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Dry Cell & Storage Battery Joint Stock

Company

Head Office: 321 Tran Hung Dao, District 1, Ho Chi Minh City

Tel: (84.8) 920 3062 – 920 3063

Fax: (84.8) 920 3060 – 920 3061

Email: [email protected]

Website: http://www.pinaco.com

mailto:[email protected]

http://www.pinaco.com/

27

TÌNH HÌNH HOẠT ĐỘNG

BÁO CÁO THƯỜNG NIÊN 2015 - PAC

ANNUAL REPORT 2015

DRY CELL & STORAGE BATTERY JOINT STOCK COMPANY

INDEX

ANNUAL REPORT 2015 - PAC

I. GENERAL INFORMATION..…………………..…01

Overview ………….……………………………………………..…...02

Business lines and business locations …………………………...…..05

Management model………………………………………………......07

Development orientation…………………………………………….09

Risks…………………………………………………….…………….11

II. BUSINESS PERFORMANCE…………………...13

Situation of production and business activities….…………………...14

Organization and human resources…………………………………….15

Investment, research and development ………………………………..18

Financial situation ……………………………………………………..18

Shareholder’s structure…………………………………………………21

Environmental and social impact assessment report of the company …23

III. REPORT OF BOARD OF MANAGEMENT........25

Evaluation of business performance…………………….......…………26

Performance of targets………………………………..…………………29

Financial situation……………………………………...………………31

Development plans……………………………………..………………34

Report of responsibilities for community and environment…….. ……37


IV. EVALUATION OF BOARD OF DIRECTORS..............38

Evaluation about operations.........................................................................39

Plans, orientations…...................................................................................40

V. CORPORATE GOVERNANCE .........................................41

Board of Directors...........................................................................................42

Inspection Committee.....................................................................................45

Transactions, remunerations and benefits of Board of Directors, Board of

Management and Inspection Committee……………………………………........48

VI. FINANCIAL STATEMENT..................................................49

1

GENERAL INFORMATION


Part I

GENERAL

INFORMATION

2

GENERAL INFORMATION


OVERVIEW

Company name : CÔNG TY CỔ PHẦN PIN ẮC QUY MIỀN NAM

English name : DRY CELL AND STORAGE BATTERY JOINT STOCK

COMPANY

Abbreviated

name : PINACO

Certificate of

business

registration

:

No. 0300405462 issued by the Department of Planning

& Investment of HCMC with first issuance on

23/09/2004 and 13th amendment registration on

18/12/2015

Charter capital :

309,812,930,000 VND (Three hundred and nine billion

eight hundred twelve million and nine hundred thirty

thousand dong)

Head Office : No. 321 Tran Hung Dao, Co Giang Ward, District 1,

HCMC

Tel : (84.8) 3920 3062 – 3920 3063

Fax : (84.8) 3920 3060 – 3920 3061

Email : [email protected]

Website : www.pinaco.com

Stock code : PAC

Stock exchange : Hochiminh City Stock Exchange (HOSE)

3

GENERAL INFORMATION


ESTABLISHMENT AND DEVELOPMENT

•Precursor of PINACO is Drycell and Storage Battery Company establishedon 19 April 1976 under decision of The General of Chemical (now knownas Vietnamese Chemical Group). The company was founded on the basisof the nationalization of all factories: Eagle Battery (Vidopin), Cat Battery,Diamond Battery, VABCO battery factory and VIDECO battery factory.

1976

•On 25 May 1993, according to Decree 388 of the Government on theestablishment of State enterprises, Ministry of Heavy Industry (now:Ministry of Trade and Industry) made decision No. 304/QD/TCNSDT toestablish Drycell and Storage Battery Company (Pinaco) belonging toVietnamese Chemical Group.

1993

•Since 1998, Pinaco has continuously invest in renewal of equipment toincrease production capacity, replacing old obsolete production technologywith new one.

1998

•The company has also made completely new investment in Saigon BatteryFactory in Tan Tao Industrial Park.

2003

•Since 01 Oct 2004, PINACO officially transformed into joint-stockcompanies according to business registration certificate number4103002690 issued by Department of Planning and Investment of Ho ChiMinh City for the first time on 23 September 2004.

2004

•PINACO listed on Ho Chi Minh Stock Exchange according to Share ListedLicense No. 69/UBCK-GPNY of the State Securities Commission andofficially implemented first transaction on 12 Dec 2006 with transactionprice of 40,000 VND per share and stock code of PAC.

2006

•The company also has invested in new battery factory in Nhon Trach-DongNai (Dong Nai 2 Battery Factory).

2011

•PINACO constantly invested in new equipment, replacing old obsoletetechnology production with new one, in accordance with increasing demandfor high technology of the market.

2012

•Has increased the charter capital from 269,878,430,000 VND to309,812,930,000 VND in the form of issue of shares for dividend.

2015

During nearly 40 years of development, with the goal of always strengthening the inherent

competitive capacity to be ready for process of integration, PINACO has achieved a proud

achievement for the company in particular and electrochemical industry in general. In the keen

competitive situation of economic integration, PINACO still firmly defended its position as a leading

business in Vietnam, and received many achievements and noble titles awarded by the State and

institutions.

4

GENERAL INFORMATION


AWARDS, TITLES ACHIEVED

Competitive flag of the Prime Minister (2013, 2014, 2015)

National Brand (2012, 2014, 2015)

The Top 5 Enterprise of Employee Benefits recognized by Vietnam National

Chemical Company (2015)

Certificate of Preferred Supplier of Ford Group, Quarter 1 (2014)

The best innovation supplier of HONDA (2014)

The Reputed Exporter in 2014

Top 50 most efficient businesses in Vietnam (2012)

High-quality Vietnamese goods during 20 consecutive years (1997 – 2016)

Independence Medal for First Class (2011, 2015), Second Class (2005),

Three Class (2002)

ISO 14001 Certificate – environment management system (2013)

ISO/TS 17025 Certificate – management system of experiment laboratory

(2013)

ISO 9001 Certificate- Quality Management System (2011)

ISO / TS 16949:2009 Certificate - Quality management systems for suppliers

of products for automotive industry (2011)

Reliable Supplier in 2011

Vietnam Golden Star (2009 - 2011)

Gold Stocks (2009)

TOP 100 leading brands in Vietnam (2008)

Brand reputation for securities & leading joint stock company in Vietnam

(2008)

Labor Hero Unit in Renovation Period (2000)

Third-class Labor Medal (2000)

5

GENERAL INFORMATION


BUSINESS LINES AND BUSINESS LOCATIONS

Business lines

o Manufacturing Battery and Storage Battery: provide diverse categories of batteries and storage batteries for domestic market and export. Including common types of zin-carbon battery and types of battery used for many purposes such as: storage batteries for automobiles, motorbikes, boats; civil storage batteries for lighting, electric vehicles and various kinds of storage battery for industry, etc…

o Trading, importing and exporting battery and storage battery products, materials and equipment for production and trade of battery and storage battery.

Business locations

o Inland market: The company has a Head Office in District 1, Hochiminh City, 3 enterprises for storage battery and 1 enterprise for battery – all are located in Hochiminh City and Dong Nai Province. 2 branches in Hanoi and Da Nang. The business locations are covered whole the country.

o Export market: Currently the products of PINACO are exported to 29 countries and territories, including: Cambodia, the Middle East, Brunei, Hong Kong, Nigeria, Algeria, Egypt, Saudi Arabia, Yemen, Myanmar, China, Sri Lanka, Lebanon, Jordan, Sudan, etc...

Typical products

The products of PINACO have achieved leading quality standards with

technology transferred from Europe, Japan, produced on advanced the

machinery, equipment of Austria, the USA, Germany, England, Italy, etc .. and

advanced management system, met the stringent requirements of many

customers and the world leading automobile and motorbike assembly companies

in Vietnam, including Ford Vietnam, Suzuki Vietnam, Honda, Piaggio, Yamaha,

Mercedes - Benz Vietnam, etc ..

6

GENERAL INFORMATION


TYPICAL CUSTOMERS

7

GENERAL INFORMATION


MANAGEMENT MODEL, BUSINESS ORGANIZATION AND

MANAGEMENT APPARATUS

GENERAL ASSEMBLY

OF SHAREHOLERS

BOARD OF DIRECTORS

BOARD OF

MANAGEMENT

INSPECTION

COMMITTEE

OFFICE

R&D Department

IT Department

Engineering – QA Dept.

Planning Dept.

Administration Dept.

Accounting – Finance Dept.

HR Department

Consumption – Market

Dept.

Materials – Transport Dept.

PRODUCTION

BRANCHES

Saigon Battery Enterprise

Dong Nai Battery Enterprise

Dong Nai 2 Battery Enterprise

Eagle Battery Enterprise

Da Nang Branch

Ha Noi Branch

8

GENERAL INFORMATION


SUBSIDIARIES

Enterprises

Eagle Battery Enterprise

752 Hau Giang, Ward 12, District 6, HCMC

Tel: (84 8) 38750 556

Dong Nai Battery Enterprise

Road No. 1, Bien Hoa 1 Industrial Park, An Binh Ward, Bien Hoa City, Dong Nai

Tel: (84 61) 3 836 116

Saigon Battery Enterprise

Block 64, Road No. 2, Tan Tao Industrial Park, Tan Tao A Ward, Binh Tan District,

HCMC

Tel: (84 8) 37 540 244

Dong Nai 2 Battery Enterprise

Road N2, Nhon Trach Textile Industrial Park, Nhon Trach, Dong Nai

Tel: (84 61) 3 569 968

Branches

Ha Noi Branch

18 Lane 44 Duc Giang, Thuong Thanh Ward,

Long Bien District, Ha Noi

Tel : (84 4) 39 333 611

Da Nang Branch

348 Dien Bien Phu, Thanh Khe District,

Da Nang City

Tel: (84 511) 3 649 957

Warranty Service Centers

Northern Region Warranty Center

02 Dang Thai Than, Hoan Kiem District, Hanoi City

Tel: (84 4) 3826 1030

Central Region Warranty Center

348 Dien Bien Phu, Thanh Khe District, Da Nang

Tel: (84 511) 3769 055

Southern Region Warranty Center

Block 64, Road 2, Tan Tao Industrial Park, Binh Tan

District, HCMC

Tel: (84 8) 3754 1151

Showrooms

321 Tran Hung Dao, District 1, HCMC

Tel: (84 8) 8368 529

21-23 Tran Hung Dao, District 1, HCMC

Tel: (84 8) 293 932

752 Hau Giang, District 6, HCMC

Tel: (84 8) 38752 230

Road No. 1, Bien Hoa 1 Industrial Park, Dong Nai

Province

Tel: (84 61) 3 836 116

02 Dang Thai Than, Hoan Kiem District, Hanoi

Tel: (84 4) 38 261 030

348 Dien Bien Phu, Thanh Khe District, Da Nang

Tel: (84 511) 3 649 957

9

GENERAL INFORMATION


DEVELOPMENT ORIENTATION

Major goals of the company

Developing steadily, being always on the basis of sustainable investment, innovation, enhancing competitive capacity in order to provide high quality products, superior services, maintaining the leading position in the field of battery and storage battery production in Vietnam and Southeast Asian region.

Medium-term and long-term development strategy

Business strategy

Focusing on manufacturing, developing traditionally dry cells & storage batteries;

Improving the competitive capacity based on a combination of factors: product diversification, high quality, reasonable price, preeminent customer care policies;

Maintaining and constantly expanding market share in the domestic market through a distribution system in three regions of the country;

Developing existing export markets and exploiting new markets on the basis of taking full advantages of opportunities when Vietnam integrates into the global economy.

Investment strategy

Always updating, investing modern technologies of production equipment in order to maintain superior product quality and meet the diverse needs of the market;

Focusing on research activities to diversify products and develop new technologies to meet the timely needs of the market;

Innovating, investing equipment of battery industry to improve productivity, quality, and seeking, researching investment and development opportunities of of battery industry.

HR Strategy

With the perception that human resources is a key factor to the success of the business, PINACO always focuses on building and developing the human resources through the following activities:

Recruiting appropriate trained personnels and expertise being appropriate to jobs;

Developing and transparently reporting to all officers and staffs forr the policy of recruitment, selection of legacy to motivate dedication to each officer and staff;

Developing and applying policies on salaries, bonuses, fair benefits for employees, thereby creating favorable conditions to help them feel secure for long-term commitment in the Company;

Respecting for the equal rights of men and women, no discrimination in terms of gender in employment and salaries to ensure the fairness of the capabilities of each person.

Management strategy

Developing and undertaking to

maintain management transparency

and efficiency environment, taking

customer satisfaction as standard for

the management improvement;

Improving the management system

according to international standards in

order to be ready for the integration

process.

Dividend policy

Ensuring a stable dividend level, not

less than 1.5 times of interest rate of

banks on the basis of the business

performance of each year and

decisions of the AGM.

10

GENERAL INFORMATION


Goals for environment, society and community

Environmental policy

Always adhering to the provisions

of environmental legislation on the

basis that it was invested the

environmental management

systems and equipment to collect,

treat and supervise polluted

elements under standards;

Applying advanced technologies to

minimize emissions at source,

strictly controlling risks which can

cause pollution;

Maintaining environmental

management system under ISO

14001

Social responsibilities

Committed to manufacture and

supply of products with good

quality, safety for humans and the

environment as stipulated by the

relevant legislation;

Implementing responsibilities for

society through philanthropy,

community support, sharing with

the disadvantaged, contributing to

reduce social pressure.

