimum quorum of at least 2/3 for Board decisions?

E.3.7

Does the Company secretary play a significant role in supporting the Board in discharging its responsibilities?

E.3.9

Does the Company disclose the criteria used in selecting new Directors/Commissioners?

E.3.11

Are all the Directors/Commissioners subject to re-election at least once every 3 years, or 5 years for listed companies in countries whose legislation prescribes a term of 5 years each?

E.3.13

Is there disclosure of the fee structure for Non-Executive BOD Member and/or the Senior Executives?

E.3.14

Do the Shareholders or the BOD approve the remuneration of the Executive Directors and/or the Senior Executives?

E.3.16

Does the Company have a separate Internal Audit function?

E.3.17

Is the Head of Internal Audit identified or, if outsourced, is the name of the external firm disclosed?

E.3.20

2018 ANNUAL REPORT

Is the meeting attendance of the Audit Committee meetings disclosed? Did the Audit Committee meet at least 4 times during the year? Does the Audit Committee have primary responsibility for recommendation on the appointment, and removal of the external auditor?

E.3.4

E.3.18

Source: GEC

Are all Directors/Commissioners, Senior Management and employees are required to comply with the code? Does the Company have a process to implements and monitors compliance with the code of ethics or conduct? Does the Company have any Executive Directors who serve on more than 2 Boards of listed companies outside of the Group?

E.2.18

E.2.23

15%

RESPONSIBILITY OF THE BOD

Does the appointment and removal of the Internal Auditor require the approval of the Audit Committee? Does the Annual Report/CG Report disclose that the BOD has conducted a review of the Company's material controls and risk management systems?

E.3.21

Does the Company disclose the key risks to which the Company is materially exposed to?

E.3.22

Does the Annual Report/CG Report contain a statement from BOD or Audit Committee commenting on the adequacy of the Company's material controls and risk management systems?

E.4.1

Do different persons assume the roles of Chairperson and CEO?

E.4.3

Is any of Directors a former CEO of the Company in the past 2 years?

E.4.4

Are the roles and responsibilities of the Chairman disclosed?

E.4.6

Does at least one of the Non-Executive BOD Members have expertise in the major sector that the Company is operating

Document Company Charter

Code of CG

 



Code of conducts

Website

Current compliance

Assessment



Good



Very good



Good



Very good



Good

Very good

Good



Very good



Good



Good



Very good



2017-2018 2018 AGM Annual Report

 

Information Disclosure



Very good

Good

Very good

www.geccom.vn

PENALTY SCORECARD Item

PENALTY

Sort by performance

76% Very good (19 Qs)

Does the Company fail or neglect to offer equal treatment for share repurchases to all Shareholders?

A.2.1

Is there evidence of barriers that prevent Shareholders from communicating or consulting with other Shareholders?

A.3.1

Does the Company include any additional and unannounced agenda item at the most recent AGM for which due notice has not been given?

A.4.2

Voting cap?

A.4.3

Multiple voting rights?

B.1.1

Has there been any conviction of insider trading involving Directors/Commissioners, Management and employees in the past 3 years?

B.2.1

Has there been any cases of non-compliance with the laws, rules and regulations pertaining to significant or material related party transactions in the past 3 years?

C.1.1

Have there been any violations of any laws pertaining to labor/employment/consumer/ insolvency/ commercial/competition or environmental issues?

C.2.1

Has the Company faced any sanctions by regulators for failure to make announcements within the requisite time period for material events?

D.1.1

Does the Company receive a "qualified opinion" in its external audit report?

D.1.2

Does the Company receive an "adverse opinion" in its external audit report?

D.1.3

Does the Company receive a "disclaimer opinion" in its external audit report?

D.1.4

Has the Company in the past year revised its FS for reasons other than changes in accounting policies?

E.1.1

Is there any evidence that the Company has not complied with any listing rules and regulations over the past year apart from disclosure rules?

E.1.2

Have there been any instances where Non-Executive BOD Member(s)/Commissioner(s) resigned and raised any issue of governance-related concerns?

E.2.1

Does the Company have any Independent BOD Member/Commissioner who has served for more than 9 years or 2 5-year terms in the same authority?

E.2.2

Did the Company fail to disclose the identity of the Independent BOD Member(s)/ Commissioner(s)?

E.2.3

Does the Company have any Independent BOD Members/Commissioners who serve on a total of more than 5 Boards of publicly-listed companies?

E.3.1

Is any of the BOD Members or Senior Management a former employee or partner of the current external auditor in the past 2 years?

E.4.1

Has the Chairman been the Company's CEO in the last 3 years?

E.4.2

Do Independent Non-Executive BOD Members have the right to hold call option or ESOP?

Good (2 Qs)

Sort by improvement degree

92% Short term (23 Qs)

A.1.1

Medium term (2 Qs)

Source: GEC

2018 ANNUAL REPORT

Document Company Charter

Website



 

2017-2018 AGM

2018 Annual Report

Current compliance



2018 FS



Assessment

Very good

Good

Very good

Khá

www.geccom.vn

BONUS SCORECARD

Item 15%

BONUS

Sort by performance 39%

Very Good (5 Qs)

B.1.1

Does the Company release its notice of AGM as announced to HNX, at least 28 days before the date of the meeting?

C.1.1

Does the Company adopt an internationally recognized reporting framework for sustainable development (GRI, Integrated Report, SASB)?

D.1.1

Are the audited annual financial report/statement released within 60 days from the financial year end?

D.1.2

Does the Company disclose details of remuneration of the CEO?

E.1.1

Does the Company have at least one female Independent BOD Member/Commissioner?

E.1.2

Does the Company have a policy and disclose measurable objectives for implementing its Board diversity and report on progress in achieving its objectives?

E.5.1

Does the Board describe its governance process around IT issues including disruption, cyber security, disaster recovery, to ensure that all key risks are identified, managed and reported to the Board??

Good (2 Qs)

31% Sort by improvement degree 69%

Short term (9 Qs)

Medium term (4 Qs) Source: GEC

2018 ANNUAL REPORT

Document Code of Information Disclosure

Website



Assessment

2018 Annual Report

Current compliance



Good



Very good



2018 FS



Good 



Very good

Good 



www.geccom.vn

CODE OF CONDUCTS

The youthful, dynamic and enthusiastic GEC's team

In 2018, with the consultancy of IFC, a Member of World Bank and GECâ&#x20AC;&#x2122;s foreign strategic Shareholder; The Code of Conduct was issued with the goal of creating major changes in awareness, attitude and behavior in relationships both internally and with partners; step by step to build a highly - qualified professional team, as well as creating the Company's culture.

2018 ANNUAL REPORT

One of the prerequisites of the Code of Conduct is to demonstrate GEC’s commitment to its employees. GEC is committed to maximize the protection of human rights, privacy, fair and equal treatment to all employees; there is no distinction in position, title or gender. Besides, the Company always respects, commits to professional cooperation; aiming at the highest benefits for Stakeholders including Government Authorities, Suppliers, Customers, etc. as well as committing to respect the interests of Shareholders, Investors and itself. Regarding Law and Society, the Company is committed to properly conduct with the Government and Social Agencies adherence to Law-abiding. On the other hand, employees must also fulfill their ethical commitments. Accordingly, GEC employees must strictly comply with the provisions of the law and internal policies, act on the interests of GEC. This would mean that all decisions in work should be based on the highest interests of the Company, not for any personal interest or purpose; at the same time, they shall behave in an honest, objective and fair manner during work. In addition to the request that employees make public and explain to Stakeholders on the Company's policy of transparency and fairness in all transactions, information security of the Parties is also a core principle that employees must absolutely fully comply. The Code of Conduct also specifies the principles of communication and interaction between the managers and subordinates, colleagues in the same department or other departments; as well as GEC employees and Stakeholders.

ince 2014, GEC’s BOD has closely built up ethical standards, which is considered one of the core values to ensure integrity, transparency as well as sustainable development in the organization. In 2018, with the consultancy of IFC, a Member of World Bank and GEC’s foreign strategic Shareholder; GEC amended and supplemented the Code of Conduct in accordance with good CG practices, bringing GEC’s CG activities closer to the corresponding models of developed countries in the region and over the world. The Code of Conduct was issued with the goal of creating major changes in awareness, attitude and behavior in relationships both internally and with partners; step by step to build a highly-qualified professional team, as well as creating the Company's culture.

Most importantly, each GEC’s Member has enough confidence and the right to raise their concerns, which will be addressed seriously by the competent authority, for GEC’s sustainable development. While detecting the violations or signs of violation, GEC’s BOD encourages immediate reports and creates favorable conditions for the Internal Audit Committee to receive and clarify the incident. In this Code of Conduct, violations are not only acts of non-compliance with laws and regulations but also the acts of revenge which are detrimental to individuals and the organization. The Company encourages each employee to come into light upon committing breeches, to which cases the management shall offer a lenient hand. Through the promulgation of the Code of Conduct, GEC aims at creating a work environment that complies with the culture, open communication and interaction, observes human rights but still meets legal requirements.

www.geccom.vn

BOARD OF DIRECTORSâ&#x20AC;&#x2122; REPORTS & CORPORATE GOVERNANCE ACTIVITIES

Endless Energy from the sun contributes to minimize negative impacts on the environment

According to the VII Adjusted Power Development Master Plan, in the 2020-2030 period, the output share of Renewable Energy by 2020, 2025 and 2030 will be 9.9%, 12.5%, and 21.0%, respectively, with a compound growth rate of 16%. The proportion of locally generated and imported electricity in the Renewable Energy is estimated to increase significantly with a compound growth rate of 14%, accounting for 6.5%, 6.9% and 10.7% by 2020, 2025, and 2030, correspondently. ECONOMIC GROWTH PROMOTES THE NEED FOR POWER 2018 was a year of comprehensive success for the Vietnamese economy with all 12 socio-economic indicators achieving target. GDP growth in 2018 reached a record 7.08%, the highest rate in the last 10 years. Inflation was successfully controlled at 3.54%, outperforming the planned target of 4%. In 2018, Vietnam attracted an additional 3,046 projects with total new capital inflow of USD 35.5 billion comprising of new and incremental FDI as well as foreign Investorsâ&#x20AC;&#x2122; capital contribution for shares purchase. The Processing 58

2018 ANNUAL REPORT

and Manufacturing Industry were the biggest recipient of FDI with USD 16.6 billion, accounting for 47% of the total volume, followed by the Property sector with USD 6.6 billion, making up 19%. Although newly registered capital was only 99% of the volume in 2017, disbursed FDI reached a record of USD 19 billion, up to USD 2 billion. In order to continue attracting large investment capital from abroad, one of the prerequisites is to ensure the stable availability of Energy supply, especially electricity, for business operations.

GDP growth and inflation in 2012-2018 GDP Inflation

FDI attraction in 2018

3,046 projects

6.8%

Others 6.0%

7.1%

6.7%

6.8%

6.2%

24%

Processing and Manufacturing

4.7% 6.0%

47%

5.3%

3.5%

5.4%

10%

3.5% Retail & Wholesale

1.8% 0.6%

19%

Real estate

0% 2012

2013

2014

2015

2016

2017

2018

Source: GEC collected

Source: Foreign Investment Department

As of December 31 , 2018, the population of Vietnam was 96.9 million, up by 1.5 million people compared to 95.4 million of 2017. Vietnam is home to 1.3% of the World's population and currently ranks 14th in terms of population. The population density is 313 people/km2 and 35% of the population, i.e. over 34 million people, live in rural areas. All these factors have increased the need for power with the output of both locally generated and imported electricity as well as commercial electricity increasing 10% in 2018 versus 2017. st

Electricity output in 2013-2019

Electricity consumption per capita in 2013-2018 2,500

100 233

Billion kWh

128

142 115

160 128

177 144

213

193 160

175

212

193

98 96 94

1,390

1,259

1,692

1,538

2,000 97

1,990

1,830

1,000

1,500

500

88 2013

2014

2015

Generated and purchased electricity

2016

2017

2018

2019 Target

Commercial electricity

2013

2014

2015

Population (Million people)

2016

2017

2018

Consumption per capita (kWh/person) Source: EVN

According to the VII Adjusted Power Development Master Plan, in the 2020-2030 period, the output share of Renewable Energy by 2020, 2025 and 2030 will be 9.9%, 12.5%, and 21.0%, respectively, with a compound growth rate of 16%. The proportion of locally generated and imported electricity in the Renewable Energy is estimated to increase significantly with a compound growth rate of 14%, accounting for 6.5%, 6.9% and 10.7% by 2020, 2025, and 2030, respectively. The increase in the proportion of Renewable Energy in the structure of capacity and production in the period 2020-2030 indicates the Governmentâ&#x20AC;&#x2122;s growing attention to the exploitation and development of natural resources. With the electricity tariff of 9.35 cents/kWh, the total capacity of Solar Energy contracted in 2018 reached 2,867 MW, exceeding the target of 850 MW before 2020. Besides, an additional 10,000 MW of Solar power has been subscribed by Investors. Out of this volume, 8,100 MW has been incorporated into the master plan with 121 projects, and over 100 projects have completed

the PPA. Other 220 projects are waiting to be added to the Master Plan. In 2018, although the development of Wind power projects could not match that of Solar power ones, the Prime Ministerâ&#x20AC;&#x2122;s Decision 39/2018/QD-TTg, which was applicable to projects with commercial operation starting before November 1st, 2011 and adjusted the tariff for landbased Wind power and sea-based Wind power to 8.5 cents and 9.8 cents/kWh, respectively, fueled their dramatic leap. As of December 2018, there were 7 operational projects in with a total capacity of 300 MW and 2,000 MW of Wind power was incorporated into the Master Plan. The total power capacity from Renewable Energy by the end of 2018 accounted for about 2.1% of the whole system. Accelerating the participation of Renewable Energy sources in general and Wind and Solar Energy in particular for electricity generation plays an important role not only in meeting the demand for power but also ensures the sustainable development of the economy. www.geccom.vn

BOARD OF DIRECTORS’ REPORTS & CORPORATE GOVERNANCE ACTIVITIES (continued) The share of Renewable Energy in the power supply structure in 2020-2030 Capacity

25%

Targets of generated and imported electricity and commercial electricity Generated and imported electricity

Output of generated and imported electricity 21%

Commercial electricity

Billion kWh

20%

572 506

15%

13% 10%

10%

400

11% 7%

352

213

233

193

265 212

235

2020

2025

2030

2018

2019 Target

2020 Target

2025 Target

2030 Target

Source: The VII Adjusted Power Master Plan

According to the National Power Development Master Plan approved by the Government, the Country’s installed power capacity will reach 130,000 MW by 2030 compared to the current 47,000 MW. As such, about 83,000 MW of new power will need to be built and put into operation from now until 2030, accompanied by transmission and distribution infrastructure. The continuous increase in electricity demand in many years will pressure for further investment in the Country’s power generation, transmission and distribution capacity. After Decision 11/2017/QD-TTg was issued, the race for investment in Solar power projects has become fierce, leading to the threat of grid overload, thus putting pressure on transmission capacity. Meanwhile, the upgrading of transmission capacity can not be completed in 1 or 2 years to develop the grid system. In addition, investment in Renewable Energy development entails some other disadvantages such as high investment costs, low power operating hours, and the limitations to release full capacity in many areas rich in this source of Energy. Besides, the demand for vast areas of land, especially Solar Energy projects, is another noteworthy aspect. The term “release capacity” has become a big concern not only of producers but also Investors. In 2019, the MOIT drafted a decision to propose the development of Solar Energy projects connected to the grid in 3 forms. Firstly, development of Solar Energy projects whose connection to the grid is carried out in accordance with the Power Development Master Plan. Secondly, Solar Energy projects with a capacity of

No.

Solar power technology

Electricity tariff in I Region (28 provinces North Region) VND/ kWh

over 50 MWp which are not included in the Power Development Master Plan must be appraised and submitted to the Prime Minister for approval of incorporation into the Power Development Master Plan. Thirdly, the MOIT approves and incorporates into the Power Development Master Plan Solar Energy projects that have a capacity of less than or equal to 50 MWp and have not been included in the Power Development Master Plan. In addition, before June 30th, 2019, the Government will issue a new tariff mechanism for Solar Energy. According to the draft decision, the tariff of Solar electricity will be calculated according to 4 radiation zones and 4 types of production, which means a complete difference from the previous undifferentiated tariff of 9.35 cents, or nearly VND 2,086/kWh. With this differentiation, the MOIT seeks to create an incentive for projects located in a lowradiation region, thereby relieving regions of traditionally high heat radiation regions such as Binh Thuan and Ninh Thuan and balancing the development of Solar Energy across the Country for sake of optimal efficiency in power generation and supply. The proposal, in addition, provides that the buyer of electricity shall be responsible for purchasing all power volume generated from connected Solar Energy projects under the permitted conditions of gird operation; and priority shall be given to the utilization of the entire capacity and generated power from Solar Energy projects for commercial operation. However, since the buyer is sole EVN, if EVN declines to purchase for the reason “not allowed by the power grid”, then this will be one of the major concerns for Solar Energy developers. Electricity tariff in II Region (6 provinces Central Region)

UScents/ kWh

VND/ kWh

Electricity tariff in III Region (23 provinces South Region)

UScents/ kWh

VND/ kWh

Electricity tariff in IV Region (6 provinces South Region)

UScents/ kWh

VND/ kWh

US cents/ kWh

Floating Solar power

2,159

9.44

1,857

8.13

1,664

7.28

1,566

6.85

Ground Solar power

2,102

9.20

1,809

7.91

1,620

7.09

1,525

6.67

Solar power with integrated storage system

1,994

8.72

1,877

8.21

Solar rooftop

2,486

10.87

2,139

9.36

1,916

8.38

1,803

7.89

Source: The MOIT’s proposals

2018 ANNUAL REPORT

TRANSFORMATION STEPS IN GOVERNANCE ACTIVITIES, THE FOUNDATION OF SUSTAINABLE DEVELOPMENT 2018 marks a remarkable milestone of GEC when we successfully launched the first 2 Solar Energy projects in Vietnam. With greater ambitions for 2019 and beyond, GEC’s BOD considers it a prerequisite to leverage the synergy of strengths from each BOD Member to enhance the governance, supervision and management functions, thus creating an efficient CG system. Good CG is the basis for GEC to realize our strategy, generate and maintain sustainable sources of Revenue and Profit, and maximize the raising of funds from international markets. One of the key factors that big Investors take into account while making investment decision is credibility, which is reflected by a standardized and transparent CG system, especially after the 2008 global financial crisis that surprisingly sank an array of giants. Besides, talents on the labor market, especially Senior Executives, tend to prefer employers that operate a transparent and responsible CG system. IFC and Armstrong’s strategic participation since 2016 is not only confined to financial aspects but also plays a significant part in improving GEC’s CG performance. Since mid-2017, IFC has conducted a comprehensive assessment of CG activities at GEC under a CG consultancy contract within IFC’s Consulting Framework in the Mekong Region with the aim of improving CG performance of GEC and Subsidiaries. IFC makes appropriate recommendations, proposes practical solutions to improve the quality of the CG framework, and closely supports the implementation of changes. Specifically, IFC advises on the development and fine tuning of policies, especially more stringent control of Related Party transactions, about which biggest Investors in the world is concerned while getting involved in Vietnamese businesses. IFC has also accompanied GEC to organize CG training courses according to international practice. These courses, delivered by IFC’s experts, were attended by Members of the BOD and BOM as well as advisors to the BOD. Although GEC is only listed on the unofficial Upcom exchange, thanks to the of involvement of international strategic Shareholders, GEC has always complied with Vietnam’s latest CG standards under Decree 71 and Circular 95 issued in 2017. At the end of the 3rd Quarter of 2018, GEC held an EGM to change governance model following international standards, replacing the Supervisory Board with the Audit Committee under the BOD. This move was intended to optimally promote the BOD’s role of independent supervision over the Company's operations. This decision also aimed at the ultimate goal of ensuring the interests and equitable treatment for Shareholders, especially minority ones. The Audit Committee’s Membership structure is also best optimized and close to the

ASEAN CG Scorecard with the Committee Chairman being the only Independent female Member of the BOD. Out of other 2 Non-Executive Members, one is an Indian-nationality representative of IFC’s stake with over 30 years of experience in financial investment and more than 2 years of employment with GEC. The structure of the Audit Committee ensures that executive supervision is fully and autonomously implemented without conflict of interests.

IFC and Armstrong’s strategic participation since 2016 is not only confined to financial aspects but also plays a significant part in improving GEC’s CG performance. The fact that GEC is currently one of the very few listed companies on the stock market that applies this international standard structure in Vietnam demonstrates the Company's adaptation as well as the BOD’s proactive integration into the World's advanced governance standards. In 2018, there were 1,533 Members listed, 52% of which came from the Upcom exchange. Ho Chi Minh City Stock Exchange (HOSE) is home to the market’s quintessence with the VN30 index covering the leading blue chips. Among that, however, only a few big names are applying the new CG standards such as VNM, SAB, NVL, REE, CTD, and SBT. This list accounts for about 20% of VN 30 and 0.38% of the entire market. These are local brands with market cap of tens of billion of US dollars, namely VNM (USD 10 billion), SAB (USD 7 billion) and SBT (about USD 400 million). They are also known for, among other things, striking the Country’s top fund-raising deals, thus attracting billion of USD from the international market through the private placement of shares, preferred stocks, international bonds, and convertible bonds. This is exactly the goal that GEC is aiming for. In the annual assessment of FTSE taking place in September, the Vietnamese stock market was included in a watch list for Membership in the Secondary Emerging Market list when 10 out of 21 quality criteria have been met. The prospects for improvement and thus the chance to meet these standards are probable. However, in order to achieve this goal, the Vietnam stock market in general and each entity in particular need to constantly improve the CG quality by enhancing transparency to provide timely information, especially bilingual imformation disclosure, to Shareholders and Investors. www.geccom.vn

BOARD OF DIRECTORS’ REPORTS & CORPORATE GOVERNANCE ACTIVITIES (continued) Although there exist several differences in viewpoints and governance culture, the presence of two Board of Director Members from a wellknown international Financial institution and Investment fund is highlight in GEC’s governance. Consultation with the Board of Director, therefore, provide a multidimensional view on both technical and financial aspects and promote the attention to sustainable development, environmental protection, and social constructivism thanks to lessons learnt from governance activities around the globe.

100%

OVER 10 YEARS OF EXPERIENCE IN ENERGY, GOVERNANCE, FINANCE, AUDIT

50%

Given a strong demand for development, in order to strengthen governance resources, the General Meeting of Shareholders adopted an increase in the number of BOD Members from 5 to 6. What is special about the BOD membership is 100% of the Members have 10 years of experience in the Energy, Governance, Finance, and Auditing. 50% of BOD Members are Non-Executive; 50% are female, 33% are Independent Members, and 33% are foreign nationals, namely British and Indian members, who representatives of the 2 foreign strategic players. The Chairman and one Non-Executive foreign of the BOD, who both have nearly 30 years of experience in the relevant fields, assist the BOD with sufficient professional expertise as well as practical experience in making strategic decisions. According to the latest “Women in Business” reported by Grant Thornton International, the proportion of businesses worldwide 2018 that have at least 1 woman in Senior Management team was 87%, a yoy increase of 12%, and the proportion of senior roles held by women worldwide is 29%. In the ASEAN Region, the proportion of businesses with at least 1 senior female manager is 94% and the proportion of senior roles held by women is 28%. In particular, when it comes to the proportion of senior roles held by women, Vietnam scores 36%, the second highest in Asia, higher than Singapore (33%), South Korea (30%), United Arab Emirates (24%), Japan (15%), followed by the Philippines, which scored 37%. According to an estimate by the Global Entrepreneurship Monitor 62

2018 ANNUAL REPORT

50%

FEMALE

NON-EXECUTIVE MEMBERS

33% FOREIGN NATIONALS

a global gender research agency, women contribute 40% of Vietnam’s GDP, nearly equal to China. GEC is operating a clear gender equality policy in our BOD membership, the fairness in career development path, no bias in recruitment, and flexible working hours for female workers. At the end of 2018, although the BOD only had 1 Independent Member, in January 2019, GEC named another one, thereby ensuring the ratio of regulatory 1/3 ratio under Decree 71. Although there exist several differences in viewpoints and governance culture, the presence of two BOD Members from a well-known international Financial Institution and Investment fund is highlight in GEC’s governance. Consultation with the BOD, therefore, provide a multidimensional view on both technical and financial aspects and promote the attention to sustainable development, environmental protection, and social constructivism thanks to lessons learnt from governance activities around the globe. In addition, IFC’s knowledge of the global Energy Industry also enables GEC to become a model Renewable Energy developer through the adoption of optimal Industry standards while contributing to the expansion of the supply of clean and reliable Energy.

Diverse membership of the Board of Directors 100%

50%

Over 10 years of expenrience

NonExecutive

50%

Female

33%

Independent

Expat Source: GEC

Assignment of duties for BOD Members after the transformation of the governance model

No.

Full name

Tan Xuan Hien

Do Thu Ngan

Designation

BOD Chairman

Independent BOD Member

Non Executive Deepak Chand Khana BOD Member

Andrew Mark Affleck

Nguyen Thuy Van

BOD Member

Independent BOD Member

Non Executive Pham Ngoc Thanh Mai BOD Member

Expertise

Electric engineer Finance and Accounting

Business Administration

Business Administration Economic

Business Administration Climate change Sustainable development

Business Administration Auditing

Economic Taxation

Experience

Concurrent incumbency in Audit Committee

Key functions and duties

30 years

Strategic orientations Corporate re-structuring

15 years

Independent consultancy and supervision of Governance and Management Consultancy on financial investment, joint ventures, partnership and M&A Consultancy on planning, management and policy for the Senior Management

30 years

Consultancy on CG structure improvement Execution of independent supervision Consultancy on itinerary for synchronous development of Renewable Energy

12 years

Implementation of CG following international standards Planning and implementation of M&A activities Consultancy on development strategies Realization of business objectives

15 years

Consultancy on CG structure improvement Execution of independent supervision Leading the auditing, internal auditing and independent auditing functions

10 years

Consultancy on development of internal auditing strategy Training and organization of internal auditing team Execution of supervision and auditing methods following standards

Member

Chairwoman

Member

On October 10th, 2018, the BOD officially appointed Ms. Nguyen Thai Ha as the first female CEO in the nearly 30-year history of the Company's development and development. Globally, despite the increasing presence of women in senior management, gender equality in key roles remains elusive. When it comes to the position of CEO or Managing Director, only 15% of businesses in the world have women incumbents. Possessing over 15 years of experience in various fields including governance, supervision and management at public and listed companies, the new CEO is expected to continue to improve and professionalize management, executive, Investor relations and Capital market functions and to support GEC in realize its development strategy, meeting sustainable business objectives as the BODâ&#x20AC;&#x2122;s orientations. www.geccom.vn

BOARD OF DIRECTORS’ REPORTS & CORPORATE GOVERNANCE ACTIVITIES (continued)

In 2018, GEC introduced a new organization chart which was designed to optimize governance and management including direction - implementation - monitoring and reporting functions and to deliver the 4 core values, namely Fairness - Responsibility - Transparency - Accountability

FAIRNESS

CG must protect Shareholders’ interests and ensure fair treatment among Shareholders, including minority ones

RESPONSIBILITY

CG must recognize the interests of Stakeholders as required by law CG encourages constructive cooperation between the Company and Stakeholders in generating wealth and jobs CG supports the Company's financial viability

Small as the size of the Company is, GEC’s strategy of developing various types of Renewable Energy entails the division of the major Energy Sectors into distinct sections with which dedicated Deputy CEOs are charged. Such sections currently include Project Development, Solar power and other Energy, Hydropower, and Technology. GEG’s ambitious strategy is would not be realized without the Finance Division, of which one of the key tasks in 2019 are to arrange sufficient cash flows for GEC to develop multiple Solar Energy projects and to embark on the Wind power market. According to Ernst & Young Solutions data, the global investment inflows in global Green Energy has increased from USD 47 billion in 2004 to USD 336 billion in 2017. By 2030, as forecast says, as much as USD 90,000 billion will be needed to achieve global climate and sustainable development goals. In the ASEAN

2018 ANNUAL REPORT

TRANSPARENCY

ACCOUNTABILITY

CG needs to ensure the timely and accurate disclosure of information

CG needs to ensure the availability of a strategic orientation for the Company

CG is required to disclose important issues including financial status, operation result, ownership and control structure

CG ensures effective supervision by the BOD CG ensures the BOD’s accountability to the Company and Shareholders

Region, the potential size of the green credit market is estimated at USD 3,000 billion, out of which Vietnam accounts for about 16%, second only to Indonesia at 36%. These number speak volumes about how attractive the local Renewable market is both to local and foreign Investors. According to experience from countries that have previously leveraged this huge funding, the raising of funds for Green Energy can be done via a wide variety of channels and does not necessarily depend on banking institutions. For GEC, while bank loans remain the priority, the Company has been preparing ourselves to diversify funding sources by partnering with global players, issuing international bonds and convertible bonds, raising funds from Shareholders, issuing preference shares, private placement to investment funds and major Investors, and calling for strategic partners’ involvement.

GENERAL MEETING OF SHAREHOLDERS

BOARD OF DIRECTORS

BOD's Office

Audit Committee

CHIEF EXECUTIVE OFFICER

Finance Division

Internal Audit Department

Human Resources Department

Administration Department

System Management Department

EHSS Department

Solar Power and Other Energy Division

Hydropower Division

Technical Division

Sales Department

Accounting Department Finance and Planning Department

Project Development Division

Project Development Department

Project Management Unit

Operations & Maintenance Department

Capital Construction Management Department

Branch/Plant

Technical Department

Experiment and Service Department

Representative Office

www.geccom.vn

BOARD OF DIRECTORS’ REPORTS & CORPORATE GOVERNANCE ACTIVITIES (continued) GEC’s CG which were improved in 2018, established a Code of Conduct for Members of the BOD, the Audit Committee, the BOM and the Executives. The Code ensures the meeting of the 5 key criteria for the CG functions operates optimally (1) Rights of Shareholders, (2) Equitable Treatment of Shareholders, (3) Role of Stakeholders, (4) Disclosure and Transparency, and (5) Responsibilities of the Board. Meet the criteria of Asean Scorecard No.

Key contents

Detailed contents

Disclosure Equitable Role of Responsibilities Rights of and Treatment of Stakeholders of the Board Shareholders Transparency Shareholders

General Meeting of Shareholders (GMS)

• Sequence and procedures of convening GMS • Registration for attendance • Voting and vote count manner • GMS minutes • Sequence and procedures of obtaining comments in writing • Disclosure of GMS resolutions • How to challenge GMS resolutions



Board of Directors

• BOD membership • BOD membership eligibility • Nomination, candidacy, and election of BOD Members • Removal and dismissal of BOD Members • Notice of election, removal, and dismissal of a BOD Member • Sequence and procedures of convening BOD meetings • Conditions to conduct voting and manner of voting in BOD meetings • BOD Meeting minutes and Resolutions • Audit Committee • Committees of the BOD • Company Secretary



Board of Management

• BOM membership eligibility • Sequence and procedures of appointment and removal of a BOM Member



• Responsibility of BOD Members, BOM Members and Executives to be honest and avoid conflict Prevention of conflict of interest of interest • Ensure the legitimate rights of persons having interests related to the Company



Training on Corporate • BOD & BOM Members and Company Secretary Governance have to attend training courses

• Sequence and procedures of convening, announcing meetings, announcing the results of meetings between the BOD and the BOM • Summon the BOD at the request of the CEO and Working process between the Board of other Executives of the Company Directors and Board of • The reporting and supply of information by the CEO to the BOD Management • The coordination of control, management and supervision activities between BOD, BOM Members and other Executives

Evaluate of the rewarding and discipline of the Board of Directors - Board of Management Members and other Executives

• Method of evaluating performance of BOD, BOM Members and other Executives • Performance evaluation criteria • Ranking • Reward and discipline

2018 ANNUAL REPORT



In 2019, GEC’s policies continued to focus on CG quality, including the strengthening of the BOD’s commitments, the election of Independent BOD Members, the restructuring and strengthening of Internal Audit functions, the continued improvement of procedures for dealing with Stakeholders and avoiding conflicts of interest to ensure the full rights of Shareholders, the establishment of Committees to assist the BOD including Strategy, Remuneration, and HR, the promotion of the BOD’s role in ensuring the BOM’s accountability, HR planning, and the assurance of sustainable development in each economic, environmental and community issue. Ms. Do Thu Ngan - Independent Board of Director Member

Although the application of the CG model following the best practices in the market has only been implemented for 4 months, thanks to the proper preparation since the involvement of foreign Shareholders, evaluation results are based on the ASEAN Scorecard standards have been positive although there is still a lot of room for improvement. On average, GEC performs relatively well in 65% of the total standards. The Company performs particularly well in Role of Stakeholders and Disclosure and transparency criteria with

100% and 81%, respectively. In order to continue improving the quality of governance, GEC plans to strive to fulfill over 88% of the criteria within 1 year and the remaining 12% will be implemented in the medium term, from 1 to 3 years. In 2018, the Company spent nearly VND 1.4 billion on non-audit expenses, 5 times higher than auditing cost, which was only VND 300 million. These non-audit expenses, which were mainly for the purpose of CG consultancy, indicating the BOD and BOM’s profound attention to the improvement of CG quality.

Evaluation of CG quality following ASEAN Scorecard standards 120% 100%

100% 80% 60%

63%

62%

84%

81%

73%

45%

54%

40% 20% 0% Standard score card

Rights of Shareholders

Equitable Treatment of Shareholders

Role of Stakeholders

Disclosure and Transparency

Responsibilities of the Board

Bonus score card

Penalty score card Source: GEC

BOARD OF DIRECTORS’ REPORTS & CORPORATE GOVERNANCE ACTIVITIES (continued) REALIZATION OF BUSINESS STRATEGIES 2018 is a pivotal year when the foundation will be built for GEC to become a leading private player in Renewable Energy. During the year, the BOD held a total of 40 meetings in various forms to take timely courses of action to properly commitments adopted at GMS. In addition to meetings held at the required quarterly frequency, the BOD held extra meetings via online channel and collected opinions in writing, via email, etc. 36 resolutions were issued that focused on the Company's core issues including Governance (58%), Finance (27%), and Project Development (15%). The BOD provided directions to the BOM in successfully completing the assigned tasks and exceeding the set targets. Number of resolutions

Content

Governance

February, March, April. May, August, September, October, December

Approval of matters relating to GMS, collection of opinions in writing Approval of CG-related matters such as the issue of the Corporate Charter, the replacement of the Supervisory Board with the Audit Committee, and the appointment of important positions such as CEO, Deputy CEO

Finance

March, April, May, July, August, December

Approval of the transfer of shares, borrowings, IPO, guarantee for bank loans, the issue of bonds, the increase of Charter capital

Projects

January, February, June

Renewable Energy development strategy relating to the approval of investment projects and the selection EPC contractors to implement the projects

Topic

Month

With decades of experience in Governance, diversity in various areas of business, the equality of gender and the diversity of nationalities in the structure of membership, the BOD has made quick and well-considered decisions in carrying out its duties while managing not to miss any business opportunities.

• Structuring the CG system according to good practices in the international market;

With the business performing exceeding targets in 2018, total income of BOD, Supervisory Board and BOM Members including salaries and other gross benefits was VND 8.5 billion, which was commensurate with their contributions as well as the ratio of responsibility fulfillment. For the BOD, the remuneration paid out was VND 776 million. For the BOM, the remuneration structure is quite similar among Members with salary ranging between 86% and 93% and bonus between 7% and 14%. The CEO’s bonus was the highest with 14% in bonus and 86% in salary. The performance of the BOM is reflected in the following aspects:

• Making policies and decisions related to Project and Finance, directing the

2018 ANNUAL REPORT

• Proposing, selecting and appointing appropriate positions in the BOD and BOM; • Closely controlling and monitoring transactions with the Stakeholders; • Participating in BOD meetings at a rate of between 98% and 100%; • Fully participating in IFC - held training courses for CG awareness raising and skill building; BOM in the completion of the commercial operation targets of Phong Dien and Krong Pa plants ahead of the planned schedule;

• Providing thorough directions over the Project and Finance streams to ensure the launching of Ham Phu and Duc Hue Solar power Plants before June 30th, 2019;

• Giving appropriate directions thanks to which, the Hydropower business managed to exceed the targets of Revenue and Output in spite of weather obstacles;

• Facilitating and supporting the BOM in properly implementing investment and seeking of potential projects in accordance with the BOD’s orientations;

• Approving the feasible issuance plan and the fund utilization purpose for the initial public offering to increase Charter capital at a ratio of 1: 1, increasing the size of the Company as a basis for the expansion Solar and Wind power;

• Directing and overseeing the full compliance with IFC’s international standards in sustainable development including environment, health and safety in the implementation and operation of Solar Energy projects as well as activities of the whole Company toward the community and society.

Participation rate, income structure, time in service, and training program of the Board of Directors, Supervisory Board and Audit Committee Members. No. I

Full name

Title

Number of Reason meetings Rate of attended absence

Reason

Remuneration (Million VND)

Training program

BOARD OF DIRECTORS BOD Chairman

1 Mr. Tan Xuan Hien

2 Ms. Do Thu Ngan

3 Mr. Deepak C.Khanna

Time

Mr. Andrew Mark Affleck

BOD Vice Chairman Independent BOD Member Non-Executive BOD Member Audit Committee Member

98%

12 100%

Vice Chairman Chairman Business trip Appointment Jan 1st, 2018 - Mar 26th, 2018 overseas as Chairman th st Mar 26 , 2018 Dec 31 , 2018

CG training 146 - IFC Dec. 2018

Sep 18th, 2018 - Dec 31st, 2018 Appointment

CG training 33 - IFC Dec. 2018



98% Personal

Jan 1st, 2018 - Dec 31st, 2018 

117 

12 100%



Sep 18th, 2018 - Dec 31st, 2018 Appointment

33 

12 100%



Sep 18th, 2018 - Dec 31st, 2018 Appointment

CG training 33 - IFC Dec. 2018

Audit Committee Member

12 100%



Sep 18th, 2018 - Dec 31st, 2018 Appointment

CG training 33 - IFC Mar. 2018

7 Mr. Thai Van Chuyen

BOD Chairman

10 100%



Jan 1st, 2018 - Mar 26th, 2018 Resignation

CG training 33 - IFC Mar. 2018

8 Mr. Yasushi Ojiuka

BOD Member

28 100%



Jan 1st, 2018 - Sep 18th, 2018 Resignation

77 

9 Ms. Dao Thi Thien Thanh BOD Member

28 100%



Jan 1st, 2018 - Sep 18th, 2018 Resignation

CG training 77 - IFC Mar. 2018



Jan 1st, 2018 - Mar 20th, 2018 Resignation

23  15 

5 Ms. Nguyen Thuy Van

Ms. Pham Ngoc Thanh Mai

BOD Member

Independent BOD Member Chairman of Audit Committee BOD Member

II SUPERVISORY BOARD 1 Hoang Thi Mai Thuy

Chief Supervisor

2 Tran Thi Nga

BOS Member



Jan 1st, 2018 - Mar 20th, 2018 Resignation

3 Han Phi Hai

BOS Member



Jan 1 , 2018 - Mar 20 , 2018 Resignation

  53



Pham Ngoc 4 Thanh Mai

Chief Supervisor

4 100%



Change of Mar 20th, 2018 - Sep 18th, 2018 CG model

Refer to the BOD section

5 Mai Van Nho

BOS Member

4 100%



Mar 20th, 2018 - Sep 18th, 2018

Change of CG model

CG training 35 - IFC Mar. 2018

6 Trinh Xuan Ha

BOS Member

4 100%



Mar 20th, 2018 - Sep 18th, 2018

Change of CG model

CG training 35 - IFC Mar. 2018



Sep 18th, 2018 - Dec 31st, 2018

Change of CG model

 - IFC -



Change of Sep 18th, 2018 - Dec 31st, 2018 CG model

 



Change of Sep 18 , 2018 - Dec 31 , 2018 CG model

CG training - IFC  Mar./Dec. 2018

III AUDIT COMMITTEE 1 Nguyen Thuy Van

Chairwoman of Audit Committee

2 Deepak C.Khanna

Audit Committee Member

Audit Committee 3 Pham Ngoc Thanh Mai Member

 



 



CG training Dec. 2018

www.geccom.vn

BOARD OF DIRECTORS’ REPORTS & CORPORATE GOVERNANCE ACTIVITIES (continued)

Income structure, time in service, and training courses of the Board of Management

No.

Full name

Title

Income Salary

Bonus

Time in service

Reason for change

Training program

BOARD OF MANAGEMENT

Nguyen Thai Ha

CEO

86%

14%

Oct 10th, 2018 - Appointment on Dec 31st, 2018 Oct 10th, 2018

CG training - IFC Dec. 2018

Le Thanh Vinh

Permanent Deputy CEO

87%

13%

Jan 1st, 2018 Dec 31st, 2018



CG training - IFC Mar. 2018

Nguyen Dinh Tuan

CEO

92%

Jan 1st, 2018 Dec 31st, 2018



CG training - IFC Mar. 2018

Phan Thanh Lac

Deputy CEO

93%

Jan 1st, 2018 Dec 31st, 2018



CG training - IFC Mar. 2018

Ha Nguyen Hoang

Deputy CEO



Jan 2nd, 2019

Appointment on Jan 2nd, 2019



Le An Khang

CEO

87%

13%

Jan 1st, 2018 Oct 10th, 2018

Resignation on Oct 10th, 2018

CG training - IFC Mar. 2018

OTHER SENIOR MANAGERS

Tran Thi Hong Tham

87%

13%

Jan 1st, 2018 Dec 31st, 2018



CG training - IFC Mar. 2018

2018 ANNUAL REPORT

Chief Accountant

THE BOD’S EVALUATION OF THE ACTIVITIES OF THE BOARD OF MANAGEMENT AND THE AUDIT COMMITTEE IN 2018 Unit

Detailed Assessment

• In the first 8 months of the year, the Supervisory Board properly fulfilled their duties as the The Supervisory Board

watchdog of the implementation of and compliance with resolutions of the GMS as well as applicable Laws • All Supervisory Board Members appointed after the AGM fully participated in meetings • Ensuring transparency in financial activities and operations of the BOD and BOM

• In March 2018, the formation of the Audit Committee was adopted by the GMS. This marked a transition from the Supervisory Board to the Audit Committee

• On August 19th, 2018, the Audit Committee officially started their role instead of the Supervisory Board in the new governance model

• The Audit Committee has played an active role in advising the BOD on supervision activities in an independent efficient manner

Audit Committee

• The Audit Committee quickly issued important policies including: »» By-laws on the Audit Committee »» Policy on transactions with Related Parties »» Development of a plan to improve CG activities »» Organization of CG training »» Monitor activities of the BOD and BOM »» Oversee the preparation of FS and transparent and timely information disclosure »» Oversee the maintenance and improvement of the internal control system as well as the independent auditing service

• The Audit Committee has also worked out operation plans for 2019 for the key objectives: Improving such activities as CG, Internal Supervision, Risk management, Internal Auditing, FS according to IFRS standards, Bilingual information disclosure, Supervision of transactions with Related Parties, and the efficiency and accountability of the BOM

• One Independent BOD Member, who has with 15 years of experience in finance, investment and accounting and auditing, was appointed in September 2019

• The Independent BOD Member, who at the same time serves as Chairwoman of the Audit

• Independent Board of • Director Members

• • • •

Committee, is gradually strengthening and completing the effective internal control system, thus ensuring the highest level of compliance with the OECD Principles of CG and the ASEAN CG Scorecard - ASEAN SCORECARD Providing the best protection of Stakeholder interests, especially those of Shareholders and Investors, including minority Shareholders Supporting the BOD in strengthening CG through the establishment and implementation of independent and effective internal monitoring functions Overseeing the implementation of information disclosure according to applicable regulations Overseeing and providing opinions on conflicts of interest and transactions with Stakeholders Orientating and organizing the operations of the Audit Committee as well as internal audit activities according to current regulations and in accordance with international practices The remaining Independent BOD Member, appointed in January 2019, is expected to provide support to the Audit Committee in independently advising and overseeing governance and management activities

• The BOD highly appreciates the capabilities and performance the BOM through the successful

The Board of Management

commercial operation of the first two Solar power Plants in Vietnam. This achievement helped realize the Renewable Energy development strategy entrusted by the GMS. • The BOM took proactive, drastic and creative steps in structuring the management model along the line of specialization of each type of Energy into respective dedicated business division, thereby facilitating quick and easy decision-making as well as accountability in executing the BOD’s strategies • The BOM ensured financial safety by successfully negotiating credit packages with reputable local banks and successfully realizing the 1: 1 capital increase that enabled the Company to implement multiple Solar power projects in 2018 for subsequent operation of another 5 projects in 2019 • The BOM decently conducted business in the Hydropower business of small and medium size, thus ensuring stable cash flows and even exceeding the assigned targets regardless of unfavorable weather conditions.

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RENEWABLE ENERGY TRENDS A VIEW FROM SOUTHEAST ASIA & VIETNAM LARGE POTENTIAL OF RENEWABLE Energy IN SOUTHEAST ASIA

Abundant potential for Renewable Energy in Southeast Asia

In 2000-2016, the Region's Hydropower capacity increased from 16 GW to 44 GW focus on Vietnam, Laos, Cambodia and Myanmar; Geothermal projects were mainly carried out in Indonesia and the Philippines.

ecently, some Countries in the Region such as Thailand and Philippines have carried out activities to seek for renewable sources while Vietnam, Laos or Cambodia have not made significant progress. According to The Asean Post, from 2000 to 2016, Regional economic growth boosted primary Energy demand by 70%. Governments of Southeast Asian Countries, therefore, implemented a series of policies to ensure that the increasing demand for Energy is met. In 2006-2016, Southeast Asia invested about USD 27 billion in Renewable Energy. In particular, investment in 2007 increased by 63% yoy as a result of Thailand's Bio-Energy development; 2011 by 83% yoy as a result of Indonesia's large Geothermal projects and Thailand's additional Bio-Energy projects; 2013 by 43% yoy as a result of Thailand's and the Philippines' Solar and Wind projects.

2018 ANNUAL REPORT

Thailand has invested most heavily in Renewable Energy during 2006-2016 with more than USD 10 billion; accounting for nearly 40% of the Region's total investment, followed by Indonesia and the Philippines, with each accounting for about 20%. The Philippines increased its investment in Solar and Wind power projects, while Malaysia and Vietnam reduced their investments in Renewable Energy in the past decade. Although Malaysia increased Solar power, it reduced investment in Biomass while Vietnam reduced investment in small Hydropower and Biomass. In 2016, the Region's investment in Renewable Energy was USD 2.6 billion (excluding large Hydropower plants), accounting for 1% of world's investment in Renewable Energy. The Country that invested heavily into Renewable Energy was Thailand with USD 1.3 billion, accounting for 50%; followed by Indonesia and Singapore investing mainly into Solar power at USD 577 million and USD 575 million respectively. In 2000-2016, the Region's Hydropower capacity increased from 16 GW to 44 GW focus on Vietnam, Laos, Cambodia and Myanmar; Geothermal projects were mainly carried out in Indonesia and the Philippines.

Southeast Asian investment in Renewable Energy from 2006 to 2016 Philippines

Thailand

Singapore

Indonesia

Vietnam

Malaysia

USD Billion 1.4

2.4

2.3

1.7

1.6

2.9

2.0

2.9

3.4

3.8

2.6

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

100%

80%

60%

40%

20%

(Notes: Based on Power Sector asset finance data for Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam)

Source: BNEF, 2017

Southeast Asian investment in Renewable Energy by Type from 2006 to 2016 Solar power

Small Hydropower

Geothermal

Wind power

Bio-Energy

USD Billion 1.4

2.4

2.3

1.7

1.6

2.9

2.0

2.9

3.4

3.8

2.6

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

100%

80%

60%

40%

20%

(Notes: Based on Power Sector asset finance data for Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam) Source: BNEF,2017

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RENEWABLE ENERGY TRENDS A VIEW FROM SOUTHEAST ASIA & VIETNAM (continued) VIETNAM ELECTRICITY MARKET - REFORMED FOR MORE APPEAL

ietnam's Electricity Industry, through nearly 80 years of establishment and development, contributed a significant part to the national socio-economic progress. The Electricity market was strongly reformed for more appeal with new enterprises and investment resources, especially in electricity generation. In the coming years, the Electricity Industry will continue to develop its investment, production and development plans with an annual growth rate of 9-11%.

On October 8th, 2013, the Prime Minister issued Decision No. 63/2013/QD-TTg regulating the roadmap, conditions and structure of electricity sector for formulation and development of electricity market levels in Vietnam Accordingly, the Electricity Market in Vietnam is established and promoted on 3 levels:

COMPETITIVE ELECTRICITY GENERATION MARKET

COMPETITIVE WHOLESALE ELECTRICITY MARKETS

• Pilot in 2009-2012 • In 6 years of operation 2012-2018: »»Number of plants increased by 3 times »»Capacity increased by 2.8 times »»87 power plants, total capacity of 23 GW • Selling electricity: Power plants with capacity > 30 MW, except for: »»BOT project »»Renewable Energy except Hydroelectricity • Purchasing electricity: Only EVN • Equitizing EVN's generating units • Private units may produce electricity and offer competitive prices

• Pilot in 2017-2019 • Operation in 2019-2021 after 1 year of piloting • Selling electricity: Power plants with capacity > 30 MW, except for: »»Solar power »»Wind power »»Imported electricity • Purchasing electricity: 5 Corporations under EVN and big customers in electricity market • Industrial zones may directly buy electricity from the plants

3 COMPETITIVE RETAIL ELECTRICITY MARKETS • Pilot in 2021-2023 • Official operation in 2023 • Consumers may buy electricity from various electricity wholesalers

Source: Decision of the Prime Minister in 2013

On October 8th, 2018, MOIT held the Conference to review the operation of Competitive Generation Market and the pilot of Competitive wholesale electricity markets from July 1st, 2017 to June 30th, 2018, in order to review and evaluate 2 markets above. The number of power plants that took part in the market transactions was 87 with a total capacity of 22,946 MW, increasing by 2.8 times compared to the first operation time in July 2012 - only 31 power plants. By end of 2018, it was expected that there will be 90 power plants with a total capacity of 23,054 MW, accounting for 53% of total capacity of the system directly participates in the competitive electricity generation market. Accompanying with the promotion and development of Competitive Generation Market, the MOIT led and coordinated with other agencies and units to prepare the Competitive Electricity Wholesale Market. The trial 74

2018 ANNUAL REPORT

TOTAL EXPECTED ELECTRICITY CAPACITY IN VIETNAM BY END OF 2018

23,054 MW

operation of electricity wholesale market was continued to be carried out in 2017 and the first months of 2018. In particular, from January 1st, 2018, the pilot electricity wholesale market moved to the stage of real payment instead of simulating calculations in previous periods. The development of competitive electricity market increased transparency and fairness in scheduling, mobilizing power plants, which contributes to optimizing the entire system, creating motivation and trust to attract more Investors.

THE VALUE CHAIN OF VIETNAM'S ELECTRICITY INDUSTRY Primary Energy

• Hydropower • Coal • Gas and Oil • Other Renewable Energy

Production

• EVN • GENCOs • PVN • TKV • BOT • Others

Transmission

Distribution

Consumption

• National Power Transmission Corporation (NPT) controls 500 KV, 220 KV and 110 KV transmission lines • Medium voltage lines from 6 KV to 35 KV are controlled by regional and local transmission companies

• EVN Hanoi • EVN HCM • Northern EVN • Southern EVN • Central EVN • Electricity companies under cities and provinces

• Industry • Construction • Trade • Service • Civil • Agriculture and Forestry • Others

Source: Electricity Industry 2018 Report

SUPPLY AND DEMAND OF THE ELECTRICITY MARKET

At the EVN Conference of summarizing the work in 2018 and deploying the tasks in 2019 held on January 3rd, 2019, the current electricity capacity of the whole system was almost 48,000 MW. Electricity production and purchase reached 212.9 billion kWh, exceeding the plan by 2.4 billion kWh and increased by 10% yoy. Commercial electricity output reached 192.9 billion kWh, an increase of 11% yoy. EVN expects 2019 power production and purchase will reach 232.5 billion kWh, increase by 9% yoy and is able to meet higher electricity demand. Accordingly, the commercial electricity output is expected to be reach 211.9 billion kWh, up 10% yoy. Power Output 2013 -2019 Generated and purchased electricity

Billion kWh

Commercial electricity

250

233

200

193 160

160 144

142

128 115

193 175

177 150 100

212

231

128

50 0 2013

2014

According to EVN, electricity supply in 2018 was more reliable than in 2017, in which the System Average Interruption Duration Index (SAIDI) was 723 minutes, down 30% compared to 2017, SAIDI per unit reduced by 18-40% compared to 2017. EVN's total electricity loss in 2018 was estimated at 7%, 0.3% better than planned and being 1 year ahead of the 5-year plan as assigned by the Prime Minister. All Electricity Corporations performed better than their target plans.

2015

2016

2017

2018

Plan 2019

Power Output by Type in 2018 - 2030 MW

Hydropower

Thermalpower

Oil & Gas

Import

140,000

Others 31,857

120,000 12,063 80,000 5,940 1,440

60,000

315

40,000

1,356 8,687

8,940

20,000 O

1,448 15,054

1,554 19,037

47,575

55,167

21,886

18,445

25,620

18,610

18,060

20,362

November 2018

2020

2025

2030

Source: EVN, National Load Dispatch Centre

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RENEWABLE ENERGY TRENDS A VIEW FROM SOUTHEAST ASIA & VIETNAM (continuted) RENEWABLE ENERGY IN VIETNAM - TRENDS AND CURRENT STATUS Solar Power

A bird's eye view of Krong Pa Solar power Plant - Gia Lai with total investment of VND 1,300 billion and capacity outputs 103 million kWh/ year

Solar Energy potential is determined based on Solar radiation. Vietnam has relatively large and stable annual Solar radiation, especially in the Central Highlands, Central Coast and the South, Mekong Delta. On average, Vietnam's Solar radiation Energy is 4-5 kWh/sqm/day.

urrently, fossil fuels as coal, oil and gas have been utilized to provide for most of Vietnam's Energy demand. While coal prices are determined based on reasonable production costs and profits of coal mining companies such as Vinacomin, Northeast Corporation, Vietmindo or market gas price - 46% of FO oil price, which is exploited exclusively by PVN, Renewable Energy require no input cost. In addition, with endless supply, less environmental pollution, no emissions of harmful gases, this category secures its position among all other Energy sources. Fossil Energy resources are finite; therefore, researching and using Green Energy - Renewable Energy as Wind power, Solar power, Geothermal, Biomass is

2018 ANNUAL REPORT

indispensable. In addition, the Government also issued policies to boost Renewable Energy projects, supporting the Renewable Energy with a promotion policy, ensuring national Energy security, contributing to Energy resources conservation, minimizing electricity production's negative environment impacts: â&#x20AC;˘ Decision No. 11/2017/QD-TTg on the mechanism for incentive of Solar power development in Vietnam with such as: PPA, CIT reduction, import tax exemption for imported goods as projects' fixed assets and deductions of land use tax; â&#x20AC;˘ Decision No. 39/2018/QD-TTg amending and supplementing Decision 37/2011/QD-TTg on the support mechanism for the development of Wind power projects in Vietnam with purchase prices up to 8.5 cents/kWh for onshore and 9.8 cents/kWh for offshore Wind power. Solar Energy potential is determined based on Solar radiation. Vietnam has relatively large and stable annual Solar radiation, especially in the Central Highlands, Central Coast and the South, Mekong Delta. On average, Vietnam's Solar radiation Energy is 4-5 kWh/sqm/day. According to the assessment, the areas with 1,800 hours of sunshine/year or more are considered potential. In Vietnam, many provinces meet this criterion, especially ones in the South.

