GrantThornton Financial Statements and Independent Auditors' Report Da Nang Sustainable City Development Project Under Financing Agreement No. 5233-VN and Additional Financing Agreement No. 6032-VN between the International Development Association ("IDA") and the Government of the Socialist Republic of Vietnam For the year ended 31 December 2020 Da Nang Sustainable City Development Project Financing Agreement No. 5233-VN and Additional Financing Agreement No. 6032-VN For the year ended 31 December 2020 Contents Page Part I - Financial Statements Report of the Project Management Board 1 Independent Auditors' Report 3 Balance sheet 5 Statement of Sources and Uses of funds 6 Statement of Designated account 7 Statement of withdrawals 9 Notes to the financial statements 11 Part II -Auditors' Report on Compliance 19 Part III- Auditors' Report on the Internal Control 22 Da Nang Sustainable City Development Project Financing Agreement No. 5233-VN and Additional Financing Agreement No. 6032-VN For the year ended 31 December 2020 Part I Financial Statements Da Nang Sustainable City Development Project Financing Agreement No. 5233-VN and Additional Financing Agreement No. 6032-VN For the year ended 31 December 2020 Report of the Project Management Board The Project Management Board submits its report together with the audited financial statements of Da Nang Sustainable City Development Project ("the Project") for the year ended 31 December 2020. Auditors The Project's financial statements for the year ended 31 December 2020 have been audited by Grant Thornton (Vietnam) Limited. The Project Management Board The members of the Project Management Board are responsible for overall direction and management of the Project during the period and to the date of this report were: Name Position Mr. Huynh Anh Vu Acting Deputy Director Ms. Vuong Thi Quynh Giao Chief Accountant Appointed on 4 December 2020 Mr. Nguyen Van Vinh Chief Accountant Resigned on 4 December 2020 Statement of the Project Management Board The Project Management Board is responsible for preparing Financial Statements for the year ended 31 December 2020 which give a true and fair view of: " the financial position of the Project; * the funds received and expenditures incurred for the year; * the activities of the designated accounts for the year; and * the funds withdrawn for the year. In preparing those Financial Statements, the Project Management Board is required to: * select suitable accounting policies and then apply them consistently in accordance with Financing Agreement No. 5233-VN and Additional Financing Agreement No. 6032-VN between the International Development Association ("IDA") and the Government of the Social Republic of Vietnam; * make judgements and estimates that are reasonable and prudent; * state whether applicable accounting principles have been followed, subject to any material departures disclosed and explained in the financial statements; and * design and implement an effective internal control system for the purpose of properly preparing and presenting the financial statements so as to minimise errors and frauds. The Project Management Board is responsible for ensuring that proper accounting records are kept which disclose, with reasonable accuracy at any time, the financial position of the Project and to ensure that the accounting records comply with the accounting system as described in the Project's Operations Manual. They are also responsible for safeguarding the assets of the Project and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Project Management Board confirms that they have complied with the above requirements in preparing the Financial Statements. Da Nang SstainableCity Developmen Pr o Finaring Agreert NoN 23VN at Ait A in No,32N For th year onded 31 December 2020 Approval of the financI statements We hereby approve the acconipani financa s ate n on pa 5 to 1 wc iv au ru a fair view of the fund balance of the Da Nang Sustaikn Ciy Developm Proec as at 31 D ecpmber 2 020, about fu-intui wn the balances of the Designated Accounts and the grant fundsasH a 31 December 202 n the funds recive'd ndJ disbursed for the year then ended, inu accordane with tie acounting pli as dsid nNo 2 to the 'i 1:ca statements. In add ition, n the opii of the Proc Management Board, wtitdia have been adquai,ly ' rc;oiciled to the statemnts of expenditures prePAr b the Project duing the year, dnd uh stte3 n i f expenditures were adequately sipported. n behaf of the Peroet MAnageme B Huyh Anh Vu Aiti:q Deputy Director Da Nang, Vetnarn 28 June 2021 GrantThornton An instinct for growth Independent Auditors' Report on the financial statements of Grant Thornton (Vietnam) Limited 18" Floor Da Nang Sustainable City Development Project Hoe Binh International Office Bul ding Financing Agreement No. 5233-VN and Additional Financing Agreement 6 Hiayg DsrcVt atreet No. 6032-VN between the International Development Association ("IDA") Vietnam and the Government of the Social Republic of Vietnam T +84 24 3850 1686 for the year ended 31 December 2020 F +84 24 3850 1688 