11

GENERAL INFORMATION


RISKS

Macroeconomic risk

In general, the world economy in 2015 has developed slowly, but appeared some

positive signals. It can be seen that, after more than 7 years occurred the global

economic crisis (2008), the world economy has not yet regained its momentum as

before. According to data from the World Bank (WB), the global growth rate in 2015

was 2.4%, this growth was mainly due to the group of developing countries.

However, Vietnam's economy remained among the few countries with impressive

speed of recovery. GDP growth rate of Vietnam in 2015 reached 6.68%, kept the

growth rate that this year was higher than last year (2012 economic growth rate

reached 5.25%, 2013: 5.42%; 2014: 5.98% and 2015: 6.68%). However, Vietnam

continued to face many risks and difficulties, to limit the impact from economic risks,

the company has prepared flexibly plans for production and business activities in

order to timely response to changes in the economy.

6,8%

5,9%

5,0%5,4%

6,0%6,7%

0,0%

1,0%

2,0%

3,0%

4,0%

5,0%

6,0%

7,0%

8,0%

2010 2011 2012 2013 2014 2015

Growth of GDP through years

Exchange rate risk

With a characteristics that 70% input

materials were imported and 20% of

revenue from exports, so that

fluctuation in exchange rates would

affect costs and business results of

the Company. To limit the risk from

exchange rates, the Company

actively prepared contingency plans

to minimize this risk.

Interest rate risk

With the characteristics of the company

was that the loan accounted for 30% -

40% of total capital, and they are mostly

short-term loans, so that the fluctuation

of the interest rate would significantly

impact business performance of the

Company. In 2015, lending interest rates

for VND and USD of PINACO were

respectively at 4.1% - 4.3%/year and

1.5% - 2.2%/year. This was a lower

interest rate than the market because

PINACO was assessed with high trust

levels and healthy financial position.

This has helped the company have less

impact by interest rate risk.

12

GENERAL INFORMATION


Risk of raw materials price

fluctuations

More than 70% of raw materials of

lead are imported from abroad by

PINACO, so that the price fluctuation

of lead will affect the cost of products.

Accordingly, the Company has always

actively sought for additional

resources from the domestic market

with corresponding quality to maintain

stable production.

Risk of alternative products

In the trend that technology is growing, there are a lot of substitutes for all kinds of ordinary batteries, storage batteries. However, these products are only concentrated in a few specific segments such as rechargeable lamp, phone, etc ... while sectors such as automotive, motorcycle, etc ... the majority continues to use acid-lead battery and traditional battery, the risk of replacing the battery and storage battery is not high. However, the company has always focused on researching and seeking new technologies to replace existing technologies to meet development needs in the future.

Legal risk

As a joint stock company listed on the stock exchange, PINACO must comply with and be subject to the effects of the laws, such as the Law on Enterprises, Securities Law, Tax Law, etc ... The documents in this field is in the process of completion, therefore changes in policy will affect administrative and business operations of the company. In addition, the Company's main products include batteries and storage batteries, the product group was listed as the high environmental pollutants, so that the company always has to comply fully with the requirements of environmental safety and build factories in the industrial parks.

Other risks

Other risks such as natural disasters,

epidemics, fires, etc ... are the risks of

force majeure and if occurring, it

would cause great damage for

materials and humans as well as the

general activities of the Company.

Therefore, PINACO was always

aware of preventing these risks

through measures of ensuring labor

safety in production, while actively

implementing environmental

protection commitments.

13


BUSINESS

PERFORMANCE

Part II

BUSINESS OPERATION

PERFORMANCE

14


BUSINESS

PERFORMANCE

SITUATION OF PRODUCTION AND BUSINESS ACTIVITIES

Target Unit Actual

2014 Actual

2015 Plan 2015

Actual 2015/

Actual 2014

Actual 2015/ Plan

2015

Revenue Billion VND

2,027 2,260 2,100 111.49% 7.60%

EBT Billion VND

95 121 100 127.64% 21.00%

Dividend % 45 (*)25 >=15 55.56% 166.67%

(*) Advanced 15% by cash, expected 10% more to be approved by AGM

In 2015, the Company exceeded all set targets. In particular, the revenue reached

2,260 billion VND, growth of 11.49% as compared to 2014 and exceeded 7.6% as

compared to the plan. The EBT achieved 121 billion VND, an increase of 26 billion,

respectively, increased by 26.8% as compared to 2014 and reached 21% as

compared to the plan.

The revenue increased by 11.49%, particularly the battery consumption increased by

7% higher than at the rate of 1% - 4% of the previous years.

The cost of the company was also managed rather well as selling expenses on

revenue was 8.6%, lower than 3.1%, decreased by 45 billion VND and the

management cost on revenue achieved 1.7%, less than 0.1% as compared to 2014.

1.9801.870 1.879

2.027

2.260

-10%

-5%

0%

5%

10%

15%

20%

25%

0

500

1.000

1.500

2.000

2.500

2011 2012 2013 2014 2015

(Bill

ion V

ND

)

Revenue and growth of 2010 - 2015

Revenue Growth of revenue

111,9

84,9 87,6

94,8

121,0

-30%

-20%

-10%

0%

10%

20%

30%

40%

0

20

40

60

80

100

120

140

2011 2012 2013 2014 2015

(Tỷ đ

ồng)

EBT and growth of 2010-2015

EBT Growth of EBT

15


BUSINESS

PERFORMANCE

ORGANIZATION AND HUMAN RESOURCES

Board of Management

Mr. TRAN THANH VAN

CEO, Member of BOD cum Secretary of Party

Committee

DOB: 1960

Native village: Ben Tre

Qualifications: Engineer of Mechanism – Master of

Economics

Political theory: Advanced politics

Number of holding shares: 84,870 shares

Mr. LE VAN NAM

Deputy CEO

DOB: 1967

Native village: Đang Thap

Qualifications: Chemical Engineer

Number of holding shares: 2,385 shares

Mr. NGUYEN DUY HUNG

chief Accountant

DOB: 1973

Native village: Ha Tinh

Qualifications: Bachelor of Economics

Number of holding shares: 568 shares

Changes in Board of Management:

- Ms. Nguyen Bao Hanh was dismissed from Deputy CEO on

01/05/2015;

- Mr. Le Van Nam has been appointed as Deputy CEO on 12/05/2015.

16


BUSINESS

PERFORMANCE

Employees policy

Labor structure of the company in 2015

No. Criteria Quantity Rate (%)

I Educational level 1,094 100.00%

1 Post-university 7 0.64%

2 University 230 21.02%

3 College 37 3.38%

4 Others 820 74.95%

II Type of labor contract 1,094 100.00%

1 Definite term 270 24.68%

2 Indefinite term 760 69.47%

3 Seasonal labor contract (timework) 64 5.85%

0,64%

21,02%

3,38%

74,95%

Under educational level

Postgraduate

University

College

Others

24,68%

69,47%

5,85%

Under labor contract

Defined period

Undefined period

Seasonality

17


BUSINESS

PERFORMANCE

Movements

In 2015, the Company launched 2 stages of competition – strived to fulfill the 2015

plan, made achievements to welcome the Party Congress of the Company and

the 12th Congress of the Party.

Organized many movements for the 40th anniversary of establishment of the

company in order to promote creativity and solidarity and cohesion of staff such

as: cooking contest, wall-newspaper and held two stages of manoeuvre for

workers.

Initiative – creative movements, competition for saving – anti-waste practice which

has been promoted very well. In 2015, the company has all of 203 ideas and

technical innovations, provided high-value benefits. In which there were proposed

initiatives awarded the Labor Creativity Certificate by Vietnam General

Confederation of Labor.

6.881.000 7.431.000

8.870.000 9.520.000

11.994.000

0

2.000.000

4.000.000

6.000.000

8.000.000

10.000.000

12.000.000

14.000.000

2011 2012 2013 2014 2015(V

ND

/per

son

/mo

nth

)

Average income

Personnel and salary

2015, the Company has

conducted a survey for

satisfaction levels of

employees, consolidated,

analyzed and brought

forward improved plans at

the units in 2016.

Developing statutes of

salary payment for the

whole company tied to

productivity, quality and

efficiency that employees

contributed.

Signing policies for health insurance, 24/24 accident insurance for employees to

feel secure to work.

Coordinating with QA Department integrated MCL and KPIs to enable the units

to implement.

Xây dựng khung lương đóng BHXH mới theo thông tư 17/2015/TT-BLĐTBXH.

18


BUSINESS

PERFORMANCE

FINANCIAL SITUATION

Financial situation

Target Unit 2015 2014 % up/down

Total assets Million VND

1,264,214 1,251,690 1.00%

Net revenue Million VND

2,116,802 2,026,331 4.46%

Profit from operating activities

Million VND

121,374 94,758 28.09%

Other profits Million VND

(422) 688 -

EBT Million VND

120,952 95,447 26.72%

EAT Million VND

90,476 74,409 21.59%

EPS % (*)25 45 (44.44%)


1.252

2.026

95 74

1.264

2.117

121 90

0

500

1.000

1.500

2.000

2.500

Total assets Net revenue EBT EAT

(Bill

ion

VN

D)

In 2014 in 2015

19


BUSINESS

PERFORMANCE

Financial ratios

Targets Unit 2015 2014

Liquidity

Short-term ratio Time 1.18 1.18

Quick ratio Time 0.60 0.57

Capital structure

Debt ratio/Total assets % 59.97 59.10

Debt ratio/Owners’ equity % 149.79 144.70

Working capacity

Inventory turnover ratio Cycle 3.72 3.50

Performance ratio of using assets Time 1.68 1.51

Profitability

EAT/Net revenue % 4.27 3.67

EAT/Owners’ equity % 17.78 14.76

EAT/Total assets % 7.19 5.56

Operating margin/Net revenue % 5.73 4.68

Liquidity

The company maintained the

secure liquidity when short-term

ratio maintained above 1.

reached 1.18 times. Quick ratio

reached 0.6 times, slightly

increased as compared to 0.57

times in 2014. PINACO

maintained quite stably

indicators of liquidity in the

period of 2012 - 2015 which

showed that the liquidity of the

company is always guaranteed.

1,181,09

1,18 1,18

0,50,55 0,57 0,60

0

0,2

0,4

0,6

0,8

1

1,2

1,4

2012 2013 2014 2015

Liquidity

Short-term ratio Quick ratio

Time

20


BUSINESS

PERFORMANCE

54%65% 59% 60%

116%

187%

145% 150%

0%

20%

40%

60%

80%

100%

120%

140%

160%

180%

200%

2012 2013 2014 2015

Capital structure

Debt ratio/Total assets Debt ratio/Total assets

3,13,35

3,5

4,07

1,461,6 1,51

1,68

0

0,5

1

1,5

2

2,5

3

3,5

4

4,5

2012 2013 2014 2015

Working ratio

Inventory turnover Assets turnover

Time

11,9% 11,9%

14,8%

17,8%

5,5%4,8%

5,6%

7,2%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

2012 2013 2014 2015

Profitability ratio

ROE ROA

Financial leverage level

The debt ratio/total assets and

debt ratio/owners’ equity

remained stably as compared to

2014 and respectively 60%;

150%. In which, the short-term

loan was accounted for about

60% of total liabilities. However,

this was the financial leverage

level in line with sector specific

and ensured safety.

Working capacity

The inventory turnover and

asset utilization increased as

compared to 2014. In which, the

inventory turnover and asset

utilization ratios reached

respectively 4.07 rounds and

1.68 times. This shows that the

company operated more

effectively while reducing the

cost of capital for inventory and

used assets more effectively.

Profitability

The indicators of profitability

were increased as compared to

2014 and maintained upward

trend from 2013 to present. In

which, the net profit margin,

ROE, ROA and net profit

margin from business

operations respectively reached

17.78%, 7.2%, 4.27% and

5.73%.This showed that the

company operated very well

and was increasingly growing.

21


BUSINESS

PERFORMANCE

SHAREHOLDER STRUCTURE

Shares

Number of shares : 30,981,293 shares

- Treasury shares : 362,812 shares

- Outstanding shares : 30,618,481 shares

Type of share : common shares

Par value : 10,000 VND/share

Shareholder structure (On 09/12/2015)

No. Type of shareholder

Quantity (Share)

Value under par value (VND)

Percentage of

ownership

I Domestic shareholder

22,698,319 226,983,190,000 73.3%

1 Institutional 16,240,108 162,401,080,000 52.4%

1.1 State shareholder 15,932,182 159,321,820,000 51.4%

2 Individual 6,095,399 60,953,990,000 19.7%

II Foreign shareholder

7,920,162 79,201,620,000 25.6%

1 Institutional 7,521,185 75,211,850,000 24.3%

2 Individual 398,977 3,989,770,000 1.3%

III Treasury share 362,812 3,628,120,000 1.2%

Total 30,981,293 309,812,930,000 100.0%

List of large shareholders

No. Name Quantity

(Share) Value under par

value (VND)

Percentage of

ownership

1 VIETNAM NATIONAL CHEMICAL GROUP

15,932,182 159,321,820,000 51.43%

2 BEIRA LIMITED 1,614,386 16,143,860,000 5.21%

22


BUSINESS

PERFORMANCE

Change in ownership’s equity:

In the year, the company issued the shares for dividend payment, namely:

No. Contents Before Change After Reason

01 Charter capital (VND) 269,878,430,000 39,934,500,000 309,812,930,000

For

dividend

paymen

t

02 Total shares 26,987,843 3,993,450 30,981,293

03 Number of treasury share 362,812 - 362,812

04 Number of outstanding

voting shares 26,625,031 3,993,450 30,618,481

Transaction of treasury shares in the year: None

23


BUSINESS

PERFORMANCE

ENVIRONMENTAL AND SOCIAL IMPACT ASSESSMENT REPORT

Management of raw materials:

No. Raw materials Unit Total

1 Lead kg 20,235,226

2 Sulfuric Acid kg 3,004,598

3 Electricity KWH 22,866,089

4 Water M3 198,826

5 Gas Liter 1,630,786

6 Zinc kg 1,241,065

Lead scrap in the production process was collected by PINACO and delivered to a

processing unit for recycling back into production, the recycling rate reached 62%.