Economic potential of Solar power

Region

Area (km2)

Area

Capacity (MW)

Capacity factor

Output (MWh/year)

Total investment: 789 USD/kWp Weighted average cost of capital: 7.8%

Binh Phuoc, Binh Duong, Tay Ninh, Ba Ria-Vung Tau, The South Dong Nai, Ho Chi Minh City, Long An, Tien Giang, Ben Tre, Tra Vinh, Soc Trang, Dong Thap, An Giang, Bac Lieu

2,746

137,288

0.18

216,484,730

Quang Ngai, Kon Tum, Gia Lai, Dak Lak, Binh Dinh, Phu Yen, Lam Dong, Khanh Hoa, Ninh Thuan, Binh Thuan, Dak Nong

1,334

66,688

0.18

105,142,432

Quang Binh, Quang Tri, Thua Thien Hue, Da Nang, Quang Nam, Quang Ngai, Kon Tum, Gia Lai, Dak Lak, Phu Yen, Binh Dinh, Dak Nong, Lam Dong, Khanh Hoa, Ninh Thuan, Binh Thuan

8,815

423,737

0.18

694,948,154

Binh Phuoc, Binh Duong, Tay Ninh, Ba Ria-Vung Tau, Dong Nai, Ho Chi Minh City, Long An, Tien Giang, Ben Tre, Vinh Long, The South Tra Vinh, Can Tho, Hau Giang, An Giang, Soc Trang, Dong Thap , Bac Lieu, Kien Giang, Ca Mau

4,302

232,096

0.18

441,607,677

The North Lai Chau, Dien Bien, Son La, Thanh Hoa, Nghe An

1,559

77,959

0.15

102,438,933

Central

Total investment: 950 USD/kWp Weighted average cost of capital: 8.5%

Central

Source: MOIT/GIZ Energy Support Program, January 2018

Considering the rapid development of science and technology, the electricity generation cost from Renewable Energy sources is decreasing rapidly and becoming more and more competitive. According to IRENA, the average installation cost of PV Photovoltaic (Solar Photovoltaic) was reduced by 69% and Concentrated Solar Power (CSP) Technology was decreased by 27% from 2010 to 2017. Moreover, power factor of the panels increased over the years, with Photovoltaic Module rose to 18% from 14% and Concentrated Solar Power (CSP) Panel boosted from 27% to 34%. At the same time, as the global and regional markets for Solar Energy technology are developing, the bigger the market sizes the more opportunities for supply chain efficiency to be improved, through which required investment could reduce strongly. Cost of Production of Electricity from Solar power, 2010-2017

Target

Average installation cost (USD/kW)

Plant capacity factor

Electricity generation cost (USD/kWh)

2010

2017

% Increase/ Decrease

2010

2017

% Increase/ Decrease

2010

2017

% Increase/ Decrease

Photovoltaic Solar Panel

4,394

1,388

-69%

14%

18%

29%

0.36

0.10

-72%

Concentrated Solar Power (CSP) Panel

7,583

5,564

-27%

27%

34%

26%

0.33

0.22

-33%

Source: Renewable Power Generation Costs in 2017, IRENA 2018 (The data is based on calculation of global average data as well as top 100 Solar power and CSP projects in the period of 2010-2017)

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RENEWABLE ENERGY TRENDS A VIEW FROM SOUTHEAST ASIA & VIETNAM (continuted) Wind power

Vietnam has abundant resources to develop Wind power. According to German Agency for International Cooperation (GIZ), Vietnam's technical potential of Wind Energy is estimated at 27 GW. Currently, the installed capacity that has been put into operation is approximately 200 MW, so there is still a lot of Wind power potential that has not yet been developed.

Being considered a Country with potential for Wind power development; however, the current data of Vietnam's potential for Wind power exploitation is not fully quantified due to the lack of survey and measurement. According to World Bank forecasts, data on Wind Energy potential contains a great difference, from 1,800 MW to over 9,000 MW, some even records a potential of over 100,000 MW. Based on the Industry report, Vietnam's Wind power potential is mostly concentrated in the Central Coast, the South, the Central Highlands and the Islands. Until June 2018, there were 6 projects being put into operation with a total capacity of 189.2 MW and 2,000 MW. Wind power was added to the planning.

Total capacity of Wind power projects that have been installed over the years reaching approximately 300 MW

Before 2016

2017

• 2012: REVN - 30 MW - Binh Thuan • 2012: Cong Ly Phase 1 - 16 MW Bac Lieu • 2013: Cong Ly Phase 2 - 83.2 MW Bac Lieu • 2016: Cong Ly Phu Lac - 24 MW Binh Thuan

2018

• Huong Linh 2 - 30 MW - Quang Tri • Dam Nai Phase 1 - 8 MW Ninh Thuan

• Trung Nam Phase 1 - 40 MW Ninh Thuan • Mui Dinh - 37.6 MW - Ninh Thuan • Dam Nai Phase 2 - 30 MW Ninh Thuan

Source: MOIT

International Cooperation (GIZ), Vietnam's technical potential of Wind power is estimated at 27 GW. Currently, the installed capacity that has been put into operation is approximately 200 MW, so there is still a lot of Wind power potential that has not yet been developed. According to IRENA, the average installation costs of onshore Wind power decreased by 20% and that of Offshore Wind power decreased by 2% in the period of 2010-2017. Besides, turbine power factor is increasing year by year, that of onshore Wind power increases by 11% and Offshore Wind power increases by 15%. Cost of Electricity Production from Wind Energy, 2010-2017

Main Target

Average installation cost (USD/kW)

Electricity cost (USD/kWh)

Plant capacity factor

2010

2017

% Increase/ Decrease

2010

2017

% Increase/ Decrease

2010

2017

% Increase/ Decrease

Onshore Wind power

1,843

1,477

-20%

27%

30%

11%

0.08

0.06

-25%

Offshore Wind power

4,331

4,239

-2%

34%

39%

15%

0.17

0.14

-18%

Source: From Renewable Power Generation Costs in 2017, IRENA 2018

2018 ANNUAL REPORT

(The data is based on calculation of global average data as well as top 100 onshore and offshore Wind power in the period of 2010-2017)

Near-shore Wind projects also get preferential tariff from the Government

The trend towards Renewable Energy shows that developing Renewable Energy resources - Solar power and Wind power alike - has a great prospect and is an effective solution to achieve both Energy security and commitment to reduce emission, keeping global average temperature increase well below 20C compare with the pre-industrial levels as stated in the COP24 Agreement Dec, 2018.

ith an annual economic growth rate of about 6-7% while electricity consumption also increases by 10% per year, Vietnam needs a lot of alternative Energy sources in the context of exhausting Hydropower potential while Coal and Thermal power are causing environmental pollution as well as getting expensive due to recent increase in coal price. According to the revised VII Power Development Master Plan, Vietnam set targets of 800 MW of Wind power by 2020 and 6,000 MW by 2030. The Government issued a number of Decisions and Circulars to promote Wind power development. A number of provinces supplemented the Wind power plan, got approved by the MOIT, namely Binh Thuan (2012), Ninh Thuan (2013), Soc Trang (2014), Quang Tri (2015), Ben Tre (2015), Bac Lieu (2016), Ca Mau (2016). In the context of climate change and fossil fuels depletion, the development of Renewable Energy Industry including Wind Energy in Vietnam is an inevitable trend for sustainable development, which is considered so new and not easily applicable. The biggest obstacle likely to lead to high economic risks for project developers and Investors is the model PPA, which may cause difficulty for Investors in mobilization of capital, especially foreign Investors, as the terms contain imminent risks. For example, the cancellation and termination terms: in case the seller - being the violated party - choose to terminate the agreement, EVN shall compensate for only 1 year of payment. In

addition, long-term financial loans are difficult to access, which means low interest rates and loan extensions are desired financial solutions. It can be said that future clear and transparent policies for Vietnam's Wind power will be the key to build Investor confidence and a driving force for further development. The trend towards Renewable Energy shows that developing Renewable Energy resources - Solar power and Wind power alike - has a great prospect and is an effective solution to achieve both Energy security and commitment to reduce emission, keeping global average temperature increase well below 20C compare with the pre-industrial levels as stated in the COP24 Agreement December, 2018. This is also the foundation for a strong transition in Energy Industry and in power generation from Renewable Energy. The lack of traditional resources for electricity generation in Vietnam can be completely offset by the exploitation and use of Renewable Energy resources if there are appropriate policies. There is still a lack of information and supporting policies to develop Renewable Energy. These bottlenecks need to be resolved to effectively ensure optimal combination of traditional and Renewable Energy resources. For a Developing Country like Vietnam, accelerating power generation from renewable sources in general - in particular Wind and Solar Energy - plays an important role in both meeting the power demand and assuring economic sustainable development. www.geccom.vn

RENEWABLE ENERGY TRENDS A VIEW FROM SOUTHEAST ASIA & VIETNAM (continuted)

M&A ACTIVITIES - ENERGY PROJECTS IN THE PIPELINE According to the reports at Vietnam M&A forum 2018, M&A value in the first 6 months increased by 55%, reaching USD 3.55 billion. For the whole year, the figure was forecast to reach USD 6.5-6.9 billion, equivalent to 64% in 2017. In the first 6 months of 2018, the Real Estate industry dominated the market at 67%, Banking and Finance accounted for 19% and Manufacturing for 10%. Vietnam's Energy Industry was also expected to present significantly in M&A activities in 2019. In 2018, there was no prominent M&A project; instead there was a series of Solar power Plants investment projects in Vietnam:

No.

Project

Long Son Solar power Plant

HCG and HTG Solar power Plant

Location

Capacity

Investor

Investment (VND Billion)

Expected operation

Khanh Hoa 170 MWp

Long Son Co., Ltd

4,900

2019

Tay Ninh

Hoang Thai Gia Trust Investment and Management Co., Ltd

1,600

Jun 2019

Nha Trang Bay Investment and Construction JSC

1,425

Apr 2019

Tasco Energy JSC

1,400

May 2019

Hoang Son Trading Construction Energy Investment JSC

1,362

2019

100 MWp

HCG Tay Ninh Solar Power JSC

Phuoc Huu Solar power Plant

50 MW

Thuan Nam 19 Solar power Plant

Ninh Thuan 49 MW

My Son Solar power Plant

Vinh Hao 6 Solar power Plant

Binh Thuan 50 MWp

Vinh Hao 6 Energy JSC

1,361

Jun 2019

BP Solar 1 Solar power Plant

Ninh Thuan 46 MWp

BP Solar 1 JSC

1,315

Jan 2019

Krong Pa Solar power Plant

Gia Lai

Gia Lai Electricity JSC

1,284

Dec 2018

Phan Lam 2 Solar power Plant Binh Thuan 49 MWp

Phan Lam Energy Co Ltd.

1,202

Srepok 1 Solar power Plant

Dai Hai Investment and Development JSC

Duc Hue 1 Solar power Plant

Duc Hue 2 Solar power Plant

50 MW

69 MWp

Jun 2019 Dak Lak

50 MW

Long An

49 MWp

Tay Son 1 Solar power Plant

Binh Dinh

49 MWp

Cam Lam Solar power Plant

Khanh Hoa 50 MWp

Ham Phu 2 Solar power Plant

Ham Phu 1 Solar power Plant

Phong Dien Solar power Plant Hue

48 MWp

Tay Son 2 Solar power Plant

Binh Dinh

30 MWp

Vinh Tan Solar power Plant

Binh Thuan 6.2 MW

Gia Lai Electricity JSC

1,200 947

Jun 2019

947

2019

936 2020-2021 Cam Lam Solar Co Ltd.

Binh Thuan 49 MWp Gia Lai Electricity JSC

930

Jun 2019

927

Jun 2019

925

2019

853

Oct 2018

594 2020-2021 Power Engineering Consulting 2 JSC

100

Jan 2019 Source: GEC

2018 ANNUAL REPORT

TTC 01 and TTC 02 - Tay Ninh, 2 Energy Projects that TTC cooperates with Gulf Energy Development Public Company Limited - Thailand, were also added to the planning and construction in order to be operational by June 30th, 2019. In addition to the above prominent projects, TTC Energy is also proud to contribute 10 Solar power projects, in which GEC became the first Company in Vietnam that successfully operates 2 Solar power Plants - Phong Dien - Hue and Krong Pa - Gia Lai in 2018; the others Solar Plants, Duc Hue 1 Long An, Ham Phu 2 - Binh Thuan, are expected to be energized before June 30th, 2019; Duc Hue 2 and Ham Phu 1 are also expected to be grid-connected in 2019. Tay Son 1, 2 - Binh Dinh are expected to be in operation in 2020-2021. Besides strong domestic investments, foreign capital flow is also very active in this Sector. Solar battery panels of Phong Dien Plant - Hue

Some prominent projects are as follows: Location

Dau Tieng 1 and Dau Tieng 2 Solar power Plant

Tay Ninh

350 MW

Xuan Cau Co., Ltd in cooperation with Grimm Power Pubic - Thailand

9,100

Jun 2019

Sao Mai Solar power Plant An Giang

210 MW

Sao Mai Group in cooperation with USAID - USA

5,600

Jun 2019: 104 MW

Hoa Hoi Solar power Plant Phu Yen

Truong Thanh Vietnam Group JSC 257 MWp in cooperation with Grimm Power Pubic - Thailand

4,986

CMX Re Sunseap Vietnam Solar CMX Renewable Energy Ninh Thuan 168 MWp power JSC in cooperation with Vietnam Solar power Plant Sunseap - Singapore

4,400

Fujiwara Binh Dinh Solar power Plant

1,465

Tay Ninh

Investor

Expected operation

Project

Binh Dinh

Capacity

Investment (VND Billion)

No.

100 MW

Fujiwara Group - Japan

69 MWp

TTC Group in cooperation with Gulf Energy Development Public Co., Ltd. - Thailand

1,421

Jun 2019

TTC 01 Solar power Plant

Cat Hiep Solar power Plant Binh Dinh

49,5 MW

Truong Thanh Vietnam Group Joint Stock Company in cooperation with Quadran International - France

1,140

TTC 02 Solar power Plant

50 MWp

TTC Group in cooperation with Gulf Energy Development Public Co., Ltd - Thailand

1,103

Tay Ninh

Source: GEC

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RENEWABLE ENERGY TRENDS A VIEW FROM SOUTHEAST ASIA & VIETNAM (continuted)

Operator hub of Krong Pa Solar power Plant - Gia Lai

By the end of December 2018, the total capacity of Solar power projects with signed PPA is 2,866.43 MW and there are 1,620.99 MW under contract negotiation. Solar power capacity under signed PPA (MW)

Solar power capacity under negotiations (MW)

Province/ City

Ninh Thuan

725.80

577.40

12 Quang Tri

39.90

0.10

Binh Thuan

566.31

222.69

13 Quang Binh

39.92

Tay Ninh

430.00

178.00

14 Lam Dong

38.00

An Giang

264.00

15 Hue

35.00

40.00

Phu Yen

214.20

200.80

16 Long An

32.70

79.80

Khanh Hoa

120.00

90.00

17 Quang Ngai

59.20

Vung Tau

96.00

56.00

18 Thanh Hoa

30.00

Dak Lak

85.30

23.70

19 Hau Giang

23.00

Binh Dinh

80.30

40.30

Dak Nong

50.00

Gia Lai

49.00

Total

No.

Province/ City

Solar power capacity under signed PPA (MW)

No.

2,866.43 MW under signed PPA 1,620.99 MW under negotiations Source: EVN

2018 ANNUAL REPORT

Wind farms are expected to take shape along the Vietnamese coasts

TOTAL SOLAR POWER CAPACITY UNDER SIGNED PPA

2,866.43 MW

A high development in Vietnam's economy was recorded with 2014-2018 average GDP stable growth of 6% - 7%, with a peak of the last 10 years being 7.1% in 2018. In parallel, there is also a demand for strong foreign investment in Processing and Manufacturing, which accounts for about 47% of the total registered capital of USD 16.6 billion. Therefore, it is forecast that Vietnam's

consumption and use of Energy in general and electricity in particular in the coming time will be enormous. In order to meet that demand, from a net exporter, Vietnam became an Energy importer, increasingly dependent on import of coal and liquefied gas. In this context, Renewable Energy development will be indispensable to diversify of supplies, lessen the dependence on imported coal and primary Energy resources, and similarly, utilize natural resources efficiently towards protecting the environment and community. This is also a necessary step to assuring national Energy security.

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BOARD OF DIRECTORSâ&#x20AC;&#x2122; STRATEGIC VISION 2019-2020 DEVELOPMENT PLAN, 2022 STRATEGIC VISION - CHALLENGES AND OPPORTUNITIES TOTAL CAPACITY OF GEC

395

2019

2022

HYDROPOWER

184.1

SOLAR POWER

701.5

WIND POWER Strengthening cooperation strategic with international partners to contribute to GEC's brand value

earing in mind the strategic goal of becoming a private corporation in Renewable Energy, with the largest portfolio of projects in Vietnam by 2022, GEC constantly expands its scale of electricity production and trading. This is carried out on basis of maximizing the value chain of the Power Industry, including Hydro, Solar, Wind power, Waste-to-Energy , etc. GEC upholds the guidelines across its activities, which aim at

2018 ANNUAL REPORT

attaching economic performance to the common Social-Community interests, as well as protecting the environment. These are performed with the commitment from 2 strategic Partners with international prestige - IFC and Armstrong. GEC is resolute in expanding its scope to various Renewable Energy sources. Starting off with only 84.1 MW of Hydropower 3 years ago, GEC has quickly become the pioneer in the Solar Energy market

1,136

250

MW 16%

MW 62%

MW 22%

in Vietnam in 2018, connecting 2 projects in Hue and Gia Lai to the national grid with a total capacity of 117 MWp. Quick decisions from the Board and the way they realize the strategy shows the determination from a private economic organization desiring to contribute to supply for the demand for Energy in the context that 2019 GDP is expected to be 6.8% and annual electricity demand increase is expected to be around 10%. For an output - unlike others - that is dependent on one single customer namely EVN, with an exception of Rooftop Solar, it is clear that the Energy market has certain advantages and characteristics. In Vietnam, operational Hydro projects account for about 43% of electricity. According to the VII Adjusted Power Development

Master Plan, the installed capacity of Hydropower plants by 2030 is around 25,400 MW - compared to 23,182 MW at present. During its 30 years of development, GEC's core business activities gained achievements in small and medium Hydropower plants, with 14 plants with a total capacity of 84.1 MW, which have been operating stably and efficiently, yielding an annual average of approximately VND 40 billion within the last 5 years. The electricity tariff is applied according to avoidable cost tariff for small and medium Hydropower plants, with the peak in the dry season reaching nearly 7 cents/kWh, and the remaining times - depending on negotiation being approximately 5 cents/kWh. This field is also improved day by day in compliance with the stricter regulations of the Sectoral Authority on the operation of Hydropower as well as regulations on safety management of dams and reservoirs. Particularly in the field of M&A, GEC is actively seeking potential projects at a reasonable cost around VND 30 billion/MW. In addition, flexible decisions of the Board allow the Company to seek additional investment opportunities from the Hydro sector in Laos, including new construction as well as joint ventures with developers who are building and in need of support in PPAs from Laos to Vietnam. Following MOIT's orientation to 2020, electricity will be imported from Southern Laos through the existing 220 KV lines with the highest capacity of 1,000 MW. So far, Vietnam and Laos have an electricity import agreement with 5,000 MW in total for all phases. At the end of 2018, MOIT submitted to the Prime Minister a mechanism for electricity purchase from power plants in Laos. The current draft tariff frame principle or the tariff ceiling is under consideration with 2 scenarios: concentrated direct importing from the plant and purchasing from several Lao electricity projects through the transmission lines. The current electricity shortage is still a problem that needs to be solved as the

Hydropower is also improved day by day in compliance with the stricter regulations of the Sectoral Authority on the operation as well as regulations on safety management of dams and reservoirs. Particularly in the field of M&A, GEC is actively seeking potential projects at a reasonable cost around VND 30 billion/MW. In addition, flexible decisions of the Board allow the Company to seek additional investment opportunities from the Hydro sector in Laos, including new construction as well as joint ventures with developers who are building and in need of support in PPAs from Laos to Vietnam. total capacity of national power supply by the plants that are put into operation during 2018-2020 is only 8,900 MW, which fulfills about 60% of the target. The current available solution is still importing electricity from China at a relatively high tariff of VND 1,500 to 1,600/kWh, while EVN is buying electricity from domestic power plants at around VND 800-900/kWh of negotiation prices and VND 1,0001,100/kWh of the avoidable cost tariff. GEC has an advantage from existing small and medium Hydropower projects by selling electricity under this cost tariff, which is about VND 1,100 in average, equivalent to 4.7 cents. GEC could fully exploit the Hydropower value chain and to gradually own power plant technologies to ensure its management as well as proactive, safe and efficient operation.

Prime Minister's Decision 11/2017 on Solar power tariff increase to 9.35 cents, equivalent to VND 2,086/kWh, effective from June 1st, 2017 to June 30th, 2019, provides various incentive mechanisms for enterprises. By the end of September 2018, 121 approved projects were added to the National and Provincial electricity plans with a total generating capacity of 6,100 MW by 2020 and 7,200 MW by 2030. In addition, 221 projects are waiting for approval, with a registered capacity of more than 13,000 MW. Thus, the total capacity of registered investment in this type reached 26,300 MW, accounting for about 60% of Vietnam's total power capacity of 47,000 MW, far exceeding the amended VII Power Development Master Plan targets for Solar power capacity of just 850 MW by 2020 and 4,000 MW by 2025.

According to EVN's forecast, the power plants will not accumulate enough water in 2019, along with reduced power from gas output will cause to high power shortage from the dry season until the end of 2019. GEC took a step ahead by timely expanding its scope to Solar power with the successful deployment of 117 MWp in 2018. The Company also speeds up to be able to energize 4 EPC Solar power projects before June 30th, 2019 and 2 self-implemented projects in 2019 as planned, with a total capacity of 275 MWp. GEC's Solar power projects create a stable source of Revenue for 20-year life cycle of the projects. The

After June 30th, 2019, new electricity tariff will be applied for grid-connected Solar power projects; GEC proactively proposed solutions to reduce costs so that they can be compatible with new electricity tariffs. These solutions include self-developing projects instead of hiring EPC contractors with the help of its experienced staffs and professional engineers. In addition, transmission lines and connection capacity are the challenges that GEC has to timely and completely overcome through different solutions, one of which is finding the right locations to develop projects in accordance with the guidelines that GEC has been following.

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BOARD OF DIRECTORSâ&#x20AC;&#x2122; STRATEGIC VISION (continuted) 2019-2020 DEVELOPMENT PLAN, 2022 STRATEGIC VISION - CHALLENGES AND OPPORTUNITIES (continuted) Targets of Solar power capacity in Southeast Asian Countries 2020

December 2018

2025

Power purchase agreements and negotiation as of February 2019 (including Wind power)

6,500

8,000

5,431

6,000

4,000

3,000

2,000

1,250

850

900

1,000

190

285

Phillipines

140

350

Singapore

358 Malaysia

Thailand

117

Indonesia

Vietnam Source: International Renewable Energy Agency

It is expected that by the end of 2019, GEC's Energy portfolio will have a total capacity of 395.1 MW, which is diversified with 84.1 MW from Hydropower, 392 MWp from Solar power, equivalent to 311 MW. By 2022, GEC 's total capacity will reach 1,135.6 MW, almost 3 times that of end 2019, in which 184.1 MW is Hydropower, accounts for 16%, 701.5 MW is Solar power, accounts for 62% and 250 MW is Wind power, accounts for 22%. In order to successfully implement the plan, the targeted sectors will be Solar and Wind along with strategic steps in both local

market and Laos, Cambodia as well as other areas with ready transmission line and flexible and effective financial solutions are also required. The BOD gave a great attention towards Wind power development opportunities as the current Wind power tariff will remain at preferential rates of 9.8 cents/kWh for offshore and 8.5 cents/kWh for onshore projects until November 2021. However, the development goes along with challenges of Wind power technology, requirements to get approval, etc.

GEC's Renewable Energy portfolio structure by 2022

16%

22%

Hydropower 184.1 MW

Wind 250 MW

62%

Solar 701.5 MW

Source: GEC

2018 ANNUAL REPORT

2019 - MAINTAINING THE POSITION OF VIETNAM'S LEADING SOLAR POWER DEVELOPER Main targets

Operational orientation

• Approaching and joining in the competitive electricity market in accordance with Vietnam Electricity Industry's general development orientation in order to promote the efficiency of GEC power plants: »» Taking advantage of the PPA with avoidable cost tariff for power plants under 30 MW; »» Taking advantage of the PPA with fixed tariff of 9.35 cents/kWh for Solar power Plants under the Government's incentives mechanism • Retail Hydropower in Chu Pong - Gia Lai: »» Modernizing electricity retail business with automatic measuring system and consumer support software; »» Continuing to carry out the task of ensuring loss rate is maintained under 5% per station in areas with high loss rates; »» Expanding consumer electricity supply network in the Region in order to increase the number of current electricity consumers; there are 200 new customers each year; »» Professionalizing all stages from electricity supplying to take care of electricity consumers so that a solid foundation could be built for the Company to join competitive electricity market • Solar power:

Business strategy

»» In addition to the on-going Solar power projects that will be energized as planned in 2019, GEC continues to seek and approach more provinces that have ready transmission lines in order to seize opportunities for rapid development; »» Being flexible with new development plans in Laos and Cambodia through optimal financial coordination solutions between EPC and contractors as Investors have PPA but are unable to implement project • Wind power: »» Getting approval, preparing and appraising dossiers and technical designs for Wind power projects with a total capacity of about 250 MW at potential locations in the Southwest, Central Highlands, etc; »» Finding partners for co-development of Wind power projects, which have high investment rates of about VND 35 billion/MW for onshore projects and VND 45 billion/MW for offshore projects, creating "consumption demand" for GEC's Renewable Energy business • Expected 2019 business results: »» Electricity Revenue reaches VND 937 billion, accounting for 94% of total Revenue; in which Hydropower reaches VND 430 billion, accounting for 46%; Solar power reaches VND 507 billion, accounting for 54%; »» Service Revenue: VND 62 billion, accounting for 6% of Net Revenue; »» Profit before tax: VND 240 billion; »» Commercial electricity: 590 million kWh, up 55% compared to 2018; in which Hydropower is 352 million kWh, accounting for 60%, Solar power is 238 million kWh, accounting for 40% www.geccom.vn

BOARD OF DIRECTORS’ STRATEGIC VISION (continuted)

Main targets

Operational orientation

Financial strategy

• Professionalizing Capital market activities and Investor relations: »» Enhancing GEG stock position in financial market, attracting foreign investment; »» Building optimal capital structure towards diversifying capital mobilization channels: Issuing long-term credit through direct loans for projects, issuing international bonds of about USD 50-100 million to meet investment capital demand to 2020; »» Calling for foreign investment cooperation regarding each project • Ensuring liquidity at a leverage rate that is suitable for each period with the following goals: »» Minimum initial funding rate for projects at 70% of total investment; »» The rest will be funded with equity through retention of Revenue from reinvestment or mobilization from Shareholders to meet development needs; »» Effective distribution of capital for projects • Consolidated Revenue and Profit before tax reach nearly VND 3,000 billion and over VND 652 billion respectively by 2022

Operation management strategy

• Developing a complete set of professional, modern operating procedures and regulations on the basis of acquiring experience from international units and partners in Energy Industry to ensure safe and effective operation • Building a team of professional technical workers that is proactive in every management and operation activity of Renewable Energy plants • Modernizing management and operation through automation solutions and specialized software to improve pro-activeness as well as gradually reduce unskilled labor and errors due to subjective factors in operating activities at the plants • Hydropower: »» Completing the operation of all GEC's power Plants and Subsidiaries through the repair and renovation plans that aim at operational optimization; »» Investing in operational efficiency improvement for Dak Pi Hao 2, Ayun Ha, Ia Meur 3, H’Mun, etc. Hydroelectric power Plants towards production capacity improvement; »» Gradually investing in equipment to automate plant management and operation »» Increasing capacity by 5% of output to 90 MW; »» Coordinating with the Science Council of Water Infrastructures to identify maintenance plans on the basis of cost and quality balance, following a periodic schedule to optimize the Company's operation; »» Researching to find the optimal direction to avoid retail losses at Chu Prong - Gia Lai power generation cluster • Technical Division: »» Gradually increasing its contribution proportion in GEC Revenue and Profit from 2019 onwards; »» Ensuring fulfilling responsibility at the highest level and key role in the deployment of selfimplementing Solar power projects instead of the current coordination with EPC contractors; »» Effectively coordinating with Indian experts to develop a skilled team of O&M engineers, building a complete O&M model, ensuring centralized operation, technical coordination of repair and O&M plans, focusing on monitoring the SCADA system for data analysis and warning; »» Effective O&M activities for all GEC's Solar power Plants as well as offering services to external plants to diversify GEC's Revenue sources; »» Perfecting ERP system as planned, improving business operation efficiency as well as supervision activities

2018 ANNUAL REPORT

Main targets

Operational orientation

Investment and M&A strategy

• Following the motto of utilizing natural Renewable Energy sources, GEC actively seeks potential projects and assesses their effectiveness for M&A plans implementation, especially opportunities for Hydropower development in Laos, Wind power projects in potential areas of Southwestern and Central Highlands • According to vision to 2025, GEC and its Member Companies will become the largest private companies in Renewable Energy sector with a diversified investment portfolio including Hydropower, Solar power, Wind power and Waste-to-Energy • Investment will be self-sufficient throughout all stages from searching, surveying and developing projects to complete construction and put into operation the Renewable Energy plants of GEC and its Member Companies • Based on 2018 results of investment activities in Solar power Plants, GEC strives to be fully selfsufficient in Solar power Plant implementation • It is expected that in 2019, GEC will start and implement at least 2 new Solar power Plants by itself beside 4 Projects that are implemented through EPC contractors

R&D strategy

• Continuing to master technology, GEC researches optimal solutions and automation solutions for Energy plants: »» Research and master technology of power plants through periodic equipment testing and experiments; »» Pro-actively manufacturing alternative equipment to ensure stable, safe and continuous operation; »» Regularly holding meetings of Science Council of Water Infrastructures to optimize operation; »» Research and manufacturing electrical and electronic equipment to serve internal needs as well as step by step provide to external customers, namely electrical switchboards and activation boxes, Solar panel cleaning robots at Solar power projects, grid-connected inverter for roof systems, etc • Receiving new Renewable Energy technologies with the aim of optimizing operation of the coming plants while improving operational efficiency of existing plants: »» Receiving technology transfer in operational management for Solar power Plants from international contractors in existing projects; »» Step by step completing all the processes and manuals for plant operational management; »» In addition to the important equipment of Solar power projects that have to be imported, one of the Subsidiaries - GCC, completed the expanded investment project in Dien Phu Industrial Park by the end of 2018 with the frame system for Solar power projects, which was certified by Department of Science and Technology as a qualified product; »» On the basis of pro-actively providing the frame system for Solar power projects, GEC shall make investment in new construction as well as expansion of existing projects.

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REPORT OF THE INDEPENDENT BOARD MEMBER Upon supervising and advising on CG activities, the Independent Member of the BOD, along with the BOD, made impartial decisions that would not give rise to conflicts of interest among Shareholders and Investors, and especially to protect the rights and interests of the minor Shareholders.

EC’s EGM in 2018 took place on September 18th, 2018 and arrived at an agreement to appoint Ms. Nguyen Thuy Van as an Independent Member of the BOD and Chairwoman of Audit Committee. This appointment is in line with the latest CG standards issued on June 6th, 2017 according to Decree 71/2017/ND-CP with a vision to reach international standards in CG practices, chosen by Vietnam’s leading listed enterprises in the Industry to replace outdated models. Although GEG - GEC’s stock code was only listed on Upcom, GEC’s Management was taking proactive actions in meeting the good standards of CG. As an Independent Member of the BOD, she accompanied the BOD in supervising and operating the Company independently, for the interests of Shareholders and Investors in a context where minority Investors’ interests did not receive enough attention in the market scenario.

MAIN ACTIVITIES OF THE INDEPENDENT MEMBER OF THE BOD IN 4Q 2018 Upon supervising and advising on CG activities, the Independent Member of the BOD, along with the BOD, made impartial decisions that would not give rise to conflicts of interest among Shareholders and Investors, and especially to protect the rights and interests of the minor Shareholders. GEC’s Independent Member of the BOD effectively fulfilled the tasks assigned by the BOD, through these prominent activities in 4Q 2018: 90

2018 ANNUAL REPORT

Renewable Energy ensures Sustainable development in each economic, environmental and community issues

Assisting the BOD in implementing effective and transparent CG by addressing issues related to CG standards Monitoring the implementation of information disclosure according to regulations Monitoring and giving inputs on conflicts of interest and transactions with Stakeholders Directing and organizing the activities of the Audit Committee and Internal Audit, considering applicable regulations and international practices Assisting the BOD in strengthening CG by establishing and implementing independent and effective internal monitoring functions.

EVALUATION OF THE BOM’S ACTIVITIES • The BOM implemented the Company's business activities in accordance with the direction and plan of the General Meeting of Shareholders and the BOD. • Under BOM guidance, the Company successfully met business and financial targets in 2018: »» Deploying and effectively putting into operation the first 2 Solar power projects in Vietnam; »» Continuing to carry out the underway Solar power projects to generate electricity before June 30th, 2019; »» Organizing business activities of the operational small and medium Hydropower and Solar power Plants ; »» Making quick and market fluctuations.

timely

responses

• With the results achieved, GEC proved its position as one of the effective companies with good profitability, solid internal strength and potential advantages in implementing various types of Renewable Energy, which is proven through becoming the pioneer that operating Vietnam’s first Solar power projects.

EVALUATION OF THE BOD’S ACTIVITIES

OPERATION PLAN FOR 2019

• The BOD made efforts to improve CG capacity in accordance with applicable regulations and international practices.

As the Independent Member of the BOD, Ms. Nguyen Thuy Van shall continue to act in the role of a supervisor, to reduce the risk of abuse of power in management and executive positions, to contribute to the protection of legitimate interests of Shareholders and Investors.

• Within the scope of its responsibilities, the BOD issued resolutions and decisions related to the Company's operations in accordance with its competence, in line with the provisions of law and internal regulations of the Company. • The BOD maintained regular activities in accordance with the provisions of the Company's Charter, Code of CG and ensured that the requirements on number of meetings and attending Members could be met, to achieve legality and efficiency. • The BOD monitored the implementation of its decisions, and of the Resolutions by the General Meeting of Shareholders.

Simultaneously, in her responsibility as Chairwoman of the Audit Committee, Ms. Nguyen Thuy Van shall continue to provide effective orientation and solutions for Internal Audit activities to best promote the function of supervising - consolidating - maintaining the effectiveness of GEC’s internal control system. She will ensure the promotion of Internal Audit’s role and make Internal Audit the third line of defense in independent and objective monitoring, according to the standard CG model that GEC is aiming at.

• The BOD directed and supervised the implementation of the Company's important projects. www.geccom.vn

REPORT OF THE AUDIT COMMITTEE With the ambition to create the attraction of the value and image of the Company for domestic and foreign Investors, GEC has taken a practical assessment on the CG in comparison with the ASEAN Corporate Governance Scorecard.

ear 2018 was considered as a year of transformation in CG - Control - Direction of the Company, typically the change in business structure from Supervisory Board model to Audit Committee under the BOD. Accordingly, the Audit Committee gradually improves inspection, supervision, independence, comprehensiveness and its positive image in the Shareholders and Investorsâ&#x20AC;&#x2122; eyes.

The Audit Committee has efficiently supported to the Board of Directors in independent supervision

On September 18th, 2018, the EGM of Shareholders officially approved the change in the Company's structure way by establishing the Audit Committee under the BOD, assigning the BOD to decide on the number of Members as well as organizational structure, standards, assignments of tasks and other matters related to the operation of the Audit Committee. The BOD agreed to appoint 3 BOD Members to be Members of the Audit Committee:

No.

Full name

Position in the BOD

Position in the Audit Committee

Ms. Nguyen Thuy Van

Independent BOD Member

Mr. Deepak C. Khanna

Non-Executive BOD Member Member

Ms. Pham Ngoc Thanh Mai

Non-Executive BOD Member Member

Date of appointment

Details

Please refer to the Profile of the BOD, page 26

Chairwoman September 18th, 2018

Please refer to the Profile of the BOD, page 25 Please refer to the Profile of the BOD, page 26

By appointing an Independent BOD Member to be the Chairwoman of the Audit Committee, it has shown the appreciation of the independent role of the BOD. This is also a mandatory criterion for listed companies to increase transparency and, above all, protect the interests of Shareholders and Investors.

2018 ANNUAL REPORT

PERFORMANCE OF THE AUDIT COMMITTEE IN 2018 In 2018, the Audit Committee carried out the tasks according to its functions and duties as follows: 1

Developing Charter of the Audit Committee to be approved by the Board of Directors

The Charter of the Audit Committee is considered the core document regulating the Committee’s scope of work, authority, accountability and operation, creating a mechanism for the Committee to promote its strengths and makes effective consultation to the BOD. Through the development of documents serving Internal Audit activities, the Audit Committee reviewed and improved the activities and skills in examining the following activities: CG, Information Disclosure, Annual Report, FS, Internal Control, Risk Management, Internal Audit, External Auditing, Transaction with Related Parties and the efficiency and accountability of the BOD.

Building the transaction policy with the Related Parties

The Company recognizes that transactions with the Related Parties have potential conflict of interests between the participants and may cause suspicion “whether those transactions are in the best interest for the Company?“. Expecting to increase transparency, the policy on transaction with Related Parties has regulated a critical threshold - it must be reviewed and evaluated by the Audit Committee and the BOD should be advised before making decisions. Before the official issuance and application, IFC and Armstrong also gave consultancy to strengthen the policies, making the transactions more strictly controlled.

Developing a plan to improve Corporate Governance

With an ambition to attract domestic and foreign Investors by the Company's value and image, the Company assessed the current status of CG on ASEAN SCORECARD. Based on that, the Company build a roadmap to improve and create a premise to move from Upcom to HOSE. The plan to improve CG was developed with the following key contents: Improvement plan

Commitment on Corporate Governance

Details of operation

• Strengthening the BOD’s commitment on best CG practices

• Developing a Code of Ethics • Updating the Code of CG • Increasing

the BOD Members

number

Independent

• Establishing key Committees under the BOD • Clarifying and promoting the obligations of Performance of BOD Members the Board of Directors • Strengthening BOD’s role in ensuring accountability of the BOM and talent pool planning • Ensuring full participation in environmental and social issues

• Documenting all services used between the Company and Subsidiaries with TTC Group Governance control environment

• Restructuring and strengthening the Internal Audit function

• Improving the Company's operation related to independent auditing

Transparency and Investor relations activities

• Disclosing information in English • Improving information disclosure on the Website • Developing policies and procedures on conflict of interests and Related Parties transactions.

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REPORT OF THE AUDIT COMMITTEE (continued)

Trainings on Corporate Governance

Monitoring the preparation of Financial Statements and Information Disclosure

The Audit Committee organized a training course on Corporate Secretary and Internal Audit in accordance with international practices and good CG standards in December 2018.

The Audit Committee supervised the Quarterly, Semi-annual and Annual 2018 FS as well as advised the BOD to approve the selection of Independent Auditor. The FS monitoring results were as follows:

Training on CG awareness according to best practices for Senior Management is expected to be carried out in the first Quarter of 2019.

• In 2018, there was no change in Accounting Regime and Standards, Tax policies that had a significant impact on the financial situation and the published FS;

• Quarterly, Semi-annual and Annual FS were prepared in accordance with applicable Vietnamese Accounting Standards as well as relevant legal regulations;

• There are no unusual records of Related-Party transactions; • The disclosure of FS was carried out strictly in accordance with Circular 155/2015/TT-BTC guiding the information disclosure on the stock market.

Monitoring activities of the Board of Directors and Board of Management

Following the previous monitoring and supervision by the Supervisory Board, the Audit Committee continued to monitor the BOD’s activities and recorded the following results: • The Company's operations complied with the Company Charter, applicable Vietnamese laws and Company’s internal regulations; • The BOD activities in accordance with its functions and duties stipulated in the Company Charter; • The BOD timely directed the implementation of strategies and directions for business and investment activities as well as the plan to increase Charter capital, approved by the General Meeting of Shareholders; • The BOM was required to execute the directions in accordance with the BOD’s resolutions.

2018 ANNUAL REPORT

Supervising the maintenance and improvement of Internal Control system

At the end of 2018, Internal Audit Department began to operate. Therefore, in 2018, the Audit Committee directly participated in the review and inspection Company’s activities to assess the compliance and to propose resolutions to strengthen and maintain the sustainability of the Internal Control system: • The organizational structure was reviewed and simplified to ensure the compliance with the functions and duties of all departments; • The Company's BOM was aware of the importance of establishing the internal management regulations, one of the tools for effective CG. The procedure and guidelines were reviewed regularly to ensure full updates when there was any change in Law, management and control methods towards efficiency; • Proposals and warnings of the Audit Committee were considered by the BOM and managers for recognition and improvement.

Monitoring the independent auditing service

In 2018, the Company signed a contract with an Independent Auditor to audit Semi-annual and Annual FS. The auditor was selected among the Big 4 of World’s renowned auditors to increase the Investor’s confidence in the Company's business performance and financial health. The audits in 2018 were carried out by the auditor in accordance with the contract on the scope, object, time and method of implementation. Before the audit report was issued and officially published, the Audit Committee had meetings to discuss and clarify the content of FS contents that were provided to the auditor in order to ensure the trust of the readers.

Supervising the operation of Solar power Plants

TENTATIVE ACTION PLAN FOR 2019 GEG share is expected to be officially listed on HOSE in 2019; therefore, the Audit Committee’s functions and duties will be more focused to maintain the reliability and transparency, to fully promote its tasks which were assigned by the BOD according to the Charter of the Audit Committee. No.

Criteria

Content

• Developing risk policies, criteria and risk control tools for all activities of the Company 1

Internal control and risk management

and submitting to the BOD for approval

• Effectively reviewing and monitoring the internal control system, proposing solutions for improvement

• Evaluating the effectiveness and compliance of the Company's Code of Ethics • Supervising Internal Audit activities to ensure full implementation of functions, duties 2

Internal Audit

Financial Statements and information disclosure

and compliance with the Charter of Audit Committee, on behalf of the BOD • Evaluating the Internal Audit’s performance, the efficiency and independence of its operation by reviewing the results of any inspection, as well as feedback from the BOM and External Auditor

• Monitoring the truth and fairness of the FS in accordance with the law • Reviewing the compliance and consistency with Accounting standards applied by the Company and its Subsidiaries

• Supervising information disclosure in accordance with Information disclosure regulations • Reviewing and monitoring the Company's implementation and compliance of Related Party transactions in accordance with the Law, Company Charter and policy on transactions with Related Parties • Reviewing transactions with important Related Parties in accordance with the Law and the Company Charter to review whether those transactions are made on an independent market and reported to the BOD on any serious issue

Monitoring transactions with Stakeholders

• Maintaining a good relationship with the BOD through open communication tools and Effectiveness and through regular, straightforward dialogue accountability of the Board • Ensuring that the BOM is provided with information from the Audit Committee before of Directors making important decisions

Corporate Governance

• Assisting the BOD in ensuring that CG is implemented in accordance with the Law and the Company Charter.

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MAJOR RISKS & RISK MANAGEMENT ACTIVITIES RISK APPETITE

One of the requirements for an organization to ensure comprehensive risk management that meets international standard is having its own comprehensive Risk Policy with a focus on risk appetite statement (RAS), which provides a framework for the Company's approach to Risk management.

2018 ANNUAL REPORT

n the past, GEC's activities consisted of relatively simple production and trading of electricity; therefore, the Company's organizational structure did not involve a Risk Management Department. However, the Company's Risk Management activities were still implemented through the checking points of Regulatory Document system as a tool for Risk management. In addition, through the Reporting

EXTERNAL ENVIRONMENT

MACRO ECONOMY

system including periodic meetings and technology-based monitoring of daily activities, business issues are updated and resolved in real time to ensure minimum interruptions and impacts on GEC's business results. Based on practical circumstances and assessment of factors that directly affect the Company's operation, GEC's BOM developed a Risk Management process to prevent and minimize major risks:

PRESSURE OF COMPETITION

BUSINESS ENVIRONMENT

Identifying strategic objectives, dividing them into smaller objectives and action plans for each year

Identifying risks that may affect strategic objectives

Developing specific solutions, scenarios and action plans to prevent risks

Implementing solutions and action plans after being approved by the Board of Management and the Board of Directors

Supervising, monitoring and adjusting action plans to achieve strategic objectives

In 2018, GEC's Risk management was implemented with 2 main tools: Regulatory Document system and Reporting system, which were recognized as effective in ensuring safety for the Company's business activities.

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MAJOR RISKS & RISK MANAGEMENT ACTIVITIES (continued)

REGULATORY DOCUMENT SYSTEM GEC developed a Regulatory Document system that covers all of the Company's activities. Until end of 2018, the Company had issued 220 Regulatory documents to ensure the identification, management and restriction of risks that may occur during the Company's operation, including every activity in key areas as Engineering, Accounting, Planning, Project Management, etc. Regulatory Documents

Process

Statute

Rules

Technological development

Production techniques

Guide

EHSS

18 15

Administration

Legislation

Finance - Accounting

Planning

Company Office

HCM Representative Office

Internal control

Gia Lai Electricity and GEC

Project development Number of documents

2018 ANNUAL REPORT

Handbook

Project management

Chu Prong Branch

Manual

Policy

Charter

Regulation

Agreement

1 2

3 1

137

REPORTING SYSTEM

In 2018, the Company developed and updated Reporting system including Daily/Monthly/Quarterly/Annual to evaluate and control risks in GEC's business activities. At the same time, Company organized Weekly/Monthly/ Quarterly and Preliminary/Summary meetings to assess the accomplished and unaccomplished objectives as well as to determine the directions and solutions to achieve the remaining objectives. With Reporting system, the BOM can oversee the Company's daily operations as well as monitor and quickly detect risks to take timely and effective measures.

No.

Type of reports

Frequency of reports

Consolidated report of power output by plants

Revenue, expenditure, debt report

Project report

Focuses of the week report

Directives follow-up report

Cash flow report for 18 months

Investment portfolio report

Capex and major expenditure report, overhaul

Cost report

Industry briefing report

Detailed FS

Business results estimation

Monthly - Quarterly

Quarterly consolidated FS

Quarterly

Half year reviewed FS, annual audited FS

Every 6 months

Objectives and Budget

Semi-final and final reports

Daily

Weekly

Monthly

Every 6 months - Annually

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MAJOR RISKS & RISK MANAGEMENT ACTIVITIES (continued) RISK MANAGEMENT IN OPERATION TYPE OF RISKS

IDENTIFICATION OF RISKS

Market risk

• Legal regulations of Electricity Industry have a significant impact as businesses in the Industry are subject to Government's strict management through the MOIT, EVN and its Subsidiaries (regulatory and transmission units, etc.). The possibility to expand investment as well as electricity price and output are under the influence of existing legal and policy system Legal and policy risks

• The legal risks in recent years are generally not high in the context of urgency of electricity demand for the economy and the Government's requirement to ensure Energy security, while the domestic supplying being still insufficient • In the coming years, the competitive wholesale market officially takes place, Electricity Industry's legal system will have appropriate changes to regulate the Electricity Market, preferential policy, investment, taxes that will affect GEC's business • In addition, production and business activities of GEC and Members are governed by other legal and policy systems including Enterprise Law, Bidding Law, Electricity Law, Tax policies, etc. • After IPO in July 2010, GEC became a Public Company and started to operate under JSC model, so GEC is also subjected to Securities Law and other related legal documents

• Debt balance as of December 31st, 2018 was VND 1,527 billion and expected to increase rapidly when a series of investments in Solar power projects and planning for Wind power development in 2019 and beyond take place Interest rate risk

• Although Debt to Asset ratio is 0.35 times, Debt to Equity is 0.63 times and this capital structure is within control and very safe in comparison to the Industry's benchmark. However, using leverage may put pressure on debt and interest payment as well as on solvency, especially when the investment or project has not entered the payback period • In addition, interest rate fluctuation will directly affect financial expenses as well as impact GEC's business and performance indicators

Operational risk

• The goal of GEC and its Subsidiaries is to ensure a balance of financial resources to be able to pay liabilities on their due dates; to maintain solvency at an appropriate level to meet current regulations and daily business requirements Solvency risk

• Solvency ratios in 2018, though decreased compared to the previous year as the Company made disbursements of more than VND 1,200 billion for 2 projects: Phong Dien and Krong Pa in 4Q, still stayed at a very high level • Current and Quick ratios are both greater than 2 times, with Cash Ratio is even greater than 1 time, GEC ensures there is no solvency risk.

100

2018 ANNUAL REPORT

SOLUTIONS

• Promoting proactive and continuous improvement of the Legal Department's expertise to ensure that GEC's investment and business activities comply with the provisions of the law • Regularly updating guidance and participating in training on new legal documents • Assessing the impact of new legal documents, if any, and adjusting existing GEC activities according to new regulations to ensure compliance with the provisions of the law • Organizing internal training for all relevant departments to update information and capture changes of the legal document system, to make their operation effective, time-efficient and unquestionably compliant

• In order to ensure sustainable development, GEC does not abuse leverage but remain a reasonable balance between debt and equity, maintain a justifiable ratio throughout its development process, ensuring solvency at all times • The BOM regularly updates relevant economic information to facilitate assessment, decision-making and solutions on financial planning. • Negotiating with credit institutions to adjust financing plans in accordance with changes in the financial market • Expanding domestic and foreign capital market relations to diversify capital mobilization channels and avoid dependence on banks, so as to limit the risk of interest rate fluctuations in: Bonds, convertible bonds, preference shares, preference convertible shares, joint venture with foreign Investors, etc.

• Focusing on core business activities, which are production and trading of electricity, and avoid any outward investment, GEC's cash flow is kept stable for business operations and financial liability • To prevent and mitigate risks, GEC and its Subsidiaries develop periodic cash flow plans (Monthly/Quarterly/Annually) to monitor short, medium and long-term debts and identify Revenue and expenditure flows to balance resources for principal and interest payables • Building a Management Reporting system to monitor daily payments and always ensure GEC to adapt for working capital and payment of projects.

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101

MAJOR RISKS & RISK MANAGEMENT ACTIVITIES (continued)

TYPE OF RISKS

IDENTIFICATION OF RISKS

Operational risk

• Power plants are important construction related to National Energy Security, providing Energy for all economic sectors and social needs • In the context of increasing Energy demand, if the plants' operation is interrupted, production and the stability of supply will be affected, leading to power shortage, directly affecting business activities of many enterprises in particular and the National economy in general Operational risk

• Risks involving fire, explosion and other physical losses may cause enormous damage to property. Exposure to electricity/ power also puts workers at safety risks. Therefore, workers in power plants need to be permanently fully equipped with expertise, experience as well as labor safety measures to minimize damage to humans • Currently, GEC's power plants, which are small and medium scaled, have not accounted for a large proportion of Vietnam's total power output. Most operational risks shall impact on GEC's production and business activities, rather than on the Industry's Electricity supply.

1. Legal risks related to external disputes: • Legal risk related to contract disputes: Risks related to the lack of appraisal of partners' financial capacity and reputation; Risk of contract invalidation; Risks of loose terms in contracts; Risks of agreement on jurisdiction of dispute resolution; Risks from not understanding international business practices, etc. Legal and compliance risks

• Legal risks related to non-contractual disputes: Being sued for violating intellectual property; The Company's intellectual property rights being illegally exploited; Facing unfair competition; Disclosure of internal business information and technology know-hows, etc. 2. Legal risks related to disputes with state agencies: • Legal risks related to tax obligations: Tax arrears; Administrative tax penalties, etc. • Legal risks related to social insurance obligations: Social insurance arrears; Administrative penalties for social insurance • Legal risks related to administrative violations: Being sanctioned for administrative violations in: Labor, environment, business law, etc.

• The transaction processes with partners, suppliers or daily activities of GEC and its Members generate information related to production, business, financial situation, etc. Human-related Risks

• This information needs to be properly protected in order to avoid being illegally exploited and used, which may affect GEC's operational strategy • The disclosure of business secrets, information of customer, supplier and Related Parties will affect GEC's performance, cause distrust and possible damage to its Stakeholders, which harms GEC prestige.

