CNG VIETNAM JSC - ANNUALCNG VIETNAM JSC REPORT 2016
CNG VIETNAM JOINT STOCK COMPANY [ ] : 7th Floor, GAS Tower, No. 61B, 30/4 Street, Thang Nhat Ward, Vung Tau City [ ] : (84.64) 3574635 [ ] : (84.64) 3574619 2016 [ ] : www.cng-vietnam.com ANNUAL REPORT CONTENT ANNUAL REPORT 2016
05 Message from the Chairman LIST OF ABBREVIATIONS 78 REPORT OF THE BOM AND BUSINESS OPERATION ANALYSIS 07 CEO’s Letter 79 2016 financial highlights
08 CNG VIETNAM AND VALUE CREATION PROCESS 81 Outstanding managerial solutions in 2016 ASM Annual Shareholders' Meeting 09 Overview of CNG Vietnam 83 Business results in 2016 BOD Board of Directors 10 Vision - Mission - Core Values 85 Report on project implementation progress BOM Board of Management 11 Objectives and Development Orientations 86 Financial analysis BOS Board of Supervisors 14 Development milestone and Achievements 96 SUSTAINABLE DEVELOPMENT CNG Compressed Natural Gas 17 Shareholder’s structure and Capital increase history 97 Overview 18 Scope of business and Key customers CNG Vietnam/the Company CNG Vietnam Joint Stock Company 98 Related important parties and reporting areas 19 About CNG – Green fuel 100 Safety in manufacturing, transportation and customer service IP/IZ Industrial Park/Zone 22 Value creation process and Main resources 104 Incentives for human resources ISO ISO standards 31 Core competitive advantages 110 Responsibility for environment LNG Liquefied Natural Gas 35 BUSINESS CONTEXT AND DEVELOPMENT STRATEGIES 118 Economic contribution LPG Liquefied Petroleum Gas 36 Macroeconomic and business environment in 2016 119 Responsibility for community OHSAS Occupational Health and Safety standards 39 2017 market outlook and business strategy 123 FINANCIAL STATEMENTS (AUDITED) PRU Pressure Reducing Unit 44 Strategic business orientations in 2017 124 Report of the Board of Management PVGas PetroVietnam Gas Joint Stock Corporation 46 Specific plan for the year 2017 126 Independent audit report PVGas North PetroVietnam Northern Gas Joint Stock Company 47 CORPORATE GOVERNANCE 128 Balance sheet 130 Income statement PVGas South PetroVietnam Southern Gas Joint Stock Company 48 Governance model and Management structure 131 Cash flow statement PVGas-D PetroVietnam Low Pressure Gas Distribution Joint Stock Company 52 Introduction of BOD, BOS and BOM 59 Report of the Board of Directors 132 Notes to financial statements PVN/PetroVietnam Vietnam National Oil and Gas Group 66 Report of the Board of Supervisors 69 Transaction, remuneration and benefits of the BOD, BOS and BOM 69 Investor Relations 72 Risk management
3 MESSAGE FROM THE CHAIRMAN
Dear Valued Shareholders, Partners and Staffs,
The year 2016 saw a lot of changes in CNG Vietnam’s zz Profit after tax reached VND 120.3 billion, 13.5% organizational structure and governance. Specifically, CNG higher than the annual plan and increased by 1.3% Vietnam officially became a subsidiary of PetroVietnam Gas compared to 2015. EPS respectively was VND 3,900. Joint Stock Corporation (PVGas) in March 2016, following the restructuring guidance of PVGas and PetroVietnam. The BOD, in 2016, focused on the following: strategy formation, operational control and supervision and risk CNG Vietnam subsequently rearranged the organizational structure to be in line with operational model of PVGas, under the direction of CEO Vu Van Thuc since 07 April 2016.
In respect of business environment, the oil price in 2016 fluctuated in the range of only USD 40-50/barrel despite of many favourable factors. The oil price tended to fluctuate in VND bil a more complex manner, which made our business planning 898.1 and management become more difficult. total revenue
The Management clearly perceived the difficulties and 108.6% annual plan challenges which the Company were facing and had worked out flexible solutions for the management as well
2016 2015 Item Unit Planned Actual (%) Planned (%)
Consumption volume Million Sm3 110.0 119.6 108.7 94.3 126.8 Southern region Million Sm3 82.2 92.4 112.4 85.3 108.3 Northern region Million Sm3 27.8 27.2 97.8 9.0 302.2 Total income Billion VND 827.1 898.1 108.6 959 93.7 Total expenses Billion VND 695.0 750.4 108.0 814 92.2 Profit before tax Billion VND 132.0 147.7 111.9 145 101.8 Profit after tax Billion VND 106.0 120.3 113.5 118.7 101.3
as business operation, in order to ensure efficient business management. In the coming years, the BOD will continue to activities and appropriate strategy. accompany and support the BOM to overcome difficulties caused by the markets, make use of internal strengths and Thanks to the above, the Company gained several competitive advantages to bring CNG Vietnam reach new outstanding achievements in the year 2016: heights.
zz CNG consumption volume reached 119.6 million Sm3, We wish you and your family good health, success and completed 108.7% of the annual plan. happiness.
zz Total revenue was VND 898.1 billion, completed Yours faithfully, 108.6% of the annual plan.
zz Profit before tax reached VND 147.7 billion, completed 111.9% of the annual plan and increased by 1.8% Vu Tuan Ngoc Chairman of the BOD compared to 2015.
4 ANNUAL REPORT 2016 5 www.cng-vietnam.com CEO’S LETTER
Dear Valued Shareholders, Partners and Staffs,
Being in charge of CEO since April 2016, I rapidly witnessed the solidarity, consensus, high determination of the staffs as well as support and close direction of PVGas and the BOD in stabilizing the organizational structure, orientating the business strategy and operation. 119.6 120 Despite of many complex fluctuations on the world as well as domestic oil and gas markets, CNG Vietnam gained many 110 outstanding achievements in 2016. Specifically: 100 94.3
zz Customers increased strongly from 41 to 47. 90
80 zz CNG consumption volume reached 119.6 million Sm3, 74.6 70
significantly increased by 26.8% compared to 2015 62.3
and completed 108.7% of the annual plan. 60 53.0
zz CNG sales declined but profit after tax still increased 50
by 1.3% to VND 120.3 billion and completed 113.5% of 40 the annual plan. 30
zz Market capitalization of the Company passed the VND 20 1,000 billion level, reached approximately VND 1,102 billion, and cash dividend at a high rate of 30% was 10
maintained. 0 2012 2013 2014 2015 2016 26.8% zz Compensation and benefit policy for employees was well maintained. consumption volume (Mil Sm3) zz Sustainable development activities were continually enhanced. The Management appreciates the solidarity, efforts of departments, branches and staffs in the year 2016. Our goals set for 2017 and coming years will be rough to achieve given many difficulties and complications. Hence, the BOM calls all staffs to hold solidarity spirit, together promote creativeness, enthusiasm in order to achieve the 2017 targets, and step by 47 customers step to realize the Company’s long-term visions. as compared to 41 On behalf of CNG Vietnam, I would like to take this occasion to convey my thanks to the BOD, PVGas for their support, customers in 2015 close direction in the past and hope to receive more support in the coming period.
Yours faithfully, In 2017, the global and domestic economic environment will continue to have complex fluctuations, which make our business forecast and management become more difficult. Vu Van Thuc Meanwhile, fuel prices will be still kept at low level and input gas prices of the Company will be modified to rise. Chief Executive Officer
6 ANNUAL REPORT 2016 7 www.cng-vietnam.com CNG VIETNAM AND VALUE OVERVIEW OF CNG VIETNAM 01 CREATION PROCESS 09 Overview of CNG Vietnam 10 Vision - Mission - Core Values 11 Objectives and Development Orientations 14 Development milestone and Achievements 17 Shareholder’s structure and Capital increase history 18 Scope of business and Key customers Vietnamese name : Công ty Cổ phần CNG Việt Nam 19 About CNG – Green fuel English name : Cng Vietnam Joint Stock Company 22 Value creation process and Main resources 31 Core competitive advantages Abbreviation : CNG VIETNAM
Stock symbol : CNG
Company logo
Business Registration Certificate No. 492032000040 (first registration on 28 May 2007 and 11th registration change on 19 September 2016 issued by the Industrial Zone Management Agency of Ba Ria - Vung Tau Province)
Chartered capital : VND 270 billion (Two hundred and seventy billion VND)
Headquarter : Road No 15, Phu My 1 Industrial Zone, Tan Thanh District, BR - VT Province
Transaction Office : 7th Floor, GAS Tower, No 61B, Street 30/4, Thang Nhat Ward, Vung Tau City
Telephone : (064) 357 4635
Fax : (064) 357 4619
Website : www.cng-vietnam.com
Green - Clean to create values
9 3. OBJECTIVES AND DEVELOPMENT VISION - MISSION - CORE VALUES ORIENTATIONS
VISION To build and develop CNG Vietnam Joint Stock Company for sustainable growth, to become a leading supplier of CNG, LNG in Vietnam, pioneer in technology and market share’s leader in CNG, LNG market.
MISSION
To build trust for customers to use CNG, LNG as a OBJECTIVES AND DEVELOPMENT ORIENTATIONS clean, safe and efficient fuel. Therefore, to reinforce the Company’s growth, bring in sustainable values To build CNG Vietnam to become a company with strong brandname and business 11 presence across the country. for customers, shareholders, employees and society. To develop CNG Vietnam based on diversified business activities with CNG, LNG as the core 2 business.
CORE VALUES The Company is committed to the To train staffs to have solid technical skills, discipline and meet all requirements of advanced 3 technology of CNG, LNG. following values
Medium-term and long-term development strategies Social Quality Safety Cooperation Efficiency responsibility 1.To build CNG Vietnam brand and culture:
zz To make short-term and long-term marketing strategies be appropriate with development process in order to improve the brand reputation. Continually to improve the quality of advertisement and sales promotion work.
zz To promote marketing and expand market across the country. To build strategic relationship with partners to support and cooperate for mutual development.
10 ANNUAL REPORT 2016 11 www.cng-vietnam.com OBJECTIVES AND DEVELOPMENT ORIENTATIONS (CONT...) To comply with laws and regulations of environmental protection
To use technology Medium-term and long-term development strategies (cont...) which is advanced and environment-friendly 2. To enhance supply capacity: research and application of advanced technology in operational aspects. zz To make maximum use of infrastructure, “environmental equipment and gas resources in CNG Phu My Plant 5. To build plan for development of new service units: in order to develop CNG market zz Equipment and factories with advanced technologies. zz To construct more compression stations in areas To proceed, transport and protection” with gas sources available such as Nhon Trach – zz Professional skilled staffs, engineers and workers. CNG Vietnam always con- Dong Nai, Thai Binh, in line with development of arrange safely for emission the national gas network. zz To develop professional transport system, provide ceives the importance of en- transport service. zz To consider application of LNG technology in vironmental protection and small capacity (30 million Nm3/year) and put into zz To carry out advertising and marketing for CNG/LNG build the society and com- operation. effectively. Objectives for environment, munity z society and community 3. To invest to expand CNG Phu My Branch. z To have good relationship with customers, win their trusts. CNG Vietnam is the first company specializing in Compressed Natural Gas (CNG), always conceives the 4. To improve the effectiveness of supply chain: zz To support customers about technical problems and importance of environmental protection and build controlling usage of CNG/LNG in production. zz To improve organizational structure, conduct human the society and community: strategies for recruitment and have trainings in zz To apply flexible entry price for specific markets and ¾¾ To comply with laws and regulations of appropriate rout in order to meet all requirements periods. of development, expansion of the Company in every environmental protection. period. To especially pay attention to marketing zz To consider to apply advanced technology in ¾¾ To use technology which is advanced, clean, green aspects and R&D. operation. and environment-friendly with an objective of zz To apply automation, technological applications effectiveness, cost saving and environment impact to supervise strictly all process, controlling aspects reduction. and operation as well for cost reduction of supplies and labor and increase efficiency, quality, safety and ¾¾ To proceed, transport and arrange safely for effectiveness of operation. emission of materials, products and wastes in responsible ways. zz To set joint-venture with prestigious partners for
12 ANNUAL REPORT 2016 13 www.cng-vietnam.com DEVELOPMENT MILESTONES AND ACHIEVEMENTS
NORTHERN BRANCH PUT INTO OPERATION 19.2 67.2 70 125 70%DIVIDEND 213.28 270 94.3 56% 3 ON CHARTER CAPITAL 3 HOLDING RATE BIL VNd BIL VND MIL Sm BIL VND BIL VND BIL VND MIL Sm PVGas BECAME A MAJOR INITIAL CHARTER INCREASED INITIAL INCREASE CAPACITY OF PHU CHARTER CAPITAL AFTER CHARTER CAPITAL AFTER CHARTER CAPITAL AFTER CNG VOLUME SUPPLIED TO SHAREHOLDER OF CNG việt CAPITAL CHARTER CAPITAL MY CNG PLANT ADDITIONAL ISSUE ESOP 2011 ADDITIONAL ISSUE CUSTOMERS nam
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
CNG Vietnam JSC Chartered capital PetroVietnam Gas To invest in projects of From March 2011, According to On 25/09/2013, State On 08/07/2014, CNG 2015 recognized On 14/03/2016, was established on increased to VND agreed to transfer operational expansion, after compressor resolutions of ASM in Security Commission Vietnam approved the success of CNG PVGas became a 28/5/2007 under 67.2 billion with the whole capital CNG Vietnam issued stations in adjusted 2011 about issuing of Vietnam accepted the mechanism of Vietnam’s strategy major shareholder of the Investment the contribution of in CNG Vietnam to 5,780,000 shares to period in operation, stocks for employees the additional issue organization and to expand into the CNG Vietnam with a Certificate No. shareholders such as: PVGas South. CNG increase chartered total capacity of CNG at rate of 5% of of stock to increase operation of the northern region. holding rate of 56% PetroVietnam Gas Joint Vietnam continued to from VND 67.2 billion Vietnam officially chartered capital chartered capital of the Company’s Northern CNG has officially of chartered capital 492032000040 Stock Corporation expand the market of to VND 125 billion for reached 70 million (ESOP 2011), the BOD Company from VND Branch. supplied gas for this after purchasing whole issued by (PVGas), PetroVietnam CNG distribution by present shareholders, Sm3 which supplied for gave a Resolution No. 213.28 billion to VND region, bringing the shares from PVGas Management Low Pressure Gas increasing capacity of key staffs and strategic 21 customers in Nhon 01/BQ – HDQT/2012 270 billion. total volume of CNG South. Agency of Ba Distribution Joint Stock CNG Phu My Plant to 70 shareholders under Trach, Binh Duong, which approved the supplied to 94.3 Ria - Vung Tau Company (PVGas-D). million Sm3. Resolution No. 314/NQ HCM City and Long An. stock distribution In 2013, CNG Vietnam million Sm3, saw a On 19/04/2016, the Province with initial – ASM/2010 of ASM on under ESOP 2011 and paid out cash dividend strong growth of 26% BOD issued a decision chartered capital First factory of CNG 02/04/2010. After increasing the completed the capital with a rate of 30% compared to 2014. changing the name of VND 19.2 billion Vietnam was located chartered capital to increase to VND 213.28 of current chartered of functional division from the founding in Phu My 1 Industrial After 2 years in VND 203.1 billion, the billion. capital. In April 2015, CNG (Ban) to department shareholders: Zone, Tan Thanh operation, CNG Vietnam stock of the Company Vietnam Central (Phòng) to comply with District, Ba Ria – Vung had constructed officially was listed on Station at My Phuoc operational model of zz Drilling Mud Joint Tau Province with an and applied Safety - Ho Chi Minh City Stock 3 Industrial Zone PVGas. Stock Company initial capacity of 30 Quality - Environment Exchange (HOSE) with (Binh Duong) was (DMC): 51% million Sm3 per year, management system 20,312,038 shares, put into operation On 17/05/2016, the chartered capital; put into operation on under standards code of CNG, based on and supplied CNG BOD issued a resolution zz IEV Energy Sdn. 03/09/2008. OHSAS 18001:2007, Decision No.167/2011/ to customers in this approving the Bhd. (Malaysia): ISO 9001:2008 and QD-SGDHCM of HOSE. industrial zone. This establishment of Phu My 42% chartered ISO 1400:2004 which is part of the business Branch. capital; and BSI (Britain Standard expansion plan as well zz Son Anh Co., Ltd: Institute) verified, as development of 7% chartered acknowledged and central supply station capital. certified on 22/07/2010. model.
14 ANNUAL REPORT 2016 15 www.cng-vietnam.com Achievements and Awards SHAREHOLDER’S STRUCTURE AND CAPITAL INCREASE HISTORY
CAPITAL INCREASE HISTORY
Initial Additional Accumulated chartered chartered charter Year Method capital (VND capital (VND capital (VND billion) billion) billion) 2007 19.2 - 19.2 2008 19.2 48 67.2 Additional issue Certificate of Merit from the Prime Minister Certificate of Merit for the Excellent Competition Unit 2010 67.2 57.8 125 Issue for crucial staff and strategic shareholders from Prime Minister (2011) 2011 125 37.5 162.5 Paying dividends by stock Certificate of Merit from Ministry of Industry and Trade 2011 162.5 40.6 203.1 Paying dividends by stock and stock compensation Certificate of Merit from Vietnam National Oil and Gas 2012 203.1 10.2 213.3 ESOP for staffs 3rd Level Labor Medal Group 2010 – 2015 2013 213.3 56.7 270.0 ESOP for staffs and stock compensation
Most Equity shares Classified by minor shareholders (under 5%) top 50 Effective Vietnam's Companies in 2012 Total number of shares : 27,000,000 Type of share : Common shares Shareholder’s name % Shares Number of transfer-restricted shares : 0 Others 23.92 6,459,060 Fastest Number of free-floating shares : 27,000,000 top 50 Growth Enterprises of Vietnam in 2013 Shareholder’s structure Best Classified by domestic and foreign shareholders top 50 Annual Reports IN 2011, 2012, 2015 Domestic Foreign Group Total (shares) (shares) (shares) Best Individual 3,405,317 172,722 3,578,039 top Annual Reports IN 2013 20 Institution 16,297,414 7,124,547 23,421,961 23.92% Total 19,702,731 7,297,269 27,000,000 Best 56.00% top 15 Annual Reports IN 2014 Classified by major shareholders (from 5% or more) 9.63%
Shareholder’s name % Shares 10.45% PVGas 56.00 15,120,000 Sustainable Utilico Emerging Markets Limited 10.45 2,820,000 Halley Sicav - Halley Asian Prosperity 9.63 2,600,940 top Development Enterprises in 2016 Total 76.08 20,540,940 100 Shareholder’s name % Capital increase history PVGas 56.00 Changes in owner’s investment capital: Total chartered Utilico Emerging Markets Limited 10.45 capital as at 31/12/2016 is VND 270 billion. Halley Sicav - Halley Asian Prosperity 9.63 Treasury stock transactions: The Company currently Other 23.92 holds 327 treasury shares, representing 0.001% of ownership. During the year, the Company did not have any trading transaction of treasury shares. 16 ANNUAL REPORT 2016 17 www.cng-vietnam.com SCOPE OF BUSINESS AND KEY CUSTOMERS CNG - GREEN FUEL
Scope of business
Provide services of renewing, maintenance, repairing and Transportation installation of services of Provide services CNG Vietnam is the pioneer in the conversion CNG, LNG, LPG of construction, Trading and producing, distributing CNG Produce, equipment for and other fuel installation, lease of Transportation in Vietnam. The company extract and vehicles using business in maintenance industrial of goods by provides solutions for supply CNG, CNG, LNG and accordance with and repairing of equipment for container- LNG and LPG. LPG. the regulations. gas works. gas works. carriers. modern fuel, helps bussiness reduce cost and increase effectiveness of machines which partly protects environment and energy security for economy.
Business locations
South East region of Vietnam and other areas, including Ba Ria - Vung Tau, Binh Duong, Dong Nai, HCM City, Long An, Binh Thuan.
Northern region, including Hanoi, Ninh Binh, Hai Phong, Thai Nguyen, Thanh Hoa. 17%
The Company continues to do research and expand into new markets, new business locations in the South Western provinces, northern areas and other areas in accordance 48% with the business strategy. Specifically, CNG was deliveried by CNG Vietnam to Key customers factories which use heat energy in operation, serviced 35% in apartment buildings and was used as a stubtistue of oil in transporation. Moreover, customers who belong to Production of Constructive material aspect occupied 48% of total comsumption, customers belonged to Food aspect represented 35% and other customers had the rest.
COFFEE GM Thanh Thanh Currently, CNG Vietnam is mastering the technology and control of compressor stations, filling stations, transport Customers %
ÄáÅó ÅäÉ facilities, cylinders, PRUs, gas-using devices under international criterias and Vietnam standards which Manufacturing - Building materials 48% gurantee enough conditions for safe operation and are Foods 35% checked annually. Others 17%
18 ANNUAL REPORT 2016 19 www.cng-vietnam.com CNG production and distribution
ylinders
Compressor station Filling station CNG c Tube trailers PRU at customer’s site Gas metering station 01 02 03 04 05 06
CONTROL ROOM Gas-using devices of customers 07
PRU
1. Gas metering station 4. CNG cylinders: 6. PRU at customer’s site
Natural gas is taken from the low pressure system in Phu The compressor is controlled by PLC, which is able Composite cylinders 20 ft: Total volume of 01 CNG The trailers take CNG to the customer place (PRU) and My (PV Gas-D), goes to the CNG Vietnam’s Phu My Plant to control operational parameters such as pressure, cylinder is 17m3; Working pressure is 250 barg. from here, gas with pressure of 200 to 250 barg is taken through 6" pipelines with pressure of 22 Barg. Gas flow is temperature, gas leak, vibration ... to ensure the safety from cylinders (on trailer) and goes into PRU system to controlled by the inlet metering system. during operation time. zz Composite cylinders 40 ft: Total volume of 01 CNG reduce pressure by 2 stages (stage 1: reduce pressure to cylinder is 34m3; Working pressure is 250 barg. 60 barg, stage 2: reduce pressure to 2-7 barg) and supply Metering system is designed to automatically update the The Fire and Gas system is installed in the control room for customers. gas, pressure, temperature, displaying the information in and any system’s signals (gas detectors, fire detectors, zz Steel cylinders 40 ft: Total volume of 01 CNG cylinder place and transmission to the center (GDC) to calculate smoke detectors, heat ...) will be monitored and sent to is 18m3; Working pressure is 200 barg. PRU system is designed to comply with international the gas volume the control system for switching devices when having standards and the standards and regulations of Vietnam problems (shutdown valve, stop compressors, activate zz The equipment is regularly tested to ensure the safety. laws. The system is controlled by PLC, controlling 2. Compressor station siren, warning lights...). problems, gas leaks by the emergency shutdown valves 5. Tube trailers (SDV), safety valves, gas detectors. The gas delivery From metering station, gas is led into CNG compressor The compressors and control systems are designed in volume is controlled by the metering system. All these station to refill the tube trailers (cylinders) with the compliance with international standards and standards The tube trailers are complied with the strict regulations systems are tested annually. capacity of compressors as follows: and regulations of Vietnam to ensure the safe conditions of dangerous goods transport, fire and explosion. Also, of operation, and tested annually. they are registered and inspected on time in accordance 7. Gas-using devices of customers zz Capacity of the compressor from 2000 to 2500 Sm3/h. with the laws, standards and regulations of Vietnam zz Specifications: 3. Filling station to ensure safety and prevent fire and explosion during Customers install the gas using system which uses the - Flow: 2000 to 2500 Sm3/h; transportation and storage. gas with pressure from 2-4 barg. - Input pressure: 14-22 barg; TAt filling stations, gas is filled into the cylinders - Output pressure: 200 to 250 barg; (composite, steel) to transport to customers with cylinder’s volume as follows: - Gas inlet temperature: 10-40 ° C; - Power: ≤ 370 KW/h/machine.
20 ANNUAL REPORT 2016 21 www.cng-vietnam.com VALUE CREATION PROCESS AND MAIN RESOURCES
VALUE Customers CREATION NATURAL RESOURCES PROCESS
Shareholders/ Investors Environment is a place where Impact of natural resources on other supplies fundamental inputs for resources production. In CNG Vietnam’s viewpoint, environment is a place Business activities of CNG Vietnam have some negative impacts on natural resources and affects indirectly other Corporate Risk Partners, Objectives/ Suppliers providing operational space, resources such as human resources, community or governance Strategies management gas input for business activities, society. electricity, water and other fuels like oil… which are important However, natural resources are transformed to new products (CNG) with higher value by going through Employees elements to guarantee operation production. Therefore, there is able to have positive and distribution of CNG. effects on other resources.
Resource allocation Usage of natural resources in 2016 Resources Business Agencies Natural interaction activities resources 2016 2015 management Name Unit Quantity Value Quantity Value Diesel oil 0,05 Liter 641,248 6,713,526,454 650,893 8,771,782,557
Community PLC Komart Liter 4,104 219,144,546 8,155 548,411,169 Human Mogas A92 Petrol Liter 75,000 1,057,382,177 94,690 1,534,910,408 resources Electricity for Factories and MP3 Kwh 8,288,375 12,899,093,097 7,264,140 11,305,089,631 station
Society Water m3 8,945 86,254,302 9,117 87,914,250 Manufacturing resources
Financial Resources
Social resources and related parties
22 ANNUAL REPORT 2016 23 www.cng-vietnam.com VALUE CREATION PROCESS AND MAIN RESOURCES
NATURAL RESOURCES (cont...)
