Seeing the Quality in You Annual Report Pnj - 2014 Seeing the Quality in You

SEEING THE QUALITY IN YOU ANNUAL REPORT PNJ - 2014 SEEING THE QUALITY IN YOU

CONTENTS

6 VISION- MISSION 60 PERSONNEL ORGANIZATION & ENTERPRISE ADMINISTRATION 62 ORGANIZATION CHART 8 CORE VALUES 65 BOARD OF DIRECTORS 10 CHAIRWOMAN'S MESSAGE 68 BOARD OF MANAGEMENT 70 BOARD OF SUPERVISION 16 MILESTONES OF ESTABLISHMENT & DEVELOPMENT 72 SITUATION CORPORATE GOVERNANCE 22 CORPORATE REPORT 76 PRODUCTS & SERVICES 78 BRAND PNJ GOLD JEWELRY 24 BOARD OF DIRECTORS' REPORT 79 BRAND PNJSILVER 32 BOARD OF SUPPERVISION REPORT 80 BRAND CAO FINE JEWELLERY 38 BOARD OF MANAGEMENT REPORT 81 BRAND JEMMA AN OVERVIEW OF VIETNAM ECONOMIC SITUATION AND GOLD MARKET 42 IN 2014 52 2014 BUSINESS PERFORMANCE 82 ENTERPRISE CULTURE 54 KEY MISSIONS PERFORMANCE 84 PNJ CULTURAL IDENTITY 56 RISK MANAGEMENT 86 10TH ANNIVERSARY OF PNJ CHARITY FUND – A JOURNEY OF LOVE 57 FINANCIAL RATIOS 89 TYPICAL ACTIVITIES 58 SUBSIDIARIES’ PERFORMANCES 90 FINANCIAL STATEMENTS - 2014 CONCLUSION

135 PNJ DISTRIBUTION NETWORK

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COMPANY INFORMATION

Name of company : NHUAN JEWELRY JOINT STOCK COMPANY Abbreviation : PNJ Address : 170E Phan Dang Luu Street, Ward 3, Phu Nhuan District, HCMC Telephone : 08.3.9951703 - Fax: 08.3.9951702 Email : [email protected] Website : www.pnj.com.vn Business Registration License : 0300521758

Type of business : Joint stock company LEGAL : Ms. Cao Thi Ngoc Dung – Position: Chairman, Chief Executive Officer REPRESENTATIVE

CHARTER CAPITAL : VND 755,970,355,000 (seven fifty five billion, nine seventy million, three hundred fifty five thousand)

BUSINESS LINES Manufacturing and trading gold, silver, precious stones, accessories and souvenirs Trading watches and gold bar Testing diamond, gemstone and precious metals House leasing base on Real Estate Business Law ANNUAL REPORT PNJ - 2014 SEEING THE QUALITY IN YOU

VISION BECOMING THE LEADING JEWELRY PROCESSOR AND RETAILER IN ASIA MARKET AND SECURING NUMBER ONE POSITION IN THE SEGMENT OF MEDIUM AND HIGH-END JEWELRY IN VIETNAM

MISSION PNJ BRINGS CUSTOMER PRIDE WITH ELEGANT, OUTSTANDING QUALITY JEWELRY PRODUCTS.

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CORE VALUES 1. HONESTY Honesty is the leading ethical standard in business and in life that every individual or organization aims to Legal profit and business ethics are the base for every activities Building credibility and transparency to earn trust Consistently fighting against all dishonest actions 2. QUALITY Quality is a solid basis to ensure survival and a measure of every individual or organization ‘s value Always guaranteeing the materials’ quality to make high quality products Every member commits to accomplish assigned tasks with the best quality and not to deliver substandard products to anyone else.

3. RESPONSIBILITY Taking responsibility as a motivation, a driving force for every activities. Put customers’ and social benefits into company’s. Every individual commits to live responsibly with himself, his family, the company and the community Carrying out excellently every task with voluntary, active, creative and dedicated spirit. Always pioneering in pursuing and realizing difficult tasks with the spirit to win

4. INNOVATION Innovation is the foundation of everlasting development in a company Do not be complacent with achievements. Be open, willing to learn and apply new knowledge, experience and skills. Constantly improving to optimize benefit for the company.

5. CREATIVITY Create to make significant differences and competitive advantages Meeting customers’ expectation is a base to orient creativity With responsible spirit and passion, every member of the company and the company itself commit to create continuously, offer breakthrough solutions, produce outstanding products and services

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CHAIRWOMAN’S MESSAGE

Dear Value Shareholders, 2014 has passed with many ups, downs and Meeting of Shareholders’ resolutions, ensuring challenges for world and Vietnam economics. the operation is in accordance with proposed However, there have been many signals showing strategy, which are: that Vietnam economy gradually recovered with • Improving the efficiency of manpower by training, positive figures, such as: GDP growth reached coaching, building breakthrough remuneration 5.98%, CPI reached 4.09% - a relative low figure policies; completing the organizational structure in the last 10 years but there was no sign of under the new development model, assigning deflation. additional junior – senior manager staff. According to a report of the World Gold Council, • Raising customers’ satisfaction through regularly world gold jewelry market’s demand in 2014 has launching new jewelry collections which suit deeply declined in most major markets. Total customer tastes or lead the trend; superior estimated value of jewelry consumed in Vietnam quality products with advanced processing has declined 8%, but output yields has grown techniques and skillful workers; assuring quality 4% compared to 2013 - which is a good growing with committed standards by strict controlling sign of the jewelry industry. World gold price has procedures in every stage of the supply chain; fallen unprecedentedly last year, which attracted focusing on building customer care programs consumers to buy more gold jewelry. Changes in to maintain sustainable relations; building gold business operations managing policies have appropriate marketing programs and providing certain influences to the domestic gold market useful information to customers; regularly and have strong impacts to the operation of organizing training courses to enhance customer companies. After more than a year determining service skills of the consultant staffs. to implement Circular 22 on managing jewelry quality of Government agencies, Vietnam gold • Strengthening current sales system under PNJ jewelry market is expected to be transparent and standards and developing new stores according this is an opportunity for well-known companies to network development plan approved by Board with modern, large scale production and broad of Directors, ready for an even more extensive retail stores system as PNJ to rapidly develop PNJ jewelry retail chain development. market, capture the love and trust of customers. • Restructuring jewelry workshops to increase 2014 marked the third year of 10 year development the productivity by 35% over 2013; increasing strategy (2012 – 2017) of PNJ with the mission the industrialized level in production, reducing of completing first phase of the comprehensive wastage and increasing labor productivity to restructuring. PNJ has accomplished 2014 tasks boost marginal profit of sales sector. with impressive results, all criterias reached In 2015, a new phase of the long-term or exceeded targets: gross consolidated sales development strategy has been established and reached 9.297 billion VND; gross profit reached pursued, PNJ continues to set itself new peaks 790 billion VND, rose 32% over the same period to conquer the Vision of "Becoming the Asia's and exceeded yearly plan by 17%; earnings leading jewelry company, ranking Number 1 in before tax reached 326 billion VND, rose 36% the medium and high-end jewelry segment in over the same period and exceed yearly plan by Vietnam" with following goals: 18%, consolidated earnings after tax reached 255 • PNJ is recognized as a leading jewelry brand billion VND, ensured the 2014 dividend payoff is in the middle and high-end segment in the last 15% in cash and 30% in share. few years. PNJ has also constantly improved the To achieve these results, Board of Directors has image and value to be on a par with international closely directed the implementation of short and brands in the region. long-term plans which related to production and • About the product strategy, PNJ will still pursue business operations, implementation of General Ms CAO THỊ NGỌC DUNG, The chairwoman and CEO of PNJ SEEING THE QUALITY IN YOU

the path of leading the market and heading the core production business, implementing the toward customers. With a business organizing strategy firmly step by step; ensuring proper and model which is active from designing, processing adequate investment for each critical stage of the and distributing, PNJ can fully meet the diverse investment route; effective financial management needs of the market and build unique marks and risk management… will be a solid foundation through commercial or limited jewelry collections. for PNJ to achieve objectives of growth, earning Continuing to launch diversified and unique market share, increasing profit; which will lead to products, focusing on the product’ types which the rising of employees’ income, total tax income are likely to bring higher margins. value of the Company, shareholders’ dividend • Constantly improving the manpower’s quality, and Company’s value. We commit to strive to prevailing in human and organization by arranging successfully implement objectives set by the and operating the organization by function blocks; General Meeting of Shareholders to deserve the building attractive and fair remuneration policy; trust of shareholders and customers. regularly training to improve employees’ capacity; On behalf of PNJ’s Board of Directors, I would motivating and encouraging creative thinking, like to thank all Authorities, Value Shareholders, supporting positive and optimism thinking, and Partners, Value Customers and all Employees of building sustainable corporate culture. PNJ for supporting and companying, joining hand • Keep developing the retail system intensively to create success for PNJ in 2014. We hope we under “PNJ Standards” and constantly learning will still receive the support and cooperation in from managing experiences of world’s leading the near future. We wish value Shareholders, retailers to enhance operational efficiency of Customers and Partners a 2015 of health, each store. Beside, PNJ will focus on developing wellbeing, prosperity and happiness. product lines for the young customer, promoting e-commerce channel, facilitating customer to Chairwoman of Board of Directors interact more through online channels… to build PNJ image an innovative, creative and trendy Ms. CAO THI NGOC DUNG jewelry brand. • Improving productivity by investing in modern equipments; focusing on R & D to create more innovative and unique products; improving production processes to increase labor productivity and optimize costs. We believe that with the strategy focusing on

DIAMOND JEWELRY Sets made and produced by PNJ 13 OPERATION HISTORY ANNUAL REPORT PNJ - 2014 SEEING THE QUALITY IN YOU

MILESTONES OF ESTABLISHMENT & DEVELOPMENT

1988 - 1992 1993 - 2000 2001 - 2004 ESTABLISHMENT AND IDENTIFYING QUICKLY EXPANDING THE BOOSTING BRAND-BUILDING AND DEVELOPMENT STRATEGY NETWORK AND BUSINESS FIELD IMPLEMENTING EQUITIZATION

On 28/04/1988, Phu Nhuan Jewelry Sales In 1994, PNJ Hanoi branch was established, In 2001, PNJSilver brand name was officially Store was found, under the People's Commit- opening the expanding system strategy in the launched to meet the needs of the young tee of Phu Nhuan District when the Vietnam provinces and large cities nationwide later as people who love jewelry along with continuous- jewellery industry was still young, not yet de- Da Nang branch (opened in 1998), Can Tho ly developing PNJ gold jewelry brand strongly veloped, the market still had many limits… branch (opened 1999), PNJ distribution system with many well-known marketing programs those were challenges that 20 founders people had been continuously expanded. with the auspice of the World Gold Council. founded the of PNJ had to pass. This phase was also a milestone in the work On 01/02/2004: PNJ officially implemented In 1992, PNJ was officially named Phu Nhuan of PNJ’s professional branding, PNJ jewelry be- equalization, transformed from a public compa- Jewelry Company after two name changes gan to be exported. Only after several years ny into Phu Nhuan Jewelry Joint Stock Com- from Phu Nhuan Jewelry Sales Store and Phu from inception, PNJ jewelry brand had pany. Also during this time, PNJ was awarded Nhuan Art Jewelry and Foreign Exchange quickly dominated the market, been trusted the Top 500 Leading Retailers in Asia - Pacific Company, as well as identified the develop- by the consumer and proved its prestige. With title and received the 1st Rank Labor Medal. ment strategies was to be a professional jew- honors and awards achieved: "High Quality Viet- elry manufacturer and trader. At this point, PNJ namese Goods" Title certification, 3rd Rank also expanded its operations with the creation Labor Medal, 2nd Rank Labor Medal … PNJ of the East AsiaDong A Bank with 40% con- was also awarded DNV’s Certification of tributed equity. System Quality Management according to ISO standards.

16 17 ANNUAL REPORT PNJ - 2014 SEEING THE QUALITY IN YOU

MILESTONES OF ESTABLISHMENT & DEVELOPMENT

2005 - 2008 2009 - 2014 BRAND RE-LAUNCH AND LISTING STOCK, RESTRUCTURING DEVELOPING HIGH CLASS AND STRIVING TO SUSTANABLY DEVELOP BRAND NAME

This is a stage of strong development on 3/2009, PNJ stock was officially listed on HOSE, gurated the largest Center of jewelry, diamonds Realizing the needs of restructuring the strategy all aspects of PNJ, especially in the devel- increased its charter capital to 400 billion VND. and watches on the system at 52A - 52B Nguyen and operational mechanism to sustainably development of new brands and products, marked 8/2009, PNJ established CAO Fashion Limited Van Troi, Phu Nhuan District, Ho Chi Minh city, op, since 2012, PNJ has hired foreign consultants by the PNJSilver new image re-launch event. Company and added watch business with which is also the headquarters of PNJ - the first to standardize the management system accord- CAO Fine Jewellery brand name was officially world-famous brands in PNJ system. PNJ became gold and silver store established nearly 25 years ing to international standards. born. PNJ was the crown and jewels sponsor the jewelry sponsor for the Miss Earth 2010 held ago and considered one of the the largest dia- for the Miss Universe 2008 held in Vietnam. in Vietnam. mond and jewelry center in Vietnam market. In 2014, PNJ has opened several jewelry center And on 3/4/2008, PNJ officially announced across Vietnam, raising the number of retail jew- the new logo change to celebrate 20 years 18/10/2012, PNJ inaugurated PNJ Jewelry Fac- 2013 marked a year of important events in PNJ elry stores to nearly 173 stores nationwide. of establishment and development with a tory after nearly 18 months of construction. With brand development strategy. On 10/09/2013, professional, more modern image, worthy for a total investment of 120 billion VND, production PNJSilver officially repositioned brand name, Superior business results of 2014 is a outcome a new way. capacity of over 4 million products a year, this launched new brand identity system, opened up of the successful company restructuring which factory was rated as one of the biggest jewelry a "Her world is shining" with a fashion- aimed to sustainably develop, let PNJ become an PNJ had become one of the 200 larg- manufacturing factory in Asia. a b l e p u r ple color and breakthroughs in product Asian leading crafting and retailing jew- est enterprises in Vietnam as announced by and brand development strategy. In parallel, PNJ elry company, dominating in all market UNDP and honored to receive the prestigious gold jewelry brand announced new message Besides, PNJ had continued to upgrade and ex- segments that PNJ aimed in Vietnam. title awarded by the President: 3rd Rank Inde- pand the distribution system, inaugurated new "Seeing the Quality in You” for the purpose of pendence Medal. branches and opened new Jewelry Centers in honoring the “golden” values, the noble qualities Kien Giang, Binh Duong, Bien Hoa, Ha Noi, and of women in modern day society on the platform Da Nang, turned these centers into largest jewel- inherits harmoniously with the traditional values ers in the area. Especially, PNJ has officially inau- of Vietnamese women.