The Electricity Industry is considered one of the industries with high operational risks from plants and labor safety systems. In 2008, the risks of GEC's plants are effectively managed through the World's most advanced management and technical solutions. All GEC activities must comply with the Regulatory Document system and must be reported on schedule and in

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2018 ANNUAL REPORT

SOLUTIONS • Being aware of the losses if risks occur, the BOM proposes to devise specific plans to minimize the risks during production • Establishing maintenance strategies with the goal of maintaining stability and operating the plants in the safest conditions • The risks to GEC's plants are managed through the system of the World's most advanced management and technical solutions • Building a complete O&M model for the operating plants, the Technical Department manages maintenance plans, O&M Department focuses on monitoring SCADA system for data analysis and warning • All large-scale power plants use modern technology to meet international standards and minimize risks during operation • Plant repairment and maintenance are pro-actively carried out periodically to optimize operation capacity, timely detect potential incidents that may increase the risk level of plant operation process • Regularly organizing training courses for employees to improve their knowledge, skills and operation to ensure that plant operation is carried out properly, continuously and safely • The Industry characteristics require large investment with many risks in operation; therefore, GEC focuses on buying insurance of major insurance organizations for its plants to prevent risks and minimize possible losses. Currently, most risks that may arise during operation are covered by large and reputable insurance companies. • The Company issued the Regulatory documents to control operational risks as: »» Hydropower plant operation and incident management process; »» Regulations on operation and incident management by SCADA system; »» Operation and incident management process for 35 KV line to 371/F7 route. 1. Legislation: • In 2018, the Legislation Department, the Company's legal hub with participation in drafting, legal appraisals, carrying out legal proceedings, etc. through important documents as the Company's Charter, CG Regulation, Internal Regulations and Processes, etc., contributed to improving the legal framework on governance, administration and basic operations of GEC and its Subsidiaries • Providing consultancy to the Management, the Divisions/Centers/Branches/Boards and coordinating with professional Law Firms/Offices to give advises and supports regarding many legal issues arising in management, governance and business processes 2. Compliance with legal and internal regulations: • Along with the internal control system, the assessment of compliance risks in all activities helps GEC implement its sustainable development strategy in every business and throughout the system • GEC regularly assesses compliance risks in legal regulations, internal regulations, regulations to ensure benefits for employees • Compliance with information disclosure obligations according to the current regulations by timely giving accurate information is important to the market and Investors; and helping the Company create and enhance prestige, aiming at sustainable development on international standards • The Company also issued the processes and regulations documents as: »» Internal control regulation; »» Regulations on compliance assessment and group classification; »» Internal control process. • Being aware of the importance of information security, GEC applied various measures to warn, prevent and punish as well as build an internal information control system • Maintaining IT system security at the highest level to prevent data loss, protect business secrets, customers, partners and Stakeholders of the Company • GEC issues its Code of Conduct and professional ethics as a basis for strict adherence to ethical rules and strict handling of violations in daily work of all levels, from Leaders to Employees, which contributes to creating a professional, safe, efficient and sustainable working environment.

accordance with regulations. In 2018, all GEC business activities took place smoothly, there was no trouble in the operation of 14 Hydropower plants and 2 Solar power Plants. In 2019, the Company will continue to promote, improve and enhance the system to minimize external and internal risks that may affect the plants' operation as well as the Company's business.

www.geccom.vn

103

COMPLIANCE WITH VIETNAMESE LAW, APPROACHING TO INTERNATIONAL STANDARDS

ccording to the long-term development strategy, GEC is directed to become Vietnam’s leading Company in the field of Renewable Energy including small and medium plants of Hydropower, Solar power, Wind power, Waste-to-Energy, LNG, etc. Simultaneous development of a series of Energy project requires that implementation fully and strictly compliance with the Law in all related areas as electricity, construction, land, environmental protection, and investment. Aiming at Sustainable development goals and becoming a prominent organization in Vietnam’s Renewable Energy Industry, the Company is applying international standards in implementing projects and operation of power plants, especially the Environmental and Social Activities Standards issued by the International Finance Corporaion - IFC. By the end of the year 2018, the BOD directed the BOM to build and complete institutions to ensure that the Company operating in accordance within the legal framework, through the issuance of 217 regulatory documents. In addition, the regulatory documents system is also reviewed, amended and supplemented annually, ensuring that all activities are strictly controlled and in accordance with abiding-law.

Aiming at Sustainable development goals and becoming a prominent organization in Vietnam’s Renewable Energy industry, the Company is applying international standards in implementing projects and operation of power plants, especially the Environmental and Social Activities Standards issued by the International Finance Corporation - IFC.

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2018 ANNUAL REPORT

In the process of developing Energy projects and operating the power plants, the BOD pays special attention to and directs the compliance with regulations on Safety, Health and Environment. These are 25 regulatory documents in this area developed not only on the basis of Vietnamese law but also in strict compliance with international standards, with consultancy from IFC - a member of World Bank and GEC’s strategic Shareholder with the ownership of 14.68% as of December 2018. It supports the management of Safety, Health, and Environment from feasibility study to investment and operation of Energy facilities.

GECâ&#x20AC;&#x2122;S PROCESS OF DEVELOPING AND OPERATING AN ENERGY PROJECT STRICTLY COMPLIES WITH LEGAL PROVISIONS IN THE FOLLOWING AREAS:

Environmental and Social Performance Standards

Surveying and supplementing power planning

Project development

Acceptance, completion and commissioning

Operation

137

Issued regulatory documents in 2018 by Category

140 120 100 80 60 40

27 20 1

Policy

Handbook

Mannual

20 0

Guide

Regulations

Code

Procedure

Issued regulatory documents in 2018 by Adjusted field 31

27 20

14 10 0

Finance & Planning

Control

Legal Technological Electricity Information Operation Accounting Projects development business Technology

HR, training

EHSS

Production Administration, Electrical technical Supporting experiment

Source: GEC

www.geccom.vn

105

COMPLIANCE WITH VIETNAMESE LAW, APPROACHING TO INTERNATIONAL STANDARDS (continued)

ENVIRONMENTAL AND SOCIAL PERFORMANCE STANDARDS 2016 is a memorable milestone that marked the strategic cooperation between GEC and the World's 2 major Financial Institutions, IFC - a World Bank Member and Armstrong Clean Energy Fund - an Investment Fund specialized in the field of Renewable Energy. As a result, in addition to compliance with Vietnamese laws, GEC projects also work in line with the standards issued by IFC as well as best CG practices:

PERFORMANCE STANDARD

7 Indigenous people

1 Assessment and management of the Environmental and Social risks and impacts

2 Labor and working conditions

6 Biodiversity conservation and sustainable management of living natural resources

Resource efficiency and pollution prevention

Land acquisition and involuntary resettlement

Community health, safety, and security

To ensure compliance with the above mentioned Environmental and Social Performance Standards, in 2016, the BOD decided to establish EHSS Department in order to approach IFC’s standards:

• Periodically carrying out internal inspection, assessment and reporting to the BOD about EHSS Management System compliance in GEC activities;

• Advising the BOD on issuing EHSS policies in accordance with Vietnam’s regulations and international standards; proposing revisions when there are any changes in relevant Laws and Standards;

• Developing and implementing annual training programs at Company level that covering all EHSS aspects in construction and operation;

• Being responsible for coordinating the developing and monitoring the implementation of EHSS processes and procedures that are related to GEC activities;

• Ensuring the contact point for EHSS - related tasks and procedures implementation in, for example, occupational accident investigation, environmental impact assessment reporting, environmental and labor environment monitoring reporting and other related tasks suitable for each period.

• Organizing the development and implementation of EHSS Management System with specific action plans throughout GEC activities in accordance with Vietnam’s regulations and international standards;

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2018 ANNUAL REPORT

Solar power Plants at GEC meet IFC's international standards

SURVEYING AND SUPPLEMENTING POWER PLANNING 1 2 3 4 5

No. I

GEC always ensures that the areas of selected projects comply with the following criteria: Minimizing the conversion of forest land; Ensuring livelihood of the people whose land is recovered; Causing no negative impact on biodiversity, habitat of endemic species and protected species; Having favorable conditions for connection and transmission; In alignment with local land use planning. Type

Document name

Amended content

Issued on

GENERAL PROVISIONS

Dec 3rd, 2004

Electricity Electricity Law Electricity Law Decision Decision 30/2006/QD-BCN Investment management of independent electricity projects

Decree

Decree 137/2013/ND-CP

Guidance on Electricity Law

Aug 30th, 2006

Circular

Circular 43/2013/TT-BCT

Approving adjustment and supplement of electricity planning

Dec 31st, 2013

SOLAR POWER

Decision

Decision 11/2017/QD-TTg Mechanism for Solar power project development

Circular

Circular 16/2017/TT-BCT

III

WIND POWER

1 2 3 4

Circular

Nov 4th, 2017

Solar power project development and Standardized PPA for Sep 12th , 2017 Solar power projects

Decision 37/2011/QD-TTg Wind power project development mechanism Decision

Oct 21st, 2013

Decision 37/2011/QD-TTg Decision 39/2018/QD-TTg Amending development mechanism

Jun 29th, 2011 Wind

power Sep 10th , 2018

Circular 96/2012/TT-BCT

Guidelines for financial mechanism to support electric price for Jun 8th , 2012 Wind power projects on grid tie

Circular 32/2012/TT-BCT

Wind power project development and Standardized PPA for Nov 12th , 2012 Wind power projects

Circular 06/2013/TT-BCT

Regulations on Wind power planning

Mar 8th, 2013

ELECTRICITY FROM SOLID WASTE

Decision

mechanism for the development of power generation May 5th, 2014 Decision 31/2014/QD-TTg Support projects using solid waste

Circular

Circular 32/2015/TT-BCT

Project development and model electricity sale contract applied Oct 8th , 2015 to generation projects using solid wastes. www.geccom.vn

107

COMPLIANCE WITH VIETNAMESE LAW, APPROACHING TO INTERNATIONAL STANDARDS (continued)

PROJECT DEVELOPMENT During construction process, the following relevant legal provisions are applied: 1

Compliance with approved land use master plans and purposes;

Compensation, support and ground clearance comply with the policies issued by competent Authorities, ensuring livelihoods for people whose land is recovered;

Compliance with regulations on investment project management, ensuring that projects are implemented in accordance with approved designs;

Strict supervision of safety, health, environmental protection in construction.

No.

Type

LAND

Law

2 3

Decree

Decree 43/2014/ND-CP

Detailing a number of articles of the Land Law

Decree 46/2014/ND-CP

Regulations on collection of land rent and water surface rent May 15th, 2014

Decree 47/2014/ND-CP

Regulations on compensation land expropriation

Law

Decree

support

for

Jun 18th, 2014

Decree 32/2015/ND-CP

Management of construction costs

Mar 25th, 2015

Decree 37/2015/ND-CP

Detailed regulations on construction contracts

Apr 22nd, 2015

Decree 46/2015/ND-CP

Quality control and maintenance of construction

May 12th, 2015

Decree 59/2015/ND-CP

Construction project management

Jun 18th, 2015

Circular 03/2016/TT-BXD

Classification of construction works

Mar 10th , 2018

Environmental Law

Environmental protection

Jun 23rd, 2014

Decree 18/2015/ND-CP

Environmental impact assessment and environmental protection plan Feb 14th, 2015

Decree 19/2015/ND-CP

Detailed guidance on environmental protection law

Circular 27/2015/TT-BTNMT

Guidance on preparation of environmental impact assessment May 29th, 2015 reports and environmental protection plans

III

ENVIRONMENT

Law

and

Construction

Circular

Decree

Nov 29th, 2013

Construction Law

Issued on

Land

CONSTRUCTION

Amended content

Land Law

108

Document name

Circular

INVESTMENT

Law

Investment Law

Investment

Nov 26th, 2014

Decree

Decree 118/2015/ND-CP

Detailed guidance on Investment Law

Nov 12th, 2015

2018 ANNUAL REPORT

ACCEPTANCE, COMPLETION AND COMMISSIONING

1 2

No.

The process of acceptance and Commercial Operation Date of a power project is implemented and strictly complied with the process issued by the competent Authorities: Having all technical design documents, construction drawings, construction and installation completion documents and other technical documents as prescribed; Performing experiments, adjusting each part and the whole system of equipment in power generation, transmission and distribution line to ensure compliance with the standards, technical regulations and specifications that are specified in the approved design. Type

Law

Document name

Amended content

Electricity Guidance on Electricity Law Regulations about electricity safety Detailed regulations on electricity safety Stipulating the procedure for dispatching of national power system Amending and supplementing Circular 40/2014/TT-BCT

1 2 3 4

Decree

Electricity Law Decree 137/2013/ND-CP Decree 14/2014/ND-CP Circular 31/2014/TT-BCT

Circular

Circular 40/2014/TT-BCT

Circular 39/2015/TT-BCT

Issued on

December 3rd, 2004 October 21st, 2013 February 26th, 2014 October 2nd, 2014 November 5th, 2014 November 18th, 2015

OPERATION

1 2 3 4

No.

The process of operating a power plant, especially Hydropower plants, needs to comply with the following main regulations: Compliance with the operation and troubleshooting procedures of plants and lines; Compliance with environmental protection solutions that committed in Environmental Impact Assessment Report or Environmental Protection Plan; For Hydropower plants, compliance with the policy on maintaining minimum flow; Ensuring safety and health for employees who are directly involved in plant operation. Type

Document name

ELECTRICITY

1 2

Law

Issued on

Electricity Guidance on Electricity Law Stipulating in detail the implementation of electricity law regarding electricity safety Stipulating certain details of electrical safety Stipulating the procedure for dispatching of national power system Amending and supplementing Circular 40/2014/TT-BCT

Dec 3rd, 2004 Oct 21st, 2013

ENVIRONMENT

Law on water resources Water resources Law Environmental protection Environmental protection Law 2014 Detailing the implementation a number of articles of the law Decree 201/2013/ND-CP on water resources Environmental impact assessment and environmental Decree 18/2015/ND-CP protection plan Decree Decree 19/2015/ND-CP Detailed guidance on environmental protection law Developing and managing the corridor for protection of Decree 43/2015/ND-CP water sources Decree 114/2018/ND-CP Dam safety and reservoir Management Guidance on strategic environmental assessment, Circular 27/2015/TT-BTNMT environmental impact assessment and environmental Circular protection plan Circular 47/2017/TT-BTNMT Monitoring the exploitation and use of water resources

Jun 21st, 2012

Decree

Electricity Law Decree 137/2013/ND-CP

Amended content

Decree 14/2014/ND-CP

Circular 31/2014/TT-BCT

Circular Circular 40/2014/TT-BCT

Circular 39/2015/TT-BCT

2 3 4 5 6 7 8 9

Feb 26th, 2014 Oct 2nd, 2014 Nov 5th, 2014 Nov 18th, 2015

Mar 26th, 2014 Nov 27th, 2013 Feb 14th, 2015 Feb 14th, 2015 May 6th, 2015 Sep 4th, 2018 May 29th, 2015 Nov 7th, 2017

www.geccom.vn

109

INVESTOR RELATIONS ACTIVITIES & CAPITAL MARKET GEC'S CHARTER CAPITAL INCREASED 7 TIMES FROM 2010 TO 2018

September 9th, 2010

June 6th, 2012

CHARTER CAPITAL

VND

262 BILLION

523 BILLION

Private placement for strategic Partners Distributing to 4 Shareholders with VND 12,000/share

CHARTER CAPITAL TIMES INCREASED FROM 2010 TO 2018

November 11th, 2015

November 8th, 2015

August 29th, 2014

CHARTER CAPITAL

VND

745 BILLION

722 BILLION

602 BILLION

Issuing swap shares Distributing to 119 Shareholders

Paying dividends, increasing share capital from equity Distributing to 212 Shareholders

Paying dividends, increasing share capital from equity Distributing to 250 Shareholders

June 21st, 2017

November 14th, 2017

October 30th, 2018

CHARTER CAPITAL

VND

894 BILLION

Issuing shares to pay dividends Distributing to 302 Shareholders

971 BILLION

Issuing swap shares Distributing to 1,163 Shareholders

1,942 BILLION

Issuing for existing Shareholders Distributing to 1,533 Shareholders

Source: GEC

On September 9th, 2010, GEC officially transformed to Gia Lai Electricity JSC, with Charter capital of VND 262 billion. After 8 years of operation and development under JSC model, GEC has increased its Charter capital 7 times, at VND 1,942 billion by the end of 2018. In 2018, GEC successfully issued 97,091,275 shares to existing Shareholders on 1: 1 ratio, which means an existing Shareholder who owns 1 share is entitled to buy another share at the issuing price of

110

2018 ANNUAL REPORT

VND 10,000/share. This is GEC's largest capital increase since its establishment, which gained VND 971 billion and raised the Charter capital to VND 1,942 billion. This capital increase initiated the Company's first steps of increase in scale to significantly supplement capital for Solar power project operation and working capital for other activities as well as to prepare for Renewable Energy diversification, especially Solar and Wind power in 2019.

STABLE SHAREHOLDER STRUCTURE WITH GLOBAL BRAND NAMES AS STRATEGIC FOREIGN SHAREHOLDERS As of December 31st, 2018, GEC had 4 major Shareholders owning 80.69% in total, including Thanh Thanh Cong Investment JSC with the highest percentage of 23.03%, Ben Tre Import-Export JSC with 22.87%, Armstrong Clean Energy Fund from Singapore - the Investment fund specializing in Renewable Energy - with 20.11% and IFC a World Bank Member - with 14.68%. In addition, GEC also has a major individual Shareholder, Ms. Dang Huynh Uc My, who owns 5.08%. As such, the total number of shares held by major Shareholders as of the end of December 2018 was 85.77%. The strategic cooperation with 2 large Financial Institutions, IFC and Armstrong in 2016 marked an important step in GEC's strategic expansion into Renewable Energy, becoming a pioneer in energizing Vietnam 's first Solar projects complied with international standards.

GEG SHAREHOLDER STRUCTURE AS OF DECEMBER 31ST, 2018 Number of Shareholders

No.

Type of Shareholders

I 1

MAJOR SHAREHOLDERS (Owning from 5% and above) Domestic

1 1

4 2

166,546,628 98,974,872

85.77 50.97

Foreign

67,571,756

34.80

SHAREHOLDERS OWNING 1% - 5%

5,170,000

2.66

Domestic

2,400,000

1.23

Foreign

2,770,000

1.43

III

SHAREHOLDERS OWNING LESS THAN 1%

1,531

22,465,922

11.57

Domestic

1,516

20,787,876

10.71

Individual

Institutional

Number of shares

Percentage (%)

Foreign

1,678,046

0.86

TOTAL

1,532

194,182,550

100

Domestic

1,517

122,162,748

62.91

Foreign

72,019,802

37.09

Structure by Major Shareholders (%)

Structure by Type of Shareholders (%)

Structure by Origin of Shareholders (%)

0.03

2.26

5.08

5.08 14.23

10.42

1.52

23.03

37.09

14.68

62.91

34.79

45.90

22.87 20.11

TTC Investment JSC Ben Tre Import-Export JSC AVH Pte Ltd.

IFC Other Shareholders Dang Huynh Uc My

Foreign Shareholders Domestic Shareholders

Foreign individuals Major domestic individuals Major domestic institutions Major foreign institutions

Domestic institutions Foreign institutions Domestic individuals Source: GEC

www.geccom.vn

111

INVESTOR RELATIONS ACTIVITIES & CAPITAL MARKET (continued) According to a survey on Vietnam's energy listed Companies, there are about 31 enterprises that operate 1.8 MW to 400 MW plants; however, there are only 2 listed Companies with foreign Shareholder's ownership percentage greater than 5%: Can Don Hydropower JSC (SJD - HOSE) with 13.62% and Vinh Son - Song Hinh Hydropower JSC (VSH - HOSE) with 9.81%, but these foreign Shareholders are not involved in management.

No.

Stock code

Company

AVC

A Vuong Hydropower JSC

BHA

Bac Ha Hydropower JSC

BSA

Buon Don Hydropower JSC

DNH

Da Nhim - Ham Thuan - Da Mi Hydropower JSC

EAD

Dak Lak Power Hydroelectric JSC

EIC

EVN International JSC

GEG

Gia Lai Electricity JSC

GSM

Huong Son Hydro Power JSC

SBM

Bac Minh Development Investment JSC

HNA

Hua Na Hydropower JSC

HPD

Dak Doa Hydropower JSC

ISH

Idico Scrok Phu Mieng Hydro Power JSC

NED

North - West Electric Investment and Development JSC

SBH

Song Ba Ha Hydropower JSC

SP2

Su Pan 2 Hydropower JSC

SVH

Song Vang Hydropower JSC

TDB

Dinh Binh Hydropower JSC

VCP

Vinaconex Construction Investment and Energy Development JSC

HJS

Nam Mu Hydropower JSC

SEB

Mien Trung Power Investment & Development JSC

CHP

Central Hydropower JSC

S4A

Se San 4A Hydropower JSC

SBA

Song Ba JSC

DRL

Hydro Power JSC – Power No.3

SHP

Southern Hydropower JSC

SJD

Can Don Hydropower JSC

TBC

Thac Ba Hydropower JSC

TMP

Thac Mo Hydropower JSC

TTE

Truong Thinh Energy Investment JSC

VPD

Vietnam Power Development JSC

VSH

Vinh Son - Song Hinh Hydropower JSC

Percentage of foreign Shareholders

Foreign Shareholders

Exchange

34.79%

• IFC: World Bank • Armstrong: Singapore

UPCOM

HNX

13.62%

• Samarang Ucits - Samarang Asian Prosperity: Luxembourg • PYN Elite Fund: Poland

HOSE

9.81%

Samarang Ucits - Samarang Asian Prosperity: Luxembourg Source: GEC's research

112

2018 ANNUAL REPORT

Among Hydropower businesses that are listed on both official and unofficial exchanges, GEG has the outstanding advantage of high percentage of foreign ownership - up to 37% - and these Shareholders are amongst the World's reputable credit organizations. The fact that IFC and Armstrong became GEC's strategic Shareholders contributed greatly to operation improvement as well as realized GEC's development strategy of expanding to various types of Renewable Energy since 2016:

MILESTONES

KEY CONTENT

Apr 2017 Dec 2018

Professional training and Corporate Governance practices training 1 2 3 4

Oct 2017

Holding courses on international good CG practices, training by IFC experts Participants: the BOD, BOM, Head of Department, Division, etc. Informing on international CG trends Gradually building GEC as Vietnam's exemplary Energy enterprise Establishment of Environment, Health, Social Policy, Safety

1 2

Jan 2018

Coordinating, implementing and monitoring activities related to EHSS Ensuring compliance with Vietnam's EHSS standards and international practices

Realizing the Renewable Energy strategy 1 2 3

Sep 2018

Supporting the decision-making processes for GEC's strategic direction on developing renewable Energy projects Creating a pioneer in Vietnam's Solar Energy Industry Affirming GEC's prestige and brand name for local and foreign Financial Institutions Changing the Corporate Governance structure

1 2 3

Putting an end to Supervisory Board operation Establishing the Audit Committee Step by step getting closer to international practices, being aligned with the objectives and orientation of GEC activities

In 2018, GEC's Shareholder structure did not change significantly, especially there was no change in the structure of strategic foreign Shareholders. Strategic Shareholders continued to accompany the Company's development and pro-actively supported finance, governance and shared such a good experience in Renewable Energy. The stability of Shareholderâ&#x20AC;&#x2122;s structure is an important condition that gives the Company much time to focus on professional activities, serving the Sustainable development strategy in recent years. www.geccom.vn

113

INVESTOR RELATIONS ACTIVITIES & CAPITAL MARKET (continued)

TRANSACTION OF SHARES BY MAJOR SHAREHOLDERS, INTERNAL PERSONS AND RELATED PARTIES IN 2018

No.

Position/Relationship with Internal Persons

Individual/Institutional

MAJOR SHAREHOLDERS

Thanh Thanh Cong Investment JSC

Major Shareholders

Ben Tre Import-Export JSC

Major Shareholders

AVH PTE. LTD

Major Shareholders

IFC

Major Shareholders

Ms. Dang Huynh Uc My

Major Shareholders

THE BOARD OF DIRECTORS AND RELATED PARTIES

Mr. Tan Xuan Hien

Chairman of the BOD

Related Parties 6.1

Ho Thi Anh Ngoc

Wife

6.2

Tan Thi Xuan Hien

Sister

6.3

Tan Xuan Hau

Sister

Ms. Pham Ngoc Thanh Mai

BOD Member

BOARD OF MANAGEMENT AND RELATED PARTIES

Ms. Nguyen Thai Ha

CEO

Mr. Phan Thanh Lac

Deputy CEO

Related Parties 9.1

Ms. Phan Nhat Le

Daughter

Mr. Nguyen Dinh Tuan

Deputy CEO

Mr. Le Thanh Vinh

Deputy CEO

OTHER INTERNAL PERSONS

114

2018 ANNUAL REPORT

Ms. Tran Thi Hong Tham

Chief Accountant

Mr. Pham Thanh Tuan Anh

Authorized person to disclose information

Opening ownership Percentage (%)

Quantity

Ending ownership Percentage (%)

Quantity

Restricted shares (October 2018 October 2019) (Private placement)

Reason of increase/decrease

22,200,000

22.87

44,714,296

23.03

Increase by additional issuance

Number of shares: 314,296

22,200,290

22.87

44,400,580

22.87

Increase by additional issuance

17,922,535

18.46

39,057,174

20.11

Increase by additional issuance and additional purchases

14,257,291

14.68

28,514,582

14.68

Increase by additional issuance

1,369,000

1.41

9,859,996

5.08

Additional purchase, becoming major Shareholder

206,679

0.21

536,058

0.27

Increase by additional issuance

Number of shares: 122,700

331,861

0.34

663,722

23,896

0.024

0.342 -

Increase by additional issuance

Sold out

7,505

0.004

Increase by additional issuance

Number of shares: 7,400

15,000

0.007

Increase by additional issuance

Number of shares: 15,000

30,700

0.015

Increase by additional issuance

Number of shares: 30,700

0.34

366,524

0.188

Increase by additional issuance

Number of shares: 34,600

50,000

0.02

Increase by acquiring more

0.10

187,606

0.096

Increase by additional issuance

Number of shares: 34,600

37,300

0.019

Increase by additional issuance

Number of shares: 37,300

27,600

0.014

Increase by additional issuance

Number of shares: 27,600

30,800

0.016

Increase by additional issuance

Number of shares: 30,800

331,924

99,253

Source: GEC

www.geccom.vn

115

INVESTOR RELATIONS ACTIVITIES & CAPITAL MARKET (continued)

GEG SHAREâ&#x20AC;&#x2122;S MOVEMENT WERE POSITIVE IN 2018 IN BOTH PRICE AND LIQUIDITY AN INCREASE OF 160% COMPARED TO MARCH 21st, 2017 BEING TRADED ON UPCOM

Indicator

194

Share price

VND

Number of listed shares

Market Capitalization

VND Billion

Value

15,300 194,182,550 2,971

52 WEEKS

Million of Shares in transaction

UP 171% COMPARED TO 2018

USD

Unit

130

Highest price

VND

15,300

Lowest price

VND

9,700

Average transaction volume

Average transaction value

VND Billion

147,931 2.07

FOREIGN

Million Market capitalization

Foreign ownership limitation

Percentage of foreign ownership

37.08

EPS

VND

1,121

P/B

Times

1.2

P/E

Times

13.7

STOCK INDICATORS

Source: GEC

GEG SHARE PRICE INCREASED IN 2018

35%

116

March 21st, 2017 was the first day GEC officially traded its share GEG on the unofficial exchange Upcom of Hanoi Stock Exchange, with par value of VND 10,000/share and the number of registered shares of 74,490,339. As of December 31st, 2018, the total number of listed shares was up to 194,182,550, an increase of 160% from the time of listing. Although 2018 witnessed stable macro economy, high GDP growth, business results of listed companies were estimated to grow about 20% yoy, but such global factors as 3 hikes in FED's interest rate and the escalating US-China trade war negatively affected the stock market, global capital flow, and Investor confidence. Vietnam stock market experienced a year of volatility, contrary to the bright note expected by of most securities companies at the beginning of the year, despite of many improved internal factors of the economy as well as the stock market. From the World's strongest growing market position in

2018 ANNUAL REPORT

April 2018, Vietnam ended 2018 as one of the World's fastest declining markets. Against this downtrend, GEG share had visible growth in both liquidity and price. GEG share price was soared significantly, at VND 15,300/share on December 28th, 2018, up 35% from VND 11,300 at the beginning of the year. Market capitalization at the end of 2018 reached VND 2,971 billion, equivalent to USD 130 million, up 171% compared to VND 1,097 billion at the early of 2018. The Energy shares were generally stable, with almost no changes compared to other shares with quite low liquidity. However, GEG share were actively traded during the last 6 months of 2018, the volume of stock transactions averaged at 267 thousand shares per session, 13 times higher than the average of the first half - just about 20 thousand shares.

GEG share price was soared significantly, at VND 15,300/share on December 28th, 2018, up 35% from VND 11,300 at the beginning of the year. Market capitalization at the end of 2018 reached VND 2,971 billion, equivalent to USD 130 million, up 171% compared to VND 1,097 billion at the early of 2018. Price movements of GEG and VN Index Points

VND

1,500

20,000

1,200

15,000

900

10,000 600

5,000 300

0 01

Month

VNIndex

GEG

GEG transaction volumes Million of Shares 6

0 Month

Source: GEC

www.geccom.vn

117

INVESTOR RELATIONS ACTIVITIES & CAPITAL MARKET (continued) IN COMPARISON WITH OTHER SHARES FROM THE SAME INDUSTRY In comparison to the small and medium sized Hydropower listed enterprises of the same scale, GEC currently has the best Market capitalization and liquidity at December 28th, 2018.

DIVIDEND

10% -20% /Year

There are about 13 companies being listed on Vietnam stock exchange that operate small and medium power plants with capacities ranging from 0.6 MW to 33 MW, which are equivalent to GEC's. Most Hydropower companies joined the stock market quite late compared to companies in other industries except Nam Mu Hydropower JSC (HJS - HNX) and Mien Trung Power Investment and Development JSC (SEB HNX) were listed before 2010, the rest were just listed in the market past few years. No.

Stock code

In comparison to the listed small and medium sized Hydropower enterprises of the same scale, GEC currently has the best market capitalization and liquidity at December 28th, 2018. On the other hand, in addition to the strengths of Hydropower projects, GEC is investing in the construction and operation of Solar power Plants and also aiming at Wind power. GEC was initially successful in its ambitious development strategy to become a pioneer in Vietnam's Solar Energy market. This will contribute to creating added value for Shareholders and Investors, especially when GEG prices and liquidity grow year by year.

First day of trading

Outstanding shares

GEG

Mar 21st, 2017

194,182,550

2,971 UPCOM

147,931

1,121

13.7

SBM

Sep 21 , 2017

39,000,000

1,170 UPCOM

7,887

2,939

10.0

SEB

Jan 14 , 2009

31,999,969

1,014 HNX

22,715

7,443

4.2

GHC

Apr 26 , 2011

20,500,000

648 UPCOM

2,968

4,640

6.9

DRL

Apr 11 , 2012

9,500,000

477 HOSE

1,245

5,132

9.7

HJS

Dec 20 , 2006

20,999,900

437 HNX

42,007

2,172

9.5

NED

Aug 18 , 2017

40,500,000

405

30,255

964

10.0

TDB

Jul19 , 2017

8,230,000

5,511

3,540

11.0

GSM

Apr 8 , 2015

28,562,000

300

10,887

190

55.0

th th

Capitalization (VND Billion)

Exchange

319 UPCOM

Average transaction volume of 52 weeks

EPS

P/E

TTE

Dec 10 , 2018

28,490,400

296 HOSE

91,044

420

23.0

SVH

Dec 28th, 2017

14,820,662

197

51,519

966

13.0

HPD

Jun 11th, 2015

8,306,590

3,224

2,184

8.2

EAD

Sep 30 , 2016

2,877,800

3,995

2.0

150 UPCOM 24

Source: Vietstock, CafeF December 28th, 2018

CONTINUOUS EFFORT TO PAY STABLE DIVIDEND EVERY YEAR With the stable cash flow from Hydroelectricity business, GEC always does its best to ensure the interests of Shareholders and Investors by paying dividends in various form, in cash or shares, with an attractive dividend rate compared to the average of other listed companies. Since 2014, GEC has paid dividends mainly in cash, at 10% on average, only once in shares in 2016 at 20%. At the same time, most of other small and medium cap listed companies paid dividends in shares or failed to do that.

118

2018 ANNUAL REPORT

Dividends payment history 2014 - 2019 Cash

20%

11% Average 10%

2014

2016

10%

2017

2018

2019 Source: GEC

Diversifying financial resources to flexibly meeting business needs, GEC continues to improve management capacity, capital efficiency to maintain good relationship with local financial institutions. In addition to the goal of increasing working capital, supplementing working capital to maintain and expand operations, bond issuance also supported GEC in stabilizing the cash flow, increasing capital efficiency and streamlining the financial structure. On June 20th, 2018, GEC issued 300 bonds with the par value of VND 1 billion each, for investment in Phong Dien and Krong Pa Solar power Projects. GEC has been maintaining credit relationship with reputable local banks, with its total outstanding loans by the end of December 2018 being VND 1,527 billion. Outstanding loan at Credit Institutions at December 31st, 2018 Short term borrowings

Long term borrowings

VND Billion 1,000

941.3

800 600 415.5

400 200 0

40.5 Vietcombank

15.3

63.7

Vietinbank

50.0 Agribank

0.1

0.6 Others Source: GEC

www.geccom.vn

119

INVESTOR RELATIONS ACTIVITIES & CAPITAL MARKET (continued) HIGHLIGHTS OF INVESTOR RELATIONS AND CAPITAL MARKET ACTIVITIES IN 2018

March 2018

April 2018

May 2018

June 2018

July 2018

120

2018 ANNUAL REPORT

Organizing the 2017 Annual General Meeting of Shareholders • Performance of production and business activities in 2017: Revenue of VND 539 billion, PBT of VND 230 billion, exceeding 4% and 53% of the targets, respectively • Paying 10% dividend in cash • Stock issuance plan to increase Charter capital to VND 1,942 billion • 2018 plan: Revenue of VND 547 billion, PBT of VND 170 billion, 6% and 14% respectively higher than 2017 targets • Expected dividend payment rate of 5% -10% Signing the credit contract of VND 870 billion for Krong Pa Solar power Project • Cooperating with Vietnam's leading bank Vietcombank • Expressing both parties' confidence in the success of the first investment in Solar power project in Gia Lai Province, the second project in Vietnam Continuing to implement a series of Solar power Projects • Agreeing to approve the investment plan for Ham Phu 1 Solar power Project, total investment of VND 929 billion • Agreeing to approve the investment plan for Ham Phu 2 Solar power Project, total investment of VND 927 billion • Agreeing to approve the investment plan for Duc Hue Solar power Project, total investment of VND 947 billion

Signing a bond subscription contract between GEC and Vietcombank - Gia Lai Branch • The total number of subscribed bonds is 300 • Each bond was worth VND 1 billion • Investing in Phong Dien - Hue and Krong Pa - Gia Lai Solar power Projects Organizing the Preliminary Conference of first half and plan for second half of 2018 • Revenue reached VND 227 billion, PBT reached VND 98 billion, completed 58% of the annual plan • Agreeing on implementation actions for H2 2018 plan, striving to exceed the targets set for 2018 Agreeing to approve the change of investment loan for Phong Dien - Hue Solar power Project • Agribank Gia Lai Branch and Agribank Thua Thien Hue Branch • The co-financing contract was worth VND 490 billion

Approving the increase in Charter capital of Member Companies • Thuong Lo Hydropower One Member Limited Liability Company • Charter capital increased to VND 70 billion December 2018

October 2018

Obtaining written opinions of Shareholders for approval on the transfer from Upcom to HOSE • An opportunity for GEG code to continue to improve its brand image • Calling for attention from international Investors community

Completing the increase of Charter capital to VND 1,942 billion • Continuing to realize the Company's development in size and stature • Ensuring financial resources was ready for the deployment of new projects in accordance with the strategy Completing 2017 dividend payment • The dividend payout ratio, to be paid in cash, was 10% • Ensuring profitability for Investors' investments • Fully implementing commitments on benefits of Shareholders and Investors Issuing Resolution to approve the support for Gia Lai Hydropower Joint Stock Company • Borrowing for Ham Phu 2 Solar power Project • Vietcombank Gia Lai showed their support by lending or arranging sufficient investment capital in case total investment of the project increases

September 2018

Guaranteeing and approving for Subsidiary - Gia Lai Construction and Electrical Mechanic One Member Limited Company - to borrow short-term loans at Vietcombank Gia Lai • The loan is VND 40 billion • Supplementing and compensating working capital for production and business activities Organizing the Extraordinary General Meeting of Shareholders 2018 with the key contents • Approving the review and elimination of businesses that limit the percentage of foreign Investors' ownership • Approving on the BOD's resignation and election of additional Members of the BOD for the term 2015-2020

August 2018

Signing the credit contract of VND 490 billion for Phong Dien Solar power Project • Affirming the long-term and sustainable cooperation, on the basis of maximizing the potentials of both Parties • Showing the support for Renewable Energy development promotion by major credit institutions • Meeting the needs of production consumption and contributing to environmental protection, ensuring local and national Energy security State Security Commission of Vietnam granted the Certificate of Registration of public offering • The number of approved offering shares was 97,091,275 • This is the legal basis for implementing the Company's Charter capital increase • Ensuring financial resources to deploy business plans and investing in a series of future new projects. www.geccom.vn

121

A corner of Krong Pa Solar power Plant - Gia Lai

BOARD OF MANAGEMENT YEAR IN REVIEW 124 130 138 146 158 164 166 170

Remarkable milestones in a year of operation Project portfolio & Services Positioning GEC on the Renewable Energy market Business activities analysis based on Business Model Investment, operation and production activities of each major Energy segment R&D activities - Optimal Energy solutions Investment in technology development to increase the operation efficiency Human resource and training - Lever of growth

1,136

TOTAL CAPACITY MW TO 2022

PIONEER'S IMPRINT MARKET LEADER IN THE CONTEXT OF INCREASING DEMAND FOR ELECTRICITY FROM AN AGGRESSIVE AND EMERGING ECONOMY, FOSSIL SOURCES BEING DEPLETED, GEC HAS PROVEN ITS PIONEER POSITION BY PROACTIVELY INVESTING AND BRINGING GIA LAI ELECTRICITY TO BECOME VIETNAM'S "CAPITAL" OF SOLAR ENERGY; WITH A LEADING ROLE IN THE CLEAN ENERGY MARKET.

REMARKABLE MILESTONES IN A YEAR OF OPERATION Summary conference of 2017 activities as well as deploying tasks and plans for 2018 with outstanding contents related to various types of Hydropower, Solar power and Wind power

JANUARY

HYDROPOWER

THE TOTAL OUTPUT OF COMMERCIAL ELECTRICITY WAS EXPECTED TO REACHED NEARLY BEING EQUIVALENT TO THE REVENUE FROM ELECTRICITY BUSINESS REACHED NEARLY

OPTIMIZING COST CONTROL TO ENSURE PBT TARGET OF

SOLAR POWER

447 604

MILLION KWH

VND

195

BILLION

• Operating Phong Dien and Krong Pa Solar power Projects in 4Q 2018 • Continuing to complete legal procedures, which were the basis for implementing Solar power projects in accordance with strategic objectives.

WIND POWER

• Focusing on surveying and developing new feasible Wind power projects • The areas of interest are South Central and Mekong Delta coastal areas.

124

2018 ANNUAL REPORT

Signing Engineering Procurement and Construction contract to implement Phong Dien - Hue Solar power Project

FEBRUARY

• The contract was signed with joint venture of SHARP Group Japan - Sharp Solution Asia Company - SSSA Thailand and NSN Construction and Engineering JSC Vietnam.

The Chairman of the Group (on the right) gave a souvenir to Japanese EPC Partner

• The signing of EPC contract with Sharp's JV - SSSA - NSN was an important milestone in the trend of cooperation and development, which contributed to the effectiveness of the Parties' performance and increased benefits for the community in the context of local and global climate change.

MARCH

Organizing 2017 Annual General Meeting to report the operation as well as to get approval for key items related to finance, capital mobilization and interests of Shareholders and Investors • Reporting 2017 production and business activities with Net Revenue of VND 539 billion, PBT of VND 230 billion, exceeding 4% and 53% of the targets, respectively. • Paying 2017 dividend of 10% in cash and planning to issue shares to increase the Charter capital to VND 1,942 billion. • According to 2018 plan, Net Revenue was expected to be VND 547 billion, PBT of VND 170 billion, 6% and 14% respectively, higher than 2017 targets, with expected dividend payout ratio of 5% -10%. Signed the next Engineering Procurement and Construction contract with a foreign partner • The cooperation with JGC Vietnam Co., Ltd. was to deploy Krong Pa - Gia Lai Solar power Plant, which was expected to generate electricity in 4Q 2018. • JGC Vietnam Co., Ltd. is a 100% foreign-invested company with 3 major Shareholders JGC Corporation Japan, JGC Plant Innovation and JGC Singapore EPC Japanese partner.

www.geccom.vn

125

REMARKABLE MILESTONES IN A YEAR OF OPERATION (continued)

Signing the credit contract of VND 870 billion for Krong Pa Solar power Project

APRIL

• The collaboration with Vietcombank Vietnam's leading bank, demonstrated the confidence from both Parties in the success of the investment in the first Solar Power Project in Gia Lai Province. • Vietcombank not only showed confidence in GEC's business performance, but also supported the development process of Solar power - Renewable Energy source, the global trend of developing new Energy towards sustainable development and environmental protection.

Completing Phase 1 of Dak Pi Hao 2 Hydropower Plant

MAY

• Under the supervision and technology transfer of Indian VOITH contractor, the Project was completed on schedule. • The Project improved production efficiency, step by step modernized and automated the Plant's operations, increasing operational efficiency by more than 10%.

Celebrating the 29th anniversary of GEC's establishment and development

JUNE

• From a small State-Owned Enterprise that owned and operated only Ia Drang 2 Hydropower Plant with a capacity of 1.2 MW; GEC has become a leading enterprise of small and medium Hydroelectric plants as well as Solar power Plants in Vietnam. • GEC's current project portfolio has more than 14 Hydropower plants with a capacity of 84.1 MW; 2 Solar power projects expected to be completed in 2018, elevating generation capacity to 182 MW.

126

2018 ANNUAL REPORT

Organizing the Preliminary Conference of first half and plan for second half of 2018

JULY

• Evaluating and recognizing production and business activities in first half 2018 with Net Revenue reaching VND 227 billion, PBT of VND 98 billion, fulfilling 58% of the annual plan. • Agreeing on implementation actions for second half 2018 plan, striving to exceed the targets set for 2018.

AUGUST

Signing Engineering Procurement and Construction contract to implement Phong Dien - Hue Solar power Project Marking the successful cooperation between EVN, Electric Power Trading Company, and GEC for the first time in Solar Power Industry. Signing a credit contract of VND 490 billion with Agribank Gia Lai Branch, Agribank Thua Thien Hue Branch for Phong Dien Solar power Project • Affirming the long-term and sustainable cooperation, on the basis of maximizing the potentials of both Parties. • Major credit institutions showed their support for Renewable Energy development, which not only meets the needs of production but also contributes to environmental protection and ensures local and national Energy security. State Securities Commission of Vietnam granted GEC the Certificate of Registration of Shares Offering to the Public GEC got the approval for 97,091,275 offered shares, which was the legal basis to deploy the plan to increase the Company's Charter capital, ensuring financial resources to implement business plans and investment in a series of coming projects.

www.geccom.vn

127

REMARKABLE MILESTONES IN A YEAR OF OPERATION (continued)

Organizing the 2018 Extraordinary General Meeting of Shareholders

SEPTEMBER

The most important contents included reviewing and removal of business lines that were subject to a limit in the percentage of foreign Investors ownership, removing and electing additional BOD Members for the term 2015-2020. Signing the next Power Purchase Agreement This was GEC's second Solar Power Purchase Agreement for Krong Pa - Gia Lai Solar power Project, which was scheduled to generate electricity officially in October 2018.

OCTOBER

Putting Phong Dien - Hue Solar power Plant into operation, officially The 48 MWp plant became the first Solar power Plant in Vietnam to officially on COD; which affirmed GEC's milestone as the first Company to own an operational Solar power Plant. Appointment of Ms. Nguyen Thai Ha as Chief Executive Officer She became the first female CEO of GEC in its 29 years of history. In the position of a CEO, she continued to improve and professionalize the management, governance, Investor relations and Capital market; supporting the Company to meet its objectives and development strategies in the near future. Completing the increase of Charter capital to VND 1,942 billion Continuing to realize the Company's development in size and scale, as well as to ensure financial resources to prepare for the implementation of investment projects under the Company's strategy. Completing dividend payment for 2017 The dividend payout ratio to be paid in cash is 10%, which ensures profitability of investment for Investors and also fulfills commitments on benefits for Shareholders and Investors. 128

2018 ANNUAL REPORT

DECEMBER

Power generation of the 2nd Solar power Plant - Krong Pa - Gia Lai Krong Pa Solar power Plant with a capacity of 69 MWp officially on COD; becoming the first Solar power Plant in Gia Lai Province and the Solar power Plant of biggest capacity in Vietnam to date.

2018 customer appreciation Program at TTC Chu Prong Branch - the only Branch to deploy electricity retail The Program is held annually in December to express gratitude to customers who trust and choose GEC's consumer electricity, as well as to tighten the relationship between the Company and the local people. Getting Shareholder's opinion in writing Proposal for transferring from Upcom to HOSE; which demanded the Company to meet strict criteria of transparency, prestige and efficiency in operation. This is an opportunity for GEG to continue to promote its brand as well as to attract the international Investors community.

www.geccom.vn

129

PROJECT PORTFOLIO & SERVICES

With nearly 30 years of development since establishment, profound experience in investment, management and exploitation of various power types; GEC directly and indirectly has owned 14 potential small and medium sized Hydropower plants with a total capacity of 84.1 MW in the Central and Central Highlands regions, which operate with stable cash flow and effective financial indicators.

POWER

POWER SERVICE

Solar power

Experiment

Hydropower

Mechanical installation

Power consulting

130

2018 ANNUAL REPORT

LIST OF POWER PLANTS Hydropower PLANT

CAPACITY

14 84.1 HANOI

HOANG SA ISLAND THUA THIEN HUE

H’Mun

16.2 MW

Ayun Thuong

12 MW

H’Chan

12 MW

Dak Pi Hao 2

Da Khai

8.1 MW

Ia Puch 3

6.6 MW

Thuong Lo

6 MW

Dak Pi Hao 1

5 MW

Ayun Ha

3 MW

Ia Meur 3

1.8 MW

Ia Drang 3

1.6 MW

Ia Drang 2

1.2 MW

Kenh Bac

Ia Drang 1

9 MW

1 MW 0.6 MW

BINH DINH

Solar POWER

GIA LAI

PLANT

LAM DONG

CAPACITY

392

MWp

Phong Dien

48 MWp

Krong Pa

69 MWp

Ham Phu 2

49 MWp

Duc Hue 1

49 MWp

Ham Phu 1

49 MWp

Duc Hue 2

49 MWp

Tay Son 1

49 MWp

Tay Son 2

30 MWp

BINH THUAN

LONG AN

HCMC

PHU QUOC ISLAND TRUONG SA ISLAND

www.geccom.vn

131

PROJECT PORTFOLIO & SERVICES (continued)

HYDROPOWER PLANT SYSTEM

No.

Plant

Region

Position

Commercial operation date

Plant Area (m2)

Capacity (MW)

Water use and Water flow

H'Mun

Bar Maih Commune, Chu Se District, Gia Lai Province

2010

18,158

16.2

In the Auyn River basin

Ayun Thuong

Lo Pang Commune, Mang Yang District, Gia Lai Province

2011

642,696

In the Auyn River basin

H'Chan

De Ar Commune, Mang Yang District, Gia Lai Province

2006

14,181

In the Auyn River basin

Highland 4

Dak Pi Hao 2

Cho Long Commune, Kong Chro District, Gia Lai Province

2008

106,183

Dak Pi Hao Spring: Level I Branch of Ba River Average annual flow of 4.45 m3/s

Da Khai

Dar Sa-Da Nhim Commune, Lac Duong District, Lam Dong Province

2010

32,000

8.1

In the Da Nhim River basin Average annual flow of 2.77 m3/s

Ia Puch 3

Ia O Commune, Chu Prong District, Gia Lai Province

2009

147,148

6.6

Puch Spring

Thuong Lo

Thuong Lo Commune, Nam Dong District, Thua Thien Hue Province

2015

44,284

Ba Ran River Average annual flow of 12.9 m3/s

2014

66,082

Ä?ak Pi Hao Spring Average annual flow of 3.16m3/s

Ayun River Flow rate through turbine 23.4 m3/s

North Central

Dak Pi Hao 1

Kon Chieng Commune, Mang Yang District, Gia Lai Province Cho Long Commune, Kong Chro District, Gia Lai Province

Ayun Ha

Ayun Ha Commune, Phu Thien District, Gia Lai Province

2001

6,069

Ia Meur 3

Ia Boong Commune, Chu Prong District, Gia Lai Province

2005

63,888

1.8

Ia Meur Spring

Ia Drang 3

Ia Boong Commune, Chu Prong District, Gia Lai Province

2005

24,690

1.6

Ia Drang Spring

Ia Drang 2

Ia Drang Commune, Chu Prong District, Gia Lai Province

2002

66,082

1.2

Ia Drang Spring

Kenh Bac

Phu Thien District, Gia Lai Province

2010

3,481

Ia Drang 1

Thang Hung Commune, Chu Prong District, Gia Lai Province

2003

41,929

0.6

Gia Lai, Lam Dong, Hue

2001-2014

Highland

Total

132

2018 ANNUAL REPORT

84.1

Ayun Ha irrigation canal Flow rate through turbine of 10.8m3/s

Ia Drang Spring

HYDROPOWER PLANTS IN CENTRAL, HIGHLAND

AVERAGE CAPACITY/YEAR

369

Million kWh

Reservoir capacity (Million m3)

Efficiency (Hour/ Year)

Average output (GWh/Year)

0.868

4,100

66.4

4.54

4,200

50.4

0.768

4,700

56.4

0,195

4,161

36.9

• Stable water flow in dry season • Being categorized as in the small and medium scale, so its contracts are signed on an avoidable cost basis • Preferential tariff for Renewable Energy

Highlights of the Plant

• Largest capacity in GEC's Hydropower plant system, being built in an area with good water flow and high uptime. • Being categorized as in the small and medium scale, so its contracts are signed on an avoidable cost tariff basis • Preferential tariff for Renewable Energy • Second largest capacity in GEC's Hydropower plant system, being built in areas with good water flow and high uptime. • Being categorized as in the small and medium scale, so its contracts are signed on an avoidable cost basis • Preferential tariff for Renewable Energy

9.95

4,568

37.0

• The only plan in the system that has a reservoir with large useful capacity, convenient for maximizing efficiency in avoidable cost • Da Khai Plant is the highest efficiency in the system, considering the investment on MW. • Being categorized as in the small and medium scale, so its contracts are signed on an avoidable cost basis • Preferential tariff for Renewable Energy

0.117

4,638

30.6

• Being connected to a retail grid with a relatively high electricity price of about VND 1,700/kW and a wholesale price of VND 792/kW • The only private enterprise's Plant cluster in Vietnam that is allowed to sell directly to consumers

4.03

3,000

18.0

• Making the most out of water flow into electricity generation during peak hours to increase Revenue efficiency • Being categorized as in the small and medium scale, so its contracts are signed on an avoidable cost basis • Preferential tariff for Renewable Energy

4,200

21.0

• Stable water flow in dry season • Being categorized as in the small and medium scale, so its contracts are signed on an avoidable cost basis • Preferential tariff for Renewable Energy • Utilizing water from Ayun Ha hydroelectric dam to generate electricity, so water is available all year round • This is 1 of the 2 plants of highest efficiency in the system with the longest operating hours. • Being categorized as in the small and medium scale, so its contracts are signed on an avoidable cost basis • Preferential tariff for Renewable Energy

253

6,600

20.0

0.021

4,333

7.8

0.4

5,800

8.8

0.012

5,416

6.5

• Being connected to a retail grid with a relatively high electricity price of about VND 1,700/kW and a wholesale price of VND 792/kW • This is the only private enterprise's plant cluster in Vietnam that is allowed to sell directly to consumers

6,000

6.0

• Utilizing water from Ayun Ha hydroelectric dam to generate electricity, so water is available all year round • This is 1 of the 2 plants of highest efficiency in the system with the highest uptime • Being categorized as in the small and medium scale, so its contracts are signed on an avoidable cost tariff basis Preferential tariff for Renewable Energy

0.05

5,500

3.4

• Being connected to a retail grid with a relatively high electricity price of about VND 1,700 kW and a wholesale price of VND 792 kW • Being located in a GEC sole cluster, the only private Enterprise in Vietnam allowed to carry out direct sales to consumers

369.3

www.geccom.vn

133

PROJECT PORTFOLIO & SERVICES (continued)

SOLAR POWER PLANT SYSTEM • GEC is gradually becoming one of the leading private companies in developing green, clean and environmentallyfriendly Renewable Energy in Vietnam. • In 2018, GEC put into commercial operation of Phong Dien - Hue 48 MWp and Krong Pa - Gia Lai 69 MWp Solar power Plants. The preferential price of electricity at the time of delivery was 9.35 cents/kWh, which shall be applied in 20 years of commercial operation. • Currently, 2 Subsidiaries are implementing 2 Solar power Plants with a total capacity of 98 MWp, which are expected to be put into operation by June 2019, to benefit from the Government's preferential mechanism for Solar power projects.

No.

Plant

Region

Position

IN OPERATION

Phong Dien

Krong Pa

UNDER CONSTRUCTION

Ham Phu 2

Duc Hue 1

III

PLANTS UNDER LEGAL PROCEDURE COMPLETION

Ham Phu 1

South Central

Duc Hue 2

South East

Tay Son 1

Tay Son 2

134

Commercial operation date

Plant Area (Ha)

Capacity (MWp)

Number of sunny hours (Hours/Year)

North Central

My Hoa Village, Dien Loc Commune, Phong Dien, Thua Thien Hue

October 2018

44.80

1,700 - 2,000

Highland

Chu Gu Commune, Krong Pa District, Gia Lai Province

December 2018

70.23

1,900 - 2,200

South Central

Ham Phu Commune, Ham Thuan Bac District, Binh Thuan Province

Expected in June, 2019

54.20

2,520

South East

My Thanh Bac Commune, Duc Hue District, Long An Province

Expected in June, 2019

58.00

2,445

Ham Phu Commune, Ham Thuan Bac District, Expected in 2019 Binh Thuan Province

54.20

2,520

My Thanh Bac Commune, Duc Hue District, Long An Province

58.00

2,445

62.00

2,627

38.00

2,626

South Central

2018 ANNUAL REPORT

Tay Thuan Commune, Tay Son District, Binh Dinh Province Tay Thuan Commune, Tay Son District, Binh Dinh Province

Expected in 2019

Expected in 2020-2021

• In addition, GEC and its Subsidiaries are also in the process of implementing 4 more Solar power Plants with a total capacity of 177 MWp. • GEC's Solar power Plants - both in operation and under construction - are all carried out in the EPC format. The general contractors are from Japan, with modern technologies, meeting Japanese and European standards.

The potential Average of Solar power/ output radiation (GWh/Year)

Technology

4.6 kWh/sqm/day

• Polycrystalline Technology 59.7 • Capacity of 330 Wp • Produced by SHARP, Japan

4.8 - 5.2 kWh/sqm/day

• Polycrystalline battery by Astronergy • Inverter by Tmeic with the function of Maximum Power 103 Point Tracking (MPPT), adjusting P, Q (cos φ from -0.85 to 0.85)

The general contractors are from Japan, accompanied by high technology that meeting Japanese and European standards.