www.grantthornton.com vn No: 20-11-278 To: Project Management Board Da Nang Sustainable City Development Project Auditors' opinion We have audited the accompanying balance sheet of the Da Nang Sustainable City Development Project ("the Project") as at 31 December 2020, and the statement of sources and uses of funds, statements of designated accounts and statements of withdrawals for the year then ended and the notes thereto (collectively referred to as "Financial Statements") as set out on pages from 5 to 18. In our opinion, in all material respects: - The accompanying financial statements give a true and fair view of the balance sheet as at 31 December 2020 and the funds received and expenditures of the Project for the year then ended in conformity with the accounting policies described in Note 2 of the Notes to the financial statements; - The accompanying statements of designated accounts give a true and fair view of the balances of the designated accounts as at 31 December 2020 and the Project's receipts and disbursements via the designated accounts for the year then ended in conformity with the relevant covenants of the Financing Agreement No. 5233-VN and Additional Financing Agreement No. 6032-VN Financing between the International Development Association ("IDA") and the Government of the Social Republic of Vietnam, the Project's Operations Manual and relevant regulations established by the World Bank; and - Withdrawal Applications were adequately reconciled to the statements of expenditures ("SOEs") prepared by the Project Management Board for the year ended 31 December 2020 and those SOEs were adequately supported by accounting vouchers. Basis for auditors' opinion We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Project in accordance with the ethical requirements that are relevant to our audit of the financial statements in Vietnam, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. l2021 Grnt Thoirnt (Vietnam) Ltc Ak rights reserved 3 Other matter The financial statements as at and for the year ended 31 December 2019, included for comparison purpose, have been audited by other auditors whose report dated 18 June 2020 expressed an unqualified opinion. Responsibility of the Project Management Board for the financial statements The Project Management Board is responsible for the preparation and fair presentation of these financial statements in accordance with accounting policies as described in Note 2 to the financial statements and for the set up internal control system which is determined by the Project Management Board to be necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors' responsibility Our objectives are to obtain reasonable assurance about whether the financial statements of the Project as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also: * Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control; * Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances; and * Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by Project Management Board. We communicate with the Project Management Board, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. GRAIKIT THORNTON (VIETNAM) LIMITED Nguyqrk Honi Ha Nguyen Thi Huong CPA Vietnam Practising Certificate CPA Vietnam Practising Certificate No: 1710-2018-068-1 No: 3482-2021-068-1 Deputy General Director Auditor Hanoi, Vietnam 28 June 2021 @ 2021 Gant Thorlon (Vienmrn) Limited. Al rights reserved. 4 Da Nang Sustajinable City D,v, opret r e Financing Agroemt N 2 V d ddiI F N-. Ageew No 603 as at 31 December 2020 ASSETS Cash 12 wahon hai442l29,0 M 4 Cash Å/t ba* 4 1l¥/2j 2 I UNG Receivable!s 25 I434M3 4 Advanæ ff 1 4 /. Advancebs to contlracto b769 220/MiU 7 Or m r Vi ii TOTLAI. SSi LIABILITlIESAND FUND BALANC Tae andlb3 ih,uns yab,edgoikhe Fudre blnce car_g_ow_ 1 31 7i'~>I~ I 7 8 TOTAL L IABILJITES AND FUNDt BIAL ANCE 35 423O 174 16i9,8 Da Nang, Vietnartn 8 Jule 202 HynIh Anh Vi vub.i I Iye i ThezI note e ou from11 I ) fnn a in al p(1 n *a nil $i1 .-. Da Nang Sustainable City Dmvlopint Prot Financing Areement o VN ind Additio FinAgi g A runt No 032-VN for the year ended 31 Decembe 2020 Acc umuatd to Yearj~ ened Acuided to Notes 31 December 201 9 31 Decem ber~ 202i 31 Demmberi~9u 2029 VNDLVN VND SOURCES Fundsi received ftiom the Worni[9ldBnk 8 2,93939,000tj,000r 3594,24,492 2,730,6 9 Amouints refunded to the Wold ni k (29k 0 2,259) Coijuterpart fund 9 152736834l9%9i 20 2 90 (7 i 411 ) I D09 34701 USES OF FUNDS Caftegoyiry 1: Voks other than wth u Component 5 1 Q 9535%44 Category 2: Works wnder Component 5 i 4625Q~ 6 Category 3; Goodst imnoncosulting snties consultinig services trainin andl orshops hund be Project Fund banfce at begmila tW yr DaNang, Vietnam 28 uiie 2021I uyn AChV of Aut nm The notes9 set out on pages fro 1-1 to 19 foni, ~in [ iegr pi of1i i fini sameinii/ Da Nang Sustainabkl City Deeomeni t Prjc~t Fning Agremnit No. 5233-VN and Additi Financiin Aqreement No. 632-,VN For tIh y,ar anded: 31 December 2020 Accnint INumibe: 1902l7B8888803 Depos ioy Bniik: Vietilm Tchnlgicl o Sock CXomm dail ik Addms: Techcomihnk Bing 91 a rl ieu stee H0 o Trung distI, 1 n Loanr Aqeemnent: 5233-VN and 6032 VN Currency: USD1 3S Dece UD Part A- Accouni activity Opelnig balance as ?t I January -1202 339032? 