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MERITS & AWARDS

CUP TOP 500 TOP 50 CUP CUP TOP 100 QUALITY PRODUCT OF LEADING RETAILER IN VIETNAMESE BEST BUSINESS BESTOWED TITLE MOST EXCELLENT VIETNAM BEST WORKPLACES ASIA-PACIFIC ASIA-PACIFIC PERFORMANCE ENTERPRISE BUSINESS LEADERS

BEFORE 2014 YEAR 2014

1 PNJ received honor for the title of “Gold 8 PNJ received certificate and trophy for 16 PNJ Labor Union was awarded with Third-Class 01 PNJ was recognized as 2014 Viet- Quality of National Brand’’ 2011 Strong Brands in 2006 and 2007 Labor Medal nam National Brand by Vietnam Government 2 Bestowed Title of National Brand by the 9 PNJ received certificate and trophy for Vi- 17 PNJ was awarded Flag of Honor for “ Strong and Government (2009-2011) etnamese Golden Star Award in 2003-2012 excellent local Labor Union” by Hochimin Labor 02 PNJ was awarded 2014 High Qual- Union (2003) ity Vietnamese Goods Award 3 Award-winner of 16 consecutive Titles of Vi- 10 PNJ received certificate and trophy for Vi- etnamese High-Quality Products etnam Record as “the first enterprise to in- 18 PNJ has been awarded as “ Strong and excellent 03 Ms Cao Thi Ngoc Dung – PNJ’s vest in large scale production and modern local Labor Union” by Central Committee of General Director was voted one of technology in jewelry processing” (2007) Hochiminh Communist Party (1997-2011) 50 Most Excellent Business Leaders 4 PNJ became on of 3 Vietnamese enterprises by Investment Bridge Magazine to receive the award for Quality Product of 11 The President of the State awarded PNJ 19 PNJ Annual report was in top 50 best AR of 2012 Asia-Pacific 2011 with Third-Class Independence Medal (07/2012) 04 PNJ was recognized as one of Top (June 12, 2008) 100 Vietnam Best Workplaces by 5 PNJ joined top 50 Vietnamese Best Business The President of the State awarded PNJ 20 Ms. Cao Thi Ngoc Dung- CEO was awarded First Nielsen’s survey Performance Enterprise (19/06/2013) with First-, Second-, and Third-Class Labor Class Labor Medal Medal in 1995, 2000, and 2003, respectively 6 PNJ join the rank of 500 Leading Retailer in 21 Ms. Cao Thi Ngoc Dung was the only female en- Asia-Pacific and top 3 biggest retailer in Viet- 12 PNJ became leader and receiving Govern- trepreneur in top 5 entrepreneurs that awarded nam (2003-2012) ment Flag of Honor (2002) international Enrst and Young entrepreneur of the year 13 PNJ was granted City Flag of Honor for 20 7 Vietnamese only enterprise that ranked in year development (1998-2008) by City Peo- 22 Ms. Cao Thi Ngoc Dung- CEO received award for top 16 of 500 worldwide largest manufactur- ple’s Committee 50 pioneers published by Vnexpress (16/10/2012) er and retailer published by Plimsoll (Eng- land) 2012 15 PNJ was granted Flag of Honor for “ Build- 23 Cao Thi Ngoc Dung- top 10 successful female ing strong Local Communist Party” by Viet- entrepreneur of 2013, published by Forbes Mag- namese Communist Party (1995-1999) azine

20 21 CORPORATE REPORTS ANNUAL REPORT PNJ - 2014 SEEING THE QUALITY IN YOU

BOARD OF DIRECTORS' REPORT 2014 OPERATION PERFORMANCE REPORT AND 2015 STRATEGIC ORIENTATION 1. 2014 OPERATION PERFORMANCE OVERVIEW:

As Organizing and Operating Charter, 18th Annual General Meeting’s Resolution – Major goals of 2014 were synchronously performed and had positive result as fol- 2014, PNJ’s Board of Directors reports to the General Meeting of Shareholders the lowing: operation

1.1 ENHANCING USAGE OF MANPOWER 1.3 STRENGTHENING CURRENT RETAIL GOAL: SYSTEM AND DEVELOPING NEW SYSTEM I. TASK PERFORMING: After adding personnel for vacant positions, GOAL: in 2014 PNJ has basically completed the or- With current system, the Board has directed 2014 is the third year in 10 year developing strategy (2012 – 2022) and the end of ganizational structure under the new develop- to implement the standard store model, which the comprehensive restructuring’s first stage. ment model. Specialized positions are espe- would begin to change the brand recognition cially trained to meet the evolving needs of of image, colors, light, decorations, product Despite receiving few support signals from the macro-economy, but with the foundation the company. display and professional service manner. With solidly built in the first 2 years of innovation, 2014 still marked a powerful transformation of Beside enhancing the professional capability, the standardization of the system, customers PNJ. This is also a pivotal year, reflecting the initial results of the restructuring stage before the Board also directed to enhance internal will always receive the best quality of service going to the accelerating stage toward long-term strategic objectives. communication so that all employees could at any of PNJ stores nationwide. "PNJ Stand- ards" has been studied and developed based Facing this important milestone, the Board of Directors has directed closely the implemen- understand the vision and strategic goals of the company, thereby earning their trust, in- on modern practice of advanced countries tation of short-term and long-term plans related to production and business operation and such as UK, USA, Italy, Hongkong ... to gradu- implementing resolutions of the General Meeting of Shareholders, ensuring operating in ac- spiring them, making them proud to be a part of an elite community. ally make PNJ one of the Asia's leading jew- cordance with the strategic orientation. elry companies, in accordance with the stra- 1.2 RAISING CUSTOMERS’ SATISFACTION tegic vision. To do this, beside regular training GOAL: on rules of reception and advising customers, sudden / regular checking is focused to moni- Not only bringing good products, PNJ also tor the implementation of the system. brings customers the pride of owning high class, sophisticated products and professional Along with the consolidation of current stores, services from PNJ’s staff. Each salesperson is research of expanding new system is also an intended to consult and take care of customers important goal of the Board. In 2014, beyond with passion and pride, be able to inspire cus- the completion of planned targets, the Board tomers through stories behind the jewelries. also adopted a scheme to expand the network by the end of 2015, ready for the deeper and Newly launched collections in 2014 as Mys- wider development of the PNJ jewelry retail tery, Friendship, Rose, Royal ... are imprinted chain. with PNJ’s creation and lead the fashion trend in Vietnam. Customers therefore always trust in PNJ’s brand, think of this as a way to express lifestyle and class.

24 25 ANNUAL REPORT PNJ - 2014 SEEING THE QUALITY IN YOU

BOARD OF DIRECTORS' REPORT

1.4 ACCOMPLISHING PLANNED TARGETS: 3. ABOUT ORGANIZING MEETINGS OF THE BOARD:

In 2014, PNJ has successfully accomplished the plan in most of important indicators such as gross In 2014, the Board has held 26 meetings; issued 28 minutes, resolutions and decisions. All meetings profit, financial income, earning before tax, earning after tax… complied with procedures prescribed by the company Charter and the Enterprise Law to solve arising Unit: Milion VND problems in time. Minutes of the meetings were made with full signatures of attending Board’s members in the meeting, ITEMS PLAN 2014’s performing Act/plan ensuring the correct form as prescribed by law; records, documents have been submitted to all attend- Total revenue 9,124,297 7,294,174 80% ing Board’s members in the meeting for reference as the Charter. + Include: Jewelry revenue 5,205,448 5,275,349 101% Gross profit from sale and service supplying 677,251 790,172 117% 4. ABOUT THE SUPERVISING OF GENERAL DIRECTOR AND OTHER MAN- Financial income 27,000 48,071 178% AGERS: Operating net profit 275,676 326,306 118% In 2014, the Board has well monitored the management and administration of General Director and Earning before tax 275,676 326,791 119% other managers of the company. Members of the Board who also have role in the Board of Manage- Earning after tax 220,967 256,571 116% ment have to participate fully regular briefings of the Board weekly, monthly, and quarterly. Therefore, Consolidated Earning before tax 279,920 334,966 120% the Board’s members are always aware of Company’s operations as well as well coordinate with the Board of Management to make right decisions, overcome difficulties and strive to achieve targets. Consolidated Earning after tax 202,551 255,816 126% In general, the supervision of General Manager and other managers are maintained regularly and Expanding retail network 12 store 18 store 150% closely, ensuring the stability and safety of company’s operation, complying with the law, achieving Dividend 20% 20% the plan set by the Board and General Meeting’s Shareholders.

Realizing this is a favorable period to develop the network and to take advantage of the economy’s recovery, the Board has approved the promotion of retail system development, rapidly gaining market share in the target markets. This is one of the right decisions when all the new stores opened in 2014 has quickly achieved sales expectations and attracted a large number of mid and high end customers in the area to visit and go shopping, thereby contributed to the higher profit growth rate than planned.

2. ABOUT THE 2014 ANNUAL GENERAL MEETING’S RESOLUTION PERFORMING:

Third term Board of Directors (2012 – 2017) officially began on 14/04/2012 according to 2012 Annual General Meeting’s Resolution. In 2014, the Board has convened 26 periodic meetings, issuing 28 minutes, resolutions, and decisions to perform 2014 Annual General Meeting’s Resolution’s tasks as following: - Paying 2013 2nd phase dividend in cash (10%) and provisioning funds in accordance with Article 5 of Annual General Meeting’s Resolution. - Advance payment of 2014 1st phase dividend in cash: 12% - Choosing Ernst & Young Vietnam to perform the audit for financial year 2014 - Completing the shares’ issuance under optional program for staff and employees in 2013 - Amending the Organizing and Operating Charter of PNJ to suit the Model Charter and actual situation of the company - Dismissing Ms. Nguyen Thi Huong Giang as a Member of the Board and appointing Mr. Andy Ho as a new Member with the tenure of the rest of Third term (2012-2017).

26 27 ANNUAL REPORT PNJ - 2014 SEEING THE QUALITY IN YOU

BOARD OF DIRECTORS' REPORT

II. OPERATION, SALARY AND OPERATIONAL COST OF III. THE BOARD OF DIRECTORS’ STRATEGIC ORIENTATION THE BOARD OF DIRECTORS IN 2015:

1. BOARD OF DIRECTORS’ PERSONNEL: Although 2014 was a relatively successful year for PNJ, the Board realized this was only a transitional stage of the restructuring; achievements in recent years need to be strengthened in order to accelerate On 14/04/2012, the 2012 15th Annual General Meeting elected the Board of Directors for the Third in later years, while ensuring the sustainability of the business. term (2012-2017) with seven members, including Ms. Cao Thi Ngoc Dung as Chairman of the Board In 2015, world economic is generally forecasted to have many uncertainties and recovery is only in and Mr. Nguyen Vu Phan as Deputy Chairman of the Board. expectation of most countries. For Vietnam's economy in particular, although its growth is rather slow 2014 Annual General Meeting has approved the dismissal of Ms. Nguyen Thi Huong Giang from the but more stable than the 2012 – 2013 period. In this situation, PNJ has determined only a solid en- Board due to personal resignation and appointed Mr. Andy Ho as a new member of the Board with gine, a proper strategy and high determination can help PNJ grow fast and steadily to overcome these the tenure of the rest of Third term (2012-2017). Effective date: since 03.03.2014. difficulties. Based on the macro-economic situation and outlook analysis of PNJ’s key operations, the Board has oriented operation in 2015 as following:

2. BOARD OF DIRECTORS’ OPERATION:

Members of the Board have good solidarity, responsibility and comply with jurisdiction and duties of 1. CREATE A FOUNDATION TO ADVANCE IN MANPOWER AND ORGANIZATION: members of the Board of Directors in accordance with the Charter. To achieve this goal, firstly arranging and operating organizing structure by function, while ensuring During the term, the Board has carried on resolutions of the Annual General Meeting very well, com- the strength of online structure. plied with jurisdiction and duties of the Board of Directors in accordance with Company’s Charter and the Law. Building fair and attractive remuneration policies to attract and keep qualified and highly skilled employees. 3. BOARD OF DIRECTORS’ SALARY AND COST : Continuous training and improving employees’ capacity. Constructing the basic standard of core com- petencies for providing and training qualified personnel. Chairman of the Board 26,600,000 VND/month Keeping and promoting PNJ’s unique culture while rapidly developing network and manpower. Deputy Chairman of the Board 20,600,000 VND/month Commissioner of the Board 16,600,000 VND/month 2. STRONGLY DEVELOPING THE DISTRIBUTION NETWORK AND RAISING CUSTOMERS’ SATISFACTION: KEEP CONFIRMING THE LEADING POSITION 4. SALARY AND BONUS OF THE BOARD’S MEMBER CUM COMPANY’S MANAGER: IN CORE BUSINESS SEGMENT About the distribution network, the Board will keep monitoring the development of "PNJ Standards" Currently, PNJ has 3 member of the Board of Directors who also are Company’s managers: while developing network as well as selling, continue to boost average revenue growth on each store • Chairman of the Board cum Chief Executive Officer: and constantly learning, applying international management experiences. Salary and subsidies # 130,000,000 VND/month Bonuses # 2.5 salary month Intensively expanding the system under the sales point diagram studied and approved by the Board. (including 13th salary month and 1.5 ABC salary month) Beside retail channel, wholesale channel is also built according to PNJ standards, offering more profes- • Deputy Chairman of the Board cum Deputy General Director for Technical: sional and quality services than competitors in the same industry. Wholesale channel does not only Salary and subsidies # 79,800,000 VND/month focus on expanding market share, but also deeply exploit the potential of each existing store to increase Bonuses # 2.5 salary month efficiency for the whole system. (including 13th salary month and 1.5 ABC salary month) To improve customer satisfaction, the company will continue to create, innovate and improve product • Commissioner of the Board cum Permanent Deputy General Director: quality. Customer care department is assigned to manage and exploit the data to provide attractive Salary and subsidies # 92,500,000 VND/month aftersales policies, thus having more and more loyal customers. Bonuses # 2.5 salary month (including 13th salary month and 1.5 ABC salary month) Also, PNJ has no member of the Board who are also managers of subsidiaries. Other members of the Board are not involved in managing the Company and its subsidiaries.