Highlights of the Plant

• The most favorable construction conditions among the ongoing projects • 2 Solar power plants of • Lowest investment rate largest scale in Vietnam • Exemption from land lease for the first at the time of grid 15 years connection • Positioning in areas of the best radiation • Fully enjoying preferential in Vietnam policies for Solar power • Exempting from land lease throughout the Project's life cycles

5.3 kWh/sqm/day

• Polycrystalline technology with a capacity of 330 Wp by SHARP, Japan • Central Inverter

• Positioning in areas of the best radiation in Vietnam • Exempting from land lease for the first 15 years

4.93 kWh/sqm/day

• Photovoltaic - Polycrystal line silicon: Polycrystalline Solar panels - 72 cells 330Wp (PV module) • Provided by Solargiga with technology by SHARP, Japan

• Exempting from all land lease throughout the Project's life cycle

5.3 kWh/sqm/day

• Monocrystalline or polycrystalline technology with a capacity> = 330 Wp from advanced countries of G7 78 • Central inverter with a capacity of > = 2x2550kW from advanced countries of G7

4.93 kWh/sqm/day

72.7

5.18 kWh/sqm/day

5.21 kWh/sqm/day

• Positioning in areas of the best radiation in Vietnam • Exempting from land lease for the first 15 years

• Photovoltaic - Polycrystal line silicon: Polycrystalline Solar panels - 72 cells 330Wp (PV module) • Provided by Solargiga with technology by SHARP, Japan

• The land was identified and agreed by the People's Committee of Long An Province for transfer of land use purpose to Energy structures

• Polycrystalline technology with capacity of 325 Wp • Produced by SHARP, Japan

• The location with good radiation

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PROJECT PORTFOLIO & SERVICES (continued)

POWER SERVICE

TESTING SERVICE

Activities

• In early 2016, VILAS laboratory was put into operation under ISO/IEC 17025-2005 standard.

• Maximizing potential of the value chain in Power Industry.

• Constantly investing in expanding and developing laboratory capacity to meet the needs of power projects in investment and operation. Effectiveness • The laboratory is now capable of testing on almost all machines and equipment of Hydropower and Solar power Plants. • Every year, the laboratory manages to: »» Reduce cost of more than VND 1.7 billion; »» Get Revenue from service provision to customers of more than VND 3 billion.

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BASIC CONSTRUCTION SERVICES (CONSULTING, CONSTRUCTION, MECHANICAL SERVICES, ETC.)

2018 ANNUAL REPORT

• Having invested in and developed 2 subordinate units, GEC owns 100% working capital in capital construction: »» Gia Lai Consultancy and Energy Development Co., Ltd; »» Gia Lai Construction and Mechanical Co., Ltd. Effectiveness • Being fully proactive in: »» Project development activities: Survey, design, plan addition, feasibility analysis, etc. »» Construction completion phase: Construction, mechanical, construction supervision, etc. »» Putting into operation. • In 2018, the total value of capital construction activities was VND 70 billion.

GEC IS TAKING STEPS TO BECOME ONE OF THE

LEADING PRIVATE UNITS TO DEVELOP GREEN, CLEAN & ENVIRONMENTALLY FRIENDLY RENEWABLE ENERGY IN VIETNAM

Wind power will contribute to diversify GEC's Revenue sources

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POSITIONING GEC ON THE RENEWABLE ENERGY MARKET GEC'S OPERATION NETWORK IN OPERATION

84.1

MW 14 HYROPOWER PLANTS

117

MWP 02 SOLAR POWER PLANTS

IN CONTRUCTION

MWP

02 SOLAR POWER PLANTS

ONGOING LEGAL PROCEDURES

177

MWP

04 SOLAR POWER PLANTS

PHONG DIEN: 48 MWP

THUONG LO: 6 MW H'CHAN: 12 MW AYUN THUONG: 12 MW H'MUN: 16.2 MW AYUN Háº : 3 MW DAK PI HAO 1: 5 MW DAK PI HAO 2: 9 MW KENH BAC: 1 MW IA DRANG 1: 0.6 MW IA DRANG 2: 1.2 MW IA DRANG 3: 1.6 MW IA MEUR 3: 1.8 MW IA PUCH 3: 6.6 MW

TAY SON 1: 49 MWP TAY SON 2: 30 MWP KRONG PA: 69 MWP

DA KHAI: 8.1 MW

HAM PHU 1: 49 MWP HAM PHU 2: 49 MWP

DUC HUE 1: 49 MWP DUC HUE 2: 49 MWP Source: GEC

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2018 ANNUAL REPORT

List of projects by Status of implementation

Hydropower 84 MW Operating 84 MW

Ongoing 79 MW

Legal procedures 148 MW

Solar power 311 MW

Source: GEC

EC directly and indirectly owns 14 power plants with a total capacity of 84.1 MW mainly concentrated in the Central Highlands (93%) and North Central (7%). These include 70 MW in Gia Lai Province, accounting for 83% of GEC's total operating Hydropower capacity. In particular, GEC owns about 24% of small and medium Hydropower projects operating in the area. In addition, 8.1 MW in Lam Dong Province and 6 MW in Hue, accounts for 10% and 7% of GEC's total Hydropower capacity respectively. In Lam Dong, GEC accounts for about 14% of capacity of small and medium Hydropower. List of operating, ongoing and prepared to operate projects by Province

List of operating, ongoing and prepared to operate projects by Location Hydropower

Solar power

Projects

Hydropower Projects

MW 200

180

Solar power

Projects Projects

MW 120

177

100

160

98 12

12 140

120

100 80

78,1

48 69

20 2

8.1

6 0

0 Highland

North Central

South Central

Southeast

Hue

Binh Ä?inh

Binh Thuan

Long An

0 Gia Lai

Lam Dong

Source: GEC

Capacity rate of Hydropower plant by Province

Besides, GEC directly and indirectly owns 8 Solar plants with 392 MWp, 2 of which are operating with 117 MWp (30%), 2 will be operating by June 2019 with 98 MWp (25%), 2 are expected to operate in 2019 with 98 MWp (25%) and 2 are planned to be operational around 20202021 with 79 MWp (20%).

7% 10%

Gia Lai Lam Dong Hue 83%

Source: GEC

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POSITIONING GEC ON THE RENEWABLE ENERGY MARKET (continued)

North-South 500kV electricity transmission line

Two operational power Plants were Phong Dien - Hue with 48 MWp and Krong Pa - Gia Lai with 69 MWp in 2018, accounting for 100% capacity and leading the Solar market in North Central and Central Highlands. GEC will be deemed as a pioneer in Solar power in Vietnam. Ham Phu 2 - Binh Thuan with 49 MWp, Duc Hue 1 - Long An with 49 MWp in the South Central and Southeast Regions have been added to the planning, under construction and expected to be operational by June 30th, 2019. This is done quickly to make the best of the FiT of 9.35 cents/kWh during the 20-year project life cycle. Up to now, Vinh Tan Solar Project in Binh Thuan of Construction Consultancy 2 JSC - EVN's Subsidiary has been put into operation in January 2019 with limited capacity of about 6.2 MW. Long An has not seen any operational Solar factory. If GEC carries out the plan as expected, GEC will remain the market leader in these 2 Regions. GEC is also completing legal procedures to operate 2 more factories of Ham Phu 1

CRITERIA

Commercial operation date Installed capacity Total invested capital Estimated average output Number of Solar cells Estimated Revenue FIT for 20 years Land area Reduction of CO2 emissions

Capacity rate of Solar power Plant by Province

12%

18%

Gia Lai Binh Thuan

20%

Long An 25%

Binh Dinh Hue

25% Source: GEC

and Duc Hue 2, each with 49 MWp in 2019. Aiming for the development strategic target to 2022, GEC continues to establish its Subsidiaries to build and manage 2 Solar Plants - Tay Son 1 with 49 MWp and Tay Son 2 with 30 MWp in Binh Dinh. These are expected to operate in the South Central Region around 2020-2021. This area has not seen any operational Solar projects.

TTC PHONG Ä?IEN - HUE

TTC KRONG PA - GIA LAI

October 2018

December 2018

48 MWp ~ 35 MW

69 MWp ~ 49 MW

VND 853 billion

VND 1,284 billion

~ 60 million kWh/year

103 million kWh/year

145,560 panels

209,100 panels

VND 128 billion/year

VND 220 billion/year

VND 2,086/KWh

VND 2,086 /kWh

44.80 ha

70.23 ha

20,503 tons/year

29,000 tons/year Source: GEC

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2018 ANNUAL REPORT

MEDIUM AND SMALL-SCALE HYDRO PLANTS

ccording to the International Hydropower Association, Hydropower resources from 200 kV to 10 MW are referred to as small Hydro, from 10 MW to 100 MW are known as medium Hydropower ones. However, in Vietnam, a Hydro source up to 30 MW is considered a small Hydropower plant, the ones with larger capacity are called largescale Hydro plants. Thus, in Vietnam, the category of "Hydropower plants of less than 30 MW" already includes medium Hydropower plants.

As of September 2018, in Gia Lai Province - the capital of GEC's Hydro projects, there are totally 55 small and medium sized Hydropower projects of 384.6 MW. In which (1) 36 projects are operating with a total capacity of 294.5 MW (77%); (2) 5 projects are being implemented with a total capacity of 44.7 MW (12%); (3) 14 projects with a total capacity of 45.4 MW (11%), included in the planning, but have not been approved for investment policy. GEC is operating 70 MW in the area, accounting for 24% of operating Hydropower projects.

According to approved plan, by 2018 there will be 818 Hydropower projects with a total installed capacity of 23,182 MW, of which (1) 385 operational plants with a total installed capacity of 18,564 MW (80%), (2) 143 plants under construction with a total installed capacity of 1,848 MW (8%) and (3) 290 projects under study for investment with a total installed capacity of 2,770 MW (12%). Currently, GEC accounts for about 0.45% of the total installed capacity of operational projects across the Country.

Small and medium-scale Hydropower projects in Gia Lai Province as of September 2018 PROPORTION OF OPERATING HYDROPOWER PROJECTS IN GIA LAI

24%

Projects

Capacity (MW)

350 294.5

300 250 200

PROPORTION OF OPERATING HYDROPOWER PROJECTS IN LAM DONG

14%

In Lam Dong, the power source is mainly supplied by 9 small and medium Hydropower plants with a total installed capacity of 57.3 MW and 12 large capacity Hydropower plants with a total installed capacity of 1,404 MW. Besides, (1) 9 small and medium Hydropower projects are under construction with a total capacity of 97.1 MW, (2) 4 projects are under investment preparation with a total capacity of 54.5 MW and (3) 9 projects are under consideration for investment policy with a capacity of 62.7 MW. At present, with 1 Da Khai Plant operating at 8.1 MW, GEC accounts for 14% of the total small and medium-scale capacity Hydropower plants in Lam Dong.

150 100

44.7

36 10

0 In operation

45.4 14

Under consideration for investment policy Source: Gia Lai Provincial Information Portal

GEC - in operation

Under construction

Small and medium-scale Hydropower projects in Lam Dong Province as of July 2018 Projects

Capacity (MW)

120 97.1

100 80

62.7

57.3

54.5

40 20 8.1

In operation

GEC - in operation

9 4

Under construction

Under investment preparation

Under consideration for investment policy

Source: Planning of Electricity development in Lam Dong Province, period of 2016-2025, with a view to 2035

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POSITIONING GEC ON THE RENEWABLE ENERGY MARKET (continued)

According to data from Vietnam Clean Energy, Thua Thien Hue has 21 Hydropower projects with a total capacity of 459.5 MW. In particular, (1) Huong River lader Hydropower planning included 4 projects with a total capacity of about 314.5 MW; (2) the Ministry of Industry's National Small Hydro Plan approved (now MOIT) consists of 5 projects with a total capacity of 33.2 MW; (3) Small Hydropower planning approved by the Provincial People's Committee, which consists of 12 projects with a total capacity of 111.8 MW. GEC is operating Thuong Lo Hydropower Plant with a capacity of 6 MW, accounting for 18% of small hydro, contributing to the Province's development.

Hydropower projects in Thua Thien Hue Province as of June 2018 Projects

Capacity (MW)

350 314.5

300 250 200 150

111.8

100 50 0

33.2 4 Huong River lader Hydropower

GEC - in operation

5 MOIT's approval

12 Provincial People's Committee' Small Hydropower Source: Vietnam clean Energy

The process of connecting to the national electricity grid in plants

142

2018 ANNUAL REPORT

SOLAR POWER

fter the Decision No. 11/2017/QD-TTg dated April 11th, 2017 on the mechanism of encouraging the development of Solar projects in Vietnam, the FiT of 9.35 cents/kWh has witnessed a series of Solar projects added to the planning. According to EVN, as of December 2018, PPAs were signed for 2,866.5 MW, exceeding the target of 850 MW by 2020, according to the amended VII Power Development Master Plan. As statistics were recorded of projects with PPAs, GEC accounts for nearly 3% of the total capacity. However, if compared with the target under amended VII Power Development Master Plan, GEC already accounts for about 10%; with Phong Dien of 35 MW (equivalent to 48 MWp) and Krong Pa of 49 MW (equivalent to 69 MWp). Status of implementing the Solar projects as of December 2018 Capacity under PPA

Capacity under negotiated contract (MW)

800 700 600 500 400 300 200 100 0 Quang Binh

Quang Tri

Hue

Quang Ngai

Gia Lai

Dak Lak

Dak Nong

Binh Dinh

Phu Yen

Khanh Hoa

Ninh Thuan

Binh Thuan

Lam Dong

Long An

Vung Tau

Tay Ninh

An Giang

Hau Giang

Thanh Hoa Source: EVN

According to the Vietnam Energy Portal, Gia Lai Provincial People's Committee has agreed to allow 23 enterprises to survey and invest in 33 Solar projects in the Province, with a total capacity about 3,968 MWp. In particular, (1) 2 projects have been approved for additional planning, under investment and construction with a total capacity of 98 MWp and total investment of VND 2,672 billion; (2) 11 projects have been submitted by the Provincial People's Committee to competent authorities for consideration and approval for additional planning, with a total capacity of 675 MWp; (3) 20 projects have been under FS before filing for additional planning, with an expected capacity of 3,195 MWp. GEC is currently the only Enterprise that has generated electricity in Gia Lai, with a capacity of 69 MWp from Krong Pa plant. Its total investment capital is VND 1,284 billion and land area of 70.23 ha.

Status of implementing the Solar projects in Gia Lai Province as of October 2018 Projects

Capacity (MWp)

4.000

3,195 3.000

2.000

1.000 675

Approved for additional planning

GEC - in operation

11 Submitted for additional planning approval

20 Under surveying

Source: Vietnam Energy Portal

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POSITIONING GEC ON THE RENEWABLE ENERGY MARKET (continued)

Equally, within Binh Thuan Province as of October 10th, 2018, there were 90 Solar projects with a total registered capacity of 5,341.1 MWp with (1) 28 projects were approved by the MOIT in the additional planning of national and provincial electricity, with a total capacity of 1,475.18 MWp, in which 23 projects have been granted investment policy decisions by the Provincial People's Committee with a total capacity of 1,115.2 MWp; (2) 62 projects are being submitted for Additional Planning with a total capacity of 3,865.9 MWp. GEC is also catching up with the trend rushing to complete construction and commissioning of Ham Phu 2 Project before June 2019 - to enjoy the preferential FIT of 9.35 cents/kWh, and is completing procedures for Ham Phu 1 Project, expected to connect to the national grid in 2019. Each project has a capacity of 49 MWp, hence a total capacity of 98 MWp and a total investment of VND 1,852 billion, on an area of approximately 109 ha.

According to MOIT's Solar development report to the Prime Minister on June 11th, 2018, in Long An Province there are 11 projects with a total capacity of 584.5 MWp requesting additional planning. In which, there were (1) 3 projects were approved for additional planning with a total capacity of 140 MWp and (2) 8 projects with a total capacity of 444.5 MWp was awaiting approval. GEC is also fulfilling Duc Hue Project 1 for commissioning by June 2019, and is finalizing the procedures for commissioning Duc Hue 2 no later than end of 2019. The total 2 projects have a capacity of 98 MWp and a total investment of VND 1,894 billion, on an area of approximately 116 ha.

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2018 ANNUAL REPORT

Status of implementing the Solar projects in Binh Thuan Province as of October 2018 Projects Capacity (MWp) 4,500 3,865.9

4,000 3,500 3,000 2,500 2,000 1,475.2

1,500

1,115

1,000 500 0

28 Approved for additional planning

Granted investment policy by the Provincial People's Committee

GEC - operation in 2019

Submitted for additional planning Source: Vietnam Energy Portal

GEC is also catching up with the trend - rushing to complete construction and commissioning of Ham Phu 2 Project before June 2019 - to enjoy the preferential FiT of 9.35 cents/kWh, and is completing procedures for Ham Phu 1 Project, expected to connect to the national grid in 2019. Status of implementing the Solar projects in Long An Province as of June 2018 Projects

Capacity (MWp)

500 444.5 400 300 200 140 98

100 0

3 Approved for additional planning

2 GEC - operation in 2019

8 Submitted for additional planning

Source: No. 4614/BCT-Ä?L Report on the status of Solar power development

The above report also mentions that Binh Dinh Province currently has 12 Solar projects with a total capacity of 837.5 MWp. In particular, (1) 3 projects were approved for additional planning with a total capacity of 149.5 MWp, and (2) 9 projects are being submitted for additional planning with a total capacity of 688 MWp. According to the development strategy to 2022, GEC is also urgently completing procedures for commissioning Tay Son 1 and Tay Son 2 Projects around 2020-2021. These are with a total capacity of 79 MWp and investment of VND 1,530 billion on an area of 100 ha.

Status of implementing the Solar projects in Binh Dinh Province as of June 2018 Projects

Capacity (MWp)

800 688

700 600 500 400 300 200

149.5 79

100 9

Approved for additional planning

2 GEC - submitted for additional planning

Submitted for additional planning

Source: No. 4614/BCT-Ä?L Report on the status of Solar power development

In Hue, 4 Solar projects are being implemented with a total capacity of 154.3 MWp. In particular, (1) 2 projects were approved for additional planning with a total capacity of 85 MWp, and (2) 2 projects were being submitted for additional planning with a total capacity of 69.3 MWp. In October 2018, GEC officially became a pioneer in Solar power in Hue and particularly the North Central Region in general, when GEC commissioned Phong Dien plant with a capacity of 48 MWp. On top of that, GEC was also completing legal procedures for additional planning of Phong Dien 2 Project with a capacity of 29.5 MWp, with total capital of VND 575 billion on an area of 35 ha.

Status of implementing the Solar projects in Thua Thien Hue Province as of June 2018 Projects

Capacity (MWp)

100 85 80 69.3 60 48 40 29.5 20

2 Approved for additional planning

1 GEC - operating

2 Submitted for additional planning

1 GEC - submitted for additional planning

Source: No. 4614/BCT-Ä?L Report on the status of Solar power development

With a goal in mind to become a leading private enterprise in Renewable Energy in Vietnam, and to diversify activities nationwide, GEC has been incessantly implementing projects as planned; simultaneously expanding the portfolio through M&A, seeking opportunities to develop Energy projects, to contribute to the Nation's economic development.

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BUSINESS ACTIVITIES ANALYSIS BASED ON BUSINESS MODEL

GEC partly contributes to stabilization of National Energy Security

DEBUT OF SOLAR ENERGY NEW DEVELOPMENTS IN BUSINESS OPERATIONS GEC currently owns a variety of small and medium Hydropower, Solar Energy and Wind power projects with a total designed capacity of 184.1 MW, 668 MWp and 250 MW, respectively, from both operational and ongoing ones. GECâ&#x20AC;&#x2122;s stable business performance was evidenced by the Net Revenue of VND 560 billion by the end of 2018, up 4% compared to 2017, from core business activities including electricity sale and supply of services and construction, accounting for 95% of the total Revenue. Financial and other Revenue only contributed at modest level 5% to the total income.

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2018 ANNUAL REPORT

Revenue in 2018 mainly came from the core business which was the generation and supply of electricity by 14 power plants in Gia Lai, Lam Dong and Hue with a total designed capacity of 84.1 MW and an amount of VND 446 billion, accounting for 80% of the total Revenue structure. Besides, since they were just put into operation in October and December, 2018, respectively, the 2 Solar Energy Plants, Phong Dien - Hue and Krong Pa Gia Lai, with a total designed capacity of 117 MWp only contributed over VND 37 billion, accounting for 7% of the total Revenue.

GROWTH OF RETAIL SALES THANKS TO CUSTOMER GROWTH Chu Prong Branch is operating Ia Puch 3, Ia Meur 3, Ia Drang 3, Ia Drang 2 and Ia Drang 1 Hydropower plants, which together make up the only privately owned plant cluster in Vietnam permitted to sell electricity directly to consumer. Electricity tariffs for consumers are issued by the MOIT and currently stay at a relatively high level of VND 1,700/kWh. This plant cluster sells electricity via 2 channels, i.e. distribution to retail customers, which is prioritized, and distribution to EVN at agreed tariffs.

The total output of Hydropower plants that distribute electricity directly to EVN was 344 million kWh, 4% higher than the planned target. Electricity sales reached VND 414 billion, 8% higher than then assigned target.

In 2018, GEC acquired an additional 314 retail customers, bringing the total number of customers of Chu Prong Branch to 7,318, an increase of 5% compared to 2017. The output of retail commercial electricity reached approximately 19 million kWh, accounting for 31% of

Chu Prong Branch’s electricity output and 6% of the total commercial electricity output, a yoy increase of 6%. Retail Revenue reached almost VND 33 billion, accounting for 46% of Chu Prong Branch’s electricity sales and 8% of total commercial electricity sales, up 10% over the same period. Electricity output structure

Revenue and Output of retail electricity in 2015-2018 Retail electricity output Retail electricity Revenue Million kWh

Billion VND

18.8

Chu Prong Branch

18.6

19%

32.6

18.5

18.5 32

18.4

81%

31.2

18.2

Other Branches

30.5

Revenue structure

17.8 30

Chu Prong Branch

29.6

17.6

17.5

17.4

17.2 17

28 2015

2016

2017

84%

2018

Other Branches

Source: GEC

HYDROPOWER PLANTS THAT DISTRIBUTE ELECTRICITY DIRECTLY TO EVN EXCEEDED THEIR SALES TARGETS Electricity sales of GEC’s Hydropower plants comes from the direct distribution to EVN. Electricity tariffs are fixed as per the avoidable cost tariff. In 2018, the total output of Hydropower plants that distribute electricity directly

to EVN was 344 million kWh, 4% higher than the plan. Electricity sales reached VND 414 billion, 8% higher than then assigned target.

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BUSINESS ACTIVITIES ANALYSIS BASED ON BUSINESS MODEL (continued) GEC, with over 30 years of experience in Hydropower, forecasted the situation and set for 2018 Revenue and Output targets that were lower than those in 2017. Besides, since GEC regulated the optimal water supply, ensured continuous operation, and minimized time to handle incidents; the business performance of 14 power plants in 2018 even exceeded expectations. Revenue and Output of electricity sold to EVN in 2015-2018 Revenue of electricity sold Output of electricicty sold

VND Billion

Million kWh

500

450

430

450

455 400

414 400

384

350 300

303

326

344

350

330 300

309 259

250

250 200 200 150

150

100

In 2018, the favorable weather in the 2Q with a large amount of rainfall provided sufficient water for GEC’s 14 Hydropower plants. The first months and the last 2 months of the year, however, were a bit challenging due to the drought-caused decrease in water flow. GEC, with over 30 years of experience in Hydropower, forecasted the situation and set for 2018 Revenue and Output targets that were lower than those in 2017. Besides, since GEC regulated the optimal water supply, ensured continuous operation, and minimized time to handle incidents; the business performance of 14 power plants in 2018 even exceeded expectations.

50 0 2015

2016

2017

Target 2018

0 Actual 2018 Source: GEC

In 2018, the average operating hours of Hydropower plants was 4,310. The total electricity output reached 380 million kWh, equaling 103% of the target. Out of this, Hydroelectricity Output contributed 362 million kWh, which was 3% higher than the assigned target. Hydropower Revenue therefore reached VND 447 billion, equal to 106% of the assigned target of VND 421 billion. Electricity Output of Hydropower plants 2016 2017 2018 Million kWh 10 8 6 4 2 0 H’Mun

H’Chan

Ayun Thuong Dak Pi Hao 2

Da Khai

Ia Puch 3

Ayun Ha

Dak Pi Hao 1 Thuong Lo

Ia Drang 3

Ia Meur 3

Ia Drang 2

Kenh Bac

Ia Drang 1 Source: GEC

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2018 ANNUAL REPORT

BUSINESS ACTIVITIES OF SOLAR POWER PLANTS A NEW SOURCE OF REVENUE IN 2018 In the face of increasingly complex climate change, GEC proactively diversifies its Revenue sources by expanding into new types of Energy. The Company conducted research and prepared itself for the development of Solar Energy several years ago. In 2018, GEC reaped the first fruits from Solar Energy while commissioning the first 2 plants in the Country, namely 48 MWp Phong Dien - Hue and 69 MWp Krong Pa - Gia Lai. The average power output of the 2 plants is estimated at 163 million kWh per year. Due to a short period of operation, the 2 Plants only produced approximately 18 million kWh. In 2018, Solar Energy output only accounted for about 5% of the total commercial electricity output, but Revenue therefrom contributed about VND 38 billion, equivalent to 8% of the electricity sales and 7% of the Net Revenue.

Electricity output structure 2018

Net Revenue structure 2018 Construction services

Solar power 5%

Services providers

10%

Solar power 95%

80%

Hydropower

Electricity Revenue structure 2018

Net Revenue structure 2017

Solar power

Services providers and Construction services

92%

Hydropower

10%

90%

Hydropower

Source: GEC

REVENUE FROM SERVICES PROVIDERS OUTPERFORMED FINANCIAL INCOME Revenue from other services Revenue from services Ratio compared to Net Revenue

VND Billion

20%

76 17%

15%

55 40

13% 10%

10% 5% 15

0 2015

2016

2017

2018 Source: GEC

Other income came from financial activities and supply of service provision. In 2018, realized Financial income reached VND 20 billion, 8% higher than 2017. Revenue from financial activities mainly came from savings deposits and lending from pending disbursements for new projects. Apart from the major income from electricity distribution, Revenue from services increased 38% over the same period, reaching VND 76 billion and accounting for 13% of the Net revenue in 2018. Service Revenue growth mainly came from the services providers for external Hydropower projects such as EPC general contractor, project management consultancy, experiment, supply of electrical panels, etc.

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BUSINESS ACTIVITIES ANALYSIS BASED ON BUSINESS MODEL (continued)

THE GROSS PROFIT MARGIN WAS HIGHER THAN THE INDUSTRY AVERAGE AND HAS STABILIZED OVER YEARS Indicators (VND Billion)

Gross profit margin

% 2018 Actual /2018 Target

% 2018/2017 Actual

483

105%

100%

101%

138%

Total Revenue

540

537

559

104%

Electricity distribution

184

195

100%

106%

97%

134%

Total cost of goods sold

227

256

254

99%

112%

Electricity distribution

301

267

288

108%

96%

122%

155%

Services providers

Gross profit

2018 Actual

462

Revenue from service supply

Cost of goods sold

2018 Target

485

Revenue from electricity Revenue

2017

Service supply Total gross profit

312

281

305

109%

98%

Electricity distribution

62%

58%

60%

103%

97%

Service supply

20%

19%

22%

116%

110%

Total

58%

52%

55%

106%

95% Source: GEC

GROSS PROFIT MARGIN ELECTRICITY DISTRIBUTION

60% 109% GROSS PROFIT

COMPARED TO TARGET

PROFIT BEFORE TAX

122% COMPARED TO TARGET

150

2018 ANNUAL REPORT

COGS was controlled better compared to the same period of 2017. In particular, in services providers, COGS was 3% lower than target, which enabled the total COGS to be 1% lower than plan. The Gross Profit Margin in 2018 was 55%, which exceeded the plan of 106%. For electricity distribution activities, COGS that met the target while Revenue exceeding 5%, enabling the Gross Profit Margin to reach 60%, higher than the target of 58%. For services providers, with 30 years of experience in Hydroelectricity, GEC managed to keep COGS at 3% lower than plan while achieving a 1% increase in Revenue compared to the set target. This helped the Gross Profit Margin reach 22%, higher than the target of 19%. Thanks to the guaranteed availability of buyers, it did not cost GEC much for selling expenses. In 2018, the Company's selling expenses even fell by 40% and stayed at VND 588 million. Reasonable and stable cost management over a long period is also an advantage of GEC. Although the Company implemented the first 2 Solar Energy projects in Vietnam, the ratio of corporate management expenses to Net revenue only slight increased from 12% to 14%. Pre-tax and after-tax Profit in 2018 recorded VND 207 billion and VND 187 billion respectively. PBT even exceeded the target by 22%.

GEC’s cost structure in 2015-2018

Net Revenue and Profit in 2015-2018 Net Revenue

Profit before tax

Profit after tax

COGS Selling expenses

VND Billion CAGR: Net Revenue 16%, PBT 12%, PAT 12%

400

539

400

200

431

354

149 132

300

149

134

230

209

207

187

200

157

0 2016

2017

254

227

213

100

0 2015

Others

VND Billion

559

600

Financial expenses General and Administration expenses

2015

2018

2016

2017

2018 Source: GEC

FUND RAISING AND CAPITAL STRUCTURE INDICATORS In 2018, with the completion and operation of 2 Solar Energy projects and the implementation of 2 more in Binh Thuan and Long An, GEC’s Total assets increased significantly to VND 4,361 billion, 2.6 times the number in 2017. Fixed assets were VND 2,878 billion, also a 2.6-time increase. The compound growth rate of Total assets and Fixed assets between 2015 and 2018 was high at about 33%. Cash and cash equivalents were VND 610 Total assets and Equity in 2015-2018 Total assets Equity

VND Billion 4,600

4,100 3,100 2,100 1,600 1,100

Fixed assets versus Total assets in 2015-2018 Fixed assets

1,885

1,552

4,361

28 quity 3%, E

1,162

1,659 1,151

1,318

2,408

600 100 2015

2016

2017

Total assets

VND Billion

t l asse : Tota CAGR

3,600 2,600

billion, an increase of 174% compared to the beginning of the year; due to additional funding from capital increase and a rise in assets form Solar Energy projects, Long-term assets increased 2.7 times to VND 3,131 billion. With cash and cash equivalents being 6 times higher than short-term loans and finance lease liabilities, which are about VND 106 billion, GEC is totally capable of meeting payment obligations.

2018

5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0

d : Fixe CAGR

1,885 1,224

2015

1,169

1,552

2016

4,361

s 33%

asset

2,878

1,114

1,659

2017

2018 Source: GEC

www.geccom.vn

151

BUSINESS ACTIVITIES ANALYSIS BASED ON BUSINESS MODEL (continued)

GEC’s Debt structure in 2015-2018

DEBT/TOTAL ASSETS

0.35

VND Billion

Times

1,600

1,420

1,400

1,424

1,200 DEBT/EQUITY

0.63 Times

1,000 800 600

518

528

518

400

Short-term debt Short-term liabilities Long-term debt Long-term liabilities

200

103

205 45

0 2015

135

265 266

232 6

2016

237

106

103 2017

2018 Source: GEC

In order to implement Solar Energy projects, GEC has approached credit institutions to negotiate and select preferential funding for investment in clean Energy projects. Thanks to our reputation, GEC has won high trust from financial institutions such as Vietcombank and Agribank, both of which have approved funding for GEC’s Solar Energy projects. A bank loan and together with a bond package of over VND 1,200 billion is responsible for an increase of liabilities in the capital structure. This ratio, however, remains well within the Industry standard as well as under GEC’s control. The Debt to Asset ratio and the Debt to Equity ratio are 0.35 and 0.63 times, respectively. Although this represented a sharp yoy increase, these Ratios remained below the respective Industry averages of 0.38 and 0.88 times. In addition, in the fourth quarter, GEG completed the issue of over 97 million shares to increase its Charter Capital to nearly VND 1,942 billion. This move is intended to raise funds for other Renewable Energy projects according to the Company's strategy until 2022. Equity also increased 1.8 times compared to 2017, reaching VND 2,408 billion. The 2015-2018 CAGR was thus 28%. Although the use of financial leverage in business expansion is a generally applied practice, it will cause pressure of repayment and liquidity, especially when a project or investment has not entered a stabilization period. Therefore,

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2018 ANNUAL REPORT

Capital structure ratios in 2015-2018 Debt/ Total assets (times)

Debt/ Equity (times) 0.63

0.53

0.33

0.27 0.18 0.20

2015

2016

0.35

0.14 2017

2018 Source: GEC

in order to ensure the sustainable development, GEC does not over use this tool. We have instead chosen to strike a balance between Debt and Equity by maintaining an appropriate ratio throughout the development process. In addition, the increase in Debt ratio within the control of liquidity has helped the Company to optimally utilize financial leverage to create the impetus for future growth. At GEG, with the participation of 2 strategic Shareholders, IFC and Armstrong, GEC’s Management considers sustainable development the top priority. We do not prefer over-heated and inefficient development. Over the past several years, debts have shown a downtrend and an increase in liabilities is only seen when projects are implemented. On the contrary, a stronger rise in Equity has been recorded. Until now, the first and only 2 Solar Energy projects in Vietnam that could generate power in 2018 both belong to GEC.

PROPER CONTROL OF LIQUIDTY AS INDICATED BY SOLVENCY RATIOS Solvency ratios Current ratio

Quick ratio

Cash ratio

Times 5

4.7

4 3 2 1

4.4 2.4

2.5

2.3

2.4

2.3

0.4

0.5

2.2

1.6

0 2015

2016

2017

2018 Source: GEC

Current and Quick ratios were both greater than 2 times, staying at 2.3 times much higher than the Industry average of 1.7 and 1.6 times, respectively.

OPERATING RATIOS - LOW DEBTS, INSIGNIFICANT INVENTORIES Operating ratios Receivables turnover Payables turnover Inventory turnover Times 25 20 15

17.7 13.2

16.5

10 5 0

10.6

3.8

19.1 10,7 5.5

2016

10.0 6.1

For electricity retailing, despite the large number of customers, an electricity sale policy that was applied according to EVNâ&#x20AC;&#x2122;s regulations making sure customer make payments properly. Regarding the sale of electricity to EVN, the only corporate customer of GEC, well-defined terms on payment under sale contracts ensure no payments were delayed and no provisions must be made for them. For services providers, GECâ&#x20AC;&#x2122;s major customers were all financially sound and are capable of making payments timely.

1.3

4.9 2015

In 2017, in order to prepare financial resources for new Solar projects, GEC restructured all Hydropower projects. This resulted in a significant decrease in short-term and long-term loans. Therefore, the Company's Liquidity ratios improved sharply compared to the 2015-2016 period. In 2018, in order to develop new Solar Energy projects, in addition to loans from credit institutions that were secured by new projects, GEC also issued VND 300 billion bonds to secure additional funding. Liquidity ratios in 2018, though lower than the same period, remained at a very high level. Current and Quick ratios were both greater than 2 times, staying at 2.3 times much higher than the Industry average of 1.7 and 1.6 times, respectively. The Cash ratio was even maintained at 1.6 times, higher than the Industry average of 0.5 times. This helps make sure there is no liquidity risk. Thanks to the characteristics of business operations, Inventory only plays a small part in the Total assets. Therefore, there was no significant difference between the Current ratio and the Quick one.

2017

2018 Source: GEC

In 2018, Receivables turnover increased by 11% compared to 2017, recording 6.1 times, which means the number of receivable days was only 60 days compared to 66 days in 2017. This is typical of the electricity trading business.

As a characteristic of the Power Industry, Inventories were limited and mostly comprised of contingency tools and equipments. The Inventory turnover, as a result, was always high and stable between 2015 and 2018, namely 10 times. The Payables turnover ratio decreased significantly by 93% in 2018. Most of payables were debts to be paid to contractors of Solar Energy projects. These were payables under previously signed contracts and GEC always honors promised by paying debts on time.

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153

BUSINESS ACTIVITIES ANALYSIS BASED ON BUSINESS MODEL (continued) STABLE BUSINESS PERFORMANCE IN MANY YEARS THROUGH PROFITABLITY RATIOS Apart from the trend of green, clean and sustainable development, one of the factors that makes the Renewable Energy business appealing to local and international Investors is, a decent level of profitability. In the past 4 years, GEC’s Gross and Net Profit Margin have always been maintained at above 50% and 30%, respectively. The Gross and Net Profit Margin of 2017 were 55% and 33%, both higher than the Industry average of 48% and 29%. Electricity Revenue make up the bulk of the total Income with a Gross Profit Margin of 60%. Together with service providers and construction, this was the supporter of GEC’ Gross Profit Margin. Effective cost control helped the Company maintain the EBITDA Margin at a high and stable levels over the years at 62%, higher than the Industry average of 61%. The EBIT Margin in 2018 saw a slight yoy decline but still achieved an impressive 44%, higher than the Industry average of 42%.

It is worth noting that all 14 GEG’s power plants have entered stable operation. Several of them have been almost fully depreciated and will contribute further to the improvement of these Ratios in the future. For ROAA and ROAE Ratios, despite a slight adjustment in 2018 due to the delay from the profitability of new loans and capital contributions, remained at a positive ratio of 6% and 10%, respectively. In addition, a capital increase and the commissioning of new Solar Energy projects that have yet to contribute significantly to Revenue and Profit in 2018 was partly responsible. It is expected that after more plants have been put into operation, these ratios will see significant improvement in 2019.

Profitability ratios 75% 62%

54%

44% 2015

62%

62% 47%

2016

2017

EBITDA Margin

EBIT Margin

44% 2018

56%

58%

51%

38%

2016

Net Profit Margin

33%

39%

31%

2015

55%

2017

2018

Gross profit Margin Source: GEC

CONTRIBUTION TO NATIONAL ECONOMIC DEVELOPMENT THROUGH PAYMENTS TO THE STATE BUDGET Every year, GEC and its Member Companies fulfill our obligations to the State budget through various taxes including but not limited to CIT, Value added tax, Natural resource tax and Personal income tax. In 2018, along with a strong development in electricity distribution and new project investment, the magnitude of contribution to the State budget recorded a significant rise. The total value of contribution to the budget in 2018 reached VND 228 billion, which is 209% of the number in the same period of 2017. Value-added tax saw a sudden 3-fold increase compared to 2017 mainly due to the development of multiple Energy projects. Tax payment structure in 2015-2018 CIT Resource tax Personal income tax

VND billion

Tax payment structure in 2018

Value added tax Others

250

Value added tax

200

CIT 157

100 20

11%

2015

Personal income tax Resource tax 69%

154

3%3%

Others

150

14%

2016

2018 ANNUAL REPORT

2017

2018

Source: GEC

BUSINESS ORIENTATIONS FOR 2019 A system of 14 small and medium sized Hydropower plants with a total capacity of 84.1 MW and 2 Solar power Plants with a capacity of 117 MWp are enabling GEC to generate stable annual cash flows. With the aim of fulfilling the strategic objectives of 2022, the Companyâ&#x20AC;&#x2122; management has set a development orientation of focusing on Renewable Energy sources in order to increase the scale of power generation, Besides, the Company is to focus optimizing the operations of existing plants by streamlining the structure and controlling costs so as to enhance operating efficiency and fulfill the profit plan. In 2019, GEC plans to start operating 2 more Solar Energy plants in Long An and Binh Thuan before June 30th, 2019 to take advantage of the preferential electricity selling price for 20 years of 9.35 cents/kWh, thus ensuring stable cash flows and high profitability. The total capacity of these 2 projects will be 98 MWp. In addition, in 2019, GEC will continue to commission 4 more Solar Energy projects with a total capacity of 177 MWp. In total, GEG currently owns a portfolio of 22 projects with 14 operating Hydropower plants, 2 operating Solar power Plants, and 6 Solar power Plants which under implementation and will enter operation in 2019. The total capacity of the entire GEC portfolio will include 84.1 MW of Hydropower and up to 392 MW of Solar power.

Renewable Energy is gradually replacing Fossil sources

Given the limited performance of the Hydropower business in the first months of the year, the profit from this business line is forecast to decrease in 2019. Newly developed Solar Energy plants, however, are expected to make up for the decline in Revenue from Hydropower. Although the Revenue target is set at 86% higher than the 2018 target, the pre-tax profit target for 2019 is lower since in the first year of operation, the new projects are not likely to contribute significantly to overall profit. From the second year onwards, the profit from Solar Energy projects will contribute significantly due to decreasing financial costs and because the control of costs will be carried out according to plan.

GECâ&#x20AC;&#x2122;s portfolio of projects in 2019

14 operating Hydropower

84 MW

148 MW

2 operating Solar power Plants 2 Solar power Plants will enter operation before June 2019 4 Solar power Plants will enter operation in 2019 84 MW 82 MW

Source: GEC

Revenue and Profit estimates for 2019

Indicator (VND Billion)

2018 Target

2018 Actual

2019 Target

% Increase 2019 Target /2018 Target

% Increase 2019 Target /2018 Actual

Total Revenue

546

581

1,014

75%

86%

PBT

170

207

240

16%

42% Source: GEC

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155

BUSINESS ACTIVITIES ANALYSIS BASED ON BUSINESS MODEL (continued)

Detailed solutions No.

Major activities

2018 Execution

2019 Plan

• Implementing the regular maintenance and repairing

of Hydropower plants based on the optimization of cost while ensuring the schedule and plan

Electricity distribution

• Reviewing the operating efficiency of Hydropower • Output: 590 million kWh, up 55%

against 2018 plants, developing plans to increase their efficiency via improvement and upgrading plans: Dak Pi Hao • Revenue: VND 937 billion, up 94% 2, Ayun Ha, Ia Meur 3, H’Mun against 2018 • Acquiring technology to operate Solar Energy projects through EPC contractors and international experts to optimize the Renewable Energy resources

• Renewable Energy market research • Customer demand assessment through various stages: »» Investment research: Supply of consultancy service »» Implementation of construction: Supply of project management and EPC contractor services

Services providers

»» Operation management: Supply of operation management consultancy service

• Revenue: VND 62 billion

• Optimally exploiting existing resources based on

experience acquired from operating Renewable Energy projects and acquiring technology from international contractors

• Income is to come from the services providers for

Renewable Energy projects, especially Solar Energy projects

• Securing and efficiently coordinating sufficient funding for Energy projects

• Investor relations: Promote GEC’s brand image to • Revenue: VND 15 billion 3

Finance

seek opportunities for efficient investment and • Issue of international Bonds worth cooperation USD 50-100 million • Identifying construction investment, operation management and supplying of services for Renewable Energy as the core business Source: GEC

THE MOTTO FOR OPERATIONS IN 2019 WILL BE “STREAMLINED STRUCTURE - COST CONTROL - PROACTIVE OPERATION”. GEC WILL OPTIMIZE OUR EXISTING RESOURCES IN ORDER TO INCREASE THE COMPANY'S VALUE AND CONTINUE TO FULFILL THE MISSION OF SUSTAINABLE DEVELOPMENT BASED ON THE HARMONY OF 3 FACTORS SUSTAINABLE ECONOMIC GROWTH, PROTECTION OF THE ECOSYSTEM, AND SOCIAL ENGAGEMENT.

156

2018 ANNUAL REPORT

THE MOTTO FOR OPERATIONS IN 2019 WILL BE

STREAMLINED STRUCTURE COST CONTROL PROACTIVE OPERATION GEC WILL OPTIMIZE OUR EXISTING RESOURCES IN ORDER TO INCREASE THE COMPANY'S VALUE AND CONTINUE TO FULFILL THE MISSION OF SUSTAINABLE DEVELOPMENT BASED ON THE HARMONY OF 3 FACTORS SUSTAINABLE ECONOMIC GROWTH, PROTECTION OF THE ECOSYSTEM, AND SOCIAL ENGAGEMENT.

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157

INVESTMENT, OPERATION AND PRODUCTION ACTIVITIES OF EACH MAJOR ENERGY SEGMENT HYDROPOWER PLANT SYSTEM With years of experience in investment, management and operation, GEC is effectively operating power plants with stable Revenue and an average annual Revenue of approximately VND 400 billion in the last 5 years.

84.1

TOTAL CAPACITY OF HYDROPOWER

REVENUE OF HYDROPOWER

VND

446 Billion

GROSS PROFIT OF HYDROPOWER

VND

265 Billion

A panaromic view of Ayun Ha Plant reservoir - Gia Lai

fter nearly 30 years of investment in construction and operation of Hydroelectricity projects, GEC currently directly and indirectly owns 14 potential small and medium sized power plants with a total 84.1 MW in the Central Highlands and Northern Central. With years of experience in investment, management and operation, GEC is effectively operating power plants with stable Revenue and an average annual Revenue of approximately VND 400 billion in the last 5 years. In order to ensure safe and efficient operation, GEC has issued 27

158

2018 ANNUAL REPORT

procedures related to production activities and more than 36 procedures related to electrical experiment activities. In operation, GEC promulgates its own operation and troubleshoot procedures based on specific plant characteristics. The detailed operation procedures namely operation methods, how to start and stop a machine clusters, operate the speed control system, the excitation system, the water inlet valve system, the converter station, etc. In addition, each plant will have its detailed methods of how to handle incidents, namely electrical emergency incidents, electrical signals incidents, hydraulic engineering emergency incidents,

and incidents at main converter station and grid exit points. All plant operations must strictly follow the applicable procedures to ensure continuity in the electricity production process. Most small and medium sized Hydroelectricity plants signed PPAs with avoidable cost tariff - Preferential tariff for Renewable Energy sector According to Circular No. 32/2014/TTBCT. Avoidable cost tariff is calculated based on costs that can be avoided by the national electricity system when 1 kWh of generation capacity from small Hydropower plants is transmitted to distribution grids, in which avoidable cost refers to the cost for producing 1 kWh of generation capacity by

generating stations in the national electricity system and this cost is avoidable if the buyer purchases 1 kWh from an alternative small Hydropower plant. Avoidable cost tariff is applied while meeting one of following conditions (1) Installed capacity of plants is smaller or equal to 30 MW and all electrical Energy is produced from Renewable Energy or (2) The Seller has multiple terraced Hydropower plants on the same river shall be eligible for applying avoidable cost tariff schedule for the terraced Hydropower group when total installed capacity of these plants are smaller or equal to 60 MW.

From 2008, MOIT issued Decision 18/2008/QD-BCT regulating the Avoidable cost tariff and model PPAs for small power plants that run on Renewable Energy sources. This decision helped businesses reduce time and cost in case of PPA negotiation. However, there were some issues during the implementation process that required more specific guidance; Therefore, MOIT issued Circular No. 32/2014/TTBCT for replacement. Specifically, the tariff of small Hydropower plants will be distinguished for 3 rates: peak hours, normal hours, and off-peak hours in the dry and rainy seasons. In rainy seasons,

there will be additional rates for excess electricity. At the same time, different regions will also be subject to different tariffs. Besides, during peak hours in the dry season, there will be an added tariff, which will be applied for all 3 regions. Avoidable cost tariff will be calculated for the whole system; when electricity tariff does not increase and avoidable cost increases, Investors still enjoy high selling price because it does not depend on retail electricity tariff; on the other hand, small Hydroelectricity plant output is not high so EVN will commit to buy maximum output and pay off all of its purchases.

Avoidable cost tariff in 2018

Dry season (November-June)

Electricity tariff (VND/kWh)

Rainy season (July-October)

Peak hours

Normal hours

Off-peak hours

Peak hours

Normal hours

Off-peak hours

Excess electricity

The North

617

618

624

617

625

632

316

Central

615

617

622

615

622

630

315

The South

641

643

648

640

648

656

328

2,306

Capacity tariff (VND/kWh)

Source: Decision No. 341/QD-BCT on the Avoidable cost tariff in 2018

Commercial electricity output and average tariffs of the plants during 2017-2018 2018 Commercial electricity

2017 Commercial electricity

2017 Average tariffs

2018 Average tariff

Electricity output: Million kWh

Selling tariff: VND/kWh

2,000

1,800

1,600 1,400

1,200

1,000

800

600

400

200

0 Hâ&#x20AC;&#x2122;Mun

Hâ&#x20AC;&#x2122;Chan

Ayun Thuong

Dak Pi Hao 2

Da khai

Ia Puch 3

Ayun Ha

Dak Pi Hao 1

Thuong Lo

Ia Drang 3

Ia Meur 3

Kenh Bac

Ia Drang 2

Ia Drang 1 Source: GEC

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159

INVESTMENT, OPERATION AND PRODUCTION ACTIVITIES OF EACH MAJOR ENERGY SEGMENT (continued)

VND

REVENUE OF HYDRO POWER

446

Billion

Particularly, the power plants in TTC Chu Prong Branch, Chu Prong District, Gia Lai Province namely Ia Puch 3, Ia Meur 3, Ia Drang 3, Ia Drang 2, Ia Drang 1 have 2 main electricity businesses: Retailing and selling the excess electricity to EVN at an agreed tariff. In rainy season, when the power plants generate enough output, the retail electricity accounts for a small proportion, the remaining output is

The power plant cluster in Chu Prong Province is now the only private Enterpriseâ&#x20AC;&#x2122;s cluster in Vietnam that is allowed to sell electricity directly to consumers.

mostly sold to EVN CPC - Central Power Corporation - at the purchasing and selling site at voltage level of 35 kV. Electricity retail tariff for customers, which is determined by the MOIT, is relatively high at about VND 1,700/kWh for average. The wholesale tariff is fixed at VND 792/kWh with a 3-year cycle, then tariff for the next cycle will be negotiated. With a long history of development along with the power grid projects which used to be invested by the state and then handed over to GEC for management, the power plant cluster in Chu Prong Province is now the only private enterpriseâ&#x20AC;&#x2122;s cluster in Vietnam that is allowed to sell electricity directly to consumers. The total commercial electricity output in 2018 reached 355.87 million kWh, equivalent to 85% of 2017 output. Although commercial electricity decreased but thanks to the avoidable cost tariff increased in 2018, the average selling tariff in 2018 increased by 9% yoy, which resulted in Hydroelectricity Revenue reaching VND 446 billion, equivalent to 97% of 2017 Revenue and gross profit reaching VND 265 billion, 93% yoy.

Business results of the plants during 2017-2018

No. Plant

H'Mun

Ayun Thuong

Capacity (MW)

Revenue (VND Billion)

Branch 2017

2018 2018/2017

2017

Gross profit margin

2018 2018/2017

2017

2018

94%

91%

67%

65%

12 Mang Yang

93%

63%

H'Chan

93%

89%

74%

71%

Da Khai

8.1 Lam Dong

78%

69%

64%

56%

Ia Puch 3

6.6 Chu Prong

132%

138%

52%

55%

Dak Pi Hao 2

9 Ayun Ha

139%

153%

61%

68%

Thuong Lo

6 Hue

59%

34%

67%

38%

Dak Pi Hao 1

89%

94%

57%

60%

Ayun Ha

96%

98%

55%

57%

Ia Meur 3

1.8

135%

146%

34%

38%

Ia Drang 3

1.6 Chu Prong

150%

167%

30%

34%

Ia Drang 2

1.2

103%

117%

30%

40%

Kenh Bac

101%

97%

50%

Ia Drang 1

130%

0,831

0,897

108%

21%

18%

460

446

97%

286

265

93%

62%

60%

Total

16.2

Gross profit (VND Billion)

Ayun Ha

1 Ayun Ha 0.6 Chu Prong 84.1

Source: GEC

160

2018 ANNUAL REPORT

Over the past years, GEC constantly checked, controlled and repaired key equipment of the plants to increase and maximize capacity as well as improve management and operational efficiency. In 2018, GEC spent a total VND 23 billion on repairment, in which VND 21 billion was used for 14 Hydropower plants.

GROSS PROFIT MARGIN OF HYDROPOWER

60%

Repair costs in 2018

Plant MANG YANG BRANCH

H'Chan

H'Mun

Capacity (MW) 40.2

6,834

Repairing the connection between H'Chan - H'Mun, repairing and 12 replacing cooling water tanks, cost of inspecting machinery and equipment, cost of stand-by fuel storage

2,955

Repairing the connection between H'Chan - H'Mun, installation of 16.2 new remote trash traps and pressure tanks, inspecting machinery and equipment, hiring operation management and SCADA

2,862

Purchasing mechanical electrical equipment, tools, fuel, building plant wall and gates

1,017

Ayun Thuong

LAM DONG BRANCH

8.1

Da Khai

8.1

CHU PRONG BRANCH

Value (VND Million)

Key repair items

5,569

Construction of a water infrastructure monitoring station for the hub area, clearing corridors along the lines, procurement of electricity and fuel

11.8

5,569 5,149

Ia Puch 3

6.6 Securing piles, repairing facade , electricity and fuel purchase

2,297

Ia Drang 2

1.2 Buying converters, rebuilding plant gates and walls

Ia Drang 3

1.6

Digging wells, treating downstream springs, purchasing electromechanical equipment, fire protection

791

Ia Meur 3

1.8

Procurement of electromechanical equipment, fire protection, waste storage construction, road repairs, dredging

765

Ia Drang 1

0.6

Painting and repairing the plant, upgrading the foundation, pouring concrete, purchasing electrical equipment and materials

339

AYUN HA BRANCH

957

3,513

Making safety warning signs, buying and selling electro-mechanical products

Dak Pi Hao 2

Kenh Bac

1 Purchasing electro-mechanical equipment

873

Dak Pi Hao 1

5 Procurement of electro-mechanical equipment, making warning piles

707

Ayun Ha

3 Procurement of equipment, tools and cleaning the plant

579

HUE BRANCH

249

Thuong Lo

6 Construction of concrete roads and plants, dredging canals

249

TOTAL

84.1

1,354

21,314 Source: GEC

In addition, GEC also examined and renovated the electricity grid at Chu Prong Plants with totally VND 1.2 billion in order to improve and upgrade the existing power grid, which contributed to improving power supply reliability, reducing power loss and improving power supply quality. www.geccom.vn

161

INVESTMENT, OPERATION & PRODUCTION ACTIVITIES OF EACH MAJOR ENERGY SEGMENT (continued)

SOLAR POWER PLANT SYSTEM

lectricity demand tends to increase along with economic development in the last 10 years. Understanding that Energy is a need, GEC is gradually becoming one leading private Company in green, clean and environmentally-friendly Renewable Energy sector in Vietnam. By end of 2018, GEC put into commercial operation 48 MWp Phong Dien Solar power Plant in Thua Thien Hue and 69 MWp Krong Pa Solar power Plant in Gia Lai. The preferential tariff of electricity at the time of connection was 9.35 cents/kWh, applied in 20 years of commercial operation.

commercial bank exchange rate increased by 2.8% and the free market rate increased by 3.5% compared to that of the beginning of the year. The cause of domestic exchange rate increase is:

According to the Briefing of 2018 Financial Market Overview Report by the National Financial Supervisory Commission, in 2018, USD/VND rate increased slightly by 1.5% compared to that of the beginning of the year; the

As the Revenue from selling electricity is calculated by multiplying the set tariff in US dollars with the rate, so when the rate increases, it positively impacts GEC’s Revenue.