Methods of managing natural Impact of human resources resources on other resources zz Complying the law of environmental protection. Human resources of CNG Vietnam zz Upgrading controlling safety system to meet the have been continuously invested criteria OHSAS 18001:2007, quality under ISO standard in recent years. In 2016, total staffs 9001:2015 and environment under ISO standard increased by 5.7% compared to 2015 14001:2015 in business activities of the Company. and was 239 people. However, this increased operational cost of the zz Supervising energy under TCVN ISO 50001 in order to Company also and affected financial not only enhance effectiveness of using energy but also resources in short-term. reduce emission of gas and impacts on environment. Nevertheless, in its place: zz Improving perception of staffs about using energy economically and effectively to reduce wastes and make zz In long-term, investment of saving tradition become a tradition of the Company. human resources will enlarge operational scope and zz Increasing investment of technical infrastructure, effectiveness of the Company. fixed asset and advanced safe technology in order to improve effectiveness of operation, cost saving and zz Recruitment also help increase optimization in fuel consumption. relationship between CNG Vietnam and Social community.
HUMAN RESOURCES Main statistics of human resources of CNG Vietnam
Hence, CNG Vietnam always Criteria Unit 2015 2016 asserts that the company provides Number of employees Person 226 239 Technical skill, experience, efficiency of transparency, safety, physical and laborer are important features in making sure spiritual life guarantee for staffs in Total salaries and compensation VND billion 57.6 60.7 working environment. In addition, Number of training courses Course 44 52 the production is safe and effective and they the Company also takes care of are necessary resources to make different and developing ability of the staffs by Number of participants in training courses Person 973 731 increase competitive ability of CNG Vietnam in training courses, so this can increase Training costs VND billion 2.18 3.34 satisfied level of the staffs which the market which will contribute to the growth Labour accidents Time 0 2 of the Company. creates motivation for them to stay and devote for the Company. Insurance for employees % 100% 100%
24 ANNUAL REPORT 2016 25 www.cng-vietnam.com VALUE CREATION PROCESS AND MAIN RESOURCES
HUMAN RESOURCES (cont...)
Important tasks in managing human Impact of financial resources on other resources resources
zz Upgrading safety - quality - environment Apportioning financial resources helped CNG Vietnam management system into new edition 2015: ISO maintain and develop business activities of the 9001:2015, ISO 14001-2015, OHSAS 18001:2007 Company. At the same time, it also creates positive in order to guarantee transparency, safety of impacts on other resources such as fixed asset, labor environment and enhance effectiveness of staffs. resource, increase of social community relationship and environment as well. zz Increasing training for staffs, especially concentrating in technical training which is appropriate with the Important input criteria need of development of the Company to make sure that the operation is safe and help improve zz Market capitalization reached VND 1,102 billion on effectiveness and competitive ability in the market. 31/12/2016
zz Maintaining and developing qualified human zz Equity: VND 464.6 billion resources who are in relationship with the Company through giving transparent, effective and competitive zz Loan for investment strategy: VND 47 billion statute about salary and compensation. zz Total capital disbursed in 2016: VND 32.65 billion zz Constructing and bringing up management skills for staffs in order to make inherited teams.
Achievements from investment of financial resources
FINANCIAL RESOURCES Item Unit 2015 2016
Operating profits VND billion 146.2 150.1 Profit before tax VND billion 145.1 147.7 To control financial resources effectively is one of important features Profit after tax VND billion 118.7 120.3 of investment strategy which is for maintenance and development of Cash flow from operating activities VND billion 161.8 181.4 business activities of the Company. Debt/EBITDA % 35% 22% The Company apportion financial resources appropriately through digital investment channel, process of production, Financial leverage Time 1.55 1.50 human and natural resources. The Company always considers return on equity when giving investment decisions. Beside creating value through business activities, financial resources also were reinvested into 5 business resources of EPS VND 3.942 3.900 the Company on balanced way to assure result of the Company most effectively. Profits distributed to shareholders VND billion 81 81 ROIC % 21.86% 22.55%
26 ANNUAL REPORT 2016 27 www.cng-vietnam.com VALUE CREATION PROCESS AND MAIN RESOURCES
Fixed assets of the Company
Criteria 2015 2016
Fixed assets (VND billion) 170.4 142.5 (cont...) FINANCIAL RESOURCES - Historical value 679.5 711.6 - Accumulated depreciation (509.1) (569.1) Managing financial Intangible fixed assets (VND billion) 0.4 0.15 resources - Historical value 1.0 1.0 - Accumulated depreciation (0.6) (0.9) zz The Company always prepares project’s bond. oil price and effects from low Fixed assets under construction (VND billion) countered flexible plans for price of oil in long period on - - fluctuation in gas market. zz Completing all plans and environment of the Company. rechecking targets which are zz Paying attention to optimization for saving cost and cash to zz Simulating business situations in apportioning financial guarantee sustainable business when oil price is USD 30/barrel Business facilities resources and maintain higher activities at USD 44/barrel. to determine bearing level and rate of return on investment conduct contingent plans for Facilities in Northern Sm3 per year (equivalent to 33,000 industry, serving community better, capital than average capital cost zz Making use of enforced risk this price. Branch: In 2015, the Company tons LPG per year). The plant was reducing environmental pollution, and minimum internal rate of management to determine invested into new equipment for put into operation on 03 September and also in line with the overall return. methods of measuring risk taste zz Testing liquidated ability and market development purpose, 2008 and till now the capacity was strategy of the Company, which is to and risk tolerance to guarantee paying ability to determine with a key focus on northern areas, expanded to 95 million Sm3 per diversify customers. zz Considering sponsoring plans sustainable business activities. bearing level of debt of the upgrading the supply capacity to year and is always operating on the instead of investments for Company. customers in the region to 30 million design capacity. Transport facilities: capital increase, including z z Adjusting capital structure to Sm3/year. Including 07 Nissan tractors, 35 sponsoring projects, lending be suitable with plans of risk My Phuoc 3 Central CNG steel tanks 40 feet (including trailer), for bank, company’s bond and management for fluctuation of Phu My CNG Plant: This is the Station: Central CNG Station at 31 composite tanks 40 feet and 4 first CNG plant in Vietnam, located in My Phuoc 3 Industrial Zone (Binh composite tanks 20 feet, with a total Phu My 1 Industrial Zone, Tan Thanh Duong) officially went into operation transport capacity of 95 million Sm3 MANUFACTURING RESOURCES District, Ba Ria – Vung Tau Province in April 2015, as part of the business gas per year. . with an initial capacity of 30 million expansion plan and implementation of central station supply model. Pressure Reducing Units FIXED ASSETS installed at customer’s This is a joint project between CNG site (PRU): Including 18 Vietnam and Becamex Investment pressure reducing systems which To complete business strategy and incessantly expand the and Industrial Development To become a head supplier of CNG, are supplying gas for customers. market, CNG Vietnam invested technical facilities and fixed Corporation (IDC). My Phuoc 3 station LNG in Vietnam market, investment Each PRU consists of pipelines assets fundamentally, advanced safe technology as well, will provide CNG through pipeline and pressure reducing valves from including: in techinical facility was an important to customers in the industrial zone. 250 bars to lower than 7 bars, gas mission for the Company. The station is currently supplying measuring system, heating system zz Machine and equipment system at CNG Phu My CNG to Kumho Tires Factory, Asian and other auxiliary equipment to Plant. However, due to the effect of low oil price, the Company Food Factory and Aluminum Washin ensure the safe and continuous gas adjusted released capital to optimize effectiveness of capital Factory. supply for customers. zz My Phuoc 3 Central CNG Station. and fixed assets as well. Maintenance was also watched out to guarantee stabilized operating ability, optimization of Also at this station, CNG Vietnam for The entire system is designed in zz Transport facilities and Pressure Reducing Units fixed assets of the Company. the first time installed the supply accordance with ASME B31.3, 31.8, (PRU) installed at customer’s site. system for transportation vehicles API, ANSI, IEC, NFPA standards… All and are currently providing CNG for tanks are designed and produced buses using clean fuel of Becamex in accordance with ISO 11439, ISO Tokyu Bus (Japan). This is a trial gas 11119, ASME (for composite tanks) supply model for transportation and DOT, ASME (for steel tanks).
28 ANNUAL REPORT 2016 29 www.cng-vietnam.com VALUE CREATION PROCESS AND MAIN RESOURCES
zz Complying the law, constructing good relationships MANUFACTURING RESOURCES with local authority and controlling agencies.
zz Constructing good relationships with customers, FIXED ASSETS (cont...) suppliers, complying and acting rightly under negotiated commitments and usually making conversations to have improve change on Impact of investment in fixed assets on effectiveness of cooperation. other resources Nevertheless, CNG Vietnam commits that the Company will minimize impacts of investment in expanding Impact on other resources To complete growth objective of the Company, operation on environment, community – society through investment in fixed assets is extremely necessary. In investment in modern technical technology in order to zz To invest in building relationships with society and short-term, the investment will affect two main resources increase effectiveness of operation, optimize usage of related parties is an important feature to accelerate which are finance (capital usage for investment) and energy along with contribution to community – society growth in business activities of the Company and environment (increase of usage of natural gas, electricity, and make sure the sustainable development even when have positive impact on financial resources. However, water, petrol, oil…) using more additional capital if necessary. in short-term, this activity will make a reduction of financial resources. SOCIAL RESOURCES & RELATED PARTIES CORE COMPETITIVE ADVANTAGES MOTIVES FOR COMPANY'S GROWTH In business, operation of the Company always actively fulfills demands of related To contribute to the parties, construct good relationships general development of to create favorable environment for with a nation-wide network, other regions across Vietnam. community and society, investment and market development. aiming at safety and efficiency, and constructing trusts with The company always actively receives The objective of become the main supplier of clean In general, the Company has more feedbacks from these parties to improve fuel for industrial zones and means advantages than other traditional related parties is one of strategies, systems, processes in order to the Company is to of transportation. CNG Vietnam fuel suppliers; especially, these important key to help CNG build lasting relationship and increase become a strong is the leading company in natural advantages in the future will Vietnam develop. contribution to social community. (More gas production and distribution be more obvious as the social details in Sustainable Development Report) company in the in Vietnam market. As a pioneer - economic development trend business of clean in the industry, the Company has requires sustainable development, Activities for building relationship with community and related parties fuel (CNG, LNG) , established the leading position environmental protection. in South East markets and is zz Encouraging staffs to participate in social activities, build and link to social community through expanding into northern as well as environmental higienic activities, visit, giving present to policy family, the poor and poor children who are fond of learning in local area. Specifically, the Company has built up its position based on: zz Enhancing relational activities with investors and trust of them for the Company as well.
30 ANNUAL REPORT 2016 31 www.cng-vietnam.com CORE COMPETITIVE ADVANTAGES
For environment Top of clean fuels
zz Thanks to the simple components, it is easily processed to eliminate the hazardous compounds such as SOx, NOx, CO2 without benzene and CORE COMPETITIVE ADVANTAGES, hydrocarbon. Thus, the fuel does not free hazardous exhausts such as SO2, NO2, CO… and nearly no MOTIVES FOR COMPANY'S GROWTH arising dust. (cont...) zz The main components of exhaust gas in the process of natural gas combustion are H2O and CO2 and a negligible proportion of environmental pollutants such as CO, NOx, HC, SOx and soot. Exhaust smoke content is almost equal to zero. CO2, CO, Strength of product Hydrocarbon content is lower than in gasoline and diesel oil.
zz Natural gas is stored in a self-contained system For economic efficiency without gas evaporation (as gasoline). Therefore, More cost-saving than traditional The Company also has more advantages than other traditional fuel there is no hydrocarbon exhaust to environment, fuels suppliers of coal, FO, DO thanks to the preeminent features of using not creating ozone which is the main factor causing greenhouse effect. CNG as alternative fuel. The preeminent feature is represented in zz CNG is cheaper than traditional fuels such as DO, FO, many aspects: technology, economic, and especially environment. For safety LPG, electricity, so using natural gas would save a lot More safety in using of fuel costs in production process.
z zz CNG is lighter than air so it quickly rises up when z Pressure Reducing Unit (PRU) is modernized and leakage, and minimizing the risk of fire and improved continuously to fit customer’s conditions so For technology explosion in using, compared to other fuels such as as to minimize the land area used and save operating High efficiency – Extend DO, FO, LPG, electricity… costs.
equipment’s life zz Improved quality of products also represents the economic efficiency and productivity of CNG. zz CNG is compressed natural gas to improve product quality. zz Natural gas is neither hazardous with main ingredient of CH4 - nor corrosive for equipment. methane (making up 85% - 95%) zz Natural gas is predominant in treated and compressed at the heating capacity with the same zz Natural gas helps to extend the STRENGTH OF HUMAN RESOURCES high pressure (200 to 250 bar) to amount of fuel in comparison life of equipment: As a clean fuel, have the high heating value and with coal, firewood, DO, FO and it does not generate coal soot on The management and staff of the Company are burning efficiency, easily adjust LPG. equipment’s working surfaces, experienced in the oil and gas industry and passionate the temperature of combustors minimizing maintenance and for success. Therefore, the organization and personnel repairing cost. are always connecting and stable in operating to toward the common goal of the Company.
In addition, the Company has always focused on training activity to improve the skills of employees to maintain its personnel strength.
32 ANNUAL REPORT 2016 33 www.cng-vietnam.com CORE COMPETITIVE ADVANTAGES (cont...) BUSINESS CONTEXT AND DEVELOPMENT 02 STRATEGIES 36 Macroeconomic and business environment in 2016 39 2017 market outlook and business strategy 44 Strategic business orientations in 2017 46 Specific plan for the year 2017 STRENGTH OF INPUT GAS SOURCE
The input gas source of the Company is always stable and meeting adequately the customer demand. The input gas is directly supplied from the pipeline of PVGas-D and the gas gathering and distribution system of Ham Rong and Thai Binh fields.
STRENGTH OF FIXED ASSETS - TECHNOLOGY AND DISTRIBUTION SYSTEM
zz Modern equipment and machines: CNG Vietnam invested in technical facilities and fixed assets fundamentally, advanced safe technology as well. This guaranteed quality of product, increased efficiency, optimized usage of fuel.
zz Favorable location of factory and gas station: The factory and central gas station are located at convenient places, near key industrial zones appropriate for business of CNG and LPG which is only distributed in the range of 200km. Moreover, the convenient locations can maximize the mobility STRENGTH FROM FULL CONNECTION WITH strength in transporting CNG and quickly respond to RELATED PARTIES maximum demand of customers. zz With a spirit of sustainable development, CNG zz Wide network of PRU: The Company has promoted Vietnam always connects the growth and prosperity the investment and installation of total 18 PRUs at of the Company with customers, partners, industrial zones. The wide network can help the shareholders, laborers, parent company, agencies,
Company in attracting new customers at these community. TAX I industrial zones and dominate the market. In addition, the transportation system, storage tankers zz Therefore, CNG Vietnam had built full connection are also actively invested to meet the demand with related parties and help business and and rapid transportation requirement for different investment activities more favorable. locations as required by customers.
Creative to overcome challenges
34 ANNUAL REPORT 2016 www.cng-vietnam.com MACROECONOMIC AND BUSINESS ENVIRONMENT IN 2016
016 saw a year of many unexpected fluctuations on Flexible exchange rate. 2016 was recorded as a 22,900 USD/VND rate the world markets. Brexit, the second-time increase stable year of exchange rate and foreign exchange market 22,800 in Fed’s fund rate along with new US president Donald (Forex). VND depreciated 1.1% compared to USD in total 22,700 2 last year. This was a positive reduction in forex which faced 22,600 Trump caused many effects on the global economy. many challenges: (1) process of Fed interest rate raise, (2) 22,500 USD appreciated moderately in international market and 22,400 With the strong integration into the global economy, Vietnam last year could not avoid negative (3) seasonal demand for year-end payment. 22,300 impacts. However, policies of the Government helped the domestic economy maintain a 22,200 sustainable growth. To alleviate the pressures on exchange rate policy, in 2016, the State Bank of Vietnam officially applied a 22,100 new policy which central exchange rate was adjusted 22,000 flexibly. This will help currency market of Vietnam 21,900 be stable when confronting pressures from global Jul Feb Sep Jan Apr Jun Aug Mar May Oct Dec ECONOMIC financial market in near future. Nov ACHIEVEMENTS Called interest rate In 2016, average called interest rate long-term. increased slightly while increased slightly compared to 2015 which was originated from: (1) Regardless of slight increase in Inflation maintained at moderate level. pressure on higher cost of education and medical care. lending interest rate increasing demand of called capital called interest rate, lending interest Because domestic demand recovered slightly in 2016, Nevertheless, the Government had showed ability of seemed to be stable and when growth of called capital was rate continued to be stable. growth of CPI faced many pressures from: (1) increasing control and guarantee inflation target under 5% last year. hardly fluctuated. smaller than credit last year, and (2) Therefore, average of short-term price of staple goods, (2) recovery of oil price, and (3) Circular No 36 was modified strictly lending interest rate was maintained in regulations of borrowing short- popularly at 6%-7% and 9%-10% in term capital to lend in middle and case of long-term lending interest rate.
CPI chart called and lending rate 120 0.9 16%
0.8 14% 100
0.7 12%
80 10% 0.6
60 8% 0.5
6% 0.4 40 4% 0.3 20 2% 0.2
0 0 0.1 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 06/12 10/12 02/13 06/13 10/13 02/14 06/14 10/14 02/15 06/15 10/15 02/16 06/16 10/16
Foods Beverage&Tobacco Healthcare CPI Export Less than 1 month Manufacturing 3 months
36 ANNUAL REPORT 2016 37 www.cng-vietnam.com MACROECONOMIC AND BUSINESS ENVIRONMENT IN 2017 MARKET OUTLOOK AND BUSINESS 2016 (cont...) STRATEGY
CHALLENGES The global economy is predicted to have many difficulties and unexpected AFFECTING CNG VIETNAM risks in 2017. For domestic economy, recovery signals are expected to become more positive in 2017.
Oil price recovered but reducing quantity. Hence, despite of recovery, oil price last year was still was at low level. Nevertheless, recovery hardly can happen strongly when confronting present risks and challenges. World Bank generally lower than average of oil Continuing to be a harsh year of fuel forecasts that the growth rate of GDP Vietnam in 2017 is 6.3%, which is considerately low compared to recent years. market, especially oil and gas market, price in 2015. In US market, WTI oil oil price in 2016 was considerately price reached averagely USD 44.39/ Given that situation, CNG Vietnam perceives opportunities and challenges of business activities of the Company as follows: low from the beginning of the year barrel and was still low compared due to return of oil country Iran after to average price of USD 49.1/barrel abolishment of embargo. Facing in 2015. gradual disadvantageous situation, OPEC and non-OPEC oil exporting countries reached an agreement in Fluctuation of fuel price
120 Oil price is expected to continuously recover in 2017. Global oil price was recorded to recover well in 2016. According to IEA, level of compliance in reducing quantity of OPEC was 90% in January 2017. This is expected to stimulate oil price to remain recovery in 2017 and support recovery of gas 100 price.
80
60 Crude oil price 120
40 100
20 80
0 60
05/2009 05/2009 05/2009 05/2009 05/2009 05/2009 05/2009 05/2009 40
20
0
01/2013 01/2014 01/2015 01/2016 01/2017
38 ANNUAL REPORT 2016 39 www.cng-vietnam.com 2017 MARKET OUTLOOK AND BUSINESS STRATEGY (cont...)
International integration
Firstly participate in integration companies also accelerate expansion of business Exchange rate usd/vnd activities to meet opportunities. of Free Trade Agreement (FTA). Leaving out of TPP of USA was not a positive signal. However, Free Trade Agreement Vietnam – EU Prospect of development of South (EVFTA) along with establishment of Asia Economic USD will keep East region and Hong River Delta USD appreciation will affect negatively global oil price. Community (AEC) are expected to have loads of appreciating due to the plan of increasing interest rate at least 3 times in next years of Fed. This will With transparent opportunities for attracting FDI into Vietnam in near seems to be positive. create more pressures on reduction of oil price in 2017. environment expressed by good growth rate of future. economy, stability of inflation and exchange rate, In addition, recovery of oil price can encourage many countries except OPEC to increase quantity and better policies and investment environment: (1) In 2016, Vietnam attracted more than USD 24.3 recovery will be disturbed as a result. prospect of Vietnam economy is currently very billion of FDI, which was at very high rate of 7.1% good, and (2) Vietnam will be a potential destination compared to last year, speed of releasing capital for FDI. also increased extremely to USD 15.8 billion at a rate of 9%. 22,900 With strategic location, South East market and Hong River Delta markets are evaluated to continuously 22,800 One noticed point is that environmental problem become magnets for FDI and open demand of CNG, is one of priorities in foreign companies. Therefore, 22,700 LNG consumption afterwards. these companies tend to use clean energy resources 22,600 and CNG is one of them. These are also familiar markets of CNG Vietnam. 22,500 In brief, number of potential customers in near 22,400 future are very high. Last but not least, operating 22,300 22,200 FDI registered capital weakened in 2016. Although value of disbursed FDI capital kept 22,100 growing strongly, new FDI registered capital showed a slow-down signal when was lower 2.5% than previous 22,000 year. The decline of growth rate of FDI should be taken care of due to many effects on prospect of capital 21,900 development in near future.
250 Registered FDI 01/2016 02/2016 03/2016 04/2016 05/2016 06/2016 07/2016 08/2016 09/2016 10/2016 11/2016 12/2016 01/2017 01/2017 01/2017 Disbursed FDI 200
150
100
50
00
2012 2013 2014 2015 2016
40 ANNUAL REPORT 2016 41 www.cng-vietnam.com 2017 MARKET OUTLOOK AND BUSINESS STRATEGY (cont...)
Increasing demand clean fuel
Prospect from transportation Prospect of development of vehicles. Sustainable traffic development LNG market will help increase is a general tendency in the world and Vietnam. consumption in future. Up to 2020, HCM city, Binh Duong, Quang Ninh currently demand for LNG consumption will reach 15 prioritize public transportation system. Bus billion m3. Moreover, plans of exploitation and using CNG is suggested as an optimal solution import of LNG are accelerating step by step for green traffic and receives many favorable which will help raise prospect of LNG market in policies. future.
Intense competition from and coal. Because of cheaper price up to 20- 25%, ample supplies and low transference cost, substitutes. In the economy which is competition in fuel market will be even more still having many difficulties, loads of companies intense. tend to choose fuel substitutes such as biomass CNG is a potential market which attracts many competitors to participate in. Gas-Petrolimex Corporation is an example in near future.
42 ANNUAL REPORT 2016 43 www.cng-vietnam.com STRATEGIC BUSINESS ORIENTATIONS IN 2017 SOLUTIONS FOR MANAGEMENT & ADMINISTRATIon SOLUTIONS FOR MARKET & BUSINESS Production, transportation and Finance other fuels, based on context station in order to serve all distribution of CNG zz Taking priority and actively arrange capital for To maintain growth of ensuring profits for the retail customers and cut Company and stabilizing investment and human costs. zz Keeping maintenance, repair and strict supervision investment projects and business activities. as in recent years in production for customer. for processes of production and delivery to ensure zz Monitoring operating costs efficiently, manage zz In southern markets, the that machinery is always in the best operating front of difficulties accounts receivable and payable, minimize overdue zz Continuing to accelerate Company should actively condition. and challenges of activities of market cooperate with agencies and debt from customers. development and seeking for investors of industrial zones to zz Setting up safety controlling methods effectively to macroeconomics, zz Company’s funds and capital will be utilized flexibly to new customers. Guaranteeing gather market information and minimize accidents, problems. Strictly monitoring increase income from financial activities. industry and best services and supports for meet customers in industrial and eliminating unsafe conditions. customer who receives gas. zones. specifications in zz Supporting information disclosure in compliance with zz Continuing to apply effective application of Safety the laws to maintain the prestige and picture of the business activities of zz Developing gas market under - Quality - Environment Management system Company in front of shareholders. CNG Vietnam as well, diversifying users of CNG to according to OHSAS 18001: 2007, ISO 9001: 2008 and grant stability and reduce ISO 14001: 2004 on the production and business of the Company worked dependence on a specific the Company. out solutions and productive industry. Organization, staffing and human zz Encouraging initiatives/ideas which improve resource business strategies in zz Applying flexibly diverse technology to optimize business activities. 2017 as follows: forms of gas sales including sales for faster customer Investment zz Continuing using policy of appointing, assigning base development, reducing human resources appropriately to meet demand of investment costs and human zz Increasing in monitoring, supervising the investment business activities in each period. zz Applying flexible policies resources on the principles process to ensure the projects are implemented safely, in pricing and discount to of safety, efficiency and completed with quality and schedule proposed. zz The Company will review organizational structure, encourage customers in each sustainability. production activities to ensure conformity with the region and each stage, in order zz Actively carrying out the procedures, documents in development of the Company in each period. Create to increase consumption and zz Accelerating supplying gas compliance with the regulations and the Company’s effective environment to attract human resources avoid customers switching to to customers through central procedures. with qualifications and experiences to work for the Company for the long time.
zz Recruiting high quality human resources with qualifications, skills and experience as the base for CNG Vietnam’s growth in the future. Renewing reasonable remuneration based on performance to be suitable with labor market/industry.