28 29 ANNUAL REPORT PNJ - 2014 SEEING THE QUALITY IN YOU

BOARD OF DIRECTORS' REPORT

3. STRENGTHENING AND ENHANCING PRODUCTION CAPACITY:

Investing in modern equipments as well as enhancing employees’ capacity to meet modern management model of the jewelry industry. Developing R&D functions of the factory, allowing direct management department to look for new, innovative ways of processing which are more efficient or to improve the process to increase productivity. Implementing the costs and production capacity optimizing project under the direction of the Board.

4. SALES AND PROFITS GROWTH: With efforts to enhance the production – business operation efficiency, the Board has set growth targets as following: Unit: Milion VND

ITEMS 2014’s performance 2015’s plan Change (%)

Total sales 7,294,173 8,227,568 13% + Include: Jewelry sales 5,275,349 6,703,565 27% Gross profit 790,172 976,516 24% Financial sales 48,071 12,000 -75% Earning before tax 326,790 380,126 16% Earning after tax 256,571 300,000 17% Consolidated Earning before tax 334,966 388,000 16% Consolidated Earning after tax 255,816 306,400 20% Widening retail network 18 new stores 35 new stores 94% Planned dividend 20% 20%

In 2015, PNJ will turn the foundation built in the recent years into lever to take itself to a new stage of faster development. From experiences summed up in the first phase of restructuring, the Board is confident in the successful implementation of strategic goals and bringing the highest benefit to shareholders. Above is the 2014 operation performance report and 2015 orientation of the Board of Directors, respectfully send to General Meeting of Shareholders for reviewing and comments. Regards.

THE MISS OCEAN CROWN made & produced By PNJ 30 31 ANNUAL REPORT PNJ - 2014 SEEING THE QUALITY IN YOU

BOARD OF SUPERVISION'S REPORT 2014 OPERATIONAL REPORT OF SUPERVISORY COMMITTEE OF PHU NHUAN JEWELRY JOINT STOCK COMPANY

- Efficiently divested the investment in SFC, brought 35.87 billion dong profit to the company. I. SUPERVISORY COMMITTEE’S PERFORMANCE OVERVIEW - Strived to develop the distribution network, opened new stores under strict process. Supervisory Committee consists of 03 members; each member of the Supervisory Board continue to - Investing in 2014 has been kept closely to the orientation approved by the General Meeting of share- develop the ability to work independently as well as closely coordinatate in necessary tasks. holders, all investments are forcasted to achieving growth targets as oriented in medium and long-term Keeping closely in touch with PNJ’s Board of Directors and Board of Management, SC has accom- strategies; some investments has promoted the efficiency immediately in the investment’s process and plished the tasks given by the shareholders. contributed to create good business results in 2014. SC has targeted at important matters, focused on controlling safety and efficiency level of information - PNJ’s separated EBT rose 40.7% over 2013, exceeded16.2% of plan. EPS reached 3,396 dong – and operation of PNJ, details as following: strongly rose 40.7% over 2013. Conclusion: Through the monitoring, operation of the BOD, BOM and major businesses of PNJ have Maintaining monitoring financial status of the Company, legality of activities of Board of Directors’ been fully and honestly reflected in the documents (files) of PNJ, compliance with rules, regulations of members, Board of Management’s members (BOM) and other managers. PNJ and the laws. - Monitoring the coordination between members in units such as Supervisory Committee, Board of Directors, Board of Management, shareholders and others as prescribed law. - Monitoring the status and results of implementing the General Meeting of Shareholders’ resolution 2. EXAMINING 2014 PROFIT DISTRIBUTION PLAN (GM) in this term and in 2014, other resolutions, decisions and other directives of Board of Directors - (BOD). Monitoring the implementation of PNJ’s regulations and other provisions. - Assessing the 2014 Financial Statement of PNJ. According to the proposal of 2014 profit distribution plan of the BOD sending to the General Meeting - Performing other functions and responsibilities as prescribed by laws and PNJ’s Regulations. of Shareholders, Supervisory Committee claims that the 2014 profit distribution plan complies with Salary and operational cost of SC in 2014: the provisions of laws and PNJ’s Charter. Dividend payout plan of 25%/par value, exceeding 5% of - Head of SC : 11,300,000 Dong/Month the 20% plan approved by 2014 AGM, including issuing stock dividend with payout ratio of 10%/par - Member of SC : 4,800,000 Dong/Month value to increase charter capital and reduce permanent loan to meet the development of distribution channels and production. Profit to distribute: 255,871,804,695 dong Includes: II. OPERATIONAL PERFORMANCE . Divident payout: 25%/par value, equal to 188,990,819,000 dong PNJ has paid phase 1 dividend in advance with payout ratio 12%/par value by cash in 2014. PNJ has 1. SUPPERVISING BOARD OF DIRECTOR AND BOARD OF MANAGERMENT expected to pay phase 2 dividend of 2014 with payout ratio 13%/par value with 10% by shares and 3% by cash. . Deduction for setting up funds: 63,587,181,000 dong, details: 2014 is the third year of the 2012-2017 term, the economic situation as well as Vietnam and interna- Unit: Milion VND tional market were still experiencing great difficulties with not many positive points. For PNJ, this is the third year deploying the strategic restructuring of the company. This is a very important phase, if the ITEMS Amount Note leadership of the Board has a slight mistake, it will lead to changing strategic objectives or prolong the restructuring process which creates huge waste. With those challenges, Board of Directors and Board Financial Reserved Fund of Management has: - Implemented fully issues raised in the 2014 AGM’s Resolution; objectives and measures outlined in Investment – Development Fund 33,000,000,000 (10% earning after tax) the resolution of the term are reviewed, discussed and implemented uniformly in practical operation Bonus – Welfare Fund 25,587,181,000 of PNJ. Operational fund of BOD – SC 2,000,000,000 - Each resolution of the Board of Directors has strictly comply rules, regulations and of PNJ and the Operational fund of BOM 3,000,000,000 laws. - Evaluated correctly internal resources and potential of PNJ, scrutinized the business environment and operational environment of current and future PNJ, better positioned the vision, mission of PNJ, created .Retained earning: 3,293,804,695 dong. breakthroughs for all strategic activities of the company. - Strictly controlled other investments, efficiently divested investments when suitable. New and expanding investments focus on core jewelry producing and business operation. - PNJ focused on reducing costs by greatly increasing proportion of the self-production to replace the import goods. Priorities are product lines with high efficiency and PNJ has production advantages.

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3. FINANCIAL CONTROLLING Evaluating the fluctuation and growth of PNJ Group Total assets: 2,828,672 million dong, declined 4% over the same period due to deinvestment from 3.1 Figures about PNJ’s equity, assets at 31/12/12014 and PNJ Group’s business performance: SFC. Total assets of PNJ particularly is 2,813,187 million dong, rose 10% over the same period, mainly due to increasing inventories (expanding the distribution channels and stocking products for peak occasions such as 14/2, 8/3…) Unit: Million dong Total equity: 2,828,672 million dong, declined 4% over the same period, in which short-term debt declined 1%, authorized equity declined 2%, shareholder interest declined 3% and long-term debt PNJ PNJ GROUP rose 2% over 2013. Total equity of PNJ particularly is 2,813,187 million dong, rose 10% mainly due NORMS to loans for business operation in the end of year. 2014 2013 % change 2014 2013 % change Authorized equity: Authorized equity of PNJ particularly is 1,266,710 million dong, declined 7.4 bil- 1. Total Assets 2,813,187 2,813,187 110 2,828,672 2,956,698 96 lion dong (0.6%) over 2013 and accounted for 98.3% total authorized equality of PNJ Group. Includes: PNJ’s Chartered Equity is: 755,970,350,000VND, unchanged in 2014. Cash and cash equivalents 269,739 269,739 92 272,305 507,822 54

Short-term receivables 76,313 76,313 118 71,325 76,021 94 3.2 Evaluating some financial indexes (until 31/12) Inventories 1,420,997 1,420,997 145 1,437,416 1,087,344 132 Unit: Million dong Fixed assets 452,200 452,200 104 452,468 550,009 82 Financial investments 531,800 531,800 72 531,864 589,705 90 ITEMS PNJ GROUP PNJ 2012 2013 2014 "% change 2012 2013 2014 "% change Other assets 62,138 62,138 124 63,294 60,808 104 2014-2013" 2014-2013" Commercial advantages 0 84,989 Return on Equity ratio (ROE) 20.49% 12.82% 19.74% 6.91% 19.10% 14.32% 20.27% 5.95% 2. Total Equity 2,813,187 2,813,187 110 2,828,672 2,956,698 96 Return on Charterd Equity ratio (1) 40.38.% 23.38% 33.85% 10.47% 35.74% 25.23% 33.96% 8.73% Includes: Return on Assets ratio (ROA) 10% 6.15% 8.85% 2.70% 9% 7.22% 9.55% 2.33% Net Profit Margin 3.79% 1.90% 2.78% 0.88% 3.45% 2.42% 3.57% 1.15% Short-term debts 1,408,893 1,408,893 122 1,394,565 1,415,480 99 Gross Profit Margin (Sales and Services supplying) (2) 8.91% 7.51% 9.67% 2.15% 8.60% 7.95% 10.98% 3.03% Long-term debts 137,584 137,584 106 137,584 135,200 102 Total Assets Turnover (3) 2.46 3.24 3.18 (0.06) 2.46 2.99 2.68 -0.31 Authorized captital 1,266,710 1,266,710 99 1,296,523 1,318,220 98 Inventory Turnover 6.95 8.78 6.58 (2.20) 6.75 7.87 5.33 -2.54 Minor shareholders interest - 87,798 Fixed Assets Turnover 16.34 19.18 19.85 0.68 16.04 17.41 16.21 -1.20 3. Business performance Debt to Asset Ratio 51.17% 52.45% 54.16% 1.72% 52.65% 50.25% 54.97% 4.72% Sales revenue 7,294,174 7,294,174 96 9,297,810 8,973,965 104 Current Ratio 1.19 1.21 1.31 0.10 1.17 1.19 1.29 0.10 Gross sales of Business 790,172 790,172 132 889,235 669,687 133 Quick Ratio (4) 0.41 0.45 0.28 (0.16) 0.41 0.34 0.28 -0.06 Financial income 48,071 48,071 182 18,739 23,798 79 Other sales income 1.510 1.510 102 2,668 3,181 84 Note : Operational expenses (416,883) (416,883) 128 (484,572) (375,869) 129 (1) Charter capital, calculated on weighted average. Financial expenses (95,054) (95,054) 153 (90,254) (84,970) 106 (2) Calculated separately for Sales and service rendering operation. Other expenses (1,026) (1,026) 89 (1,586) (2,240) 71 (3) (Operating revenues for sales and service rendering)/(Total average assets). (4) Given characteristics of the inventory in the jewelry sector, quick ratio may include substantially Earning before tax 326,790 326,790 136 335,034 233,007 144 gold (which is also inventory), so basically this ratio will be much higher. Enterprise income tax (70,308) (70,308) 121 (79,455) (64,190) 124 Deferred enterprise income tax 219 219 99 293 220 133 In general, basic criterias used to evaluate the operational and financial efficiency of PNJ Group and PNJ in 2014 also show stability and safety, suggesting that PNJ has a good governance system and ef- Earning after tax 256,701 256,701 142 255,871 169,037 151 fective operations.