• In terms of international factors, the USD index rose about 5% from the beginning of the year, up 9% from the bottom rate of February 2018; • In terms of domestic fundamental factors, the exchange rate is still under pressure of inflation but it is positively supported by the balance of foreign currency supply and demand.

Movement of Central rate of USD/VND in 2018

22,825

22,800 22,714

22,726 22,750

22,650 22,595 22,600

22,463

22,669

22,678

Jul

Aug

22,539

22,441 22,458

22,400 Jan

Feb

Mar

Apr

May

Jun

Sep

Oct

Nov

Dec

Source: State Bank of Vietnam

As a pioneer in Solar power Plant construction and operation, GEC faced various challenges and difficulties from design evaluation, design agreement, testing to acceptance, namely: • Difficulties in implementing and coordinating in execution as the current detailed regulations on acceptance and testing have not been issued; • In Vietnam, there is no capable testing company to carry out experiments of panel performance; • There are no specific regulations on tests after the plants are connected to the grid (after energizing of inverters); • There are no specific instructions on how to measure panel performance under implementation at the plants; • There are no regulated procedures for conducting tests and running 72-hour pilot tests, which lead to a passive position in determining the date of commercial operation. 162

2018 ANNUAL REPORT

Identifying the difficult steps in implementation process, GEC coordinated with functional contractors and local authorities to organize meetings in order to clarify and solve problems to complete the work in time: • Communicating and clarifying with the National Load Dispatch Center A0 on the pilots after grid connection. On October 1st, 2018, A0 officially issued guidelines for implementing pilot items at the plants; • Working in details with the electricity trading companies, experimenting with multiple control methods to make panel performance measurement method more accurate on field level. The EPC general contractor, who gave significant support to successfully put the plants into operation, was responsible for the design, technology supply and construction. The EPC contractor joint venture “Sharp Solar Solution Asia Co.,

Ltd., Sharp Group and NSN Construction and Design JSC” contributed to making GEC a pioneer in Vietnam Solar Power Industry by putting Phong Dien plant into operation. In addition, with the experience from being an EPC general contractor of more than 700 MW capacity of Solar power projects in Japan, Japan’s JGC Group and JGC Vietnam are responsible for implementing Krong Pa project. During the implementation process, EPC contractors faced numerous

challenges from uneven construction ground, harsh weather and tight schedules. However, with experience and professionalism, JGC Vietnam Co., Ltd, a Member of JGC Group, Japan and 3 other Contractors namely Sharp, SSSA and NSN managed to complete 2 projects and met both quality standards as well as schedules. In addition, this is also thanks to constant efforts of all project management, supervisors, consultants and GEC staff.

TTC PHONG DIEN - HUE

TTC KRONG PA - GIA LAI

INVESTMENT

Installed capacity

48 MWp ~ 35 MW

Installed capacity

69 MWp ~ 49 MW

Area

45 ha

Area

76 ha

Number of Solar cells

145,560 panels

Number of Solar cells

209,100 panels

Total investment

VND 853 billion

Total investment

VND 1,284 billion

BUSINESS EFFICIENCY

Number of sunny hours per year 1,700 - 2,000

Number of sunny hours per year 1,900 - 2,200

Radiation rate

4.6 kWh/sqm/day

Radiation rate

4.8-5.2 kWh/sqm/day

Estimated average yield

59.7 million kWh/year

Estimated average yield

103 million kWh/year

FIT for 20 years

9.5 cents/kWh

FIT for 20 years

9.35 cents/kWh

Estimated Revenue

VND 128 billion/year

Estimated Revenue

VND 220 billion/year

ENVIRONMENTAL EFFICIENCY

Reduction of CO2 emissions

ENVIRONMENTAL EFFICIENCY

20,503 tons / year

2018 ACTIVITIES

Reduction of CO2 emissions

29,000 tons/year

2018 ACTIVITIES

Commercial operation

October

Commercial operation

December

Electricity output

11.9 million kWh

Electricity output

5.8 million kWh

Revenue

VND 25.4 billion

Revenue

VND 11.9 billion

Gross Profit

VND 15.2 billion

Gross Profit

VND 7.4 billion

Gross Margin

60%

Gross Margin

62% Source: GEC

In order to professionalize production and operation of Solar power projects, GEC established the O&M Department in November 2018 with these following main functions and duties:

• Monitoring the activities of GEC’s plants; • Developing and implementing maintenance and repairing plans; • Directing the handling and troubleshooting of incidents based on 2 options of self-implementation and outsourcing; • Developing a manual for plant operation management. Coordinating with Indian experts and skilled operation engineers to ensure efficiency in the operation of GEC’s Solar power Plants, which are gradually being professionalized. This contributes to the operation of Solar power projects under GEC system and TTC Energy sector; also aims at becoming a value-added service for external Solar power Plants operating in the future. In addition, O&M is also coming to solutions to support the diversification of GEC’s Revenue sources in the long term, starting from 2019 and especially building GEC into a strong brand in Vietnam’s Renewable Energy market. www.geccom.vn

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R&D ACTIVITIES OPTIMAL ENERGY SOLUTION

R&D projects at GEC are at high feasibility

R&D - FROM PLANNING TO PRACTICE For every business in any field, application of scientific and technological solutions to optimize production and business activities plays a decisive role in productivity, performance and competitiveness. Recognizing this importance, GEC established a dedicated R&D Department in 2011, which carried out regularly many different tasks:

R&D

Recruiting and training a team of R&D specialists

Researching technological solutions to optimize and streamline production in order to improve power production and business efficiency

Researching and owning high technology products

Gradually approaching and integrating with the 4.0 Industrial Revolution

Launching the movement of technical innovations, taking scientific research projects as criteria for competition and reward evaluation

Researching and applying new Energy sources: Solar power, LNG, Wind power and Biomass, etc.

Following the orientation of Vision - Innovation - Implementation, GECâ&#x20AC;&#x2122;s R&D Department is a pioneer in applied technology research, its Mechanical - Electrical - Automation Engineers are experienced in:

Optimizing production, lines, technological processes and products

Information exchange, data collection (SCADA/HMI)

Sensors and automation controls

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2018 ANNUAL REPORT

Robotics

Energy and Energy efficiency solutions

Application of Artificial Technology (AI), Internet of Things (IoT)

R&D IMPLEMENTATION - SUPPORTING OPTIMAL ENERGY SOLUTIONS THROUGH YEARS Since its establishment, GEC has invested VND 10 billion to upgrade its plants on specific purposes as replacing working wheels to increase power generation efficiency, renovating SCADA/HMI automation system to supervise the plants’ operation at the Company's dispatch center, etc. Researches to improve production streamline such as the excitation and speed regulation systems; self-powered DC Year

Project

2011

Developing SCADA/HMI remote monitoring and data collection system for power plants

2012

2013

2014

2015

2016

2017

Fabricating and putting into use the 220V DC power supply system for Ayun Ha Hydropower Plant Manufacturing automatic magnetic control cabinet for Ayun Ha Hydropower Plant Fabricating and applying automatic speed regulators for Ayun Ha Hydroelectric Plants Manufacturing temperature and oil level measurement equipment, flow meter, 1-way pressure and 3-phase power measurement equipment for the plants Successfully fabricating 3-phase power measurement equipment set

Investment

system; 35 kV grid monitoring equipment were applied. Owning these key technologies helps minimize production, reduce business interruptions and cut down the time required to overcome such problems. Research and production streamline activities were taken seriously with many projects being applied, operating stably and meeting technical requirements during 2011-2018, namely: Project’s performance • Remoting collection, monitoring and control of data • Recording and generating data reports • Forecasting and analyzing risks of possible incidents • Multitasking, process control at the Control Center • Owning the technology • Replacing the China-origin equipment, which was outdated with frequent breakdowns • Shortening required time to go over problems and incidents • Ensuring continuous power generation of the plants • Saving the cost of new investment

VND 5 billion • Replacing pieces of equivalent equipment that were out of production • Proactively replacing spare supplies, meeting the monitoring of continuous signals at the plants

• Running automation in operation • Developing data to manage and control the entire process by computer • Multitasking, process control by sensors, control software, limiting the risk of incidents that may shutdown the units • Digitizing data into charts, files, etc. to help query and analyze history data for the fastest data storage and troubleshooting • Streamlining operation process, optimizing production with advanced technologies

Upgrading the distributed control system (DCS) of H'Chan Hydropower Plant

USING ROBOTS • Cleaning time: 3 seconds/panel • Required amount of water for cleaning: 0.12 liters/panel

VND 70 million/Robot 2018

Fabricating and applying Solar panel-cleaner robots for Solar farms, Rooftops

Planning to produce 4 Robots per 1 Solar power plant

MANUAL CLEANING • Cleaning time: 21 seconds/panel • Required amount of water for cleaning: 1.2 liters/panel EFFICIENCY It is estimated that during the same operation duration, the use of a Robot to clean 1 panel block (20,790 battery panels) helps save 104 hours, 24 workers and 22.4 liters of water in one session, in comparison to the traditional cleaning method 2019 • The product will be registered for trade rights, TUV quality assessment to ensure legality and competitiveness for external partners • Mass production and official operation at Krong Pa Solar power Plant • Completing more features to diversify the product’s functions in working on various types of terrain • Continuing to apply to Phong Dien Solar power Plant • Aiming at commercializing the product. www.geccom.vn

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INVESTMENT IN TECHNOLOGY DEVELOPMENT TO INCREASE THE OPERATION EFFICIENCY INVESTMENT IN UPGRADING DAK PI HAO 2 HYDROPOWER PLANT

TOTAL INVESTMENT

VND

17 BILLION

PROGRESS

1st phase: Completed

2nd phase: Expected to be completed in mid-2019

Inside of Dak Pi Hao 2 Hydropower Plant - Gia Lai

Purpose of the Project • Increasing and maximizing power generation capacity during peak hours. • Increasing Revenue, reducing repair costs. • Increasing operation safety level. Current status Dak Pi Hao 2 Hydropower Plant, Cho Long Commune, Kong Chro District, Gia Lai Province: • Under Dak Pi Hao Stream - Level I Branch of Ba River with an average annual flow of 4.45 m3/s; • Construction in 2005; • Completion and putting into operation in 2008 with a designed capacity of 9 MW. In the first years of operation, the plant produced about 37 million kWh annually. In recent years, the power output decreased due to a number of factors, affecting the Plant's capacity, which reached only 8.7 MW: • Weather factor: drought;

Efficiency improvement after the Project being put into operation • Research on the Project was started in 4Q 2016: »» Installation Consultancy was provided by foreign experts; »» Construction was carried out by a Member of GEC - Gia Lai Construction and Electrical Mechanic One Member Limited. • The upgrade was divided into 2 phases, during each phase, only 1 unit was under upgrade, to avoid affecting the Plant's production. • In 2Q 2018, GEC completed 1st phase of upgrading and successfully installed a new unit with a maximum capacity of 5 MW whereas the previous capacity was a mere 4.6 MW. • 2nd phase of the upgrade was expected to begin in Feb 2019 and finished in mid-2019. • After the upgrade, the Plant's total capacity may increase to 9.5 MW.

• Worn-out mechanical equipment, with frequent break-downs;

• According to the initial evaluation, the Project achieved good results, with the new machine operating in a stable manner.

• The automatic control system was not in good working order, etc.

• GEC continues to monitor and evaluate the project efficiency and make proposals to upgrade the other plants.

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REPLACING PROTECTIVE RELAYS AND DISTRIBUTED CONTROL SYSTEMS (DCS) OF AYUN HA HYDROPOWER PLANT

TOTAL INVESTMENT

VND

3.2 BILLION

PROGRESS

1st phase: Completed in 2018

2nd phase: Expected to be completed in 2019

Distributed control system at Ayun Ha Hydropower Plant - Gia Lai

Purpose of the Project • Meeting GEC's strategic objective of effectively managing operations towards automation. • Minimizing risks of operational incidents. • GEC's Technology Development Center carried out the survey and made plans to implement the DCS system at Ayun Ha Plant. • GEC shall complete the renovation and repair of Ayun Ha Plant and then the others. Current status • Ayun Ha Hydropower plant was built in Ayun Pa Commune, Phu Thien District, Gia Lai Province: »» Under Ayun River, with a flow rate through turbine of 23.4 m3/s; »» Being put into operation since 2004; »» Total capacity of 3 MW. • The Plant's protective relay system has been in operation for a long time, so it could no longer be reliable; some functions were out of order, which might lead to the risk a chain of unexpected incidents.

• The DCS system was old, therefore unable to perform automated control, unfocused and unable to centralize all the Plant's data to computers, so it could not monitor the whole operation of the Plant, which could well lead to operation incidents. Efficiency improvement after the Project being put into operation 1st phase: • Total investment: VND 1.2 billion. • Focusing on replacement of the protective relay system. • The project was implemented from Jan 2018 to July 2018. 2nd phase: • Total investment: VND 2 billion. • Focusing on renovating and replacing control equipment, measuring and installing DCS system. • The implementation was expected to be completed by the end of 2018 or early 2019, depending on the actual works carried out by the Plant.

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INVESTMENT IN TECHNOLOGY DEVELOPMENT TO INCREASE THE OPERATION EFFICIENCY (continued)

SOLAR PANEL-CLEANER ROBOTS

TOTAL INVESTMENT

VND MILLION/ROBOT 4 Robots are expected to be made for each Solar power Plant

PROGRESS

• The sample version was completed • Robots officially entered operation in 3Q 2019 Cell-cleaning robots - achievements from GEC's R&D are expected to be commercially viable in 2019

Purpose of the Project • GEC's Technology Development Center researched and manufactured Solar panel-cleaner robots • In addition to safe and efficient operation, keeping Solar panels clean helps improve power generation efficiency and minimize losses due to underperforming absorption of surface.

Efficiency improvement after the Project being put into operation

Current status

• It takes 3 seconds and 0.12 liters of water to clean a panel.

• In 2018, GEC became the first Enterprise in Vietnam that put a Solar power Plant into operation

• Initially, the sample version of the cleaner robot is a success.

• Two of GEC's Solar power projects came into operation with a total capacity of 117 MWp »» Phong Dien - Hue: 48 MWp »» Krong Pa - Gia Lai: 69 MWp • In 2019, GEC expects to put into operation 4 other Solar power Plants with the total capacity of 196 MWp: »» Ham Phu 2 - Binh Thuan: 49 MWp - Before June 30th, 2019 »» Duc Hue 1 - Long An: 49 MWp - Before June 30th, 2019 »» Ham Phu 1 - Binh Thuan: 49 MWp - 2019 »» Duc Hue 2 - Long An: 49 MWp - 2019.

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2018 ANNUAL REPORT

• It is estimated that during the same operation duration, the use of 1 Robot to clean 1 panel block (20,790 battery panels) helps save 104 hours, 24 workers and 22.4 liters of water in one session, in comparison with the traditional cleaning method.

• Quality verification and trademark registration are under preparation. • Being expected to be applied for all GEC's projects. • By the end of 2019, GEC will commercialize this Product for projects of GEC, TTC Group and external customers.

ENTERPRISE RESOURCE PLANNING (ERP) SOFTWARE

TOTAL INVESTMENT

1.2

VND

BILLION

Purpose of the Project • Standardizing business management process. • Applying information technology tools in management. • Improving competitiveness, updating information timely and accurately. Current status • In 2018, GEC carried out the ERP Project: »» Maximizing use of resources including manpower, material, and production resources; »» Analyzing and evaluating information accurately and timely with the system of information storage solutions.

PROGRESS

• Being under deployment • Being expected to be completed in mid-2019 Efficiency improvement after the Project being put into operation • The selected software, Microsoft Dynamics 365 for Finance and Operation Enterprise Edition version: »» Meeting Armstrong Representative's requests; »» Meeting Technology orientation of TTC Group; »» Being implemented by FPT Software. • Being put into operation, ERP will effectively support GEC: »» Maximizing the level of information exchange; »» Cutting down required time for data access; »» Contributing to the standardization of GEC's activities.

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HUMAN RESOURCE & TRAINING LEVER OF GROWTH In 2018, besides striving to achieve business and production targets of Hydropower projects,

GEC ALSO AIMED AT BECOMING

A PIONEER IN VIETNAM'S SOLAR ENERGY DEVELOPMENT.

The achievement has to depend heavily on highly-skilled, experienced and devoted personnel. The growth rate of Human resources in the last 5 years has been evident for GEC's continuous expansion and development.

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2018 ANNUAL REPORT

THE STAFF STRUCTURE CHANGES TO SERVE SCALE EXPANSION

Employees structure by Gender in 2018

ue to the nature of Energy industry, the proportion of female employees is relatively lower than that of male workers, accounting for only 16%, but still higher than the rate 13% of leading Vietnam Energy industry - EVN in this aspect. Gender equality is always taken into consideration at GEC; qualified women have opportunities to develop their talents, intellect and personal experience. Especially in 2018, the proportion of female employees increased significantly, accounting for 16% of the total number of employees compared to 14% of 2017. In particular, the proportion of females in management is relatively high, accounting for 23%. In addition, GEC had the first female CEO, appointed in October 2018.

16%

TOTAL NUMBER OF EMPLOYEES IN 2018

Male Female 84%

349

Total number of employees (Including seasonal employees) Total number of fulltime employees Growth rate

Emloyees

Total number of employees in 2014 - 2018 500

Distribution of management by Gender in 2018

16%

400

349

300

263

23%

296

281 249

238

315

275

12%

319

296

11%

200

Male Female 77%

8% 7%

100

6% 5%

4% 2014

2016

2015

2017

2018 Source: GEC

Employees structure by Education in 2018 8% 4%

Postgraduate Graduate Colleage 42% Vocational training Unskilled workers

38%

Qualification of HR is one of the matters that receive special attention because the requirement for employeeâ&#x20AC;&#x2122;s standards is increasing as GEC's portfolio is expanding to a variety of Renewable Energy types, namely Solar power, Wind power besides small and medium power plants, which is GEC's strength. In detail, Graduate and Postgraduate degree account for 42%, Colleage accounts for 8%, Vocational training certificates account for 38%, and the rest 8% involves Unskilled workers. GEC's personnel qualification level changed significantly in 2014-2018 when the number of highly qualified employees increased to 146 in 2018 from 98 in 2014, up 50%, which met the requirement for the next development stage. Employees by Education in 2014-2018

160

147

131 134

122

120

129

91 80 40 7

0 2014 2015 2016 2017 2018

2014 2015 2016 2017 2018

Postgraduate

Graduate

College

Vocational training

Unskilled worker Source: GEC

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HUMAN RESOURCE & TRAINING LEVER OF GROWTH (continued)

With 41% of employees under 35 years old, a yoy upturn of 20%, GEC's current team was considered young, dynamic, agile and highly adaptive.

Employees structure by Seniority in 2018

Employees structure by Age in 2018

5% 18%

21%

36%

42% 15%

41%

7% 15%

Age from 18 to 25

Age from 35 to 45

Below 1 year

From 5 to 10 years

Age from 25 to 35

Age above 45

From 1 to 3 years

Above 10 years

From 3 to 5 years Source: GEC

Moreover, in terms of Seniority, more than 56% of employees who have over 5 years of loyalty and 42% have more than 10 years of loyalty. These are the strongest evidence of a professional and effective environment that has workplace wellbeing, which are important conditions for retaining loyal employees who have long-term dedication to GEC. 2014-2018 also witnessed a continuously rejuvenating of GEC's HR with a growth in the proportion of employees under 35 years old, from 67 in 2014 to 133 people in 2018, a surge by approximately 100%. Distribution of employees by Age in 2014-2018 160

134 132

121

120

103

115

67 50

0 2014 2015 2016 2017 2018

2014 2015 2016 2017 2018

18 - 25

25 - 35

35 - 45

> 45 Source: GEC

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2018 ANNUAL REPORT

GEC's Human resources is a variety of ages, genders and experiences

EFFECTIVE HUMAN RESOURCES DEVELOPMENT WITH SOUND POLICIES OF REMUNERATION AND BENEFITS In order to develop both quality and quantity of GEC's HR as well as increase employee retention, GEC continuously added, updated and renewed the policies related to:

Attractive salary and bonus

Development opportunities for employees

Suitable benefit regime

Appropriate and proper assignment of responsibilities, functions and tasks

Professional environment

Controlling external factors

Connective corporate culture

Relationships across levels and colleagues

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HUMAN RESOURCE & TRAINING LEVER OF GROWTH (continued)

TREATING EMPLOYEES - BALANCING HUMAN VALUE AND WORK VALUE GEC was successful in attracting loyal and devoted staff, this strength will continue to be promoted to ensure the Company's continuous operation as well as each employee's performance. Salary, bonus and remuneration are based on performance, competence, responsibility, position, seniority, professional qualifications, results, level of accomplishing tasks and the Company's policies from time to time.

HUMAN RESOURCES POLICY WAS A BALANCE BETWEEN TWO FACTORS

Human Value

Work Value

Choosing the right person for the right job Quantifying job descriptions to fairly determine salary and bonuses. EQUALITY

HUMAN

WORK

BENEFITS FOR TALENTS

QUANTIFYING JOB DESCRIPTION

SALARY STRUCTURE

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2018 ANNUAL REPORT

esides the efforts to maintain benefits regime for employees in accordance with current Vietnam law and Company regulation. In 2018, GEC also developed some salary and bonus policies to encourage, motivate and promote employee's dedication: • Promulgating the policies for employees at Energy projects. This policy was a timely material support for employees at the projects, which contributed to improving their performance and speeding up the projects' progress; • The policy of performance-based rewards for laboratory bidding packages encourages employees to create and increase Revenue; • Promulgating the reward policy for Solar power and Wind power projects development; encouraging employees to complete the projects on schedule, saving costs and enhancing work quality. • Researching and developing benefits policies to improve employee's material and mental lives, whereby the compensation was structured into two parts: »» Direct: Salary, bonus and benefit in cash such as the 13th monthly salary and profit sharing; »» Indirect: Annual leave/time off in-lieu, insurance (health insurance, accident insurance), occupational safety (periodic health examination), benefit for family, and other services (lunch, birthday gifts, Tet gifts, travels), etc.

TOTAL

LY OV

VND

2017

BILLION

TH E

VND

Through the specific and direct policies, employees' lives improved significantly, which is reflected in GEC's average salary has growth over the years. In the last 5 years, along with the increase in employees, GEC's salary budget has also surged significantly. The total salary fund upturned steadily from VND 30 billion in 2014 to VND 60 billion in 2018, growing 100% and 9% from VND 55 billion in 2017. In addition, a stable growth is also recorded in GEC employee's average salary, from VND 9.6 million in 2014 to VND 14 million in 2018, growing 46%.

VND

SALA

2018

YEAR

BILLION 2014

REMUNERATION AND BENEFITS

Average salary (VND/person/month) 16

DIRECT

INDIRECT

14 13

Salary

Time off in-lieu

Bonus

9.6

10.5

2014

2015

2016

8 2017

2018 Source: GEC

Insurrance

Benefit in cash

GEC salary budget in 2014-2018 (VND Billion)

Occupational safety

70 60 50

Profit sharing

Benefits for family

42 30

Other services

10 0 2014

2015

2016

2017

2018 Source: GEC

Indirect HR cost also increases correspondingly yoy as the Company complies fully with compulsory insurance, accident insurance, birthday gifts, travels policies, etc. Total indirect HR cost in 2014 was VND 8.6 billion, surged to VND 14.6 billion in 2018, which is a growth of 70%. Particularly, the costs in 2018 increased by 13% yoy. In 2018, GEC implemented different prominent new Energy projects, 2 Solar power Plants commercially operated in October and December. There were special support and benefits for employees who worked

away from homes and on construction sites. This is to encourage and create the most favorable working conditions for them. This also boosted the spirit of the staff who were working night and day on the construction sites to ensure in-time completion as committed with the leadership.

VND Billion

Year

2014

2015

2016

2017

2018

Increase/Decrease 2018-2017

Compulsory insurance

2,670

3,480

3,762

4,041

4,961

23%

Health examination expenses

121

127

117

226

425

88%

Travel expenses

685

750

1,790

965

-46%

Accident insurance

Birthday gifts

129

195

51%

Other expenses

5,054

5,253

5,583

6,686

8,011

20%

8,583

9,665

10,300

12,905

14,591

No.

Total

13% Source: GEC

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175

HUMAN RESOURCE & TRAINING LEVER OF GROWTH (continued)

1,897 hours

Total training duration in 2018

23% Female Leaders

176

2018 ANNUAL REPORT

42%

Postgraduate and Graduate

450

Beneficaries

Total participants

HUMAN

SOLIDATION TO DEVELOP www.geccom.vn

177

HUMAN RESOURCE & TRAINING LEVER OF GROWTH (continued) PAYING ATTENTION AND DEVELOPING ACTIVITIES THAT PROVIDE ADDED VALUE

The Company also regularly promoted donations and volunteer activities to encourage, support and reduce the burdens of people in needs and people in hardship through various programs as White Shirts to School, Winter Clothes of Love, Blood Donation, Support for flood victims, donation and support for staff to overcome sickness, etc.

EMPLOYEE POTENTIALS A STRONG SUCCESSIVE GENERATION The quality of HR is always considered an advantage edge to every company, which contributes greatly to maintaining and promoting sustainable development through productivity improvement.

Community and social engagement activities are always highly valued and promoted

In order for Human resources training and development to be effective, GEC started to develop a curriculum training frame for each position. The Company cooperated with Trade Union, Youth Union, Women Union to organize traditional sports festival, cultural exchange and create conditions for employees to participate in the activities, which contributed to strengthening the connection among employees and improve their mental lives. For employees on night shifts, the Company also subsidized such practical benefits as an allowance of VND 25,000/person/shift to foster their physical and mental health as well as to bring about the peace of mind for these employees at work. Every year, the Company has invited functional agencies to tests on noise, vibration, dust, etc. in order to provide a foundation for researches and provision of additional personal protective equipment as uniforms, protective equipment for employees to minimize impacts from the work environment on workers' health and reduce harmful factors, etc.; thereby improving the work environment and introducing an allowance for working with toxics. From September 2018, HR Department proposed a plan to pay allowance for noise pollution for plant staff, which stood at VND 10,000/person/day in cash.

178

2018 ANNUAL REPORT

In 2018, GEC promoted the internal and external training programs with the group of key programs based on operational needs from time to time. In order for HR training and development to be effective, GEC started to develop a curriculum training frame for each position. Through this curriculum training frame, Management and Leaders at all levels can have an overview of the Organization's training and HR development activities. The total cost of training in 2018 was VND 1.4 billion, an increase of 14% and 115% respectively compared to 2017. In 2018, training courses for professional development accounted for 79% of the total 39 training courses at GEC with 450 participants. Every year, HR Department reviews and records proposals from other departments to build a strong successive generation. The appointment rate of GEC's existing staff accounts for 84%.

Business development training course for GEC sales team

GEC staffs are participating in the afforestation

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179

HUMAN RESOURCE & TRAINING LEVER OF GROWTH (continued) Training program implemented in 2018

No.

Program Group

Training according to the law and requirements of standard and quality certification organizations

Professional training

Key content

Meeting the law's requirements on qualifications and knowledge

Programs

Target

• Occupational Safety and Hygiene • Electrical Safety • Production worker • Fire protection • Professional staff • Head of operation • Certificate of supervision

Participant

Training Course

229

144

450

and bidding

Providing essential knowledge and skills related to specific work and expertise

• Inspector • R&D: Embedded programming • Accounting profession • Professional • HR profession specialist • Tax profession • Professional staff • Finance - Planning profession • Secretary profession • IT profession

• Company 3

Onboard training

• TTC Group introduction introduction • Industry introduction • Necessary guidance for new employees • Company introduction • Visiting and learning

Foreign training

experiences in European • Fostering Countries knowledge • Learning and transfer • Sharing experiences equipment technology in China

• Fostering 5

knowledge Management and • Developing Leadership skills leadership and training management skills for Management levels Total

• HR management • Developing middle management • 2018 TTC Talent • CEO

• New recruitment • Managers at all levels • Staff of Solar power Project management team

• Managers at all levels

Source: GEC

The united and coordinated working environment at GEC

180

2018 ANNUAL REPORT

Beside continuing to promote a healthy, united and cooperative work environment, GEC also organized soft skills classes to develop relationships at work and ensure skilled management, effective organization at work and assignment of the right person for the right job. GEC always encourages management levels to share knowledge, experience with employees and create close relationships between supervisors and employees. Specifically, internal professional training courses were conducted by staff of different departments in 2018, such as professional knowledge training on electricity, Shareholders management, information disclosure, secretariat, assistant, along with professional activities on accounting, etc.

GEC BUILT ITS OWN CODE OF CONDUCT, WHICH EXPRESSES GEC CULTURE AND LEADS TO A PROFESSIONAL BUT FRIENDLY WORK ENVIRONMENT THAT MOTIVATING EMPLOYEE'S DEVELOPMENT AND DEVOTION. GEC CULTURE IS REPRESENTED IN MANY AREAS FROM 5S RULES COMPLIANCE

SHINE

SET ON ORDER

STANDARDIZE

STRAIGHTEN

SUSTAIN

TO BUILD A CIVILIZED, CLEAN WORK ENVIRONMENT THAT CONTRIBUTES TO IMPROVE WORKING PERFORMANCE; AS WELL AS EMPLOYEES' WORK ETHICS. ALL OF THESE CREATES SYNERGIES AND BUILDS UP GEC INTO AN IDEAL DESTINATION FOR TALENTS IN THE ENERGY INDUSTRY. THESE TALENTS WILL COME AND STAY, ON THE COURSE OF SUSTAINABLE DEVELOPMENT OF THE COMPANY.

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Brightening withvềknowledge, highland children, day-to-day Mang ánh sáng các buônforlàng Tây Nguyên

SUSTAINABLE DEVELOPMENT 184 190 200 206 214 215 216 218 220

Stakeholders Engagement Commitment on economic - Sustainable economic growth Commitment on environment - Sustainability from the ecosystem Commitment on the community - Community and society engagement Sharing from Foreign Shareholders Sharing from Contractors Sharing from Customers Sharing from Employees Contact Information for Stakeholders

VND

7,400 ~12,800

INVESTMENT IN ECONOMICALLY-DIFFICULT AREAS

BILLION

GEC'S PROJECTS BENEFICARIES

CLEAN ENERGY SOURCE MORE GREEN TO THE COMMUNITY WITH ASPIRATIONS TO CONTRIBUTE TO PROMOTE ECONOMIC DEVELOPMENT, STRENGTHEN SOCIAL SECURITY IN VARIOUS LOCALITIES, ADD RENEWABLE ENERGY TO THE NATIONAL GRID; GEC JOINTLY PROTECTS THE ENVIRONMENT, LENDING A HAND TO THE GLOBAL EFFORT, LIMITING THE INCREASINGLY COMPLICATED GREENHOUSE EFFECT ON EARTH.

STAKEHOLDERS ENGAGEMENT

General

GRI 102-42

IDENTIFYING AND SELECTING STAKEHOLDERS Having developed small and medium Hydropower plants for nearly 30 years in Vietnam, GEC gets advantages from Executive Management experience, production capability, as well as strong connections in Vietnam's Electricity Industry.

That is also the reason GEC boldly and strongly pioneered in investing and developing Solar power with 2 projects successfully grid connection in Hue and Gia Lai. GEC has various Stakeholders, each acting as an important link in the Company's existence, operation and development. Appropriate action and engagement plans are developed based on the degree of interaction and influence of each Stakeholder in the key categories.

Key Stakeholders with significant engagement with GEC's operation are categorized into 5 main Groups:

State Agency and Local Authority

• The Government, MOIT, Ministry of Natural Resources and Environment, Ministry of Agriculture and Rural Development • Provincial People's Councils and People's Committees • Department of Industry and Trade, Department of Planning and Investment, Department of Natural Resources and Environment, Department of Agriculture and Rural Development, Forest Protection Sub-Department • Department of Culture, Sports and Tourism, Military Agencies (Provincial level), Public Security (Environmental Police) • District Committees, District People's Committees and Departments • Communal People's Councils and People's Committees • Local communities

Electricity trading partners

• Electricity and Renewable Energy Authority • Vietnam Electricity (EVN) • Electricity Power Trading Company (EPTC) • Load Dispatch Centers A0, A1, A2, A3 • Electricity Regulatory Authority of Vietnam (ERAV) • Northern, Central and Southern Power Corporations

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2018 ANNUAL REPORT

Power projects contractors

• EPC construction companies • Consultancy firms • Equipment and tools suppliers

Shareholders and potential Investors

• Local and international major Shareholders • Existing Shareholders • Local and international potential Investors • Investors on the stock market

Employees

• Executive Board • Full time staff

General

STAKEHOLDER ENGAGEMENT APPROACH INTERACTION BETWEEN GEC AND STAKEHOLDERS Reviewing and evaluating

Identifying Stakeholders

Prioritizing Stakeholders

Frequency of consultancy

Identifying Stakeholders through their direct and indirect interactions with GEC.

Categorizing a Stakeholders based on the degree of 2 way influences between GEC and the Stakeholders.

Developing, consulting plans by related department managers.

Initially evaluating risks of major issues that may arise in the interations with Stakeholders. Defining how these major issues can affect GEC’s operation as well as its relationships with Stakeholders.

Indentifying and scoring the influence and impact of Stakeholders.

Reviewing feedbacks and concerns of Stakeholders that participated in consultancy.

Proposing methods of working and communicating with Stakeholders.

Constantly updating and improving approaches, methods and solutions to maximize the values of GEC and Stakeholders.

Carrying out periodic and extraordinary activities of consulting.

Reviewing and evaluating major issues that are chosen to be improved by managers so that they will serve GEC’s business strategy and mitigate Stakeholder’s concerns.

Identifying major issues that are concerned by Stakeholders to develop appropriate response plans.

3.0

2.5

INTERACTION BETWEEN GEC AND STAKEHOLDERS

Stakeholders' dependency on GEC

GRI 102-43

Employees 2.0

Power contractor Shareholder/potential Investor

1.5

1.0

Electricity trading partners

0.5

State Agencies/ Local Authority

0 0

0.5

1.0

1.5

2.0

2.5

3.0

GEC's dependency on Stakeholders

Source: GEC

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185

STAKEHOLDERS ENGAGEMENT (continued)

EVALUATION OF KEY BUSINESS SECTORS

High

GEC's Renewable Energy operation includes small and medium Hydropower plants, Solar plants, and coming Wind power projects in 2019. GEC operates across provinces in the Central Highlands, North Central, South Central and Southeast. Following the current strategic plan, GEC continues to promote Solar projects in the Southeast (Long An), South Central (Binh Dinh, Binh Thuan) and Central Highlands (Dak Nong). The Mekong Delta and Central Highlands are under survey for Wind power projects. By boldly and assertively investing in Renewable Energy, GEC became Vietnam's first Company successfully connected

Matrix of key items

to the grid with 117 MWp of Solar power. Maintaining continuous operations at existing plants and continuing to expand business to other types of Renewable Energy will be the basis for GEC to increase Revenue. This is also the best solution to mitigate its dependency on only one Energy type, which plays a critical role in ensuring the Company's Sustainable development. Based on assessment of key concerns in the two-way interaction of GEC and its Stakeholders as well as UN's Sustainable development trend, GEC identified a matrix of 14 key items including Economy, Environment and Society:

4.0

Local community Education and Training

Jobs Diversity and Equal opportunity

3.5

Anti-corruption

Indirect ecomomic impacts Emission

Solid and Water waste

Material

Energy Labor safety and Employee health

2.5

Average

Impacts on Stakeholders

3.0

Economic efficiency

2.0

1.5

1.0

Low

0.5

1.0

1.5

2.0

Low

2.5

3.0

3.5

4.0

4.5

Average

5.0

High

Impacts on Gia Lai Electricity JSC

ECONOMY

GRI 201 - Economic efficiency GRI 203 - Indirect ecomomic impacts GRI 205 - Anti-corruption

186

2018 ANNUAL REPORT

ENVIRONMENT

GRI 301 - Material GRI 302 - Energy GRI 305 - Emission GRI 306 - Solid and Water waste

SOCIETY

GRI 401 - Jobs GRI 403 - Labor safety and Employee health GRI 404 - Education and Training GRI 405 - Diversity and Equal opportunity GRI 413 - Local community

General

GRI 102-44

KEY TOPICS AND CONCERNS RAISED In recent years, in order to ensure transparency and efficiency of all activities, GEC strove to develop and complete its engagement mechanisms with Stakeholders; thereby facilitate them in giving feedback to GEC and increase satisfaction as well as Stakeholder engagement efficiency. GEC's goal is to create a sustainable value chain by concentrating on medium and long-term interests for GEC and Stakeholders.

Stakeholder Group

Main concern

Current approach

Key plan

• Compliance with the law • Compliance with policies, processes and procedures of the Government • Compliance with social and environmental policies • Supporting policies and movements of State Agencies

• Fulfilling all corporate obligations, namely tax obligations, annual insurance, health safety, occupational safety, etc. • Strictly complying with the regulations related to additional survey of electricity planning, project development, acceptance and completion of energizing, etc. • Implementing projects based on IFC's 7 Performance Standards on Environmental and Social Sustainability as well as current good governance practices • Continuously updating policies and regulations issued by Government and State Agencies. In particular, the Decision 39/2018/QD-TTg on revising mechanism to support the development of Wind power projects in Vietnam or MOIT's Official Letter 4614/BCT-DL to the Prime Minister, on Solar power development • Participating in Government's activities in the Energy Industry as Renewable Energy and Wind power conferences organized by MOIT • Joining in State Agencies' movements and programs to support the community and society though activities as: Contributing to the Gong Festival in response to Gia Lai Provincial People's Committee's calling for contribution in promoting the unique culture of Central Highlands

• Pro-actively interacting with the Government and State Agencies, upgrading GEC's level and affirming its brand as Vietnam's pioneer in Renewable Energy Industry • Focusing on updating legal documents related to GEC's business on a regular and timely basis • Fully complying with the Law • Leading and pioneering in meeting State Agencies' requirements related to economy, community and society

• Collaborating with local authorities by participating in Social and Community funding activities within GEC's scope of operation: »» Offering gratitude houses to the poors in Phong Dien Hue and Krong Pa - Gia Lai areas »» Giving financial support to help poors in Long An to buy breeding cattle

State Agency and Local Authority

• Creating jobs for the local Communities • Increasing income for local people • Carrying out community activities in the localities • Protecting local natural environment and living environment • Promoting local economy

»» Sponsoring charity programs in Ha Giang, etc. • Developing community development programs, health care and social welfare programs as conducting ecosystem service assessment at Krong Pa Solar power Project: »» Assessing the project's impact on husbandry and firewood collecting of the local Community »» Conducting surveys, interviews and group discussions with related individuals of impacted villages »» Identifying the project's impacts and corrective actions that could be implemented for local Communities as constructing roads along the project, making repairs to roads with stone and rock filling, etc. • Prioritizing the recruitment of local workers, organizing training courses and internship programs to improve local income and human resource capacity with 92.6% of GEG employees are local workers • Implementing environmental protection programs: »» Identifying pollution sources from the project as gas emissions, wastewater, solid waste, noise, etc. »» Proposing solid waste, waste water and gas treatment plans »» Developing environmental management and monitoring programs

• Pro-actively participating in and willing to support Local Community programs: Hunger eradication and poverty reduction, contributing to "joining hands for a healthier life", supporting to increase the quality of education, etc. • Finding and developing Renewable Energy projects in areas with power shortage, supporting clean Energy sources, contributing to local development • Providing sustainable jobs for local Communities where the projects are developed • Preparing and developing environmental impact assessment programs, implementing local environmental protection measures.

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187

STAKEHOLDERS ENGAGEMENT (continued)

Stakeholder Group

Main concern

• Off-take agreements • Tariff commitment • Complying with contractual provisions Electricity trading partners

• Instructions on how to implement electricity distribution as well as other procedures related to electricity • Supporting the access to local and global latest information and trends in Energy Industry

• Professional partners and contractors with international brand and reputation

Power projects contractors

• Providing equipment and tools to ensure meeting standards and schedules • Developing legal documents that comply with Vietnamese law • Being committed to project construction progress, ensuring the quality of project on implementation

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2018 ANNUAL REPORT

Current approach

Key plan

• Working with EVN EPTC to ensure PPAs with the Government's tariff are signed for GEC output • Assigning employees to regularly contact, receive and respond to the two-way information between GEC and EPTC power trading partners, etc. in order to negotiate favorable tariffs for GEC Hydroelectricity projects • Organizing regular and ad-hoc training courses for engineers at the request of A0 Dispatch Center under EVN, ensuring that GEC personnel meet the system's operational requirements • Continuously updating information related to Energy Industry as information related to new technologies and systems e.g. electronic measuring system, SCADA connection system, etc. in order to ensure the preparation and improvement of operational efficiency

• Developing plans for additional planning, basic design documents, technical designs in accordance with the Company's plan and Vietnamese law • Cooperating with 2 prestigious international EPC contractors from Japan: Sharp for Phong Dien and JGC for Krong Pa Solar power Projects • By end of 2018, GEC put 2 Projects into commercial electricity operation with a total 117 MWp and 17.7 million kWh output • There are 4 other Solar power projects being implemented by EPC contractors and 2 selfimplemented Solar power projects. The expected output in 2019 will be 392 MWp for Solar power and 84.1 MW for Hydropower • Project construction quality, progress and performance are ensured according to the EPC contracts, with GEC's close monitoring and timely support for EPC contractors during project implementation

• Ensuring that PPAs are signed at the best tariffs according to the State's incentives • Providing enabling policies to ensure safe and efficient plant operation • Actively researching, developing and applying technology not only in the operation and monitoring of the plant system but also in project construction

• Accompanying 2 Contractors - Sharp and JGC in the next 4 projects of GEC • Gathering internal resources, self-implementing 2 Solar power projects in Binh Thuan and Long An, which aims at improving staff capacity, reducing costs and increasing profits; at the same time, ensuring quality and progress are met before June 30th, 2019 • Searching and approaching equipment suppliers in Top 10 international suppliers of Renewable Energy equipment to ensure product quality and competitive prices • Focusing on urging and monitoring consulting firms and EPC contractors to ensure 6 projects in 2019 achieve their commitments to national grid connection

Stakeholder Group

Main concern

• Executive Board capacity • Over the years, GEC's business results grow steadily, fairly and sustainably in the medium and long-term • Market value of GEC shares reflects internal strength and potential growth Shareholders and potential Investors

• GEC's intrinsic value is continuously and sustainably growing • Compliance with international information disclosure standards, ensuring regular, continuous, transparent and reliable information • Protecting benefits and ensuring fairness for Shareholders and Investors

Current approach

Key plan

• Organizing programs and events to timely provide information to Shareholders and Investors; specially providing 2 foreign strategic Shareholders with information on strategic planning, CG, business activities, financial situation, etc. through AGM and EGM of Shareholders, obtaining written opinions of Shareholders

• Improving and enhancing the activities of Investor Relations

• Organizing meetings with potential Investors who have interest in GEC and Vietnam's Power Industry namely Bgrimm, Gulf from Thailand; Topinfra from Korea; Power China from China; Green City 3, RJC Energy Solution from the US, etc., in order to attract and call for investment from countries with developed Renewable Energy Industry • Carrying out information disclosure in accordance with the provisions of Circular 155, Circular 162, Circular 95, Decree 71, etc. for listed companies in Vietnam, ensuring Shareholders' rights and fair treatment: »» Carrying out information disclosure on periodic, extraordinary, 24-hour, and 10-day basis at specific request; »» Carrying out information disclosure on capital mobilization activities; »» Disclosure of specialized information through Notes of FS, press releases updating GEC activities, information on forums, etc.

• Improving the application of information security standards according to current good practices as implementing bilingual information disclosure, regular and transparent information updating for Shareholders and Investors in order to meet international CG standards as well as contribute to improve information disclosure quality of Vietnam stock market, especially as perceived by foreign Investors • Organizing roadshow for Shareholders, and potential Investors to update business status, short-term orientation, medium- and long-term business strategy, etc. • Organizing meetings with analysts from securities companies, investment funds, financial institutions, etc. as well as meeting with potential Investors in GEC and Vietnam Power Industry • Timely handling information crisis to help Shareholders and Investors avoiding loss • Replying to questions via email, phone, website, etc. in a timely and accurate manner

• Replying to questions from existing and potential Shareholders and Investors via official channels

• Professional and dynamic working environment • Ensuring labor safety • Executing good remuneration and benefits scheme Employees

• Holding appropriate training programs to improve staff's knowledge and skills • Offering career advancement opportunities • Training successor generation

• Paying attention to and focusing on training, making an important contribution to the development of HR through developing training curriculum for every position: Training in accordance with the Law and requirements of certification organizations, Professional trainings, Integration trainings, Overseas Trainings and Trainings on Management skills, Leadership • Organizing soft skills courses to develop work relationships, ensuring skilled management, managing work effectively, assigning right people to the right jobs • Building the code of conducts towards a professional but friendly work environment that motivates employee's development and devotion. The 5S principles, the Code of Conducts, employees conduct and work rules, etc. • Researching and developing welfare policy to directly and indirectly improve material and mental lives for employees • Paying attention to and developing activities that add value namely traditional sports festival; Cultural exchanges; Practical trainings; toxic allowance; Having favorable working regime for employees of Energy projects; Performance bonus for bidding packages of the Laboratory; Promulgating reward policy for Solar power and Wind power projects development; Carrying out donation, charity programs, etc.

• Developing training programs, especially international programs to improve staff capacity • Implementing successors training programs • Developing and adding appropriate remuneration mechanisms to attract talents, especially longterm policies, retirement policies, etc. • Regularly conducting employees' satisfaction survey with the goal of creating a friendly, civilized and respectful working environment • Aiming at achieving GEC into one of Vietnam Best Places to Work.

• Obtaining employees' feedbacks via email, phone and suggestion box.

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189

COMMITMENT ON ECONOMIC SUSTAINABLE ECONOMIC GROWTH Economy

GRI 201

ECONOMIC PERFORMANCE In terms of economy, GEC is operating on economic aspects impact, both directly and indirectly, in line with GRI's Global Standard of Sustainable Development, including Direct economic value generated and distributed, Impact on financial activities, other risks and opportunities from climate change, Financial support from the Government, Indirect critical economic impact and Anti-corruption.

GRI 201-1

With a strategic vision to become a leading private enterprise in the field of Renewable Energy, GEC's BOD and BOM have been harmoniously combining business mission and contribution to the national economy, ensuring security, environment, creating added value for society, gradually meeting the criteria of sustainable development of Vietnam in particular and the United Nations in general. Managing sustainable economic growth will be the basis for GEC's BOD to enhance CG awareness, make sound business decisions, thereby improve growth quality and reach beyond that, bring added value to Shareholders, care for employees' welfare and contribute to a sustainable community.

DIRECT ECONOMIC VALUE GENERATED AND DISTRIBUTED REVENUE GEC's total audited consolidated Revenue in 2018 reached VND 581 billion, of which Net Revenue reached VND 560 billion, up 4% over the same period. Although 2018 Net Revenue grew only slightly, but provided the CAGR in 2015-2018, with an encouraging figure of 16%, ensuring a stable annual growth rate. Net Revenue in 2018 resulted from 2 main areas of electricity for 86% and providing technical and construction services for 14%. The electricity Revenue in 2018 changed, compared to 2015-2017 when the 2 Factories - Phong Dien and Krong Pa - became operational. However, the change in electricity Revenue structure in 2018 was not noticeable. Since 2 factories just came into operation in the last months of 2018, Solar Energy accounts for only about 5% of the total output, or 8% Revenue of the electricity output structure. PBT in 2018 increased by 22% compared to the plan, but that was only 90% yoy, as the implementation of a series of projects added up to the expenses, but the 4-year CAGR still reached 12% .

190

2018 ANNUAL REPORT

2015-2018 CAGR

TOTAL REVENUE

TOTAL EXPENSE

PROFIT BEFORE TAX

PROFIT AFTER TAX

14% 16% 12% 12%

Source: GEC Audited consolidated FS in 2015-2018

Annual growth in Revenue, Cost and Profit Total Revenue

VND Billion

Total cost

Profit before tax

600

Profit after tax 581

559

500

461 391

400

312 300

329

243

374

230 209

200

148

149

132

134

207

187

100 0 2015

2016

2017

2018 Source: GEC Audited consolidated FS in 2015-2018

OPERATION COST The total cost in 2018 was VND 374 billion, including COGS, Finance, Sales, SG&A. The COGS was about VND 253 billion or 68% of the total. The cost for generating electricity was about VND 194 billion and the cost of service and construction was about VND 59 billion. SG&A expense and others in 2018 were recorded at VND 588 million, VND 77 billion and VND 2.6 billion respectively, or 0.16%, 21% and 0.7% respectively in total cost. Notably, Selling and Other expenses decreased by 39% and 76% yoy. Besides, Financial expenses accounted for 10% of the total cost, mostly from interest of the VND 40 billion loan, up 1.6 times compared to 2017 as GEC mobilized capital to invest in Solar projects and expand business, to increase the economic value for the society. Gross profit margin reached 55%, remaining stable despite a slight yoy decrease. This margin has been stable in recent years at more than 50%, higher than the Industry average of 48%. EBIT and EBITDA margins also achieved positive results at 44%, slightly down from 2017 and 62% respectively yoy.

44% 62%

EBIT MARGIN

EBITDA MARGIN

2018 PROFIT BEFORE TAX

Billion

Operational efficiency

Cost structure

EBIT margin

Gross margin

70%

Financial expenses Sale expenses General and Administrative expenses Others

EBITDA margin

80%

0.7% 21%

COGS

207

VND

62%

60% 50%

0.16%

40%

10.14%

30%

62% 55%

58%

44%

47%

20% 68%

10% 0% 2015

2016

2017

2018

Source: GEC Audited consolidated FS in 2015-2018

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191

COMMITMENT ON ECONOMIC SUSTAINABLE ECONOMIC GROWTH (continued)

REMUNERATION AND EMPLOYEE BENEFITS

21%

2015 - 2018 CAGR OF SALARY

REVENUE FROM OFFICIALLY-CONTRACTED EMPLOYEES

1.8

VND

Billion

To obtain a dynamic and professional environment in terms of quality and quantity by implementing direct and indirect policies on betterment of employees' life, GEC issued a regulation on remuneration dated May 14th, 2018, which was applied to the Office and Production Divisions. This adjustment was not only aimed at reasonable remuneration for employees so that they can perform professional work, but also to advocate a boost in labor productivity, exceeding the business plan

making meaningful contribution for the society. CAGR of employees from 2015-2018 was 9%, but the salary growth rate was still higher, at 21%; demonstrating the focus on quality of HR and policies that encourage the dedication of HR to the development of GEC. With 2018 average salary at about VND 14 million per person, up 8% over the same period; an officially-contracted employee can generate VND 1.8 billion in 2018 total Revenue.

Employee Growth and Salary budget

Net Revenue and Average salary of employees

Official staff (persons) Salary budget (VND billion) Salary budget growth rate (%) 350

296 31%

300 250

319

275 249 24%

200 150

100 50

0 2015

2016

2017

Income/ Person (VND million)

35%

2,100

30%

1,800

25%

1,500

20%

1,200

15%

900

10%

600

300

2018

Average salary (VND million)

1,889

1,821

1,676

1,570

10 2015

10,5 2016

13 2017

14 2018 Source: GEC

In addition to paying reasonable salaries, GEC was also interested in welfare policies as insurance, health check, vacation, accident insurance, birthday gifts and expenses as well as other fees, up 13% compared to 2017 and 2015-2018 CAGR reached 15%. Especially the strongest growth was 88% in health check. The highest amount of money spent on other expenses was more than VND 8 billion.

192

2018 ANNUAL REPORT

The quality of HR is always considered an advantage edge to every company, which contributes greatly to maintaining and promoting sustainable development through productivity improvement. For effective HR training and development activities, in 2018, GEC began to develop a curriculum framework for each position. In 2018, training courses for professional development accounted for 79% of total courses - comprising 39 courses with 450 students. The total cost of training in 2018 was approximately VND 1.4 billion, an increase of 14% compared to 2017, a strong increase of 115% compared to 2016.

Human resources costs Compulsory insurance

VND million

Health check cost

Vacation cost

Accident insurance

Birthday gifts

Others

10,000

8,011

8,000

6,686 6,000 4,000

5,583

5,253

4,041

3,762

3,480

4,961 1,790

2,000

127

750

30 25

117

2015

750

965 226

33 55

2016

425

33 129

34 195

2017

2018 Source: GEC

AMOUNTS PAYABLE TO THE GOVERNMENT Contributing to meet the Energy demand from Clean Energy, in addition to optimizing profit, creating jobs and improving income for the Local Community, ensuring benefits for the Shareholders and Stakeholders; obligations to the State are also considered by GECâ&#x20AC;&#x2122;s BOD as one important mission in sustainable growth. Fulfilling tax obligations is not merely compliance with the law but also a significant contribution to development of the country in general, and the localities where GEC is operating and providing services. CAGR of the amounts payable to the Budget, from CIT, Value Added Tax, Natural Resources Tax, Personal Income Tax and others during 2015-2018 has been increasing at 58%. During this period, GEC paid totally VND 480 billion in taxes to the State Agencies. The biggest amount was from Value Added Tax at VND 264 billion, or 55%, and Natural Resources Tax at VND 103 billion, or 22%.