44 ANNUAL REPORT 2016 45 www.cng-vietnam.com STRATEGIC BUSINESS CORPORATE GOVERNANCE ORIENTATIONS IN 2017 (cont..) 03 48 Governance model and Management structure 52 Introduction of BOD, BOS and BOM 59 Report of the Board of Directors 66 Report of the Board of Supervisors SPECIFIC 69 Transaction, remuneration and benefits of the BOD, BOS and BOM 69 Investor Relations PLAN FOR THE YEAR 2017 72 Risk management
No Item Unit 2017 Plan I Volume Million SM3 110.00 1 North Million SM3 10.00 2 South Million SM3 100.00 II Revenue Billion VND 974.60 1 North Billion VND 88.70 2 South Billion VND 885.90 III Profit before tax Billion VND 101.00 IV Profit after tax Billion VND 80.80 V Profits after tax/ Equity % 30 VI Dividend % 15
LEAN TO MAINTAIN EFFIC IENCY
46 ANNUAL REPORT 2016 www.cng-vietnam.com GOVERNANCE MODEL AND MANAGEMENT STRUCTURE General Shareholders Meeting (GSM) and long term, medium term and annual investment plan of the Company. General Shareholders Meeting is the highest competent authority in decision-making with regard to obligations Department of Sales GOVERNANCE MODEL and rights stipulated by laws and Charter of CNG Vietnam. Sales Department is a general management unit, has General Shareholders Meeting also makes decision on function of advising the Board of Management in CNG Vietnam operates as a joint stock company under the direct functional organizational structure and has investment and development policy, capital structure, developing strategy on joint venture, association in the no investment in subsidiaries, associated companies. business plan, organizational structure and operation gas business (LPG, CNG, LNG …) of the Company. management of the Company. CNG Vietnam Joint Stock Company is organized and operated under the Law of Enterprises, Company’s Charter To manage and develop the business activities of gas of Organization and Operation which are approved by the General Shareholders Meeting. Board of Directors (BOD) products (LPG, CNG, LNG…) in accordance with the business strategy of the Company. Board of Directors is the corporate governance unit of the Company, has full rights on behalf of the Company To manage, supervise and negotiate gas buying and to make decision for the objectives and benefits of the selling contracts and other contracts for the needs of the GSM Company, except for matters within the authority of Company. General Shareholders Meeting. BOS To build and maintain the quality management system Board of Directors is directly responsible before General in accordance with the standards of ISO, OHSAS at the BOARD OF DIRECTORS Shareholders Meeting for all matters about corporate department and the Company. management stipulated by laws, Company’s charter and revolutions of General Shareholders Meeting. Department of Administration
BOM Board of Supervisors (BOS) Administration Department is a general management unit, has function of consulting and assisting Board Board of Supervisors is elected by General Shareholders of Management in administrating the organization Meeting, supervising entire operations of the Company in and personnel, training activity, compensation and accordance with the charter as well as related regulations. remuneration policy, compliance in the Company.
Board of Management (BOM) To administrate office equipment, document archive, security and communication. Board of Management is the corporate governance unit of To research, propose and implement the improvement the Company and manages all activities of the Company plans for organizational structure in line with the under the Law, requirements of industry, disciplines of the objectives of the Company and requirements of the Company. production and business. Chief Executive Officer is the legal representative of the DEPT OF DEPT OF Department of Accounting and Finance DEPT OF SALES DEPT OF DEPT OF FINANCE NORTHERN Company. PLANNING & TECHNOLOGY AND PHU MY BRANCH ADMINISTRATION & ACCOUNTING BRANCH INVESTMENT SAFETY Department of Planning and Investment Accounting and Finance Department is a general management unit, responsible for consulting and assisting Board of Management in exploiting, maximizing Department of Planning and Investment is a general the efficiency and development of the Company’s capital management unit, responsible for advising and assisting and assets. the Board of Management to build and implement the development strategy, production and business plan, To manage the financial operations of the Company. investment plan for the Company. To manage and ensure the accounting and statistics To prepare, propose and manage the detailed solutions system to comply with Vietnam accounting standards, to implement the strategy, planning, policy, business plan, Accounting Law, Statistics Law, tax laws and systems of financial management and accounting of the State and the Company.
48 ANNUAL REPORT 2016 49 www.cng-vietnam.com GOVERNANCE MODEL AND MANAGEMENT STRUCTURE (cont...)
To build, propose the financial regimes and defend the Board of Management in administering and managing general financial plan of the Company. Periodically, the production and transportation of CNG according making report about the implementation of financial plan to production plan approved, ensuring the safety and assigned as prescribed. meeting the requirements of customers; monitoring and calculating, reporting the data to Board of Management To co-ordinate with other departments of the Company and other relating departments. assigned by Board of Management in the preparation, negotiation, signing and implementation of contacts with To manage and monitor periodically (daily, monthly) partners, be responsible for reviewing the terms related to or irregularly the maintenance and repair activity for finance and accounting… equipment of plants allocated by the Company.
Department of Technology - Safety To coordinate with the Department of Technology – Safety – Quality in planning regularly the maintenance Department of Technology – Safety is a general and repair, overhaul and conducting safety analysis for management unit, responsible for consulting and assisting dangerous work before performing maintenance and Board of Management in managing, administering and repair. organizing the implementation of scientific and technical activities, quality, technology and production of Company. To establish and implement the safety – heath – environment task, fire protection and emergency rescue To administer and manage the safety, fire protection, system for production, transportation of gas. To apply and labor safety and environmental protection; to build maintain the safety – quality – environment management and maintain the safety management system in the system in accordance with ISO 9001:2008, OHSAS Company’s activities. 18001:2007 and ISO 14001:2015….
To co-ordinate with other departments of the Company Northern Branch in preparation of bidding documents, evaluation of bids, building cost estimates, maintenance and repair and Northern branch is a dependent accounting unit in other services including production, negotiation, signing line with the financial regulations of branch approved and implementation of contacts with partners… by Board of Directors and the financial regimes of the Company, having self-managed mechanism in production Phu My Branch and business activities as assigned by the Company, and being responsible for the obligations and benefits of the Phu My Branch is a direct reporting unit of the Company, Company within the capital and assets assigned to the involves directly in the production and transportation of branch. CNG. The Plant has function of consulting and assisting
Changes in organizational and management structure in 2016
zz On 14/03/2016, PVGas South transferred its entire shares to PVGas. PVGas became a major shareholder of CNG Vietnam with the holding rate of 56% of chartered capital.
zz On 19/04/2016, BOD issued Decision No. 113/QD-CNG changing the name of functional divisions to departments, to be in line with the operational model of PVGas.
zz On 17/05/2016, BOD issued Decision No. 09/NQ-HDQT approving the establishment of Phu My Branch.
50 ANNUAL REPORT 2016 51 www.cng-vietnam.com BOARD OF DIRECTORS
Mr Vu Tuan Ngoc Mr Vu Van Thuc Ms Nguyen Thi Hong Hai Mr Pham Dinh Dat Ms Le Thi Thu Giang Chairman Member/CEO Member/Deputy CEO Non-executive Member Independent Member
Year of birth: 1957 Year of birth: 1976 Year of birth: 1973 Year of birth: 1962 Year of birth: 1973 Qualifications: Economic Engineer Qualifications: Bridge and Road Construction Qualifications: Shipping Economy Qualifications: Bachelor of Economics Qualifications: Bachelor of Finance Engineer Engineer, Bachelor of Accounting – Accounting, Master of Business Personal ownership: 69,030 Personal ownership: 0 & Finance, Master of Finance and Personal ownership: 0 Administration Banking Ownership representative for PVGas: Ownership representative for PVGas: Ownership representative for PVGas: Personal ownership: 625 4,860,000 (18.00%) 4,860,000 (18.00%) Personal ownership: 0 2,700,000 (10.00%)
Ownership representative for PVGas: 2,700,000(10.00%)
52 ANNUAL REPORT 2016 53 www.cng-vietnam.com BOARD OF MANAGEMENT
Mr VU VAn ThUc Mr Bui Van Dan Ms Nguyen Thi Hong Hai Mr Tran Quang Dan Mr Nguyen Nguyen Vu CEO Deputy CEO - Technology Deputy CEO - Finance Deputy CEO - Investment Deputy CEO - Sales
Year of birth: 1976 Year of birth: 1965 Year of birth: 1973 Year of birth: 1963 Year of birth: 1971 Qualifications: Bridge and Road Qualifications: Oil Technology Qualifications: Shipping Economy Qualifications: Construction Machinery Qualifications: Bachelor of English, Contruction Engineer Engineer, Bachelor of English Engineer, Bachelor of Accounting Engineer, Corporate Governance Aquatic Economy Engineer & Finance, Master of Finance and Engineer Personal ownership: 0 Banking Personal ownership: 6 Personal ownership: 4 Ownership representative for PVGas : Personal ownership: 0 Personal ownership: 762 4,860,000 (18.00%) Ownership representative for PVGas: 2,700,000(10.00%)
Changes in the BOM in 2016
New CEO: On 07/04/2016, the BOD issued Decision No. 99/QD-CNG appointing Mr. Vu Van Thuc as the new CEO from 07/04/2016, to replace Mr. Dang Van Vinh who resigned from the BOD member cum CEO.
New Deputy CEO: On 26/05/2016, the BOD issued Decision No. 149/QD-CNG appointing Mr. Truong Manh Thang as Deputy CEO from 19/05/2016.
54 ANNUAL REPORT 2016 55 www.cng-vietnam.com BOARD OF MANAGEMENT (cont...) BOARD OF SUPERVISORS
Mr Truong Manh Thang Mr Nguyen Manh Hung Mr Huynh Lam Kiet Ms Tran Thi Thu Hien Ms Pham Thi Loan Phuong Deputy CEO - Planning Chief Accountant Chief Supervisor Member Member
Year of birth: 1975 Year of birth: 1984 Year of birth: 1986 Year of birth: 1975 Year of birth: 1988 Qualifications: Bachelor of Economics Qualifications: Bachelor of Finance and Qualifications: Bachelor of Economics Qualifications: Bachelor of Accounting, Qualifications: Bachelor of Business Banking Bachelor of Laws Administration, Bachelor of Accounting
Personal ownership: 0 Personal ownership: 0 Personal ownership: 16 Personal ownership: 354 Personal ownership: 86
56 ANNUAL REPORT 2016 57 www.cng-vietnam.com GOVERNANCE MODEL AND REPORT OF THE BOARD OF MANAGEMENT STRUCTURE (cont...) DIRECTORS
List of BOD members who have corporate governance certificates
CManagement members regularly participate in corporate governance training programs to promote their capacity and enhance their contribution for the operations of CNG Vietnam. Aware of the decisive roles of management board, the Company pays full attention to the corporate training courses and programs.
No Fullname Position
1 Mr Vu Tuan Ngoc Chairman 2 Mr Vu Van Thuc Member of the BOD cum CEO 3 Mr Pham Dinh Dat Non-executive member of the BOD 4 Ms Nguyen Thi Hong Hai Member of the BOD cum Deputy CEO 5 Ms Le Thi Thu Giang Independent member of the BOD
List of BOD members participated in training programs of corporate governance in 2016
No Fullname Position BOD’S ACTIVITIES in 2016 1 Mr Vu Tuan Ngoc Chairman 2 Mr Vu Van Thuc Member of the BOD cum CEO 3 Mr Pham Dinh Dat Non-executive member of the BOD In 2016, the BOD fulfilled all obligations under the laws, rules and 4 Ms Nguyen Thi Hong Hai Member of the BOD cum Deputy CEO regulations, procedures of the Company, concentrated in: strategy 5 Ms Le Thi Thu Giang Independent member of the BOD formation, operational control and supervision and risk management.
Strategy Operational Supervision Risk formation control management
To counter complicated Report of Board of To supervise feedbacks of Risk management situations on the world Management related parties process oil and gas market Report of operational To supervise feedbacks of To identify possible risks Macroeconomic outlook effectiveness staffs in the year and give the mission of monitoring/ Context of market and Report of financial To monitor compliance handling to Board of competition situation of law, regulations/ Management procedures of the Report of investment Company, especially To supervise process of activities issues related to “Safety risk management and – Quality – Environment” work out solutions to Dividend for shareholders improve
58 ANNUAL REPORT 2016 59 www.cng-vietnam.com REPORT OF THE BOARD OF DIRECTORS (cont...)
In 2016, the Board of Directors held 1 Annual Shareholders Meeting, 4 periodical meetings of Board of Directors and many times of seeking Board of Directors members’ consent in writing in 2016. Evaluation of
Resolutions/ Decisions of bod issued in 2016 the BOD about
No Resolution/ Decision number Date Content business activities
1 01/NQ-HĐQT 20/01/2016 Second dividend payment of 15% for 2015 n 2016, global gas market had some specific 2 26/QĐ-CNG 01/02/2016 Approval of salary and labour plan for 2015 positive signals. Cutting agreements were passed 3 02/NQ-HĐQT 15/03/2016 Approval of business plan for 2016 continually which made an improvement in oil 4 03/NQ-HĐQT 30/3/2016 1st quarter/2016 meeting of the BOD Iprice. Despite of positive information to support oil 5 04/NQ-HĐQT 07/04/2016 Dismissing Mr. Dang Van Vinh from member of the BOD cum CEO price, it only fluctuated in range of USD 40-50/barrel 6 05/NQ-HĐQT 07/04/2016 Appointing Mr. Vu Van Thuc as a member of the BOD cum CEO in the year. Specially, oil price had tendency to vary 7 113/QĐ-CNG 19/04/2016 Renaming functional “Division” to “Department” more complicated, so building plans and running business operation of the Company faced more 8 06/NQ-HĐQT 21/04/2016 Dismissing Mr. Tran Van Nghi from member of the BOD difficulties. 21/04/2016 và Appointing Mr. Pham Dinh Dat to a non-executive member of the 9 07/NQ-HĐQTvà 120/QĐ-CNG 27/04/2016 BOD The BOD always follows fluctuations of market, 10 08/NQ-HĐQT 11/05/2016 Approval of adjustments to business plan progress of business operation, prospect of 11 09/NQ-HĐQT 17/05/2016 Establishment and appointing Director of CNG Phu My Branch macroeconomics to give appropriate orientations 19/05/2016 và for practical situations. In general, the whole 12 10/NQ-HĐQT và 149/QĐ-CNG Appointing Mr. Truong Manh Thang as Deputy CEO 26/05/2016 Company had attempts to complete missions and 13 155/QĐ-CNG 01/06/2016 Salary and compensation policies of the Company business targets well in 2016. Operational and organizational mechanism, financial mechanism, 14 188/QĐ-CNG 27/06/2016 organizational structure of Phu My Branch 15 11/NQ-HĐQT 27/06/2016 Resolution for 2nd quarter/2016 meeting of the BOD 16 196/QĐ-CNG 07/07/2016 Approval for investment regime and bid management 17 199/QĐ-CNG 13/07/2016 Decision of approval of safety bonus mechanism Evaluation of production and safety Decision of approval of organizational and training regime in the 18 208/QĐ-CNG 29/07/2016 Company BOD always follows fluctuations in production Decision about traveling cost for staff for foreign short-term business 19 238/QĐ-CNG 15/08/2016 trips of market, progress of In business operation, CNG Vietnam always puts 20 248/QĐ-CNG 29/08/2016 Decision of dismissing Director of Northern branch business operation, prospect first priority on safety in production, transportation and delivery. The Company incessantly maintains 21 249/QĐ-CNG 29/08/2016 Decision of appointing Director of Northern branch of macroeconomics to give and improves operational method to have the most 22 251/QĐ-CNG 29/08/2016 Decision of depreciation level of Subaru optimized and safe results. 23 12/NQ-HĐQT 05/10/2016 Resolution of 3rd quarter/2016 meeting of the BOD appropriate orientations for practical situations. In general, the The Company improved continually and applied Activities of BOD’s independent members whole Company had attempts to into operational production of the Company: safety - quality - environment management system (ATCLMT) Non-executive members attended all meetings and involved in dealing with the issues relating to Board complete missions and business to meet standards OHSAS 18001:2007, quality of Directors’ responsibility adequately. Non-executive, independent BOD members were appointed to targets well in 2016. standard ISO 9001:2015 and environmental standard ensure interest balances of shareholders, government and employees of the Company. Besides, these ISO 14001:2015. members play an important role to enhance the efficiency and transparency of corporate governance.
Activities of committees under the BOD: Board of Directors has not yet set up committees because it is not a reasonable time for the current situations of the Company.
60 ANNUAL REPORT 2016 61 www.cng-vietnam.com REPORT OF THE BOARD OF DIRECTORS (cont...)
Evaluation of Evaluation of Financial management Evaluation of Organization and human resources In 2016, Financial – Accounting department advised the the BOD about BOD to implement policies in saving, cost reduction Recruitment, arrangement and transference were and give many solutions to retrieve revenue, debt appropriate to assure effectiveness of business comparison, accelerate capital turnover, compute, (cont...) operation. Training activities were hold regularly in business activities balance capital appropriately for effective business order to enhance skill, competence of staffs on purpose operation. of human preparation for development in near future.
To develop role of supervising, monitoring and advising Paying salary, remuneration and funding were followed to the BOD, in order to meet management requirements fairly and transparently under approved statutes. The in ever-changing monetary policy and growing scale of Management paid attention to carry out fully labor the Company’s assets, the BOD requires that financial policies under the Law in time, which made jobs and activities continually pay attention to following stable incomes for 239 staffs. 32.65 VND bil problems: total capital zz Active arrangement of capital to finance investment Evaluation of performance of the BOM projects and business operation of the Company. disbursed in 2016 The BOM complied with Enterprise Law, Company’s zz Effective mangement of cost, debt and restriction in statutes, resolutions of the ASM, resolutions and due debt of customer. decisions of the BOD in management and execution. The BOM directed related departments to complete Evaluation of basic construction zz Always focusing on activities in capital conservation targets about revenue, profit. such as: activities related to retrieving debt need to In 2016, based on approved plans by the BOM, total investment in basic construction in 2016 was VND 253.37 billion as be more supervised and executed by many ways, Perceiving clearly difficulties and challenges the detailed as follows: controlling debts by debt provisions under current Law. Company were facing, the BOM had gaven flexible solutions in execution as well as business operation to zz Cooperating with departments, factories to outsource controll effectively activities of the Company and have capital for business operation. appropriate strategies for orientation. Investment capital No Project (VND billion) zz Cooperating in information announcement in securities market under the Law. 1 Transfering project “Investment for development of market” 9.11 2 Transfering project “Investment for development of Northern markets” 30.85 zz Analyzing economy annually to consult the BOD about management, execution of business operation of the 3 Transfering “Purchasing and installing PRU” 4.05 Company in time. 4 Transfering “3,000 KVA transformer station” 4.43 Transfering “Purchasing and installing 03 2,000Sm3 – 2,500Sm3 compressors with 5 46.74 compressed pressure at 250bar and input compressed pressure at 18bar 6 Purchasing and installing 01 CNG gas compressor 16.25 7 Purchasing 10 transporting tanks 108.34 8 Purchasing 10 trailers 3.6 9 Head burning supplying gas system for Vigalacera customers 30 Total 253.37 According to demand of customers and order from the Corporation, some projects were temporarily stopped. Total realeased capital in 2016 was VND 32.65 billion.
62 ANNUAL REPORT 2016 63 www.cng-vietnam.com REPORT OF THE BOARD OF DIRECTORS (cont...)
PLANS, ORIENTATIONS OF THE BOD
zz Constructing and developing zz Maintaining, improving and CNG Vietnam sustainably, applying effectively safety Based on core becoming a leading supplier of - quality - environment CNG in Vietnam, pioneer in CNG management system in business business operation, technology and having largest activities of the Company. achieved goals market share of CNG in market. and judgements zz Complying with Law of zz Diversifying other models of information disclosure in about market in business and customers of CNG. securities market to publicize next period, the transparently information for zz Diversifying capital resources, investors and shareholders. BOD had planned calling capital effectively from and orientated different sources.
development of zz Expanding and developing CNG CNG Vietnam as market in the South and North of follows: Vietnam and pioneering of LNG consumption in next period.
64 ANNUAL REPORT 2016 65 www.cng-vietnam.com REPORT OF THE BOARD OF SUPERVISORS
Results of supervising business operationS in 2016
In 2016, the Company completed targeted plan for plan of maintainence and periodic repair and labor operational production of ASM. protective plan in 2016.
The Company installed consecutively and safely gas The Company continually held a program which was for supply system for customer as well as protected gas saving and waste avoidance, improved salary policies stations and safe area of total system, implemented and distributed salary, remuneration by the way which was connected to effective performance.
Results of supervising members Of the BOD and BOM
right and duty of the BOD and BOM solutions to achieve the best result.
The BOD, the BOM implemented rights and obligations Head of the Company paid attention to solutions of capital rightly with high responsible spirit for legal benefits of the conservation. Activities related to retrieving debts were Company and shareholders. The BOM followed closely concerned and resolved by many ways and provisions for target, orientation of ASM’s decisions to make specific the debt were complied with regulation. missions. Based on resolutions, decisions of the BOD, the BOM make these missions into reality and had flexible Activities of the BOS in 2016
Compliance with the Law in management, Reporting activities: The Company complied well In 2016, the BOS implemented following missions: execution stipulations of information announcement as a listed company. Financial statement, report of management, Investment activities: Investment of fix asset was annual report, report of stock transaction of internal zz Supervising activities of the BOD, BOM in applying operation; Checking effectiveness of capital usage in followed by regulation. Constructive investment was shareholders, transaction of treasury shares, advanced resolutions of ASM; Considering compatibility of investment. followed by stipulations of Bid law, stipulations about dividend, top staff supplement… were announced fully in decisions of the BOD, BOM; Monitoring progress, qualily management, cost management of construction. Company website in time to provide official information procedure of establishment of statute, regulation, zz Auditing accounting receipts for legality, for shareholders, investors. document in the Company. appropriation and compliance in current policies. Verifying quarter and annual financial statement Establishment of statutes, internal regulations zz Testing logicality, legality and honesty in before and after auditing. management, execution to discover latent risks or Establishment of statutes, internal regulations were implemented strictly and carefully based on business reality and undetected risks to advise management activities appropriate with the Law. Passing contributed ideas for draft promoted collective knowledge, therefore statutes had been in running refined risk solutions in business highly feasible which were effective tools for management and execution.
66 ANNUAL REPORT 2016 67 www.cng-vietnam.com REPORT OF THE BOARD OF SUPERVISORS (cont...)
TRANSACTIONS, REMUNERATION AND BENEFITS OF BOD, BOS, BOM AND CHIEF ACCOUNTANT
The Company applied salary policy for the Management under the Law which harmonize with policies of annual salary and fund of the Company and is a worthy reward for working capacity and result of every member. Other remuneration and general welfare were followed by labor policy and labor collective agreement of CNG Vietnam. The bonus of the Management was Evaluation of the BOS extracted from after tax profit which was followed by decision of ASM about remuneration for the BOD and BOM.
Salary, compensation and other benefits of the BOD: In 2016, total paid salary, remuneration for the BOM, BOS and BOM memberts was VND 3,222,000,000 and was 77.5% of the plan which was approved in Resolution of the ASM 2016 (VND 4,158,402,500 approved).
During recent years, the At the same time the BOS also Transaction of internal shareholders/major shareholder BOS attempted to supervise participated fully in meetings The BOS currently operational activities, discover of the BOM, updated current Relationship Stock ownership at the Stock ownership at has 3 members. Due and prevent issues and mistakes situation of the Company in time, Stt Person with internal beginning of period the end of period Reason in time in order to guarantee contributed ideas positively as people Shares % Shares % to possession of operation under the law and well as frequently had advices PetroVietnam Southern profound knowledge statute as well as implement to improve policy, procedure, Major 1 Gas Joint Stock 14,904,263 52.2 56,382 0.2 Offering stock annual resolutions of ASM. statute, management ability shareholder and longtime Company and risk prevention in business experiences in Offering publicly operation of the Company. PetroVietnam Gas Joint Majore 2 0 0 15,120,000 56 to increase stock finance, members Stock Corporation shareholder ownership of the BOS Operational plans of the BOS in 2017 Internal 3 Mr Tran Quang Dan 45,592 0.19 762 0 Selling stock always determine shareholder To supervise successfully under Enterprise Law and Company’s statutes, the responsibilities for BOS built working plans in 2017 as follows: supervising activities of the Company zz Supervising the BOD and the BOM in management and execution of the Company. under regulation to protect benefit zz Continually monitoring activities of execution in business operation followed by functions, requirements of Enterprise law and Company’s INVESTOR RELATIONS of CNG Vietnam statutes. shareholders. zz Supervising compliance with statutes, regulations and internal controlling Shareholders are real owners of receives feedbacks, advices answer for investor by email; procedure of the Company. the Company and are sponsors of current and potential Receiving feedback by website; of equity if necessary so that the shareholders. At the moment, Participation in investment zz Monitoring, checking outsourcing of investment capital and constructive Company is able to maintain the Company have already had conference of securities effectiveness in buildings. and expand business operation. Investor Relation team (IR) to companies; Annual report; Relationship with investor build a link with current and Analyzed report of securities zz Verifying quarter and annual financial statements of the Company. contributes to image construction potential shareholders. companies, investment fund; of the Company in capital market. and Information announcement zz Increasing close cooperation between members of the BOS in every unit Material interactive channels under the Law. and internal supervisory department to monitor and supervise. General policy is that the include: Annual Shareholders' Company always provides Meeting; Visit to the Company In 2016, CNG Vietnam paid cash zz Requiring members of the BOS to participate in training courses to enhance essential information sufficiently and factories; Interacting dividend of 30%, which was technical skill and also attend fully specialized conferences related to for investors when being asked, investor by phone; Question and equivalent to VND 81 billion. supervision.