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4. EVALUATING THE COORDINATION OF SUPERVISORY WITH BOD, GENERAL DIRECTOR, OTHER MANAGERS AND SHAREHOLDERS

In 2014, Supervisory Committee and Board of Directors, General Director and other managers has always closely collaborated for the benefit of the Company, shareholders and complied fully with the provisions of Internal Regulation, Company’s Charter and laws. Board of Directors and General Direc- tor have always created favorable conditions for Supervisory Committee in implementing functions, duties and jurisdition. SC has not received any requests or complaints of shareholders in 2014. SC has also regularly monitored the disclosure of the Company to ensure shareholders receive information adequately, correctly and promptly. III. CONCLUSION - RECOMMENDATION

Strategies of this term is being executed to BOM by BOD very well. This term is very important due to the effects of the company’s restructuring strategies and it will significantly affect the development of PNJ in many coming years. There are many indexes exceeding the expectation and PNJ still has to go a long way to achieve its vision and missions while the 2012 – 2017 term has only 2 years left. In this situation, SC recommends BOD and BOM following things:

1. RECOMMENDATIONS FOR BOARD OF DIRECTORS

BOD should consider to announce the vision achieved and relocate what exactly has to be done, from that propose the unified strategy. BOD should focus on directing to achive bigger success in building foundation and pillars to operate the company; completing the organizational and personnel structure; properly exploiting the smart IT administrating system; expanding the retail network and other sale channels; enhancing the producing and supplying capacity; controlling the finance, maintaining the cash in flow to profit; upgrading the integrated administrating system; enhancing the capacity of R&D department to develop new products and technologies. About the cultural orientation in the company: summarizing, announcing new corporate culture, PNJ is where the professionals and successfuls gather. PNJ is a creative and socially responsible company.

2. RECOMMENDATIONS FOR BOARD OF MANAGEMENT

Synchronously exploiting internal investments which formed existing resources, preventing waste after investing. Improving the efficiency of supply chain management, further reducing inventory costs. Increasing the efficiency of each process of PNJ through process measuring and improving; developing IT integrated software to exploit more effectively data warehouse of company. Above is the 2014 PNJ Operational Supervising Report, Supervisory Committee respectfully sends to 2015 Annual General Meeting. Supervisory Committee would sincerely like to thank PNJ’s Shareholders, Board of Directors, Board of Management, subordinate units for trusting and closely cooperating effectively. We hope to get close cooperation in the future.

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I. AN OVERVIEW OF VIETNAM ECONOMIC SITUATION AND 2014 GOLD PRICE CHART GOLD MARKET IN 2014: 37,400

1. STABILIZING MICRO ECONOMY: 37,100

Despite many challenges, 2014 still marked a stable and growing year of the micro-economy. Inflation 36,800 rate has been maintained in a low level and GDP firstly exceeded target planned in 3 years, reached 5.98%. Other indexes in industry and retail also highly grew, showing a recovery of gross demand. 36,500 This should be considered as an achievement of Vietnam economy rather than the result of global 36,200 economic stability. On the other hand, world economy has had a tough year with the intense conflicts between Russian 35,900 and the Western countries, the rising of the IS, the slow growth of China economy, Ebola outbreak… these events have affected the world’s growth rate severely. 35,600

35,27035,300

35,000 2. VIETNAM GOLD MARKET: 34,700

2.1 Circular 22/2013/TT-BKHCN dated 26/09/2013 – New quality management policy 34,400 protected consumer better and gave PNJ opportunity to widen market segment: 01/2014 02/2014 03/2014 04/2014 05/2014 06/2014 07/2014 08/2014 09/2014 10/2014 11/2014 12/2014

Circular 22/2013/TT-BKHCN dated 26/09/2013 aimed to make jewelry gold quality transparent and better protect consumer, its presence was a turning point for Vietnam jewelry gold market.After a year striving to perform Circular 22 about jewelry gold quality management of government agencies, Vietnam jewelry gold market has been expected to be more transparent, and this is an opportunity for large and well-branded firms with a broad network and outstanding producing scale like PNJ. In other words, indirect effect of Circular 22 created a really good advantage for PNJ to quickly grow its market share, based on the prestige of reliability and sophistication of products that PNJ has constantly built for more than 20 years.

2.2 Vietnam jewelry gold market’s gross demand grew in term of quantity but declined in term of value due to gold price falling:

With general difficulties of the economy, it’s able to understand that world jewelry gold’s demand has deeply declined in almost major markets. China market’s price fell 39% over the same period last year, Japan’s price fell 17%, India’s price fell 4% and US’s price fell 1% over 19% of average rate. Vietnam was not an exception. By the end of 2014, total value of jewelry consumed in the whole market was 519 million USD, fell 8% over the same period due to gold price falling despite rising in sales by 4%. (Source:World Gold Council 2014 Report)

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2.3 Vietnam jewelry gold market in 2014 has seen a strong growth of market share of well-branded retailers, especially PNJ:

Despite gross demand declining, 2014 has still seen the rapid growth of well - known jewelry retail chain – a strong proof for the trend of using jewelry brands with a large network. PNJ, a brand with 25 years of credibility advantage and a network of nearly 170 retail stores nationwide, has lead the trend and quickly expanded market share.

RETAIL MARKET SHARE FOR PNJ JEWELRY 2009 - 2014 (%) NUMBER OF STORE 2009 - 2014 21%

169 157 147 151 138 14% 123 13% 13% 12% 12%

2009 2010 2011 2012 2013 2014 2009 2010 2011 2012 2013 2014

(*) Source:World Gold Council 2014 In 2014, PNJ closed some Jemma stores to build multi-brand stores which sell different product lines.

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II. 2014 BUSINESS PERFORMANCE: 1. 2014 BUSINESS OPERATING RESULT – MOST OF MAIN INDEXES REACHED 2. 2014 SALES – JEWELRY SALES GREW OUTSTANDINGLY, IN LINE WITH CORE OR EXCEEDED THE PLANNED TARGET BUSINESS SEGMENT DEVELOPMENT STRATEGY: Sales structure changed significantly compared to the same period, particularly bullion gold sales After many years pursuing high-end jewelry line with an absolute trust on the growing potential of occupied only 28% total sales instead of 43% as in 2013, jewelry gold revenue rose from 54% in Vietnam market, 2014 marked this shift clearly. Consumers looking for jewelry gold products now 2013 to 70% in 2014. These figures represented for PNJ’s determination in developing the core busi- care about the need of self-actualization and one’s own lifestyle rather than speculating as before. This ness segment, focusing on improving its gross profit rate. Two major factors affected this change are was covered in PNJ’s strategic orientation, so that PNJ could quickly seize the opportunity and turn it the Board’s long-term strategy and the market’s consumption trend. About the strategy, bullion gold into impressive figures. would still be traditional business segment; jewelry gold would be intensively invested to grow rap- After a slow growing period due to focusing on reconstruction, 2014 saw a strong acceleration of PNJ. idly and sustainably in coming years. About the market in 2014, gold price changed insignificantly, By the end of 2014, PNJ’s gross profit was 790 billion VND, rose 32% over the same period, exceeded customers therefore were not interested in gold bullion, in long-term, this is the Government’s goal to target 17%. EBT reached 326 billion VND, rose 36%, exceeded target 18%. EAT rose 41%, exceeded convert the accumulated gold into cash in circulation. target 16%. This is a great encouragement for what PNJ has determined to perform for the last 2 years. An appro- 2014 SALES STRUCTURE priate development strategy and a spirit of daring to change, daring to challenge to achieve the goals are the contributors for PNJ’s success in recent years. 0.20% 2.09% 0.12% 2014 BUSINESS OPERATING RESULT – PERFORMANCE VS PLAN

Unit: Million VND 27.68% 2014 +/- (%) Perf/Plan GOLD BAR ITEMS PLAN 2014 2013 Accumlated Accumlated PNJ GOLD Total revenue 9,124,297 7,294,174 7,603,581 -4% 80% SERVICES + Include: Sale from jewelry 5,205,448 5,275,349 4,296,745 23% 101% Gross profit from sale and service supplying 677,251 790,172 599,778 32% 117% 69.91% WATCH Financial income 27,000 48,071 26,361 82% 178% PNJ SILVER Financial expenses 85,000 95,054 62,134 53% 112% Selling expenses 253,400 310,940 232,532 34% 123% G & A expenses 90,175 105,944 91,804 15% 117% Unit: Million VND Operating net profit 275,676 326,306 239,510 36% 118% 2014 2015 CHANGE +/- (%) Earning before tax (EBT) 275,676 326,791 240,111 36% 119% Earning after tax (EAT) 220,967 256,571 182,394 41% 116% Bullion gold 2,018,825 3,268,239 -38% Consolidated EBT 279,920 334,966 233,007 44% 120% Jewelry gold 5,099,662 4,184,756 22% Consolidated EAT 202,551 255,816 169,037 51% 126% Jewelry silver 152,280 131,427 16% Widening retail network 12 cửa hàng 18 cửa hàng 150% Watches 14,726 10,422 41% Dividend 20% 45% Services 8,680 8,737 -1% 7,294,174 7,603,581 -4% (*) 2014 dividend will be paid 15% by cash and 30% by shares. Total revenue

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2.1 Strong growth in core business segment, wholesale and retail jewelry gold business: 2.1.1 PNJ Gold – Retail Business: In 2014, jewelry gold sales accounted for 70% total sales and 85% gross profit, affirmed itself a core Retail business plays a major role in sales and business operation of PNJ. And in this year, jewelry gold sales rose 22%, highest rate in 3 consecutive gross profit growth rate of PNJ, and this busi- years. This growth rate is the outcome of a strong investment on technology, training, reorganizing sale ness segment has been concretely invested for staff and retail operation and ERP support in managerment. recent years, especially in strategy 2012-2022 % period. This business segment will still be invested concentratedly and hopefully keep growing strongly in 70 coming years. Total Revenue

TOTAL REVENUE AND JEWELRY GOLD REVENUE IN 2010 – 2014 GOLD JEWELRY's REVENUE AND GOLD RETAIL SALES Unit: Million VND Unit: Million VND

Gold Jewelry Revenue Total revenue Gold Retail Sale Jewelry Gold revenue 17.355 Growth Rate Of Gold Retail 37% Jewelry Gold Sales Growth Rate 5.100 13.078 42% 4.185 33% 3.541 3.647 22% 2.934 21% 7.604 7.294 6.428 15% 2.280 5.100 13% 1.609 3.647 4.185 1.406 1.586 1.550 2.934 3.541 -2% 4% 3% 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014

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2.1 Strong growth in core business segment, wholesale and retail jewelry gold business:

2.1.1 PNJ Gold - Reatail Business

In 2014, retail jewelry gold sales reached ing jewelry retailers on the world, separat- Customers increasingly prefer high quality Network Expanding (Place): 2,280 billion, rose 42%;gross profit rose 36% ing function and responsibility of some units, jewelry products such as diamonds, colored In 2014, PNJ exceeded the network expand- over the same period, contributed 31% to therefore enhancing the coordinating and gemstones, highly sophisticated jewelry ... ing plan, adding 18 stores nationwide, focus- gross sales and 74% gross profit. Compar- managing effects. In addition, added senior which are the advantage of PNJ. These move- ing at level 1 and level 2 cities. Most of the ing to 4% growth rate of 2013, these figures manager staff to enhance retail managing ca- mentsare the beginning of an inevitable trend new stores are large scale stores,located in represented for an outstanding result and an pability of the entire system. as the market grows and customers’demand prime locations and quickly generate buzz, initial success of the comprehensive reforma- In spite of quickly increasing in store num- is increasingly higher. And with it legacy, help PNJ dominate the market. tion in retail operation, especially when Viet- PNJ has a solid foundation to be ready for a ber nationwide in 2014 and the increasing of Newly opened stores have quickly achieved nam’s total jewelry demand in 2014 declined staff at local stores, PNJ was still outsanding breakout stage of development in all aspects, 8% over the same period. (World Gold Council exactly the goal set: "Vietnam leading jewelry expected revenue and profit, contributing in training – coaching and cultural integrat- 10% of extra total retail sales in 2014. 2014 Report) ing, ensuring the homogenous service quality company in middle and high-end segment." Same store sales grew 25% in 2014 and 18 throughout the expanding process. PNJ has taken advantage of the database on By the end of 2014, PNJ had 173 stores in- newly opened stores has contributed 10% on advanced ERP platform to coordinate prod- cluding 80 gold jewelry stores (independent additional retail sales. Products and Customer Service (Product): ucts and optimize product categories in gold jewelry stores and general stores), 85 sil- To achieve these impressive results in 2014, stores, increase the supply of products prop- ver jewelry stores and 8 Cao Fine Jewellery Keep promoting the reliability and sophistica- erly and in line with tastes of customers. independent stores. PNJ has applied breakthrough improvements tion of products, PNJ’s long-term strategy is in managing and administrating retail opera- Orientatingthe consulting staff at the store to With experienced foundation and standard- creating the difference about product’s qual- focus on consulting best suited solutions to tion at following key factors: Human Resourc- ity – a key element to position a brand class ized network expansion process, this activity es (People); Products and Customer Service the needs of customers has contributed signifi- is expected to be accelerated in the coming and earn customers’ trust. To do this, PNJ has cantly to the satisfaction of the customers. Ac- (Product); Brand Recognition and Marketing constantly invested onlatest technologies and years to strengthen the leading and dominant (Promotion) and Network Developing (Place). cording to the market research department’s positionof PNJ in Vietnam jewelry industry. manufacturing methods in the world. Because latest study, improving the quality of service of right investment decisions, PNJ has success- Human Resources (People):: itself has increased the level of customer sat- fully manufactured jewelry by Italian technol- isfaction and frequency of successful transac- 2014 has marked significant change in coach- ogy, diamond jewelry… These products were tions significantly over the same period. ing and training PNJ jewelry consulting staff loved by customers due to equivalent quality to enhance sale skills and serving manner at with imported but lower price. The goal in the Marketing (Promotion): stores. It can say that investing on this staff is next 2 years is completely replacing imported one of top priorities of PNJ in 2014. Exam- products with self-manufactured products. Advocating standardizing recognizedimage at the stores after completing the standard ining and assessing programs are regularly Investing on technology as well as manpower performed to quickly detect weak points in store model has created synchronization and for designing staff to bring unique designs positive in the whole system. the system as well as potentially capable that lead the fashion trend and make a sym- candidates to promote. Consumers therefore Promotional activities aiming to increase the bol for PNJ. In 2014, PNJ has launched vari- visitors to the stores had initial success and always feel satisfied about the service when ous notable collections with hundreds of jew- they come to PNJ. will continue to develop in the future. elry designs. This means the tireless creativity Promotional activities for important events in- Beside, excellent remuneration policy, ap- of designing staff has brought more choices to cludingWedding Season, March 8 Day (Inter- propriate acknowledgement for achievements the customers as well as to be the trend crea- national Women Day), October 20 Day, Val- also contribute significantly to exhort this tor in Vietnam jewelry market. entine Day ... are planned and implemented staff’s spirit. Besides subjective changes, it must mention correctly. This has contributed to boost sales 2014 is also the year when the retail network the impact of objective factors such as macro- and generate buzzes for PNJ on the market. finished converting to managing under well economic situation, consumer trends ... these practicing standards structure of world lead- factors are the causes to help boost sales.