9 Add; Totamount addvanced to DesDgnatd AconU Lesx: TotMl amDUnt Withdrawn ro D g naU ACcOUn 'j0 1 ij Ciosing balance as at 31 Decembekr 2020 Part B- Acojit reconclio Amouni advancr,,d by fipe Vo rldnk Iat 1 anuary 202 AdvanœlCl rltkdved fromi theC Wodd k Banjk Amount cleared WhUWja- Advanced amount of Desitd Aommt aat 3 Decemb 020 Designated AccýOunt's bamne as ct3 eebr22 Add: Bank charge Am, unt withdirw but not yet c[lime to cear Advancled amount of Des nate d Abcunt as atJ Dcrnber 2020I irun 2021 The ~un Thwu Quyd Gbiac 3fo no o '~ Chief AccounŽani D Nang Sutinable City Development Pr~jct Financirg Agreeint No. 5233VN and Additio fminanci Agrocmnt No G32-VN For the year ended; 3 Decembr 2020 AccDunt Nurber; 1902788888048 Depository Bank: ena Tecnical John R-ck md -i ik Address; Techcombank Budi 191 a T su D iree Ba Ton didirk,if Loan Ariemnt: 233-VN n 602 USD Part A: Aount activity Opening balance w at s January 1, 20 Tuda~V Add: Toladlau (i!nadvanced t Deignate Accoum Closing balance o s t31 Decmbmr 20 22 Pr MS Aont iCon lt AmounIt advaniedi byi the Wordi Ban :1 i 1 Janiry 2020 Add: Advanced amnounit of Desinteid AcounIt as at 31 Dec nIie 2102 4 7l~ Designated Aouolnte a baiance as1 at 31 Decembr 20201 Banrk chargs .iI Amo unit wihdrawn bu ot et c usmiaa1 to cIi5,7eii Advanced ameo~i u of Das gnted Accounti as at31 D oee 2020v i Da. Nang,3 iea 28 une 2021 iiuyflI Al Ii VuIng TN111 Quynh Gils Aeúng Deputy D)irelcto ~L::cis~s &:- 卜臘不不 一’一〕＿一＿‘、取”一 一＿匹’紛、＿一仔叩 鄴」＿邢一”&，一叩需仕－」：－一？一。矓t ko6擊32一V類 誓二一＿仰 】亡丰馴分二化唱于：：馴他他r彎任 ～一一－―一一一――一－一一→～--－一－～一 D才日b。。：· －一。－－·，州·二二警。你二一飛煩朧f排獸編：氈瞬亡皺翁e孵皖c然 －一‘－一、不一2凡八→二）奉膳貿。你7乙7 ＿計＿一。·！一二。織翁。歟7己2辟2 ＿一·－一＿亡〕65魚96侮 :__＿一＿_____―一＝上上－－一一·法疲一坤，·註旦韭＿______: 一一丁―一界一丫衫’ 州一，―二忠一j九一一一→一～～一一一一一一一～→酌－一―一―一―必一＿一也肥竺 一一歟＇ ＇拷，斗一＇＿一－-－一一一一 一f一沫－--－一一一了他匹－--－一 一一－－一－一－-－一―－一－-----－一韉 訌＿了 、瘁邸珍。寫e一邢祕仁數數很迅59 取八召綠甲嘰」以丑一V縱 一！-－一一＿＿啊”＿計』叮乙〕手 二＿？·于註＿于一：一。 一’－、｀方－一丫’&：二一＿_’·：!tN’一發 一仰一！仁一主 入mo～抓二 ；吃于f弘 化一不丁一化一‘兀日于，；化，？戶鳥一亡一孵。取母 二二、‘_－一霧＿一j?：方：- ,_＿亡一二－－一《抓一二、j(J才 一亡一兀必50一3－一〕7透嘆CS織，叮兀付不。緣 一一JS紛－一兀叮e乏C亡叩一亡二。二－ 上二一＿＿·＿\!S谿＿____＿麻＿___＿必＿_＿二二壁三坐坐至亡＿二－··一必二韭＿____ 一→＿驕糁懇塑撇一嫵＿_~＿一‘一＿一＿ 江｀必 一 一＿一＿＿一兀一二二一 二一、華亡！二 Project "Da Nang Sustainable City Developaiont" Financing Agreement No. 5233-VN and Additional Financing Agreement No. 6032-VN Notes to the financial statements for the year ended 31 December 2020 1 The Project's information The Project of Da Nang Sustainable City Development is funded by the International Development Association ("IDA") under Financing Agreement No. 5233-VN dated 30 April 2013 with total funding amounts of 133,700,000 Special Drawing Rights ("SDR") (equivalent to LISD202.43 million) and counterpart funds from the Socialist Republic of Vietnam (USD69.70 million). On 29 September 2017, the International Development Association approved additional funding amounts of USD72.52 million (under Financing Agreement No. 6032-VN) for the Project with the following additional activities: 0) Development of a separate sewer/house connection system in the coastal My An - My Khe area of Da Nang city under part 1 (b) of the Original Project; (i i) Establishment of an intelligent transport system and integrated fare collection system for public transport under Part 2 of the Original Project; (iii) Improvement of the road from Hoa Nhon to Hoa Son area of Da Nang City under Part 3 of the Original Project. The total investment of the Project after amendment is USD358.32 million, in which funds from World Bank is USD274.95 million and counterpart funds from the Government of Vietnam is USD83.37 million. The Project's initial implementation period is from 30 April 2013 to 30 June 2019 and is extended to 30 June 2021 according to the International Development Association Extension Letter ("IDA") dated 4 September 2019. The objectives of the Project is to expand access of city residents to improved drainage, wastewater collection and treatment services, the arterial road network and public transport in selected areas of Da Nang City. The Project consists of five components as follows: Component 1: Drainage and wastewater improvements a) Included: (j) rehabilitation of retention lakes; (ii) rehabilitation and construction of box culverts and open canal; and (iii) rehabilitation and construction of outlets to lakes and offshore outlets; and b) Wastewater collection and treatment: (i) construction of house connection to sewerage networks; (ii) construction of wastewater collection and transmission pipelines-, (iii) construction of Lien Chau wastewater treatment plant; (iv) expansion of Hoa Xuan wastewater treatment plant-, (v) upgrading of existing Son Tra, Hoa Cuong, Phu Loc and Ngu Hanh Son wastewater treatment plants; and (vi) development of a separate sewer/house connection system in the coastal My An - My Khe area of Da Nang City (the additional activity under Financing Agreement No. 6032-VN). Component 2: Bus Rapid Transit development Development of