68 ANNUAL REPORT 2016 69 www.cng-vietnam.com RISK MANAGEMENT
Step 1: Defining context of the Company and its business operation
The BOM and Head of departments determine: and opportunity.
RISK MANAGEMENT PROCESS AT zz Strategy, expected output result of safety - quality - zz Activities for risk counteraction and opportunity environment management system. possibly are: Avoidance; Acceptance for another CNG VIETNAM opportunity; Elimination; Modification of probability zz Problems inside and outside related to objective, to minimize risk; Sharing or Storage of risk by public cost of risk to create more value strategic orientation and expected output result of decision. Based on the specific business activities and for the Company. safety - quality - environment management system. Step 4: Evaluation of feasibility of organizational structure, CNG Vietnam does not isk management system zz Problems outside including politics, law, environment activities in risk counteration and was built into specific rules, maintain a separate risk management department, R of financial macroeconomics, technology, opportunity together with consistency in competition, environmental condition related to but instead, relevant departments based on their controlling system by spreading weather, air quality, water quality, pollution… knowledge of risk. In fact, The BOM, Head of department evaluate possibility of functions and tasks are in charge to build processes of activities in risk counteraction and opportunity in case of business environment always zz Problems inside including: value, cultural knowledge, high risks, specifically: evaluation and implementation of risk management for changing, situations will happen resources, operational steps of organization. unexpectedly, the Company related activities. zz Evaluating level of compliance with planned incessantly researches, defines zz Demand and expectation of parties related to safety - solutions. new risks in order to combine quality - environment management system. n 2016, the Company continually of business environment. The solutions flexibly in time. This zz Evaluating level of achieving expected result. ideveloped ways to manage risks Company invested in research, not only guarantees operation Step 2: Risk evaluation to assure flexibility and suitability analysis of fundamental of risks but also help the Company seize In every 6 months, responsible people evaluate possibility with demand for business and gave optimized solutions market opportunities in time. zz Defining risk and opportunity: The BOM, Head of operation of the Company in under current resources, approved of activities in risk counteraction and opportunity in case department determine expected result, uncertainty of high risks and report to the BOM. front of incessant fluctuation cost balance and management affecting to the result from inside and outside of determined problems, opportunity when having Step 5: Monitor and update controlled risk. Supervising, monitoring, updating Chart of defining risk zz Risk analysis: the BOM, Head of department analyze and opportunity in organizational context: risks base on 2 criterias: probability of occurrence and consequence while considering validity of current zz Every year. method and statistics in the past. zz When there is a change in organizational context zz Risk evaluation: The BOM, Head of department (problems inside, outside, demand, expectation of evaluate risks in 3 levels: high, medium and low. INFORMATION Monitor and interested parties) which affects expected result of AND CONSULT update safety - quality - environment management system. Step 3: Risk counteration and opportunity zz When there is an unexpected change related to he BOM, Head of department consider and give solutions environment, risks affecting labor health. Risk counter to counter risks and seize opportunities specifically as 01 Process of risk 05 follows: Defining context zz Regard of low, medium risks, responsible people management maintain and improve (if necessary) current solutions 04 for risk management. In case of high risks, they need 02 Risk evaluation to be in action to counter risk and seize opportunity Defining risk and as well as supplement other methods. opportunity zz Arranging responsible people for risk counteraction 03 and opportunity. Analyzing risk zz Popularizing and carry out risk counteraction
70 ANNUAL REPORT 2016 71 www.cng-vietnam.com RISK MANAGEMENT
3 Achievements in 2016 119.6 Sm CNG VOLUME, 25.5% Using solution for preventing risk of gas price effectively, COMPARED TO 2015 the Company had some positive achievements::
Sorts of risk Because input gas price was managed effectively and there were appropriate policies, the Company attracted 6 new customers together with quantity of supply at 119.6 which have the million Sm3, which increased by 25.5% compared to 2015. 120 BIL VND The effectiveness of cost control helped total cost in 2016 PROFIT AFTER TAX, 1.3% strongest was only VND 747.5 billion, accounting for 77.6% of 2015 COMPARED TO 2015 and made after tax profits at VND 120 billion, being 1.3% influenceS to CNG higher than previous year due to fall of revenue. : Vietnam Interest Achievements in 2016
In 2016, proportion of Payables and Equity in total capital risk were 28.5% and 71.5% respectively which proved that the rate financial strength of the Company was very strong. Total Debt of the Company computed to last year 2016 was VND 47.4 billion and lower 36.8% compared to 2015 in which Gas input Potential affected scope short-term debt was 65%. Despite the raise, debt rate was only 7.3% of total capital. Under the objective that zz Interest rate risk maintaining transparency of capital structure, priority of price risk Equity usage to finance business was reasonable.. zz Risk taste and risk tolerance
zz Mid-term business plan Potential affected scope Solution for risk management zz Long-term strategic objective zz Business effectiveness zz The Company continually supervises happening and predict global oil price to have appropriate Nature of risk zz Mid-term business plan modifications in price. Considering price of output gas, the Company negotiates with customers on Interest rate risk occurs from debts of the Company. When Nature of risk basis of every month in order to minimize risks due average of interest rate increases highly, financial cost 28.5% to fluctuation of oil price and improve effectiveness of will put pressure on revenue of the Company. In addition, CNG Vietnam specializes in CNG supply and its revenue business for all customers and the Company. TOTAL LIABILITES/ the substantial increase of interest rate will make capital EQUITY extremely depends on difference between output and raising for investment projects in future become more z input price of the product. z The Company accelerates development of market to difficult. increase consumption and apply policies of flexible Input gas price of the Company is determined by PVGas price to be suitable with the market in every period, and delivered through tubes of PVGas-D. According to every class of customer and every area. Solution for risk management the route of price increase, input gas price will raise z 10% in next years and 2017 is a period to import zz Building close relationshop with supplier by z The Company starts to research and build necessarily LNG. However, since 2015, the Company establishment of good reputation through fulfilling appropriate capital structure for business production. had negotiated successfully to change the measure payment and related obligations well. The Company can have its own capital by effective operation to finance the business. BIL VND for computing input gas price; specifically, the price 47.4 would be allowed to fluctuate along with global oil zz Conducting budget plan, supervising strictly operating SHORT-TERM LOAN, z price. Despite of a reduction of pressure resulted from cost, maintaining cost… to assure that all costs are in z The Company analyzes capital resources for DOWN 36.8% AS IN 2015 increasing input gas price, strong fluctuation of global planned budget. Beside operating cost, the Company investment activities in order that cost of capital is oil price will still affect considerably business activities always restricts other costs to a minimum amount in minimum and financial structure is safe. of the Company. order to earn highest profits.
72 ANNUAL REPORT 2016 73 www.cng-vietnam.com RISK MANAGEMENT
Risk of demand for Risk of fuel consumption receivables Potential affected scope Potential affected scope Solution for risk management zz Business effectiveness BIL VND 106RECEIVABLES IN 2016 zz Mid-term business plan The Company always monitors activities of debt control 22% AS IN 2015 such as analysis of debt age, due date. Nature of risk zz Long-term strategic objective The Company always build profound relationship with Harsh economy makes value of cash flow extremely zz Business effectiveness customers to understand clearly financial situation, credit important; in which receivables are one of high risk of of everyone. Moreover, the Company shares difficulties capital take over and shortage of the Company. Nature of risk with customers by loosing time of repayment but strictly customers and partners because receivables are from controls receivables. Risk of cash flow happens when the Company are customer operating in different industry and apportioning Customers who consume gas of the Company are facing difficulty in financial obligations and cannot in different geographical areas. mainly industrial productive households, so when The Company do not have any material credit risks with seize important opportunity due to insufficient facing a slow growth of economy, industry will narrow customers and partners because receivables are from capital. Therefore, this is a problem related to asset Regard of receivables which have substantial risk, the production, real estate will be quiet, productive customer operating in different industry and apportioning and working capital management. Bad debts from Company has provision reasonably. The provisions companies will be conservative and demand for CNG in different geographical areas. customers who delay or cannot afford make the are created for due receivables in 6 months or more will fall as well. Company have to have provision and therefore reduce or for receivables cannot be repaid due to liquidation, Regard of receivables which have substantial risk, the profits. bankruptcy or similar cases of debtors. Moreover, when gas price strongly fluctuates, prices Company has provision reasonably. The provisions of substitutes which are lower 25% than CNG make are created for due receivables in 6 months or more Solution for risk management Achievements in 2016 many customers of the Company have a tendency or for receivables cannot be repaid due to liquidation, to use other substitutes. Apparently, this will have bankruptcy or similar cases of debtors. The Company always monitors activities of debt control In 2016, receivables were continually supervised, an impact on the existence and development of the such as analysis of debt age, due date. strictly controlled. Retrieval of receivables was Company. Achievements in 2016 accelerated, therefore the balance was VND 160 billion, The Company always build profound relationship with lower 22% than 2015. Specially, bad receivables were In next years, economic situation is forecasted to have In 2016, receivables were continually supervised, customers to understand clearly financial situation, credit accelerated to retrieve and provision for bad short- unpredictable fluctuation and affect negatively on the strictly controlled. Retrieval of receivables was of everyone. Moreover, the Company shares difficulties term receivables reduced to VND 3 billion from VND 3.3 Company. accelerated, therefore the balance was VND 160 billion, with customers by loosing time of repayment but strictly billion in 2015. lower 22% than 2015. Specially, bad receivables were controls receivables. accelerated to retrieve and provision for bad short- term receivables reduced to VND 3 billion from VND 3.3 The Company do not have any material credit risks with billion in 2015.
+6 customers STRONG GROWTH IN CNG VOLUME SUPPLIED, FROM 41 TO 47 CUSTOMERS.
74 ANNUAL REPORT 2016 75 www.cng-vietnam.com RISK MANAGEMENT (cont...)
Risk of Risk of labor safety human MANAGEMENT Potential affected scope Achievements in 2016
zz Mid-term business plan In 2016, the Company recruited 13 additional laborers, which made total laborer increase to 239 people. zz Long-term strategic objective At the same time, laborers were also got a salary, a Potential affected scope Nature of risk stable income along with deserved remunerations and welfares for high efficiency. Average of salary zz Mid-term business plan Risk of controlling human resources is a problem maintained persistently at VND 18.3 million/month that the Company takes care of because human is a in 2016. The Company purchased volunteer retired zz Reputation of the Company decisive feature for success of any businesses. insurance for staffs to supplement income when retiring, gave 52 courses, 721 people with corresponsive Nature of risk Along with main activities in production and filling cost of CND 2.2 billion… of CNG, LNG and LPG, human resources of the Human resource is a valuable base prioritized firstly Due to specifications of oil industry, operating risks Company are always trained well with high technical in operation of CNG Vietnam. Constructing stable like fire, machine problems, traffic accidents, labor skills. Running systems of compressor, pressure human resources and giving all possible opportunities accidents, thunderstruck accidents, gas leak always reducing unit, equipment is required high skills and for individuals to express themselves to contribute to are latent in production, transportation and delivery. competency. Poor management will lead to shortage of high skilled workers, internal disunity, ineffective the Company and serving community are core values which CNG Vietnam always aims to and fortifies. The consequence is extremely serious if risks happen. operation. In fluctuant business environment, high Hence, these risks will cause damages to properties, ISO 14001:2015 and OHSAS 18001:2007 according Britain qualified human resources are a challenge for the progress of projects, prestige of the Company under Standard Institute (BSI). From operational period up to Company. view of labors and customers. Considering laborers, now, the Company has not let any serious issues happen damages of life, mentality will affect negatively and and this is a pride of a corporation in gas industry. Solution for risk management reduce labor efficiency which is unavoidable. The Company purchases human insurance (accidental The Company always balances benefit of laborers and Solution for risk management insurance, life insurance, insurance for medical care and general benefit of the Company in management of human surgery) for laborers with responsible levels ranged from resources. Assurance of labor safety in operation is always put VND 80 million/case to VND 180 million/case. Therefore, 1st priority on. Activities of operation are also strictly this will reduce loss for the Company if any risks happen. Laborers are recruited, transferred reasonably to make sure supervised and complied with specific procedure. enough human resources and effectiveness in operation. Achievements in 2016 The Company guarantees salary, compensation and other Laborers are trained carefully and labor protection is policies fairly and transparently under Company rules especially emphasized. The Company usually hold training In 2016, activities of production, operation and delivery and laws. The Company always tasks care of physical and courses for fire-fighting in order to increase perception and of CNG Vietnam were carried out safely and effectively spiritual life of staffs to create the best opportunities for train necessary skills in case of accidental issues. and there was no regretful problem. Safety - quality them to develop. In addition, despite of harsh economy, - environment management system was complied this is a chance for the Company to seek and supplement Factories and equipment always have plans for strictly and incessantly improved. qualified human resources in reasonable cost. maintainence, periodic repair and are sustained in the most effective and safe operation. Staffs are usually trained in technical skills, major subjects PERSONS to increase capacity. 239 Completing upgrading safety - quality - environment tOTAL EMPLOYEES 13 AS management system (ATCLMT) under ISO 9001:2015, COMPARED TO 2015
76 ANNUAL REPORT 2016 77 www.cng-vietnam.com REPORT OF THE BOM AND BUSINESS 2016 financial highlights 04 OPERATION ANALYSIS 79 2016 financial highlights 81 Outstanding managerial solutions in 2016 83 Business results in 2016 85 Report on project implementation progress Business 2012 2013 2014 2015 2016 86 Financial analysis operations Consumption volume (Million Sm3) 53.0 62.3 74.6 94.3 119.6 Number of customers 28 23 36 41 47
Business results (VND billion) 2012 2013 2014 2015 2016 Net revenue 801.2 949.8 1.085.6 950.2 890.6 Gross profit 185.0 205.5 229.5 232.7 238.5 Net operating profit 135.5 139.0 136.1 146.2 150.5 Profit before tax 132.2 138.2 130.0 145.1 147.7 Profit after tax 117.9 114.5 112.5 118.7 120.3
Balance sheet (VND billion) 2012 2013 2014 2015 2016 Total asset 623.7 628.1 641.5 643.8 649.9 Owner's equity 380.6 423.0 432.4 398.7 464.6 Chartered capital 213.3 270.0 270.0 270.0 270.0
Profitability % 2012 2013 2014 2015 2016 Return on average total asset
CNG VIET NAM 17.7% 18.3% 17.7% 18.5% 18.6% (ROAA) Return on average owner's equity 30.7% 28.5% 26.3% 28.6% 27.9% (ROEA)
Share 2012 2013 2014 2015 2016 information Outstanding shares (Million shares) 21 27 27 27 27 Earnings per share (VND) 4,569 4,377 4,166 3,943 3,900 Book value per share (VND) 17,844 16,426 16,014 14,760 17,207 Together attempt Dividend rate (%) 45 35 35 30 30 Year-end market price (VND) 14,500 30,000 29,000 31,400 40,800 to make success Market capitalization (VND billion) 309.3 810.0 783.0 847.8 1.101.5
79 2016 financial highlights OUTSTANDING MANAGEMENT SOLUTIONS IN 2016 47 649.9 41 643.8 36
641.5 Given such advantages and disadvantages of the industry and economy in 2016, the BOM has proposed appropriate
28 solutions in a timely manner to improve the operational efficiency of the Company, including: 23 628.1 623.7 Market and business Management and administration 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 CNG Vietnam continues to promote customer relations NUMBER of CUSTOMERS Total asset (Bil VND) In term of Organization and market development through exposure, image promotion, CNG product promotion, sales policies and zz In order to improve operation, production reasonable support policy: management and safe operation of production units, the Company had upgraded Phu My CNG Plant into zz Applying flexible pricing policies and encouraged Phu My CNG Branch.
464.6 customers in each region as well as each stage to 432.4 423.0 380.6
398.7 increase consumption, avoided customers switching 119.6 zz Changing the structure of the company in line with 94.3 to other fuels on raw materials. Ensure profit for the the operational model of PetroVietnam Gas Joint 74.6 Company and stabilize production for customers. Stock Corporation. 62.3
53.0 The company continued to develop services and supported to create the best conditions for customers In term of Policy - Management who receive gas. 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 zz Upgrading the safety - quality - environment 3 zz Developing towards customer diversification to CONSUMPTION VOLUME (Mil Sm ) management system to new version 2015: ISO owner's equity (Bil VND) ensure stability and reduce dependence on a 9001:2015, ISO 14001-2015, OHSAS 18001:2007. particular industry, with strategies for promoting image promotion, finding new customers. zz Reviewing and update the procedures, regulations of PetroVietnam Gas Joint Stock Corporation; zz Expanding into Northern regions to increase output, 30.7% 1,085.6 reduce the negative impact of falling oil prices and to z
949.8 950.2 z Organizing 5S training for staffs throughout the 890.6 28.5%
28.6% 27.9% improve profitability. Company and implement 5S. 26.3% 801.2 zz Setting up a unit responsible for monitoring and 18.3% 18.5% 17.7% 18.6% 17.7% forecasting oil prices in order to keep abreast of In term of Production, Transportation, Distribution world oil and gas market movements and to respond of CNG promptly to the worst fluctuations. Collaborating with 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 other departments to develop suitable solutions, zz Preparing supplies, equipment and tools for NET REVENUE (Bil VND) focusing on suitable market solutions, solutions production and close monitoring to ensure that Return on average owner's equity (ROEA) to cash flow, improve production and business machinery and equipment is in the best operating Return on average total asset (ROAA) efficiency. condition.
zz Closely coordinating with PVGas, PVGas-D to ensure zz Maintenance, maintenance of equipment, machinery, a stable supply of gas, continuous and reasonable vehicles are always followed manufacturer's pricing mechanism. regulations and maintenance and repair plans to
120.3 minimize downtime due to incidents, also such as the efficient use of transportation vehicles even after 1,101.5 118.7 117.9 depreciation. 847.8 810.0 783.0
114.5 (tiếp theo)
112.5 Về quản lý và điều hành 309.3 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016
PROFIT AFTER TAX (Bil VND) Market Capitalzation (Bil VND)
80 ANNUAL REPORT 2016 81 www.cng-vietnam.com OUTSTANDING MANAGEMENT BUSINESS RESULTS IN 2016 SOLUTIONS IN 2016
zz Employee’s benefits and welfares constantly Despite of many difficulties improved. In the context that the oil and gas industry had many difficulties in operations and and challenges, the CNG Vietnam was no exception, the company still BOM has been taking had a 239 in workforce, maintaining a stable worker high responsibility in welfare policy as detailed as follows: management, making best 2016 average employee’s income significantly efforts to fulfill the tasks, maintained VND 18.3 million/person/month. and implementing ASM Upgrading the personal insurance scheme and BOM’s resolutions in for employees (accidental insurance, life insurance, hospital surgery insurance) with limit of indemnity up to line with the determined VND 80 – 180 million/person/case. directions and targets. Buying voluntary pension insurance for all employees to improve their benefits on retirement. zz Number of customer increased strongly from 41 to 47. In which there are 01 new customer from Organizing professional training courses on skills Northern region and 02 new customers in Southern for all employees. region. In term of Investment zz Maintaining efficient work environment, reasonable zz Met sustainable development goals. With remuneration based on performance to ensure the zz The Company also signed agreements with 3 new implemented policies such as corporate customers to supply gas in 2017, and expected to zz Monitoring, supervising the investment process to employee’s benefits. restructuring, upgrading Safety – Quality – ensure the projects were implemented, completed improve the CNG consumption volume. Environment management System maintaining with quality and proposed schedule. zz Continuing to promote training activities; building effective risk management, contributing to community, sharing interests with partners and a system to evaluate employee’s performance, zz CNG sale volumes reached 119.6 million Sm3, determine the strengths, weaknesses and from which engaging the development of CNG Vietnam with the In term of Finance increased by 26.8% compared to 2015. CNG sale to build suitable training plans for employees. prosperity of local community. Specifically: volumes in Southern region reached 92.4 million zz Taking priority and actively arranging capital for Sm3, increased by 8.3%, CNG sale volumes in North investment projects and business activities. region reached 27.2 million Sm3, highly increased compared to 9 million Sm3 in 2015. zz Monitoring operating costs efficiently, manage accounts receivable and payable, minimize overdue zz debt from customers. Company’s funds and capital Revenue declined, but net profit still increased should be utilized flexibly to benefit from financial by 1.3% and completed 113.5% the yearly plan. income. In 2016, the oil price complicatedly fluctuated and maintained at the low level compared to the oil In term of Staffing and Human resource price in 2015, revenue in 2016 reached only VND % 890.6 billion, decreased by 6.3% compared to 2015. development 30 Although the revenue fell sharply, profit after tax cash dividend, still reached VND 120.3 billion, increased by zz Implementing rotation and arranging appropriate 1.3% compared to 2015 and completed 113. 5% martket cap 1,102 bil personnel in production to ensure production annual plan. efficiency. vnd
82 ANNUAL REPORT 2016 83 www.cng-vietnam.com BUSINESS RESULTS IN 2016 (cont...)
a. Environmental indicators (water consumption, c. Responsibility for the local community: 2016 energy consumption, emissions…): Carrying out the was a macroeconomic year with many fluctuations, the undertakings, the thrift practice and anti wastefulness business situation was affected by the sharp drop in oil REPORT ON PROJECTS program of the Corporation in 2016, CNG Vietnam prices. However, the Company was still trying to make simultaneously implemented many measures to its social responsibility through charitable programs IMPLEMENTATION PROGRESS reduce costs in production and business activities (fuel, ("Heart for children", building houses of gratitude, ...), electricity, Water, ...) with a total cost reduction of VND contributing to support the funds under the program 18.89 billion. of launching the Company (Mutual Fund, Petroleum Reserves Fund, Fund for generationsYoung people, etc.) as well as local charitable and philanthropic movements. In 2016, CNG Vietnam accelerated investment activities to b. Workers: Matters related to workers in 2016 such raise the supply capacity for customers. The investment as employment, policies, compensation, insurance, More detailed assessments are in the Sustainable projects implemented in 2016 ensure the quality of works, welfare, labor contracts, training, exercising democracy in Development Report. quality of equipment, on schedule, absolutely safe and the workplace ... were well implemented and ensured the meet the business plan of the Company and the demand of improvement of material life as well as spirit for workers. receiving gas of customers, detail: In parallel with that, the company focused on building corporate culture to create a professional and friendly Projects transferred and continued working environment to help employees maximize their professional ability and creativity. from 2015:
Project “Investment for market development”: Not implemented the rest as the customer invested themselves. 2016 ACTUAL RESULTS COMPARED TO BUSINESS PLAN AND PREVIOUS YEAR Projects approved in 2016 At the end of fiscal year 2016: Project “Northern market development”: The company zz Consumption volume reached 119.6 million Sm3, completed 108.7% annual plan. stopped its implementation under the direction of PetroVietnam Gas Joint Stock Corporation. However, the zz Revenue in 2016 reached VND 898.1 billion, completed 108.6% annual plan. company will invest in a CNG station for buses in Quang Ninh in 2017. zz Profit before tax reached VND 147.7 billion, completed 111.9% annual plan and increased by 1.8% compared to 2015 zz Bought and installed 02 compressors CNG 250 bar: zz Profit after tax reached VND 120.3 billion, exceeding 13.5% of the annual target and increased by 1.3% compared to Completed in quarter I/2016 2015. EPS was recorded at VND 3,900. zz Bought and installed 01 3,000 KVA transformer station: The above remarkable results of 2016 represented the capacity, dedication of BOM and all employees of the Company. Completed in June 2016; zz In addition, some items were given to customers themselves: supplying 10 tanks CNG composite 40ft & 10 trailers, Gas supply system for Viglacera. 2016 2015 Item Unit Capital disbursement: Planned Actual (%) Planned % Consumption volume Million Sm3 110.0 119.6 108.7 94.3 126.8 Total disbursed capital in 2016: VND 32.65 billion, of which: Southern region Million Sm3 82.2 92.4 112.4 85.3 108.3 bil vnd 3 zz Bought and installed PRU: VND 2.53 billion 32.65 Northern region Million Sm 27.8 27.2 97.8 9.0 302.2 total capital Total income Billion VND 827.1 898.1 108.6 959 93.7 zz 3,000 KVA transformer station: VND 3.56 billion Expenses Billion VND 695.0 750.4 108.0 814 92.2 zz Bought and installed 03 compressor 2000 Sm3-2500 DISBURSED in 2016 Sm3, input pressure 18 bar: VND 26.57 billion Profit before tax Billion VND 132.0 147.7 111.9 145 101.8 Profit after tax Billion VND 106.0 120.3 113.5 118.7 101 3
84 ANNUAL REPORT 2016 85 www.cng-vietnam.com FINANCIAL ANALYSIS Revenue reached VND 890.6 billion, completed 108.6% annual plan
Although sale volumes increased significantly, net revenue in 2016 slightly decrease by 6.28% and was only BUSINESS RESULTS (VND billion) 2015 2016 Change (%) VND 890.6 billion. This was due to the fact that the world Consumption volume oil and gas price was still lower than the price level of 2015 Net revenue 950.2 890.6 -6.3% 2016 and affects the Company's gas price. Also, it caused the COGS 717.5 652.1 -9.1% average gas price in 2016 of the Company only reached Gross profit 232.7 238.5 2.5% 7,524 VND / Sm3, decreased by 25% compared to 2015. Financial income 8.7 7.4 -14.4% By expanding the market, increasing output, CNG still excellently completed 108.6% of the annual revenue plan Financial expense 6.2 6.2 -1.0% set. In which: Interest expense 6.1 6.2 0.8% Selling expenses 18.8 26.3 40.2% 23%
General and administrative expenses 70.2 63.0 -10.3% 1.100 Operating profit 146.2 150.5 3.0% 1,085.6 950.2
1.000 949.8
Other income 0.0 0.1 310.9% 890.6 Other expenses 1.1 2.9 161.1% 77% 900 801.2
Profit (loss) from other activities (1.1) (2.8) 156.5% 800 Profit before tax 145.1 147.7 1.8% 700 Profit after tax 118.7 120.3 1.3% 600 Area % 500 Nothern region 23% 400 Southern region 77% Consumption volume reached 119.6 300 119.6 120 million Sm3, increased by 26.8% 200
compared to 2015, completed 108.7% 110 100 annual plan 100
94.3 0 Sales activities of the company continued to reach good 90 Consumption volume 2012 2013 2014 2015 2016 7.13% results in 2016, Consumption volume reached 119.6 80 2015 million Sm3, increased by 26.8% compared to 2015, this 74.6 NET REVENUE (billion vnd) was also the highest growth rate in 4 years. 70 62.3
60
With the policy of increasing market share and promoting 53.0 Gross profit margin improved to 26.8% new customers, especially in the Northern market, this 50 10% from 24% in 2015, and gross profit still growth was a result of the unremitting efforts of the BOM 40 increased by 2.5% as well as all members of the Company in the past year. 30 Despite the decline in revenue, gross profit in 2016 was In details, CNG sale volumes in southern region reached 20 increased by 2.5% compared to 2015 VND 239 billion. 92.4 million Sm3, increased by 8.3%, CNG sale volumes in Besides, gross profit margin recorded positive signal, Northern region reached 27.2 million Sm3. 10 90% reached 26.8%, improved sharply compare to 24% in 2015. 0 Compared to 2015, structure of consumption volume 2012 2013 2014 2015 2016 26.8% Gross profit margin was significantly improved thanks to: had changed with increased contributions in the North that accounted for 23% of total consumption volume zz Maintain reasonable pricing policy. The Company 3 adopted a floating fuel price mechanism based on FO while the South had dropped to 77%. Consumption volumE (million Sm ) Area % price, and the selling price of gas was based on FO Nothern region 10% price or other oil related products such as LPG, DO (depending on customers). It adjusted monthly prices Southern region 90% according to fluctuations in oil prices and negotiates with customers monthly. This helped the company to maintain a positive gross margin in the global oil price fluctuations.