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2.1 Strong growth in core business segment, wholesale and retail jewelry gold business: 2.2 Exporting: 2.1.2 Wholesales:

Targeted to nationwide enterprises, in 2014 PNJ opened Buon Ma Thuot branch to promote busi- PNJ is proud to be able to meet strict standards of foreign partners, thus become the only Vietnam firm ness in the Central –Tay Nguyen region. With the opening of this branch, PNJ has currently had five to export jewelry. Through exporting, PNJ does not only introduce "made in Vietnam" jewelry brand wholesale centers in the Northern region, Central – Tay Nguyen region, HCMC and Mekong Delta to the world but also build long-lasting relationships with partners in the industry and other industries, region, rapidly expanded market share in most important areas across the country. which help PNJ easily accessible with new production technology, current fashion trends, advanced In 2014, total sale quantity rose 17%, sales rose 36% over the same period. PNJ has not only pro- management methods, all of which enhancePNJbusiness performance. ducedcommon jewelry products but also targetedspecific gifts ordered by companies with high 2014, gold exporting sales was 76 billion, fall 12% over the same period mainly due to declining gold demands on crafted level, unique designs. PNJ is currently considered the leading reliable address price, however public salesrose 20% over the same period. Silver exporting sales rose 5% over the for large companieswhich are inneed of high quality jewelry gifts, medals, logos ... same period. Although the increasing is not outstanding, in the situation of unstable economy of the world, especially the US market - the main exporting market of PNJ - showed no signs of growth in demand, this is an encouraging result for PNJ sales team.

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2.3 PNJSILVER: 2.4 Gold bar:

As highlighted in official reports as well as messages to investors in recent years, bullion gold is not the main business of PNJ, it is just a traditional business with a brand strategy. PNJ is one of few companies licensed to tradebullion gold in Vietnam, this earns customers’ trust and is the first choice when talk to gold products. Thus, despite the marginal profit only 0.5%-1% and contributing only 2% of gross PNJSILVER SALES IN 2010 – 2014 profit, this will still be one of PNJ’s business activities. However, fluctuations in this business do not significantly affect the overall result of the company. Unit: Million VND

37% 2.5 Others (watches, services): 35% Grown 164.861 Reached 23.3 billion in sales, accounted for 0.3% 155.778 151.290 total sales. In this segment, watch salesrose 41%. 131.427 Despite not contributing significantly to gross 120.497 sales, this is still a potential business segment 15% due to available retail outlets and watch sales has % grown steadily over 40% a year. 41 Year on year -6%

-16% 2010 2011 2012 2013 2014

After re-launching PNJSilver with a more luxurious image and many marketing strategies aimed to over 20-year-old customer, PNJ silver sales has achieved the growth rate of 15%, an impressive figure after 2 years of negative growth. In 2014,PNJ has not openedany silver-only jewelry stores, butcombined selling with gold jewelry in large gold jewelry stores. This combination helped PNJSilver expose more to high income customers, and PNJ stores will be known as one-stop jewelry shopping place.

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III. KEY MISSIONS PERFORMANCE: 1. ENHANCING HUMAN RESOURCES’ EFFICIENCY: In 2014,PNJ has completed the organizational structure under the new model, filling up key positions and consolidating KPI system to individual level. Applying competitive remuneration policies, focusing on the production and sales department. Investing in training is regularly carried out to improve manpower’s quality to meet company’s operating and developing needs via internal training programs and training with international experts.

2. STRENGTHENING AND DEVELOPING THE SYSTEM: In 2014, PNJ has invested in reconstructing thesystem’s infrastructure and the standardized recognized image for stores, brought a new face to the whole system. Completing product distribution process to optimize capital, optimize supply chain and products portfolio in stores. Planning on opening new stores and new sales channels in accordance with market demand. Improving the standard storemodel to increase operational efficiency. Opening the Tay Nguyen Wholesale Center, increased total wholesale centers to 5nationwide, enable market developing to almost all provinces across the country. Besides expanding the market, PNJ also focuses on developing the wholesale channel in depth to fully exploit existing markets and customers.

3. RAISING CUSTOMER SATISFACTION: In 2014, PNJ has built a standard store model, unified from recognized image to serving manner and quality of service provided to customers. Raising customer satisfaction through training skills and serving manner of staff toward customers (internal and external). Raising customer satisfaction through products and services. Developingparticular technical service center (warranty, manufacturing according to specific requirements ...). Developing business policy, customer policy to bring customers more benefits, which increases customers’ loyalty to the brand.

4. GROWING SALES AND PROFIT: To optimize sales per store and per customer, in 2014PNJ has simultaneously implemented projects aimed to enhance the service’s quality, ensure the products’ quality and quantity, showcaseproducts properly, combine with marketing to increase number of visitors to the store, and build timely and worthy reward policy for consulting staff at the stores. Thanks to the research and thoroughly preparation before implementingnetwork expanding project, PNJ’s plansucceeded beyond expectation and all the new stores has quickly reached the expected revenue, increased 10% of retail sales over the same period. Increasing industrial stages in production, contributing to reduce wastage and improve labor productivity. Current loss ratio of PNJ is <1%, well below comparing to the average level of jewelry manufacturing industry in the world, contributing to increased the marginal profit of PNJ

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BOARD OF MANAGERMENT'S REPORT

IV. RISK MANAGEMENT: 3. RISK MANAGEMENT IN HUMAN RESOURCES: In an unstable business environmentlike Vietnam, effective risk management is a big challenge for In 2014, PNJ has reviewed and rebuilt the remuneration policy to guarantee income and benefits so it every company.Knowing how to seize the opportunity will elevate one company to big success, but can be more comprehensively competitive than average level of the labor market. only companies withaneffective risk management systemcan turn this opportunity into sustainable Beside attracting the talented, PNJ has also focused on training to improve, enhance the professional development, and this is the aim of PNJ. capabilities and provide a clear promotion roadmap to each employee to ensure the long-term commitment. 1. RISK MANAGEMENT IN BUSINESS STRATEGY: Also, it must not exclude the bond between PNJ employees formed by PNJ culture, where people at- After years of building and developing, PNJ is proud to be the leading jewelry company in Vietnam. tach to each other and dedicateto the benefit of the company as a whole family. Its products do not only bring pride to the customers but also become a Vietnam’s outstanding repre- In 2014, PNJ was one of 100 Best Workplaces in Vietnam as Nielsen’s survey, and ranked 2nd in Best sentative in world arena. What made the difference between PNJ and other jewelry companies? Those Vietnam Retail Companies. areright development strategy, appropriate to each developing stage of the market, and these are the decisive factor, bringing PNJ step-by-step solidly and deeply marked in consumers’ hearts. 4. FINANCIAL RISK MANAGEMENT: Development strategy is built on the basis of comprehensive studies on macroeconomic situation, Risk of inventory: Inventory management is a very important factor to each retail company includeP- PNJ’s competitive advantage over competitors in the industry; thereby PNJ can determine the long- NJ, contributing to the performance of the company. term vision and goals for each stage of development. Understanding this matter, inventory management has beencarried out carefullyfrom the storage, Toachieve those goals, the Board has actively promoted internal communication, help all employees based on assessments of market demand to distribution and regularly monitoring to take timely meas- understand and comply with the strategic orientation, together lead PNJ to the target. ures to boost sales with slow-moving goods. In 2014, inventory turnover of most product groups rose, increased operational efficiency and savedfund for the company. 2. RISK MANAGEMENT IN OPERATIONAL ENVIRONMENT: Risk of capital: The finance department is responsible for building long-term financial plan, budgeting Policy risk: Although Vietnam is determined a very potential market for jewelry industry, but just and controlling activities under budget, so the company can take the initiative in allocating resources like other emerging markets, the economy always has potential uncertainties and risks. Especially rationally, improving the efficiency of capital. for a sensitive market like gold market, the policy changing is inevitable before it canbe completed. Therefore, to reduce risks, PNJ has always focused on observing policies and major orientations of the Government, from that made appropriate changes in the strategies. At the same time, PNJ actively researched and proposed on building and developing solutions for Vietnam jewelry industry to Gov- ernment agencies and gradually marked its name on the map of countries with large scale jewelry producing and exporting in the world. Risk of purchasing power decreasing due to economic cycle: This is a general risk that any company- can experience, but with a branding strategy aimed at multiple customer segments andvarious product lines, PNJ has partially limited this risk. Risk of unstable input price:This risk is relatively well controlled through analyzing, forecasting and managing the company's price. With the support of ERP software, cost and inventory controlling become easier and more efficient. Not only applyingadministrating methods, product’s strategic orientation is one of the fundamental elements to reduce price risk. In the future when the brand is the main factor of cost,this risk will be reduced much more.

54 55 ANNUAL REPORT PNJ - 2014 SEEING THE QUALITY IN YOU

BOARD OF MANAGERMENT'S REPORT

V. FINANCIAL RATIOS VI. SUBSIDIARIES’ PERFORMANCES: After divesting from the SFC, PNJ had only two subsidiaries:CAO Fashion Limited Company (CAO Fine Jewellery) and PNJL Assessment Limited Company. Unit 2014 2013

Liquidity’s indexes 1. CAO Fine Jewellery o Current ratio Times 1.29x 1.21x With 10 - billion authorized capital, CAO’s sales reached 40.8 billion, fall 5.3% over the same period; o Inventory turnover Turn 4 5 net profit reached 1.2 billion. As known, despite positive signs from the economy, this is still not the time consumers willing to pay for luxurious products, so 2014 was still a tough year for CAO. How- o Inventory day Days 81 76 ever, the Board has determined CAO is a brand strategy and the investment needs long time to catch Performance’s indexes the trend and certainly it willbring impression when the time comes. In the present, CAO has already o Gross Profit Margin (GPM) % 10.9% 7.9% been rated as a high-end jewelry brand by customers, comparable to international brands, and this is the most important success of CAO. o Return on Sales (ROS) % 4% 2% 2. PNJL: o Return on Assets (ROA) % 9% 7% Major in providing gem and diamond testing services. o Return on Equity (ROE) % 20% 14% - Gross sales in 2014 reached 11.8 billion, rose 13% over the same period. - Gross profit reached 8.4 billion, rose 17% over the same period. - Earning before tax reached 6.1 billion, rose 21%. Indicators of solvency do not change significantly over the same period, because working capital is Along with gemstone purchasing trend, PNJL’s sales have constantly increased. PNJL brand has been mainly from loans. Unlike other companies, PNJ's inventory is gold and precious stones which have rated as the most credit-worthy brand in the field of diamond and stone quality control. high liquidity, thus significantly reducing the risk of liquidity risk. Inventory day increased over the same period clearly reflected the business situation in 2014 when jewelry segment gradually accounted for higher proportionthan bullion gold segment. Despite low inventory days, bullion gold does not contribute significantly to gross profit. Therefore, the increasing of inventory daysmay press the equity situation but generally is a positive trend due to much higher marginal profit. Regarding each product group, inventory day of both gold and silver jewelry are reduced by 4% and 12% over the same period. All profit indicators were higher than the same period, reflecting an efficient year of the entire company.