a BRT system, including: (a) construction of the BRT core route and three addition BRT-branded routes; (b) acquisition of BRT buses-, and (c) establishment of an intelligent transport system and integrated fare collection system for public transport (the additional activity under Financing Agreement No. 6032-VN). Component 3: Urban strategic roads a) Improvement of the connectivity of the urban arterial road system, including construction of two (2) new east- west connecting roads to the north-south bypass of Da Nang City and the national expressway network; b) Construction of resettlement sites', and c) Improvement of the road from Hoa Nhon to Hoa Son area of Da Nang City (the additional activity under Financing Agreement No. 6032-VN). Project "Da Nang Sustainable City Development" Financing Agreement No. 5233-VN and Additional Financing Agreement No. 6032-VN Component 4: Technical assistance and capacity building Provision of technical assistance to the People's Committee and relevant Departments of Da Nang City on urban infrastructure management under the Project including: (i) strategic planning and effective management of drainage and monitoring of public service performance contracts; (ii) oversight of public transport management and operations, and management of road safety, urban traffic and parking; (iii) management and monitoring of public service performance contracts; (iv) development of a green and sustainability development index of the Project; and (v) support to the Project's implementation. Component 5: Transferred activities from the Da Nang Priority Infrastructure Investment Project (P/IP) Provision of support for the completion of some major infrastructure for which construction started under the PIIP, including: (i) construction of the Southern road link connecting to the Hoa Phuc - Hoa Khuong road; (ii) construction of Hoa Xuan wastewater treatment plant, upgrading of Son Tra wastewater treatment plant, and construction of Phu Loc bride and embankment of Phu Loc river mount; and (iii) associated construction supervision and safeguards monitoring services. 2. Principal accounting policies 2.1 Basis of accounting The financial statements, expressed in Vietnamese Dong ("VND"), except for the statements of designated accounts and statement of withdrawals which are expressed in United States Dollars ("USD") as required by the World Bank and Circular 79/2019[TT-BTC dated 14 November 2019 issued by the Ministry of Finance of Vietnam applicable to Project Management Boards using public investment capital. The Financial Statements are prepared in conformity with a modified cash basis of accounting rather than generally accepted accounting principles. The significant policies adopted in the preparation of the financial statements are set out below. 2.2 Accounting period The Project's fiscal year is from 1 January to 31 December. 2.3 Foreign currency transaction Transactions arising in foreign currencies are translated into Vietnamese Dong ("VND") at the exchange rates ruling as follows: * Transactions related to sources are translated using monthly exchange rate quoted by Vietnam Technological Joint Stock Commercial Bank (Techcombank) at receipt dates. * Payment transactions from the designated accounts are translated using exchange rates quoted by the commercial bank on the transaction dates. Foreign exchange differences are not cash flows. However, the effect of exchange rate changes on cash is reported separately in the statement of sources and uses of funds in order to reconcile fund balances at the beginning and the end of the period. 2.4 Recognition of funds and expenditures Funds and expenditures are recognised in conformity with a modified cash basis of accounting. IDA funds: Fund is recognised when credited to the Designated Accounts of the Project. - Counterpart fund: Fund is recognised when payments are made directly from the Vietnamese Government to contractors/suppliers of the Project or when received. - Other funds: Funds are recorded when received. - Expenditures is recognised when actually paid rather than the obligation to pay except for expenditures for contractor/suppliers on completion of contracts or completion of works, and expenditures covered by counterpart fund including salary, allowances and related expenses for Project management's staff. 12 Project "Da Nang Sustainable City Development" Financing Agreement No. 5233-VN and Additional Financing Agreement No. 6032-VN 2.5 Receivables Receivables are recognised when the right to collect arises. 2.6 Payables Payables are recognised for amount to be paid in the future for goods and services received and approved by the Treasury. 