Energy consumption:

The company always saved maximumly energy resources through the initiatives of

using efficiently energy and reduced from 5% -10% of Gas and Electrictity than the

norm.

24


BUSINESS

PERFORMANCE

Water consumption:

Water supply and water used in the factory:

Factory Supply Consumption (m3)

2014 2015

Dong Nai Dong Nai Water Co., Ltd. 93,145 123,145

Dong Nai 2 Vinatex Investment JSC - Tan Tao 63,159 72,400

Total 156,304 195,545

In addition, the company also actively implemented to treat and re-use part of the

treated water for the purpose of saving resources which has been increasingly

depleted, including:

Reused volume of treated water for cleaning the floor of chemical finished

product area: 1,049 m3.

Used the RO filter system to replace the Ion Water Filtration System: 3,000

m3.

Installed the water circulation system to high-coated roller: 300 m3.

Compliance with legislation on environmental protection:

The company ensured compliance with the law and complied with the regulations on the environment, so the company didn’t have any public sanctions for violation.

Policies for employees

Average hours of training under classification of employees:

Average of direct employees: 15 hours/year/person.

Average of indirect employees: 9 hours/year/person.

Average of managing employees: 12 hours/year/person.

Average of staff: 13 hours/year/person.

The training programs improving qualifications and skills for workers:

Programs instructed directly in work applied for new employees, new workers and probationers

Internal training programs: The Company designed its own programs for professional training, skills and spreading awareness, enhancing the positive work attitude to employees.

Training programs for managers: applied for the managing staff, including programs of improving management skills, professional skills for intermediate and senior managers.

Training programs improving levels of political theory for managing staff and officers of unions.

Training programs for qualifications and skills that the Company associated with outsources to train for employees.

25

REPORT OF BOARD OF

MANAGEMENT


Part III

REPORT OF BOARD OF

MANAGEMENT

26

REPORT OF BOM


EVALUATION OF BUSINESS OPERATION PERFORMANCE

Business operation performance

Unit: Million VND

No. Target 2015 2014

1 Revenue from sales of goods and providing

services 2,260,210 2,027,040

2 Deductions 143,408 710

3 Net revenue from sales of goods and providing

services 2,116,802 2,026,331

4 Cost of goods sold 1,744,355 1,648,833

5 Gross profit from sales of goods and providing

services 372,447 377,498

6 Revenue from financial activities 19,873 21,073

7 Financial expenses 39,189 29,872

- Of which: Interest expenses 9,590 18,685

8 Sales expenses 193,327 237,436

9 Administration expenses 38,429 36,504

10 Net profit from operating activities 121,374 94,758

11 Other incomes 2,060 1,007

12 Other expenses 2,481 319

13 other profits (422) 688

14 Total profit before tax 120,952 95,447

15 Applicable corporate income tax expense 35,456 20,597

16 Deferred corporate income tax expense (4,981) 441

17 Profit after tax 90,476 74,409

18 Earning per share (VND/share) 2,334 1,920

27

REPORT OF BOARD OF

MANAGEMENT


Gross domestic product (GDP) in 2015 was expected to increase by 6.68% as

compared to 2014, higher than the target of 6.2% and higher than the growth rate of

years from 2011 up to now. This showed that the macroeconomic situation was

stable. However, the world situation was unstable which caused by geopolitical

conflicts in many regions and China's economy growth slowed somewhat affected

the business environment in general.

Advantage

In 2015, macroeconomic situation was

quite stable and achieved the highest

growth rate within last 5 years. Low

price inputs helped the company be

more advantageous in the

implementation of the set profit targets.

The policy of tightening vehicle weight

helped the automotive assembly sector

grow leading to strong demand for

storage batteries. Stable product

quality and uninterrupted improvement

created more confidence to consumers,

contributed to improving the

competitive capacity of PINACO’s

products in the market.

Disadvantage

The Chinese Renminbi devaluation and

instability in some overseas markets

made it difficult to export activities. The

exchange rate between USD/VND and

strong fluctuations in the year end also

caused the decline of the corporate

profits in Quarter 4.

28

REPORT OF BOM


In 2015, the storage battery products still took major proportion, achieved 1,987 billion VND, accounted for 88% of total revenue, contributed 88.5% to gross profit structure. The remaining battery products accounted for 12% of the revenue, achieved 267 billion VND, contributed 41 billion VND, equivalent to 10.9% of gross profit. This structure did not change much as compared to 2014.

In general, demand for batteries in the domestic market was already saturated and the battery production was only to meet domestic demand. Therefore, PINACO focused on growing in the storage battery business as the demand for this product has gradually been increasing.

13%

87%

Year 2014

Pin

Ắc quy

12%

88%

Year 2015

Structure of revenue under

group of products

Achievements

2015 was an overall successful year of the Company with the results exceeded all

set targets: Industrial production value increased by 16% over the same period,

revenue consumption grew up 12% over the same period, the highest level in last 5

years. In particular, the battery consumption increased by 7%. The EBT reached 121

billion VND, increased by 26.8% over the same period. Workers Income before taxes

was on average of 12.7 million VND/person/month, increased by 4.5% as compared

to 2014. PINACO has made 4 major breakthroughs, contributed significantly to the

impressive achievements of company this year and created the conditions for the

company to continue to grow up in the future. Specific:

Breaking off the gradual decline and regaining market share for the line of

motorbike storage battery by PTX motorbike storage battery, achieved a

growth rate higher than 27% over the previous year;

The new line of CMF storage battery had growth rate over 45% as compared

to 2014, contributed largely to the revenue growth of the company.

The storage battery industry which initially planned towards specialization has

created conditions for the enterprises to improve production capacity, increase

productivity, reduce costs, reduce product cost, and improve competitive

capacity.

The battery industry had officially good profitable operations through

investment in equipment with high productivity, streamlined production,

changing supply of materials and technical innovations, etc ...

This success marked effort, wisdom and determination of the collective employees,

contributed to the achievements towards the 40th anniversary of the company’s

establishment.

Accumulator

Battery

29

REPORT OF BOARD OF

MANAGEMENT


Performance of targets

Target Unit Plan 2015 Actual 2015 % YoY

Revenue Billion VND 2,100 2,260 107.6%

EBT Billion VND 100 121 121.0%

Dividend % >=15 (*)25 166.67%


In 2015, PINACO has completed set targets with the revenue of 107.6% as

compared to the plan, the EBT was 121% as compared to the plan. PINACO’s net

revenue grew 4.4%, while the EBT increased by 26.8% as compared to 2014.

Markets and consumption of products:

In conditions of fierce competition of the

market, the company promptly launched

programs that promoted flexible,

appropriate consumption to successfully

compete on each point of sale. Reviewed,

replaced the distributors, agents who were

no longer sufficient capacity to serve for

the market in constant and stable

manners. Results of sales on the market

were high growth over the same period;

The export also made a great effort to

overcome difficulties, sought and opened

markets, so far PINACO’s products have

been exported to 30 countries and

territories. However, it had to adjust the

selling prices to compete even though the

export volume increased by 6%, the export

sales only reached by last year.

The marketing was also interested in

promotion: through the year, the company

deployed advertising activities

implemented, communicated information in

order to enhance its brand image, such as

the Overenthusiastic Saturday Program on

TV Football, Chatting with Driver on VOV,

VOH channels, etc ..

Engineering – Production:

Coordinated flexible production to meet timely

needs of domestic sales and exports. After

re-planning the battery manufacturing in the

end of 2014 towards specialization has

helped sharply reduce production costs and

promote well production capacity of the

storage battery industry.

Implemented measures to reduce costs in

production: tightly controlled of material

consumption, standardized technology, semi-

finished products, using local materials in lieu

of sources of imports while ensuring quality,

etc .. contributed to exceed the profit target.

Financial management:

Closely monitored the situation of exchange

rate and interest rate fluctuations to negotiate

with banks to obtain the most reasonable

rates. Effectively managed cash flows,

ensured liquidity and took full advantage of

unemployed capital for term deposits at

reputable banks, bringing income of 15.1

billion VND for the company.

Managed tightly inventory expenses,

liabilities, not incurred bad debts. The

inventory turnover speed achieved 3.72

rounds/year, an increase of 7% over the last

year.

30

REPORT OF BOM


Science – Engineering and

development research:

Researched to replace successful

part of materials; lead and zinc

imported by domestic supply while

ensuring product quality and superior

stability as compared to competitive

products in the market. Researched to

complete a number of products in line

with demands.

Investment:

Carried out investment projects on

scheduled plan with a total cost of

over 31 billion VND.

Projects of exploitation of facilities

in HCMC:

The project of building the Business

Center and Office Building at 445-449

Gia Phu: The alternative design has

been assessed by the Ministry of

Construction to be approved by the

Department of Construction of HCMC

for the building permit.

The cooperative project for the facility

at 752 Hau Giang: Signed the

cooperation agreement with Viet Real

Estate Trading Joint Stock Company

(Vietcomreal) to invest the Business

and Service Center on this land.

The Internal Control Division has

conducted several assessments,

detected inappropriate points of

management to regulate and amend

statutes and procedures in order to be

more perfection in the management.

31

REPORT OF BOARD OF

MANAGEMENT


FINANCIAL SITUATION

Assets

Unit: Million dong

Target 2015 2014 % +/- YoY 2014

Short-term assets 890,569 839,740 6.1%

Long-term assets 373,645 411,950 (9.3%)

TOTAL ASSETS 1,264,214 1,251,690 1.0%

In 2015, total assets of the company reached 1,264 billion VND, an increase of 13

billion VND, equivalent to an increase of 1% as compared to 2014. The structure of

assets has not changed much as compared to the last year when short-term assets

accounted for 70.44% of the assets of the company. Last year, there were some

changes in the assets of the Company, including:

Short-term assets reached 891 billion VND, increased by 51 billion VND, equivalent to an increase of 6.1% as compared to 2014. In particular, the cause was mainly due to the short-term financial investment, an increase of 55 billion VND, the short-term receivables, an increase of 46 billion VND as compared to the same period last year.

Long-term assets of the company reached 374 billion VND, decreased by 9.3% as compared to 2014. In which, the item that significantly reduced was the fixed assets, decreased by 49 billion VND as compared to 2014.

67,09%

32,91%

Structure of asssets in 2014

Short-term asset

Long-term asset

70,44%

29,56%

Structure of assets in 2015

32

REPORT OF BOM


In the structure of short-term assets, inventories took a major proportion, accounted for 49% with the value of 437 billion VND. Also, short-term financial investments took the proportion of 23% with the value of 200 billion VND; cash and cash equivalents accounted for 15%, with a value of 133 billion VND and short-term receivables accounted for 12%, with a value of 110 billion in turn.

The structure of long-term assets

did not change much as compared

to 2014 when the fixed assets also

took a major proportion, more than

80% of the long-term assets, with a

value of 316 billion VND. Long-term

unfinished assets and long-term

financial investments took a small

proportion of the structure of long-

term assets, respectively achieved

8.5 billion VND and 3.6 billion VND.

Other long-term assets accounted

for 12% of the structure of the long-

term assets, reached 45.8 billion

VND.

15%

22%

12%

49%

1%

Structure of short-term Assets of PAC

Cash and equivalents Short-term capital investment

short-term receivables Inventories

Other short-term assets

85%

2% 1%12%

Structure of long-term assets of PAC

Fixed assets Long-term unfinished assets

Long-term financial investment Other long-term assets

33

REPORT OF BOARD OF

MANAGEMENT


Liabilities

Unit: Million dong

Target 2015 2014 % +/- YoY 2014

Current liabilities 753,981 736,115 2.4%

Long-term liabilities 4,123 4,123 0.0%

Liabilities 758,104 740,238 2.4%

The debt structure in 2015 remained stable as compared to 2014 while short-term

debt still took a major proportion. In which, short-term debts reached 754 billion

VND, accounted for 99.46% of total liabilities, an increase of 2.43% as compared to

2014.

12%

15%

9%56%

7%

Short-term Debt structure of PAC

Short-term payables to sellers

Payable to employees

Short-term expense payables

Long-term loans and debts of financial lease

Others

In the short-term debts, the item took a major proportion was the short-term loans used by the Company to supplement working capital for operations during the year. In which, short-term loans remained at 421 billion VND, accounted for 56% of total short-term liabilities. The remaining items included payables to employees, accounted for 15%, with a value of 117 billion VND, payable to suppliers, accounted for 12%, with a value of 94 billion VND and short-term expense payables accounted for 9%, reached 69 billions dong VND.

Long-term debts of 2015 kept

unchanged as compared to 2014

when the company still remained

only a long-term payable with the

amount of 4.1 billion VND.