86 ANNUAL REPORT 2016 87 www.cng-vietnam.com 88 Other expenses/Net revenue www.cng-vietnam.com ANNUAL REPORT 2016 General andadministrative /Net revenue Selling expenses/Net revenue -Interest expense/Net revenue Financial expenses/Net revenue Depreciation /Net revenue Cost structure FINANCIAL ANA z z z z management the Company continued to strengthen itscost With advantages anddisadvantages oftheoilmarket, compared to 2015. expenses were VND89.3billion,increased by0.3% In 2016,total sellingandgeneral &administrative general &administrative expenses Effective mana Reduced depreciationandamortizationcost. Oil pricesrecover. Oil still increased b from 24%in2015,andgrossprofit Gross profitmarginimproved to26.8% operation inthepast year. from theimplemented projects hadcome into to years, previous depreciation expensesas new depreciation in2016was relatively lowcompared than 2015.Compared withrecent years, of thelevel reduced to onlyVND60.8millionand5.3%lower Depreciation and amortization cost in 2016 was significantly inimproving gross profit margin. were still in stable performance and contributed depreciated, andtherefore thesemachineries vehicles whichwere fully equipment, machinery, Company efficientlymanaged themaintenance of gross margin improved onayearly basis. of 2016,whichalsocontributed to thecompany's low, there was agood recovery inthesecond half cost ofmanagement was monitored closely by the to ensure gement Although oilprices remained YSIS (cont y 2.5% profitability. of ( continued) selling In particular, ...) and The the
50,0 100 150 200 250 300 0 sharp customers3 new withgas consumption along with 2.96% in2016.However, thecompany hadwelcomed decline insellingprices. led heavily onsales,care andcustomer search, which In otherhands,thecompany was stillwillingto spend expense/revenue resources for market expansion, itsadministrative concentrating onimproving equipmentandhuman Company. althoughthecompany Asaresult, was still 23.1% to 2012 increase an 185 Gross profit (bilVND) increase Gross margin 21.6% 2013
in 205.5 2016 ratio in 21.1% 2014 the which had 229.5 cost continued 0.12% 7.39% 1.98% 0.64% 0.65% 6.8% 2015 offset 24.5% 2015 of
sales/sales 232.7 somewhat to 26.8% 2016 fall 238.5 to 0.32% 7.07% 2.96% 0.69% 0.69% ratio 2016 7.07%. for 6.8% 0,0% 05,0% 10,0% 15,0% 20,0% 25,0% 30,0% 35,0% 40,0% the to
501 149 Owner's equity Long-term liabilities Short-term liabilities Liabilities Long-term assets Short-term assets Total assets Year z z allocation, whichareasfollows: golden rules in capital raising, assets Company alwayscomplieswith development ofCNGVietnam.The helped maintainthesustainable structure ofassetsandresources The stableandappropriate z z ASSETS overall businessefficiency. 2015 to 13.5%,remarked apositiverecovery of Net profit margin improved from 12.5%in yearprevious andcompleted 114%yearly plan. billion, slightly increased by 1.3% compared to the profit after tax in2016reached VND120.3 andbetterefficiency expensemanagement, Thanks to improvement ofoperational Profit billion, plan after completed 114% annu tax reached VND 120.3 & Bil VND Bil VND Bil VND Bil VND Bil VND Bil VND Bil VND Unit RESOURCES 380.6 166.4 243.2 307.3 316.4 623.7 al 2012 76.7 z z z 108 110 112 114 116 118 120 122 0 z z z ensure theliquidity. the short-term asset at70%-80%oftotal asset to working capital, sotheCompany always keeps in gas businesswhichrequires large amountof Understanding thetrading business,especially operations aswellinvestmentsinfixed asset. Always usinglong-term resources to finance the noncore business activities, notspreading outfor investmentsin All resources are focused for core business 423.0 168.0 205.2 117.2 511.0 628.1 2013 37.2 14.7% 2012 Pofit after tax (BilVND)
Profit margin 117.9 12.1% 2013 114.5 432.4 184.3 209.2 120.4 521.1 641.5 2014 24.9 10.% 2014 112.5
12.5% 2015 398.5 201.2 245.1 178.2 465.6 643.8
2015 118.7 43.9 13.5% 2016 120.3 2016 464.6 157.3 185.3 149.4 500.5 649.9 28.0 0,0% 2,0% 2,0% 6,0% 8,0% 10,0% 12,0% 14,0% 16,0% 89 FINANCIAL ANALYSIS ( cont...) 342.7 ASSETS Short term assets
At the end of 2016, short term asset 294.7 was VND 500.5 billion, accounted for 77% of total asset. In which, At the end of 2016, total cash, cash equivalent accounted for
asset of CNG Vietnam the highest proportion, increased 135.6 sharply by 21.6% and respectively
was VND 649.9 billion, 307 117 120 178 149 was 52.7% of total asset about more
grew slightly by 0.3% in VND 342.6 billion (see more details 106 comparison with 2015. in Cash flow Analysis). Cash, cash equivalent accounted for a high 42.0
In particular, short term 26.4
proportion of the company's assets 9.7 asset was VND 501 billion, over the years. These amount helped 8.9 Company ensure fast payment
accounted for 77% of total 316 511 521 466 501 requirements from partners and 2016 2015 asset and long term asset create an advantage for being more was VND 149 billion, active in expansion investment in the future. Cash / short -term financial investment Investories accounted for 23% of Long term assets Short -term receivables Other short -term assets Short-term receivables were total asset. Short term assets 2012 2013 2014 2015 2016 decreased sharply by 21.8%, only Short-term assets structure reached VND 106 billion and mostly in short-term receivables. In 2016, CNG continued to strengthen LONG term assets receivables control so that short term receivables continue to shrink, At the end of 2016, long term Compared to 2015, the original cost helped to optimize working capital asset was only VND 149.4 billion, of fixed assets slightly increased by as well as reduce financial expenses decreased by 16.4% compared to VND 31.2 billion and stayed at VND bil vnd for the Company. 2015, accounted for 23% of total. In 711.6 billion, mainly because major
649.9 50% 81.3% 81.2% which fix assets accounted for the projects were mostly completed in
total asset, up 1% as 72.3%
77.0% Besides the decreased in short- highest proportion VND 142.6 billion. 2015. in 2015 term receivables, the Company also Long term assets were decreased showed bad debt recovery well, as sharply due to depreciation and provision for doubtful receivables amortization in the year. by the end of 2016 was just over VND 2.9 billion, down up to 8% compared
500.5 bil vnd 49.3% to 2015. short-term asset 27.7% 18.7% 18.8% account for 77% total 23.0% Long term assets asset 2012 2013 2014 2015 2016 Short term assets
90 ANNUAL REPORT 2016 91 www.cng-vietnam.com FINANCIAL ANALYSIS ( cont...)
RESOURCES
Equity was still the main source of funding for the Company, accounted Owner’s equity for 71.5% of total capital with VND 464.6 billion. Meanwhile, liabilities In 2016, Owner’s equity of Company reached VND 465 billion, increased by 16.6% compared to 2015 and only accounted for 28.5% with VND 185.3 billion. accounted for 71% of total resources. 70 bil vnd Due to better higher rate of return, undistributed earnings investment fund, extracted after tax was VND 114 billion, increased by 58.8% from profit 51.3% compared to 2015 and investment and development fund was VND 70 billion, increased by 51.3%. These were 465 bil vnd also factors that helped increase equity in the year. 185.3 28.5% 205.2 209.2 245.2 owner's equity, 71.5% 32.7% 32.6% 38.1% resources 243.2 39.0% ANALYSIS 67.3% 61.9% 71.5% 380.6 423.0 423.4 398.5 464.6 61.0% 67.4% CASH FLOWS 185.3 bil vnd liabilities, 28.5% resources 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 Cash Flows from Operation 176.4 210.4 189.6 164.0 181.4 Cash Flows from Investing (78.6) 67.9 (48.7) (87.7) (12.2) Owner's equity Cash Flows from Financing (191.8) (113.8) (101.9) (83.5) (108.3) Liabilities Owner's equity Liabilities Liabilities NET CASH FLOWS (94.0) 164.5 38.9 (7.2) 61.0 At the end of 31/12/2016, liabilities of the Company were VND 185.3 billion, 11.2% Business activities continued to be the main operation Disbursements for financial activities during the year accounted for 38.1% of total resources, of the company when bringing in more than VND 181.4 increased to VND 108.3 billion, mainly due to dividend concentrated primarily in short term billion, up 10.6% over the same period last year. paid to shareholders at VND 80.7 billion and repayment liabilities with VND 157 billion and long 9.0% 7.0% 6.3% of principal at VND 42 billion. term liabilities with VND 28 billion, 5.9% 4.7% During the year, the Company continued to increase fixed accounted for 15% of liabilities. asset investment (installed PRU stations, transformers, With effective business operations, reasonable cash flows 5.7% 4.8% compressors ...) with total disbursed capital of VND 32.6 management along with a sharp decrease in cost items Total short term and long term debts were 2.8% 2.6% billion. At that time, the Company also recovered loans helped the Company to increase its cash flows in 2016, VND 47 billion, decreased sharply 36.8%. and sold other debt instruments of VND 13 billion, helped helped the cash item and cash equivalent increased by Debt/owner’s equity ratio was only 7%. The 2012 2013 2014 2015 2016 the total disbursement for investment activities in 2016 to 16.2% over 2015 to VND 342 billion. low level of debt not only helped reduce stood at VND 12.2 billion risks of interest payment and pressure of Short term Debt /Owner's equity ratio debt payment but also showed that the Company could be easy to raise capital Long term Debt /Owner's equity ratio from borrowings for future investments if necessary.
92 ANNUAL REPORT 2016 93 www.cng-vietnam.com FINANCIAL ANALYSIS ( cont...)
Asset turnover Profitability ratios
Asset turnover in 2016 was only 1.4 times, slightly reduce The effect of the price change policy had helped the compared to 2015 which was influenced by decline in company's profit still show positive growth in 2016. ANALYSIS OF revenue due to volatility of oil price. In addition, cash Accordingly, after-tax profit margin was 12.6% and gross reserves along with the need to increase inventory made profit margin was 26.2%, both positive improvement the asset turnover also reduced slightly in the previous compared to 2015. RATIOS year. FINANCIAL ROAA reached 18.6%, increased compare to 2015. ROEA Resources structure reduced compare to 2015, only reached 27.9%. Decline in ROEA was mainly due to the relatively rapid growth of Financial ratios Unit 2012 2013 2014 2015 2016 BOM always emphasizes safety in working capital, equity in the past year 17% compared to 2015. 1. Liquidity ratios therefore, the debt structure kept a low proportion in the capital structure. In 2016, the debt/equity ratio dropped Current ratio time 1.9 3.0 2.8 2.3 3.2 to only 28.5% because of the efficiency of the business Quick ratio time 1.8 2.9 2.7 2.2 2.9 which helped the company gain more financial resources Cash ratio time 0.5 1.5 1.6 1.4 2.2 from the increase in retained earnings. 2. Efficiency ratios With the positive financial situation, the Company also Day of receivables day 65.8 61.6 54.9 56.4 49.5 reduced the use of loans. Accordingly, short-term and Day of inventories day 9.3 11.0 9.6 12.3 19.2 long-term loans also sharply reduced by 37% compared to 2015, helped the company significantly reduce the Day of payments day 57.6 44.7 45.5 56.5 55.0 interest expense pressure in the next years. Total assets turnover time 1.2 1.5 1.7 1.5 1.4 3. Profitability ratios Gross margin % 23.1 21.6 21.1 24.5 26.8% Operating profit margin % 16.9 14.6 12.5 15.4 16.9% Net profit margin % 14.7 12.1 10.4 12.5 13.5% Return on average owner's equity % 30.7 28.5 26.3 28.6 27.9% (ROEA) Return on average total assets (ROAA) % 17.7 18.3 17.7 18.5 18.6% 35 4. Leverage ratios 31% 29% Liabilities / Total assets % 39.0 32.7 32.6 38.1 28.5% 29% 30 26% 28% Liabilities / Owner's equity % 63.9 48.5 48.4 61.5 39.9% 24% 27% 23% 25 22% 21% Liquidity ratios Short term ratio, Quick ratio and Cash ratio were kept 18% 18% above 1.0 time which showed that the Company’s 20 18% 18% 19% liquidity was maintained in a safe and stable status. This 17% Gross margin Financial situation of the Company remained strong as in 15% previous years. Large amount of cash and cash equivalent will improve probability of calling capital for business 15% 17% 15 Operating profit margin meets requirements of business and development for the operation of the Company if necessary. 15% 13% 14% Net profit margin Company. 12% 12% 10 ROEA 10% Receivable turnover Payment turnover ROAA 5 In 2016, the Company continued to improve the Day of payments reduced lightly 55 days. The Company accounting progresses, management regimes, and always strives to liquidate all partner’s obligations on a 0 accounting compliance. Therefore, day of receivables timely basis, which helped to build good reputation for were 49.5 days, the short term receivable balance was CNG Vietnam during the past years. Moreover, appropriate 2012 2013 2014 2015 2016 only VND 106 billion, reduced by 20% compared to 2015 payment policies helped improve the efficiency of cash flows management.
94 ANNUAL REPORT 2016 95 www.cng-vietnam.com 05 SUSTAINABLE DEVELOPMENT 1. OVERVIEW 97 Overview 98 Related important parties and reporting areas 100 Safety in manufacturing, transportation and customer service 104 Incentives for human resources 110 Responsibility for environment 118 Economic contribution 119 Responsibility for community
he sustainable development report is prepared by CNG Vietnam for the fiscal year 2016 based on information and data collected and verified by the Company, in which the Tfinancial data and information is audited by Deloitte Vietnam Limited Company, the Safety – Quality – Environment management system complying with ISO & OHSAS standards is verified and certificated by British Standard Institution (BSI) Vietnam Period: The report is prepared for the financial year ended 31/12/2016. The report is prepared on an annual basis. Scope of report: Information and data disclosed in the report are collected and analyzed for the fiscal year 2016 in respect of the whole Company, including transaction office in Vung Tau City, Phu My CNG Branch at Phu My 1 Industrial Zone, the central gas station at My Phuoc 3 Industrial Zone – Binh Duong, Pressure Reducing Units (PRU) and Northern Branch in Hanoi. Applied standard: GRI-G4 Contact information: If you have any comment or questions concerning the report, please contact: CNG Vietnam Joint Stock Company Sustainable Development Report Team
| 7th Floor, GAS Tower, No 61B Street 30/4, Thang Nhat Ward, Vung Tau City
| (+84 64) 3574635
| (+84 64) 3574619
Ms Nguyen Thi Hong Hai – Deputy CEO
Share to develop sustainably
97 IMPORTANT RELATED PARTIES CONSULTING RELATED PARTIES ABOUT CONCERNS AND EXPECTATIONS
CNG Vietnam proactively consulted major related parties Related party Consultation channel Concerns and expectations Reporting content on the economic, environmental and social aspects of Shareholders zz Shareholders' meeting zz Company's achievements in Business Results, Financial the Company's business and production. Our important / Investors various aspects: economy, analysis, Market Outlook, stakeholders include: customers, shareholders/investors, zz Company visit society and environment Investor Relations (IR) suppliers, employees, competent agencies/industrial zz Telephone conversations zz Investor Relations (IR), associations and local communities. information disclosure.
Customers, zz Contact, regular and zz Strong financial situation, Suppliers Business situation, Financial periodic dialogue through stable and on-going analysis, Market Outlook, t agencies the process "Selling gas and operation. en Safety in production - et so Cus customer care". p l as cia t business, environment. a ti o z m ri o m z Safety in production and o t s e C s r zz Opinion poll transportation of CNG, u d Buying/Selling price and
n i zz Dialogue, negotiation of terms
purchase price / sale price and terms. zz Customer service
ies cat i Sh Employees n a zz Regular meetings, regular zz Employee’s compensation: Work environment, Training u r m e dialogues salary, bonus, insurance, and education, Occupational m h o o occupational safety …
l health and Safety, Business C d zz Evaluate the performance
l
e Results, Financial analysis,
a CNG
r and salary review. zz Work environment and career
c
s Market Outlook, Community
o
promotion opportunities.
/
L
I support activities
viEt nam n zz Operation of the Union and v
e
s z t Youth Union. z Company’s business
o
r s performance and reputation zz Employee Conference. in terms of economy, environment and society.
Competent zz Conferences, workshops Environment, occupational Safety in production - agencies/ organized by the agencies. health and safety, waste water business, environment, industrial and waste management, working environment z compliance with legal Em associations z Meet, exchange information p lo s regulations yyees Supplier
Local zz Social activities, community. Environment, production Communities Safety in production - safety and benefits for local business, environment, labors zz Information from community support management agencies, media ...
98 ANNUAL REPORT 2016 99 www.cng-vietnam.com REPORTING AREAS
Safety in technology – equipment
zz Most of equipment such as tanks, compressors, PRU zz Production and transportation processes of CNG are Safety in Manufacturing, Incentives for Responsibility for Responsibility for Transportation and Economic are imported from Canada, USA, Germany, Italy, UK also selected to simply operate with high automatic Human resources Environment Community Customer Service contribution in order to minimize risks, defection, ensure stable level. gas supply for customers. zz The vehicles are subject to strict requirements for safety and tested periodically as prescribed at testing central, and registered for use at local departments of labor, invalids and social affairs.
Safety in production, operation and transportation
zz Building processes, operating guidance, occupational safety and health. SAFETY IN MANUFACTURING, transportation, maintaining machinery at Phu My Plant and My Phuoc 3 stations and PRU: apply, zz Regularly organizing training courses to improve the TRANSPORTATION AND CUSTOMER SERVICE supervise and update frequently. knowledge on occupational safety and health for the network in order to improve the efficiency of the zz Safely examining devices, transportation vehicles operation as well as to ensure occupational safety and drivers at the beginning of each work phase in and health for the Company. order to eliminate unsafe factors, technical error of Safety is one of the most important and vital tasks means, production devices, human perception. zz Implementing the 5S program for all employees at the Company Office as well as Phu My Branch, for a business operating in the oil and gas industry zz Maintaining devices periodically, remedying timely Northern Branch. The program consists of 5 steps: such as CNG Vietnam. damaged devices, ensure vehicles, devices to be in Screening, Arranging, Cleaning, Care and Readiness, a stable, efficient situation. aiming to make the working environment clean, professional and safe, contributing to productivity zz Organizing training about techniques, specialized and efficiency. Work by saving time, saving space skills, safety for employees, bringing the safety and rationalizing production. culture to all employees, particularly the direct production labor forces. Implemented solutions zz Setting up a student safety net and developing a z z z From the inception of the operation, the Safety and z Safety - Quality – Environment Management working regulation for the purpose of ensuring Engineering Department was set up, responsible System at CNG Vietnam was built in accordance for managing safety issues in the production and with ISO & OHSAS and recognized by the British business process. Standards Institute (BSI). In 2016, the company had upgraded ISO 9001 Quality Management System zz Measures to ensure safety as well as emergency and Environmental Management System ISO 14001 response are carried out continuously, throughout to the new 2015 version. the production process and periodically evaluated, improved and perfected. zz The system is maintained and continuously improved, to control all hazards and environmental factors in all production and business activities, bringing high efficiency in the production and business process of the Company.
100 ANNUAL REPORT 2016 101 www.cng-vietnam.com SAFETY IN MANUFACTURING, TRANSPORTATION AND CUSTOMER SERVICE
Safety in gas supply for customers Preparation for emergency Evaluation for the year 2016 Before supplying gas: zz The Safety and Technology Department is primarily responsible for dealing with crises, emergencies, zz Safe production, sufficient and secure gas supply to communicating and responding to all staffs. zz CNG Vietnam performs site inspection to ensure customers. safety standards for the station. Depending on the level, a crisis management team will be established with the leadership of the company to zz In the year, there were 2 accidents/incidents, including respond and resolve. zz Updating detailed drawings. 1 incident and 1 vehicle driving incident. These cases had been found the cause, disciplined, reviewed the zz Deploying emergency procedures in accordance zz Providing a complete documentation of fire relevant individuals. prevention, operational coordination process with ISO and OHSAS management system standards, developing specific emergency situations and between CNG Vietnam. zz Completing a labor protection plan for all staffs. organizing planned training. zz CNG Vietnam also support customers in training zz 100% staffs of the Company's Offices, Branches and zz Periodically, firefighting exercises are coordinated by about operation, using gas; guiding the regulations sub-stations were trained in Firefighting & Rescue and provincial Firefighters, Preventive Medicine Centers on safety; giving technical advice on transition to rehearsal of possible incident scenarios. operation makesure continuous production for and other units in the health sector. customer zz Completing a maintenance plan for machinery and zz Regularly consulting with relevant authorities, equipment, in accordance with the manufacturer's inform local communities about fire prevention and After supplying gas: regulations and the actual situation. firefighting, … zz Technical assistance zz 100% of machinery /equipment /vehicles was tested zz Preparing flood and disaster preparedness materials in accordance with the law. and tools and how to handle disaster situations. zz Periodically surveying, evaluating the quality and maintenance of equipment repairs. zz Completing an emergency rescue plan.