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BOARD OF MANAGERMENT'S REPORT

VII. CONCLUSION: Ending 2014 with impressive figures, the entire staff of PNJ believed in the strategy proposed.Investors could also see the effectiveness in the management of the Board. This is aninitial success as the foundation of the manpower, the system and new strategy has gradually formed a complete and smooth mechanism. From what has been achieved, the Board believes that 2015 and subsequent years will be a period of stronger growth, letting PNJ quickly achieve the goal: “Become the leading jewelry manipulating and retailer in Asia, Holding top rank in mid and high-end segments in Vietnam”

RUBY JEWELRY Sets made and produced by PNJ 58 STRUCTURE OF PERSONNEL ORGANIZATION & ENTERPRISE ADMINISTRATION ANNUAL REPORT PNJ - 2014 SEEING THE QUALITY IN YOU

PNJ' ORGANIZATION CHART

GENERAL SHAREHOLDER COUNCIL

BOARD OF SUPERVISION

BOARD OF DIRECTORS

BOARD OF DIRECTORS OFFICE

CHIEF EXECUTIVE OFFICER (CEO)

REPRESENTATIVE MANAGERS (ISO)

DEPUTY DIRECTOR DEPUTY DIRECTOR DEPUTY DIRECTOR DEPUTY DIRECTOR (PERMANENT)

FINANCE AND ACCOUNTING MARKETING DEPARTMENT PNJ JEWELRY FACTORY HUMAN RESOURCE DEPARTMENT NORTHERN BRANCH DEPARTMENT

ADMINISTRATIVE DEPART- EFFICIENCY MANAGEMENT CENTRAL BRANCH DESIGN DEPARTMENT E-COMMERCE DEPARTMENT MENT DEPARTMENT

WESTERN BRANCH WHOLESALE DEPARTMENT IT DEPARTMENT

RETAIL SALE DEPARTMENT EXPORT DEPARTMENT

SUPPLY DEPARTMENT

SERVICE CENTER

62 63 ANNUAL REPORT PNJ - 2014 SEEING THE QUALITY IN YOU

BOARD OF DIRECTORS

Mrs. CAO THI NGOC DUNG Mrs. NGUYEN THI CUC Mr. NGUYEN VU PHAN 1 CHAIRWOMAN 2 MEMBER OF BOD 3 VICE CHAIRMAN Year of birth: 1957 Year of birth: 1960 Year of birth: 1956 Nationality: Vietnam Nationality: Vietnam Nationality: Vietnam Professional skills: Bachelor of In- Professional skills: MBA, Univer- Professional skills: dustrial Commercial Economics ( Uni- sity of Economics Hochiminh City o MBA of University of Technology versity of Economics Hochiminh city) Hochiminh City o Forging and Mechanical Engineer, Uni- versity of Technology Ha Noi

EMPLOYMENT HISTORY EMPLOYMENT HISTORY EMPLOYMENT HISTORY 1984 - 1985: Deputy Manager of Plan- 1983 - 1988: Officer of Statistic and 1978 -1985: Head of Technical Depart- ning department, Phu Nhuan Synthesis Planning Department, Phu Nhuan ment, Caric Factory Company District 1985-1987: Technical Officer of Syn- 1985-1987: Planning Manager of Phu 1988-1995: Chief Accountant of Phu thetic Equipment Company ( Hochiminh Nhuan Agricultural Foods Company Nhuan Jewelry Company Industrial Department) 1988-2003: General Manager of Phu 1996-2003: Deputy Manager of Phu 1987-1996: Technical Officer of New Nhuan Jewelry Company Nhuan Jewelry Company Technology Company (COTEC), Vietnam 1990: General Manager of Phu Gia 2004- present: BOD member and Scientific Institution, Hochiminh Branch Credit Center Deputy Director of Phu Nhuan Jewelry 1996-1999: Deputy Manager of Garment 1991-1992: General Manager of Phu JSC factory, Binh Duong Manufacturing and Nhuan Trading Company 2007- present: Head of Dong A Bank Import-Export Company 1992-1997: Chairwoman of Dong A ‘s Board of supervision 1999-2003: Deputy Manager of Phu bank Nhuan Jewelry Company 2003-present: Chairwoman of Dong 2004-present: Vice Chairman and A Land Deputy Director of Phu Nhuan Jewelry 2005-2011: Chairwoman of Dai Viet JSC Energy JSC 2004-present: Chairwoman-CEO of Phu Nhuan Jewelry JSC

DIAMOND JEWELRY Sets made and produced by PNJ 64 65 ANNUAL REPORT PNJ - 2014 SEEING THE QUALITY IN YOU

BOARD OF DIRECTORS

Mr. NGUYEN TUAN QUYNH- MEMBER OF BOD Mr. ANDY HO - MEMBER OF BOD MRS. PHAM VU THANH GIANG - MEMBER OF BOD MRS. NGUYEN THI BICH HA - MEMBER OF BOD 4 5 6 7 Year of birth: 1972 Year of birth: 1972 Year of birth: 1983 Year of birth: 1969 Nationality: Vietnam - Nationality: America Nationality: Vietnam Nationality: Vietnam Professional skills: - Professional skills: Professional skills: Professional skills: o PHD Degree in Business Administration, Para- o MBA of Massachusetts Institute of Technology o Master of banking and finance, University of o MBA, Vanderbilt University, USA mount University o Bachelor of Accounting, Colorado University Applied Sciences, Northwestern Switzerland. o Applied economics in policy analysis Certificate, o MBA of Hochiminh City Open University. o Bachelor of Banking and Finance, Banking Fulbright Program, Vietnam o Bachelor of Business Administration, University of EMPLOYMENT HISTORY University, Ho ChiMinh City o Bachelor of Foreign Trade, University of Economics Economics Hochiminh City 2000 - 2004: Investment Manager at Dell Computer Hochiminh City EMPLOYMENT HISTORY EMPLOYMENT HISTORY Corp (America) 2005 - 2006: AON Vietnam Staff EMPLOYMENT HISTORY 1994 - 2005: 2004 - 2007: Investment Manager at Prudential Fund 2007-present: Investment Manager, Mekong 1992 - 1993: Staff, Sales Department of Phu Yen Import- o Assistant CEO, Deputy sale manager of Gas Management Capital Export company, Hochiminh Branch Saigon Petro 2007 – Present: CIO of Vina Capital representative office 1994- 1999: Sale manager of Phu Yen Import- Export o BOD Member of Sai Gon Phu Yen oil and gas JSC company, Hochiminh Branch o BOD Member of Sai Gon Nghe An oil and gas JSC 2000-2001: Deputy Director of Saigon 1 Joint Stock 2005-2007: Deputy Director of Saigon Gas Company 2007-2012: Deputy Director of Phu Nhuan Jewelry 2001-2005: Deputy Manager of Dong A Bank JSC 2006-2008: Deputy General Director of Dong A Bank 2007-2011: Vice Chairman of Dai Viet Energy JSC 2006-2009: Consultant, BOD member of Binh Minh 2007-2010: Chairman of Hong Vina Gas Company Community Development 2007- Present: Chairman of Doanh Chu Investment 2010- 2012: Senior Consultant of College of Business and Training JSC Administration and Management (CBAM) 2008- Present: Chairman of Saigon Fuel JSC 2013- present: Deputy Director of Life’s Value Research and Consultant Center

66 67 ANNUAL REPORT PNJ - 2014 SEEING THE QUALITY IN YOU

1 Mrs. CAO THI NGOC DUNG - CHAIRWOMAN BOARD OF MANAGEMENT Year of birth: 1957 Nationality: Vietnam Professional skills: Bachelor of Industrial Com- mercial Economics ( University of Economics Hochiminh city) EMPLOYMENT HISTORY 1984 - 1985: Deputy Manager of Planning department, Phu Nhuan Synthesis Company Mr. LE HUU HANH - DEPUTY DIRECTOR 1985-1987: Planning Manager of Phu Nhuan Agricultural 4 Foods Company Year of birth: 1963 Nationality: Vietnam 1988-2003: General Manager of Phu Nhuan Jewelry Company Professional skills: 1990: General Manager of Phu Gia Credit Center o Bachelor of Chemistry, University of Technology 1991-1992: General Manager of Phu Nhuan Trading Com- Hochiminh City pany o Gemstone and Diamond Testing Expert 1992-1997: Chairwoman of Dong A bank EMPLOYMENT HISTORY 2003-present: Chairwoman of Dong A Land 1983 - 1988: Technical Staff of No.4 Printing company 2005-2011: Chairwoman of Dai Viet Energy JSC 1988-1992: Sale staff of General Services Company, Go 2004-present: Chairwoman-CEO of Phu Nhuan Jewelry JSC 1 Vap District 1992-2003: Sale staff, Manager of Hanoi Branch, Sale 3 2 Mrs. NGUYEN THI CUC - MEMBER OF BOD Deputy Manager, Sale manager of Phu Nhuan Jewelry Company Year of birth: 1960 2004-present: Deputy director of Phu Nhuan Jewelry JSC Nationality: Vietnam Professional skills: MBA, University of Economics Hochiminh City

EMPLOYMENT HISTORY Mrs. PHAM THI MY HANH - DEPUTY DIRECTOR 1983 - 1988: Officer of Statistic and Planning Department, 5 Phu Nhuan District Year of birth: 1970 Nationality: Vietnam 1988-1995: Chief Accountant of Phu Nhuan Jewelry Professional skills: Company o MBA, National Economics University – Washington 1996-2003: Deputy Manager of Phu Nhuan Jewelry Com- University pany o Bachelor of Foreign Language, University of Social Sci- 2004- present: BOD member and Deputy Director of Phu ences and Humananities Hochiminh City o Bachelor of Bussiness Administration, University of Eco- 2 Nhuan Jewelry JSC 2007- present: Head of Dong A Bank ‘s Board of supervision nomics Hochiminh City EMPLOYMENT HISTORY 1993 - 1994: Staff of Sales Department, Phu Nhuan Jewelry 3 Mr. NGUYEN VU PHAN- VICE CHAIRMAN Company 1994-1995: Secretory – Toba Investment Year of birth: 1956 1995-2003: Sale Satf, CEO assistant, Deputy Manager then Nationality: Vietnam Manager of Research and Marketing Department, Phu Professional skills: Nhuan Jewelry Company o MBA of University of Technology Hochiminh City o Forging and Mechanical Engineer, University of Technol- 2004-2009: Manager of Research andMarketing Depart- ogy Ha Noi ment, Manager of CAO brand 2009- 2011: Manager of CAO Limited company EMPLOYMENT HISTORY 2012 – present : Deputy Director of Phu Nhuan Jewelry JSC 1978 -1985: Head of Technical Department, Caric Factory 1985-1987: Technical Officer of Synthetic Equipment Com- pany ( Hochiminh Industrial Department) 1987-1996: Technical Officer of New Technology Company (COTEC), Vietnam Scientific Institution, Hochiminh Branch 1996-1999: Deputy Manager of Garment factory, Binh Duong Manufacturing and Import-Export Company 4 5 1999-2003: Deputy Manager of Phu Nhuan Jewelry Company 2004-present: Vice Chairman and Deputy Director of Phu Nhuan Jewelry JSC

68 69 ANNUAL REPORT PNJ - 2014 SEEING THE QUALITY IN YOU

BOARD OF SUPERVISION

Mr. PHAM VAN TAN 1 HEAD OF BOARD OF SUPERVISION

Year of birth: 1960 Nationality: Vietnam Professional skills: o Bachelor of Industrial Commercial Economics ( Uni- versity of Economics Hochiminh city) o Bachelor of Political Economy, National political institution – Journalism and Communication Department

2 Mrs. NGUYEN NGOC HUE MEMBER OF BOARD OF SUPERVISION EMPLOYMENT HISTORY 3 1982 - 1989: Assistant in Teaching and administration department, University of Economics Hochiminh city. Year of birth: 1965 Nationality: Vietnam 1989- 1992: In charge of Sale and Administration, SJC Professional skills: Jewelry Factory o Bachelor of Commercial Finance, Finance and 1992 – 2010: Manager, Branch manager, Deputy Director Accouting University, Hochiminh City of Dong A Bank o Certificate of Accounting & Finance of Import- Ex- 1 2010- 2012: BOD consultant of International Cominuca- port activities, Foreign Trade College tion Net (IN-COMNET) o Certificate of Chief accountant training course, Ministry of finance.

EMPLOYMENT HISTORY 1988-1991: General accountant, Codimex Company Mr. TRAN VAN DAN Vung Tau 2 MEMBER OF BOARD OF SUPERVISION 1991 – 1994: Chief accountant, Canadian Hotel, Vung Tau Year of birth: 1974 1994-1997: Chief Accountant, Giao Chau Company, Nationality: Vietnam Vung Tau Professional skills: 1997-1998: General Accountant, Duhacom, HCM o Bachelor of Accounting, Commercial University City o Bachelor of Business Administration, Hochiminh 1998-1999: Chief Accountant of Compunet Com- University of Technology (HUTECH) pany, HCMC o Chief accountant certificate, Hochiminh National 2000-2010: Head of Payment Division of PNJ University 2011-present: Chief accountant of PNJ Laboratory Limited Company. EMPLOYMENT HISTORY 1997 - present: Đã trải qua các chức danh sau tại Công ty Vàng Bạc Đá Quý Phú Nhuận - PNJ: From 14/08/2012: Head of Executive Board, Produc- tion Subsystem, ERP-Xman Project From 03/06/2013: Head of Strategy Unit – Strategy Administrating Department (In charge of Producing and Office Units) From 01/11/2013: Head of Administrative Unit - Strat- egy Administrating Department (In charge of Produc- ing and Office Units) 3 From 10/10/2014: Deputy Director – Efficiency Ad- ministrating Department From 15/01/2015: Head Department – Jewelry Work- shops Quality Administrating Department

70 71 ANNUAL REPORT PNJ - 2014 SEEING THE QUALITY IN YOU

SITUATION CORPORATE GOVERNANCE II. BOARD OF DIRECTORS’ RESOLUTIONS

COMPANY INFORMATION No. Resolution’s number Dated Content

Name of company : PHU NHUAN JEWELRY JOINT STOCK COMPANY Ratifying time, venue and contents of some docu- 1 79/2014/NQ-HĐQT-CTY 17/01//2014 ments of 2014 Annual General Meeting; Signing Abbreviation : PNJ trade agreements with relevant persons. Address : 170E Phan Dang Luu Street, Ward 3, Phu Nhuan District, HCMC 2 215/2014/BB-HĐQT-CTY 03/03/2014 Supplementing working capital Telephone : 08.39951703 - Fax: 08.39951702 Changing members of Board of Director (Nguyen Charter capital : VND 755,970,355,000 3 219/2014/NQ-HĐQT-CTY 03/03/2014 Thi Huong Giang, Andy Ho) Security code : PNJ 227/2014/NQ-HĐQT-CTY Agreeing on contents of 2014 Annual General Meet- 4 12/03/2014 ing’s documents 228/2014/BB-HĐQT-CTY Supplementing working capital of jewelry business 5 12/03/2014 I. . BOARD OF DIRECTORS’ OPERATION 6 229/2014/BB-HĐQT-CTY 12/03/2014 Agreeing on loan plan