100%

Strcuture of long-term debts of PAC

Other long-term payables

34

REPORT OF BOM


DEVELOPMENT PLANS IN THE FUTURE

Judgment of general situation

In 2016, with the participation in 12 bilateral and multilateral free trade agreements,

along with several other agreements being negotiated and prepared to sign,

Vietnam's economy is assessed to be quite favorable. The government sets a target

of 6.7% GDP growth, expressing determination to speed up economic development

from beginning year of the term 2016 - 2020. However, the situation of conflict,

instability in some countries , regions and especially the decline of China's economy

will be a major impact on Vietnam's economy.

Advantage

In 2016, Vietnam's economy will be

evaluated to be continuously

recovered, so that the purchasing

power is expected to improve. The

free trade agreements in effect open

up export opportunities in large

markets. In addition, product quality

and incessantly improvements will

help strengthen the company's

reputation in the market.

Disadvantage

The policy of restriction on foreign

currency lending, flexible adjustment

of exchange rate of the state bank will

create enormous pressure for the

company in securing capital for

production, business and investment.

Competition will become more intense

when the barriers are lifted gradually

under the free trade commitments.

Disaster situation, drought in the

Central, Central Highlands and

Southwest will affect the purchasing

power of the market.

After a period of uninterrupted high

growth, now the company's factories

have been operating at full capacity,

so that in the near future it easily

occurs shortage of goods.

In that context, the Company plans to

focus on speeding up investments to

increase production capacity,

maintain superior quality, tightly

control costs, continue diversification

of products and find appropriate

partners to cooperate for

technological innovations, business

development to continuously

successfully compete in the period of

deeper integration into the

international economy.

35

REPORT OF BOARD OF

MANAGEMENT


Target, production and business

Unit: Billin VND

Target Plan 2016

Value of industrial production 2,285

Total revenue 2,440

EBT 130

Total investments 79.93

- Construction 28.43

- Equipment 49.41

- Others 2.09

Gradually perfecting the organizational

structure, supplementing personnel for

deficient positions, seeking, improving and

developing potential personnel, paying

attention to the remuneration policy for the

Company's staff to feel secure and work in

order to achieve the set goals.

Goals

Enhancing internal competitive capacity to

sustain in the integration process. 5 strategic

solutions, including:

Ensuring outstanding quality in the domestic and export markets.

Tightly controlling costs in order to have competitive prices and maximization of profit.

Continuing to diversify the products: Big, small size Industrial batteries and various kinds of battery when having ripe opportunity.

Positively selecting partners for technical cooperation, production and sales to fast technological innovation, management capability and having more business opportunities.

Improving the organization, nurturing and developing human resources, considering as the major driving force for the development of the company.

General tasks

Strengthening and developing the existing

distribution system.

Focusing on investment and exploiting empty

segments and promoting the marketing,

introducing new product lines that are in

demand by markets such as industrial

storage batteries, telecommunications

storage batteries, ISS, high-class batteries,

etc .. Striving to complete the revenue target

in 2016.

Ensuring stable operation. Gradually

investing in upgrading both size and

production technologies in the enterprises.

Continuing to improve quality uniform

management system throughout the

company. Calculating and managing properly

stock goods.

Strengthening inspection and monitoring in

order to detect and promptly handle risks in

the production process so as not to affect the

overall operation of the Company, nor to let

poor-quality products to reach the market .

Investing and researching solutions to

reduce material consumption, reduce

production costs, thereby increase

competitive capacity while ensuring product

quality of the company.

36

REPORT OF BOM


Specific orientations, solutions

Consumption - Market

Continuing to strengthen human resources of the distribution system, closely monitoring the evolution of the market for appropriate policy responses in order to maintain the market and grow the sales. Continuing to seek new customers to expand opportunities of export, especially emphasizing on markets with preferential trade agreements with Vietnam.

Investing strongly for the marketing and advertising, promotion programs on the occasion of the event of the 40th anniversary of establishment to promote PINACO’s image, brand.

Production engineering

Maximizing existing production

capacity. Operating flexible

production to meet all market

requirements in the condition that

the production is at peak capacity.

Strictly managing expenses, striving

to reduce costs by 2% of the cost

by cost saving measures and using

local materials without affecting the

quality of products to enhance

competitive capacity.

Supplementing and perfecting the

system of management regulations,

strengthening internal controls to

control costs and prevent risks.

Applying a new payroll system,

implementing assignments and

evaluating the of work under KPI

and new regimes of preferential

treatment, including: health

insurance, voluntary pension

insurance, etc .. for the whole

company to attract high-quality

employees.

Investment and development

research

Fast deploying investments to

overcome the bottlenecks to

increase production capacity,

combining with the gradual

reorganization and re-planning of the

storage battery factories and

relocating the Eagle battery factory

to Tan Tao Industrial Park.

Researching to diversify products to

meet market demands.

Investing 9.8 hectares of land next to

Dong Nai 2 Battery Factory in

preparation for expanding the battery

production in the near future and 2

hectares of land in Bac Ninh to build

the transit warehouse and the office

of the North branch. Continuing to

implement the steps of investment

cooperation, efficient exploitation of

the facilities at 445-449 Gia Phu and

752 Hau Giang.

37

REPORT OF BOARD OF

MANAGEMENT


REPORT OF RESPONSIBILITIES FOR COMMUNITY AND

ENVIRONMENT

Evaluation in respect of environmental targets

For waste water: All of PINACO’s enterprises are investing the 24/24 wastewater treatment systems. All industrial waste water and domestic waste water will be collected and treated to meet approved standards before discharging outside, or discharged into the concentration waste water treatment system of industrial parks. Particularly, the treated waste water in Dong Nai Battery Enterprise is reused, contributing to save water use and minimize environmental impact. The average amount of water reused is 20 m3/day. For dust - emission: PINACO has invested the dust - emission handling

system at all factories, areas arising dust, poison gas. Specifically: acid vapor treatment systems in the workshops of the storage battery factories, dust and noxious gas treatment systems from the digesters of lead, zinc, cutting cards and assembly, etc ...

For solid waste - Hazardous waste: The company has invested temporary storage in accordance with the regulations of the Ministry of Natural Resources and Environment, signed contracts with the functional units for collection of solid waste and reused lead and zinc collected from zinc slag, lead slag, lead scrap, etc ..

For domestic waste: signed a contract with the treatment units specialized in treatment of domestic waste for collection, transport and processing to ensure the environment.

.

Evaluation about the

employees

The company has set up a council of labor protection, in order to inspect and supervise the work of occupational safety and hygiene across the company, equipped fully with personal protection for workers right with jobs. The company also actively fostered, supported for hazardous allowances and organized the periodic health examination, occupational medical examination for employees in accordance with the regulations of the government. Periodically, held on vacation to relieve stress, improve spirit and efficiency, responsibility in work for employees. In addition, the government and trade unions often organized movements of cooking contest, maneuvers, public arts performances creating a healthy playground for staff after stressful hours of work.

Evaluation regarding the

responsibilities of the

company for local community

PINACO has always actively and

actively participated in social

activities such as: taking care of

Vietnamese Heroic Mothers and

serious wounded soldiers,

contributing stones to construction of

Spratly Island; building charity

houses in District 1, District 6; love

classes; taking up collection for

victims of disaster, flood; organizing

to visit and offer gifts for the elderly

and disabled orphans living alone

and helpless in every spring.

38

REPORT OF BOARD OF DIRECTORS


Part IV

EVALUATION OF BOARD OF

DIRECTORS

39



EVALUATION OF OPERATIONS OF THE COMPANY IN 2015

In 2015, due to many positive

elements from the macroeconomics,

the business operation of the company

was quite favorable, especially in the

automotive industry had a very high

growth rate contributing to more

demand for domestic storage battery

use. The reasonable incentive sale

policies created outstanding

competitive power in the market.

Export markets had difficult phase due

to the Chinese Renminbi devaluation

which negatively affected exports in

some countries such as Cambodia,

Myanmar, Malaysia, Brunei, the

Philippines, etc ...

The manufacturing activity was quite stable, in the year, the company has invested some additional equipment to improve production capacity to meet the growing demand of the market. Prices of some major materials, gasoline prices reduced strongly in some stages were also good conditions for business operations.

The resolution of AGM in 2015 approved the business plan with targets: The revenue of 2,100 billion VND, profits of 100 billion, dividend 15% (1,500 VND/share). In 2015, the company has been striving to exceed the assigned plan, namely: has achieved 2,260 billion VND in revenue, exceeded 160 billion VND as compared to the original plan, profit reached 121 billion VND, exceeded 21 billion VND as compared to the plan. On dividends, the company allocated 15% by cash (1st allocation of 8% in Jul/2015, 2nd allocation of 7% in December/2015), therefore, dividend plan in 2015 was completed. However, with the business performance achieved in 2015, The Board of Directors have expected the dividend plan for 2015 is 25% and paid in cash. If it is passed by AGM, the 10% remaining will be allocated immediately after having the AGM’s resolution.

40



PLANS, ORIENTATION OF BOARD OF DIRECTORS

On the basis of the forecast of the world economic situation and Vietnam, based on

the company's development plan to 2016. The Board of Directors has proposed

business plan in 2016, the management and operation orientation, including some

contents as follows:

Business targets:

Total Revenue: 2,440 billion VND, or 108% as compared to actual 2015

EBT: 130 billion VND, or 107% as compared to actual 2015

Dividend: At least 12%.

Operation orientations of Board of Directors

In the short term, continuing to invest in equipment to increase capacity to

meet the growth of the market, researching powerful and modern equipment,

synchronizing with centralized production planning for storage battery industry

in Nhon Trach.

Continuing to research and seek investment for production technology:

industrial storage batteries, telecommunications storage batteries, ISS, high-

class batteries, etc ... for further growth opportunities.

Directing to relocate the Eagle Battery Enterprise, combining with the storage

battery industry planning. Relocation still ensures sufficient products to meet

the market.

Assigning the targets with the aim of reducing production costs by 2% on the

basis of promoting innovations in the management of manufacturing,

engineering, propagandizing and campaigning saving – anti-waste practice.

Cooperating to exploit the land facilities at 752 Hau Giang, collecting

compensation to serve for the relocation of Eagle Battery Enterprise.

41

REPORT OF BOD


Part V

REPORT OF BOARD

OF DIRECTORS

42

REPORT OF BOD


BOARD OF DIRECTORS

Members of structure of Board of Directors

No. Full name Position % of shares in ownership

1 Phan Van Tien Chairman of Board of Directors None

3 Tran Thanh Van Member of BOD cum CEO Owning 0.274% of charter capital

4 Ngo Dinh Luyen Member of BOD Owning 0.074% of charter capital

5 Phạm Kieu Diem Member of BOD Owning 0.17% of charter capital

6 Cao Trọng Mien Member of BOD Owning 0.006% of charter capital

Change of BOD’s members:

o Mr. Tran Thanh Van has resigned from the Chairman of BOD from

13/04/2015.

o Mr. Lam Thai Duong had appointed as the Chairman of BOD from

BOD dated 13/04/2015, and removed from the office on 29/02/2016.

o Mr. Phan Van Tien has appointed as the Chairman of BOD from

29/02/2016.

Subdivisions of BOD: None

List of members of BOD who have the training certificates on corporate

governance:

All members of BOD have the training certificate on corporate governance:

43

REPORT OF BOD


Operations of BOD

Meetings of BOD

No. Full name Position Number of

meeting attended

Percentage

1 Lam Thai Duong Chairman of BOD 9/9 100%

3 Tran Thanh Van Member of BOD cum CEO

12/12 100%

4 Ngo Dình Luyen Member of BOD 12/12 100%

5 Phạm Kieu Diem Member of BOD 12/12 100%

6 Cao Trong Mien Member of BOD 12/12 100%

In 2015, the Board of Directors held meetings and issued resolutions and decisions

as follows:

No. Resolution/Decision

No. Date Contents

1 151/QĐ-HĐQT 13/04/2015 Mr. Tran Thanh Van resigned from the

Chairman of BOD

2 152/QĐ-HĐQT 13/04/2015 Appointed Mr. Lam Thai Duong –

Chairman of BOD.

3 190/QĐ-PA 12/05/2015 Appointed Mr. Le Van Nam – Deputy

CEO.

4 189/QĐ-PA 12/05/2015 Appointed Mr. Nguyen Duy Hung –

Chief of Accountant.

5 298/NQ-HĐQT/2015 14/07/2015

Assigned the Business Plan of Quarter

3/2015, Checked, amended and

supplemented the internal statutes, the

Articles of Association of the Company

44

REPORT OF BOD


under the law on enterprises in 2015,

passed the policy to move the Eagle

Battery Enterprise, acquired 2000 m2 of

Land at VSIP Bac ninh to build the

depot, office of HN Branch and some

other investment items.

6 353/NQ-HĐQT/2015 31/08/2015 Advanced the 1st dividend in 2015 by

8%

7 403/NQ-HĐQT/2015 6/10/2015

Assigned the Business Plan of Quarter

4/2015, Checked, amended and

supplemented the internal statutes, the

Articles of Association of the Company

under the law on enterprises in 2015,

passed the policy to move the Eagle

Battery Enterprise, acquired 5000 m2 of

Land at VSIP Bac ninh to build the

depot, office of HN Branch

8 533/QĐ-PA 20/11/2015

Approved Mr. Nguyen Hong Phuc –

Director of Dong Nai Battery Enterprise

to retire on pension.