3. Designated Accounts The Designated Accounts are deposit accounts in USD opened at Techcombank for settlements of the Project's activities. Payments made via the Designated Accounts are for eligible expenditures of the Project in accordance with provisions of Financing Agreement No. 5233-VN and Additional Financing Agreement No. 6032-VN, the Project's Operations Manual and relevant regulations established by the World Bank. Interests on Designated Accounts are considered as receipts of the Project and presented as Other funds in the Statement of Funds and Uses of Funds, used to cover service fees of serving bank that related to the Project 4. Cash in bank 31 December 2020 31 December 2019 USD VND USD VND At the State Treasury Account of the State Treasury, Da Nang city - Project management cost - - - 11,606,650 Account of the State Treasury, Da Nang city - Income from selling bidding documents - 505,080 - 925,080 Account of the State Treasury Da Nang city - Fund account for site clearance compensation - 975,290,010 - 3,915,717,558 - 975,795,090 3,928,249,288 At the Commercial Banks Vietnam Technological Joint Stock Commercial Bank - 2,199,245,757 884,025,068 Saigon Hanoi Commercial Joint Stock Bank - 329,140,470 - - Military Commercial Joint Stock Bank - 40,000,000,000 - - Dong A Joint Stock Commercial Bank - - - 2,180,172 Phuong Dong Joint Stock Commercial Bank - - - 33,024,189,507 - 42,528,386,227 - 33,910,394,747 The Designated Accounts Designated Account No.19027888888035 5,949,565.10 138,238,145,097 13,990,527.99 324,530,977,963 Designated Account No.19127888888048 - - 3,318,291.97 76,645,186,243 5,949,565.10 138,238,145,097 17,308,819.96 401,176,164,206 5,949,565.10 181,742,326,414 17,308,819.96 439,014,808,241 13 Project "Da Nang Sustainable City Development" Financing Agreement No. 5233-VN and Additional Financing Agreement No. 6032-VN 5. Advances to contractors 31 December 2020 31 December 2019 VND VND a. Advances for construction purposes Xuan Quang Construction JSC 10,809,324,647 10,197,812,305 An Bao Trading and Construction JSC 12,661,237,541 12,693,387,054 Joint Venture of DongYang Construction Co., Ltd and Nam Viet Hung Investment JSC 14,103,133,619 22,257,336,645 68 Trading Construction and Service JSC 24,853,322,982 34,077,318,118 Truong Xuan Construction JSC - 8,596,537,775 Joint venture of Hanoi Water Construction JSC and Construction No.1 JSC 1,376,699,892 3,881,451,392 Joint venture of Hanoi Water Construction JSC and Interdecor Construction Investment and Trading Co Ltd 326,675,887 5,786,710,387 Joint venture of Hanoi Water Construction JSC and Xuan Quang Construction JSC 6,878,791,193 21,549,115,433 Joint venture of Hanoi Water Construction JSC and Truong Xuan Construction JSC 9,774,046,917 39,140,737,277 Joint venture of Hanoi Water Construction JSC and Construction No5 JSC - 26,146,501,561 Joint venture of HAWACO Mechanical and Electrical Co Ltd and ANSV Telecommunication Equipment Co Ltd 2,931,898,353 6,534,531,103 Asian Pacific Engineering Consulting JSC - 1,160,982,680 AVN Vietnam Audit Company Limited 1,103,804,943 1,115,915,263 Vietnam Water, Sanitation and Environment JSC 978,951,725 978,951,725 85,797,887,699 194,117,288,718 b. Advances for site clearance purpose Site clearance board of Lien Chieu district 8,437,000,000 4,000,000,000 Site clearance board of Son Tra district 588,127,398 772,294,067 Site clearance board of Hoa Vang district 41,960,171,616 35,422,408,104 Site clearance board of Ngu Hanh Son district 2,815,777,527 5,652,754,604 Project Management Board of Construction Investment of Thanh Khe district 25,096,762,961 3,708,931,304 Site clearance board of Cam Le district 3,000,000,000 9,079,794,210 81,897,839,502 59,636,182,289 167,695,727,201 253,753,471,007 14 Project "Da Nang Sustainable City Development" Financing Agreement No. 5233-VN and Additional Financing Agreement No. 6032-VN 6. Payables to contractors 31 December 2020 31 December 2019 VND VND Nam Vinh JSC - 663,273,597 Trung Nam Instalment Construction JSC 11,011,582,091 11,611,646,091 545 Works Construction JSC 1,913,469,200 1,952,668,200 Joint Venture of Hanoi Water Construction JSC and Trung Nam Instalment Construction JSC 11,297,619,172 14,040,312,439 Joint Venture of Rural Development Infrastructure Construction JSC and 207 Transportation Infrastructure Construction JSC 5,209,894,536 5,209,894,536 Joint Venture of Truong Xuan Construction JSC and Bach Dang Corp - JSC 4,785,310,416 4,785,310,415 Joint Venture of Trung Nam Instalment Construction JSC and Mekong Eastern Construction Production and Trading Co Ltd 11,402,998,752 12,667,378,687 Joint Venture of Hanoi Water Construction JSC and 207 Transportation Infrastructure Construction JSC 1,559,578,403 1,727,850,403 Joint Venture of Nhat Huy Trading & Construction Co Ltd and Thai Binh Duong JSC 1,290,248,969 1,034,775,458 Joint Venture of UPL Environmental Engineers Co Ltd (India) and Khilari Infrastructure Co Ltd (India) 3,996,305,765 4,216,305,765 Bach Dang Construction Corporation - JSC 5,102,437,230 5,102,437,230 No. 1 Construction Corporation - One member Company Limited 11,113,225,640 12,991,405,981 Xuan Quang Construction JSC 8,289,490,382 5,490,437,072 Joint Venture of Thuan An Trading and Construction Development JSC and Thang Long Corporation - JSC 5,974,472,189 5,974,472,189 Joint venture of SEEN Engineering JSC and Sonadezi Service JSC 2,259,909,343 8,411,199,266 Truong Xuan Construction JSC 6,185,377,050 5,176,628,800 Joint Venture of Trung Nam