Work safety 2015 2016 Full gas supply - safe for customers Achieved Achieved Occupational accidents (Departments) 0 2 Labor Protection Plan Achieved Achieved Fire Fighting & Rescue Training Achieved Achieved Maintenance plan Achieved Achieved Inspection of equipment / vehicles 100% 100% Emergency training Achieved Achieved
102 ANNUAL REPORT 2016 103 www.cng-vietnam.com INCENTIVES FOR HUMAN RESOURCES
Labor force in CNG Vietnam
zz Remuneration regime: CNG Vietnam has been building a fair and competitive policy of remuneration, 2% consistent with the Company's specific business nature and the policy of PetroVietnam. In addition to 7% the benefit regime for employees as prescribed by the 29% 14% Government, the Company has developed specific 3% reward & bonus policy such as bonuses for safety, 27% health care, life insurance, … 8% 47% z 35% z Building a professional, equal and competitive working environment, all employees in the Company 11% are treated fairly, regardless of gender, age, race, 17% identity... Work environment zz The company is always interested in mental activities of employees, regularly organize: football clubs, Qualifications % Age % CNG Vietnam has built the work environment ensured tennis, badminton, swimming, art club, movements the following: (1) Appreciation of labor value; (2) Equal to keep the environment clean green, activities, Master's degree 3% 21 - 30 years 29% opportunities for career promotion and development; Sightseeing tours, Mid-Autumn Festival fun for University's degree 47% 31 - 39 years 35% (3) Employment on a voluntary basis. children … College's degree 8% 40 - 49 years 27% Appreciation of labor value Opportunity for promotion and career development Intermediate degree 17% 50 - 55 years 7% zz All employees are provided equal opportunity based 56 - 60 years 2% zz The BOM always create conditions for employees to Technical workers 14% take the initiative in their work. on competence. zz Prioritizing the appointment of employees in the Driver 11% z z Employees always receive the maximum support company structure, recruiting only when the workforce from the BOM, Head of Department upon request or is short-lived, or due to specific job requirements. meeting e difficulties in handling work. zz Periodically carrying out staff assessment, identify zz Building the regulations of salary in compliance strengths, weaknesses, shortcomings to plan for with the provisions of the Government to develop a effective training, develop team development mechanism for paying salary fairly and effectively, partly inheritance. contributing to improving effectiveness of management. Labor structure in CNG Vietnam by sex labor force zz Organizing in-depth training to develop staff, especially management capacity. Force Male Female % Female 18.3 18.3 The number of employees has been promoted, appointed, recruited in 2016 BOD 3 2 40.0% 14.5 15.9 BOM 6 1 14.3%
vnd/employee/month Iterm Number % of Total labor Board of Supervisors 1 2 66.7% million Number of people appointed 15 6.3% Total labor force 193 46 19.2% Number of people assigned tasks 0 0.0% 2013 2014 2015 2016
104 ANNUAL REPORT 2016 105 www.cng-vietnam.com INCENTIVES FOR HUMAN RESOURCES (Cont...) Training and Education
Issuing training process to ensure the right selection of "Corporate governance"… training courses and training subjects. After participating in the training, trained staff will retrain The training program is built with the actual needs in for other employees in the model of internal training. order to improve the quality of the staff, meeting the new Work environment (cont...) demands of production and business requirements. Organizing internal training courses on safety, operational procedures and coordination procedures to ensure safety Training to improve the management capacity of the in the operation and transportation of CNG. Employment on a voluntary basis management team, such as the courses "Improving the management capacity of the middle management team", Employment at the Company is agreed on the basis of zz Disclosing business results to the Employee compliance with the applicable labor laws. Conference, including revenue, Government Budget’s payment, development investments, and welfare Employee is regularly exchanged with leaders on issues funds and insurance settlement for employees. Training activities at CNG Vietnam they care about through the Youth Union, the Labor Union and quarterly direct dialogue with the employee zz CEO and Chairman of the Labor Union always receive and annual Employee Conference. constructive feedbacks through management units, No. Indicators Unit 2013 2014 ăm 2015 2016 unions and directly with employees. The Company issued the Regulations of Democratic 1 Number of training courses Course 43 45 44 52 z Implementation in accordance with Decision No.195/QD z Raising responsibility, obligations of employer for a Internal training Course 12 13 13 12 – CNG dated 19 August 2013: employees; creating conditions for political, political - social organizations of the Company to operate b External training Course 31 32 31 40 zz Making business plan quarterly, yearly down from the in accordance with the laws for democracy right 2 Number of participants Person 427 552 973 721 departments and units. of employees; … a Staff level Person 369 467 908 639 b Managerial level Person 58 85 65 82 Number of hours of training / 3 Hours 1.61 1.3 2.5 2.8 employee Employment at CNG Vietnam by year 4 Cost for training activities a Planned VND billion 1.90 1.20 1.81 3.6 No Indicator Unit 2012 2013 2014 2016 b Actual VND billion 0.75 1.20 2.18 3.34 c % Actual vs Planned % 39.5% 100.0% 120.9% 92.78% 1 Employment contract a Unlimited term Person 97 131 161 174 b Limit term: 1-3 years Person 74 54 65 63 c Less than 01 year Person 4 4 0 2 Ratio of employees signed employment 2 % 100% 100% 100% 100% contract 3 Change in employees a New recruitment Person 16 19 37 18 b Off work Person 10 5 0 5 Retired Person 0 0 0 0
Termination of contract Person 10 5 0 5
106 ANNUAL REPORT 2016 107 www.cng-vietnam.com INCENTIVES FOR HUMAN RESOURCES (Cont...)
Safety and Occupational health
zz Ensuring full facilities, facilities for work in all areas zz The workplace hygiene is in compliance with the from Company Office to factories, branches and Law and meet the requirements of production and stations. Labor protection equipment and tools are business. always well-equipped and meet the requirements of safety standards under the Labor Protection Law. Health care for employees
zz Annual training and training activities, such as: labor zz Every year, the Company organize periodical health safety, Firefighting and Rescue check for employees, especially female employees and occupational diseases for all employees working zz Continuously improving and upgrade the integrated in hazardous, toxic environments. management system on Safety - Health - Environment and Quality in all aspects of production and business. zz The Company has also performed the integrated detection screening, treatment consultancy and zz Implementing the 5S program, aiming to make the management of diseases with high risk for health work environment clean, professional and safe, such as hepatitis B, cancer, tuberculosis...; disease contribute to productivity and efficiency by saving prevention under medical warning in the area such as time, saving space and rationalizing production. dengue fever prevention, HIV-AIDS, influenza …
zz Disseminating the Laws and regulations relating to zz Buying health insurance, social insurance according the rights and obligations of the care and protection to regulations and high liability insurance from 80- of the health of workers, the management and 180 million / person / case; Insurance for relatives of employees; Ensure 100% of employees are managed employee from 50-150 million / person / case; Support health records and medical support when necessary. voluntary pension insurance with VND 1,000,000 / person / month.
Health care programs for employees in 2016 Occupational health care at CNG Vietnam No. Program % of Employees
1 Periodic health examination 99.5% 2 Specialized health examination for female employees 100% No. Indicator Unit 2012 2013 2014 2015 Occupational health examination for employees working in hazardous, toxic 3 100% Cost of accident insurance, health insurance environment 1 VND million 709.27 771.34 842.49 852.03 for employees 4 Health Insurance 100% 2 Cost of health care VND million 343.24 337.28 500 874.13 5 Social Insurance 100% Cases of occupational accident affecting 6 Individual life insurance 100% 3 Case 0 0 0 0 working capacity Voluntary pension insurance with the Company's contribution at VND 1,000,000 / 7 100% month / person
(*)Periodic health checks only reached 99.5% of employees mainly due to the remaining 0.5% of female employees leave maternity leave do not participate..
108 ANNUAL REPORT 2016 109 www.cng-vietnam.com RESPONSIBILITY FOR THE ENVIRONMENT Waste and sewage control and treatment
Stationary source Treatment measure
The solution has been implemented Solid waste of Eating, cleaning, daily Setting up a system of trash cans throughout the daily life life activities ... company to avoid this waste being discarded zz Apply Environmental Management System ISO indiscriminately. This amount of waste will be 14001: 2015. collected daily by Tan Thanh Urban Environment Company. zz Waste and sewage control and treatment.
zz Control of air pollution. Wastes are classified into four categories: metal, Non-hazardous Process of production activities of the plastics, paper, and collectors, and stored in zz Measuring and testing to periodically assess the waste Company. separate boxes at the site. quality of the environment inside the factory and Environmental surrounding environment. From there, take the most protection is becoming Company office area. Waste that is recyclable or reusable (packaging effective measures to overcome pollution. Frequency and carton, packaging metal, etc.) is collected, a global issue and a key of implementation: every 6 months. element in the corporate put into sacks and sold to establishments in need. sustainable development zz Energy and water saving strategy. Non-recyclable industrial waste will be collected separately, contracted with the unit responsible Apply Environmental Management for collection and disposal. System ISO 14001: 2015
zz The ISO 14001 Environmental Management System is integrated with the OHSAS 18001 Safety Management Not only contributing Maintenance, Sorting and packaging according to the type System and the ISO 9001 Quality Management Hazardous waste to environmental maintenance of and in the appropriate packaging, meeting the System. The company continuously improves its protection but also machinery and requirements of technical safety and labeled as manufacturing operations. Export business to meet helping shape the equipment, arising prescribed. the requirements of the latest version, and in 2016 brand "Clean" for from production has been certified by BSI Vietnam to ISO 14001: CNG products of the activities, periodic Being stored for a short time, in a separate 2015 Environmental Management System standard, Company. cleaning of the secure area, with barriers and signs; Then ask the expressing the Company's high responsibility for workshop. contracted units to collect, transport and treat as Environmental issues. regulated.
The company signed a contract with Ha Loc Co., Ltd. for transporting and treating waste according to the regulations on hazardous waste management under the company 36/2015 / TT-BTNMT.
Domestic waste Daily activities of staffs Domestic waste water is pre-treated by septic water such as wastewater tank in the toilet area. It is then discharged into from toilets, hand the waste water collection system of Phu My 1 IP wash, watering plants, to meet the requirements of new waste into the transportation ... environment.
The company also has a water treatment contract with the IP Management Board.
110 ANNUAL REPORT 2016 111 www.cng-vietnam.com RESPONSIBILITY FOR THE ENVIRONMENT (cont...)
Controlling waste and waste water in production in 2016
Control of air pollution Indicator 2013 2014 2015 2016
1. The volume of hazardous wastes
arises frequently Source Treatment measures - Solid waste 372 kg/year 1,000 kg/ year 670 kg/ year 2,837 kg/ year - Liquid waste 3,360 kg/ year 4,000 kg/ year 3,860 kg/ year 3,901 kg/ year Operation zz Specifying the area for each type of vehicle, not overloaded, use the correct 2. Ordinary waste of means of engine fuel, regularly check and maintain to ensure good technical condition. - Solid waste 1,180 kg/ year 1,680 kg/ year 1,500 kg/ year 2,808 kg/ year transport zz Planning work time, avoiding concentration at the same time many means of - Liquid waste n/a n/a n/a n/a transport traffic congestion, air pollution. 3. The volume of treated waste water z meets the discharge criteria z Regular cleaning, watering of roads and yards, especially hot days to limit the amount of dust that is released into the air. - Discharge into the general 10,322.80 m3/ 740.00 m3/ year 5,109 m3/ year 6,052 m3/ year processing area of the IP year zz Internal roads, yards are paved and often sprayed to minimize the emission of dust caused by vehicles.
zz Do not allow vehicle to explode while loading. Comparative chart of effluent results
700
Operation zz Generators are only used when a power failure occurs. Measures to mitigate PHU MY IP 600 of backup emissions from standby generators are applied by the company as follows: Results The results of the generator z 500 z Using less than 0.25% S% oil (DO) to reduce SO2 concentrations in the exhaust analysis of the gases. effluent discharge at 400 zz Generator rooms will be properly constructed and placed in appropriate the gas pits indicate locations to minimize impact on the surrounding environment and will not 300 that all the analyzed affect the general landscape. criteria are up to the 200 zz Generators used by the plant are new (100%) equipped with noise suppressors standards, which are and vibration to minimize the impact of noise, vibration and pollutant emissions. 100 within the permitted limits of the Phu My I zz Using high-emission emissions to dilute emissions into the air. 0 Industrial Zone. TSS COD BOD5 Total N Total P COLOR PHENOL zz The Company prioritizes the use of electricity for economic and environmental reasons.
112 ANNUAL REPORT 2016 113 www.cng-vietnam.com RESPONSIBILITY FOR THE ENVIRONMENT (cont...) Analysis results of air in production area
Targets Dust CO SO2 NO2 CxHy H2S Pb
Measuring point 1. Factory yard area 0.21 5.12 0.036 0.020 KPH KPH KPH Ambient air quality standard (QCVN 05: 2013 / BTNMT) (QCVN 06: 2009 / 0.3 30 0.35 0.2 5 0.042 - Noise, vibration zz Calibration and maintenance of the transmission parts of the machine BTNMT) in the production equipment. process 2. The area inside the factory 0.41 5.36 0.041 0.021 KPH KPH KPH zz Installing rubber noise pads, check the balance of the equipment and make adjustments as needed, regularly periodically maintain the production Occupational Hygiene Standards equipment. (Decision 3733/2002 / QD-BYT 6 20 5 5 300 10 0.05 - 10/10/2002) zz Workers working in noise-producing areas will be equipped with ear muffs or noise-canceling ear muffs. Source: Advisory Center for Environmental Technology and Occupational Safety
zz Using equipment with shock-absorbing springs and shock absorbers. Results of waste water analysis at the connecting pits of IZs zz Reinforcement of the foundation causes vibration isolation, isolation from the foundations of other works by vibration-reducing elastic system. Standard of Phu My I No. Parameter Unit Result Industrial Zone zz When designing the foundation, it is necessary to calculate that the specific vibration frequency of the foundation is different from the frequency of the 1 pH - 6.52 5 – 9 vibration of the equipment in order not to cause vibration resonance. 2 TSS mg/l 30 200
zz Choice of modern equipment and machinery that causes less vibration. 3 COD mg/l 212 600 4 BOD5 mg/l 90 100 5 Total of N mg/l 29.56 50
Once every 6 months, the company carries out measurements and tests to assess the quality of the environment inside 6 Total of P mg/l 6.24 8 the factory and its surrounding environment and has the most effective measures to overcome the pollution. 7 Colour Co-Pt 56.3 300 8 Phenol mg/l KPH (10-3) 0.5 RESULTS OF ENVIRONMENTAL PROTECTION MEASURES IN 2016 9 Total of Coliform MPN/100ml 5.800 10.000 Results of microclimate and noise Source: Advisory Center for Environmental Technology and Occupational Safety
Noise intensity Temperature Humidity Wind speed Measuring point Light (dBA) (0C) (%) (m/s) (Lux) Save energy and water 1. Factory yard area 60 30.7 70.8 0.7 ASTN zz From 2014, CNG Vietnam had developed an energy Maximum allowable limits in From zz Replacement of old air conditioners with energy-saving management system in accordance with ISO 50001: 2011 inverter technology, saving 30% of power consumption. the public and residential areas 6:00am-21:00pm: 70 - - - - and performed energy audits for the whole plant and sub (QCVN 26: 2010 / BTNMT) 9:00pm-6:00am: 55 stations. zz Researching optimized solutions for supplying gas to 2. The area inside the factory 54 25.7 63.8 0.2 770 customer in order to save fuel. zz Establishment of the Energy Management Board, Occupational Hygiene Standards issuance and development of a number of internal rules zz Expanding My Phuoc 3 Central CNG Station to optimize (According to Decision 3733/2002 85 32 80 0.2 – 1.5 >200 used in the Company in order to force employees to have / QD-BYT 10/10/2002) gas supply as well as reduce delivery process for customer the sense of responsibility to save electricity and water to in same Industrial Zone. ensure smooth operation permanent and permanent. Source: Advisory Center for Environmental Technology and Occupational Safety zz Replacing the existing lighting system with a high performance LED system, saving up to 50% energy.
114 ANNUAL REPORT 2016 115 www.cng-vietnam.com RESPONSIBILITY FOR THE ENVIRONMENT (cont...)
Achievements
Although quantity of CNG consumption in 2016 rose by 26.8 compared to 2015 at 119.6 million Sm3, saving methods had help:
zz Consumption of Diesel oil declined by 1.5% in PLZ Komart decreased by 49.7% to 4,104 liters, which comparison with 2015 to 641,248 liters, which saved saved VND 400 million. VND 765 million. zz Quantity of consumption of domestic water reduced zz Petrol consumption also reduced by 20.8% to 75,000 by 1.9% to 8,945 m3. liters, which saved VND 477 million. Consumption of
Criteria chart for usage measure of energy and resource in CNG Vietnam
Material Unit 2013 2014 2015 2016 Quantity VNd Quantity VND Quantity VND Quantity VND Diesel 0.05 liter 385,587 7,674,657,695 364,964 7,245,445,269 650,893 8,771,782,557 641,248 6,713,526,454 PLC Komart liter 3,942 183,163,638 4,764 221,114,279 8,155 548,411,169 4,104 219,144,546 Mogá A92 petrol liter 55,483 1,197,879,441 94,051 2,057,250,910 94,690 1,534,910,408 75,000 1,057,382,177 Electricity for factory and station MP3 Kwh 5,717,400 8,475,523,156 6,097,200 9,096,039,377 7,264,140 11,305,089,631 8,288,375 12,899,093,097 Living water m3 13,531 117,145,610 5,025 50,100,770 9,117 87,914,250 8,945 86,254,302
INITIATIVES TO IMPROVE PRODUCTION AND ENVIRONMENTAL PROTECTION
With the goal of rationalizing production, raising the efficiency in the discharging gas; Reduce the Reduce Import Costs. stations 200 bar parallel to the existing manifold to management, operation and exploitation of equipment, the Science and environmental impact when charge the trailer's independent gas: Save time waiting Technology Council had launched a movement of technical innovations. In removing the couple link. zz Dealing with bottlenecks in Enric tanks with additional for the gas, active time to charge the gas tank. 2016, the Council recognized 12/18 initiatives, of which: support pillows: Improves longevity, improves equipment zz Inventing Boiler Temperature safety. zz Installing power conversion system between UPS and zz 05 initiatives, improvements recognized at CNG Vietnam. Controller PRU Enric Station: mains to power the control panel of PRUs: Make sure Replaces boiler controllers that zz Connecting the power supply to the My Phuoc 3 bus that the power supply to the control cabinet is always zz 07 initiatives, improvements proposed at the PetroVietnam Gas Joint Stock are no longer manufactured on the stop: to be proactive in production, not to be affected by in case of failure of the UPS to supply continuous gas to Corporation market and redundant in case the power failure. the customer. current controller is damaged. Some noteworthy initiatives include: zz Repairing of suction valves, compressor discharge valves zz Mounting head protection cap coupling at the station: zz Inventing of Valve seat and button for reuse: Save on maintenance and repair costs. Helping to improve coupling life. zz • Installing exhaust ventilation system vent station 250 bar. Annual average in Dome loading Substitute savings of 534 mmBTU equivalent to $ 3,000; Reduce noise when Substitute Regulator 5041 Import: zz Adding 01 pipeline (Header) from the compressor 03 zz Installing boiler warning system and circulating water pump for PRU enric station: avoiding the problem of freezing on pipes, supplying stable gas to customers.
116 ANNUAL REPORT 2016 117 www.cng-vietnam.com ECONOMIC CONTRIBUTION
ECONOMIC CONTRIBUTION
In 2016, the Company had provided 119.6 million Sm3, contributing Bil vND significantly to the stabilization of clean CNG fuel for many large 62 enterprises operating in the field of manufacturing construction Total tax paid IN 2016 materials, food .... At the same time, net revenue reached nearly VND 891 billion.
The distributional economic value of CNG Vietnam is shown by:
zz Payment of operating expenses to suppliers of input materials, fixed asset depreciation, employees ... with a total cost of VND
750 billion in the year. Inside: 1,085.6 119.6 120 z 950.2 1000 z Pay for salaries and benefits for staffs: VND 60.68 billion 949.8 100 94.3 890.6 800 zz Loan interest payments for the loan providers: VND 6.15 billion. 801.2 80 75.0 62.3 600 zz Fixed asset investment in the year was VND 32.65 billion. 6053.0
400 zz Payment of dividends to shareholders at the rate of 30% of 40 charter capital, equivalent to VND 81 billion. 200 20 zz Total tax paid to the Government during the year was nearly VND 0 62.1 billion. 0 2012 2013 2014 2015 2016
Net revenue Consumption volume
Economic contribution
Expenditure UNIT 2015 2016
Total revenue VND billion 959 898 Total cost VND billion 814 750 Interest expenses VND billion 6.11 6.15 Compensation expenses for employees VND billion 57.6 60.68 Tax paid VND billion 53.07 62.06 responsibility Dividend VND billion 81 81 Expenditure for fixed assets VND billion 122.64 32.65 Community activities VND billion 1.02 2.03 for community
118 ANNUAL REPORT 2016 119 www.cng-vietnam.com RESPONSIBILITY FOR COMMUNITY
2 bil vnd for social activities
ontributing to the development of the community zz The "CNG Vietnam Youth for a Green Environment" and society is one of the important goals that the movement with specific activities such as cycling CCompany aims to. In 2016, the Company spent to work every Thursday, cycling around the city of more than VND 2 billion for social community activities Vung Tau to promote environmental protection with some outstanding programs: and promote the image of the company, collecting garbage at the coast to minimize environmental zz Supporting cardiac surgery for disadvantaged pollution, cleaning the workplace, planting and caring children under the program "Heart for children" with trees at My Phuoc central station and sub stations. a total amount of VND 928 million.
zz Staffs of the company make a one-day salary contribution of VND 260 million to visit and give gifts to families at Central flood disasters.
zz Other meaningful activities such as: Cemetery of the Martyrs' Cemetery on the occasion of July 27th; Visiting and giving presents to the revolutionary family in Chau Doc - An Giang, Suoi Nghe - Chau Duc and My Xuan - Tan Thanh communes; Donating to support the poor student, cooking and distributing free meals to the poor patient at Le Loi Hospital twice a month, Organizational program " Return to origin " for union members.
120 ANNUAL REPORT 2016 121 www.cng-vietnam.com FINANCIAL STATEMENTS 06 (AUDITED) 124 Report of the Board of Management 126 Independent audit report 128 Balance sheet 130 Income statement 131 Cash flow statement 132 Notes to financial statements
Transparent to reach new heights 122 ANNUAL REPORT 2016 www.cng-vietnam.com STATEMENT OF THE BOARD OF DIRECTORS
The Board of Directors of CNG Vietnam Joint Stock Company (the “Company”) presents this statement together with the The Board of Directors is responsible for ensuring that proper accounting records are kept, which disclose, with reasonable Company’s financial statements for the year ended 31 December 2016. accuracy at any time, the financial position of the Company and that the financial statements comply with Vietnamese Accounting Standards, accounting regime for enterprises and legal regulations relating to financial reporting. The Board THE BOARDS OF MANAGEMENT, DIRECTORS AND SUPERVISORS of Directors is also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of frauds and other irregularities. The members of the Boards of Management, Directors and Supervisors of the Company who held office during the year and to the date of this statement are as follows: The Board of Directors confirms that the Company has complied with the above requirements in preparing these financial statements. Board of Management For and on behalf of Board of Directors, Mr. Vu Tuan Ngoc Chairman Ms. Le Thi Thu Giang Member Ms. Nguyen Thi Hong Hai Member Mr. Vu Van Thuc Member (appointed on 7 April 2016) Mr. Dang Van Vinh Member (resigned on 7 April 2016) Mr. Pham Dinh Dat Member (appointed on 21 April 2016) Mr. Tran Van Nghi Member (resigned on 21 April 2016)
Board of Directors Vu Van Thuc Mr. Vu Van Thuc Director (appointed on 7 April 2016) Director Mr. Dang Van Vinh Director (resigned on 7 April 2016) 27 February 2017 Mr. Tran Quang Dan Deputy Director Mr. Bui Van Dan Deputy Director Ms. Nguyen Thi Hong Hai Deputy Director Mr. Nguyen Nguyen Vu Deputy Director Mr. Truong Manh Thang Deputy Director (appointed on 19 May 2016)
Board of Supervisors Mr. Huynh Lam Kiet Head of Board of Supervisors Ms. Tran Thi Thu Hien Member Ms. Pham Thi Loan Phuong Member
BOARD OF DIRECTORS’ STATEMENT OF RESPONSIBILITY
The Board of Directors of the Company is responsible for preparing the financial statements, which give a true and fair view of the financial position of the Company as at 31 December 2016, and its financial performance and its cash flows for the year then ended in accordance with Vietnamese accounting standards, accounting regime for enterprises and legal regulations relating to financial reporting. In preparing these financial statements, the Board of Directors is required to: zz Select suitable accounting policies and then apply them consistently; zz Make judgments and estimates that are reasonable and prudent;; zz State whether applicable accounting principles have been followed, subject to any material departures disclosed and explained in the financial statements; zz Prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business; and zz Design and implement an effective internal control system for the purpose of properly preparing and presenting the financial statements so as to minimize errors and frauds.
124 ANNUAL REPORT 2016 125 www.cng-vietnam.com INDEPENDENT AUDITORS' REPORT No. 295/ VN1A-HC-BC
To: The Shareholders Opinion The Boards of Management and Directors CNG Vietnam Joint Stock Company In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as We have audited the accompanying financial statements of CNG Vietnam Joint Stock Company (the "Company") prepared at 31 December 2016, and its financial performance and its cash flows for the year ended in accordance with Vietnamese on 27 February 2017 as set out from page 4 to page 26, which comprise the balance sheet as at 31 December 2016, and the Accounting Standards, accounting regime for and legal regulations relating to financial reporting. statement of income, and statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information..