9 535/NQ-HĐQT/2015 20/11/2015

Assigned the Business Plan of 11-

12/2015, passed the policy to move the

Eagle Battery Enterprise, sought

cooperative partners to invest the land

lot at 752 Hau Giang, District 6, HCMC

with the area of 17,000 m2; Acquired

2,000 m2 at VSIP Bac Ninh to build the

depot, office of HN Branch and some

other investment items

45

REPORT OF BOD


INSPECTION COMMITTEE

no. Full name Position % Ownership of shares

1 Tạ Duy Linh Head Owning 0.084% of charter

capital

2 Vu Nhat Tam Member Owning 0.075% of charter

capital

3 Vo Thị Cam Hong Member Owning 0.004% of charter

capital

Operations of the Inspection Committee in 2015

Supervised, checked the management and implementation of the business

targets of the Board of Directors (BOD) and the Board of Management in

2015, checked the legality and rationality of business operations in 2015

under the resolution of AGM, the resolution of the Board of Directors and the

executive decisions of the General Director in 2015.

Reviewed the appropriateness of the decisions the Board of Directors, the

Board of Management in the management and control of the orders and

procedures for issuance of documents, to ensure conformity with the

implementation plan.

Checked the reasonableness, legality, honesty and prudence in accounting,

statistics and financial statements. Reviewed of financial statements of each

quarter, 6 months, 9 months, 2015 and the consolidated financial statement

which has been audited by KPMG Vietnam Co., Limited in 2015.

Controlled operations of members of BOD, members of BOM, the

management apparatus, the suitability of the operation of production and

business development, personal transactions by members of BOD, BOM

concerning the interests of the company.

Participated in the Board of Directors’ meetings, had direct contribution

opinions to reasonableness and legality of the resolutions and decisions of the

Board of Directors and the Board of Management.

Checked the information disclosure of the Company whether they have been

fully and honestly and in compliance with legal provisions.

Discussed with the auditors concerning auditing contents and auditing results

of the annual financial statement.

Performed the inspection, review of the results reported in 2015 and

performed the tasks and duties of the Board of Directors before submitting to

AGM.

Supervised the orders, procedures for holding the Annual General Meeting of

Shareholders.

46

REPORT OF BOD


Results of inspection and supervision of the Inspection Committee

Regarding the financial activities of the Company: Based on the financial

statement in 2015 of Dry Cell and Storage Battery Joint Stock Company

audited by KPMG Limited Vietnam. The Supervision Committee found that the

company has fully complied with the current requirements of accounting

standards and accounting regulations of Vietnam in the organization of

accounting and book keeping operation and making fully the quarterly, 6

months, 9 months, and yearly financial statements. Guaranteed the

truthfulness, accuracy and caution.

Regarding the Resolution of BOD: The resolution issued by by the Board of

Directors in accordance with regulations of the government, ensured the

compliance with the Articles of Association of the company.

Regarding the activities of the Board of Management: The Board of

Management of the company always abided to comply with the laws of the

government, the provisions of the Company. Developed on the rules and

regulations in line with the actual situation of the company and the policies

and laws of the government. Strived to fulfill the tasks assigned by the AGM.

In the regular or extraordinary meetings of the Board of Directors had at least

01 members of the Supervision Committee to attend and contribute ideas.

Results of coordinating activities among Supervision Committee, Board

of Directors, Board of Management and Shareholders

In 2015, Supervision Committee has actively discussed and agreed with

Board of Directors of the Company on content of inspection, plan of

inspection and monitoring, at the company, coordinate with Board of

Management during inspection period.

Board of Directors of the Company has provided full and timely resolutions

and decisions of BOD to Supervision Committee. The Board of Management

has facilitated Supervision Committee in collecting information, documents

relating to the activities of the Company upon request.

Board of Directors, Supervision Committee, Board of management and

managing staff of the Company had close relationships to cooperate in the

administration and management of company

activities.

For shareholders: In 2015, the Inspection Committee didn’t not receive any

written requests or complaints by any shareholders or group of shareholders

with percentage and time of share ownership as defined in the Articles of

Association of the company.

Evaluation and petition

General evaluation:

47

REPORT OF BOD


In 2015, the Supervision Committee did not find any signs of unusual activity

in the Company's business. All activities were in compliance with the Law on

Enterprises, Securities Law, the Articles of Associations and the regulations of

the laws.

PINACO has fully complied with the provisions of law in the management of

the company as well as transactions. The members of the Board of Directors,

the Board of Management and the managers have complied with the

functions assigned under the provisions of the Law on Enterprises, the

Company Charter and resolutions of the AGM.

In 2015, there were no disputes arisen in PINACO relating to business

activities and investment projects.

Accounting system complied basically under current accounting standards,

preparation and submission of timely accounting reports for the competent

authorities.

The company has made full disclosure announcement for listed companies in

accordance with regulations.

In 2015, the company has received the Tax Inspection Group of the General

Department of Taxation for the compliance with the tax law in 2014. The result

of inspection was as follows:

+ Increased the output VAT with the amount of 125,178,475 VND

+ Total taxable profit increased by 3,209,432,822 VND

+ Increased the FCT with the total amount of 327,009,000 VND

Petition

The Inspection Committee has some petitions as follows:

Continuing to revise the old regulations to complete the issuance of new

regulations in line with changes in the Law on Enterprises, the Law on

Procurement, etc ... and the current actual situation of the Company.

Organizing to periodically and unexpectedly inspect the compliance with the

rules and regulations of the company, policies and laws of the government in

the divisions, departments of the company and the branches.

The customer receivables as of 31/12/2015 time decreased sharply as

compared to 2014, however, the company should have effective solutions to

quickly collect bad debts because the company does not hold any mortgage

assets from customers.

Continuing to have appropriate and effective measures for production

management, quality management, cost management, maintaining and doing

better the saving practice such as: energy, cost of raw materials, equipment

for production, etc… cost management in order to reduce the cost of product.

48

REPORT OF BOD


TRANSACTIONS, REMUNERATIONS, AND BENEFITS OF BOARD OF DIRECTORS,

BOARD OF MANAGEMENT AND INSPECTION COMMITTEE

Salaries, bonuses, remunerations and benefits in 2015

Unit: VND

No. Full name Position Remuneration

Board of Directors

1 Lam Thai Duong Chairman 81,000,000

2 Tran Thanh Van Member 81,000,000

3 Ngo Dinh Luyen Member 72,000,000

4 Pham Kieu Diem Member 72,000,000

5 Cao Trong Mien Member 72,000,000

Inspection Committee

1 Ta Duy Linh Head 72,000,000

2 Vu Nhat Tam Member 48,000,000

3 Vo Thi Cam Hong Member 48,000,000

Transaction of shares of internal shareholders and relevant persons

Mr. Vu Nhat Tam – Member of Inspection Committee bought 5,930 shares;

KITMC worldwide Vietnam RSP balanced fund – Large shareholder sold

150,000 shares;

Mrs. Do Thi Ngan, who is Mr. Tran Thanh Van’s wife – Member of BOD/BOA

bought 10,000 shares;

Mr. Tran Phuoc Tuan, who is Mrs. Pham Kieu Diem’s husband – Member of

BOD bought 10,000 shares.

The implementation of regulations on corporate governance

The Company has followed and implemented well the corporate governance under

internal regulations, the Articles of Association and regulations of the laws for public

companies

FINANCIAL STATEMENT 2015

For the year end as of 31/12/2015

(Audited)

Dry Cell and Storage Battery Joint Stock Company

Financial Statements for the year ended 31 December 2015

Dry Cell and Storage Battery Joint Stock Company Corporate Information

1

Business Registration Certificate No. 4103002690 23 September 2004

The Business Registration Certificate has been amended several times, the most recent of which is the Business Registration Certificate No. 0300405462 (13rd amendment) dated 18 December 2015. The Business Registration Certificate and its amendments were issued by Ho Chi Minh City Department of Planning and Investment.

Board of Management Mr. Phan Van Tien Chairman (from 29 February 2016) Mr. Lam Thai Duong Chairman (until 29 February 2016) Mr. Tran Thanh Van Chairman (until 13 April 2015) Ms. Pham Kieu Diem Member Mr. Ngo Dinh Luyen Member Mr. Cao Trong Mien Member Supervisory Board Mr. Ta Duy Linh Chief Supervisor Mr. Vu Nhat Tam Member Ms. Vo Thi Cam Hong Member Board of Directors Mr. Tran Thanh Van General Director Mr. Le Van Nam Deputy General Director (from 12 May 2015) Ms. Nguyen Bao Hanh Deputy General Director (until 30 April 2015) Registered Office 321 Tran Hung Dao Street Co Giang Ward, District 1 Ho Chi Minh City Vietnam Auditors KPMG Limited Vietnam

Dry Cell and Storage Battery Joint Stock Company Statement of the Board of Directors

2

The Board of Directors of Dry Cell and Storage Battery Joint Stock Company (“the Company”) presents this statement and the accompanying financial statements of the Company for the year ended 31 December 2015. The Board of Directors is responsible for the preparation and fair presentation of the financial statements in accordance with Vietnamese Accounting Standards, the Vietnamese Accounting System for enterprises and the relevant statutory requirements applicable to financial reporting. In the opinion of the Board of Directors: (a) the financial statements set out on pages 5 to 38 give a true and fair view of the financial

position of the Company as at 31 December 2015, and of the results of operations and the cash flows of the Company for the year then ended in accordance with the Vietnamese Accounting Standards, the Vietnamese Accounting System for enterprises and the relevant statutory requirements applicable to financial reporting; and

(b) at the date of this statement, there are no reasons to believe that the Company will not be able

to pay its debts as and when they fall due. The Board of Directors has, on the date of this statement, authorised these financial statements for issue. On behalf of the Board of Directors Tran Thanh Van General Director Ho Chi Minh City, dd mm 2016

3

INDEPENDENT AUDITORS’ REPORT To the Shareholders Dry Cell and Storage Battery Joint Stock Company We have audited the accompanying financial statements of Dry Cell and Storage Battery Joint Stock Company (“the Company”), which comprise the balance sheet as at 31 December 2015, the statements of income and cash flows for the year then ended and the explanatory notes thereto which were authorised for issue by the Company’s Board of Directors on dd mm 2016, as set out on pages 5 to 38. Board of Directors’ Responsibility The Company’s Board of Directors is responsible for the preparation and fair presentation of these financial statements in accordance with Vietnamese Accounting Standards, the Vietnamese Accounting System for enterprises and the relevant statutory requirements applicable to financial reporting, and for such internal control as the Board of Directors determines necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Vietnamese Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Board of 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.

4

Auditor’s Opinion In our opinion, the financial statements give a true and fair view, in all material respects, of the financial position of Dry Cell and Storage Battery Joint Stock Company as at 31 December 2015 and of its results of operations and its cash flows for the year then ended in accordance with Vietnamese Accounting Standards, the Vietnamese Accounting System for enterprises and the relevant statutory requirements applicable to financial reporting. KPMG Limited’s Branch in Ho Chi Minh City Vietnam Audit Report No.: 14-01-257

_______________________________ ______________________________ Ha Vu Dinh Dang Trung Hoan Practicing Auditor Registration Practicing Auditor Registration Certificate No. 0414-2013-007-1 Certificate No. 2235-2013-007-1 Deputy General Director Ho Chi Minh City, dd mm 2016

Dry Cell and Storage Battery Joint Stock Company Balance sheet as at 31 December 2015

Form B 01– DN (Issued under Circular No. 200/2014/TT-BTC

dated 22 December 2014 of the Ministry of Finance)

The accompanying notes are an integral part of these financial statements 5

Code Note

31/12/2015 VND

1/1/2015 VND

ASSETS

Current assets (100 = 110 + 120 + 130 + 140 + 150) 100 890,569,482,441 839,740,339,216

Cash and cash equivalents 110 6 132,718,096,879 200,636,882,571 Cash 111 92,718,096,879 160,636,882,571 Cash equivalents 112 40,000,000,000 40,000,000,000

Short-term investments 120 200,000,000,000 145,000,000,000 Held-to-maturity investments 123 7 200,000,000,000 145,000,000,000

Accounts receivable – short-term 130 109,863,293,067 64,339,966,056 Accounts receivable from customers 131 8 72,266,232,794 52,373,840,212 Prepayments to suppliers 132 27,550,166,480 5,821,567,338 Other receivables 136 9 12,037,746,085 8,122,965,450 Allowance for doubtful debts 137 10 (2,051,100,538) (2,041,490,118)Shortage of assets awaiting resolution 139 60,248,246 63,083,174

Inventories 140 11 437,076,456,605 421,031,292,994 Inventories 141 452,572,826,457 424,239,967,169 Allowance for inventories 149 (15,496,369,852) (3,208,674,175)

Other current assets 150 10,911,635,890 8,732,197,595 Short-term prepaid expenses 151 3,720,897,514 3,027,173,889 Deductible value added tax 152 7,190,738,376 5,705,023,706

Long-term assets (200 = 220 + 240 + 250 + 260) 200 373,644,583,331 411,949,672,904

Fixed assets 220 315,661,022,116 364,494,340,121 Tangible fixed assets 221 12 284,914,847,976 333,229,376,890

Cost 222 719,779,006,909 711,809,189,486 Accumulated depreciation 223 (434,864,158,933) (378,579,812,596)

Intangible fixed assets 227 13 30,746,174,140 31,264,963,231 Cost 228 57,567,728,716 55,780,846,048 Accumulated amortisation 229 (26,821,554,576) (24,515,882,817)

Long-term work in progress 240 8,542,154,671 5,634,772,664 Construction in progress 242 14 8,542,154,671 5,634,772,664

Long-term financial investments 250 3,600,000,000 3,600,000,000 Equity investment in other entities 253 15 3,600,000,000 3,600,000,000