Instalment Construction JSC and Xuan Quang Construction JSC 6,302,758,900 3,808,140,300 Joint venture of DongYang Construction Co Ltd. and Nam Viet Hung Investment JSC 7,387,082,100 3,245,328,515 Joint venture of Bach Dang Construction Corporation - JSC and Construction No 5 Joint Stock Company 35,666,730,300 21,970,894,100 Joint venture of Hanoi Water Construction JSC and Interdecor Construction Investment and Trading Co., Ltd 7,274,774,133 4,378,812,700 Joint venture of Hanoi Water Construction JSC and Truong Xuan Construction JSC 15,835,868,300 3,980,104,100 Joint venture of Hanoi Water Construction JSC and Construction No.1 JSC 4,319,426,500 3,317,525,900 68 Trading Construction and Service JSC 9,852,487,882 1,071,308,301 Others 2,836,507,797 2,870,913,722 180,867,555,049 145,699,023,767 7. Other payables 31 December 2020 31 December 2019 VND VND Payables to Da Nang Priority Infrastructure Investment Project 2,094,350,804 2,094,350,804 Payables for advances from Site clearance boards for site clearance compensation 975,290,010 3,915,717,558 Other payables 94,605,910 100,437,910 3,164,246,724 6,110,506,272 15 Project "Da Nang Sustainable City Development" Financing Agreement No. 5233-VN and Additional Financing Agreement No. 6032-VN 8. Funds received from the world Bank Year ended Accumulated to 31 December 2020 31 December 2020 Original amount VND Original amount VND USD USD Amounts received through Designated accounts 1,500,000.00 35,244,254,496 130,750,706.77 2,974,640,254,496 1,500,000.00 35,244,254,496 130,750,706.77 2,974,640,254,496 9. Counterpart funds Counterpart funds are funds from the Government of the Socialist Republic of Vietnam to grant a portion of the construction cost (15% for Category (1) and 20% for Category (2)), project management activities, other expenditures (all fees, inspection fee, verification, insurance, bomb clearance, audit, finalization, traffic guarantee, permission, issuance ... and other consulting costs like bids evaluation), compensation expenditures for site clearance and a part of contingency cost (32.26%). 10. Otherfunds Accumulated to Year ended Accumulated to 31 December 2019 31 December 2020 31 December 2020 VND VND Bank interests - Designated Accounts 645,470,920 - 645,470,920 Bank interests - Current Accounts at Commercial Banks 178,659,876 79,111,412 257,771,288 824,130,796 79,111,412 903,242,208 16 Project "Da Nang Sustainable City Development" Financing Agreement No. 5233-VN and Additional Financing Agrement No. 6032-VN 11. Expenditures by components/activities and by sources of funds Accumulated to 31 December 2019 Year ended 31 December 2020 Accumulated to 31 December 2019 Counterpart Counterpart Expenditure category IDA Fund funds Total IDA Fund funds Total IDA Fund Counterpart funds Total VND VND VND VND VND VND VND VND VND Category 1: Works other than those under Component 5 1,874,703,594,086 346,421,369,609 2,221,124,963,695 412,067,223,872 70,564,897,427 482,632,121,299 2,286,770,817,958 416,986,267,036 2,703,757,084,994 Category 2: Works under Component 5 413,303,177,382 49,047,579,184 462,350,756,566 - - - 413,303,177,382 49,047,579,184 462,360,756,566 Category 3: Goods, non-consulting services, consulting services, training and workshops under the Project 239,521,968,280 - 239,521,968,280 5,160,007,650.00 - 5,160,007,650 244,681,975,930 - 244,681,975,930 Equipment 15,553,172,589 - 15,553,172,589 - - - 15,553,172,589 - 15,553,172,589 Training, site visit and workshops 2,623,021,690 - 2623,021,690 - - - 2,623,021,690 - 2,623,021,690 Consulting services 221,345,774,001 - 221,345,774,001 5,160,007,650 - 5,160,007,650 226,505,781,651 226,505,781,651 Other expenses -1,008,606,510,684 1,008,608,510,684 - 185,580,974,910 185,580,974,910 - 1,194,189,485,594 1,194,189,485,594 Site clearance compensation expenses - 820,181,321,516 820,161,321,516 - 148,253,921,898 148,253,921,898 - 968,435,243,414 968,435,243,414 Project management expenses - 49,915,113,710 49,915,113,710 - 2,496,405,000 2,496,405,000 - 52,411,518,710 52,411,518,710 Bank charges Other expenses - 775,191,575 775,191,575 - 60,063,359 60,063,359 - 835,254,934 835,254,934 Bank charges Other expenses - 137,736,863,883 137,736,883,883 - 34,770,584,653 34,770,584,653 - 172,507,468,536 172,507,468,536 2,527,528,739,748 1,404,077,459,477 3,931,606,199,225 417,227,231,522 256,145,872,337 673,373,103,859 2,944,755,971,270 1,660,223,331,814 4,604,979,303,084 17 project "DNang Sustinable CRaty Deelopment Financing Aree,mìent Neo 5233VN a Adional H" o;& A&M o i a I N 12. Subseque t event No significant events have ocurd since the reporting date wich wcoud imfpac on,j t ia pa tion of the Project as nt 31 Decembr 2020 or the fund recevedr and expenditror thi iar i tn ended 13. Approval fAr issuance of h financiai statern c ent The financial stntementsre approved by the Project Management moard and 1 a7 Nang, Vietnam 2m June 2021 tg Deputy Director ief Aounant Project "Da Nang Sustainable City Development" Financing Agreement No. 5233-VN and Additional Financing Agreement No. 6032-VN Part II Auditors' Report on