The highest CAGR comes from Value Added Tax at 99%, followed by CIT at 33%. Total value paid to the state budget in 2018 reached VND 228 billion, 109% yoy, or 293% compared to 2015. The structure remained unchanged from previous years, with Value Added Tax accounting for the largest proportion at VND 157 billion, or 69%, up 214% compared to 2017. Natural resources tax recorded a slight decrease of 6% yoy, but its proportion in the structure fell sharply from 31% to 14%. CIT recorded in the audited FS of 2018 was VND 26 billion, up 53% yoy. Tax payment details in 2015-2018 (VND Billion)

2016 2017 2018

Corporate income tax

Value added tax

157

Natural resource tax

Personal income tax

Others

Total payment tax in 2015-2018 4% 4%

2015

Structure of taxes payable in 2017-2018 5% 3%

15%

11%

14% 22%

31%

2017 55%

Corporate income tax Value added tax Natural resource tax

Personal income tax Others

2018 46%

69%

Corporate income tax Value added tax Natural resource tax

Personal income tax Others Source: GEC

With the strategic direction of Sustainable development for many years to come, GEC will continue to contribute to the State Budget, creating a premise for the development of the communities, especially where GEC is operating. www.geccom.vn

193

COMMITMENT ON ECONOMIC SUSTAINABLE ECONOMIC GROWTH (continued) GRI 201-2

FINANCIAL IMPLICATIONS AND OTHER RISKS AND OPPORTUNITIES DUE TO CLIMATE CHANGE

THE AVERAGE OUTPUT OF 2 SOLAR PLANTS

Small and medium Hydropower plants are one of the important Renewable Energy sources

DIVERSIFYING TYPES OF RENEWABLE ENERGY TO CREATE SUSTAINABLE REVENUE SOURCES, LIMIT WEATHER RISKS AND EFFECTIVELY EXPLOIT NATURAL RESOURCES GEC's Renewable Energy plants are directly affected by weather conditions. Prolonged drought, low rainfall affects water resources, leading to a reduction in Hydroelectric output. Conversely, prolonged heavy rains could cause flash floods, damaging the damâ&#x20AC;&#x2122;s structures, causing incidents and unexpected maintenance costs. Those are the most imminent risk factors for GEC's business activities. However, when the construction investment project was developed, the Company strictly and fully complied with the construction investment management process, with standards and regulations in design and construction of Energy works, so that GEC ensures the project safety during adverse incidents as storms or floods.

operation. Specifically, in 2018, the Company invested to upgrade Dak Pi Hao 2 Hydropower Plant with a total investment of VND 17 billion. Currently, the factory has completed upgrading 1st phase with new units being successfully installed. 2nd phase will be completed in mid-2019, bringing the total capacity to 9.5 MW compared to the current of 9 MW. The positive effect is that the Plant's 2018 Revenue reached VND 43.2 billion, up 3% yoy, or 10% in 2018 electricity Revenue structure; although only

In addition, GEC has built annual repair and maintenance plans to ensure safety and efficiency in plant

Remaining plants

194

2018 ANNUAL REPORT

163

Million kWh/year

the first phase of the Project was completed. Moreover, it is expected that upon being upgraded, the Factory will reduce VND 800 million/ year in repair and restoration costs, for the next 3 years. Also, in 2018, GEC replaced the protective relay system at Ayun Ha power Plant, with a total cost of VND 1.2 billion. Its main function is to detect faulty electrical lines or equipment or other unusual or dangerous electrical conditions, and then initiate appropriate controls. The replacement of this system contributes to ensure safety in operation, minimize damage to generators, transformers and electrical loads.

Dak Pi Hao 2

10%

2017

93%

2018

Remaining plants

90%

Source: GEC

Primary Energy sources as Water, Solar and Wind are input materials of all enterprises operating in Renewable Energy, so climate change directly impacts the operation of Energy plants. Before the Solar projects came into operation, the input Energy source was primarily Water. The unfavorable weather in the early months and later months of the year led to a total of 29.8 million kWh lower in February, April, May, November and December, in comparison with corresponding average output of these months during the period of 2015-2018. On the other hand, over the total 12-month, the 356 million kWh output in commercial electricity was still 5 million kWh higher than the 2015-2017 average output of 351 million kWh. In general, it could be seen that weather changes will directly affect the overall performance of GEC Hydropower projects.

2015

MWh

Annual correlation chart with average output 2017 Average

2018

60,000 50,000 40,000 30,000 20,000 10,000 0 Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec Source: GEC

Aiming at Renewable Energy diversification, Revenue risk mitigation from a sole source, as well as stable Revenue growth; by the fourth Quarter of 2018, GEC had put into operation the first 2 Solar plants in Vietnam with a total capacity of 117 MWp. The average output stood at about 163 million kWh/year. Although operational in the last 2 months of the year, the total Revenue in 2018 reached VND 38 billion, or 8%, of the electricity structure or 7% of the Net Revenue structure. In addition, to effectively exploit natural resources, GEC has also researched and been getting approval, preparing and appraising dossiers and technical designs for Wind power projects with the capacity of about 250 MW at potential locations in the

Electricity Structure in 2018

Revenue structure in 2018 Services Suppliers

Solar 8%

Solar

92%

Hydro

Construction services

10.1% 3.5% 6.7%

79.7%

Hydro

Source: GEC

Southwest, Central Highlands, etc. and sought potential strong partners to join. The diversification of Renewable Energy types is a solution which is carefully reviewed and assessed by the BOM to minimize weather risks

as drought or prolonged flood; thus diversifying Revenue sources from the efficient exploitation of natural Energy; reducing environmental pollution; creating stable and sustainable business results; contributing to the development of the Country, community and society. www.geccom.vn

195

COMMITMENT ON ECONOMIC SUSTAINABLE ECONOMIC GROWTH (continued)

GRI 201-4

FINANCIAL SUPPORT FROM THE GOVERNMENT

The Government's financial support - compared to the taxes that GEC contributed to the budget - showed a balanced relationship between GEC and the Government.

• Incentives for exemption/reduction of land lease, land use fees and land use tax depend on project location. Most GEC's Energy projects are exempted from land lease because they are located venues of extremely difficult economic conditions. The Phong Dien Solar Project is exempted from land lease for the first 15 years, or more than VND 1.4 billion. • Incentives on CIT: Under current regulations for income tax of Energy projects, these are in the list of Government's preferential investment policies. The tax rate is at 10% for the first 15 years, with tax exemption for the first 4 years and 50% tax reduction for 9 subsequent years.

ompared to others, the Energy Sector received significant support - especially financially - from the Government upon investing in projects. In particular, the incentives for land lease and taxes of Hydropower and Solar power Plants are mainly focused on: • Incentives on import and export duties on goods imported to create fixed assets, raw materials, supplies and semi-finished products which cannot be produced domestically. The main equipment in GEC's Energy projects are exempted from import duty, for Phong Dien and Krong Pa. The amount of nearly VND 150 billion was refunded.

196

2018 ANNUAL REPORT

»» GEC is subject to the CIT rate of 20% under Circular 78/2014/TT-BTC dated June 18th, 2014 of the Ministry of Finance; »» Particularly for investment projects, tax rates and tax incentives shall be applied according to the investment preference certificates for each project. They are according to the provisions of Circular 78/2014/TTBTC dated June 18th, 2014 of the Ministry of Finance guiding the implementation of Decree 218/2013/ ND-CP dated December 26th, 2013 of the Government regulating and guiding the implementation of the Law on Enterprise Income Tax and Official Letter No. 111684/BTC- TCT on September 16th, 2005 regarding guidance on tax transfers, specifically:

No.

Plants

Capacity (MW)

Time for remaining CIT incentives Tax

Time

HYDROPOWER

H’Mun

Ayun Thuong

H’Chan

10% 5% 10% 10%

Dak Pi Hao 2

10%

Da Khai

8.1

5% 10%

Ia Puch 3

6.6

10%

16.2

Thuong Lo

Dak Pi Hao 1

Kenh Bac

SOLAR POWER

Krong Pa

Phong Dien

0% 5% 10% 5% 10% 5% 10%

2015-2023 2015-2023 2024-2025 2019-2020 2012-2018 Extension of incentives to 2020 2015-2023 2024-2025 2013-2019 Extension of incentives to 2021 2016-2019 2020-2028 2029-2020 2018-2026 2027-2028 2015-2023 2024-2025

0% 5% 10% 0% 5%

2019-2022 2023-2031 2032-2033 2019-2022 2023-2031

10%

2032-2033 Source: GEC

»» In 2018, 9 out of 14 power plants were still entitled to CIT incentives from the Governmen. One factory of which - Thuong Lo- enjoyed the 0% tax rate until 2019, accounting for 12%; 4 factories enjoyed the 5% tax incentives (Ayun Thuong, Da Khai, Dak Pi Hao 1, Kenh Bac) accounting for 44%, and 4 factories were entitled to 10% tax rate (H'Mun, H'Chan, Dak Pi Hao 2, Ia Puch 3) accounting for 44% of all factories that still got the CIT incentives. »» Total exempted CIT in 2018 was nearly VND 14 billion. For Solar projects, GEC choose to get the incentives from 2019 onwards, so the tax rate of 20% was still applied in 2018.

TOTAL EXEMPTED CORPORATE INCOME TAX IN 2018

VND

Billion

Above are Government incentives that have actively supported GEC's Renewable Energy projects in particular and enterprises operating in the Energy sector in general. The Government's financial support - compared to the taxes that GEC contributed to the budget - showed a balanced relationship between GEC and the Government.

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197

COMMITMENT ON ECONOMIC SUSTAINABLE ECONOMIC GROWTH (continued)

Economy

GRI 203

GRI 203-2

INDIRECT ECONOMIC IMPACT MAJOR INDIRECT ECONOMIC IMPACT

The construction of simultaneously developed Solar power projects have created jobs for hundreds of local workers, primarily in Thua Thien Hue and Gia Lai, followed by Binh Thuan, Long An, Dak Nong and Binh Dinh, as shown in the roadmap of GEC's Solar power projects.

with a larger scale like Krong Pa or projects with a short construction period of 3-4 months, the average total number of personnel at the construction site is about 700, up to 1,200 during peak hours.

Developing Solar power Plants at GEC contributes to promote the local economy

t the end of 2018, GEC officially operated in the field of Solar Energy. This made GEC a pioneer and a contributor to economic development for the locality. GEC's Solar projects are located in areas with particularly difficult economic conditions, as in Decree No. 118/2015/ ND-CP dated November 12th, 2015 by the Government.

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2018 ANNUAL REPORT

For each Solar project with an average installed capacity of 50 MWp, the construction time is about 6-7 months, with about 500 people at the construction site on average (including project management unit, contractor, supervision, consultant unit and construction workers). At the peak time, up to 1,000 people could be seen at the construction site. Particularly for projects

In 2018, the construction of simultaneously developed Solar projects have created jobs for hundreds of local workers, primarily in Thua Thien Hue and Gia Lai, followed by Binh Thuan, Long An, Dak Nong and Binh Dinh, as shown in the roadmap of GEC's Solar projects. Paying an average income of about VND 6 million/person, GEC has been contributing to promoting local economic development where GEC projects are operating, in its round-theclock production of electricity for the continuous activities of the Country.

Economy

GRI 205

GRI 205-2

ANTI-CORRUPTION COMMUNICATION AND TRAINING ABOUT ANTI-CORRUPTION POLICIES AND PROCEDURES

With Code of Conduct NS/QC-08 dated January 1st, 2015 on communication, conduct, committed contents on ethics, to ensure the highest standards of professional qualifications, ethics, in all levels of activities. This is also a commitment to GEC's partners and customers, etc. on transparency, integrity, objectivity and fairness in daily work through outstanding specific actions:

• Each employee makes his or her work decisions, considering GEC's best interests, and not for any other purpose or in favor of themselves and/or any other organization or individual;

• Employees must notify GEC of possible conflict of interest that they may be entitled to through transactions with GEC's Partners, Customers or other individuals. In addition to provide specific actions, conduct rules, guidelines, the Code of Conduct also promotes transparency and fairness in transactions. The Code is applied to all GEC Members, from the top level to every employee, or even the Stakeholders who have trade relationships with GEC. All activities are inspected and controlled by the Internal Control Department, now known as the Internal Audit after the change in CG structure in 2018. In addition, to officially become a Member of GEC, all new employees will go through the training programs for integration, to get a clear view of the Code's spirit and content; then they can improve business ethics and prevent corruption. Therefore, until now, GEC has not seen any corruption-related case during operation.

• Employees are not allowed to make use of the business benefits of the Company for personal interest; at the same time, they cannot use information obtained in their work positions for personal benefit or for the benefit of other organizations or individuals.

• Employees are not allowed to receive any material or spiritual benefits from the Partner, Customers in any form, with an attempt to get transactions and business from GEC. Nor will any material or spiritual benefit to benefit third parties in the performance or relevance to GEC business or transactions be performed;

• Employees and their family members must not ask or suggest receiving material or spiritual benefits from GEC's Partners and Customers that may affect GEC's business decisions. Employees cannot borrow or take loans from GEC's Customers, Partners if this affects or might affect GEC interests;

• Employees cannot represent GEC in transactions with organizations and individuals whose employees or family members have financial commitments, benefits or impacts on decision-making in purchasing, selling, borrowing, investing, bidding, etc. unless approved by the BOD;

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199

COMMITMENT ON ENVIRONMENT SUSTAINABILITY FROM THE ECOSYSTEM GEC's Environment, Health and Safety (HSE) policy is being implemented in accordance with IFC Guidelines, one of GEC's strategic Shareholders who have been accompanied GEC since 2016. This policy is implemented with an aim to preventing, ensuring safety to People, Assets, and the Environment in construction, ownership and operation of current and future GEC projects.

Environment

GRI 301

Towards this goal, in 2016, the BOD decided to establish an EHSS Department committed to establishing and maintaining an EHSS system to: • Be sufficient with the organizational structure and operation of GEC; • Be compliant with the law and IFC's Environmental and Social Standards; • Control risks that may adversely affect the Local Community and GEC Employees or the Contractors: Preventing work accidents, occupational diseases, property losses, production losses, environmental and social impacts; • Making periodic evaluation and continuous improvement.

MATERIAL GEC owns 14 Hydropower plants and 2 Solar plants, using Renewable Sources of water from river basins and sunlight in all possible locations, to produce electricity. These are 2 invaluable natural resources, if properly and rationally utilized, it will result to many benefits for the Company and the whole society; thereby enhancing community sustainability. Water, Sun and Wind have been and continued to be important source of Renewable Energy, used as input in GEC's business activities. River flow rate is the input to generate electricity of Hydropower plants

GRI 301-1

MATERIAL BY WEIGHT OR VOLUME WATER VOLUME GEC maintains stable annual electricity production by way of controlling and regulating water through our plants in both dry and rainy seasons. The water in Hydropower plants is all returned to downstream after going through the turbines, without affecting the natural flow of the basin. GEC Hydropower plants are located in the catchment of large rivers and streams namely Ba River (Hue); Auyn River, Dak Pi Hao, Puch, Ia Meur and Ia Drang Stream (Gia Lai) and Da Nhim River (Lam Dong). Each Hydropower plant has a water

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2018 ANNUAL REPORT

TOTAL RESERVOIR CAPACITY

274 Million m3

reservoir with a total reservoir capacity of ~ 274 million m3, which plays an important role in regulating water for factories. The output of power plants is closely related to the water flow, the stronger the water flow, the higher the output. In 2018, unfavorable weather conditions in the first months and drought in the last 2 months reduced the amount of water flow to factories. Water flow decreased by 15% compared to 2017, reducing the power output of the corresponding power plants.

According to the National Center for Meteorological and Hydrological Forecasting, in 2019, due to the impact of El Nino, the weather situation would remain complicated. It is forecasted that high drought and local water shortage are likely to occur in the South Central and Central Highlands. In the provinces of the Central Highlands, Central and South Central regions, there is a warning of low rainfall from the early months of 2019, forecasting rainfall would be 20-40% lower than historical average. This situation will reduce water flow, negatively affecting power plants output. Responding this situation, GEC actively transformed to Solar Energy to take advantage of Solar sources and balance the negative impacts of drought in the coming years.

Electricity output and Water flow Water flow

Electricity output

Million m3

Million kWh 450

4,000 423 3,000

400 358

350

309

300 250

2,000

200 2,674

1,000

3,661

3,097

150 100 50

0 2016

2017

2018 Source: GEC

SUNSHINE In addition to water for Hydro plants, the Solar Energy is another endless source that GEC uses for Solar projects. In 4Q of 2018, GEC put into operation the first 2 Solar plants in Vietnam with a total capacity of 117 MWp. The total average power output of the 2 Plants come to about 163 million kWh/year. Phong Dien Solar Plant - with a capacity of 48 MWp - is located in Thua Thien Hue Province where the sun shines 1,700-2,000 hours/year, with the radiation of 4.6 kWh/m2/day. This Plant has produced ~ 12 million kWh within 97 days of operation, or an annual average output of around 60 million kWh.

The Krong Pa Solar Plant has a larger scale with a total capacity of 69 MWp. Locating in the Central Highlands, where Solar radiation is much higher at 4.8-5.2 kWh/sqm/day - the best nationwide with 1,900-2,200 hours/year of sunshine. Operating 57 days in 2018, the Plant's production output reached ~ 6 million kWh out of a projected total annual output of 103 million kWh. Soon, GEC will focus on investment and development of Solar projects with 4 plants with a total capacity of 196 MWp are expected to operate right in 2019; 2 plants with a total capacity of 79 MWp are expected to operate around 2020-2021.

The Solar Energy potential in Vietnam

Regions

GEC Projects

Number of sunshine hours/ Year

Evaluation

Radiation (kWh/sqm/day)

Evaluation

Northeast

1,600 - 1,750 Not potential

3.3 - 4.1

Normal

Northwest

1,750 - 1,800 Not potential

4.1 - 4.9

Normal

North Central

Phong Dien

1,700 - 2,000 Potential

4.6 - 5.2

Good

South

Ham Phu 2, Ham Phu 1, Tay Son 1, Tay Son 2

2,200 - 2,500 Very potential

4.3 - 4.9

Very good

Central Highlands, Central Coast and South

Krong Pa, Duc Hue 1, Duc Hue 2

2,000 - 2,600 Very potential

4.9 - 5.7 Very good

Country Average

1,700 - 2,500 Potential

4.6

Good

Source: WorldtechSolar, GEC

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COMMITMENT ON ENVIRONMENT SUSTAINABILITY FROM THE ECOSYSTEM (continued)

Environment

GRI 302

ENERGY GEC is a pioneer in electricity from Renewable sources, most prominently, Solar Energy. GEC's business activities are associated with Renewable sources as Sunlight, Water, Wind and Non-Renewable sources as Electricity from EVN. In this indicator, information on Energy consumption in the organization will be focused on.

GRI 302-1

SELF-GENERATED ROOFTOP SOLAR POWER

ENERGY CONSUMPTION IN ORGANIZATION

31,450

CONSUMPTION OF ENERGY FROM RENEWABLE SOURCES In order to be self-sufficient in internal self-use Energy and to achieve the goal of cost savings and to limit the use of outside Energy sources and contribute to environmental protection, GEC installed Solar panels on our office buildings. Operational in 2016, Rooftop Solar reached 23,870 kWh, thereafter 35,010 kWh in 2017 and 31,450 MWh in 2018, meeting almost 40% of the Company's electricity demand. In 2018, GEC's Rooftop Solar output increased by 32% compared to 2016 - when it was newly operated. CAGR during 2016-2018 was 15%.

MWh

GEC Energy consumption from sources Purchase from EVN

kWh

Self-generated Solar power

100,000 80,000

80,147 60,925

60,000

41,012

40,000

48,796 35,010

31,450

23,870

20,000 0 2015

2016

2017

2018

ENERGY CONSUMPTION FROM NON-RENEWABLE SOURCES This source comes mostly from EVN grid, to serve the operation of our offices, as GEC power plants are often located in remote areas, so the electricity is connected into EVN's grid to supply to EVN's consumers. GEC does not provide connections from our power plants to our offices. By installing the Solar panels on buildingâ&#x20AC;&#x2122;s rooftop, GEC cut down electricity purchased from EVN grid in 2018 by 40% compared to 2015 - the time GEC had not installed Solar panels.

Total Energy consumption kWh 120,000

80,000

84,795 80,147

80,246 76,022

40,000

0 2015

2016

2017

2018 Source: GEC

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2018 ANNUAL REPORT

TOTAL ELECTRICITY SOLD To ensure Energy security and contribute to environmental protection, GEC contributes clean electricity to the national grid annually. However, due to the specific characteristics of Hydroelectricity, the amount of Energy produced by GEC is affected by weather and climate change factors. Over the past few years, GEC has proactively sought solutions to reduce the impact of weather, by regulating and optimizing production by developing Solar plants to diversify the sources. In 2018, GEC put into operation 2 Solar plants with a total capacity of 117 MWp to minimize weather impact. This helps GEC stabilize and increase output in the near future. By June 2019, GEC shall put into operation the Plants of Ham Phu 2, Duc Hue 1, and expects to operate 2 more Plants of Ham Phu 1 and Duc Hue 2 within 2019, elevating total Solar output to 313 MWp.

Hydroelectricity at 16%, Wind power at 22% and Solar power at 62% by 2022. This will help GEC minimize the risk from being dependent on impacts of unusual weather conditions on annual electricity production. Total Electricity output for sale Hydropower

GWh

Solar power

500

426

400 300

362

321

352 238

200 100

0 2016

2017

2018

2019 Plan Source: GEC

It is expected that 2019 total output of Solar Energy will increase by 13.2 times yoy, and the Hydropower output will be similar to that in 2018. Total electricity sold in 2016-2018 reached about 1,127 million kWh, in which Hydropower accounted for 98%, and Solar for the remaining. However, it is expected that in 2019, the proportional ratio of Energy output will change fundamentally when Solar Energy would account for 40% compared to the 2% during 2016-2018. In addition, GEC is actively researching and developing technologies and selecting suitable locations for upcoming Wind power projects, to develop synchronously Developing Solar power is a way to minimize the unusual impacts of weather

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COMMITMENT ON ENVIRONMENT SUSTAINABILITY FROM THE ECOSYSTEM (continued) Environment

GRI 305

EMISSION

GRI 305-5

REDUCING GREENHOUSE GAS EMISSION (GHG)

For all of GEC Hydropower and Solar plants in 2018 with a total power output of 380 million kWh contribute to reduce 305,000 tons of CO2/year.

Replacing Fossil Energy with Renewable Energy is an inevitable trend of Sustainable development

Hydropower and Solar plants in 2018 with a total power output of 380 million kWh contribute to reduce 305,000 tons of CO2/year. In 2018, Solar plants contributed 5% CO2 reduction compared to 95% from Hydroelectricity, as Solar plants have just started operating for less than 3 months. In 2019, if Solar plants operate at full capacity with an expected output of 163 million kWh, Solar Power will help reduce CO2 by 49,503 thousand tons, up 820% and 243% compared to the end of 2018. It is expected that with the participation of the upcoming Solar projects, CO2 emission reduction will increase 57% in 2019, contributing to protect the environment and ecosystems.

ll GEC's plants use Water (Hydro) and Sunlight (Solar) to produce electricity and absolutely do not make use of Fossil energy. Therefore, electricity produced by GEC is clean, and does not generate greenhouse gases. This contributes significantly to the reduction of CO2 emissions annually. Unlike Thermal and Biomass plants, electricity output from Hydropower and Solar Power does not only generate CO2 but also even reduces CO2 emissions.

The more commercial output, the higher the rate of CO2 emission reduction. In 2017, the large input of Water lead to a sharp increase in electricity from Hydro plants, which also meant a reduction of CO2 emissions by 343,000 tons. By 2018, the task of reducing CO2 emission were down by 11% due to lower output from Hydropower compared to 2017. In addition to maintain stable operation of 14 power plants, in 2018, GEC operated 2 more Solar plants with commercial electricity output of 17.7 million kWh - resulting in a reduction of CO2 emissions by 14,443 tons. Thus, for all of GEC

305,000 CO2 EMISSION REDUCTION

Tons CO2/Year

CO2 emission reduction Thousand tons 600

481

500 400 300

220

254

343

305

200 100 0 2015

2016

2017

2018

Plan 2019 Source: GEC

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2018 ANNUAL REPORT

Environment

GRI 306

WASTE WATER AND WASTE Environment protection towards sustainable development goals is attracting society attention, in line with provisions of the law. Recognizing the responsibility and importance of environment protection, GEC focuses on compliance activities with domestic standards as well as international standards, making contribution to wonderful life for the community and society.

GRI 306-2

TOTAL WASTE BY CATEGORY AND HANDLING METHODS Complying with the Law on Environmental Protection 2014, Decree 38/2015/ND-CP on management of waste, GEC separates the production process into 2 categories of household waste and hazardous waste. However, as Energy generation is a specific activity, the household waste amount is not noticeable. Domestic solid waste at the plants is collected and burned, ensuring no impact on the environment. HAZARDOUS WASTE Hazardous waste at the plant is mainly hydraulic oil, for lubricating the machinery. Hydraulic oil is used to lubricate generator turbine bearings and other parts. To limit corrosion, periodically once a year for the turbine bearings, and every 3 years for other parts, replacement of hydraulic oil is carried out, generating a large amount of waste oil. To ensure economic efficiency and contribute to environmental protection, GEC keeps track of the efficient use of hydraulic oil to reduce annual hazardous waste. Specifically, the amount of hazardous waste decreased by 35% during 2016-2018. GEC has signed a contract with a unit that collects and processes hazardous waste once a year.

Harzadous waste - Hydraulic oil Tons 20 14.5

10.6 10

9.5

7.5 5

0 2015

2016

2017

2018 Source: GEC

HOUSEHOLD WASTE In 2018, besides maintaining stable operation of power plants, GEC put into operation 2 Solar plants which increased the number of employees by 11%, to 349 people, thus an increase in household waste of the whole Company. Most GEC's power plants are developed in remote areas where public garbage collection is unavailable. Therefore, to minimize the impact of waste, GEC have arranged the storage areas in the plants according to current regulations, which shall be solved by incineration. GEC has burned the waste at sites far from residential areas and water sources, to limit the impact on safety and health of employees as well as surrounding communities.

Household waste Tons 5

4.2

3.7

2016

2017

4.5

3 2 1 0 2015

2018 Source: GEC

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COMMITMENT ON THE COMMUNITY COMMUNITY & SOCIETY ENGAGEMENT Society

GRI 401

GRI 401-1

“Devotion - Competency - Talent” represents three core values of GEC’s hiring policy, designed to enable the Company to recruit talents and experts in the Energy sector.

EMPLOYMENT NUMBER OF NEW HIRED EMPLOYEES AND EMPLOYEE TURNOVER

acing the increasingly competitive labor market, the acquisition and retention of high-quality HR is now a tough issue for employers, especially those operating in specific industries with high requirements for expertise as well as practical experience, like GEC. The Company, therefore, has featured great importance to build a professional working environment, maintain competitive, fair and reasonable remuneration policy, and enable employees to develop their personal competencies to gain recognition in their career path. Employees’ trust in the management’s strategic orientations and their efforts have made it possible to GEC to create a corporate culture that is profoundly characterized by “Trust and Responsibility”. In order to make the best preparation for the expansion of operations to other forms of Energy, over the past several years, GEC’s HR has gradually increased with a yoy rise of 8% in 2018 and a CAGR of 9% from 2015 to 2018.

Number of employees including resignation and new hires Total employees

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2018 ANNUAL REPORT

New hires

350 300

319

296

275

249

250 200 150 100

0 2015

8 2016

2017

2018 Source: GEC

Number of resignation and new hires by gender

The number of new hires in 2018 was 75, a yoy increase of 10%. In particular, the CAGR in the 2015-2018 period reached at very high level of 120%. The ratio of new hires to total workforce in 2018 was 24%, up from the figures of the most recent 3 years, i.e. 3%, 10% and 23%. The growth of HR has - as can be seen - in consistent with the expansion of business. Notably, the build-up reached a climax in 2017 and 2018, when GEC prepared staffing for the development of Solar Energy. 80% of new hires were male, which can be reasonably explained by GEC’s operations in the development of power projects. The number of resignation recorded a corresponding increase in 2018 with 61 people, up by 65% against 2017. GEC’s turnover rate in 2018 was 19%, up from the 13% recorded for 2017. The ratio of new hires, however, was still much higher than the turnover rate, which is consistent with the Company's situation. The turnover rate for male employees in 2018 was high at 74% due to the Company's high proportion of males in total workforce, i.e. 84%. In the 2016-2018 period, GEC’s geographic expansion of business resulted in a requirement for relocation. Employees who could not meet this requirement voluntarily left the Company with a rate of 100%. The relatively low rate of

Resigned employees

Male new hires Male resigned employees

Female new hires Female resigned employees 16 10 27 13

1 7 2 5

1 4

2015

45 15 60

16 12 2016

2017

2018 Source: GEC

turnover did not have negative impacts on GEC’s business, rather, it created the needed screening of the workforce and enhanced creativity as well as efficiency. In addition, 5 cases of maternity leave during the year, however, all returned to work.

BENEFITS PROVIDED TO FULL-TIME EMPLOYEES

GRI 401-2

The total remuneration expenses including benefits for full-time employees, employees working away from home and benefits for female employees in 2018 were VND 15 billion, a 15% increase against the VND 13 billion recorded in 2017.

No.

Type of policy

Remuneration policy for full-time employees

TOTAL REMUNERATION EXPENSES

VND

Billion

GEC always upholds the proper execution of remuneration policy for employees, constant improvement of workplace quality, and the adherence to employees’ legitimate rights and benefits under applicable regulations. The total remuneration expenses including benefits for full-time employees, employees working away from home and benefits for female employees in 2018 were VND 15 billion, a 15% increase against the VND 13 billion recorded in 2017. Remuneration expenses accounted for 3% of Revenue in 2018, up by one percentage point against the 2% in 2017. GEC constantly strives to offer the best remuneration policy to acquire and retain talents. GEC’s employees always feel secured and satisfied since their life is well taken care of, both materially and spiritually. This has helped improve productivity and efficiency as well as minimized human resource risk. Details

• Compulsory insurances including social security, health care and unemployment • Advanced benefits: Periodical medical check, birthday gift, vacations • Middle and Senior managers: BaoViet Healthcare - comprehensive health care Since 2017, GEC has adopted an allowance policy for employees working away from home:

• Due to industry-specific conditions, GEC’s employees usually have to travel to 2

Policy toward employees working away from home

different locations

• The Company provides sufficient working conditions and reasonable allowances • The maximum allowance ranges between VND 3 and 5 million per month • The maximum bonus for fulfillment of responsibilities is at least 30% for Region I and II, 40% for Region III, and 50% for Region IV

(The determination of Regions is based on the Government’ regulations on minimum salary under Decree141/2017/ND-CP)

• The top priority has always been granted to GEC’s female employees on our path of development

Remuneration policy on female employees

• GEC strictly adheres to applicable rules by not involving female employees in prohibited areas • Equality for female employees is ensured according to applicable laws in terms of recruitment, employment, training, salary, bonus, promotion, remuneration, working conditions, working safety, working hours, rest hours, and other benefits • In addition to the regulatory maternity leave, GEC offers our female employees additional expenses • We ensure jobs for female employees after maternity leave

Structure of employee benefits in 2017

Structure of employee benefits in 2018

Compulsory insurance

Compulsory insurance 31%

Other expenses Medical checkup expenses

Medical checkup expenses

52%

Travel expenses

34%

Other expenses 55%

Travel expenses

Birthday gifts

14% 1%

7% Source: GEC

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207

COMMITMENT ON THE COMMUNITY COMMUNITY & SOCIETY ENGAGEMENT (continued) Society

GRI 403

OCCUPATIONAL HEALTH AND SAFETY

GRI 403-2

TYPE AND DEGREE OF INJURY, OCCUPATIONAL DISEASE, LOST MAN DAYS, ABSENCE, AND NUMBER OF WORK-RELATED DEATHS

Operating in a specific industry, GEC considers occupational health and safety one of its top concerns. GEC always prioritizes the meeting partners’ requirements as well as requests contractors’ compliance in regards to this matter.

n the 2016-2018 period, no work accidents or injuries occurred. Prioritizing the prevention of accidents over remedies and compensation, GEC has established EHSS Department to monitor all activities associated with occupational health and safety. Prevention of hazards means complying with the highest standards and best practices regarding a safe and healthy work environment. The best practices adopted at GEC comprising of the compliance with applicable rules on occupational health and safety, striving toward international standards. GEC is committed to apply methods to control hazards and prevent risks by strict management measures and processes. In 2018, GEC started implementing a wide range of Occupational Health and Safety (OHS) related activities. The results achieved have been very positive with no serious incidents such as loss of working hours or work accidents occurring. The total cost of OHS in 2018 was approximately VND 200 million and was mostly spent on:

• Material

benefits for hazardous environment;

employees

working

• Testing of equipment and machinery subject to strict OHS requirements;

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2018 ANNUAL REPORT

• Implementation of workplace monitoring to identify harmful factors at work;

• Providing OHS training to managers and employees involved in disciplines with strict OHS requirements to improve awareness for semi-dedicated and dedicated personnel;

• Issuing OHS management procedures to control the risk of occupational accidents and occupational diseases;

• Monitoring the execution of OHS processes, regulations and norms regarding machinery, equipment and personal protective equipment;

• Strengthening the assessment and management of workplace OHS risk, ensuring the full implementation of OHS as well as disaster control procedures and regulations to timely detect and neutralize all risks and violations;

• Intensification of communication activities; • Recognition of individuals and teams with good performance in OHS activities.

Society

GRI 404 GRI 404-1

TRAINING AND EDUCATION AVERAGE HOURS OF TRAINING PER YEAR PER EMPLOYEE GEC always attaches importance to training in order to upskill our employees, thereby building trust and long-term engagement between employees and the Company. Every year, GEC develops and implements training plans for employees from staff/specialist to Management levels. Training curricula, which are based on the actual needs of GEC’s operations, mainly focus on improving employees’ knowledge and expertise, thereby enabling them to adapt new roles with greater challenges. In 2018, GEC spent about VND 1.4 billion on training, a yoy increase of 14% and up by a dramatic 115% against 2016. 39 courses were provided with a total training population of 450, covering all the title system, namely manual workers, office workers and the management. The total training duration in 2018 was 1,897 hours, a yoy upturn of 39% and surged by an impressive 191% compared to 2016, in tandem with the growth of training expenses. Total expenses and duration for training in 2016-2018 Total training cost

Structure of training courses in 2018

10% 5%

1,800 1,600

1,200

1,400

1,360

41% 16%

1,200

800

1,400

600

Hours

The average number of training hours per trainee in 2018 was about 4.2 hours. However, the training duration varied depending on the characteristics of each discipline as well as the requirements of each course. With the importance attached to build a secure workplace, ensure occupational health, and upskill employees, in 2018, 16 out of 39 courses, i.e. 41%, were dedicated to such topics as OHS, electricity safety, fire control, operation shift leader and supervision certification, tendering.

2,000

1,897

1,400

200

1,897

TOTAL TRAINING DURATION

Hours

1,600

400

Employees

Total training hour

VND Million

1,000

450

TOTAL TRAINING POPULATION

1,230

1,000 800 600

28%

400

651

200

0 2016

2017

2018

Based on laws and requirements of certification bodies for quality, standards training

Integration training

Professional training

Foreign training

Management skills training

Source: GEC

Increased budget for training and the provision of opportunities for continuous training indicates GEC’s commitment to employee development, preserve and enrich high quality HR, and improve productivity.

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COMMITMENT ON THE COMMUNITY COMMUNITY & SOCIETY ENGAGEMENT (continued) Society

GRI 405

DIVERSITY AND EQUAL OPPORTUNITY

GRI 405-1

DIVERSITY OF GOVERNANCE BODIES AND EMPLOYEES

EC’s employee structure varies each year and is experiencing a trend of rejuvenation. Between 2015 and 2018, the number of employees aged between from 25 to 35 increased gradually over the years, from 30% to 36% of the total workforce. Those aged between 18 and 25 also increased, accounting for 6% of the total head counts in 2018, compared with 0% in 2015. HR advantages play an important role in building GEC’s brand, improving work efficiency, and enhancing competitiveness. In addition, the GEC’s constantly improved remuneration has enabled the Company to retain experienced employees for long-term development. Between 2015 and 2018, the number of employees aged from 35 to 45 decreased but still dominated the personnel structure with a share of about 41% in 2018. The diversity of policies has helped GEC attract more dynamic, enthusiastic and professionally trained young workers. At the same time, the Company has been able to retain a highly experienced workforce with high assertiveness and the ability to make accurate decisions. These 2 components of GEC’s workforce structure are mutually complementary and will act as the basis for the Company to become of the exemplary developers of Renewable Energy in Vietnam.

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2018 ANNUAL REPORT

Gender equality brings a balance to improve business efficiency

Human resources structure by age 2015-2018 18 -25

25 -35

35 - 45

> 45

100% 90%

20%

17%

50%

48%

45%

41%

34%

35%

80% 70% 60% 50% 40% 30% 20% 10%

30%

0 2015

36%

2016

2017

2018 Source: GEC

GEC also strives to achieve an equality of gender mix in our workforce, thereby eliminating the gender gap. In 2018, the proportion of female employees saw an uptrend to 16% of the total workforce, compared with 14% in 2017, a yoy increase of around 14%. In the 2015-2018 period, the share of female employees aged between 30 and 50 stabilized at over 80% while the share of those aged below 30 saw a slight upturn from 7% to 13%. The proportion of male employees aged between 30 and 50 reduced from 78% to 64%. Meanwhile, the structure of males aged below 30 rose to 30% in 2018 from 15% in 2015. Structure of males by age group < 30

30 -50

Structure of females by age group

> 50

< 30

120% 100%

100%

80% 60%

> 50

84%

83%

85%

82%

13%

2015

2016

2017

2018

80%

78%

73%

67%

64%

60%

40%

20%

30 -50

120%

15%

20%

27%

30%

2015

2016

2017

2018

Source: GEC

The proportion of female Managers in GECâ&#x20AC;&#x2122;s managerial personnel structure rose to 23% in 2018 from 13% in 2015 and has seen robust growth over the past 2 years. In particular, GEC - for the first time in our development history - appointed a female CEO in October 2018. These numbers are meaningful since gender equality helps GEC properly leveraging the role and capacity of each gender, thus achieving equilibrium and improving operating efficiency.

Manager structure by Age and Gender <30

Person

30 - 50

>50

Male

Female

21 20

0 2015

2016

2017

2018 Source: GEC

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211

COMMITMENT ON THE COMMUNITY COMMUNITY & SOCIETY ENGAGEMENT (continued) Society

GRI 413 GRI 413-1

LOCAL COMMUNITIES OPERATIONS WITH LOCAL COMMUNITY ENGAGEMENT, IMPACT ASSESSMENTS, AND DEVELOPMENT PROGRAMS

Business activities cohere with local development for the community

n addition to business development activities, GEC attaches importance to the development of local communities where our projects are implemented. By doing this, we contribute to the improvement of local people’s living standards. Since GEC’s projects are usually based in less accessible and underdeveloped regions, the Company always attempts to facilitate local people’s involvement in project activities. We do this by prioritizing the employment of local people for the construction stage and publishing hiring information at the local authority’s premises

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2018 ANNUAL REPORT

to allow qualified local workers to operate projects. On the other hand, as a strategic partner of several international institutions such as IFC and Armstrong, GEC considers the identification of Stakeholders as an important aspect of project development. We build various information channels to obtain feedback, understand Stakeholders’ aspirations, and provide timely responses. As part of this effort, in 2018, GEC issued a process guiding the participation of Stakeholders together with a community claim mechanism.

As an Energy - Industry core of TTC Group, GEC always upholds the Group’s sustainability motto “Local development for the community”.

Major impacts

Details

• GEC’s new projects always comply with the Company's commitments with IFC Social impact • Environmental and social impacts assessment (ESIA) is conducted for all projects according to IFC standards assessments, including • Local communities are an important part of the assessment since they are both directly affected by a project gender impact and have special interest therein: Impacts in terms of gender, land acquisition, livelihoods or recruitment needs assessment, based of a project on community-based • The process of preparing ESIA reports will be based on community consultation (from the process of participatory processes implementing EIA Report) • Developing an appropriate environmental and social management plan. • When EIA is carried out for a project, an environmental protection action program is also in place • GEC properly implements this Program in accordance with the authority’ approval Environmental impact • For international standards, Environmental and Social Management Plan (ESMP) has proposed measures to assessment (EIA) and mitigate environmental impacts both during construction and operation phases: continuous monitoring »» Project Management Units, in collaboration with contractors, always properly follow the proposed measures »» Monitoring is simultaneously and continuously performed in both phases. Public disclosure of information about the • All EIA and ESIA reports are published to local authorities in accordance with applicable regulations results of environmental and social impact • The publication of information is done by sending official letters or holding meeting with local authorities. assessment • GEC projects in each site are always have programs to support local communities: Building houses of gratitude, support the purchasing of breeding cows, etc. • The assessment of the ecosystem Service and the impact of the project on the grazing and firewood gathering of the local community was done for Krong Pa Solar Project: Local community »» GEC contracted with external consultant to conduct surveys, interviews, and group discussions with Related Parties of the affected villages development programs are based on the needs »» The consultant’s report stated the project impacts as well as the relevant corrective actions that the project of local communities could implement for the local community: Assist the building of roads along the project and the dumping rocks for road improvement • At Phong Dien Solar Project, GEC provided a hot line number for the local community to contact • These measures are entirely based on the local socio-economic characteristics as well as the capacity of the developer. • Separate stakeholder participatory plans are developed for GEC’s new construction projects: »» Analyze the level of interest and influence of the Stakeholders Stakeholder participatory »» Give appropriate actions to these Stakeholders during the construction and operation phases of a project; programs based on »» This plan includes a mechanism to resolve complaints from local communities stakeholder mapping • This is a live document that is constantly updated whenever there are changes • The person in charge of changing contact information of the Community Liaison Officer. • GEC’s new construction projects have separated complaint reception mechanisms with hot line phone numbers at the project gate • The community liaison officer is responsible for receiving complaints and informing the complainant of Procedures for official the resolution reception and solution of complaints for the • These mechanisms, which are transparent, are referenced from contractors’ mechanism for their employees: Ensure that any complaints, whether they are related to the project or not, are received and responded to local communities • This mechanism, when completed, will be notified to local authorities via official letter. Provide information channels to receive formal complaints, act as a bridge between the project and the community, help deal with depression in a timely manner to avoid further unnecessary contradiction.

www.geccom.vn

213

SHARING FROM FOREIGN SHAREHOLDERS MOVING AND PIONEERING

he year 2018 saw GEC’s major transformation with the expansion into Solar Energy production. GEC officially became the pioneer in Vietnam’s Solar Energy market as the first organization to have power generation 2 Projects in Phong Dien - Hue and Krong Pa - Gia Lai in October and December, 2018. Since then, GEC became the leading contributor to the realization of Vietnam Government’s Renewable Energy Development Strategy. As a major Shareholder that has accompanied GEC for more than 2 years from 2016 to 2018, Armstrong is very impressed by GEC’s current road map to expand its Energy Projects portfolio; as well as the constant improvement of operational processes to support the Company's Sustainable development in the long term.

EPC GENERAL CONTRACTOR OF PHONG DIEN SOLAR POWER PLANT - THUA THIEN HUE

Mr. Andrew Affleck General Director cum Share Representative of Armstrong Asset Management Pte. Ltd in GEC

EPC GENERAL CONTRACTOR AND SUB-CONTRACTOR OF KRONG PA SOLAR POWER PLANT - GIA LAI

214

2018 ANNUAL REPORT

SHARING FROM CONTRACTORS PROFESSIONALISM TO BUILD THE BRAND

Sharp Group, Japan

NSN Construction and Engineering Joint Stock Company

We really appreciate GEC’s work, the leading Company in Vietnam’s Renewable Energy Industry. In the role of EPC Contractor for the first grid-connected Solar power project in Vietnam, we are pleased and proud of building a high quality and efficient Solar power Plant. GEC accompanied and supported us to overcome problems quickly during the construction process.

NSN is honored to cooperate and implement Phong Dien Solar power Plant with the capacity of 35 MW, as one of three EPC contractors for GEC. From the beginning, all Parties understood the challenges during implementation process and discussed on how to overcome them together to reach the final goal, which is completing the Project on schedule and with the prescribed quality.

We believe that GEC will continue to lead Vietnam’s Energy market in the field of Renewable Energy and expand its market share thanks to professionalism and experience. Sharp will certainly be a partner with GEC, not only supporting in business cooperation, but also in contributing to the development of Vietnam Energy Industry.

JGC Vietnam Co., Ltd. from JGC Group, Japan

GEC - Professionalism to build the brand

It is truly a great honor for JGC Vietnam Co., Ltd. to be chosen by GEC - a Member of TTC Group - as their partner of main EPC general contractor in implementing the construction project package for Krong Pa Solar power Plant in Gia Lai Province. This has been one of the largest commercial Solar power projects in Vietnam ever. We are grateful for the opportunity to participate in this Project; and together with GEC, we shall make great contributions to the local community and Vietnam.

During the implementation process, we have received specific requirements and professional supervision from GEC. We look forward to cooperating with GEC on coming projects.

During the construction in the sunny and windy Central Highlands, we encountered many difficulties and challenges such as rough construction site, harsh weather conditions, in the context of strict requirements of extremely detailed implementation plan. However, we managed to complete the Project as planned thanks to GEC’s proactive cooperation and flexible support. We appreciate the professional cooperation during deployment. We are also grateful for the enthusiastic and thorough support from GEC that helped put the Project into operation as committed. We wish GEC and TTC Group will develop strongly as well as implementing more successful projects all over Vietnam.

www.geccom.vn

215

SHARING FROM CUSTOMERS STABLE ELECTRIC QUALITY AND BEST VALUE ADDED SERVICES

Customer appreciation Program 2018

Following the motto “Customers create value of a company”, GEC always wants to bring qualified power and provide the best valueadded services to meet the diverse needs of customers such as simple power supply procedure, quick repair, minimizing outages, etc. From 2015 to 2018, GEC continuously improved the power grid with an investment cost of more than VND 24 billion. As a result, power outages time decreased significantly from 2,000 minutes/year in 2014 to 214 minutes/ year in 2018, dropped by 90%.

216

2018 ANNUAL REPORT

n cases of scheduled electric outages, the Company always gives notices in advance so that customers can take proactive actions in production and business activities, avoiding economic losses, as well as taking initiative in people’s daily activities. Electric installation procedures are simplified to increase convenience for customers. In the past, customers would have to present at the Company from 3 to 4 times to fulfill electric installation procedures, but now they can complete this procedure in only one visit, then the installation shall be done within 7 days. The number of new electrical installations has been increasing rapidly thanks to the credibility for improvements in the Company's operations and services. In 2014, there were only 3,894 retail customers, but in 2018, the number increased to 7,318, an increase of 88%; mainly in the center of Chu Prong Town, Ia Phin Commune, Ia Drang Commune and Ia Kly Commune in Chu Prong District, Gia Lai Province.

RETAIL CUSTOMERS IN 2018

7,318

Customers

In the past, power quality used to be very poor, it was impossible to use large-capacity electrical equipment such as electric stoves, air conditioners, etc. Since GEC has invested in the construction of the new power station, my family has been able to use any electrical equipment and the living standard has been greatly improved. In addition, big restaurants, agricultural irrigation stations, service suppliers are increasingly developed thanks to the consistent stable of electricity provided by GEC. The Company's payment method is also more flexible. Previously, it was only direct cash payment, now customers can authorize the bank to pay their bills. The Company links their payment process with many big banks as Agribank, Vietinbank, BIDV, Vietcombank, etc and expands their payment linkage network. From 2015 to 2018, the Company also organizes the annual Customer Gratitude Program, giving gifts to customers as deep appreciation. We, GECâ&#x20AC;&#x2122;s Customers, have been and will always stand side by side with the Company's development for coming years.

POWER OUTAGES TIME

90%

From 2,000 minutes/year in 2014 to 214 minutes/year in 2018

As the power management unit in Chu Prong District, which is also GECâ&#x20AC;&#x2122;s electric user, I realized that the time for electrical repair is shorter, within 30 minutes. In addition, GEC also organizes meaningful annual Customer Gratitude Programs, creating connection between the supplier and users. Customer care is continuously improved. Annually, GEC organizes customer satisfaction evaluations, receives comments and feedback from every customer; and then makes innovation in its manner and services as well as electric quality, etc. Through the process of carrying out major innovation in the power supply and service, I believe that GEC has been and will continue to bring practical benefits to its customers.

Mr. Duong Quang Phuoc Specialist of Economic Infrastructure Department, Chu Prong District

Mr. Pham Duc Tien Head of Hop Thang Village, Ia Drang Commune, Chu Prong District

www.geccom.vn

217

SHARING FROM EMPLOYEES “THERE IS A CHOICE YOU HAVE TO MAKE IN EVERYTHING YOU DO. SO KEEP IN MIND THAT IN THE END, THE CHOICE YOU MAKE, MAKES YOU” -JOHN MAXWELLAT BRANCHES AND PLANTS

GEC is an enterprise operating in the field of electricity production, distribution and retails. In addition to selling electricity produced by the power plants to EVN. As of December 31st, 2018, the Company also carried out electricity retailing to more than 7,318 customers, including organization and individual with many different uses for diversified activities from production to business, etc.

After 8 years of work, starting from a Hydropower plant operator, now I am Head of Station of Ayun Thuong Hydropower Plant. After a long time working for GEC, with continuous changes towards Sustainable development goals, I am now confident to say that GEC is leading in operational management of small and medium Hydropower plant with clear criteria:

Leaving my hometown to Gia Lai to settle down, I joined GEC and had an opportunity to learn Hydropower operation course, then I was transferred to Ayun Ha Hydropower Plant for working. At GEC, I have experienced many joys, sadness and proud moments, proving my maturity. I have been supported and facilitated, trusted by the management when assigned tasks.

In the past years, the Company has invested in building and improving the power grid to bring the best power quality to customers. At the same time, the Company paid much attention to its customers, regularly organized Customer Gratitude Programs and presented gifts to the poor people who live near the Company's Hydropower plants. In addition, the Company also offered very practical and meaningful gifts to the local community in the operation location of GEC plants on New Year occasion. This activity gets very good response by the customers and the Government, who show great appreciation to the Company's actions.

SAFE OPERATION

Beside the cheerful and friendly colleagues, who give me motivation to come to work daily; the most important thing is that GEC cares for its employees and has good remuneration policies. We get health care and travel every year. After 20 years working at the plant, I am really proud of GEC’s growth, and I believe that this is my second home for me to devote all of my talents to the development of GEC.

Mr. Pham Van Hiep Director of TTC Chu Prong Branch

218

2018 ANNUAL REPORT

PROFESSIONAL MANAGEMENT MAXIMUM EFFICIENCY Mr. Nguyen Van Quang Head of Station, TTC Ayun Thuong Hydropower Plant

Mr. Nguyen Van Nghia Shift Operation Leader, TTC Ayun Ha Hydropower Plant

EHSS DEPARTMENT

TECHNOLOGY DEVELOPMENT CENTER

PLANNING AND INVESTMENT DEPARTMENT

Working at GEC is an important milestone in my life and my career. Here, I have an opportunity to work with my expertise, to receive very good support and coordination from all the departments. Additionally, the Company's compensation policies are very good, the salary and bonus transparency keep my mind on my work. At GEC, we are facilitated to develop and improve ourselves in professional as well as soft skills.

Life has countless choices but the right choice and enthusiasm will bring us success. The choice of working at Technology Development Center brings me not only a friendly and creative working environment but also an opportunity to practice professional skills and develop thinking ability.

Professional, dynamic, creative and daring to cope with all challenges are all my impressions when I joined GEC. As a young employee, I feel so lucky to work in an experienced environment with nearly 30 years of operation in the Energy Industry. I am proud of GEC as it is the first enterprise operating the Solar power Plants in Vietnam. For me, it is a place to learn and cultivate experiences from my senior colleagues, a place of heartwarming moments when I have the opportunities to participate in the charity programs and share with people in difficult circumstances; and a place to express my efforts and passion.

As a Member of ESSH Department, whose goal is to build GEC’s environment, health, safety and social management system according to international standards, this is a fairly new field in Vietnamese companies, which requires us to constantly update and improve our qualifications to meet the job’s requirements. I am confident and proud to say that my organization has been and will be gradually meet Vietnam’s and international standards in the field of health and safety, environment and society. I look forward to accompanying GEC to create a safer working environment for everyone, an organization with a reputation for environmental and local community responsibilities.

As one of the youngest and most newly-recruited Members of the Company, I have not noticed the outdated, but on the contrary everything is very professional and dynamic. Although my engagement time here has not been very long, I still believe in the potential of development in this Company. That is the motivation for me to try and devote to the Company's development.

Mr. Tran Hai Au Technical staff

For every journey that GEC goes through, each milestone is of a historic moment. Hopefully, in the coming development path, I can devote my strength as a small part to the development and the success of GEC.

Ms. Hoac Hue Lan Planning and Investment Executive

Ms. Nguyen Thi Nguyet Anh EHSS Specialist

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219

CONTACT INFORMATION FOR RELATED PARTIES

OPERATION NETWORK

TTC Representative Office in HCMC

Head Office 114 Truong Chinh, Phu Dong Ward, Pleiku City, Gia Lai Province +84 269 3823 604 +84 269 3826 365 info@geccom.vn www.geccom.vn Branch

Address

10th floor, TTC Group Office Building, 253 Hoang Van Thu, Tan Binh District, Ho Chi Minh City Contact: Mr. Pham Thanh Tuan Anh Director of Representative Office com-off.dep-mgr@geccom.vn +84 28 3999 8822 - 6012

Contact

Phone

TTC Auyn Ha

Thanh Thuong A Hamlet, Ayun Ha Commune, Phu Thien District, Gia Lai Province

Mr. Nguyen Duy Thuan Branch Director

ayh.dep-dir@geccom.vn +84 269 3855 256

TTC Chu Prong

268 Hung Vuong, Chu Prong Town, Chu Prong District, Gia Lai Province

Mr. Pham Van Hiep Branch Director

cp.dir@geccom.vn

+84 269 6275 190

TTC Lam Dong

Da Sar Commune, Lac Duong District, Lam Dong Province

Mr. Nguyen Manh Hung ld.dir@geccom.vn Branch Director

+84 263 3615 091

TTC Mang Yang

Ro Village, Lo Pang Commune, Mr. Le Quang Quoc Dung My Thach District, Gia Lai my.dir@geccom.vn Branch Director Province

TTC Thua Thien Hue

189 Pham Van Dong, Vy Da Ward, Hue City

220

2018 ANNUAL REPORT

Mr. Truong Van Lan Branch Director

lantv@geccom.vn

+84 357 777 779 +84 234 3933 913

INFORMATION OF PERSON IN CHARGE

Person in charge of Information Disclosure Contact: Mr. Pham Thanh Tuan Anh Chief of Secretariat +84 28 3999 8822 - 6012 tbvpct@geccom.vn Integrity Hotline Contact: Ms. Luu Dang My Quynh Head of Internal Audit Department +84 28 3997 7727 - 1106 ia.mgr@geccom.vn

Department

Contact

Phone

Investor Relations Department

Nguyen Anh Vu Head of Department

vuna@geccom.vn

Project Development

Ho Qui Tri Thuc Head of Department

projectdev.mgr@geccom.vn

+84 269 3823 604 - 110

Project Management

Bui Thi Thuy Hang Deputy Manager

cons.dep3-mgr@geccom.vn

+84 269 3823 604 - 110

EHSS

Tran Hoang Thong Anh Manager

ehss.mgr@geccom.vn

Sales

Trinh Vinh Thanh Manager

business.mgr@geccom.vn

+84 28 3999 8822 - 6035

+84 28 3999 8822 - 6051 +84 269 3823 604 - 123

www.geccom.vn

221

Năng lượng là trong những chủ lực trong Wind power isgió expected contribute 22% tiêu of GEC by 2022 Gió, Năng lượng là một một to trong những mục mục tiêu chủcapacity lực của của GEC GEC trong chiến chiến lược lược phát phát triển triển bền bền vững vững đồng đồng bộ bộ các các loại loại hình hình năng năng lượng lượng

VIEW ON FINANCE

224 Summary on 2018 Audited Separate Financial Statements 229 2018 Audited Consolidated Financial Statements

55%

GROSS PROFIT MARGIN 2018

INVESTMENT SYNERGY BRIGHTENING UP THE FUTURE 2018 MARKS THE NEW DEVELOPMENT CYCLE OF GIA LAI ELECTRICITY WITH THE MISSION OF CONTRIBUTING TO ENERGY SECURITY. THIS IS ALSO A STEPPING STONE IN GATHERING ALL RESOURCES TO EXPAND INVESTMENT, SAFEGUARD OPERATION, ENSURE EFFICIENT AND TRANSPARENT BUSINESS IN ALL ACTIVITIES, GET READY FOR BREAKTHROUGHS AND BOOM IN THE FUTURE.