Other long-term assets 260 45,841,406,544 38,220,560,119 Long-term prepaid expenses 261 16 2,407,932,898 6,544,748,557 Deferred tax assets 262 17 9,005,082,120 4,024,530,683 Long-term tools and supplies 263 11 34,248,891,526 27,460,880,879 Other long-term assets 268 179,500,000 190,400,000

TOTAL ASSETS (270 = 100 + 200) 270 1,264,214,065,772 1,251,690,012,120

Dry Cell and Storage Battery Joint Stock Company Balance sheet as at 31 December 2015 (continued)

Form B 01 – DN (Issued under Circular No. 200/2014/TT-BTC



Code Note

31/12/2015 VND

1/1/2015 VND

RESOURCES LIABILITIES (300 = 310 + 330) 300 758,103,792,756 740,238,412,342 Current liabilities 310 753,980,792,756 736,115,412,342

Accounts payable to suppliers 311 18 94,330,348,979 95,569,286,119 Advances from customers 312 13,886,036,753 7,675,620,874Taxes payable to State Treasury 313 19 19,700,051,233 18,507,028,249 Payables to employees 314 116,533,424,916 79,028,472,138 Accrued expenses 315 20 69,038,956,110 34,404,052,268 Other payables – short-term 319 21 1,143,885,410 1,080,124,549 Short-term borrowings 320 22 421,442,078,873 487,353,040,594 Provision – short-term 321 23 7,281,312,372 6,908,915,025Bonus and welfare fund 322 10,624,698,110 5,588,872,526

Long-term liabilities 330 4,123,000,000 4,123,000,000

Other payables – long-term 337 4,123,000,000 4,123,000,000 EQUITY (400 = 410) 400 506,110,273,016 511,451,599,778 Owners’ equity 410 24 506,110,273,016 511,451,599,778

Share capital 411 25 309,812,930,000 269,878,430,000 Capital surplus 412 62,295,088,755 62,295,088,755 Treasury shares 415 25 (14,419,110,657) (14,419,110,657)Investment and development funds 418 27 93,729,583,577 84,681,949,730 Retained profits 421 54,691,781,341 109,015,241,950 - Retained profits brought forward 421a 109,015,241,950 103,482,528,318 - Retained profit for the current

year 421b 25,548,585,891 18,845,229,132 TOTAL RESOURCES (440 = 300 + 400)

440 1,264,214,065,772 1,251,690,012,120

Dd mm 2016 Prepared by: Approved by: Nguyen Thi Ngoc Anh Nguyen Duy Hung Tran Thanh Van Deputy Accounting & Finance Manager Chief Accountant General Director

Dry Cell and Storage Battery Joint Stock Company Statement of income for the year ended 31 December 2015




Code Note 2015 VND

2014 VND

Revenue from sales of goods and provision of services

01 29 2,260,209,841,679 2,027,040,357,716

Revenue deductions 02 143,408,191,619 709,510,303

Net revenue (10 = 01 - 02) 10 2,116,801,650,060 2,026,330,847,413

Cost of sales 11 1,744,354,988,585 1,648,833,334,537

Gross profit (20 = 10 - 11) 20 372,446,661,475 377,497,512,876

Financial income 21 30 19,872,808,195 21,072,874,462 Financial expenses 22 31 39,189,490,696 29,871,898,662

In which: Interest expense 23 9,590,403,327 18,685,358,217 Selling expenses 25 193,326,804,581 237,435,997,702 General and administration expenses 26 38,429,206,262 36,504,132,087

Net operating profit {30 = 20 + (21 - 22) - (25 + 26)}

30 121,373,968,131 94,758,358,887

Other income 31 32 2,059,505,301 1,007,403,833 Other expenses 32 2,481,632,164 319,183,377

Results of other activities (40 = 31 - 32)

40 (422,126,863) 688,220,456

Accounting profit before tax (50 = 30 + 40)

50 120,951,841,268 95,446,579,343

Income tax expense – current 51 34 35,456,054,235 20,596,732,106

Income tax (benefit)/expense – deferred 52 34 (4,980,551,437) 441,258,526

Net profit after tax (60 = 50 - 51 - 52) 60 90,476,338,470 74,408,588,711

Basic earnings per share 70 35 2,334 1,920

Dd mm 2016

Prepared by: Approved by:

Nguyen Thi Ngoc Anh Nguyen Duy Hung Tran Thanh Van Deputy Accounting & Finance Manager Chief Accountant General Director

Dry Cell and Storage Battery Joint Stock Company Statement of cash flows for the year ended 31 December 2015 (Indirect method)




Code Note

2015 VND

2014 VND

CASH FLOWS FROM OPERATING ACTIVITIES

Profit before tax 01 120,951,841,268 95,446,579,343Adjustments for

Depreciation and amortisation 02 65,945,157,314 64,715,832,777 Allowances and provisions 03 12,669,703,444 (4,498,539,546)Exchange losses arising from revaluation of monetary items denominated in foreign currencies 04 (776,394,263) 1,406,045,534Gains on disposals of fixed assets 05 (449,579,272) -Interest income 05 (15,164,835,369) (18,213,224,915)Interest expense 06 9,590,403,327 18,685,358,217

Operating profit before changes in working capital

08 192,766,296,449 157,542,051,410

Change in receivables 09 (33,816,737,199) 59,454,185,599Change in inventories 10 (871,978,409) 48,121,163,168Change in payables 11 73,263,465,797 (171,468,184,441)Change in prepaid expenses 12 (35,081,727,304) 2,845,284,726

196,259,319,334 96,494,500,462

Interest paid 14 (9,590,403,327) (18,975,614,115)Income tax paid 15 (35,020,168,674) (27,107,691,181)Other payments for operating activities 17 (4,916,571,648) (10,033,680,052)

Net cash flow from operating activities 20 146,732,175,685 40,377,515,114

CASH FLOWS FROM INVESTING ACTIVITIES

Payments for additions to fixed assets 21 (20,025,283,247) (25,234,400,051)Proceeds from disposals of fixed assets 22 449,579,272 - Payments for investments in term deposits 23 (55,000,000,000) -Collections on investments in term deposits 24 - 30,500,000,000Receipts of interest 27 10,946,974,258 20,225,779,373

Net cash flow from investing activities 30 (63,628,729,717) 25,491,379,322

Dry Cell and Storage Battery Joint Stock Company Statement of cash flows for the year ended 31 December 2015 (Indirect method – continued)




Code Note

2015 VND

2014 VND

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from borrowings 33 1,788,397,194,972 1,413,544,832,516 Payments to settle loan principals 34 (1,854,621,331,799) (1,406,799,610,860)Payments of dividends 36 (85,865,268,000) (71,887,583,700)

Net cash flow from financing activities

40 (152,089,404,827) (65,142,362,044)

Net cash flows during the year (50 = 20 + 30 + 40)

50 (68,985,958,859) 726,532,392

Cash and cash equivalents at the beginning of the year

60 200,636,882,571 199,966,907,621

Effect of exchange rate fluctuations on cash and cash equivalents

61 1,067,173,167 (56,557,442)

Cash and cash equivalents at the end of the year (70 = 50 + 60 + 61)

70 6 132,718,096,879 200,636,882,571


Dry Cell and Storage Battery Joint Stock Company Notes to the financial statements for the year ended 31 December 2015



10

These notes form an integral part of and should be read in conjunction with the accompanying financial statements.

1. Reporting entity

(a) Ownership structure

Dry Cell and Storage Battery Joint Stock Company (“the Company”) is incorporated as a joint stock company in Vietnam.

(b) Principals activities

The principal activities of the Company are to manufacture and distribute batteries and accumulators.

(c) Normal operating cycle

The normal operating cycle of the Company is generally within 12 months.

(d) Company structure

As at 31 December 2015, the Company had 1,081employees (1/1/2015: 1,096 employees).

2. Basis of preparation

(a) Statement of compliance

The financial statements have been prepared in accordance with Vietnamese Accounting Standards, the Vietnamese Accounting System for enterprises and the relevant statutory requirements applicable to financial reporting.

(b) Basis of measurement

The financial statements, except for the statement of cash flows, are prepared on the accrual basis using the historical cost concept. The statement of cash flows is prepared using the indirect method.

(c) Annual accounting period

The annual accounting period of the Company is from 1 January to 31 December.

(d) Accounting and presentation currency

The Company’s accounting currency is Vietnam Dong (“VND”), which is also the currency used for financial statement presentation purpose.

Dry Cell and Storage Battery Joint Stock Company Notes to the financial statements for the year ended 31 December 2015 (continued)



11

3. Adoption of new guidance on accounting system for enterprises

On 22 December 2014, the Ministry of Finance issued Circular No. 200/2014/TT-BTC providing guidance on Vietnamese Accounting System for enterprises (“Circular 200”). Circular 200 replaces previous guidance on Vietnamese Accounting System for enterprises under Decision No. 15/2006-QD/BTC dated 20 March 2006 and Circular No. 244/2009/TT-BTC dated 31 December 2009. Circular 200 is effective after 45 days from the signing date and applicable for annual accounting periods beginning on or after 1 January 2015. The Company has adopted the applicable requirements of Circular 200 from 1 January 2015 on a prospective basis. The significant changes to the Company’s accounting policies and the effects on the financial statements, if any, are disclosed in the following notes to the financial statements: Recognition of foreign exchange differences (note 4(a)); and Earnings per share (note 4(q)).

4. Summary of significant accounting policies

The following significant accounting policies have been adopted by the Company in the preparation of these financial statements.

(a) Foreign currency transactions

Transactions in currencies other than VND during the year have been translated into VND at actual rates of exchange ruling at the transaction dates. The actual rates of exchange applied to account for foreign currency transaction are determined as follows: Exchange rate applied to buying or selling foreign currency is the exchange rate stipulated in the

currency exchange contract between the Company and the bank. Exchange rate applied to capital contribution transaction is the foreign currency buying rate at

the transaction date quoted by the bank through which the investor transfers funds for the capital contribution.

Exchange rate applied to recognize trade and other receivables is the foreign currency buying rate at the transaction date quoted by the bank through which the Company receives money from the customer or counterparty.

Exchange rate applied to recognize trade and other payables is the foreign currency selling rate at the transaction date quoted by the bank through which the Company intends to make payment for the liability.

For asset acquisitions or expenses that are settled with immediate payment, the exchange rate applied is the foreign currency buying rate at the transaction date quoted by the bank through which the Company makes payment.




12

Monetary assets and liabilities denominated in currencies other than VND are translated into VND at actual rates of exchange ruling at the balance sheet date. The actual rates of exchange applied to retranslate monetary items denominated in foreign currency at reporting date are determined as follows: For monetary assets (cash on hand and receivables): the foreign currency buying rate at the

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

For monetary gold: the gold buying price quoted by the State Bank of Vietnam, or in absence of such price, the gold buying price quoted by an authorized gold trading organization.

For monetary liabilities (payables and borrowings): the foreign currency selling rate at reporting date quoted by the commercial bank where the Company most frequently conducts transactions.

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

(b) Cash and cash equivalents

Cash comprises cash balances and call deposits. Cash equivalents are short-term highly liquid investments that are readily convertible to known amounts of cash, are subject to an insignificant risk of changes in value, and are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes.

(c) Investments

Investments in equity instruments of other entities

Investments in equity instruments of other entities are initially recognised at cost which include purchase price plus any directly attributable transaction costs. Subsequent to initial recognition, these investment are stated at cost less allowance for diminution in value. An allowance is made for diminution in investment values if the investee has suffered a loss, except where such a loss was anticipated by the Company’s management before making the investment. The allowance is reversed if the investee subsequently made a profit that offsets the previous loss for which the allowance had been made. An allowance is reversed only to the extent that the investment’s carrying amount does not exceed the carrying amount that would have been determined if no allowance had been recognised.

(d) Accounts receivable

Trade and other receivables are stated at cost less allowance for doubtful debts.




13

(e) Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is determined on a weighted average basis and includes all costs incurred in bringing the inventories to their present location and condition. Cost in the case of finished goods and work in progress includes raw materials, direct labour and attributable manufacturing overheads. Net realisable value is the estimated selling price of inventory items, less the estimated costs of completion and selling expenses. The Company applies the perpetual method of accounting for inventories.

(f) Tangible fixed assets

(i) Cost

Tangible fixed assets are stated at cost less accumulated depreciation. The initial cost of a tangible fixed asset comprises its purchase price, including import duties, non-refundable purchase taxes and any directly attributable costs of bringing the asset to its working condition for its intended use. Expenditure incurred after tangible fixed assets have been put into operation, such as repairs and maintenance and overhaul cost, is charged to the statement of income in the year in which the cost is incurred. In situations where it can be clearly demonstrated that the expenditure has resulted in an increase in the future economic benefits expected to be obtained from the use of tangible fixed assets beyond their originally assessed standard of performance, the expenditure is capitalised as an additional cost of tangible fixed assets.

(ii) Depreciation

Depreciation is computed on a straight-line basis over the estimated useful lives of tangible fixed assets. The estimated useful lives are as follows: Buildings and structures 5 – 25 years Plant and equipment 3 – 12 years Motor vehicles 6 – 10years Office equipment 2– 5 years Others 5 – 8 years

(g) Intangible fixed assets

(i) Land use rights

Land use rights are stated at cost less accumulated amortisation. The initial cost of land use rights comprises its purchase price and any directly attributable costs incurred in conjunction with securing the land use rights. Amortisation is computed on a straight-line basis over 50 years.




14

(ii) Software

Cost of acquiring of new software, which is not an integral part of the related hardware, is capitalised and treated as an intangible asset. Software is amortised on a straight-line basis ranging from 3 to 5 years.