compliance Grant Thornton An instinct for growth Independent Auditors' Report on compliance of Da Nang Sustainable City Development Project Financing Agreement No. 5233-VN and Additional Financing Agreement Grant Thornton (Vietnam) Limited 18t" Floor No. 6032-VN between the International Development Association ("IDA") Hoa Binh International Office Building and the Government of the Social Republic of Vietnam 106 Hoang Quar Viet Street Cau Glay District, Hanoi for the year ended 31 December 2020 Vietnam T +84 24 3850 16886 F +84 24 3850 1688 www.grantthornton com.vn To: The Project Management Board Da Nang Sustainable City Development Project Auditors' opinion We have audited the accompanying financial statements of Da Nang Sustainable City Development Project ("the Project") under the Financing Agreement No. 5233-VN and the Additional Financing Agreement No. 6032-VN between the International Development Association ("IDA") and the Government of the Social Republic of Vietnam for the year ended 31 December 2020, prepared on 28 June 2021, including the balance sheet as at 31 December 2020, the statement of sources and uses of funds, statements of designated accounts, the statements of withdrawals for the year then ended and the notes thereto (collectively referred to as "Financial Statements"), and have issued our report thereon dated 28 June 2021. We have conducted the audit in accordance with the International Standards on Auditing. As part of the audit of Financial Statements per the Terms of reference, we are required to express our opinion on the Project's compliance with Applicable Laws, Regulations and the Procurement Procedures and other Provisions of the Financing Agreements and other Guidance from World Bank. In our opinion, the Project was, in all material respects, in compliance with Applicable Laws, Regulations and the Procurement Procedures and other Provisions of Financing Agreement No. 5233-VN and Additional Financing Agreement No. 6032-VN and other guidance from the World Bank that could have a direct and material effect on the Project's financial statements for the year ended 31 December 2020. This report is intended to provide information to the Project owner and the World Bank. Other matter The financial statements as at and for the year ended 31 December 2019, included for comparison purpose, have been audited by other auditors whose report dated 18 June 2020 expressed an unqualified opinion. The Project Management Board's responsibility The Project Management Board is responsible for complying with Applicable Laws, Regulations and the Procurement Procedures and other Provisions of the Financing Agreements and other Guidance from World Bank. @ 202 Grant Tnornton (v nam) I Td All righzs reserved 20 Our responsibility is to express an opinion on the Project's compliance with the requirements, based on our procedures. We conducted our engagement in accordance with the International Standard on Assurance Engagement 3000, "Assurance Engagements other than Audits or Reviews of Historical Financial Information", issued by the International Auditing and Assurance Standards Board. This standard requires that we comply with ethical requirements and plan and perform our procedures to obtain reasonable assurance about whether, in all material respects, the Project has complied with the requirements. An assurance engagement to report on the compliance with regulatory and contractual requirements at a project involves performing procedures to obtain evidence about whether the Project's activities are free of material non- compliance with the requirements. The procedures selected depend on the auditor's judgment, including the assessment of risks that the Project does not comply with the requirements and whether such non-compliance could have a direct and material effect on the Project's Financial Statements. Our procedures included testing the compliance with the requirements that we consider necessary to provide reasonable assurance that the requirements are complied by the Project. We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. 4,ANTTHORNTON (VIETNAM) LIMITED Ngyypn, gq Ha Nguyen Thi Huong CPA Vietnam Practising Certificate CPA Vietnam Practising Certificate No: 1710-2018-068-1 No: 3482-2021-068-1 Deputy General Director Auditor Hanoi, Vietnam 28 June 2021 (c) 2021 Grani Thornton (Vietnin Lirited. All rights ieserved. 