SEPARATE BALANCE SHEET as at December 31st, 2018

Code ASSETS

100

CURRENT ASSETS

110

Cash and cash equivalents

111

Cash

112

Cash equivalents

120 123 130

Form B 01 â&#x20AC;&#x201C; DN

Note

Short-term investment Investments held to maturity

4(a)

Short-term receivables

Ending balance VND

Beginning balance VND

966,416,078,355

294,766,082,853

572,264,189,785

79,904,952,746

15,247,093,885

40,604,952,746

557,017,095,900

39,300,000,000

252,000,000,000

6,672,250,000

252,000,000,000

6,672,250,000

100,872,524,438

198,692,137,509

131

Short-term trade accounts receivable

72,023,088,780

51,894,102,350

132

Short-term prepayments to suppliers

3,964,652,165

3,486,206,480

135

Short-term lending

7(a)

1,291,000,000

102,727,858,552

136

Other short-term receivables

8(a)

23,590,996,316

41,284,448,586

137

Provision for doubtful short-term debts

(700,478,459)

139

Shortage of assets awaiting resolution

2,787,177

7,897,779,840

8,965,441,721

7,897,779,840

8,965,441,721

33,381,584,292

531,300,877

3,171,334,425

462,353,626

30,210,249,867

9,637,251

59,310,000

2,942,966,568,403

1,072,331,632,693

140 141 150

Inventories

Inventories Other current assets

151

Short-term prepaid expenses

152

Value Added Tax to be reclaimed

153

Tax and other receivables from the State Budget

10(a)

200

LONG-TERM ASSETS

210

Long-term receivables

780,499,803

27,662,017,532

215

Long-term lending

7(b)

16,704,000,000

216

Other long-term receivables

8(b)

1,271,341,882

10,958,017,532

219

Provision for doubtful long-term debts

(490,842,079)

2,543,636,227,324

756,410,595,606

2,539,816,319,252

752,398,295,819

220

Fixed assets

221

Tangible fixed assets

222

Historical cost

2,912,839,214,826

1,060,682,194,778

223

Accumulated depreciation

(373,022,895,574)

(308,283,898,959)

227

Intangible fixed assets

3,819,908,072

4,012,299,787

228

Historical cost

4,571,417,184

4,746,417,184

229

Accumulated amortisation

240

Long-term asset in progress

242

Construction in progress

250

Long-term investments

251

Investments in Subsidiaries

254

Provision for long-term investments

260

Long-term prepaid expenses

262

Deferred income tax assets

224

11(b)

12 4(b)

Other long-term assets

261 270

11(a)

TOTAL ASSETS 2018 ANNUAL REPORT

10(b)

(751,509,112)

(734,117,397)

15,186,876,903

18,577,242,888

15,186.876,903

18,577,242,888

364,467,860,449

256,865,646,909

366,935,646,909

256,865,646,909

(2,467,786,460)

18,895,103,924

12,816,129,758

18,895,103,924

12,217,244,808

598,884,950

3,909,382,646,758

1,367,097,715,546

Code

RESOURCES

300

LIABILITIES

310

Short-term liabilities

Ending balance VND

Beginning balance VND

1,741,575,548,237

201,023,735,729

381,118,713,750

42,606,315,734

315,198,040,326

9,346,271,228

594,400,000

8,459,725,103

9,822,324,364

1,840,797

37,499,154

3,133,443,028

1,937,790,486

621,468,000

4,484,502,606

10,822,655,124

Note

311

Short-term trade accounts payable

312

Short-term advances from customers

313

Tax and other payables to the State Budget

314

Payable to employees

315

Short-term accrued expenses

318

Short-term unearned Revenue

319

Other short-term payables

320

Short-term borrowings

17(a)

40,660,660,000

3,824,699,000

322

Bonus and welfare fund

8,586,101,890

5,599,208,378

1,360,456,834,487

158,417,419,995

1,356,889,164,636

154,512,494,999

2,994,424,750

573,245,101

910,500,246

330

Long-term liabilities

338

Long-term borrowings

17(b)

342

Provision for long-term liabilities

343

Science and technology development fund

400

OWNERSâ&#x20AC;&#x2122; EQUITY

2,167,807,098,521

1,166,073,979,817

410

Capital and reserves

2,167,807,098,521

1,166,073,979,817

1,941,825,500,000

970,912,750,000

1,941,825,500,000

970,912,750,000

411

Ownersâ&#x20AC;&#x2122; capital

411a

- Ordinary shares with voting rights

412

Share premium

28,963,735,153

28,940,687,153

418

Investment and development fund

24,927,813,411

421

Undistributed earnings

172,090,049,957

141,292,729,253

421a

- Undistributed post-tax profits of previous years

44,201,454,253

26,869,193,074

421b

- Post-tax profit of current year

127,888,595,704

114,423,536,179

3,909,382,646,758

1,367,097,715,546

440

19, 20

TOTAL RESOURCES

Nghiem Thi Le Quyen Preparer

Tran Thi Hong Tham Chief Accountant

Nguyen Thai Ha General Director

February 28th, 2019 www.geccom.vn

225

SEPARATE INCOME STATEMENT for the year ended December 31st, 2018

Code

Note

Current year VND

Previous year VND

Net Revenue from sale of goods and services rendered

314,813,574,479

284,411,855,048

Cost of goods sold and services rendered

138,908,459,543

131,969,974,191

Gross profit from sale of goods and services rendered (20 = 10 - 11)

175,905,114,936

152,441,880,857

Financial income

62,941,473,166

61,440,207,612

Financial expenses

35,757,646,555

17,225,748,001

- Including: Interest expense

32,343,782,642

16,564,766,574

Selling expenses

588,486,215

960,049,966

General and administration expenses

65,322,353,098

51,438,736,310

137,178,102,234

144,257,554,192

15,011,146,609

4,570,331,757

3,101,800,798

10,450,931,890

11,909,345,811

(5,880,600,133)

149,087,448,045

138,376,954,059

Net operating profit (30 = 20 + 21 - 22 - 25 - 26)

Other income

Other expenses

Net other income/(expenses) (40 = 31 - 32)

Net accounting profit before tax (50 = 30 + 40)

Business income tax - current

10,196,200,217

8,269,011,970

Business income tax - deferred

598,884,950

(598,884,950)

Net profit after tax (60 = 50 - 51 - 52)

138,292,362,878

130,706,827,039

Nghiem Thi Le Quyen Preparer February 28th, 2019

226

Form B 02 â&#x20AC;&#x201C; DN

2018 ANNUAL REPORT

Tran Thi Hong Tham Chief Accountant

Nguyen Thai Ha General Director

SEPARATE CASH FLOW STATEMENT for the year ended December 31st, 2018 Indirect method

Code

Form B 03 - DN

Note

Current year VND

Previous year VND

149,087,448,045

138,376,954,059

64,719,818,906

51,362,272,807

2,613,037,364

3,340,015,925

CASH FLOWS FROM OPERATING ACTIVITIES 01

Net accounting profit before tax Adjustments for:

Depreciation and amortisation

Provisions

Unrealised foreign exchange losses

Profits from investing activities

Interest expense

25 25

Operating profit before changes in working capital

812,475,367

3,262,665

(73,946,379,386)

(54,339,738,810)

32,343,782,642

16,564,766,574

175,630,182,938

155,307,533,220

(43,519,026,193)

(20,175,222,306)

(143,155,050)

380,245,628

(24,012,976,535)

(3,818,317,710)

(9,386,839,915)

1,980,515,753

(31,086,333,528)

(17,330,707,618)

Increase in receivables

(Increase)/decrease in inventories

Decrease in payables

(Increase)/decrease in prepaid expenses

Interest paid

Business income tax paid

(10,991,619,254)

(6,656,970,724)

Other payments on operating activities

(7,550,973,662)

(7,054,444,440)

Net cash inflows from operating activities

48,939,258,801

102,632,631,803

(1,538,690,314,680)

(37,292,595,627)

19,600,831,000

1,523,363,636

(276,400,000,000)

(133,600,000,000)

148,869,250,000

136,989,000,000

(110,070,000,000)

(33,416,000,000)

42,944,043,659

86,681,532,124

52,853,647,182

(1,670,008,701,556)

30,001,458,850

CASH FLOWS FROM INVESTING ACTIVITIES 21

Purchases of fixed assets, construction of fixed assets

Proceeds from disposals of fixed assets

Loans granted

Collection of loans

Investments in other entities

Proceeds from divestment in other entities

Dividends and interest received

Net cash (outflows)/inflows from investing activities

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227

SEPARATE CASH FLOW STATEMENT (continued) for the year ended December 31st, 2018 Indirect method

Code

Form B 03 â&#x20AC;&#x201C; DN

Note

Current year VND

Previous year VND

971,069,898,000

CASH FLOWS FROM FINANCING ACTIVITIES 31

Proceeds from issuance of shares

Proceeds from borrowings

1,427,594,833,806

93,571,151,173

Repayments of borrowings

(188,566,703,169)

(155,412,325,825)

Dividends paid

(96,672,260,772)

2,113,425,767,865

(61,841,174,652)

492,356,325,110

70,792,916,001

79,904,952,746

9,115,299,410

2,911,929

(3,262,665)

572,264,189,785

79,904,952,746

Net cash inflows/(outflows) from financing activities

Net increase in cash and cash equivalents

Cash and cash equivalents at beginning of year

61 70

Effect of foreign exchange differences Cash and cash equivalents at end of year

Nghiem Thi Le Quyen Preparer February 28th, 2019

228

2018 ANNUAL REPORT

Tran Thi Hong Tham Chief Accountant

Nguyen Thai Ha General Director

2018 CONSOLIDATED FINANCIAL STATEMENTS www.geccom.vn

229

CORPORATE INFORMATION

Enterprise registration certificate

No. 5900181213 dated September 9th, 2010 was initially issued by the Department of Planning and Investment of Gia Lai Province and the 15 amendment dated October 16th, 2018.

Board of Directors

Mr. Tan Xuan Hien

Chairman (from March 26th, 2018, former Vice Chairman)

Mr. Thai Van Chuyen

Chairman (until March 26th, 2018)

Mr. Deepak Chand Khanna

Member

Mr. Andrew Mark Affleck

Member (from September 18th, 2018)

Mr. Yasushi Ujioka

Member (until September 18th, 2018)

Ms. Nguyen Thuy Van

Member (from September 18th, 2018)

Ms. Dao Thi Thien Thanh

Member (until September 18th, 2018)

Ms. Pham Ngoc Thanh Mai

Member (from September 18th, 2018)

Ms. Do Thu Ngan

Independent Member (from September 18th, 2018)

Ms. Nguyen Thuy Van

Head (from September 18th, 2018)

Mr. Deepak Chand Khanna

Member (from September 18th, 2018)

Ms. Pham Ngoc Thanh Mai

Member (from September 18th, 2018, former Chief Supervisor)

Audit Committee

230

2018 ANNUAL REPORT

Board of Supervision

Ms. Pham Ngoc Thanh Mai

Chief Supervisor (from March 22nd, 2018 to September 17th, 2018)

Ms. Hoang Thi Mai Thuy

Chief Supervisor (until March 20th, 2018)

Mr. Trinh Xuan Ha

Member (from March 20th, 2018 to September 17th, 2018)

Mr. Han Phi Hai

Member (until March 19th, 2018)

Mr. Mai Van Nho

Member (from March 20th, 2018 to September 17th, 2018)

Ms. Tran Thi Nga

Member (until March 19th, 2018)

Ms. Nguyen Thai Ha

General Director (from October 10th, 2018)

Mr. Le An Khang

General Director (until October 9th, 2018)

Mr. Phan Thanh Lac

Deputy General Director

Mr. Nguyen Dinh Tuan

Deputy General Director

Mr. Le Thanh Vinh

Deputy General Director

Mr. Ha Nguyen Hoang

Deputy General Director (from January 2nd, 2019)

Ms. Tran Thi Kim Chi

Deputy General Director (until March 15th, 2018)

Legal representative

Mr. Tan Xuan Hien

Chairman

Registered office

114 Truong Chinh Street, Phu Dong Ward Pleiku City, Gia Lai Province, Vietnam

Auditor

PwC (Vietnam) Limited

Board of Management

www.geccom.vn

231

STATEMENT OF RESPONSIBILITY OF THE BOARD OF MANAGEMENT OF THE COMPANY IN RESPECT OF THE CONSOLIDATED FINANCIAL STATEMENTS

The legal representative of Gia Lai Electricity Joint Stock Company (“the Company”) authorises the Board of Management of the Company to be responsible for preparing consolidated financial statements of the Company and its Subsidiaries (together, “the Group”) which give a true and fair view of the consolidated financial position of the Group as at December 31st, 2018, and the consolidated results of its operations and its consolidated cash flows for the year then ended. In preparing these consolidated 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; and • Prepare the consolidated financial statements on a going concern basis unless it is inappropriate to presume that the Group will continue in business. The Board of Management is responsible for ensuring that proper accounting records are kept which disclose, with reasonable accuracy at any time, the consolidated financial position of the Group and which enable consolidated financial statements to be prepared which comply with the basis of accounting set out in Note 2 to the consolidated financial statements. The Board of Management is also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

APPROVAL OF THE CONSOLIDATED FINANCIAL STATEMENTS We hereby approve the accompanying consolidated financial statements as set out on pages 6 to 61 which give a true and fair view of the consolidated financial position of the Group as at December 31st, 2018, and the consolidated results of its operations and its consolidated cash flows for the year then ended in accordance with Vietnamese Accounting Standards, the Vietnamese Corporate Accounting System and applicable regulations on preparation and presentation of consolidated financial statements. On behalf of the Board of Management,

Nguyen Thai Ha General Director Authorised signature Gia Lai Province, SR Vietnam February 28th, 2019

232

2018 ANNUAL REPORT

INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS OF GIA LAI ELECTRICITY JOINT STOCK COMPANY

We have audited the accompanying consolidated financial statements of Gia Lai Electricity Joint Stock Company (“the Company”) and its Subsidiaries (together, “the Group”) which were prepared on December 31st, 2018 and approved by the Board of Management on February 28th, 2019. The consolidated financial statements comprise the consolidated balance sheet as at December 31st, 2018, the consolidated income statement and the consolidated cash flow statement for the year then ended and explanatory notes to the consolidated financial statements including significant accounting policies, as set out on pages 234 to 285.

The Board of Management’s Responsibility The Board of Management of the Company is responsible for the preparation and the true and fair presentation of these consolidated financial statements in accordance with Vietnamese Accounting Standards, the Vietnamese Corporate Accounting System and applicable regulations on the preparation and presentation of consolidated financial statements and for such internal control which the Board of Management determines necessary to enable the preparation and fair presentation 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 the 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 standards and requirements and plan and perform the audit in order to obtain reasonable assurance as to whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including an assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Group’s preparation and true and fair presentation of the consolidated 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 Group’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Board of Management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at December 31st, 2018, its consolidated financial performance and consolidated cash flows for the year then ended in accordance with Vietnamese Accounting Standards, the Vietnamese Corporate Accounting System and applicable regulations on the preparation and presentation of consolidated financial statements.

Other Matter The independent auditor’s report is prepared in Vietnamese and English. Should there be any conflict between the Vietnamese and English copies, the Vietnamese copy shall take precedence.

For and on behalf of PwC (Vietnam) Limited

Mai Viet Hung Tran Audit Pracising License No. 0048-2018-006-1 Authorised signatory

Vo Ngoc Huyen Audit Pracising Licence No. 2610-2018-006-1

Report reference number: HCM7643 Ho Chi Minh City, February 28th, 2019 www.geccom.vn

233

CONSOLIDATED BALANCE SHEET as at December 31st, 2018

Code

ASSETS

100

CURRENT ASSETS

110

Cash and cash equivalents

111

Cash

112

Cash equivalents

120 123

Form B 01 â&#x20AC;&#x201C; DN/HN

Note

Short-term investment Investments held to maturity

Ending balance VND

Beginning balance VND

1,229,872,510,447

485,811,274,611

609,411,234,157

222,999,837,459

48,669,299,897

79,499,837,459

560,741,934,260

143,500,000,000

252,000,000,000

8,172,250,000

252,000,000,000

8,172,250,000

245,522,072,322

227,394,496,842

130

Short-term receivables

131

Short-term trade accounts receivable

109,562,153,409

74,686,373,191

132

Short-term prepayments to suppliers

103,336,396,377

50,090,997,292

135

Short-term lending

136

Other short-term receivables

137

Provision for doubtful short-term debts

139

Shortage of assets awaiting resolution

140

Inventories

141

Inventories

150

7 8(a)

Other current assets

151

Short-term prepaid expenses

152

Value Added Tax to be reclaimed

153

Tax and other receivables from the State Budget

200

LONG-TERM ASSETS

210

Long-term receivables

11(a)

216

Other long-term receivables

219

Provision for doubtful long-term debts

220

16(a)

93,843,858,552

32,849,459,242

9,562,455,993

(228,723,883)

(789,188,186)

2,787,177

24,721,958,269

26,151,056,765

24,721,958,269

26,151,056,765

98,217,245,699

1,093,633,545

3,810,607,152

777,057,097

94,389,457,115

19,000,942

17,181,432

297,575,506

3,130,686,395,290

1,172,797,759,434

785,499,803

10,963,017,532

8(b)

1,276,341,882

10,963,017,532

(490,842,079)

2,877,671,877,869

1,113,991,123,959

2,871,235,092,019

1,107,437,276,265

Fixed assets

221

Tangible fixed assets

222

Historical cost

3,494,120,676,243

1,634,923,252,323

223

Accumulated depreciation

(622,885,584,224)

(527,485,976,058)

227

Intangible fixed assets

6,436,785,850

6,553,847,694

228

Historical cost

7,448,934,975

7,483,934,975

229

Accumulated amortisation

(1,012,149,125)

(930,087,281)

240

Long-term asset in progress

215,763,242,101

18,045,866,709

215,763,242,101

18,045,866,709

36,465,775,517

29,797,751,234

11(b)

22,302,642,267

14,801,647,513

242 260

Construction in progress

12(a)

12(b)

Other long-term assets

261

Long-term prepaid expenses

262

Deferred income tax assets

6,234,469,009

5,267,241,281

269

Goodwill

7,928,664,241

9,728,862,440

4,360,558,905,737

1,658,609,034,045

270

234

TOTAL ASSETS

2018 ANNUAL REPORT

The notes on pages 240 to 285 are an integral part of these consolidated financial statements.

Code RESOURCES

Note

300 LIABILITIES 310 Short-term liabilities 15

Ending balance VND

Beginning balance VND

1,952,623,594,905

340,592,087,280

528,243,118,007

103,424,656,357

368,213,754,992

15,864,492,583

1,341,163,081

3,389,115,713

15,713,948,521

21,775,346,416

311

Short-term trade accounts payable

312

Short-term advances from customers

313

Tax and other payables to the State

314

Payable to employees

1,617,106,333

1,527,266,640

315

Short-term accrued expenses

4,327,202,805

2,264,261,123

318

Short-term unearned Revenue

2,727,271

319

Other short-term payables

9,862,783,621

35,424,600,335

16(b)

320

Short-term borrowings

18(a)

106,374,337,883

5,917,699,000

322

Bonus and welfare fund

20,790,093,500

17,259,147,276

1,424,380,476,898

237,167,430,923

96,362,637

305,280,000

1,420,255,279,818

232,384,070,181

3,455,589,342

3,471,217,859

573,245,101

910,500,246

2,407,935,310,832

1,318,016,946,765

2,407,935,310,832

1,318,016,946,765

1,941,825,500,000

970,912,750,000

330 Long-term liabilities 331

Long-term trade account payables

336

Long-term unearned Revenue

338

Long-term borrowings

342

Provision for long-term liabilities

343

Science and technology development fund

18(b) 20

400 OWNERSâ&#x20AC;&#x2122; EQUITY 410 Capital and reserves 411

Ownersâ&#x20AC;&#x2122; capital

22, 23

411a - Ordinary shares with voting rights

1,941,825,500,000

970,912,750,000

412

Share premium

28,963,735,153

28,940,687,153

418

Investment and development fund

60,968,109,047

56,347,900,991

421

Undistributed earnings

145,084,524,459

120,011,502,443

421a - Undistributed post-tax profits of previous years

81,879,674,381

31,620,215,000

421b - Post-tax profit of current year

63,204,850,078

88,391,287,443

231,093,442,173

141,804,106,178

4,360,558,905,737

1,658,609,034,045

429

Non-controlling interests

440 TOTAL RESOURCES

Dang Nguyen Thi Kim Loan Preparer

Tran Thi Hong Tham Chief Accountant

Nguyen Thai Ha General Director

February 28th, 2019

www.geccom.vn

235

CONSOLIDATED INCOME STATEMENT for the year ended December 31st, 2018

Code

Form B 02 â&#x20AC;&#x201C; DN/HN

Note

Current year VND

Previous year VND

559,488,474,875

539,100,132,317

Revenue from sales of goods and rendering of services

Net Revenue from sales of goods and rendering of services

559,488,474,875

539,100,132,317

Cost of goods sold and services rendered

253,487,961,656

227,296,100,212

Gross profit from sales of goods and rendering of services (20 = 10 - 11)

306,000,513,219

311,804,032,105

Financial income

19,454,754,655

17,993,340,549

Financial expenses

41,137,903,234

24,627,342,830

- Including: Interest expense

40,157,402,594

24,380,235,807

Selling expenses

588,486,215

960,049,966

General and administration expenses

76,636,113,903

65,053,894,776

207,092,764,522

239,156,085,082

Net operating profit (30 = 20 + 21 - 22 - 25 - 26)

Other income

2,423,137,964

2,185,526,529

Other expenses

2,577,130,502

10,904,767,147

(153,992,538)

(8,719,240,618)

206,938,771,984

230,436,844,464

Net other expenses (40 = 31 - 32)

Net accounting profit before tax (50 = 30 + 40)

Business income tax - current

20,639,269,039

21,417,063,799

Business income tax - deferred

(967,227,728)

(281,412,530)

Net profit after tax (60 = 50 - 51 - 52)

187,266,730,673

209,301,193,195

144,693,225,170

153,768,995,113

42,573,505,503

55,532,198,082

Attributable to: 61

Shareholders of the parent company

Non-controlling interests

Basic earnings per share

24(a)

1,078

1,726

Diluted earnings per share

24(b)

1,078

1,726

Dang Nguyen Thi Kim Loan Preparer

Tran Thi Hong Tham Chief Accountant

Nguyen Thai Ha General Director

February 28th, 2019 236

2018 ANNUAL REPORT

The notes on pages 240 to 285 are an integral part of these consolidated financial statements.

CONSOLIDATED CASH FLOW STATEMENT for the year ended December 31st, 2018 (Indirect method)

Form B 03 â&#x20AC;&#x201C; DN/HN

Code

Note

Current year VND

Previous year VND

206,938,771,984

230,436,844,464

97,545,316,944

79,519,881,720

CASH FLOWS FROM OPERATING ACTIVITIES 01

Net profit before tax Adjustments for:

Depreciation and amortisation

Provisions

269,636,543

345,591,175

Unrealised foreign exchange loss

812,537,808

1,899,165

Profit from investing activities

(19,126,994,659)

(11,160,096,178)

Interest expense

40,157,402,594

24,380,235,807

326,596,671,214

323,524,356,153

(95,208,039,030)

(18,082,311,652)

831,702,675

(9,969,916,861)

7,666,461,734

3,130,994,556

Operating profit before changes in working capital

Increase in receivables

Decrease/(increase) in inventories

Increase in payables

(Increase)/decrease in prepaid expenses

(10,534,544,809)

4,315,132,594

Interest paid

(50,130,091,792)

(31,347,224,014)

Business income tax paid

(25,814,715,713)

(16,866,164,374)

Other payments on operating activities

(12,291,611,514)

(10,902,029,679)

Net cash inflows from operating activities

141,115,832,765

243,802,836,723

(1,810,021,007,097)

(46,836,522,441)

216,363,636

2,665,051,209

(273,800,000,000)

(158,000,000,000)

123,816,108,552

130,500,000,000

54,927,297,373

13,904,056,547

21,360,128,900

(1,945,884,478,362)

4,615,955,041

16(b)

CASH FLOWS FROM INVESTING ACTIVITIES 21

Purchases of fixed assets and construction in progress

Proceeds from disposals of fixed assets

Loans granted

Collection of loans

Proceeds from divestment in other entities

Dividends and interest received

Net cash (outflows)/inflows from investing activities

www.geccom.vn

237

CONSOLIDATED CASH FLOW STATEMENT (continued) for the year ended December 31st, 2018 Indirect method

Code

Form B 03 â&#x20AC;&#x201C; DN/HN

Note

Current year VND

Previous year VND

CASH FLOWS FROM FINANCING ACTIVITIES 31

Proceeds from issuance of shares

1,049,815,798,000

1,000,000,000

Proceeds from short-term and long-term borrowings

1,489,392,404,794

97,718,611,173

Repayments of borrowings

(197,374,556,274)

(162,629,325,825)

Dividends paid

(150,656,453,713)

(29,508,840,780)

Net cash inflows/(outflows) from financing activities

2,191,177,192,807

(93,419,555,432)

Net increase in cash and cash equivalents

386,408,547,210

154,999,236,332

Cash and cash equivalents at beginning of year

222,999,837,459

68,003,863,792

Effect of foreign exchange differences

2,849,488

(3,262,665)

Cash and cash equivalents at end of year

609,411,234,157

222,999,837,459

Dang Nguyen Thi Kim Loan Preparer

Tran Thi Hong Tham Chief Accountant

Nguyen Thai Ha General Director

February 28th, 2019

238

2018 ANNUAL REPORT

The notes on pages 240 to 285 are an integral part of these consolidated financial statements.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Form B 09 – DN/HN

for the year ended December 31st, 2018

GENERAL INFORMATION Gia Lai Electricity Joint Stock Company (“the Company”) is a joint stock company established from the equitisation of Gia Lai Electricity Company pursuant to Decision No. 821/QD-UBND dated June 1st, 2010 of the People’s Committee of Gia Lai Province and operated pursuant to the Enterprise registration certificate No. 5900181213 issued by the Department of Planning and Investment of Gia Lai Province on September 9th, 2010. The latest amendment was issued dated October 16th, 2018. On March 21st, 2017, the Company's shares were listed and traded on the Unlisted Public Company Market (“Upcom”) pursuant to Announcement No. 309/TB-SGDHN dated March 14th, 2017 and Decision No. 155/QD-SGDHN dated March 7th, 2017 issued by the Hanoi Stock Exchange. The principal activities of the Company and its Subsidiaries (together, “the Group”) are to produce, transmit and distribute electricity; install electrical systems, construct industrial works, hydroelectric power plants, dykes, embankments and other projects; consult, survey, design, construct and supervise of small and medium hydroelectric power plants, lines and transformer stations (with voltage of 110 KV or less); sell machinery, equipment and other machine parts; and provide construction services, technical consulting services and financial investments. The normal business cycle of the Group is 12 months. As at end of year, the Group has 529 employees (as at beginning of year: 439 employees). The Company's head office is located at 114 Truong Chinh Street, Phu Dong Ward, Pleiku City, Gia Lai Province, Vietnam. As at end of year, the Company has five branches and two representative offices (as at beginning of year: five branches and one representative office) which are presented as below: • TTC Lam Dong Branch: at Village 1, Da Sar Commune, Lac Duong District, Lam Dong Province, Vietnam; • TTC Chu Prong Branch: at 268 Hung Vuong Street, Chu Prong Town, Chu Prong District, Gia Lai Province, Vietnam; • TTC Mang Yang Branch: at Ro Village, Lo Pang Commune, Mang Yang District, Gia Lai Province, Vietnam; • TTC Ayun Ha Branch: at National Road 25, Thanh Thuong A Village, Ayun Ha Commune, Phu Thien District, Gia Lai Province, Vietnam; • TTC Thua Thien Hue Branch: at 189 Pham Van Dong Street, Vy Da Ward, Hue City, Thua Thien Hue Province, Vietnam; and • Representative office of TTC Ho Chi Minh: at 253 Hoang Van Thu Street, Ward 2, Binh Thanh Districit , Ho Chi Minh City, Vietnam; and • Representative office of TTC Ha Noi: at House No. 09, Lane 310, Alley 22, Road Nghi Tam, Ward Tu Lien, Tay Ho District, Hanoi City, Vietnam.

www.geccom.vn

239

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

Form B 09 – DN/HN

for the year ended December 31st, 2018

GENERAL INFORMATION (continued) As at December 31st, 2018, the Company has 9 Subsidiaries (as at December 31st, 2017: 9 Subsidiaries) which are presented as below: Location

Status

Business activities

Percentage of interest (%) At At end begining of year of year

Gia Lai Hydropower Joint Stock Company (“GHC”)

Gia Lai Province, Vietnam

Operating

Produce, transmit and distribute electricity

58.1

Thuong Lo Hydropower One - Member Limited Company (“GTLC”) (*)

Thua Thien Hue Province, Operating Vietnam

Produce, transmit and distribute electricity

100.0

Gia Lai Gia Lai Construction and Electrical Mechanic One Province, Member Limited Company Vietnam

Operating

Construction of small and medium Hydropower projects; produce concrete and other products from cement and gypsum

Kenh Bac - Ayun Ha Hydropower Joint Stock Company

Gia Lai Province, Vietnam

Operating

Produce, transmit and distribute electricity

65.3

TTC Tay Son - Binh Dinh Solar Power Joint Stock Company

Binh Dinh Province, Vietnam

Operating

Produce, transmit and distribute electricity

100.0

TTC Tay Son - Binh Dinh Electricity Joint Stock Comapny

Binh Dinh Province, Vietnam

Operating

Produce, transmit and distribute electricity

100.0

TTC Duc Hue - Long An Solar Power Joint Stock Company

Long An Province, Vietnam

Operating

Produce, transmit and distribute electricity

83.6

TTC Duc Hue - Long An Electricity Joint Stock Company (“DIEN DH-LA”) (*)

Long An Province, Vietnam

Operating

Produce, transmit and distribute electricity

51.0

83.6

Gia Lai Consultancy and Gia Lai Energy Development One - Province, Member Limited Company Vietnam

Operating

Operate in architecture and consult on related electrical engineering

100.0

(*) During the year, the Company increased its contributed capital in GTLC and DIEN DH-LA with additional investment amounts of VND 30 billion and VND 80.1 billion, respectively.

240

2018 ANNUAL REPORT

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2.1

Basis of preparation of consolidated financial statements The consolidated financial statements have been prepared in accordance with Vietnamese Accounting Standards, the Vietnamese Corporate Accounting System and applicable regulations on preparation and presentation of consolidated financial statements. The consolidated financial statements have been prepared under the historical cost convention. The accompanying consolidated financial statements are not intended to present the consolidated financial position and consolidated results of operations and consolidated cash flows in accordance with accounting principles and practices generally accepted in countries and jurisdictions other than Vietnam. The accounting principles and practices utilised in Vietnam may differ from those generally accepted in countries and jurisdictions other than Vietnam. The consolidated financial statements in Vietnamese language are the official statutory consolidated financial statements of the Group. The consolidated financial statements in English language have been translated from the Vietnamese language consolidated financial statements.

2.2

Fiscal year The Company's fiscal year is from January 1st to December 31st.

2.3 Currency The consolidated financial statements are measured and presented in Vietnamese Dong (â&#x20AC;&#x153;VNDâ&#x20AC;?). Transactions arising in foreign currencies are translated at exchange rates ruling at the transaction dates. Foreign exchange differences arising from these transactions are recognised in the consolidated income statement. Monetary assets and liabilities denominated in foreign currencies at the consolidated balance sheet date are translated at the transfer rate at the consolidated balance sheet date of the commercial bank where the Group regularly trades. The transfer rate is average transfer rate of the commercial bank. Foreign exchange differences arising from these translations are recognised in the consolidated income statement.

2.4

Basis of consolidation Subsidiaries Subsidiaries are entities over which the Group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.

www.geccom.vn

241

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) for the year ended December 31st, 2018

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

2.4

Basis of consolidation (continued)

Form B 09 – DN/HN

Subsidiaries (continued) The purchase method of accounting is used to account for the acquisition of Subsidiaries by the Group. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any non-controlling interest. The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the consolidated income statement. Inter-company transactions, balances and unrealised gains and losses on transactions between group companies are eliminated. Accounting policies of Subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

Non-controlling transactions and interests The Group applies a policy for transactions with non-controlling interests (“NCI”) as transactions with external parties to the Group. NCI are measured at their proportionate share of the acquiree’s identifiable net assets at date of acquisition. The divestment of Group’s interest in a subsidiary that do not result in a loss of control are accounted for as transactions with owners. The difference between the change in the Group’s share of net assets of the subsidiary and any consideration paid or received of divestment of Group’s interest in a subsidiary is recorded directly in the undistributed earnings under equity.

2.5 Goodwill Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable assets of the acquired subsidiary/associate at the date of acquisition as accordance with current accounting requirements. Goodwill on acquisitions of Subsidiaries is recognised as an asset and is amortised on the straight-line basis over its estimated period of benefit but not exceed 10 years. On disposal of the investments in Subsidiaries or associates, the attributable amount of unamortised goodwill is included in the determination of the profit or loss on the disposal. Goodwill is tested annually for impairment and carried at cost less accumulated amortisation less accumulated impairment losses. If there is evidence that the impairment during the year is higher than the annual goodwill charge, the Group records the impairment immediately in the accounting period.

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2018 ANNUAL REPORT

2.6

Cash and cash equivalents Cash and cash equivalents comprise cash on hand, cash at bank, demand deposits and other short-term investments with an original maturity of three months or less.

2.7

Trade receivables Trade receivables are carried at the original invoice amount less an estimate made for doubtful receivables based on a review by the Board of Management of all outstanding amounts at the year end. Bad debts are written off when identified.

2.8 Inventories Inventories are stated at the lower of cost and net realisable value. Cost is determined by the weighted average method and includes all costs of purchase and other costs incurred in bringing the inventories to their present location and condition. Net realisable value is the estimated selling price in the normal course of business, less the estimated costs of completion and selling expenses. Provision is made, where necessary, for obsolete, slow-moving and defective inventory items.

2.9

Investments

(a)

Investments held-to-maturity Investments held-to-maturity are investments which the Groupâ&#x20AC;&#x2122;s Board of Management has positive intention and ability to hold until maturity. Investments held-to-maturity include term deposits, loans held-to-maturity for interest earning and other held-tomaturity investments. Those investments are accounted for at cost less provision. Provision for diminution in value of investments held-to-maturity is made when there is evidence that part or the whole of the investment is uncollectible.

(b)

Investments in other entities Investments in other entities are investments in equity instruments of other entities without controlling rights or co-controlling rights, or without significant influence over the investees. These investments are initially recorded at cost. Provision for diminution in value of these investments is made when the entities make losses, except when the loss was anticipated in their business plan before the date of investment.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) for the year ended December 31st, 2018

Form B 09 â&#x20AC;&#x201C; DN/HN

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

2.10 Fixed assets Tangible and intangible fixed assets Fixed assets are stated at historical cost less accumulated depreciation/amortisation. Historical cost includes expenditure that is directly attributable to the acquisition of the fixed assets. Depreciation and amortisation Fixed assets are depreciated and amortised using the straight-line method over their estimated useful lives as follows: Buildings and structures

5 - 48 years

Machinery and equipment

5 - 20 years

Motor vehicles, transmissions

5 - 20 years

Office equipment

3 - 10 years

Computer software

3 - 8 years

Others

2 - 20 years

Land use rights are amortised using the straight-line method over a period from 43 to 50 years in line with land use right certificate or term of project. Land use rights with indefinite term are recognised at historical cost and not amortised. Disposals Gains or losses on disposals are determined by comparing net disposal proceeds with the carrying amount and are recognised as income or expense in the consolidated income statement. Construction in progress Properties in the course of construction for production, rental or administrative purposes, or for purposes not yet determined, are carried at cost. Cost includes professional fees and, for qualifying assets, borrowing costs dealt with in accordance with the Groupâ&#x20AC;&#x2122;s accounting policies. Depreciation of these assets, on the same basis as other fixed assets, commences when the assets are ready for their intended use.

2.11

Operating leases Leases where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to the income statement on a straight-line basis over the term of the lease.

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2018 ANNUAL REPORT

2.12 Prepaid expenses Prepaid expenses include short-term and long-term prepayments on the consolidated balance sheet. Prepaid expenses are recorded at historical cost and allocated using the straight-line method over estimated useful lives.

2.13 Payables Classifications of payables are based on their nature as follows: â&#x20AC;˘ Trade accounts payable are trade payables arising from purchase of goods and services. â&#x20AC;˘ Other payables are non-trade payables, and not relating to purchase of goods and services. Payables are classified into long-term and short-term payables on the consolidated balance sheet based on remaining period from the balance sheet date to the maturity date.

2.14 Borrowing costs Borrowing costs that are directly attributable to the construction or production of any qualifying assets are capitalised during the period of time that is required to complete and prepare the asset for its intended use. Other borrowing costs are recognised in the consolidated income statement when incurred.

2.15 Accrued expenses Borrowing costs that are directly attributable to the construction or production of any qualifying assets are capitalised during the period of time that is required to complete and prepare the asset for its intended use. Other borrowing costs are recognised in the consolidated income statement when incurred.

2.16 Provision for severance allowances In accordance with Vietnamese labour laws, employees of the Group who have worked regularly for full 12 months or longer, are entitled to a severance allowance. The working period used for the calculation of severance allowance is the period during which the employee actually works for the Group less the period during which the employee participates in the unemployment insurance scheme in accordance with the labour regulations and the working period for which the employee has received severance allowance from the Group. The severance allowance is accrued at the end of the reporting period on the basis that each employee is entitled to half of an average monthly salary for each working year. The average monthly salary used for calculating the severance allowance is the employeeâ&#x20AC;&#x2122;s average salary for the year prior to the balance sheet date. This allowance will be paid as a lump sum when the employees terminate their labour contracts in accordance with current regulations.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) for the year ended December 31st, 2018

Form B 09 – DN/HN

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

2.17 Provisions Provisions are recognised when: the Group has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation and the amount has been reliably estimated. Provision is not recognised for future operating losses. Provisions are measured at the expenditures expected to be required to settle the obligation. If the time value of money is material, provision will be measured at the present value using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as an interest expense.

2.18 Unearned Revenue Unearned Revenue mainly comprises the amounts that customers paid in advance for one or many accounting periods for asset leases. The Group records unearned Revenue for the future obligations that the Group has to conduct.

2.19 Share capital Contributed capital of the Shareholders is recorded according to actual amount contributed and is record according to par value of the share. Share premium is the difference between the par value and the issue price of shares; and the difference between the repurchase price and re-issuing price of treasury shares. Undistributed earnings record the Group’s accumulated results after business income tax at the reporting date and after deducting the funds approved by the General Meeting of Shareholders at the time of reporting.

2.20 Appropriation of net profit Net profit after income tax could be distributed to Shareholders after approval at Annual General Meeting, and after appropriation to other funds in accordance with the Group’s charter and Vietnamese regulations. Appropriation of net profit is as follows:

(a)

Investment and development and fund Investment and development fund is appropriated from the Group’s net profit after tax and subject to Shareholders’ approval at the Annual General Meeting.

(b)

Bonus and welfare fund The bonus and welfare fund is appropriated from the Group’s net profit after tax and subject to Shareholders’ approval at the Annual General Meeting.

(c)

Dividend distribution Dividend is recognised as a liability in the Group’s consolidated financial statements in the period, in which the dividends are approved by the Shareholders at the Annual General Meeting.

246

2018 ANNUAL REPORT

2.21 Revenue recognition (a)

Revenue from sales of goods Revenue from sales of goods is recognised in the consolidated income statement when all five (5) following conditions are satisfied: • The Group has transferred to the buyer the significant risks and rewards of ownership of the goods; • The Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold; • The amount of Revenue can be measured reliably; • It is probable that the economic benefits associated with the transaction will flow to the Group; and • The costs incurred or to be incurred in respect of the transaction can be measured reliably. No Revenue is recognised if there are significant uncertainties regarding recovery of the consideration due or the possible return of goods.

(b)

Rendering of services Revenue from rendering of services is recognised in the consolidated income statement when the services are rendered, by reference to completion of the specific transaction assessed on the basis of the actual service provided as a proportion of the total services to be provided. Revenue from rendering of services is only recognised when all four (4) following conditions are satisfied: • The amount of Revenue can be measured reliably; • It is probable that the economic benefits associated with the transaction will flow to the Group; • The percentage of completion of the transaction at the balance sheet date can be measured reliably; and • The costs incurred for the transaction and the costs to complete the transaction can be measured reliably.

(c)

Construction contracts A construction contract is a contract specifically negotiated for the construction of an asset or a combination of assets that are closely interrelated or interdependent in terms of their design, technology and functions or their ultimate purpose of use. When the outcome of a contract can be estimated reliably, contract Revenue and contract costs are recognised over the completion percentage of the contract confirmed by customers. Claims and other Revenue are accounted for as Revenue only when agreed with customers and confirmed by customers. When the outcome of a construction contract cannot be reliably estimated, contract Revenue is recognised to the extent of contract costs incurred where it is probable those costs will be recoverable. Contract costs are only recognised when incurred during the year.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) for the year ended December 31st, 2018

Form B 09 â&#x20AC;&#x201C; DN/HN

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

2.21 Revenue recognition (continued) (d)

Interest income Interest income is recognised on an accrued basis.

2.22 Cost of goods sold and services rendered Cost of construction contracts is recognised over the completion percentage of construction projects and estimated gross margin on the principle of prudence and matching concept with Revenue. If the total cost of the contract exceeds the total Revenue of the contract, the estimated loss is recognised as a cost. Cost of goods sold and cost of services rendered are cost of finished goods sold or services provided during the year, and recorded on the basis of matching with Revenue.

2.23 Financial expenses Financial expenses are expenses incurred in the year for financial activities including expenses of borrowing, provision for diminution in value of investments in other entities and losses from foreign exchange differences.

2.24 Selling expenses Selling expenses represent expenses that are incurred in the process of providing services, which mainly include staff costs and other expenses.

2.25 General and administration expenses General and administration expenses represent expenses for administrative purposes which mainly include salary expenses of administrative staffs, expenses of office materials, tools and supplies, depreciation of fixed assets used for administration and other expenses.

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2018 ANNUAL REPORT

2.26 Current and deferred income tax Income taxes include all income taxes which are based on taxable profits including profits generated from production and trading activities in other countries with which the Socialist Republic of Vietnam has not signed any double taxation agreement. Income tax expense comprises current tax expense and deferred tax expense. Current income tax is the amount of income taxes payable or recoverable in respect of the current year taxable profits at the current year tax rates. Current and deferred tax should be recognised as an income or an expense and included in the profit or loss of the period, except to the extent that the tax arises from a transaction or event which is recognised, in the same or a different period, directly in equity. Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of occurrence affects neither the accounting nor the taxable profit or loss. Deferred income tax is determined at the tax rates that are expected to apply to the financial year when the asset is realised or the liability is settled, based on tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

2.27 Earnings per share Basic earnings per share is calculated by dividing the net profit attributable to Shareholders after deducting the bonus and welfare fund by the weighted average number of ordinary shares outstanding during the year, excluding ordinary shares repurchased by the Company and held as treasury shares. Diluted earnings per share is calculated by dividing the net profit attributable to Shareholders, which already subtracted the bonus and welfare fund, by the weighted average number of ordinary shares outstanding during the year and the ordinary shares expected to be issued.

2.28 Related Parties Enterprises and individuals that directly, or indirectly through one or more intermediaries, control, or are controlled by, or are under common control with, the Group, including holding companies, Subsidiaries and fellow Subsidiaries are Related Parties of the Group. Associates and individuals owning, directly or indirectly, an interest in the voting power of the Group that gives them significant influence over the enterprise, key management personnel, including Directors of the Group and close members of the family of these individuals and companies associated with these individuals also constitute Related Parties. In considering the related party relationship, the Group considers the substance of the relationship not merely the legal form.

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249

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

Form B 09 – DN/HN

for the year ended December 31st, 2018

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

2.29 Segment reporting A segment is a component which can be separated by the Group engaged in providing products or services (business segment), or providing products or services within a particular economic environment (geographical segment). Each segment is subject to risks and returns that are different from those of other segments. A reportable segment is the Group’s business segment or the Group’s geographical segment. Segment reporting is prepared and presented in accordance with accounting policies applied to the preparation and presentation of the Group’s consolidated financial statements in order to help users of consolidated financial statements understand and evaluate the Group’s operations in a comprehensive way.

2.30 Accounting estimates The preparation of the consolidated financial statements in accordance with Vietnamese Accounting Standards requires the Board of Management to make estimates and assumptions that affect assets, liabilities and presentation on potential assets and liabilities at the date of the consolidated financial statements as well as Revenue and expenses for the reporting year. Although accounting estimates are made by all knowledge of the Board of Management, the actual amount incurred may be different from the estimates.

CASH AND CASH EQUIVALENTS Ending balance VND

Cash on hand Cash at bank Cash equivalents (*)

Beginning balance VND

89,945,034

2,972,771,079

48,579,354,863

76,527,066,380

560,741,934,260

143,500,000,000

609,411,234,157

222,999,837,459

(*) Cash equivalents comprise term deposits at commercial banks with an original maturity of three months or less.

250

2018 ANNUAL REPORT

INVESTMENTS HELD-TO-MATURITY

Term deposits at banks

Ending balance VND

Beginning balance VND

252,000,000,000

8,172,250,000

Term deposits include deposits at commercial banks with an original maturity of more than three months and less than 1 year. As at end of year, a term deposit of VND 52 billion was pledged with banks for a borrowing (Note 18(a)).

SHORT-TERM TRADE ACCOUNTS RECEIVABLE Ending balance VND

Beginning balance VND

39,593,137,890

8,373,197,694

10,513,970,814

61,595,817,825

64,172,402,377

109,562,153,409

74,686,373,191

Third parties Electricity Power Trading Company Others Related Parties (Note 35(b)) As at end of year and beginning of year, the amounts of short-term trade accounts receivable that were past due were VND 375.7 million and VND 88.7 million, respectively, as presented in Note 9.

SHORT-TERM PREPAYMENTS TO SUPPLIERS Ending balance VND

Beginning balance VND

NSN Construction and Engineering Joint Stock Company

18,684,421,015

Hawee Industrial Construction Joint Stock Company

17,939,725,941

Sharp Solar Solution Asia Co., Ltd.

48,143,407,904

Others

17,330,116,517

7,090,997,292

1,238,725,000

43,000,000,000

103,336,396,377

50,090,997,292

Third parties

Related Parties (Note 35(b))

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251

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

Form B 09 â&#x20AC;&#x201C; DN/HN

for the year ended December 31st, 2018

SHORT-TERM LENDING Ending balance

Beginning balance

Book value VND

Provision VND

Book value VND

Provision VND

93,843,858,552

(343,858,552)

Short-term loans

Movements in short-term loans during the year are as follows: As at 01.01.2018 VND

Increase/ Reclassification VND

Collection/ Write-off VND

As at 31.12.2018 VND

Tam Binh An Trading Production Joint Stock Company

38,000,000,000

20,000,000,000

(58,000,000,000)

Loc Tho Joint Stock Company

32,000,000,000

(32,000,000,000)

Son Tin Commodity Trading Joint Stock Company

23,500,000,000

(23,500,000,000)

1,800,000,000

(1,800,000,000)

93,500,000,000

21,800,000,000

(115,300,000,000)

343,858,552

(343,858,552)

93,843,858,552

21,800,000,000

(115,643,858,552)

Related Parties (Note 35(b))

Mekong Wind power Joint Stock Company Third party Construction and Electrical Mechanic Joint Stock Company

252

2018 ANNUAL REPORT

OTHER RECEIVABLES

(a) Short-term Ending balance

Beginning balance

Book value VND

Provision VND

Book value VND

Provision VND

16,463,909,157

5,833,879,243

Deposits

6,025,400,697

260.790,000

Interest receivables

5,981,957,931

815,846,709

(11,028,732)

Others

4,378,191,457

2,651,940,041

32,849,459,242

9,562,455,993

(11,028,732)

29,192,055,980

7,830,127,185

(11,028,732)

3,657,403,262

1,732,328,808

32,849,459,242

9,562,455,993

(11,028,732)

Advances to employees

In which: Third parties Related Parties (Note 35(b))

(b) Long-term Ending balance

Long-term deposits Others

Beginning balance

Book value VND

Provision VND

Book value VND

Provision VND

580,158,382

10,266,834,032

696,183,500

(483,828,450)

696,183,500

(345,591,175)

1,276,341,882

(483,828,450)

10,963,017,532

(345,591,175)

Third parties

778,137,500

(483,828,450)

10,464,813,150

(345,591,175)

Related Parties (Note 35(b))

498,204,382

1,276,341,882

(483,828,450)

10,963,017,532

(345,591,175)

In which

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253

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

Form B 09 – DN/HN

for the year ended December 31st, 2018

DOUBTFUL DEBTS Ending balance Book value VND

Recoverable amount VND

Provision VND

Number of overdue years

Gia Lam Joint Stock Company

696,183,500

212,355,050

(483,828,450)

Over 3 years

GKC Co., Ltd.

280,028,312

140,014,156

(140,014,156)

Over 2 years

95,723,356

(95,723,356)

Over 3 years

1,071,935,168

352,369,206

(719,565,962)

i- Receivables, lending that were past due

Others

Beginning balance Cost VND

Recoverable amount VND

Provision VND

Number of overdue years

Construction and Electrical Mechanic Joint Stock Company

343,858,552

(343,858,552)

Over 3 years

Gia Lam Joint Stock Company

696,183,500

350,592,325

(345,591,175)

Over 2 years

88,709,727

(88,709,727)

Over 3 years

11,028,732

(11,028,732)

Over 3 years

1,139,780,511

350,592,325

(789,188,186)

i- Receivables, lending that were past due

Others

ii-Fines, interests arising from overdue receivables Construction and Electrical Mechanic JSC

10 INVENTORIES Ending balance

Beginning balance

Cost VND

Provision VND

Cost VND

Provision VNĐ

14,329,156,851

15,861,000,231

Raw materials

8,039,479,372

8,116,833,651

Tools and supplies

2,353,322,046

2,173,222,883

24,721,958,269

26,151,056,765

Work in progress

As at end of year and beginning of year, certain inventories are pledged with banks for its borrowings (Note 18).

254

2018 ANNUAL REPORT

PREPAID EXPENSES

(a) Short-term Ending balance VND

Beginning balance VND

1,353,395,357

260,157,506

Insurance expenses

983,770,748

78,520,195

Operating lease expenses

574,486,828

Others

898,954,219

438,379,396

3,810,607,152

777,057,097

Ending balance VND

Beginning balance VND

Business advantages generated from equitisation (*)

3,554,964,436

5,687,943,100

Maintenance costs for Hydropower plants

5,649,525,788

888,063,128

Prepaid land rental

5,388,440,016

Tools and supplies

(b) Long-term

Tools, supplies and office equipment

2,658,646,726

2,013,384,053

Others

5,051,065,301

6,212,257,232

22,302,642,267

14,801,647,513

(*) Business advantages generated from the revaluation of Gia Lai Electricity Company for equitisation purpose in accordance with the business revaluation minutes dated October 1st, 2009. Business advantages is amortised using the straight-line method over ten (10) years from the date of equitisation.

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255

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) for the year ended December 31st, 2018

FIXED ASSETS

(a)

Tangible fixed assets

Form B 09 – DN/HN

Buildings and structures VND

Historical cost As at January 1st, 2018 New purchases

887,332,696,943 3,166,817,817

Transfers from construction in progress

102,111,678,139

Other increases

Other decreases

As at December 31st, 2018

992,611,192,899

Accumulated depreciation As at January 1st, 2018 Charge for the year Other decreases

241,993,280,668 39,390,910,228 -

As at December 31 , 2018 st

281,384,190,896

Net book value As at January 1st, 2018

645,339,416,275

As at December 31st, 2018

711,227,002,003

As at end of year, tangible fixed assets with a net book value of VND 2,865.1 billion (at beginning of year: VND 877.6 billion) were pledged with banks as collateral assets for the Group’s borrowings (Note 18). Historical cost of tangible fixed assets which were fully depreciated but still in use was VND 50.9 billion as at end of year (as at beginning of year: VND 21.5 billion).