The Boards of Directors' Responsibility for the Financial Statements
Board of Directors is responsible for the preparation and fair presentation of these financial statements in accordance with Vietnamese Accounting Standards, accounting regime for enterprises and legal regulations relating to financial reporting and for such internal control as Board of Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditors' Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in Le Dinh Tu Pham Thu Thuy accordance with Vietnamese Standards on Auditing. Those standards require that we comply with ethical requirements and Audit Partner Auditor plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material Audit Practising Registration Certificate Audit Practising Registration Certificate Số misstatement. No. 0488-2013-001-01 No. 2259-2013-001-1
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial For and on behalf of statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material DELOITTE VIETNAM COMPANY LIMITED misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors 27 February 2017 consider internal control relevant to the Company's preparation and fair presentation of the financial statements in order Ho Chi Minh City, S.R. Vietnam to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by Board of Directors, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
126 ANNUAL REPORT 2016 127 www.cng-vietnam.com BALANCE SHEET As at 31 December 2016 FORM B 01-DN From B 01-DN
Unit: VND Unit: VND
Thuyết ASSETS Codes Notes Closing balance Opening balance RESOURCES Mã số Số đầu năm minh Số cuối năm A. CURRENT ASSETS 100 500.544,254.289 465,633,340,617 C. LIABILITIES 300 185,319,914,805 245,059,826,377 I. Cash and cash equivalents 110 5 342,673,472,949 281,710,813,470 I. Current liabilities 310 157,297,948,961 201,176,465,912 1. Cash 111 18,773,472,949 32,310,813,470 1. Short-term trade payables 311 13 96,642,193,336 100,003,964,075 2. Cash equivalents 112 323,900,000,000 249,400,000,000 2. Taxes and amounts payable to the State budget 313 14 10,477,874,058 7,050,802,250 II. Short-term financial investments 120 - 13,000,000,000 3. Payables to employees 314 6,224,744,849 9,890,753,381 1. Held-to-maturity investments 123 - 13,000,000,000 4. Short-term accrued expenses 315 15 9,566,189,146 1,462,174,315 III. Short-term receivables 130 106,086,387,832 135,602,339,039 5. Other short-term payables 319 16 626,627,677 43,098,147,358 1. Short-term trade receivables 131 6 106,258,851,793 132,158,317,364 6.Short-term loans 320 17 30,839,581,662 38,121,860,356 2. Short-term advances to suppliers 132 1,688,852,306 4,945,987,381 7. Bonus and welfare funds 322 2,920,738,233 1,548,764,177 3. Other short-term receivables 136 7 1,121,505,453 1,750,218,889 II. Long-term liabilities 330 28,021,965,844 43,883,360,465 4. Provision for short-term doubtful debts 137 8 (2,982,821,720) (3,252,184,595) 1. Long-term loans 338 17 16,614,683,724 36,928,912,826 IV. Inventories 140 42,038,312,846 26,446,863,900 2. Long-term provisions 342 18 4,452,834,481 - 1. Inventories 141 9 42,038,312,846 26,446,863,900 2. Scientific and technological development fund 343 6,954,447,639 6,954,447,639 V. Other short-term assets 150 9,746,080,662 8,873,324,208 D. EQUITY 400 464,591,381,970 398,736,380,784 1. Short-term prepayments 151 10 7,495,420,821 8,347,026,069 I. Owners' equity 410 19 464,591,381,970 398,736,380,784 2. Value added tax deductibles 152 2,250,659,841 524,215,318 1. Owners' contributed capital 411 270,000,000,000 270,000,000,000 3. Taxes and other receivables from the State budget 153 - 2,082,821 2. Share premium 412 1,695,680,000 1,695,680,000 B. NON-CURRENT ASSETS 200 149,367,042,486 178,162,866,544 3. Other owners' capital 414 9,179,045,649 3,554,581,745 I. Long-term receivables 210 1,927,000,000 936,000,000 4. Treasury shares 415 (3,270,000) (3,270,000) 1. Other long-term receivables 216 7 1,927,000,000 936,000,000 5. Investment and development fund 418 69,972,247,531 46,226,828,725 6. Retained earnings 421 113,747,678,790 71,638,096,410 II. Fixed assets 220 142,672,404,911 170,817,116,061 - Retained earnings accumulated to the prior year end 421a 2,459,072,048 - 1. Tangible fixed assets 221 11 142,525,687,323 170,390,481,805 - Retained earnings of the current year 421b 111,288,606,742 71,638,096,410 - Cost 222 711,625,098,491 679,452,127,701 TOTAL RESOURCES (440 = 300+400) 440 649,911,296,775 643,796,207,161 - Accumulated depreciation 223 (569,099,411,168) (509,061,645,896) 2. Intangible assets 227 146,717,588 426,634,256 - Cost 228 1,009,806, 700 1,009,806,700 - Accumulated amortisation 229 (863,089,112) (583,172,444) III. Other long-term assets 260 4,767,637,575 6,409,750,483 1. Deferred tax assets 262 12 4,767,637,575 6,409,750,483 TOTAL ASSETS (270=100+200) 270 649,911,296,775 643,796,207,161
Tran Ngoc Lan Nguyen Manh Hung VU Van Thuc Preparer Chief Accountant Director 27 February 2017
128 ANNUAL REPORT 2016 129 www.cng-vietnam.com The accompanying notes are an integral part of these financial statements The accompanying notes are an integral part of these financial statements INCOME STATEMENT CASH FLOW STATEMENT For the year ended 31 December 2016 FORM B 02-DN For the year ended 31 December 2016
Unit: VND Unit: VND
ITEMS Codes Notes Current year Prior year ITEMS Codes Current year Prior year 1 Gross revenue from goods sold 01 22 890,566,896,229 950,207,897,486 I CASH FLOWS FROM OPERATING ACTIVITIES 2 Net revenue from goods sold (10=01) 10 890,566,896,229 950,207,897,486 1 Profit before tax 01 147,741,573,022 145,078,365,661 3 Cost of sales 11 23 652,063,007,671 717,534,764,477 2 Adjustments for: 4 Gross profit (20 = 10-11) 20 238,503,888,558 232,673,133,009 Depreciation and amortisation of fixed assets 02 60,815,179,999 64,229,387,506 5 Financial income 21 25 7,448,617,947 8,699,779,960 Provisions 03 4,183,471,606 (3,777,406,913) 6 Financial expenses 22 26 6,155,032,345 6,216,468,597 Foreign exchange (gain)/loss arising from translating - In which: Interest expense 23 6,154,516,119 6,107,955,735 04 (7,978,031) 4,936,474 foreign currency items 7 Selling expenses 25 27 26,332,102,520 18,784,468,100 Gain from investing activities 05 (7,499,786,890) (8,556,879,660) 8 General and administration expenses 26 27 62,971,342,081 70,220,675,819 Interest expense 06 6,154,516,119 6,107,955,735 Operating profit 9 30 150,494,029,559 146,151,300,453 3 Operating profit before movements in working capital 08 211,386,975,825 203,086,358,803 (30 = 20+(21-22)-(25+26)) Decrease in receivables 09 22,361,056,002 16,583,228,874 10 Other income 31 133,808,180 32,563,637 Increase in inventories 10 (15,591,448,946) (4,515,290,815) 11 Other expenses 32 2,886,264,717 1,105,498,429 Decrease in payables 11 (8,510,636,870) (21,399,757,774) 12 Loss from other activities (40=31-32) 40 (2,752,456,537) (1,072,934,792) Decrease/(increase) in prepaid expenses 12 851,605,248 (831,269,068) 13 Profit before tax (50=30+40) 50 147,741,573,022 145,078,365,661 Interest paid 14 (6,202,556,646) (6,099,381,339) Corporate income tax paid 15 (22,850,189,788) (25,059,565,033) 14 Current corporate income tax expense 51 28 25,810,853,372 25,115,396,372 Net cash generated by operating activities 20 181,444,804,825 161,764,323,648 15 Deferred corporate tax expenses 52 28 1,642,112,908 1,235,875,260 II CASH FLOWS FROM INVESTING ACTIVITIES 16 Profit after tax (60=50-51-52) 60 120,288,606,742 118,727,094,029 1 Acquisition and construction of fixed assets 21 (32,670,468,849) (122,591,837,307) 17 Basic earnings per share 70 29 3,900 3,942 2 Proceeds from sale, disposal of fixed assets 22 61,500,000 3 Cash recovered from selling debt instruments of other entities 24 13,000,000,000 27,000,000,000 4 Interest earned 27 7,421,707,268 8,663,011,393 Net cash used in investing activities 30 (12,187,261,581) (86,928,825,914) III CASH FLOWS FROM FINANCING ACTIVITIES 1 Proceeds from borrowings 33 14,705,181,872 92,721,764,163 2 Repayment of borrowings 34 (42,301,689,668) (80,230,753,820) 3 Dividends paid 36 (80,706,354,000) (94,508,169,900) Net cash used in financing activities 40 (108,302,861,796) (82,017,159,557) Net increase/(decrease) in cash during the year (50=20+30+40) 50 60,954,681,448 (7,181,661,823) Cash and cash equivalents at the beginning of the year 60 281,710,813,470 288,734,892,821 Tran Ngoc Lan Nguyen Manh Hung VU Van Thuc Effects of changes in foreign exchange rates 61 7,978,031 157,582,472 Preparer Chief Accountant Director Cash and cash equivalents at the end of the year (70=50+60+61) 70 342,673,472,949 281,710,813,470 27 February 2017
Tran Ngoc Lan Nguyen Manh Hung VU Van Thuc Preparer Chief Accountant Director 27 February 2017
130 ANNUAL REPORT 2016 131 www.cng-vietnam.com The accompanying notes are an integral part of these financial statements The accompanying notes are an integral part of these financial statements NOTES TO THE FINANCIAL STATEMENTS These notes are an integral part of and should be read in conjunction with the accompanying financial statements FORM B 09-DN
1. GENERAL INFORMATION 3. ADOPTION OF NEW ACCOUNTING GUIDANCE
Structure of ownership On 21 March 2016, the Ministry of Finance issued Circular No. 53/2016/TT-BTC (“Circular 53”) amending and supplementing certain articles of Circular No. 200/2014/TT-BTC dated 22 December 2014 of the Ministry of Finance CNG Vietnam Joint Stock Company (the "Company") was incorporated in Vietnam for 20 years under Investment guiding the accounting regime for enterprises. Circular 53 is effective for the financial years beginning on or after 01 Certificate No. 492032000040 dated 28 May 2007 issued by Ba Ria - Vung Tau Industrial Zones Authority, as January 2016. The Board of Directors has adopted Circular 53 in the preparation and presentation of the Company’s amended. The Company's stocks were officially listed in the Ho Chi Minh City Stock Exchange dated 23 November financial statements for the year ended 31 December 2016. However, the adoption of this circular has no any significant 2011 with code CNG. impact to comparative figures
The main shareholders of the Company as at 31 December 2016 are Petrovietnam Gas Joint Stock Company ("PVGas"), 4. 4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Utilico Emerging Markets Limited and Halley Sicav - Halley Asian Prosperity with owners' rates corresponding are 56%, 10.44% and 9.63%. Other shareholders hold 22.93% of its share capital. The significant accounting policies, which have been adopted by the Company in the preparation of these financial statements, are as follows: The Company was established to implement the project of natural gas filling ("CNG Vietnam" project) for a period of 20 years from 28 May 2007. Estimates
The number of the Company's employees as at 31 December 2016 was 237 (as at 31 December 2015: 226).. The preparation of financial statements in conformity with Vietnamese Accounting Standards, accounting regime for enterprises and legal regulations relating to financial reporting requires the Board of Directors to make estimates and Principal activity assumptions that affect the reported amounts of assets, liabilities and disclosures of contingent assets and liabilities at the balance sheet date and the reported amounts of revenues and expenses during the financial year. Although The Company's operations are to produce, fill and discharge compressed natural gas CNG, LNG and LPG; to supply these accounting estimates are based on the Board of Directors’ best knowledge, actual results may differ from those services in improving, maintaining, repairing, installing transformative equipments in using natural gas CNG, LNG and estimates. LPG; to trade in transportation of CNG, LNG and LPG and other kinds of fuel to comply with the Law; to provide services in construction, installation, maintainance, repairing gas systems; to purchase and lend equipment for gas systems. Financial instruments
The Company's principal activities are to produce, fill and discharge compressed natural gas CNG, LNG and LPG to Initial recognition distribute to its customers. Financial assets: At the date of initial recognition, financial assets are recognized at cost plus transaction costs that are Normal production and business cycle directly attributable to the acquisition of the financial assets. Financial assets of the Company comprise cash and cash equivalents, trade and other receivables and held-to-maturity investments. The Company's normal production and business cycle is carried out for a time period of 12 months.. Financial liabilities: At the date of initial recognition financial liabilities are recognized at cost plus transaction costs that The Company's structure are directly attributable to the issue of the financial liabilities. Financial liabilities of the Company comprise borrowings, trade and other payables, accrued expenses and long-term provision. The Company has Head Office at Street No. 15, Phu My I Industrial Park, Tan Thanh District, Ba Ria - Vung Tau Province; 1 transaction office at Floor 7, 61B 30/4 Street, Thang Nhat Ward, Vung Tau City and 2 dependent branches. Subsequent measurement after initial recognition
Disclosure of information comparability in the financial statements Currently, there are no requirements for the subsequent measurement of the financial instruments after initial recognition.
Comparative figures are the figures of the audited financial statements for the year ended 31 December 2015. Cash and cash equivalents
2. ACCOUNTING CONVENTION AND FINANCIAL YEAR Cash and cash equivalents comprise cash on hand, demand deposits and short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Accounting convention Receivables The accompanying financial statements, expressed in Vietnam Dong (“VND”), are prepared under the historical cost convention and in accordance with Vietnamese Accounting Standards, accounting regime for enterprises and legal Receivables represent the amounts recoverable from customers or other debtors and are stated at book value less regulations relating to financial reporting. provision for doubtful debts.
The accompanying financial statements are not intended to present the financial position, results of operations and Provision for doubtful debts is made based on aging of receivable groups, detailed as follow: cash flows in accordance with accounting principles and practices generally accepted in countries and jurisdictions other than Vietnam. Overdue debts Provision rate From 11 days to 6 months 20% Financial year From 6 months to 1 year 30% From 1 year to 2 years 50% The Company’s financial year begins on 01 January and ends on 31 . From 2 years to 3 years 70% 132 ANNUAL REPORT 2016 Over 3 years 100% 133 www.cng-vietnam.com NOTES TO THE FINANCIAL STATEMENTS These notes are an integral part of and should be read in conjunction with the accompanying financial statements FORM B 09-DN
Inventories Revenue recognition
Inventories are stated at the lower of cost and net realisable value. Cost comprises direct materials and where applicable, Revenue from the sale of goods is recognized when all five (5) following conditions are satisfied: direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and condition. Cost is calculated using the weighted average method. Net realisable value represents the estimated selling a) The Company has transferred to the buyer the significant risks and rewards of ownership of the goods; price less all estimated costs to completion and costs to be incurred in marketing, selling and distribution. b) The Company retains neither continuing managerial involvement to the degree usually associated with ownership no The provisions are made for obsolete, damaged, or sub-standard inventories and for those which have costs higher than effective control over the goods sold; net realisable values as at the balance sheet date. c) the amount of revenue can be measured reliably; Tangible fixed assets and depreciation d) it is probable that the economic benefits associated with the transaction will flow to the Company; and Tangible fixed assets are stated at cost less accumulated depreciation. e) The costs incurred or to be incurred in respect of the transaction can be measured reliably The cost of purchased tangible fixed assets comprises its purchase price and any directly attributable costs of bringing Interest income is accrued on a time basis, by reference to the principal outstanding and at the applicable interest rate. the assets to its working condition and location for its intended use.
Tangible fixed assets are depreciated using the straight-line method over their estimated useful lives as follows: Foreign currencies Transactions arising in foreign currencies are translated at exchange rates ruling at the transaction date. The balances of Years monetary items denominated in foreign currencies as at the balance sheet date are retranslated at the exchange rates on Buildings and structures 10 - 25 the same date. Exchange differences arising from the translation of these accounts are recognised in the income statement. Machinery and equipment 3 - 10 Office equipment 3 - 6 Borrowing costs 3 - 6 Motor vehicles Borrowing costs are recognised in the income statement in the period when incurred unless they are capitalised in accordance with Vietnamese Accounting Standard No. 16 “Borrowing costs”. Accordingly, borrowing costs directly From 2015, for tangible fixed assets are machinery and equipment and motor vehicles which were used for CNG attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take production, the Company applies accelerated depreciation by adjusted reducing balance method under Circular No. a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such 45/2013/TT-BTC dated 25 April 2013 with the useful lives of these tangible fixed assets are applied the same with the time as the assets are substantially ready for their intended use or sale. Investment income earned on the temporary straight-line method depreciation. investment of specific borrowings pending their expenditure on qualifying assets is deducted from the cost of those assets. For specific borrowings for the purpose of construction of fixed assets and investment properties, borrowing Leasing costs are capitalised even when the construction period is under 12 months. Leases where substantially all the rewards and risks of ownership of assets remain with the leasing company are accounted for as operating leases. Rentals payable under operating leases are charged to the income statement on a Taxation straight-line basis over the term of the relevant lease. Income tax expense represents the sum of the tax currently payable and deferred tax. Intangible assets and amortisation The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit before tax as reported Intangible assets represent accounting and human resource management software which are stated at cost less in the income statement because it excludes items of income or expense that are taxable or deductible in other years accumulated amortization. These softwares are amortised on a straight-line from three years to ten years. (including loss carried forward, if any) and it further excludes items that are never taxable or deductible. Prepayments Deferred tax is recognized on significant differences between carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit and is accounted for using Prepayments are expenses which have already been paid but relate to results of operations of multiple accounting balance sheet liability method. Deferred tax liabilities are generally recognized for all temporary differences and deferred periods, including prepaid advertisement expense and insurance expense. These expenditures have been capitalised as tax assets are recognized to the extent that it is probable that taxable profit will be available against which deductible prepayments, and are allocated to the income statement using the straight-line method in accordance with the current temporary differences can be utilised. prevailing accounting regulations. Deferred tax is calculated at the tax rates that are expected to apply in the year when the liability is settled or the asset Payable provisions realised. Deferred tax is charged or credited to profit or loss, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Payable provisions are recognised when the Company has a present obligation as a result of a past event, and it is probable that the Company will be required to settle that obligation. Provisions are measured at the Board of Directors’ Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against best estimate of the expenditure required to settle the obligation as at the balance sheet date. current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis. Scientific and technological development fund The determination of the tax currently payable and deferred tax is based on the current interpretation of tax regulations. Scientific and technological development fund is established to be used for investment in scientific research and However, these regulations are subject to periodic variation and their ultimate determination depends on the results of technological development of the Company only. The maximum deduction is 10% of annual taxable income before the tax authorities’ examinations. corporate income tax calculation and depends on the decision of the Boards of Management and Directors annually. Other taxes are paid in accordance with the prevailing tax laws in Vietnam . 134 ANNUAL REPORT 2016 135 www.cng-vietnam.com NOTES TO THE FINANCIAL STATEMENTS These notes are an integral part of and should be read in conjunction with the accompanying financial statements FORM B 09-DN
5. CASH AND CASH EQUIVALENTS 8. OVERDUE DEBTS
Closing balance Opening balance Closing balance Opening balance VND VND VND VND Giá trị có thể Giá trị có thể Cash on hand 664,963,422 240,044,429 Giá gốc Dự phòng Giá gốc Dự phòng thu hồi thu hồi Demand deposits 18,108,509,527 32,070,769,041 Total amount of receivables Cash equivalents 323,900,000,000 249,400,000,000 past due or not past due but 342,673,472,949 281,710,813,470 impaired from 11 days to 6past due but impaired from 11 days to 6 months Cash equivalents represent time deposits in the local commercial banks with duration within three months and earning zz Ton Dong A Corporation 2,566,413,394 2,053,130,715 513,282,679 interest rate from 4.3% to 5.2% per annum (as at 31 December 2015: from 4% to 4.8% per annum). zz American Home Vietnam 3,897,790,058 3,118,232,046 779,558,012 2,183,473,466 1,746,778,773 436,694,693 Co., Ltd 6. SHORT-TERM TRADE RECEIVABLES zz Trung Nguyen Plaza 2,068,412,323 1,654,729,858 413,682,465 5,641,042,262 4,512,833,810 1,128,208,452 zz Thanh Tam Petrol Co., Ltd 4,035,845,215 3,228,676,172 807,169,043 2,568,048,819 2,054,439,055 513,609,764 Closing balance Opening balance zz Dong Tarn Building VND VND Materials Constructions 2,675,745,754 2,140,596,603 535,149,150 981,830,083 785,464,066 196,366,017 One Member Co., Ltd zz Dong Tam Dotalia JSC 2,236,315,248 1,789,052,198 447,263,050 624,498,492 499,598,793 124,899,699 URC Vietnam Co., Ltd 3,977,188,454 14,770,949,622 zz Others 1,450,805,046 1,111,681,755 339,123,291 Trung Nguyen Mining and Construction materials producing JSC 6,506,863,397 12,250,972,559 14,914,108,598 11,931,286,877 2,982,821,720 16,016,111,562 12,763,926,967 3,252184,595 LPG System Equipment Co,, Ltd 7,993,088,315 9,322,933,765 Phuc Sang Minh Engineering Commercial Service Co., Ltd 10,544,102,698 9,924,037,190 9. INVENTORIES KYOEI Steels Vietnam Co,, Ltd 11,478,665,707 4,631,848,746 Ton Dong A Corporation 17,273,677,918 11,590,839,126 Closing balance Opening balance Thanh Thanh Joint Stock Company - 6,001,144,916 VND VND Others 48,485,265,304 63,665,591,440 Raw materials 23,475,573,184 22,233,192,640 106,258,851,793 132,158,317,364 Tools and supplies 213,782,629 97,565,688 Work in progress 18,348.957,033 4,116,105,572 7. OTHER RECEIVABLES 42,038,312,846 26,446,863,900
Closing balance Opening balance 10. SHORT-TERM PREPAYMENT VND VND a. Short-term 1,121,505,453 1,750,218,889 Closing balance Opening balance - Accrued interest income from term deposits 578,497,222 561,917,600 VND VND - Value added tax of accrued expenses 16,645,200 Prepayment of advertisement expenses 2,834,249,996 3,993,194,400 - Advance to employees 222,928,000 219,500,000 Prepayment of insurance expenses 4,661,170,825 4,353,831,669 - Deposits and mortgages 300,000,000 945,000,000 7,495,420,821 8,347,026,069 - Other receivables 3,435,031 23,801,289 b. Long-term 1,927,000,000 936,000,000 - Deposits and mortgages 1,927,000,000 936,000,000 3,048,505,453 2,686,218,889
136 ANNUAL REPORT 2016 137 www.cng-vietnam.com NOTES TO THE FINANCIAL STATEMENTS These notes are an integral part of and should be read in conjunction with the accompanying financial statements FORM B 09-DN
11. TANGIBLE FIXED ASSETS 13. SHORT-TERM TRADE PAYABLES
Buildings and Machinery and Office Closing balance Opening balance Motor vehicles Total structures equipment equipment VND VND VND VND VND VND VND Amount able to Amount able to Amount Amount COST be paid off be paid off Opening balance 28,327,423,571 216,126,192,803 433,464,475,342 1,534,035,985 679,452,127,701 Total short-term trade payales 96,642,193,336 96,642,193,336 100,003,964,075 100,003,964,075 Additions - 427,300,000 448,134,910 875,434,910 a. Short-term trade payables to related parties 72,950,343,094 72,950,343,094 82,806,050,165 82,806,050,165 Transferred from - Petro Vietnam Low Pressure Gas JSC 68,677,748,307 68,677,748,307 66,987,135,161 66,987,135,161 construction in - 31,795,033,939 - 31,795,033,939 - Petro Vietnam Southern Gas JSC 4,127,559,187 4,127,559,187 15,571,483,623 15,571,483,623 progress - Petro Vietnam Southern Gas 145,035,600 145,035,600 142,667,400 142,667,400 Reclassification 56,172,333 (56,172,333) - - JSC - East Branch Disposal (497,498,059) (497,498,059) - Petro Vietnam Gas Services - - 104,763,981 104,763,981 Closing balance 28.327.423.571 247,907,201,016 433,408,303,009 1,982,170,895 711,625,098,491 b. Short-term trade payables to third parties 23,691,850,242 23,691,850,242 17,197,913,910 17,197,913,910 ACCUMULATED DEPRECIATION 14. TAXES AND OTHER PAYABLES TO THE STATE BUDGET Opening balance 9.582.246.272 167,267,232,867 331,304,565,208 907,601,549 509,061,645,896 Charge for the year 925.432.884 25,070,443,391 34,164,149,777 375,237,279 60,535,263,331 Opening balance Payable during Paid during Closing balance Disposal (497,498,059) (497,498,059) VND the year the year VND Closing balance 10.507.679.156 191,840,178,199 365,468,714,985 1,282,838,828 569,099,411,168 Value added tax 789,685,286 31,543,471,562 32,333,156,848 NET BOOK VALUE Corporate income tax 5,568,864,428 25,810,853,372 22,850,189,788 8,529,528,012 Opening balance 18.745.177.299 48,858,959,936 102,159,910,134 626,434,436 170,390,481,805 Personal income tax 692,252,536 6,823,652,986 5,567,559,476 1,948,346,046 Closing balance 17.819.744.415 56,067,022,817 67,939,588,024 699,332,067 142,525,687,323 Other taxes - 1,307,937,056 1,307,937,056 - 7,050,802,250 65,485,914,976 62,058,843,168 10,477,874,058 As stated in Note 17, the Company has pledged its machinery and equipment, which have the carrying value of approximately VND 81,335,496,245 as at 31 December 2016 (31 December 2015: VND 124,787,345,750), to secure banking facilities granted to the Company. 15. SHORT-TERM ACCRUED EXPENSES The cost of the Company’s fixed assets includes VND 457,151,197,115 (31 December 2015: VND 423,094,658,028) of assets which have been fully depreciated but are still in use. Closing balance Opening balance VND VND
12. DEFERRED TAX ASSETS Accrued interest 64,298,106 112,338,633 Accruals for trademark using fee 1,450,783,657 - Closing balance Opening balance Accruals for maintainance expenses 2,064,280,395 - VND VND Other accruals 5,986,826,988 1,349,835,682 Corporate income tax rates used for determination of value of deferred 9,566,189,146 1,462,174,315 tax assets : - Incentive tax rate 10% 10% 16. OTHER SHORT-TERM PAYABLES - Normal tax rate 20% 20% Deferred tax assets related to deductible temporary differences Closing balance Opening balance VND VND - Entitled incentive tax rate 1,178,354,412 Trade union fee 128,834,413 - Entitled normal tax rate 4,767,637,575 5,231,396,071 Dividends payable 292,665,000 40,499,509,500 Deferred tax assets 4,767,637,575 6,409,750,483 Short-term deposits received 1,795,675,021 Other payables 333,962,677 674,128,424 626,627,677 43,098,147,358
138 ANNUAL REPORT 2016 139 www.cng-vietnam.com NOTES TO THE FINANCIAL STATEMENTS These notes are an integral part of and should be read in conjunction with the accompanying financial statements FORM B 09-DN
17. LONG-TERM LOANS 17. LONG-TERM LOANS ( continued) Long-term loans are repayable as follows: Long-term loans VND Opening balance Closing balance Opening balance - Amount 75,050,773,182 VND VND - Amount able to paid off 75 ,050,773,182 On demand or within one year 30,839,581,662 38,121,860,356 During the year In the second year 16,614,683,724 25,821,403,876 - Increase 14,705,181,872 In the third to fifth year inclusive - 11,107,508,950 - Decrease 42,301,689,668 47,454,265,386 75,050,773,182 Closing balance Less: Amount due for settlement within 12 months 30,839,581,662 38,121,860,356 - Amount 47,454,265,386 Amount due for settlement after 12 months 16,614,683,724 36,928,912,826 - Amount able to paid off 47,454,265,386
Details as follow: 18. LONG-TERM PROVISIONS
Long-term provisions represent provision fund for environmental risks and damage compensation which As at 8 June 2015, the Company entered into a medium term loan with Vietnam Technological and Commercial was computed by 0.5% of net revenue of the year in accordance with guidance of Circular No. 86/2016/TT- Joint Stock Bank (“Techcombank”) for purchasing 10 tubes that support for its operation. This loan can be BTC dated 20 June 2016 issued by Ministry of Finance. withdrawn in Vietnam Dong with the credit limit of VND 49,900,000,000 and will be expired within 36 months. The loan interest is payable quarterly at the interest rate of 9% per annum for period from the date of first withdrawal to 30 June 2015. The following interest rate will be adjusted every three months by basic interest rate of medium term loan applied for enterprise customers plus of 1.35% per annum. Total fixed assets purchased DETAILS OF OWNER'S CAPITAL TO THE END OF 2016 were used as collaterals to secure for this loan under the collateral contract No. VTU20156141/HDTC dated 8 June 2015. The Company had withdrawn a total of VND 47,844,184,000 up to 31 December 2016. The balance as at 31 December 2016 of this loan was VND 24,143,649,002.