(iii) Others

Costs of other intangible assets comprise cost of acquiring of technology transfer fee and of consultant fee of human resources management capitalised and treated as intangible assets. Cost of other intangible assets is amortised on a straight-line basis ranging from 3 to 5 years.

(h) Construction in progress

Construction in progress represents the costs of construction and machinery which have not been fully completed or installed. No depreciation is provided for construction in progress during the period of construction and installation.

(i) Long-term prepaid expenses

(i) Tools and instruments

Tools and instruments include assets held for use by the Company in the normal course of business whose costs of individual items are less than VND30 million and therefore not qualified for recognition as fixed assets under prevailing regulation. Cost of tools and instruments are amortised on a straight-line basis over a period ranging from 2 to 5 years.

(ii) Others

Other long-term prepaid expenses comprise advertising expenses and other costs incurred in conjunction with serving the sales operation of Company. These costs are recognised in the statement of income on a straight-line basis over the period of 2 years.

(j) Trade and other payables

Trade and other payables are stated at their cost.

(k) Provisions

A provision is recognised if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability.




15

(i) Warranties

The provision for warranties relates mainly to goods sold and services rendered during the accounting period. The provision is based on estimates derived from historical warranty data associated with similar products and services.

(ii) Severance allowance

Under the Vietnamese Labour Code, when employees who have worked for 12 months or more (“eligible employees”) voluntarily terminates his/her labour contract, the employer is required to pay the eligible employee severance allowance calculated based on years of service and employees’ compensation at termination. Provision for severance allowance has been provided based on employees’ years of service and their current salary level. Pursuant to Law on Social Insurance, effective from 1 January 2009 the Group and their employees are required to contribute to an unemployment insurance fund managed by the Vietnam Social Insurance Agency. With the implementation of unemployment insurance scheme, the Group is no longer required to provide severance allowance for the service year after 1 January 2009. However, severance allowance to be paid to the existing eligible employees as of 31 December 2015will be determined based on the eligible employees’ years of service as of 31 December 2008 and their average salary for the six-month period prior to the termination date. On 24 October 2012, the Ministry of Finance issued the Circular 180/2012/TT-BTC, which requires all provision for severance allowance to be reversed. The Company follows the Circular 180 and reversed all outstanding provision for severance allowance to income in 2012.

(l) Taxation

Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognised in the statement of income except to the extent that it relates to items recognised directly to equity, in which case it is recognised in equity. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years. Deferred tax is provided using the balance sheet method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities using tax rates enacted or substantively enacted at the balance sheet date. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised.




16

(m) Bonus and welfare fund

Allocation is made to bonus and welfare fund from retained earnings each period at the discretion of the shareholders. This fund is used exclusively to pay bonuses to the Company employees.

(n) Revenue and other income

(i) Goods sold

Revenue from the sale of goods is recognised in the statement of income when significant risks and rewards of ownership have been transferred to the buyer. No revenue is recognised if there are significant uncertainties regarding recovery of the consideration due or the possible return of goods. Revenue on sales of goods is recognised at the net amount after deducting sales discounts stated on the invoice.

(ii) Interest income

Interest income is recognised on a time proportion basis with reference to the principal outstanding and the applicable interest rate.

(o) Operating lease payments

Payments made under operating leases are recognised in the statement of income on a straight-line basis over the term of the lease. Lease incentives received are recognised in the statement of income as an integral part of the total lease expense.

(p) Borrowing costs

Borrowing costs are recognised as an expense in the year in which they are incurred, except where the borrowing costs relate to borrowings in respect of the construction of qualifying assets, in which case the borrowing costs incurred during the period of construction are capitalised as part of the cost of the assets concerned.

(q) Earnings per share

The Company presents basic earnings per share (“EPS”) for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to the ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the year. The Company does not have any potential diluted shares. Prior to 1 January 2015, the profit or loss attributable to the ordinary shareholders of the Company was determined before amounts appropriated to bonus and welfare funds, if any. Effective from 1 January 2015, the profit or loss attributable to the ordinary shareholders of the Company is determined after deducting any amounts appropriated to bonus and welfare funds. This change in accounting policy has been applied prospectively.




17

(r) Segment reporting

A segment is a distinguishable component of the Company that is engaged either in providing related products or services (business segment), or in providing products or services within a particular economic environment (geographical segment), which is subject to risks and rewards that are different from those of other segments. Management is of the opinion that the Company operates in principally one business segment, which is the manufacture and sale of batteries and accumulators.

(s) Related parties

Parties are considered to be related to the Company if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions, or where the Company and the other party are subject to common control or significant influence. Related parties may be individuals or corporate entities and include close family members of any individual considered to be a related party.




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5. Segment reporting

Geographical segments

Vietnam Overseas Total 2015 2014 2015 2014 2015 2014 VND VND VND VND VND VND

External revenue 1,712,281,990,909 1,623,040,949,759 404,519,659,151 403,289,897,654 2,116,801,650,060 2,026,330,847,413Capital expenditure 20,025,283,247 25,234,400,051 - - 20,025,283,247 25,234,400,051 31/12/2015 1/1/2015 31/12/2015 1/1/2015 31/12/2015 1/1/2015 VND VND VND VND VND VND Segment assets 1,264,214,065,772 1,251,690,012,120 - - 1,264,214,065,772 1,251,690,012,120




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6. Cash and cash equivalents

31/12/2015 VND

1/1/2015 VND

Cash on hand 433,178,872 740,367,151 Cash in banks 92,284,918,007 159,896,515,420 Cash equivalents 40,000,000,000 40,000,000,000

132,718,096,879 200,636,882,571

Cash equivalents comprised short-term deposits with banks with maturity of less than three months of their transaction dates and earned interest from 6.2% to 6.7% per annum (2014: 5.2% per annum).

7. Held-to-maturity investments

Held-to-maturity investments represented term deposits in banks which maturity of greater than three months but less than one year of their transaction dates and earned interest incomes at rates ranging from 6.7% to 7% (2014: 6.2% to 7.8%) per annum.

8. Accounts receivable from customers

Accounts receivable from customers detailed by significant customers

31/12/2015 VND

1/1/2015 VND

Chea LyVeng 14,855,982,856 8,923,978,361Honda Vietnam 7,649,654,215 6,700,613,938Other customers 49,760,595,723 36,749,247,913

72,266,232,794 52,373,840,212

9. Other receivables

31/12/2015 VND

1/1/2015 VND

Interest receivable 9,364,111,111 5,146,250,000 Advances to employees 2,563,117,017 2,957,993,693Others 110,517,957 18,721,757

12,037,746,085 8,122,965,450




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10. Bad and doubtful debts

31/12/2015 1/1/2015

Overdue

days Cost Allowance Recoverable

amount Overdue

days Cost Allowance Recoverable

amount VND VND VND VND VND VND

Overdue debts My Phuong Private Company

Over 3 years 1,361,678,197 1,361,678,197 -

From 2 to 3 years 1,361,678,197 1,361,678,197 -

Hop Luc HTX DVU & TM

Over 3 years 256,132,002 256,132,002 -

From 2 to 3 years 256,132,002 256,132,002 -

Cong ty TNHH SX TM DV Hai Phuong

From 2 to 3 years 151,677,800 109,173,800 42,504,000

From 2 to 3 years 161,677,800 81,648,460 80,029,340

Cong ty Co Phan Viet Nam Motor Can Tho

Over 3 years 114,952,000 114,952,000 -

More than 3 years 114,952,000 114,952,000 -

Others Over 3

years 263,308,834 209,164,539 54,144,295More than 3

years 516,968,993 227,079,459 289,889,534

2,147,748,833 2,051,100,538 96,648,295 2,411,408,992 2,041,490,118 369,918,874

Of which:

Allowance for doubtful debts – short-term

2,051,100,538 2,041,490,118

Management believed that the allowance for overdue debts was adequate. The remaining amounts of overdue debts were collectible.




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11. Inventories

31/12/2015 1/1/2015 Cost Allowance Cost Allowance VND VND VND VND

Raw materials 131,042,277,032 - 159,784,651,608 -Finished goods 128,343,764,791 (1,275,915,461) 111,363,428,772 (1,805,036,889)Work in progress 111,595,355,300 - 96,061,594,692 -Goods in transit 78,772,670,195 - 40,421,769,898 -Tools and supplies – Short-term

2,797,803,524 - 16,450,558,153 -

Merchandise inventories 20,955,615 - 157,964,046 -

452,572,826,457 (1,275,915,461) 424,239,967,169 (1,805,036,889)

Tools and supplies – Long-term 34,248,891,526 (14,220,454,391) 27,460,880,879 (1,403,637,286) Movements in the allowance for inventories during the year were as follows:

2015 VND

2014 VND

Opening balance 3,208,674,175 5,522,386,663 Increase in allowance during the year 24,199,411,608 3,208,674,175Written back (11,911,715,931) (5,522,386,663)

Closing balance 15,496,369,852 3,208,674,175

In which: Finished goods 1,275,915,461 1,805,036,889Tools and supplies – long-term 14,220,454,391 1,403,637,286 The allowance made for inventories represented net realisable value of finished goods and slow moving of tools and supplies.




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12. Tangible fixed assets

Buildings and

structures Plant and equipment

Motor vehicles

Office equipment Others Total

VND VND VND VND VND VND

Cost

Opening balance 131,429,785,375 549,701,123,972 20,746,648,145 8,650,726,694 1,280,905,300 711,809,189,486 Additions 4,123,477,847 5,977,345,323 - 437,900,000 - 10,538,723,170Transfers from construction in progress 428,332,910 732,548,001 3,631,414,491 - - 4,792,295,402Disposals (233,516,374) (5,953,564,093) (906,772,000) (187,504,640) - (7,281,357,107)Reclassifications following State Auditors’ request - - (22,727,273) (57,116,769) - (79,844,042)

Closing balance 135,748,079,758 550,457,453,203 23,448,563,363 8,844,005,285 1,280,905,300 719,779,006,909

Accumulated depreciation

Opening balance 51,657,672,283 305,840,839,807 12,904,654,198 7,441,621,501 735,024,807 378,579,812,596 Charge for the year 9,013,562,524 51,177,467,036 2,085,993,125 1,139,874,310 222,588,560 63,639,485,555Disposals (233,516,374) (5,953,564,093) (906,772,000) (187,504,640) - (7,281,357,107)Reclassifications following State Auditors’ request - - (22,727,273) (51,054,838) - (73,782,111)

Closing balance 60,437,718,433 351,064,742,750 14,061,148,050 8,342,936,333 957,613,367 434,864,158,933

Net book value

Opening balance 79,772,113,092 243,860,284,165 7,841,993,947 1,209,105,193 545,880,493 333,229,376,890 Closing balance 75,310,361,325 199,392,710,453 9,387,415,313 501,068,952 323,291,933 284,914,847,976

Included in the cost of tangible fixed assets were assets costing VND156,481 million which were fully depreciated as of 31 December 2015(1 January 2015: VND157,045million), but which are still in active use.




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13. Intangible fixed assets

Land use rights Software Others Total VND VND VND VND

Cost

Opening balance 47,293,702,056 5,055,248,004 3,431,895,988 55,780,846,048 Additions - - 316,382,668 316,382,668 Transfers from construction in progress - - 1,470,500,000 1,470,500,000

Closing balance 47,293,702,056 5,055,248,004 5,218,778,656 57,567,728,716

Accumulated amortisation

Opening balance 20,158,018,795 3,671,484,825 686,379,197 24,515,882,817 Charge for the year 543,360,877 585,863,663 1,176,447,219 2,305,671,759

Closing balance 20,701,379,672 4,257,348,488 1,862,826,416 26,821,554,576

Net book value

Opening balance 27,135,683,261 1,383,763,179 2,745,516,791 31,264,963,231 Closing balance 26,592,322,384 797,899,516 3,355,952,240 30,746,174,140 Included in the cost of intangible fixed assets were assets costing VND19,398 million which were fully amortised as of 31 December 2015 (1 January 2015: VND25,097 million), but which are still in use.




24

14. Construction in progress

2015 VND

2014 VND

Opening balance 5,634,772,664 13,375,490,473 Additions during the year 9,170,177,409 24,087,864,369 Transfers to tangible fixed assets (4,792,295,402) (28,396,686,190)Transfers to intangible fixed assets (1,470,500,000) (3,431,895,988)

Closing balance 8,542,154,671 5,634,772,664

Major construction in progress were as follows:

31/12/2015 VND

1/1/2015 VND

Prepayments for machinery and equipment 3,843,033,354 1,082,733,766 Others 4,699,121,317 4,552,038,898

8,542,154,671 5,634,772,664

15. Equity investment in other entity

Equity investment in other entity represented equity investments in Viet Gia Phu Business Investment Real Estate Limited Company, detailed as follows:

Entity Principal activity Investment license

Effective ownership

interest Viet Gia Phu Business Investment Real Estate Limited Company

Trading of real estate, land use rights and raw materials, equipment used in construction.

Business Registration Certificate No. 0310500637 first issued on 6 December 2010 and updated 29 April 2014 by the Department of Planning and Investment of Ho Chi Minh City and the most recent of which dated 29 April 2014.