21 Project "Da Nang Sustainable City Development" Financing Agroement No. 5233-VN and Additional Financing Agreenont No. 6032-VN Part Ill Auditors' Report on the Internal Control 22 GrantThornton An instinct for growth Independent Auditors' Report on the Internal Control over financial reporting Grant Thornton (Vietnam) Limited Da Nang Sustainable City Development Project 18" Floir Financing Agreement No. 5233-VN and Additional Financing Agreement Hoa Binh nt ernational Office Building FinncngAgremnt106 Hooang Qu oc Viet Street No. 6032-VN between the International Development Association ("IDA") cau Giay District, Hanoi and the Government of the Social Republic of Vietnam Vietnam for the year ended 31 December 2020 T +84 24 3850 1686 F +84 24 3850 1688 www grantthornton corn vn To: The Project Management Board Da Nang Sustainable City Development Project Auditors' qualified opinion We have audited the accompanying financial statements of Da Nang Sustainable City Development Project ("the Project") under the Financing Agreement No. 5233-VN and the Additional Financing Agreement No. 6032-VN between the International Development Association ("IDA") and the Government of the Social Republic of Vietnam for the year ended 31 December 2020, prepared on 28 June 2021, including the balance sheet as at 31 December 2020, the statement of sources and uses of funds, statements of designated accounts, the statements of withdrawals for the year then ended and the notes thereto (collectively referred to as "Financial Statements"), and have issued our report thereon dated 28 June 2021. We have conducted the audit in accordance with the International Standards on Auditing. As a part of the audit of financial statements per the Terms of reference, we are requested to express our opinion on the design and operation of internal control over compliance with requirements that could have a direct and material effect on the financial statements as well as over financial reporting. In our opinion, except for the effect, if any, of the matter as mentioned in the Basis ofauditors'qualifted opinion paragraph, in all material respects, the Project's internal controls over compliance with requirements that could have a direct and material effect on the financial statements as well as over financial reporting were suitably designed for the year ended 31 December 2020 and the controls tested, which were those necessary to provide reasonable assurance that the control objectives were achieved, operated effectively for the year ended 31 December 2020. This report is intended to provide information to the Project owner and the World Bank. Basis of auditors' qualified opinion In accordance with the Regulations in the Project's Financial Management Manual, Chapter Il1, Section IV 1 - Advances, advances need to be cleared within the prescribed time limit. Any specific case of late payment advances need to be monitored and gave instructions for clearance by the authorised person. However, as of 31 December 2020, a number of advances from 2020 and earlier were not cleared within the stipulated time and there was no specific solutions by the authorised person. Other matter The financial statements as at and for the year ended 31 December 2019, included for comparison purpose, have been audited by other auditors whose report dated 18 June 2020 expressed a qualified opinion on the said advance clearance issue. ©@2021 Grant Thiornon (Vfetmanr.td. All riqhts reserved 23 The Project Management Board's responsibility The Project Management Board is responsible for designing and maintaining effective internal control over compliance with requirements that could have a direct and material financial effect on the financial statements as well as over financial reporting for the purpose of properly preparing and presenting the financial statements so as to minimise errors and frauds; and take responsibility for its assertions as to the effectiveness of such internal control. Auditors' responsibility Our responsibility is to express an opinion on the Project's Financial Statements and on the design and operation of controls over financial reporting, based on our procedures. We conducted our engagement in accordance with the International Standards on Assurance Engagement 3000, "Assurance Engagements other than Audits or Reviews of Historical Financial Information", issued by the International Auditing and Assurance Standards Board. That standard requires that we comply with ethical requirements and plan and perform our procedures to obtain reasonable assurance about whether, in all material respects, the Project's Financial Statements are fairly presented and the controls are suitably designed and operating effectively. An assurance engagement to report on the description, design and operating effectiveness of controls at a project involves performing procedures to obtain evidence about the disclosures in the project's description of its system and design and operating effectiveness of controls. The procedures selected depend on the auditor's judgment, including the assessment of risks that the Project's Financial Statements is not fairly presented, and that controls are not suitably designed or operating effectively. Our procedures included testing the operating effectiveness of those controls that we consider necessary to provide reasonable assurance that the control objectives were achieved. We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion. GRANT THORNTON (VIETNAM) LIMITED Ngyer _o g Ha Nguyen Thi Huong CPAVietnam Practising Certificate CPA Vietnam Practising Certificate No: 1710-2018-068-1 No: 3482-2021-068-1 Deputy General Director Auditor Hanoi, Vietnam 28 June 2021 @2021 Grant Thointon (Vielnaim) Limtiied All rqhts re8erved 24 I