In 2015, the Company entered into medium term loans with An Binh Commercial Joint Stock Bank (“ABBank”) for purchasing of machines that support for its operation. These loans can be withdrawn in Vietnam Dong with the credit limit of VND 17,040,000,000, VND 8,142,000,000 and VND 15,293,000,000, respectively. The term of these loans are thirty six months. The interest is payable monthly at the interest rate from 8% to 9% per annum 23.92% for first withdrawal period and will be adjusted every three months according to the bank's policy. The Company Shareholder’s name % pledged all fixed assets were financed by these loans. Up to 31 December 2016, the Company had withdrawn total of VND 9,023,920,740, VND 5,712,060,000 and VND 14,242,428,320, respectively. Total balances as at 31 PVGas 56.00 December 2016 of these loans was VND 21,528,283,384. 56.00% Utilico Emerging Markets Limited 10.45 9.63% Halley Sicav - Halley Asian Prosperity 9.63 As at 22 August 2016, the Company entered into a medium term loan with Saigon Thuong Tin Commercial Joint Others 23.92 Stock Bank – Ba Ria Vung Tau Branch to finance for purchase a transformer station 3000KVA that supports for its operation. This loan can be withdrawn in Vietnam Dong with the credit limit of VND 1,944,000,000 and will be expired within 36 months. The loan interest is payable monthly at the interest rate of 7.5% per annum for the 10.45% first 12 months and will be adjusted every three months equal 12 months term deposit’s interest rate plus 1.5% margin. The fixed asset purchased were used as collateral to secure for this loan. The Company had withdrawn a total of VND 1,944,000,000 up to 31 December 2016. The balance as at 31 December 2016 of this loan was VND 1,782,333,000.
140 ANNUAL REPORT 2016 141 www.cng-vietnam.com NOTES TO THE FINANCIAL STATEMENTS These notes are an integral part of and should be read in conjunction with the accompanying financial statements FORM B 09-DN
19. OWNER'S EQUITY
Movement in owner's equity
Investment and contributed capital Share premium Other owners' capital Treasury shares Retained earnings development fund Total VND VND VND VND VND VND VND Prior year's opening balance 270,000,000,000 1,695,680,000 3,554,581,745 (3,270,000) 40,602,364,821 116,518,422,421 432,367,778,987 Profit for the year - - - - 118,727,094,029 118,727,094,029 Dividends announcement - - - - - (134,998,365,000) (134,998,365,000) Funds appropriation - - 5,624,463,904 - 5,624,463,904 (28,609,055,040) (17,360,127,232) Current year's opening balance 270,000,000,000 1,695,680,000 9,179,045,649 (3,270,000) 46,226,828,725 71,638,096,410 398,736,380,784 Profit for the year - - - - - 120,288,606,742 120,288,606,742 Dividends paid by cash - - - - - (40,499,509,500) (40,499,509,500) Funds appropriation - - - 23,745,418,806 37,679,514,862) (13,934,096,056) Current year's closing balance 270,000,000,000 1,695,680,000 9,179,045,649 (3,270,000) 69,972,247,531 113,747,678,790 464,591,381,970
According to Resolution of Annual General Shareholders’ Meeting No. 08/NQ-DHDCD on 26 April 2016, During the year, the Company also appropriated to Investment and development fund and Bonus and shareholders of the Company has approved to declare dividends of 2015 from its retained earnings at the welfare fund with amounts of VND 23,745,418,806 and VND 4,934,096,056 respectively from its retained rate of 30%/par value. Accordingly, in 2016, the Company has declared dividends for the second time at the earnings of 2015 under Resolution of Annual General Shareholders’ Meeting No. 08/NQ-DHDCD dated 26 rate of 15%/par value (the Company has temporarily declared dividends for the first time at the rate of 15%/ April 2016. In addition, the Company temporarily appropriated Bonus and welfare funds with an amount of par value in December 2015). During the year, the Company has been paid 2015 dividends by cash with the VND 9,000,000,000 from its retained earnings of year 2016 under Resolution of Annual General Shareholders’ total amount of VND 80,706,354,000. Meeting No. 08/NQ-DHDCD dated 26 April 2016.
142 ANNUAL REPORT 2016 143 www.cng-vietnam.com NOTES TO THE FINANCIAL STATEMENTS These notes are an integral part of and should be read in conjunction with the accompanying financial statements FORM B 09-DN
19. OWNER'S EQUITY (continued) 24. PRODUCTION COST BY NATURE Shares Current year Prior year VND VND Opening balance Closing balance Labour 62,468,927,377 57,048,555,547 VND VND Depreciation and amortization 59,792,985,087 63,125,628,244 Number of shares issued to public Out-sourced services 274,540,981,953 204,109,429,519 + Common shares 27,000,000 27,000,000 Other monetary expenses 11,913,456,261 21,316,116,707 Number of outstanding shares in circulation + Common shares 26,999,673 26,999,673 408,716,350,678 345,599,730,017 + Treasury shares 327 327 25. FINANCIAL INCOME The Company has one class of ordinary share with par value of VND 10,000, which carries no right to fixed income. The shareholders of ordinary shares are entitled to receive dividend as declared from time to time and are entitled to one vote Current year Prior year per share at the Company’s shareholders meetings. All shares rank equally with regard to the Company’s residual assets. VND VND Detail of owners' contributed capital Interest income 7,438,286,890 8,556,879,660 Foreign exchange gain 10,331,057 142,900,300
Closing balance Opening balance 7,448,617,947 8,699,779,960 % % VND VND 26. FINANCIAL EXPENSES PetroVietnam Gas JSC 151,200,000,000 56.00 149,042,630,000 55.20 Utilico Emerging Markets Limited 28,200,000,000 10.44 28,200,000,000 10.44 Current year Prior year Halley Sicav - Halley Asian Prosperity 26,009,400,000 9.63 26,009,400,000 9.63 VND VND Other shareholders 64,590,600,000 23.93 66,747,970,000 24.73 Interest expense 6,154,516,119 6,107,955,735 270,000,000,000 100 270,000,000,000 100 Foreign exchange loss 516,226 108,489,470 Others 23,392 20. OFF-BALANCE SHEET 6,155,032,345 6,216,468,597
Foreign currency 27. SELLING EXPENSES AND GENERAL AND ADMINISTRATION EXPENSES
Closing balance Opening balance Current year Prior year VND VND VND VND United States Dollar (USD) 2,981,88 82,659,03 General and administration expenses - Management staff 23,556,548,457 18,283,945,815 21. BUSINESS SEGMENTS - Office supplies 1,378,317,029 488,418,095 The principal of business operation of the Company is trading CNG. The gross revenue and cost of sales of the Company are - Depreciation and amortisation of fixed assets 1,420,507,463 1,322,818,284 presented in following Note 22 and 23. The Company has business operation within Vietnam country only. - Out-sourced services 13,832,673,095 14,164,395,319 - Others 22,783,296,037 39,738,505,219 Accordingly, the Board of Directors assesses and believes that the non-preparation for the business and geographical segments reporting for the year ended 31 December 2016 is complied with Vietnamese Accounting Standard No. 28 – “Segment reporting” Deductions from general and Deductions from general and and in accordance with current the Company’s operation. administration expenses - Reversal of provision for short-term doubtful debts - (3,777,406,913) 22. GROSS REVENUE FROM GOODS SOLD 62,971,342,081 70,220,675,819 Gross revenue from goods sold represents total sales of CNG during the year. Selling expenses -Management staff 2,615,360,978 2,756,741,398 23. COST OF SALES - Out-sourced services 16,681,048,674 9,600,664,615 Cost of sales represents the cost of CNG sold during the year. - Others 7,035,692,868 6,427,062,087 26,332,102,520 18,784,468,100 89,303,444,601 89,005,143,919 144 ANNUAL REPORT 2016 145 www.cng-vietnam.com NOTES TO THE FINANCIAL STATEMENTS These notes are an integral part of and should be read in conjunction with the accompanying financial statements FORM B 09-DN
28. RRENT CORPORATE INCOME TAX EXPENSE 29. BASIC EARNINGS PER SHARE
Current year Prior year Current year Prior year VND VND VND (Restated) VND Current corporate income tax expenses Accounting profit after corporate income tax 120,288,606,742 118,727,094,029 - Corporate income tax based on taxable profit in the current year 24,848,519,003 25,115,396,372 Decreasing adjustments to accounting profit to determine profit - Adjustments for corporate income tax expenses in previous years attributable to ordinary shareholders: 962,334,369 - to the current year - Decrease adjustments (15,000,000,000) (12,300,000,000) + Appropriation of bonus and welfare fund Total current corporate income tax expense 25,810,853,372 25,115,396,372 (15,000,000,000) (12,300,000,000) and bonus fund of Board of Executive (i) Deferred corporate income tax expenses Profit attributable to ordinary shareholders 105,288,606,742 106,427,094,029 - Temporary deductible differences 1,642,112,908 1,235,875,260 Average ordinary shares in circulation for the 26,999,673 26,999,673 Total deferred corporate income tax expenses 1,642,112,908 1,235,875,260 Basic earnings per share 3,900 3,942 The current corporate income tax expense for the year was computed as follows: (i) The amount of appropriating bonus and welfare fund and bonus fund of Board of Directors for the year ended 31 December 2016 based on the budget planning of year 2016 which was approved by Annual General Shareholder’s Meeting according to Current year Prior year Resolution of Annual General Shareholder's Meeting No. 08/NQ-DHDCD/2016 dated 26 April 2016. VND VND Profit before tax Restatement of prior year’s calculation 147,741,573,022 145,078,365,661 Adjustments for taxable profit The prior year’s basic earnings per share has been recalculated due to change in appropriation of bonus and welfare fund and Less: non-taxable income 23,779,960,162 18,029,578,629 bonus fund of Board of Executive of year 2015 in accordance with Resolution of Annual General Shareholder's Meeting No. 08/ Add back: non-deductible expenses 17,307,150,765 10,114,473,594 NQ-DHDCD/2016 dated 26 April 2016. Accordingly, the prior year’s figures of basic earnings per share has been restated as follows: Taxable profit for current year 141,268,763,625 137,163,260,626 Previously Restated Taxable profit at normal tax rate of 22% - 94,992,252,579 Changed Code reported amount amount Taxable profit at normal tax rate of 20% 107,216,426,412 - VND VND VND Taxable profit at incentive tax rate of 10% 34,052,337,213 42,171,008,047 Basic earnings per share 70 3,993 (51) 3,942 Corporate income tax expense based on 24,848,519,003 25,115,396,372 taxable profit in the current year 30. OPERATING LEASE COMMITMENTS
Current year Prior year The Company is obliged to pay corporate income tax at the rate of 20% of its taxable profit (2015:22%). In addition, the Company VND VND is entitled to corporate income tax exemption for two years from the first profit-making year (2009) and a reduction of 50% for Minimum tease payments under operating leases recognised in the the following six years (from year 2011. 2,275,782,936 1,512,183,440 income statement for the year For the over production capacity exceeds registered production capacity under current investment license, the Company is obliged to pay corporate income tax at the normal tax rate. As at 31 December 2016, the Company had operating lease commitments which fall due as follows::
Current year Prior year VND VND Within one year 1,628,374,400 946,396,080 In the second to fifth year inclusive 3,246,561,600 2,796,018,363 After five years 9,230,000,000 9,449,579,166 14,104,936,000 13,191,993,609
Operating lease payments represent rental payables of the land and infrastructures in Ba Ria - Vung Tau Province and office rental in Ha Noi City. Details as below:
146 ANNUAL REPORT 2016 147 www.cng-vietnam.com NOTES TO THE FINANCIAL STATEMENTS These notes are an integral part of and should be read in conjunction with the accompanying financial statements FORM B 09-DN
30. OPERATING LEASE COMMITMENTS ( continued) 31. FINANCIAL INSTRUMENTS( continued) zz Rental payables by the Company for renting 10,000 m2 of land at Phu My I Industrial Zone, Tan Thanh District, Ba Ria - Vung Tau Province, Vietnam with the annual rental charge of USD 1.4/m2 according to rental contract No. 41/HDT/TLD/IZICO dated 16 August The Company has not assessed fair value of its financial assets and liabilities as at the balance sheet date since there are 2007 and its appendix. no comprehensive guidance under Circular No. 210/2009/TT-BTC issued by the Ministry of Finance on 6 November 2009 (“Circular 210”) and other relevant prevailing regulations to determine fair value of these financial assets and liabilities. zz Rental payables for office in Ha Noi, Vietnam with the monthly rental charge of VND 47,927,840 according to rental contract No. While Circular 210 refers to the application of International Financial Reporting Standards (“IFRS”) on presentation and 3/1/2015/HDTVP dated 20 March 2015. disclosures of financial instruments, it did not adopt the equivalent guidance for the recognition and measurement of zz Rental payables for office and apartment in Ha Noi City, Vietnam with the monthly charge from VND 8,000,000 to VND 26,000,000 and financial instruments, including application of fair value, in accordance with IFRS. will be annually expired based on the demand of the Company. Financial risk management objectives 31. FINANCIAL INSTRUMENTS Capital risk management The Company has set up risk management system to identify and assess the risks exposed by the Company and designed control policies and procedures to manage those risks at an acceptable level. Risk management system is reviewed on a The Company manages its capital to ensure that the Company will be able to continue as a going concern while maximising the return regular basis to reflect changes in market conditions and the Company's operations. to shareholders through the optimisation of the debt and equity balance. The capital structure of the Company consists of net debt (borrowings disclosed in Note 17, offset by cash and cash equivalents) and Financial risks include market risk (including foreign currency risk, interest rate risk), credit risk and liquidity risk. equity attributable to equity holders (comprising owner contributed capital, share premium, other owners' capital, treasury shares, investment and development fund and retained earnings). Market risk
Gearing ratio The Company's activities expose it primarily to the financial risks of changes in foreign currency exchange rates and The gearing ratio of the Company as at the balance sheet date was as follows: interest rates. The Company does not hedge these risk exposures due to the lack of any market to purchase financial instruments. Opening balance Closing balance Foreign currency risk management VND VND Borrowings 47,454,265,386 75,050,773,182 The Company undertakes certain transactions denominated in foreign currencies; consequently, exposures to exchange Less: Cash and cash equivalents 342,673,472,949 281,710,813,470 rate fluctuations arise. Net debt - - The carrying amounts of the Company's foreign currency denominated monetary assets and monetary liabilities at the Equity 464,591,381,970 398,736,380,784 end of the year are as follows:: Net debt to equity ratio - - Significant accounting policies Assets Liabilities Details of the significant accounting policies and methods adopted (including the criteria for recognition, the bases of measurement, Closing balance Opening balance Closing balance Opening balance and the bases for recognition of income and expenses) for each class of financial asset and financial liability are disclosed in Note 4. VND VND VND VND Categories of financial instruments United States Dollar (USD) 67,748,313 1,855,695,223 - 1,795,675,021
Foreign currency sensitivity analysis Carrying amounts Closing balance Opening balance Due to the Company's operation mainly arose by Vietnam Dong and balances of monetary MHUI items in foreign currency VND VND as at balance sheet date are immaterial; thus, the Company does ITT not present foreign currency sensitivity analysis. Financial assets Interest rate risk management Cash and cash equivalents 342,673,472,949 281,710,813,470 Trade and other receivables 106,101,607,526 131,372,851,658 The Company has significant interest rate risks arising from interest bearing loans which are arranged. The risk is Held-to-maturity investments - 13,000,000,000 managed by the Company by maintaining an appropriate level of borrowings and analyzing market competition to 448,775,080,475 426,083,665,128 enjoy favorable interest rates from appropriate lenders. Financial liabilities Interest rate sensitivity Borrowings 47,454,265,386 75,050,773,182 Trade and other payables 97,268,821,013 143,102,111,433 The loan's sensitivity to interest rate changes which may arise at an appropriate level. Assuming all other variables Accrued expenses 9,566,189,146 1,462,174,315 were held constant if interest rates applicable to floating interest bearing loans had been 200 basis points higher/lower, the Company's profit before tax for the year ended 31 December 2016 would have been decreased/increased by VND Long-term provisions 4,452,834,481 - 949,085,308 (2015: VND 1,501,015,464). 158,742,110,026 219,615,058,930
148 ANNUAL REPORT 2016 149 www.cng-vietnam.com NOTES TO THE FINANCIAL STATEMENTS These notes are an integral part of and should be read in conjunction with the accompanying financial statements FORM B 09-DN
31. FINANCIAL INSTRUMENTS( continued) 32. RELATED PARTY TRANSACTIONS AND BALANCES Credit risk List of related parites Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Company, The Company has a credit policy in place and the exposure to credit risk is monitored on an on-going basis, The Company does not have any significant credit risk exposure to any counterparty because the Company has assessed the customer’s financial situation before signing Related party Mối quan hệ contract to supply gas, perform closely controlling receivables by appropriate measures such as reconcile receivables with customers PetroVietnam Gas JSC Big shareholder regularly, urging customers timly payment under the contract and appropriate the provision for overdue receivable prudently and properly according to the Company’s actual financial situation (see provision for doubtful debts accounting policy in Note 4) Utilico Emerging Markets Limited Big shareholder Halley Sicav - Halley Asian Prosperity Big shareholder Liquidity risk management PetroVietnam Low Pressure Gas JSC Entity in PVN Group The purpose of liquidity risk management is to ensure the availability of funds to meet present and future financial obligations, Liquidity is PetroVietnam Southern Gas JSC Entity in PVN Group also managed by ensuring that the excess of maturing liabilities over maturing assets in any year is kept to manageable levels relative to the amount of funds that the Company believes can generate within that year, The Company policy is to regularly monitor current and expected PetroVietnam Southern Gas JSC - East Branch Entity in PVN Group liquidity requirements to ensure that the Company maintains sufficient reserves of cash, borrowings and adequate committed funding from Vung Tau Oil and Gas Petroleum JSC Entity in PVN Group its shareholders to meet its liquidity requirements in the short and longer term, PetroVietnam Gas JSC - Gas Services Company Entity in PVN Group The following table details the Company’s remaining contractual maturity for its non-derivative financial assets and financial liabilities with PetroVietnam Transportation Corporation Entity in PVN Group agreed repayment periods, The tables have been drawn up based on the undiscounted cash flows of financial assets and undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay, The inclusion of information on non-derivative financial assets is necessary in order to understand the Company’s liquidity risk management as the liquidity is managed on a net asset and liability basis, During the year, the Company entered into the following transactions with related parties:
Less than 1 year From 1-5 years Total 31/12/2016 Current year Prior year VND VND VND VND VND Financial assets Sales Cash and cash equivalents 342,673,472,949 - 342,673,472,949 Trade and other receivables 104,174,607,526 1,927,000,000 106,101,607,526 PetroVietnam Transportation Corporation 19,666,386 446,848,080,475 1,927,000,000 448,775,080,475 PetroVietnam Southern Gas JSC 1,434,032,560 422,987,401 Financial liabilites Purchases of merchandise and service Borrowings 30,839,581,662 16,614,683,724 47,454,265,386 Trade and other payables 97,268,821,013 - 97,268,821,013 PetroVietnam Low Pressure Gas JSC 314,837,772,480 366,214,196,623 PetroVietnam Southern Gas JSC 35,330,676,094 87,716,080,931 Accrued expenses 9,566,189,146 - 9,566,189,146 PetroVietnam Southern Gas JSC - East Branch 1,776,928,820 1,852,703,942 Long-term provision - 4,452,834,481 4,452,834,481 PetroVietnam Gas JSC - Gas Services Company 431,131,857 921,353,384 137,674,591,821 21,067,518,205 158,742,110,026 Vung Tau Oil and Gas Petroleum JSC 7,490,508,321 3,287,956,704 Net liquidity gap 309,173,488,654 (19,140,518,205) 290,032,970,449 31/12/2015 Less than 1 year From 1-5 years Total PetroVietnam Transportation Corporation 34,921,296,576 13,784,763,152 Financial assets Office building service charge Cash and cash equivalents 281,710,813,470 - 281,710,813,470 PetroVietnam Low Pressure Gas JSC 2,373,254,266 2,674,907,989 Trade and other receivables 130,436,851,658 936,000,000 131,372,851,658 Trademark using fees Held-to-maturity investments 13,000,000,000 - 13,000,000,000 425,147,665,128 936,000,000 426,083,665,128 PetroVietnam Gas JSC 1,450,783,657 - Financial liabilites PetroVietnam Southern Gas JSC - 9,502,078,974 Borrowings 38,121,860,356 36,928,912,826 75,050,773,182 Trade and other payables 143,102,111,433 - 143,102,111,433 Dividends paid during the year Accrued expenses 1,462,174,315 - 1,462,174,315 PetroVietnam Southern Gas JSC 44,712,789,000 52,164,920,500 182,686,146,104 36,928,912,826 219,615,058,930 Utilico Emerging Markets Limited 8,460,000,000 7,230,000,000 Net liquidity gap 242,461,519,024 (35,992,912,826) 206,468,606,198 Halley Sicav - Halley Asian Prosperity 7,802,820,000 5,103,290,000 The Board of Directors assessed the liquidity risk at low level, The Board of Directors believes that the Company will be able to generate sufficient funds to meet its financial obligations as and when they fall due
150 ANNUAL REPORT 2016 151 www.cng-vietnam.com NOTES TO THE FINANCIAL STATEMENTS These notes are an integral part of and should be read in conjunction with the accompanying financial statements FORM B 09-DN
32. RATED PARTY TRANSACTIONS AND BALANCES (continued)
Remuneration paid to the Company's Board of Management, Boards of Supervisors and Directors during the year was as follows:
Current year Prior year VND VND Salary and bonus 6,779,877,069 6,684,086,424
Related party balances at the balance sheet date were as follows:
Closing balance Opening balance VND VND Payables PetroVietnam Low Pressure Gas JSC 68,677,748,307 66,987,135,161 PetroVietnam Southern Gas JSC 4,127,559,187 15,571,483,623 PetroVietnam Southern Gas JSC - East Branch 145,035,600 142,667,400 PetroVietnam Gas JSC - Gas Services Company - 104,763,981 Accrued expenses PetroVietnam Gas JSC 1,450,783,657 -
33. SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Dividends paid during the year
Dividends paid during the year include an amount of VND 40,490,195,100, representating an amount of dividends incurred in the prior year that has not yet been paid as at prior year end.
34. SUBSEQUENT EVENT
On 9 January 2017, the Company has entered into a contract with PetroVietnam Gas JSC to purchase one piece of land at Nguyen An Ninh Street, Ward 9, Vung Tau City, Ba Ria - Vung Tau Province with the value of VND 39.6 billion for purpose of building the Company's head office. At the date of this financial statements, the Company has completed the abo transfer.
Tran Ngoc Lan Nguyen Manh Hung Vu Van Thuc Preparer Chief Accountant Director 27 February 2017
This annual report is printed in limited quantities, use of environmentally friendly paper from the source forest management system in ANNUAL REPORT 2016 accordance with international standards and are 152 available at the website: www.cng-vietnam.com www.cng-vietnam.com CNG VIETNAM JOINT STOCK COMPANY [ ] : 7th Floor, GAS Tower, No. 61B, 30/4 Street, Thang Nhat Ward, Vung Tau City [ ] : (84.64) 3574635 [ ] : (84.64) 3574619
[ ] : www.cng-vietnam.com