2.25%




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16. Long-term prepaid expenses

Total VND

Opening balance 6,544,748,557 Additions 1,319,579,225 Amortisation for the year (5,456,394,884)

Closing balance 2,407,932,898

17. Deferred tax assets

Deferred tax assets were recognised on the following: 31/12/2015

VND 1/1/2015

VND Accrued expenses 4,627,244,636 1,774,528,218Provision for warranties 1,274,589,492 1,519,961,306Allowance for doubtful debts 3,974,022 24,132,840Allowance for inventories 3,099,273,970 705,908,319

9,005,082,120 4,024,530,683




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18. Accounts payable to suppliers

(a) Accounts payable to suppliers detailed by significant suppliers

31/12/2015 1/1/2015

Cost

Amount within payment capacity

Cost


VND VND VND VND Thye Ming (Viet Nam) Industrial Limited Company - - 20,915,954,513 20,915,954,513Thai United Industry Company Limited 9,137,011,000 9,137,011,000 6,515,346,510 6,515,346,510Others 85,193,337,979 85,193,337,979 68,137,985,096 68,137,985,096

94,330,348,979 94,330,348,979 95,569,286,119 95,569,286,119

(b) Accounts payable to suppliers who are related parties

31/12/2015 1/1/2015

Cost


Cost


VND VND VND VND Bien Hoa Chemical Factory (VICACO) 754,781,280 754,781,280 2,034,886,080 2,034,886,080Industrial Gas and Welding Electrode Company Limited – Binh Duong Factory 16,478,000 16,478,000 16,893,800 16,893,800Industrial Gas and Welding Electrode Company Limited – Bien Hoa Factory - - 2,395,800 2,395,800

771,259,280 771,259,280 2,054,175,680 2,054,175,680




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19. Taxes payable to State Treasury

1/1/2015

VND Incurred

VND Net off VND

Paid VND

31/12/2015 VND

Corporate income tax 3,529,330,583 35,456,054,235 - (35,020,168,674) 3,965,216,144 Personal income tax 474,075,072 2,989,855,166 - (2,971,945,312) 491,984,926 Valued added tax 671,700,114 396,887,373,496 (381,130,869,576) (11,779,555,048) 4,648,648,986 Land rentals and others 13,831,922,480 5,151,821,954 - (8,389,543,257) 10,594,201,177

18,507,028,249 440,485,104,851 (381,130,869,576) (58,161,212,291) 19,700,051,233




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20. Accrued expenses

31/12/2015 VND

1/1/2015 VND

Discounts and selling expenses payable to distributors 62,761,364,847 29,767,223,959 Marketing and advertising expenses 1,520,097,568 - Transportation fee 3,626,517,141 3,671,000,000 Interest expense 614,306,554 376,316,217 Other payables 516,670,000 589,512,092

69,038,956,110 34,404,052,268

21. Other payables – short-term

31/12/2015

VND 1/1/2015

VND Trade union fees 885,648,580 903,096,200 Social insurance 95,582,084 118,010,653 Others 162,654,746 59,017,696

1,143,885,410 1,080,124,549




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22. Short-term borrowings

1/1/2015 Movements during the year 31/12/2015

Carrying amount

Amount within repayment

capacity

Increase

Decrease

Carrying amountAmount within

repayment capacity VND VND VND VND VND VND Short-term borrowings 487,353,040,594 487,353,040,594 1,788,710,370,078 (1,854,621,331,799) 421,442,078,873 421,442,078,873 Terms and conditions of short-term borrowings were as follows:

Currency Interest rate (per annum)

31/12/2015 VND

1/1/2015 VND

Chinatrust Commercial Bank Vietnam - Ho Chi Minh City Branch USD 1.8% - 64,330,452,147 HSBC Bank (Vietnam) Ltd. USD 1.5 % - 2.2% 22,561,844,637 135,312,202,369 Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) USD 1.5 % - 1.8% - 152,761,504,345 Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) VND 4.1% 255,543,655,266 -Joint Stock Commercial Bank for Investment and Development of Vietnam USD 1.5% 5,869,629,014 59,637,713,160Joint Stock Commercial Bank for Investment and Development of Vietnam VND 4.1-4.3% 47,438,626,149 -ANZ Bank (Vietnam) Ltd. USD 1.4% 26,038,681,089 -Military Commercial Joint Stock Bank USD 1.4%-1.45% 63,989,642,718 -Vietnam Joint Stock Commercial Bank for Industry and Trade (Viettin Bank) (*) VND 2.2% - 2.8% - 49,687,568,573 Asia Commercial Joint Stock Bank (*) VND 3.5% - 25,623,600,000

421,442,078,873 487,353,040,594




30

All the short-term bank loans were unsecured.

(*) These short-term borrowings are denominated in VND and bear effective interest rates of USD short-term loans.

23. Provision – short-term

Movements of provision for warranties during the year were as follows:

2015 VND

2014 VND

Opening balance 6,908,915,025 8,828,683,963 Provision made during the year 908,364,914 - Provision reversed during the year (535,967,567) (1,919,768,938)

Closing balance 7,281,312,372 6,908,915,025




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24. Changes in owners’ equity

Share capital

VND Capital surplus

VND Treasury shares

VND

Investment and development funds

VND Retained profits

VND Total VND

Balance at 1 January 2014 269,878,430,000 62,295,088,755 (14,419,110,657) 77,241,086,359 103,482,528,318 498,478,022,775

Net profit for the year - - - - 74,408,588,711 74,408,588,711 Dividends - - - - (53,250,062,000) (53,250,062,000) Appropriation to equity funds - - - 7,440,863,371 (7,440,863,371) - Bonus and welfare fund - - - - (8,184,949,708) (8,184,949,708)

Balance at 1 January 2015 269,878,430,000 62,295,088,755 (14,419,110,657) 84,681,949,730 109,015,241,950 511,451,599,778

Net profit for the year - - - - 90,476,338,470 90,476,338,470 Dividends by cash(Note 26) - - - - (85,865,268,000) (85,865,268,000) Dividends by shares(Note 26) 39,934,500,000 - - - (39,934,500,000) - Appropriation to equity funds - - - 9,047,633,847 (9,047,633,847) - Bonus and welfare fund - - - - (9,952,397,232) (9,952,397,232)

Balance at 31 December 2015 309,812,930,000 62,295,088,755 (14,419,110,657) 93,729,583,577 54,691,781,341 506,110,273,016




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25. Share capital

The Company’s authorised and issued share capital are:

31/12/2015 1/1/2015 Number of

shares VND Number of

shares VND Authorised share capital 30,981,293 309,812,930,000 26,987,843 269,878,430,000 Issued share capital

Ordinary shares 30,981,293 309,812,930,000 26,987,843 269,878,430,000 Treasury shares

Ordinary shares (362,812) (14,419,110,657) (362,812) (14,419,110,657)

Shares in circulation

Ordinary shares 30,618,481 295,393,819,343 26,625,031 266,250,310,000 All ordinary shares have a par value of VND10,000. Each share is entitled to one vote at meetings of the Company. Shareholders are entitled to receive dividend as declared from time to time. All ordinary shares are ranked equally with regard to the Company’s residual assets. In respect of shares bought back by the Company, all rights are suspended until those shares are reissued. Movements in share capital during the year were as follows:

2015 2014

Number of

shares VND Number of

shares VND Balance at the beginning of the year (excluded treasury shares) 26,625,031 266,250,310,000 26,625,031 266,250,310,000Dividends shares issued during the year 3,993,450 39,934,500,000 - -

Balance at the end of the year 30,618,481 306,184,810,000 26,625,031 266,250,310,000

26. Dividends

The General Meeting of Shareholders of the Company on 13April 2015 resolved to distribute dividends in shares amounting to VND39,935 million and VND85,865 million in cash. In which VND45,927 million related to Profit attributable to equity holder during the year 2015, VND79,872 related to Retained profit brought forward.




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27. Investment and development funds

Investment and development funds included investment and development funds and financial reserves, which were appropriated from retained profits in accordance with the resolution of General Meeting of Shareholders. These funds were established for the purpose of future business expansion. When the funds are utilised for business expansion, the amount used is transferred to share capital.

28. Off balance sheet items

(a) Lease

The future minimum lease payments under non-cancellable operating leases were:

31/12/2015 VND

1/1/2015 VND

Within one year 986,400,000 1,609,600,000Within two to five years 655,000,000 452,000,000

1,641,400,000 2,061,600,000

(b) Foreign currencies

31/12/2015 1/1/2015 Original

currency VND

equivalent Original currency

VND equivalent

USD USD 1,567,494.1 35,189,521,785 USD732,891 15,649,008,501EUR EUR 245.9 6,005,343 - -

35,195,527,128 15,649,008,501

(c) Capital expenditure commitments

As at 31 December 2015, the Company had the following outstanding capital commitments approved but not provided for in the balance sheet:

31/12/2015 VND

1/1/2015 VND

Approved and contracted 42,396,905,409 7,253,919,595




34

29. Revenue from sales of goods and provision of services

Total revenue represented the gross invoiced value of goods sold exclusive of value added tax.

30. Financial income

2015 2014 VND VND

Interest income 15,164,835,369 18,213,224,915 Realised foreign exchange gains 3,611,758,684 2,766,240,615 Realised foreign exchange gains due to revaluation 1,096,214,142 93,408,932

19,872,808,195 21,072,874,462

31. Financial expenses

2015 2014 VND VND

Interest expense 9,590,403,327 18,685,358,217 Realised foreign exchange losses 28,422,683,519 9,687,085,979 Realised foreign exchange losses due to revaluation 319,819,879 1,499,454,466 Others 856,583,971 -

39,189,490,696 29,871,898,662

32. Other income

2015 2014 VND VND

Scrap sales 1,025,862,254 822,337,926 Gain from disposals of tangible fixed assets 449,579,272 - Others 584,063,775 185,065,907

2,059,505,301 1,007,403,833




35

33. Production and business costs by elements

2015 2014 Raw material costs included in production costs 1,413,437,166,081 1,329,920,827,243Labour costs included in production costs 222,231,762,021 183,958,963,423Depreciation and amortisation 65,945,157,314 64,715,832,777Outside services 107,415,962,641 93,521,574,748Other expenses 168,150,697,005 239,398,960,892

1,977,180,745,062 1,911,516,159,083

34. Income tax

(a) Recognised in the statement of income

2015 2014 VND VND Current tax expense Current year 33,122,379,969 20,840,132,391 Under/(over) provision in prior years 2,333,674,266 (243,400,285)

35,456,054,235 20,596,732,106

Deferred tax (benefit)/expense Origination and reversal of temporary differences (4,980,551,437) 441,258,526

Income tax expense 30,475,502,798 21,037,990,632

(b) Reconciliation of effective tax rate

2015 2014 VND VND

Profit before tax 120,951,841,268 95,446,579,343

Tax at the Company’s tax rate 26,609,405,079 20,998,247,455 Effect of change in tax rates 900,508,212 - Non-deductible expenses 631,915,241 283,143,462 Under/(over) provision in prior years 2,333,674,266 (243,400,285)

30,475,502,798 21,037,990,632




36

(c) Applicable tax rates

Under the terms of Income Tax Law the Company has an obligation to pay the government income tax at the rate of 22% of taxable profits. The usual income tax rate applicable to enterprises before any incentives is 22% for 2014 and 2015, and will be reduced to 20% from 2016.

35. Basic earnings per share

The calculation of basic earnings per share for the year ended 31 December 2015 was based on the profit attributable to ordinary shareholders after deducting appropriation to equity funds, bonus and welfare fund of VND71,476,307,391(2014: VND58,782,775,632 ) and a weighted average number of ordinary shares outstanding of 30,618,481 (2014: 30,618,481), calculated as follows:

(i) Net profit attributable to ordinary shareholders

2015 2014 VND VND Net profit attributable to ordinary shareholders 71,476,307,391 58,782,775,632

(ii) Weighted average number of ordinary shares

2015 2014 (restated) Issued ordinary shares at the beginning of the year 26,625,031 26,625,031 Effect of dividends shares issued in 2 June 2015 3,993,450 3,993,450

Weighted average number of ordinary shares for the year 30,618,481 30,618,481

Basic earnings per share 2,334 1,920




37

36. Significant transactions with related parties

In addition to related parties balance disclosed is other notes to the financial statements, the Company had the following transactions with related parties during the year:

Transaction value 2015

VND 2014 VND

Shareholders Payments of dividends 85,865,268,000 53,250,062,000 Related parties Purchases of materials 21,226,503,570 31,766,942,737 Member of Board of Directors, Supervisory Board and Board of Management Compensation 1,471,588,015 4,444,751,077

37. Non-cash investing activities

2015 VND

2014 VND

Dividends by shares 39,934,500,000 -Capital contribution in Viet Gia Phu by a free borrowing from Hiep Phuc Investment Trading and Tourism Limited Company - 3,600,000,000




38

38. Corresponding figures

As described in Note 3, the Company adopted Circular 200 effective from 1 January 2015. As a result, the presentation of certain financial statement captions have been changed. Certain corresponding figures for the year ended 31 December 2014 have been reclassified to conform to the requirements of Circular 200 in respect of financial statement presentation. A comparison of the amounts previously reported and as reclassified is as follows: Balance sheet

1/1/2015 1/1/2015 (as

reclassified) (as previously

reported) VND VND Held-to-maturity investments 145,000,000,000 -Short-term investments - 145,000,000,000Other receivables 8,122,965,450 5,228,054,931Shortage of assets awaiting resolution 63,083,174 -Other current assets - 2,957,993,693Inventories 424,239,967,169 451,700,848,048Long-term tools, supplies and spare parts 27,460,880,879 -



Hochiminh City, April 13rd 2016

DRY CELL & STORAGE BATTERY JOINT STOCK COMPANY

Legal Representative

GENERAL DIRECTOR

TRAN THANH VAN

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