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2018 ANNUAL REPORT

Machinery and equipment VND

Motor vehicles, transmission VND

Office equipment VND

Others VND

Total VND

529,547,762,731

147,912,289,478

9,216,952,573

60,913,550,598

1,634,923,252,323

1,616,784,600

1,653,044,937

1,231,627,228

7,668,274,582

1,577,344,236,371

667,785,764

25,544,152,954

145,796,821,262

1,851,464,674,490

939,582,567

(404,524,082)

(470,583,637)

(875,107,719)

2,109,043,842,187

148,109,491,605

36,414,150,464

207,941,999,088

3,494,120,676,243

189,113,363,143

60,506,627,859

2,778,958,358

33,093,746,030

527,485,976,058

30,104,653,186

6,491,293,011

1,637,071,991

18,168,403,459

95,792,331,875

(92,705,550)

(300,018,159)

(392,723,709)

219,125,310,779

66,697,902,711

4,416,030,349

51,262,149,489

622,885,584,224

340,434,399,588

87,405,661,619

6,437,994,215

27,819,804,568

1,107,437,276,265

1,889,918,531,408

81,411,588,894

31,998,120,115

156,679,849,599

2,871,235,092,019

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257

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

Form B 09 – DN/HN

for the year ended December 31st, 2018

FIXED ASSETS (continued)

(b)

Intangible fixed assets Land use rights VND

Computer software VND

Others VND

Total VND

6,454,228,000

857,967,791

171,739,184

7,483,934,975

New purchases during the year

140,000,000

Other decreases

(175,000,000)

6,454,228,000

822,967,791

171,739,184

7,448,934,975

As at January 1st, 2018

280,843,635

588,458,771

60,784,875

930,087,281

Charge for the year

111,778,584

114,786,592

30,496,668

257,061,844

(175,000,000)

392,622,219

528,245,363

91,281,543

1,012,149,125

As at January 1st, 2018

6,173,384,365

269,509,020

110,954,309

6,553,847,694

As at December 31st, 2018

6,061,605,781

294,722,428

80,457,641

6,436,785,850

Historical cost As at January 1st, 2018

As at December 31st, 2018 Accumulated amortisation

Other decreases As at December 31st, 2018 Net book value

Historical cost of tangible fixed assets which were fully amortised but still in use was VND 190 million as at end of year (as at beginning of year: VND 175 million). As at end of year, tangible fixed assets with a net book value of VND 6.3 billion were pledged with banks as collateral assets for the Group’s borrowings (Note 18).

258

2018 ANNUAL REPORT

CONSTRUCTION IN PROGRESS

Details of construction in progress by projects are as follows: Ending balance VND

Beginning balance VND

147,982,696,483

49,861,097,907

Ham Phu 1 Solar power project

6,952,411,433

DakPihao 2 Hydropower plant efficiency improvement project

4,741,650,479

ERP implementation project

2,493,159,189

Modernisation project of Dien Phu mechanical factory

1,154,994,931

Phong Dien - Hue Solar power project

1,021,475,172

Krong Pa - Gia Lai Solar power project

8,099,921,229

Binh Thuan Solar power project

6,781,431,865

2,577,231,679

2,143,038,443

215,763,242,101

18,045,866,709

Ham Phu 2 Solar power project Duc Hue 1 - Long An electricity power project

Others

Total interest expense which has been capitalised for the year ended December 31st, 2018 was VND 11.4 billion. As at end of year, the cost of Ham Phu 1 Solar power project was used as collateral assets for a bank loan (Note 18).

14 GOODWILL Goodwill VND

Historical cost As at January 1st, 2018 and as at December 31st, 2018

18,002,047,989

Accumulated amortisation As at January 1st, 2018

8,273,185,549

Amortised during the year

1,800,198,199

As at December 31st, 2018

10,073,383,748

Net book value As at January 1st, 2018

9,728,862,440

As at December 31 , 2018

7,928,664,241

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259

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

Form B 09 â&#x20AC;&#x201C; DN/HN

for the year ended December 31st, 2018

SHORT-TERM TRADE ACCOUNTS PAYABLE Ending balance

Beginning balance

Value VND

Able-to-pay amount VND

Value VND

Able-to-pay amount VND

Sharp Solar Solution Asia Co., Ltd.

108,225,856,168

JGC Vietnam Co., Ltd.

162,923,401,169

NSN Construction and Engineering Joint Stock Company

43,224,521,800

Others

39,331,747,839

10,206,210,364

Related Parties (Note 35(b))

14,508,228,016

5,658,282,219

368,213,754,992 368,213,754,992

15,864,492,583

Third parties

As at end of year and beginning of year, there was no balance of short-term trade accounts payable that was past due.

TAXES AND OTHER PAYABLES TO/RECEIVABLES FROM THE STATE BUDGET Movements in tax and other payables to/receivables from the State Budget during the year are as follows:

(a)

Receivables Taxes and receivables from the State budget mainly include overpaid value added tax on imported goods.

(b)

Payables As at 01.01.2018 VND

Payable during the year VND

5,184,282,586

159,663,174,305

(156,687,433,770)

(3,648,494,421)

4,511,528,700

Business income tax

10,931,051,276

20,645,849,755

(25,814,715,713)

5,762,185,318

Personal income tax

610,624,288

6,997,795,993

(5,928,277,127)

(205,766)

1,679,937,388

Natural resource tax

3,836,318,867

30,615,964,985

(32,294,957,238)

2,157,326,614

Others

1,213,069,399

7,137,936,708

(6,748,035,606)

1,602,970,501

21,775,346,416 225,060,721,746

(227,473,419,454)

(3,648,700,187)

15,713,948,521

Value added tax

260

2018 ANNUAL REPORT

Payment during the year Reclassification VND

As at 31.12.2018 VND

OTHER SHORT-TERM PAYABLES Ending balance VND

Beginning balance VNÄ?

Dividend payable

3,526,499,229

22,519,533,942

Forest environment protection fees

3,424,160,592

3,514,821,083

1,276,957,963

2,912,123,800

8,113,287,347

9,862,783,621

35,424,600,335

2,653,273

1,380,000,000

9,860,130,348

34,044,600,335

Interest expenses Others

In which: Related Parties (Note 35(b)) Third parties

As at end of year and beginning of year, there was no balance of other short term payables past due.

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261

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

Form B 09 – DN/HN

for the year ended December 31st, 2018

18 BORROWINGS (a) Short-term

Beginning balance 01.01.2018 VND

Increase VND

Decrease VND

Classification VND

Ending balance 31.12.2018 VND

Bank borrowings (*)

- 241,466,360,157

(185,523,682,274)

55,942,677,883

Current portion of issued bonds

15,000,000,000

15.000,000,000

5,917,699,000

(11,850,874,000)

41,364,835,000

35,431.660,000

Current portion of long-term borrowings

5,917,699,000 241,466,360,157 (197,374,556,274) 56,364.835,000 106,374,337,883 (*) Details of short-term bank loans as at end of year are as follows: Ending balance VND

Joint Stock Commercial Bank for Foreign Trade of Vietnam (“Vietcombank”) - Gia Lai Branch The Vietnam Bank for Agriculture and Rural Development (“Agribank”) – Gia Lai Branch

Vietcombank - Gia Lai Branch

Vietnam Joint Stock Commercial Bank for Industry and Trade (“VietinBank”) - Gia Lai Branch

Purpose

Maturity

The maximum maturity period of Finance each borrowing 1,000,000 working capital is 6 months from the disbursement date GHC’s 2018 49,986,984,250 dividend payment Management expenses of Ham Phu 2 Binh Thuan, H’Mun and H’Chan Hydropower projects

To May 24th, 2019

Not yet drawdown

Finance 5,954,693,633 To January 2019 working capital

Interest

Collateral assets

(*) Unsecured

Term deposits (Note 4)

All related assets of these projects (Note 11(a))

Movement of accounts (**) receivable and inventories

55,942,677,883 (*) The interest rate is determined on each indebtedness certificate at the drawdown date based on the interest rate announced by Vietcombank - Gia Lai Branch and fixed throughout the borrowing period. (**) The interest rate is adjusted once a month based on the term deposit interest rate in Viet Nam Dong for the 12-month term of ending interest payment of VietinBank - Gia Lai Branch plus funding cost and marginal rate.

262

2018 ANNUAL REPORT

(b) Long-term As at 01.01.2018 VND

Increase VND

Decrease Reclassification VND VND

As at 31.12.2018 VND

232,245,575,182

947,741,544,637

- (41,284,000,000)

1,138,703,119,819

300,000,000,000

- (15,000,000,000)

285,000,000,000

Bond issuance fee

(3,690,000,000)

184,500,000

(3,505,500,000)

Other borrowings

138,494,999

(80,835,000)

57,659,999

1,244,051,544,637 184,500,000 (56,364,835,000)

1,420,255,279,818

Bank borrowings (*) Issued bonds (**)

232,384,070,181

(*) Details of ending balance of long-term bank loans are as followst: Ending balance VND

Purpose

Maturity

Interest and collateral assets

Vietcombank - Gia Lai Branch

To return on 98,024,000,000 investment in Hydropower plants

To October 2022

(i)

Vietcombank - Gia Lai Branch

To invest in Ayun Thuong 1A 56,350,000,000 Hydropower plant project

To December 2021

(ii)

Vietcombank - Gia Lai Branch

To invest in Krong 531,009,004,637 Pa Solar power Plant project

To November 2030

(iii)

Agribank - Gia Lai Branch

To invest in Phong 415,498,000,000 Dien Solar power Plant project

To September 2029

(iv)

VietinBank - Gia Lai Branch

Dien Phu mechanical 4,626,000,000 factory modernization project

To July 2022

(v)

VietinBank - Branch 1 Ho Chi Minh City

To invest in Kenh Bac 5,732,000,000 Ayun Ha Hydropower plant

From September 2015 to June 2022

(vi)

To January 25th, 2026

(vii)

VietinBank - Branch 1 Ho Chi Minh City

To invest in Thuong 62,780,115,182 Lo Hydropower plant project 1,174,019,119,819

Current portion

(35,316,000,000) 1,138,703,119,819

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263

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) for the year ended December 31st, 2018

BORROWINGS (continued)

(b)

Long-term (continued)

Form B 09 – DN/HN

(i) The interest rates in the first 12 months is fixed at 7.5% per annum. In the following years, the interest rate is periodically adjusted every 3 months based on the interest rate of 12-month term deposit in Vietnamese Dong announced by Vietcombank - Gia Lai Branch plus a marginal rate of 2.6% per annum.

Collateral assets include 2 operating offices of the Company, the Group’s Hydropower plants including Ayun Thuong A1, Ayun Ha, Da Khai, Dak Pi Hao 1, Dak Pi Hao 2, Ia Puch 3, Ia Drang 2, Ia Drang 3, Ia Meur 3, H’Mun and H’Chan (Note 12).

(ii) The interest rate is periodically adjusted every 3 months based on the interest rate of 12-month term deposit in Vietnamese Dong announced by Vietcombank - Gia Lai Branch branch plus a marginal rate of 3% per annum.

Collateral asset is Ayun Thuong A1 Hydropower plant (Note 12).

(iii) The interest rate for the first 12 months is fixed at 7.8% per annum. In the following years, the interest rate is periodically adjusted every 3 months based on the interest rate of 12-month term deposit in Vietnamese Dong announced by Vietcombank - Gia Lai branch plus a marginal rate of 2.6% per annum.

Collateral assets include the Krong Pa Solar power project, the Group’s Hydropower plants including Ayun Thuong A1, Ayun Ha, Da Khai, Dak Pi Hao 1, Dak Pi Hao 2, Ia Puch 3, Ia Drang 2, Ia Drang 3, Ia Meur 3 (Note 12), 11,919,364 shares invested in Gia Lai Hydropower Company and a guarantee from a Shareholder.

(iv) The interest rate for the term loan applied to each repayment period is calculated by the interest rate of 12-month term deposit in Vietnamese Dong announced by Agribank - Gia Lai Branch at the first day of the term repayment of interest plus 2.7% per year (2.5% for the first year).

Collateral asset is Phong Dien Solar power project (Note 12).

(v) The interest rate is fixed in the first 36 months from the first disbursement date. The interest rate is periodically adjusted every 12 months based on the interest rate of 12-month term deposit in Vietnamese Dong announced by VietinBank - Gia Lai Branch plus funding cost and a marginal rate.

Collateral assets are future assets and land use rights (Note 12, 13).

(vi) The interest rate is periodically adjusted once a month based on the interest rate of 12-month term deposit in Vietnamese Dong announced by Vietinbank plus the marginal rate. In case, the above interest rate is lower than the interest rate announced by Vietinbank, the interest rate is the one announced by Vietinbank at the announcement date of interest rate.

264

Collateral asset is Kenh Bac - Ayun Ha Hydropower plant (Note 12).

2018 ANNUAL REPORT

(vii) The interest rate is defined on each indebtedness certificate and periodically adjusted every 3 months based on the interest rate of 12-month term deposit in Vietnamese Dong announced by Vietcombank - Branch 1 Ho Chi Minh City plus funding cost and a marginal rate of 3% per annum.

Collateral asset is Thuong Lo Hydropower plant (Note 12).

(**) Issued bonds

Pursuant to Decisions No. 05/2018/QĐ-HDQT dated February 5th, 2018 and No.18/2018/NQ-HDQT dated May 8th, 2018 of the Board of Directors about bond issuance to the primary market. The Group has appointed Vietcombank Securities Limited Company – Gia Lai Branch as the issuance agency, registration agency and transferring management agency relating to bond issuance with the limit up to VND 900 billion which is divided into 3 phases to finance the Group’s projects.

As at June 29th, 2018, the Group completed the first issuance phase with 300 bonds issued at fair value of VND 1 billion per bond, the interest rate of 7.8% per annum within 10 years from the issuance date to invest in the Phong Dien and Krong Pa Solar power plants.

Collateral assets for this bond include the Krong Pa Solar power project, the Group’s Hydropower projects including Ayun Thuong A1, Ayun Ha, Da Khai, Dak Pi Hao 1, Dak Pi Hao 2 , Ia Puch 3, Ia Drang 2, Ia Drang 3, Ia Meur 3 (Note 12), and 11,919,364 shares invested in GHC and guarantee letter from a Shareholder.

BONUS AND WELFARE FUND Movements in bonus and welfare fund during the year are as follows: Current year VND

Previous year VND

Beginning of year

17,259,147,276

13,609,408,324

Increase during year (Note 23)

15,520,745,606

14,690,600,847

Payment during year

(11,989,799,382)

(11,040,861,895)

End of year

20,790,093,500

17,259,147,276

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265

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

Form B 09 â&#x20AC;&#x201C; DN/HN

for the year ended December 31st, 2018

PROVISION FOR LONG-TERM LIABILITIES Provision for long-term liabilities represents provision for severance allowance to employees.

DEFERRED INCOME TAX Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes relate to the same taxation authority. The offset amounts are as follows: Current year VND

Previous year VND

Deferred tax assets: Deferred tax assets to be recovered after more than 12 months

6,728,026,301

5,267,241,281

Deferred tax liabilities: Deferred tax liabilities to be recovered after more than 12 months

(493,557,292)

6,234,469,009

5,267,241,281

Movements in the deferred income tax, taking into consideration the offsetting of balances within the same tax jurisdiction, are as follows:

Beginning of year Consolidated income statement credit (Note 32) End of year

Current year VND

Previous year VND

5,267,241,281

4,985,828,751

967,227,728

281,412,530

6,234,469,009

5,267,241,281

Details of deferred tax assets and deferred tax payable are as follows:

Severance allowance Movement of unrealised profit

Current year VND

Previous year VND

650,011,700

6,234,469,009

4,617,229,581

6,234,469,009

5,267,241,281

The tax rate which was used to decide the value of deferred tax assets and deferred tax payables for the year ended December 31st, 2018 and the year ended December 31st, 2017 was 20%. Deferred income tax assets are recognised to the extent that it is probable that future taxable income will be available against which the temporary differences can be utilised.

â&#x20AC;&#x192;

266

2018 ANNUAL REPORT

22 (a)

OWNERS’ CAPITAL Number of shares

Number of registered shares, issued shares and shares in circulation

(b)

Beginning balance

194,182,550

97,091,275

Details of owners’ capital

Ending balance Ordinary shares VND

Beginning balance % Ordinary shares VND

Thanh Thanh Cong Investment Joint Stock Company

447,142,960,000

23.0

222,000,000,000

22.9

Ben Tre Import Export Joint - Stock Company (former Global Mind Viet Nam Joint Stock Company)

444,005,800,000

22.9

222,002,900,000

22.9

AVH Pte. Ltd.

390,571,740,000

20.1

179,225,350,000

18.5

International Finance Corporation

285,145,820,000

14.7

142,572,910,000

14.7

Ms Dang Huynh Uc My

98,599,960,000

5.1

Saigon Thuong Tin Commercial Joint Stock Bank

47,609,988,000

4.9

1,325,000,000

0.1

3,312,000,000

0.3

275,034,220,000

14.1

154,189,602,000

15.8

1,941,825,500,000

100.0

970,912,750,000

100.0

Saigon – Hanoi Securities Joint Stock Company Others

(c)

Ending balance

Movement of share capital Number of shares

Par value VND

As at January 1st, 2017

74,490,339

744,903,390,000

Dividends paid by shares

14,897,985

148,979,850,000

7,702,951

77,029,510,000

As at December 31 , 2017

97,091,275

970,912,750,000

New shares issued (Note 23) (*)

97,091,275

970,912,750,000

194,182,550

1,941,825,500,000

New shares issued st

As at December 31 , 2018 st

Par value per share: VND 10,000. The Company has no preference shares. (*) During the year, the Company has issued additional shares to increase its charter capital in accordance with the Resolution of the Annual General Meeting of Shareholders No. 1/2018/NQ-DHDCD dated March 20th, 2018. www.geccom.vn

267

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

Form B 09 – DN/HN

for the year ended December 31st, 2018

MOVEMENTS IN OWNERS’ EQUITY

Owners’ capital VND

Share premium VND

As at January 1st, 2017

744,903,390,000

1,980,358,653

Dividends paid by shares

148,979,850,000

77,029,510,000

26,960,328,500

Net profit for the year

Appropriation to investment and development fund

Appropriation to bonus and welfare fund

Decrease due to changing ownership interest in Subsidiaries

Dividends declared

Capital contributions from non-controlling Shareholders

As at December 31st, 2017

970,912,750,000

28,940,687,153

New shares issued

970,912,750,000

23,048,000

Net profit for the year

Appropriation to investment and development fund

Appropriation to bonus and welfare fund

Decrease due to changing ownership interest in Subsidiaries

Capital contributions from non-controlling Shareholders

Dividends declared

Other adjustments

1,941,825,500,000

28,963,735,153

New shares issued

As at December 31st, 2018

268

2018 ANNUAL REPORT

Investment and development fund VND

Undistributed earnings VND

Non-controlling interests VND

Total VND

49,052,343,723

168,385,738,484

186,360,782,795

1,150,682,613,655

(148,979,850,000)

103,989,838,500

153,768,995,113

55,532,198,082

209,301,193,195

14,690,600,847

(14,690,600,847)

(12,110,449,304)

(2,441,319,327)

(14,551,768,631)

(7,395,043,579)

(26,362,331,003)

(69,138,714,592)

(102,896,089,174)

(29,508,840,780)

1,000,000,000

56,347,900,991

120,011,502,443

141,804,106,178

1,318,016,946,765

970,935,798,000

144,693,225,170

42,573,505,503

187,266,730,673

7,752,056,298

(7,752,056,298)

(13,371,829,266)

(2,128,916,340)

(15,500,745,606)

(100,494)

100,494

78,880,000,000

(97,091,275,000)

(34,572,144,000)

(131,663.419,000))

(3,131,848,242)

(1,404,942,096)

4,536,790,338

60,968,109,047

145,084,524,459

231,093,442,173

2,407,935,310,832

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269

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

Form B 09 â&#x20AC;&#x201C; DN/HN

for the year ended December 31st, 2018

EARNINGS PER SHARE

(a)

Basic earnings per share Current year

Previous year

Net profit after tax attributable to the parent company (VND)

144,693,225,170

153,768,995,113

Less amount appropriated to bonus and welfare fund (VND) (*)

(13,371,829,266)

(10,582,679,714)

131,321,395,904

143,186,315,399

121,792,405

82,936,089

1,078

1,726

Weighted average number of ordinary shares in circulation (shares) Basic earnings per share (VND)

(*) Estimated amounts appropriated to bonus and welfare funds are determined based on the plan for profit distribution of the Group.

(b)

Diluted earnings per share The Company has no dilutive potential ordinary shares.

OFF BALANCE SHEET ITEMS

(a)

Foreign currencies Included in cash and cash equivalents are balances held in foreign currencies of US$25,836.3 (as at December 31st, 2017: US$1,075.6).

(b)

Operating lease assets The future minimum lease payments under non-cancellable operating leases were VND 44.9 billion and VND 46.9 billion for the year ended December 31st, 2018 and December 31st, 2017, respectively (Note 37).

Net Revenue FROM SALES OF GOODS AND RENDERING OF SERVICES Current year VND

Previous year VND

483,456,423,005

484,472,843,901

Revenue from construction contracts (*)

56,675,427,818

32,823,441,537

Revenue from rendering of services

19,356,624,052

21,803,846,879

559,488,474,875

539,100,132,317

2018 VND

2017 VND

142,197,472,034

85,522,044,216

Revenue from sale of electricity

(*) Accumulated Revenue from construction contracts

Accumulated Revenue from construction contract until the date of consolidated financial statements

270

2018 ANNUAL REPORT

COST OF GOODS SOLD AND SERVICES RENDERED Current year VND

Previous year VND

194,918,521,584

183,585,769,144

51,088,851,732

28,999,582,621

7,480,588,340

14,710,748,447

253,487,961,656

227,296,100,212

Current year VND

Previous year VND

15,949,363,169

17,990,691,768

3,131,833,332

373,558,154

2,648,781

19,454,754,655

17,993,340,549

Current year VND

Previous year VND

40,157,402,594

24,380,235,807

980,500,640

247,107,023

41,137,903,234

24,627,342,830

Current year VND

Previous year VND

33,682,530,451

29,218,647,869

Depreciation and amortisation

3,526,114,038

2,732,533,622

Tools and supplies

2,139,098,670

1,016,722,943

Outside service expenses

6,969,120,707

3,009,911,996

30,319,250,037

29,076,078,346

76,636,113,903

65,053,894,776

Cost of electricity sold Cost of construction contracts Cost of services rendered

FINANCIAL INCOME

Interest income from deposits and lending Interest income from advance payment Others

FINANCIAL EXPENSES

Interest expense Others

GENERAL AND ADMINISTRATION EXPENSES

Staff costs

Others

www.geccom.vn

271

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

Form B 09 – DN/HN

for the year ended December 31st, 2018

NET OTHER EXPENSES Current year VND

Previous year VND

964,519,279

573,994,512

45,798,158

750,115,899

1,412,820,527

861,416,118

2,423,137,964

2,185,526,529

901,122,047

1,819,316,835

7,504.802,919

Other income Rental income Gains on disposal of fixed assets Others Other expenses Cost of rental services Write-off projects Fines Others Net other loss

1,297,364,174

378,644,281

1,580,647,393

2,577,130,502

10,904,767,147

(153,992,538)

(8,719,240,618)

BUSINESS INCOME TAX The business income tax (“BIT”) rate applicable to the Group is 20% of taxable income. For Hydropower projects, the tax incentives are applied in accordance with the Certificate of Investment Incentive and regulations of tax incentives under Article 23, Circular No. 78/2014/TT-BTC (“Circular 78”) - Guiding on the implementation of the Government’s Decree No. 218/2013/ND-CP dated December 26th, 2013, which regulate and guide the implementation of BIT Law, as follows:

Gia Lai Electricity Joint Stock Company’s projects •

For Ia Drang 2 Hydropower Plant - 35KV transmission line 371/F7 Chu Prong - Tra Ba: the Group has the obligation to pay BIT at the prevailing rate, and is entitled to an exemption from BIT for four (4) years commencing from the first year in which a taxable income is earned (from 2006 to 2009), and a 50% reduction for the following nine (9) years for the additional income earned from the investment project (from 2010 to 2018). This privilege is specified in the Certificate of Investment Incentives No. 400/GCN-UB dated March 16th, 2005 issued by the People’s Committee of Gia Lai Province.

•

For Ia Drang 3 Hydropower Plant: the Group has the obligation to pay BIT at the rate of 15% of taxable income during the incentive period (from 2005 to 2015), and is entitled to an exemption from BIT for four (4) years commencing from the first year in which a taxable income is earned (from 2005 to 2008) and a 50% reduction for the following seven (7) years for the additional income earned from this project (from 2009 to 2015). According to the Official Letter No. 11684/BTC-TCT dated September 16th, 2005 - Guiding the transfer of business income tax rates of the Ministry of Finance (“Official Letter No.11684/BTC-TCT”), the prevailing BIT rate for the project is 10%. The incentive period is extended for two (2) years (from 2016 to 2017) in accordance with guidelines on conversion of incentives in Clause 2, Article 23 of Circular 78.

•

For Ia Meur 3 Hydropower Plant: the Group has the obligation to pay BIT at the rate of 15% of taxable income during the incentive period (from 2005 to 2015), and is entitled to an exemption from BIT for four (4) years commencing from the first year in which a taxable income is earned (from 2005 to 2008) and a 50% reduction for the following seven (7) years for the additional income earned from this project (from 2009 to 2015). According to Official Letter No.11684/BTC-TCT, the prevailing BIT rate of the project is 10%. The incentive period is extended for two (2) years (from 2016 to 2017) in accordance with guidelines on conversion of incentives in Clause 2, Article 23 of Circular 78.

• For Da Khai Hydropower Plant: the Group has the obligation to pay BIT at the rate of 10% of a taxable income and is entitled to an exemption from BIT for four (4) years commencing from the first year in which a taxable income is earned (from 2011 to 2014) and a 50% reduction for the following nine (9) years for the additional income earned from this project (from 2015 to 2023). 272

2018 ANNUAL REPORT

•

For Dak Pi Hao 1 Hydropower Plant: the Group has the obligation to pay BIT at the rate of 10% of taxable income and is entitled to an exemption from BIT for four (4) years commencing from the first year in which a taxable income is earned (from 2014 to 2017) and a 50% reduction for the following nine (9) years for the additional income earned from this project (from 2018 to 2026).

•

For Ayun Thuong 1A Hydropower Plant: the Group has the obligation to pay BIT at the rate of 10% of taxable income and is entitled to an exemption from BIT for four (4) years commencing from the first year in which a taxable income is earned (from 2011 to 2014) and a 50% reduction for the following nine (9) years for the additional income earned from this project (from 2015 to 2023).

•

For Dak Pi Hao 2 Hydropower Plant: the Group has the obligation to pay BIT at the prevailing rate and is entitled to an exemption from BIT for four (4) years commencing from the first year in which a taxable income is earned (from 2008 to 2011) and a 50% reduction for the following seven (7) years (from 2012 to 2018). The incentive period is extended for two (2) years (from 2019 to 2020) in accordance with guidelines on conversion of incentives in Clause 2, Article 23 of Circular 78.

• For Ia Puch 3 Hydropower Plant: the Group has the obligation to pay BIT at the incentive rate and is entitled to an exemption from BIT for four (4) years commencing from the first year in which a taxable income is earned (from 2009 to 2012) and a 50% reduction for the following seven (7) years (from 2013 to 2019). The incentive period is extended for two (2) years (from 2020 to 2021) in accordance with guidelines on conversion of incentives in Clause 2, Article 23 of Circular 78. • For Phong Dien Solarpower Project: the Group has the obligation to pay BIT at the prevailing rate and is entitled to an exemption from BIT for four (4) years commencing from the first year in which a taxable income is earned, the Group registered tax exemption from 2019 to 2022 and a 50% reduction for the following nine (9) years for the for the additional income generated by the investment project (from 2023 to 2031). • For Krong Pa Solarpower Project: the Group has the obligation to pay BIT at the prevailing rate and is entitled to an exemption from BIT for four (4) years commencing from the first year in which a taxable income is earned, the Group registered tax exemption from 2019 to 2022 and a 50% reduction for the following nine (9) years for the for the additional income generated by the investment project (from 2023 to 2031).

Gia Lai Hydropower Joint Stock Company’s projects •

For H’Chan Hydropower Project, the Group has the obligation to pay BIT at the rate of 10% of taxable income for fifteen (15) years since the project has been operated (2006), and is entitled to an exemption from BIT for four (4) years (from 2006 to 2009), and a 50% reduction for the following nine (9) years (from 2010 to 2018) commencing from the first year in which a taxable income is earned.

•

For H’Mun Hydropower Project, the Group is entitled to a 50% reduction for nine (9) years (from 2015 to 2023).

Kenh Bac - Ayun Ha Hydropower Joint Stock Company’s project •

For Kenh Bac - Ayun Ha Hydropower Plant, the Group is entitled to an incentive tax rate of 10% of taxable income for fifteen (15) years commencing since the project has operated, and is entitled to an exemption from BIT for four (4) years (from 2012 to 2015), and a 50% reduction for the following nine (9) years (from 2016 to 2024) commencing from the first year in which a taxable income is earned.

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273

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

Form B 09 – DN/HN

for the year ended December 31st, 2018

BUSINESS INCOME TAX (continued) Thuong Lo Hydropower One - member Limited Company’s project • For Thuong Lo Hydropower Plant, the Group is entitled to an incentive tax rate of 10% of taxable income for fifteen (15) years commencing since the project has operated, and is entitled to an exemption from BIT for four (4) years (from 2016 to 2019), and a 50% reduction for the following nine (9) years (from 2020 to 2028) commencing from the first year in which a taxable income is earned. The BIT on the Group’s profit before tax differs from the theoretical amount that would arise using the applicable tax rate of 20% as follows: Current year VND

Previous year VND

206,938,771,984

230,436,844,464

Expenses not deductible for tax purposes

20,241,565,897

13,767,996,800

Income not subject to tax

(7,830,563,390)

Estimated taxable income

219,349,774,491

244,204,841,264

Tax at the tax rate of 20%

22,976,435,850

31,180,522,450

Tax at the tax rate of 10%

10,446,759,524

8,830,222,901

(13,911,278,688)

(19,248,305,390)

160,124,625

373,211,308

19,672,041,311

21,135,651,269

20,639,269,039

21,417,063,799

(967,227,728)

(281,412,530)

19,672,041,311

21,135,651,269

Net accounting profit before tax Effect of:

Tax incentives Under provisions from previous year BIT charge (*) Charged/(credited) to the final consolidated income statement: BIT - current BIT - deferred (Note 21) (**)

(*) The BIT charge for the year is based on estimated taxable income and is subject to review and possible adjustments by the tax authorities. (**) Deferred BIT expense incurred mainly temporary differences when calculating current BIT.

274

2018 ANNUAL REPORT

COST OF OPERATION BY FACTOR Current year VND

Previous year VND

Staff costs

77,826,358,606

70,684,740,187

Depreciation and amortisation

95,023,979,091

79,519.881,720

Raw materials

58,129,344,917

63,575,982,900

Outside service expenses

26,212,093,402

17,409,334,939

Others

54,659,948,088

62,120,105,208

311,851,724,104

293,310,044,954

ADDITIONAL INFORMATION FOR THE ITEMS OF THE CONSOLIDATED CASH FLOW STATEMENT

(a)

Non-cash transactions affect the consolidated cash flow statement:

Assets purchased/ in construction but have not yet paid for

(b)

Previous year VND

342,494,918,098

Current year VND

Previous year VND

1,189,207,904,794

97,718,611,173

300,000,000,000

Current year VND

Previous year VND

197,374,556,274

162,629,325,825

Amount of loan actually withdrawn during the year

Proceeds from borrowings following normal borrowing contracts Proceeds from bonds issuance

(c)

Current year VND

Amount of loan principal actually paid during the year

Repayments for borrowings following normal borrowing contracts

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275

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

Form B 09 â&#x20AC;&#x201C; DN/HN

for the year ended December 31st, 2018

RELATED PARTY DISCLOSURES

(a)

Related party transactions During the year, the significant transactions were carried out with Related Parties as follows:

Related party

Relationship

Transaction Revenue from sales of goods and rendering of service

Thanh Thanh Cong Investment Joint Stock Company

Shareholder

1,261,913,098

Purchase of goods and services

39,000,670,651

3,711,873,285

Advance to purchase of goods

1,238,725,000

1,153,041,862

Interest income from late payment Purchase of fixed assets Expenses paid on behalf Capital contribution

Ben Tre Import Export Joint Stock Company (former Global Mind Viet Nam Joint Stock Company)

Shareholder

Central Power Corporation

Other related party

Thanh Thanh Cong Packing Trading Other related - Production Joint Stock Company party

276

2018 ANNUAL REPORT

Current year Previous year VND VND

Purchase of goods and services Sales of electricity

959,770,939

49,999,998

78,780,000,000

12,040,000

371,036,450,163 389,565,355,698

Dividends declared

2,400,000,000

1,980,000,000

Other

2,140,363,499

Loan granted

30,000,000,000

Collection of lending

30,000,000,000

Interest income

1,844,250,001

Related party

Son Tin Commodity Trading Joint Stock Company

Relationship

Other related party

Tam Binh An Trading Production Joint Stock Company

Other related party

Loc Tho Joint Stock Company

Other related party

Thanh Thanh Cong Tourism Joint Stock Company

Other related party

TTC Energy Joint Stock Company

Other related party

Current year VND

Previous year VND

23,500,000,000

74,000,000,000

3,131,833,332

2,121,930,557

607,977,550 -

3,107,556,944 43,000,000,000

3,561,023,867

43,000,000,000 20,000,000,000 2,878,607,308 58,000,000,000

23,500,000,000 61,000,000,000 3,187,200,000 23,000,000,000

32,000,000,000

827,884.323

1,946,666,667

32,000,000,000

1,910,166,401

7,257,866,636

92,454,545

10,203,254,726

507,871,000

30,400,000

349,720,553

1,119,399,000

Purchase of goods and services

59,850,000

Revenue from sales of goods and rendering of services

90,545,460

97,145,460

Loan granted

500,000,000

Collection of lending Interest income Revenue from sales of goods and rendering of service Revenue from sales of goods and rendering of services Expenses paid on behalf Collection of lending Interest expense

500,000,000 4,513,889

716.985.000

63,285,648,934

37,538,759,122

2,599,545 -

7,575,613 500,000,000 2,236,111

27,709,999

Transaction

Collection of lending Interest income from advance payments Interest income Advance payments Revenue from sales of goods and rendering of services Loan granted Collection of advance payments Loan granted Interest income Collections of lending Collection of lending Interest income Loans granted Purchase of goods and services Revenue from sales of goods and rendering of services Purchase of goods and services Expenses paid on behalf

Thanh Thanh Cong Tay Ninh Sugar Joint Stock Company

Other related party

TTC Attapeu Cane Sugar Other related Limited Company party

Thuong Tin Tau Cuoc Joint Stock Company

Other related party

Truong Phu Other related Hydropower Joint Stock party Company Thanh Thanh Cong Tourism Joint Stock Company - BenTre Branch - Travel Center

Other related party

Revenue from sales of goods and rendering of services

Purchase of goods and services

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) for the year ended December 31st, 2018

RELATED PARTY DISCLOSURES (continued)

(a)

Related party transactions (continued) Current year Previous year VND VND

Related party

Relationship

Transaction

Bien Hoa - Ninh Hoa Sugar Joint Stock Company

Other related party

Revenue from sales of goods and rendering of services

830,152,728

642,432,000

Revenue from sales of goods and rendering of services

141,272,728

1,800,000,000

12,180,822

1,800,000,000

Mekong Wind power Joint Stock Company

Other related party Loan granted Interest income from lending Collection of lending

Thanh Binh Tourism Joint Stock Company

Other related party Purchase of services

405,748,008

172,345,456

Thanh Nien Printing Joint Stock Company

Other related party Purchase of services

97,381,091

Thanh Thanh Nam Joint Stock Company

Other related party

2,150,135,247

1,162,356,286

498,204,382

Bien Hoa - Phan Rang Sugar Joint Stock Company

Other related party

Revenue from sales of goods and rendering of services

476,400,000

TTC Bien Hoa Sugar Joint Stock Company

Other related party

Revenue from sales of goods and rendering of services

210,242,000

Nuoc Trong Sugar Joint Stock Company

Other related party

Revenue from sales of goods and rendering of services

1,300,000,000

TTC Bien Hoa - Dong Nai Sugar One Member Limited Company

Other related party

Revenue from sales of goods and rendering of services

3,171,000,000

Thanh Thanh Cong Gia Lai One Member Limited Company

Other related party

Revenue from sales of goods and rendering of services

805,000,000

669,276,744

1,438,998,762

6,672,727

34,360,818

Purchase of goods and services Deposit for office rental

Gia Lai Irrigation Works Operating Other related party Purchase of services Limited Company TTC Green Energy Investment Joint Stock Company

Other related party

Branch of Thang Loi Tourism Joint Stock Company - TTC Hotel Premium - Phan Thiet

Other related party Purchase of services

Ninh Hoa Thermal Electricity One Member Limited Company

Other related party

Branch of Thang Loi Tourism Joint Stock Company TTC Palace Binh Thuan

Other related party Purchase of services

19,031,818

Sonadezi College of Technology and Management

Other related party Purchase of services

402,000,000

8,525,863,522

9,563,379,274

Compensation of Board of Management, Board of Supervision, and Board of Directors

278

Form B 09 â&#x20AC;&#x201C; DN/HN

2018 ANNUAL REPORT

Revenue from sales of goods and rendering of services

Gross salaries and other benefits

(b)

Year end balances with Related Parties Ending balance VND

Beginning balance VND

873,903,324

Central Power Corporation

38,744,337,198

63,527,729,737

Truong Phu Hydropower Joint Stock Company

21,381,608,303

286,440,000

Bien Hoa - Ninh Hoa Sugar Joint Stock Company

181,728,000

494,672,640

TTC Tourism Joint Stock Company - Can Tho Branch

100,000,000

27,801,000

150,000,000

61,595,817,825

64,172,402,377

1,238,725,000

43,000,000,000

1,238,725,000

43,000,000,000

Tam Binh An Trading Production Joint Stock Company

38,000,000,000

Loc Tho Joint Stock Company

32,000,000,000

Son Tin Commodity Trading Joint Stock Company

23,500,000,000

93,500,000,000

Short-term trade accounts receivable (Note 5) Shareholder Thanh Thanh Cong Investment Joint Stock Company Other Related Parties

TTC Bien Hoa Sugar Joint Stock Company

Ninh Hoa Thermal Power Joint Stock Company Thanh Thanh Cong Tourism Joint Stock Company Short-term prepayments to suppliers (Note 6) Shareholder Thanh Thanh Cong Investment Joint Stock Company Other related party Son Tin Commodity Trading Joint Stock Company Short-term lending (Note 7) Other Related Parties

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279

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

Form B 09 â&#x20AC;&#x201C; DN/HN

for the year ended December 31st, 2018

RELATED PARTY DISCLOSURES (continued)

(b)

Year end balances with Related Parties (continued) Ending balance VND

Beginning balance VND

74,987,498

80,104,604

3,367,615,868

Other individual

80,000,000

Truong Phu Hydropower Joint Stock Company

62,509,896

55,638,122

Mekong Wind power Joint Stock Company

38,850,000

TTC Energy Joint Stock Company

Other short-term receivables (Note 8(a)) Shareholder Thanh Thanh Cong Investment Joint Stock Company Other Related Parties Central Power Corporation

33,440,000

278,840,248

Son Tin Commodity Trading Joint Stock Company

559,412,500

Tam Binh An Trading Production Joint Stock Company

327,222,222

Loc Tho Joint Stock Company

275,555,556

Thanh Thanh Cong Packing Trading Production Joint Stock Company

155,555,556

3,657,403,262

1,732,328,808

498,204,382

12,816,612,422

4,108,569,869

1,379,200,000

504,000.000

183,212,000

687,572,430

TTC Energy Joint Stock Company

65,608,994

Thanh Binh Tourism Joint Stock Company

48,809,000

Thanh Thanh Nam Joint Stock Company

14,785,600

24,889,920

333,250,000

14,508,228,016

5,658,282,219

Other long-term receivables (Note 8(b)) Other related party Thanh Thanh Nam Joint Stock Company Other short-term payable (Note 15) Shareholder Thanh Thanh Cong Investment Joint Stock Company Other Related Parties Truong Phu Joint Stock Company Thanh Thanh Cong Tourism Joint Stock Company

Thanh Thanh Cong Tay Ninh Sugarcane Joint Stock Company

280

2018 ANNUAL REPORT

Ending balance VND

Beginning balance VND

434,251,083

2,360,464,630

Short-term advances from customers Shareholder Thanh Thanh Cong Investment Joint Stock Company Other Related Parties Truong Phu Hydropower Joint Stock Company Gia Lai Termal Power One Member Limited Company

550,000,000

Thanh Thanh Cong - Bien Hoa Joint Stock Company

252,868,000

TTC Green Energy Investment Joint Stock Company

56,532,094

437,362,987

1,296,763,081

3,344,715,713

1,380,000,000

Thanh Binh Tourism Joint Stock Company

1,421,273

Thanh Thanh Cong Investment Joint Stock Company

1,232,000

2,653,273

1,380,000,000

Bien Hoa Thanh Long Joint Stock Company Other short-term payable (Note 17) Other Related Parties Central Power Corporation

SEGMENT REPORTING The primary segment reporting format is determined to be business segments as the Group’s risks and rates of return are affected predominantly by differences in the products and services produced. Secondary information is reported geographically. The operating businesses are organised and managed separately according to the nature of the products and services provided, with each segment representing a strategic business unit that offers different products and serves different markets. For management purposes, the Group is organised into business units based on their products and services, and has reportable operating segments as follows: • Manufacturing and selling electricity: manufacture, transmit and distribute electricity; • Construction services: construct Hydropower factories, small and medium civil projects; and • Rendering of services: consult, maintain and operate Hydropower projects.

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281

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

Form B 09 – DN/HN

for the year ended December 31st, 2018

SEGMENT REPORTING (continued) The Group’s business segment for the year ended December 31st, 2018 is as follows: Electricity VND

Construction services VND

Rendering of services VND

Elimination VND

Total VND

Sales to external customers

483,456,423,005

56,675,427,818

19,356,624,052

559,488,474,875

Sales to internal customers

7,765,246,789

(7,765,246,789)

483,456,423,005 56,675,427,818 27,121,870,841 (7,765,246,789)

559,488,474,875

Revenue

Total Revenue Result Segment gross profit

288,537,901,421

5,586,576,086

7,214,701,912

4,661,333,800

Unallocated expenses

306,000,513,219 (77,224,600,118)

Financial income

19,454,754,655

Financial expenses

(41,137,903,234)

Other losses

(153,992,538)

Net profit before BIT

206,938,771,984

BIT - current

(20,639,269,039)

BIT - deferred

967,227,728

Profit after BIT

187,266,730,673

Assets and liabilities as at 31.12.2018 Segment assets

3,355,110,731,014

51,519,293,819

92,517,646,747

Unallocated assets

861,411,234,157

Total assets Segment liabilities Unallocated liabilities Total liabilities

282

2018 ANNUAL REPORT

3,499,147,671,580 4,360,558,905,737

1,860,749,150,049

31,868,931,820

59,429,540,664

1,952,047,622,533 575,972,372 1,952,623,594,905

The Groupâ&#x20AC;&#x2122;s business segment for the year ended December 31st, 2017 is as follows: Electricity VND

Construction services VND

Rendering of services VND

Elimination VND

Total VND

484,472,843,901

32,823,441,537

21,803,846,879

539,100,132,317

1,234,407,576

2,078,366,272

10,217,854,552

(13,530,628,400)

485,707,251,477 34,901,807,809 32,021,701,431 (13,530,628,400)

539,100,132,317

Revenue Sales to external customers Sales to internal customers Total Revenue

Result Segment gross profit

300,887,074,757

4,071,275,412

6,627,407,528

218,274,408

Unallocated expenses

311,804,032,105 (66,013,944,742)

Financial income

17,993,340,549

Financial expenses

(24,627,342,830)

Other income

(8,719,240,618)

Net profit before BIT

230,436,844,464

BIT - current

(21,417,063,799)

BIT - deferred

281,412,530

Profit after BIT

209,301,193,195

Assets and liabilities as at 31.12.2017 Segment assets

1,145,393,736,159

30,463,467,029

77,847,136,320

Unallocated assets

404,904,694,537

Total assets Segment liabilities Unallocated liabilities Total liabilities

1,253,704,339,508 1,658,609,034,045

295,795,643,771

1,674,103,505

15,255,768,352

312,725,515,628 27,866,571,652 340,592,087,280

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283

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

Form B 09 â&#x20AC;&#x201C; DN/HN

for the year ended December 31st, 2018

COMMITMENTS UNDER OPERATING LEASES The future minimum lease payments under non-cancellable operating leases were as follows: Ending balance VND

Beginning balance VND

5,349,287,715

5,645,890,721

Between one and five years

11,316,571,460

12,496,069,803

Over five years

28,232,489,513

28,839,736,430

44,898,348,688

46,981,696,954

Within one year

Total minimum payments

CAPITAL COMMITMENTS IN THE ESTABLISHMENT OF OTHER ENTERPRISES As at the date of the consolidated balance sheet, the Company has participated in the establishment of enterprises with the committed capitals as follows:

(a)

Enterprises have not been contributed yet Percentage of interest over charter capital

(b)

284

TTC Nhi Ha - Ninh Thuan Electricity Joint Stock Company

TTC Nhi Ha - Ninh Thuan Solar Power Joint Stock Company

TTC Nhi Ha - Ninh Thuan Energy Joint Stock Company

TTC Ham Thuan Bac - Binh Thuan Electricity Joint Stock Company

TTC Ham Thuan Bac - Binh Thuan Solar Power Joint Stock Company

TTC Bac Binh - Binh Thuan Electricity Joint Stock Company

TTC Bac Binh - Binh Thuan Solar Power Joint Stock Company

TTC Bac Binh - Binh Thuan Energy Joint Stock Company

Enterprises have been contributed Registered percentage of interest %

Amount committed to contribute VND

Amount contributed VND

Amount to be contributed VND

TTC Tay Son - Binh Dinh Solar Power Joint Stock Company

105,570,000,000

2,550,000,000

103,020,000,000

TTC Tay Son - Binh Dinh Electricity Joint Stock Company

105,570,000,000

2,550,000,000

103,020,000,000

TTC Duc Hue - Long An Electricity Joint Stock Company (*)

82,620,000,000

TTC Duc Hue - Long An Solar Power Joint Stock Company (**)

82,620,000,000

2,550,000,000

80,070,000,000

2018 ANNUAL REPORT

(b)

Enterprises have been contributed (continued) (*) At the date of the consolidated balance sheet, the Group have committed to buy 8,262,000 additional shares equivalent to VND 82.620 billion of TTC Duc Hue - Long An Electricity Joint Stock Company after this company increased its share capital from VND 162 billion to VND 324 billion in accordance with the third amendment of the Enterprise Registration Certificate No. 111860490 issued by the Department of Planning and Investment of Long An Province on 7 January 2019. (**) In January 2019, the Group has fully contributed an amount of VND 80.070 billion to TTC Duc Hue - Long An Solar Power Joint Stock Company.

CAPITAL EXPENDITURE COMMITMENTS Capital expenditure contracted for at the balance sheet date but not recognised in the consolidated financial statements was as follows:

Property, plant and equipment

Ending balance VND

Beginning balance VND

1,476,949,019,264

CONTINGENT LIABILITIES According to Circular No. 200/2014/TT-BTC dated December 22nd, 2014 issued by the Ministry of Finance, from January 1st, 2015, the Group is required to make provisions for restoration costs incurred upon the return of land and leased land in accordance with the regulations and policies applicable to the business industry of the Group. Accordingly, the Group has the obligation to clear, restore and return the premises at the end of the lease term or the termination of the project. As the date of these consolidated financial statements, the Group has not made such provision because there was no sufficient information on the prevention of environmental degradation in the Groupâ&#x20AC;&#x2122;s production and business activities. The consolidated financial statements were approved by the Board of Management on February 28th, 2019.

Dang Nguyen Thi Kim Loan Preparer

Tran Thi Hong Tham Chief Accountant

Nguyen Thai Ha General Director

February 28th, 2019

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285

DEVELOPMENT HISTORY WHO WE ARE

GENERAL INFORMATION THUA THIEN HUE Solar power, Hydropower

Trading name: CONG TY CO PHAN DIEN GIA LAI

BINH DINH

Company name in English:

Solar power

GIA LAI ELECTRICITY JOINT STOCK COMPANY Abbreviation: GEC Business registration certificate: No. 5900181213 issued by the Department of Planning and Investment of Gia Lai Province on September 9th, 2010, amended for the 15th time on October 16th, 2018

GIA LAI

Solar power, Hydropower Head Office

Listed on: Upcom

NINH THUAN

Stock code: GEG

Solar power

Number of outstanding shares: 194,182,550 shares

1,942

BUSINESS LINES AND LOCATIONS LAM DONG Hydropower

CHARTER CAPITAL VND

billion

MARKET CAPITALIZATION

VND

BINH THUAN

2,971

Solar power

billion

TOTAL ASSETS

VND

4,361 billion

286

2018 ANNUAL REPORT

HO CHI MINH CITY Representative Office

LONG AN Solar power

BUSINESS LINES No.

Business line

Manufacture of electric motors, generators, transformers and electricity distribution and control apparatus

Repair of electrical equipment In detail: Repair and maintenance of electrical machinery and equipment; machinery and equipment for the operation of power plants (not including repair of computers, peripherals, communication equipment, audiovisual equipment of household electronics, personal belongings and other household appliances)

3 4

Installation of industrial machinery and equipment Electric power generation

Electricity transmission and distribution In detail: Electricity distribution, wholesale and retail of electricity

Construction of buildings

Construction of non-residential buildings Construction of roads Construction of water supply and drainage works

8 9

Construction of other civil engineering projects In detail: Construction of industrial structures, Hydropower plants, construction of dams, road embankment and other works

Electrical installation

Other specialized construction activities In detail: Rental of construction/ civil engineering machinery and equipment with operators

Wholesale of other machinery and equipment In detail: • Trading, importing and exporting electrical equipment, mechanical and electrical equipment, industrial equipment, electric motors, transformers and other electrical materials. • Machinery and equipment for industrial, commercial, mining, construction uses and office machine and equipment

Trading of own or rented property and land use rights (within Clause 3, Article 11 of the Law on Real Estate Trading)

Management consultancy activities In detail: Business management consultation (Excluding legal consultancy, consultancy on tax, accounting, auditing, computer programming, advertising, market research and public opinion, labor brokers, job matching, education support services)

Architectural and engineering activities and related technical consultancy In detail: • Consulting on surveying, designing and executing small and medium Hydropower projects • Consulting on project planning, survey, design and construction of lines and substations (with voltage level of 110KV or less) • Supervising construction of small and medium Hydropower projects, transmission lines and substations (with voltage level of 110 KV or less) • Consulting on management of construction projects (excluding technical consultancy services related to topographic, engineering geology, hydrogeology, environmental survey, technical survey for planning urban-rural development, sector development planning)

Technical testing and analysis In detail: • Testing and calibrating electrical equipment, power plants, transmission lines and substations up to 110KV, industrial lines • Testing insulation materials, various types of insulation oil and industrial oils • Inspecting electrical equipment, electrical safety devices and electric cables, excluding inspection, calibration, testing of measuring devices, measurement standards, inspection and certification of vehicles (with an exception of inspection and certification of vehicles; except for the access to some geographical areas for national security reasons)

Other professional, scientific and technical activities n.e.c. In detail: Providing consulting services on technology namely consulting on electrical engineering, management consultancy, operation, maintenance and repair of electrical plants, electrical machinery and equipment (except for technical consultancy services) related to topographic survey, engineering geology, hydrogeology, environmental survey, technical survey for rural urban development planning, sector development planning)

Renting and leasing of motor vehicles In detail: Motor vehicle rental without the driver www.geccom.vn

287

ESTABLISHMENT & DEVELOPMENT With a strategic vision for 2016-2022, GEC promotes the development of Clean Energy and continues to pilot the models of Wind and Solar power in various potential locations. The projects - once put into operation - will serve as an economic platform for the localities, boosting regional development and meeting the expectation of partial replacement of others Energy provided by Thermal plants, thus reducing greenhouse gas emissions and helping to clean up the environment.

1989 1989

• Gia Lai - Kon Tum Province’s People’s Committee decided to establish Gia Lai - Kon Tum Hydropower Company under the Provincial People’s Committee

2001

Putting into operation 2 Hydropower Plants: Ayun Ha - 3 MW, Ia Drang 1- 0.6 MW

• Commencing the construction of the first Power Plant: Ia Drang 2 – 1.2 MW

2005

Putting into operation 2 Hydropower Plants: Ia Drang 3 -1.6 MW, Ia Meur 3 - 1.8 MW

On December 22nd, 1992, the Provincial People’s Committee changed the Company name to Ia Drang 2 Hydropower Enterprise

2006

Putting into operation H’Chan Hydropower Plant - 12 MW

2008

Putting into operation Dak Pi Hao 2 Hydropower Plant - 9 MW

2009

Putting into operation Ia Puch 3 Hydropower Plant - 6.6 MW

• Working capital: VND 1.8 billion

1992

288

1994

April 20th, 1994, the name was changed to Gia Lai Province Hydropower Company

1995

October 24th, 1995, the name was changed to Gia Lai Electricity Company

2018 ANNUAL REPORT

2010

2011

2013

• Putting into operation 2 Hydropower Plants: H’Mun - 16.2 MW, Kenh Bac - 1 MW • Successful IPO of 26,143,593 shares on HOSE • Changing the name to Gia Lai Electricity JSC • Charter capital of VND 262 billion Putting into operation Ayun Thuong Hydropower Plant - 12 MW • Acquiring Da Khai Hydropower Plant - 8.1 MW, which had been in operation from 2010 • Becoming a Member of TTC Group - a Multi-Industry Conglomerate • GEC was defined as TTC Group’s pioneer and core unit in Energy

2014

Putting into operation Dak Pi Hao Hydropower Plant 1 - 5 MW

2015

Putting into operation Thuong Lo Hydropower Plant - 6 MW

2010

2018 2018

2016

2017

• IFC - WB and Armstrong - South East Asia Clean Energy Fund, Singapore officially became GEC’s foreign strategic Shareholders: »» IFC: 11,881,076 shares; 15.95% »» Armstrong: 14,935,446 shares; 20.05% • They supported GEC to expand the Renewable Energy model in Vietnam • GEC owned 14 power plants with a total capacity of 84.1 MW

GEC officially listed on Hanoi Stock Exchange’s Upcom

• Successfully offering 97,091,275 shares to existing Shareholders at a ratio of 1: 1 • Putting into operation the 2 first Solar power Plants in Vietnam: Phong Dien - Hue 48 MWp and Krong Pa - Gia Lai 69 MWp • Getting Shareholder’s opinion in writing: Transferring from Upcom to HOSE to be listed officially • Charter capital of VND 1,942 billion Total assets of VND 4,361billion • Projects Portfolio: »» 14 Hydropower plants - 84.1 MW »» 8 Solar power Plants - 392 MWp • Impressive business results: »» Net Revenue: VND 559 billion »» PBT: VND 207 billion »» Gross profit margin: 55%

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GIA LAI ELECTRICITY JOINT STOCK COMPANY | 114 Truong Chinh, Phu Dong Ward, Pleiku City, Gia Lai Province, Vietnam

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