1. BOARD OF DIRECTORS’ MEETINGS 7 268/2014/NQ-HĐQT-CTY 24/03/2014 Approving on loan plan 289/2014/BB-HĐQT-CTY 31/03/2014 Agreeing on limit for bank loans Board of Directors’ Number of 8 No. Title participating Ratio Absence’s reason Members meetings 9 287/2014/NQ-ĐHĐCD-CTY 29/03/2014 2014 Annual General Meeting 1. Cao Thi Ngoc Dung Chairwoman 26 100% Resolution on Amending, Suppelmenting of Phu Nhuan Jewelry JSC’s Charter 2. Nguyen Vu Phan Deputy Chairman 26 100% 10 288/2014/QĐ-ĐHĐCD-CTY 29/03/2014 3. Nguyen Thi Cuc Commissioner 26 100% 11 291/2014/NQ-HĐQT-CTY Agreeing on the last registering date for paying 2nd 4. Nguyen Thi Bich Ha Commissioner 24 92% 31/03/2014 phase of 2013 dividend in cash 5. Nguyen Tuan Quynh Commissioner 26 100% Establishing PNJ – Quang Ninh Branch (a subordi- Resigned from BOD as a Com- 12 294/2014/NQ-HĐQT-CTY 31/03/2014 6. Nguyen Thi Huong Giang Commissioner 02 missioner from 03/03/2014 nate unit) Elected to BOD as a Commis- 7. Andy Ho (Ho An T) Commissioner 25 100% sioner from 03/03/2014 13 431/2014/NQ-HĐQT-CTY 14/05/2014 Producing – Business Operational Performance Re- 8. Pham Vu Thanh Giang Commissioner 26 100% port of First 4 months of 2014 and Action program.

14 432/2014/BB-HĐQT-CTY 14/05/2014 Agreeing on limit for bank loans Agreeing on loan plan for supplementing working 15 517/2014/BB-HĐQT-CTY 11/06/2014 capital of jewelry business, operating expenses 2. . SUPERVISION OF BOARD OF DIRECTORS TO GENERAL DIRECTOR 16 619/2014/NQ-HĐQT-CTY 09/07/2014 Selecting auditing agent for fiscal year 2014 Some of Board of Directors’ members attended the briefings of Board of Directors every week, month, quarter. The supervision of Board of Directors to Board of Management is done through monthly Renewing withdrawal time of Contract number 130-000- 17 646/2014/BB-HĐQT-CTY 15/07/2014 164623 dated 16.07.2013 at Branch of Shinhan Vietnam activity reports. Limited Bank - Operation Department

3. OPERATION OF COMMITTEES UNDER BOARD OF DIRECTORS Establishing affiliate of Phu Nhuan Jewelry JSC - PNJ 18 686/2014/NQ-HĐQT-CTY 28/07/2014 Quang Nam Branch Board of Directors has not established any committees. Ratifying Producing – Business Operational Perfor- 19 688/2014/NQ-HĐQT-CTY 29/07/2014 mance Report of First Half of 2014, Operational Orientation Establishing affiliate of Phu Nhuan Jewelry JSC - PNJ 20 771/2014/NQ-HĐQT-CTY 15/08/2014 Dong Thap Branch Approving to transfer a part of Saigon Fuel Corpora- 21 814/2014/NQ-HĐQT-CTY 26/08/2014 tion’s shares owning by Phu Nhuan Jewelry JSC – PNJ

Supplementing working capital at South East Asia 22 857/2014/BB-HĐQT-CTY 08/09/2014 Commercial Bank – Cong Hoa Branch

72 73 ANNUAL REPORT PNJ - 2014 SEEING THE QUALITY IN YOU

SITUATION CORPORATE GOVERNANCE

2. SHARES’ TRANSACTIONS : No. Resolution’s number Dated Content Number of Reason of Approving to transfer all of Saigon Fuel Corporation’s No. Trader Relation with inter- Number of shares own- 23 899/2014/NQ-HĐQT-CTY 22/09/2014 shares owning by Phu Nhuan Jewelry JSC – PNJ shares owning change (pur- nal share holder/ ing at the beginning at the end chase, sell, con- major shareholder vert, reward) Ratifying Producing – Business Operational Perfor- Ratio 24 969/2014/NQ-HĐQT-CTY 03/10/2014 mance Report of First 9 Months of 2014, Objectives Quantity Quantity Ratio of Fisrt 9 Months of 2014, Major goals of 2015 1 Dragon Capital Major Share- 6.843.530 9,05% 7.441.180 9,84% Purchase Agreeing on expected registration date to make the Investment Fund holders 25 971/2014/NQ-HĐQT-CTY 03/10/2014 final payment of 1st phase of 2014’s dividend in cash; Changing and appointing President of CAO Fashion Company, Ltd; Changing legal representa- 2 To Thi Thao Relating person 89.388 0,12% 0 Sell tive of CAO Fashion Company, Ltd; Amending Arti- Deputy General cle 6 of Organizing and Operating Charter of CAO 3 Pham Thi My Hanh 326.990 0,43% 416.378 0,55% Purchase Fashion Company, Ltd Director Deciding on changing legal representative and amend- 4 Cao Ngoc Vu Relating person 47.998 0,06% 0 Sell 26 972/2014/QĐ-HĐQT-CTY 03/10/2014 ing Organizing and Operating Charter of CAO Fashion Company, Ltd.

Supplementing working capital at PG Bank – Saigon 3. OTHER TRANSACTION: 27 1024/2014/BB-HĐQT-CTY 15/10/2014 Branch (transactions of internal shareholders/ major shareholders and persons relating to the Company). Transfering all of Que Huong Liberty JSC’s shares 28 1114/2014/NQ-HĐQT-CTY 04/11/2014 owning by PNJ No. Trader Relation with the Company Content of transaction

1 Dong A Real Estate JSC Relating to Board of Contract of constructing, renovat- III. CHANGING THE LIST OF PERSONS RELATING TO PUBLIC Directors’ member ing, repairing, interior decorating offices, workshops, warehouses, COMPANY ACCORDING TO THE PROVISIONS OF PARAGRAPH business – commercial systems

34, ARTICLE 6 OF SECURITY LAW 2 Golden Mark CPM JSC Relating to Board of Contract of project consulting and Directors’ member supervising On 03/03/2014, Ms. Nguyen Thi Huong Giang sent request for resigning as a member of Board of Di- rectors with personal aspirations and approved by the 2014 Annual General Meeting of Shareholders. Contract of interior decorating - 2 Golden Space Corp Relating to Board of wooden furniture (counters and On 29/3/2014, the 2013 Annual General Meeting of Shareholders approved the electing of Mr. Andy Directors’ member Ho as a member of Board of Directors in the 3rd term (2012-2017) and approved the valid time is the cabinets providing, installing, war- date of the Board of Directors appointed - 03/03/2014. ranty, repairing) for offices, production - business systems See files attached.

IV. TRANSACTIONS OF INTERNAL SHAREHOLDERS AND V. OTHER NOTES On 29/03/2014, performed amending and supplementing the Organizing and Operating Charter of Phu RELATING PERSONS Nhuan Jewelry JSC under 2014 Annual General Meeting’s Resolition

1. LIST OF INTERNAL SHAREHOLDERS AND RELATING PERSONS ON BEHALF OF BOARD OF DIRECTORS CHAIRMAN See files attached.

MS MS. CAO THI NGOC DUNG

74 75 PRODUCTS & SERVICES BRAND Brand PNJ GOLD JEWELRY PNJSILVER JEWELRY AND FASHION ACCESSORIES

Officially announced in Vietnam since 1989, PNJ gold jewelry Announced on Vietnam jewelry market in 2001, after 15 years of inno- brand has confirmed its leading position when pioneered a fash- vation and development, PNJSilver has affirmed its leading position in ion revolution in Vietnam jewelry market by exquisite jewelry with silver jewelry and fashion accessories field. Aiming at young customers, various designs and superior quality. PNJSilver with fashionable and dynamic purple – pink color has easily identified by customers in many shopping centers throughout Vietnam. More than 26 years of development, PNJ gold jewelry brand has Leading silver jewelry and accessories constantly innovated to bring hundreds of collection diverse in gold fashion trends, each year PNJSilver has re- material, abundant in kind of gemstone with extraordinary design, leased many new collections, suiting the contributing to honor the beauty, elegance and class of Vietnamese modern lifestyle with the interesting and consumers. Especially, with the message "Honoring the true value", colorful media story "Her Shinny World". PNJ has elevated the value of each jewelry product, to not only With main product lines such as Charm- adorn the beauty but also honor the soul, the virtue of the women. ing, Elegant, Stylish and Baby which are Besides, collections such as Golden Happiness Wedding Jewelry, distributed at 100 retail stores across the SEEING THE QUALITY IN YOU ECZ Jewelry, Diamond Jewelry ... are the proofs for skilled process- country, PNJSilver has kept striving, creating level, bringing the pride for customers and confirming the mis- ing constantly to become a leading silver sion of PNJ gold jewelry brand: "Bringing the pride to customers jewelry and accessories brand for young by exquisite jewelry products with outstanding quality” girls. BRAND BRAND CAO FINE JEWELLERY JEMMA JEWELRY Announced in 2005, CAO Fine Jewelry is a high-class jewelry brand in both do- Announced in late 2009, with the development orientation to mestic and international market. It is favored by fashion connoisseurs due to the become a luxury and modern jewelry and fashion accessories combination of Western sophistication and traditional Oriental beauty. brand, Jemma is a new option which brings the elegance and The uniqueness of the product is created by skillful hands of experienced design- nobility to ladies. All Jemma products are designed in a mod- ers and skilled jewelry craftsmen – who are always ready to turn ideas into real ern style based on the latest fashion trends in the world with masterpieces, satisfying the needs and preferences of each consumer. Products of CAO Fine Jewelry is crafted from 18k gold and white diamonds, colored diamonds, various and unique materials, to not only create fashion and natural gemstones, semi-precious stones with vibrant colors - all are guaranteed trendy products, but also to show character and style of the with the excellent sparkle and fine cutting edges from top names in the field of gem owners. cutting or jewelry assessment in the world ...

With the launching of Thu Khoa Huan boutique in 2013, CAO Fine Jewellery once again showed a steady direction to conquer fastidious customers as well as directly compete with other international jewelry brands in Vietnam. ENTERPRISE CULTURE ANNUAL REPORT PNJ - 2014 SEEING THE QUALITY IN YOU

“COMMON HOME” PNJ CULTURAL IDENTITY

“What is PNJ’s biggest asset? It’s not money. It is the corporate culture and human.” Ms. Cao Thi Ngoc Dung – PNJ General Director

If we regard PNJ as a house, then the people and PNJ culture and core values are instilled in the community are the foundation of that house. For business culture with customers, investors, part- PNJ is also regarded as a school where people are 27 years of development, PNJ has built a strong ners, social community and most clearly in the not treated by materials, or immediate interests, and steady foundation so the PNJ house can internal operations for its employees. Through or- but with respect and love. It is the "PNJ Common stand firmly, beautifully and sustainably develop ganizations and communities, many activities for House" culture that has created a regulated, pro- through many years. And also on that founda- the employees are held regularly and frequently, fessional, disciplined and mannerly community, tion, “PNJ Common Home” culture was born. to meet the needs of health care, improving life which is always ready to sacrifice and dedicate At which, each member of PNJ family has lived standards, as well as building pride and bonds for the company. PNJ Culture has significantly with discipline, responsibility, professional man- among members: team building seminars, the- contribute to create the position of PNJ, make ner but full of love, solidarity and ready to help matic workshops, forums of youth, entertainment competitiveness, help develop a stronger team each other in work and life, exchange informa- festivals, sports competitions, PNJ family day, and attract the talented, connect employees, be tion as well as encouraged to raise the cultural a Healthcare Club... PNJ Culture teachs each a foundation and confidence for the sustainable level and professional level. The efforts of each member of PNJ staff to live responsibly for them- development of PNJ. member are worthily rewarded, encouraged or selves, society and community, to be a citizen appointed to an appropriate position, and above who respect the law, the values of Humanity – all, they are good example for the community Politeness – Gratitude – Wisdom – Credit must and next generations to follow. always be promoted.

To create the "PNJ Common House" culture, specific characters and important major factors are core values, which are forged by PNJ in the journey of 27 years: Responsibility, Honesty, Quality, Innovation and Creativity. These 5 values are the foundation that makes PNJ people, PNJ strength, PNJ spirit, the oriental compass in every action program, every decision for the development of the PNJ, and help each individual and team to behave uniformly, mannerly in work and life.

84 85 ANNUAL REPORT PNJ - 2014 SEEING THE QUALITY IN YOU 2014 10th Anniversary of PNJ Charity Fund – A journey of love

Established in 2005, after 10 years of operation, PNJ Charity Fund has contributed to the society more than 25 billion dong to work together to improve the lives of poor people, poor patients and facilitate the development of hidden talents. Several billion dong shar- ing with the community each year may be not too much but it has demonstrated the endur- ing commitment of the leaders and PNJ charity fund for charity.

USING THE MONEY AT THE RIGHT PLACES Quang Ngai, An Giang and Kien Giang ... to share with difficult people; The second ing with the PNJ Charity Fund to perform free TO HELP AS MUCH AS POSSIBLE: Besides, PNJ Charity Fund is also willing to is money; The third is the consensus of the medial examination and dispense free medi- With the fund raising from the donation of join hands with the press agencies, unions, company when conducting each charity pro- cation for 500 poor people of Thanh Hoa com- staff and employees, welfare fund and do- associations and local authorities ... to spon- gram". mune, Thuan Chau district, Soc Trang province nations from partners .... PNJ Charity Fund sor gifts and money in emergencies such as on 17/8/2014, Ph.D Dr. Vu Thanh Tri - Head of has been able to pursue many volunteer hurricanes, floods, natural disasters, build- JOURNEYS OF LOVE WITH THE APPEARANCE Technical Department of University of Medicine and charity programs to help communities ing rural roads, building shelters for the OF THE LEADERS: and Pharmacy Hospital, said: "This is the first in this 10 year journey. poor, supporting fishermen of Truong Sa – In "journeys of love" to bring gifts to remote ar- time University of Medicine and Pharmacy Hos- Hoang Sa to keep working at sea, funding eas annual Tet holidays, there are always mem- pital has combined the medical charity with PNJ’s Regularly every year, PNJ donates several poor people to start their own business .... bers of the Board of Directors, especially Ms. Cao charity trip. Our 10 doctors delegation, including hundred million dong for the Sponsoring After each trip, any participating members Thi Ngoc Dung - General Director. With a casual 04 Ph.D, 02 professors, 03 pharmacists ... often or- Association for Poor Patients; several hun- style and intimacy in the "PNJ uniform", Ms. ganize medical charity trips several times a year, dred million dong for scholarships for poor fret with things not yet done, and always have new ideas for PNJ Charity Fund to Dung does not hesitate to do anything together but this time I have to say I am very glad to see the students ... but the biggest contribution is with everyone to help give gifts to country peo- good results in many respects. Poor people there for the poor living in remote areas. Most of keep helping the community. Since late 2014, besides annual programs, PNJ Char- ple as quickly as possible. In occasions like this, did not only receive necessary gifts, but also had the volunteer and charity programs are to she usually skip the "opening statement" for not free medical examination and medication, a new visit poor people in remote villages in the ity Fund has launched new project named “PNJ Shelters” – a plan to provide housing has anyone waited long, but she always sees the bridge and a family also received a new house. Central, Tay Nguyen or Mekong Delta area. needs of people and defects of the organizing.... The trip is also an opportunity to connect doctor In each trip, PNJ has always prepared each for the lonely poor with difficult circumstances nationwide... It is expected that PNJ to do better next time. and pharmacist with PNJ’s youngsters. I must say single gift to suit the life of people there The warm heart of Ms. Dung is a shinny exam- that you (PNJ) have created a good impression and handed them, no matter how rough will build 50 shelters, worth 40 million dong each in the first phase of the project. ple for all employees and staff who participated on us about the professionalism as well as your the road is. Only in 2014, total budget for in company’s charity trips and it has positively af- kinded hearts for poor people here. ". charitable activities of PNJ was 4.5 billion Ms. Dang Thi Lai, PNJ’s Chief Accountant fected many partners of the company as well as Those good impressions can not be gained with- dong, 2015 Tet holiday gifts program par- cum Vice President of PNJ Charity Fund, the business community, attracting them to join out the consensus of PNJ members about the ticularly occupied 2.5 billion dong, includ- said: "There are three highlights in the op- hands with PNJ to share with the society. concept “Giving is receiving the happiness and ing more than 3,000 gifts for poor people in eration of PNJ Charity Fund: The first is the Attending in the charity trip of HCMC University peace for the soul” from the leader of the com- Phu Nhuan District ang poor remote areas heart - from the Board of Management to of Medicine and Pharmacy Hospital collaborat- pany … in Dak Lak, Gia Lai, Da Nang, Quang Nam, each employees, all are genuinely eager

86 87 ANNUAL REPORT PNJ - 2014 SEEING THE QUALITY IN YOU

2014 PNJ WITH COMMUNITY

TYPICAL ACTIVITIES

Awarding Vu A Dinh scholarships, PNJ Building bridges for the poor in Ben Tre and scholarships, Saigon Economic Times Tra Vinh Donating to build shelters for the poor and Donating for programs which support the those who contributed to the country fishermen Accompanying with the “Loving Fishnets for Supporting for PNJ’s disadvantaged em- Hoang Sa, Truong Sa’s fisherment” program ployees Donating for the “Fund for the Poor” of HCMC Caring for the blind in Phu Nhuan district, disa- Vietnamese Fatherland Front Committee bled children at Phu Nhuan Niem tin School Accompanying with the funding for handi- Donating for people at disaster areas craft villages project Capital supporting for coastal area people. Donating for programs which care for vic- Organizing Blood Donating annually, col- tims of Agent Orange laborating with hospitals to give free medi- Donating for Spring on Border and Islands cal examination for the poor in remote area programs Performing the project “PNJ Shelters” to Visiting and giving Tet holiday gift annually build houses for the poor for the poor in the Central, Tay Nguyen and Mekong Delta area

88 89 SEEING THE QUALITY IN YOU

THE COMPANY

Phu NhuanJewelry Joint Stock Company (“the Company”) is a shareholding company incorporatedunder the Law on Enterprise of Vietnam pursuant to the Business Registration Certificate No. 0300521758 issued by the Department of Planning and Investment of Ho Chi Minh City on 2 January 2004, as amended.

The Company was listed on the Ho Chi Minh City Stock Exchange (“HOSE”) from 23 March 2009 pursuant to the Decision No. 129/DKNY issued by the General Director of HOSE on 26 December 2008.

The current principal activities of the Company are to trade gold, silver, jewelry and gemstones, and to FINANCIAL STATEMENTS import and export jewelry in gold, silver and gemstones. The Company’s head office is located at 170E Phan Dang Luu Street, Phu Nhuan District, Ho Chi Minh City, Vietnam. In addition, the Company also has one hundred and seventy four (174) retail shops lo- 2014 cated at various provinces in Vietnam.

BOARD OF DIRECTORS

Members of the Board of Directors during the year and at the date of this report are:

Ms Cao Thi Ngoc Dung Chairwoman MrNguyen Vu Phan Vice Chairman Ms Nguyen Thi Cuc Member Mr Nguyen Tuan Quynh Member Ms Nguyen Thi Bich Ha Member Ms Pham Vu Thanh Giang Member Mr Andy Ho Member appointed 3 March 2014 Ms Nguyen Thi Huong Giang Member resigned 3 March 2014

BOARD OF SUPERVISION

Members of the Board of Supervision during the year and at the date of this report are:

Mr Pham Van Tan Head of the Board of Supervision Ms Nguyen Ngoc Hue Member Mr Tran Van Dan Member

91 ANNUAL REPORT PNJ - 2014 SEEING THE QUALITY IN YOU

FINANCIAL STATEMENTS 2014

MANAGEMENT STATEMENT BY MANAGEMENT Members of the Management during the year and at the date of this report are: Management does hereby state that, in its opinion, the accompanying consolidated financial statements Ms Cao Thi Ngoc Dung General Director give a true and fair view of the consolidated financial position of the Group as at 31 December 2014and Mr Le HuuHanh Deputy General Director of the consolidated results of its operations and its consolidated cash flows for the year then ended in Ms Nguyen Thi Cuc Deputy General Director accordance with Vietnamese Accounting Standards, Vietnamese Enterprise Accounting System and the Mr Nguyen Vu Phan Deputy General Director statutory requirements relevant to preparation and presentation of consolidated financial statements. Ms Pham Thi My Hanh Deputy General Director

For and on behalf of management:

LEGAL REPRESENTATIVE

The legal representative of the Company during the year and at the date of this report is Ms Cao Thi Ngoc Dung.

AUDITORS

The auditor of the Company is Ernst & Young Vietnam Limited.

Management of Phu NhuanJewelry Joint Stock Company (“the Company”) is pleased to present its report and the consolidated financial statements of the Company and its subsidiaries (“the Group”) for the year ended31 December 2014.

MANAGEMENT’S RESPONSIBILITY IN RESPECT OF THE CONSOLIDATED FINANCIAL STATEMENTS

Management is responsible for the consolidated financial statements of each financial year which give a true and fair view of the consolidatedfinancial position of the Group and of the consolidated results of its operationsand its consolidated cash flows for the year. In preparing those consolidated financial statements, management is required to:  Select suitable accounting policies and then apply them consistently;  Make judgements and estimates that are reasonable and prudent;  State whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the consolidated financial statements; and  prepare the consolidated financial statements on the going concern basis unless it is inappro- priate to presume that the Group will continue its business.

Management is responsible for ensuring that proper accounting records are kept which disclose, with reasonable accuracy at any time, the consolidated financial position of the Group and to ensure that the accounting records comply with the applied accounting system. It is also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Management confirmed that it has complied with the above requirements in preparing the accompanying consolidated financial statements.

92 93 ANNUAL REPORT PNJ - 2014 SEEING THE QUALITY IN YOU

CONSOLIDATED BALANCE SHEET as at 31 December 2014 FINANCIAL STATEMENTS 2014 VND

Code ASSETS Notes Ending balance Beginning balance

INDEPENDENT AUDITORS’ REPORT 100 A. CURRENT ASSETS 1.830.870.956.574 1.717.592.172.977

110 I. Cash and cash equivalents 5 272.305.336.075 507.821.745.184 To: The Shareholdersof Phu NhuanJewelry Joint Stock Company 111 1. Cash 37.706.071.196 53.915.192.251 112 2. Cash equivalents 234.599.264.879 453.906.552.933

We have audited the accompanying consolidated financial statements of Phu NhuanJewelry Joint Stock 130 II. Current accounts receivable 6 71.324.851.689 76.020.840.245 Company and its subsidiaries (“the Group”) as prepared on 31 30 March 2015 and set out on pages 5 131 1. Trade receivables 43.282.823.370 52.341.746.512 to 39which comprise the consolidated balance sheet as at 31 December 2014, and the consolidated 132 2. Advances to suppliers 16.213.997.161 8.912.739.502 income statement and consolidated cash flow statement for the year then ended, and the notes thereto. 135 3. Other receivables 19.615.577.417 23.485.827.790 139 4. Provision for doubtful debts (7.787.546.259) (8.719.473.559) Management’s Rresponsibility 140 III. Inventories 1.437.415.596.122 1.087.344.363.095 Management is responsible for the preparation and fair presentation of these consolidated financial 141 1.437.415.596.122 1.087.344.363.095 statements in accordance with Vietnamese Accounting Standards, Vietnamese Enterprise Accounting 1. Inventories 7 System and the statutory requirements relevant to preparation and presentation of consolidated financial statements, and for such internal control as management determines is necessary to enable the 150 IV. Other current assets 49.825.172.688 46.405.224.453 preparation and presentation of consolidated financial statements that are free from material misstate- 151 1. Short-term prepaid expenses 27.279.143.455 19.924.285.797 ment, whether due to fraud or error. 152 2. Value-added tax deductible 3.659.558.376 12.001.552.590 154 3. Tax and other receivables from Auditors’ Rresponsibility the State 4.653.263.806 1.845.657.246 Our responsibility is to express an opinion on these consolidated financial statements based on our 158 4. Other current assets 8 14.233.207.051 12.633.728.820 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 consolidated financial statements are free from material misstatement. 200 B. NON-CURRENT ASSETS 997.801.346.775 1,239,106,817,480

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures 220 I. Fixed assets 452.468.356.455 474.305.452.792 in the consolidated financial statements. The procedures selected depend on the auditors’ judgment, 221 1. Tangible fixed assets 9 160.479.587.999 174.533.720.783 including the assessment of the risks of material misstatement of the consolidated financial statements, 222 Cost 265.520.614.214 290.255.974.492 whether due to fraud or error. In making those risk assessments, the auditors consider internal control 223 Accumulated depreciation (105.041.026.215) (115.722.253.709) relevant to the entity's preparation and fair presentation of the consolidated financial statements in order 227 2. Intangible fixed assets 10 291.249.678.256 290.655.810.463 to design audit procedures that are appropriate in the circumstances, but not for the purpose of express- 228 Cost 293.121.956.571 292.453.176.966 ing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the 229 Accumulated amortization (1.872.278.315) (1.797.366.503) appropriateness of accounting policies used and the reasonableness of accounting estimates made by 230 3. Construction in progress management, as well as evaluating the overall presentation of the consolidated financial statements. 739.090.200 9.115.921.546 We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis 11 75.703.549.357 for our audit opinion. II. Investment properties 241 1. Cost 77.473.939.864 242 Opinion 2. Accumulated depreciation (1.770.390.507) In our opinion, the consolidated financial statements give a true and fair view, in all material respects, 250 of the consolidated financial position of the Group as at 31 December 2014, and of the consolidated III. Long-term investments 12 results of its operations and its consolidated cash flows for the year then ended in accordance with 1. Investments in associates 531.864.217.588 589.705.137.986 252 Vietnamese Accounting Standards, Vietnamese Enterprise Accounting System and the statutory require- 2. Other long-term investments 81.456.342.588 80.652.729.586 258 ments relevant to preparation and presentation of consolidated financial statements 3. Provision for long-term invest- 460.716.988.400 523.602.408.400 259 ments (10.309.113.400) (14.550.000.000) 260 IV. Other long-term assets 13.468.610.732 14.403.411.252 261 1. Long-term prepaid expenses 14 12.547.147.880 13.701.560.928 2. Deferred tax assets 262 24.3 921.462.852 701.850.324

269 V. Goodwill 13 84.989.266.093

270 TOTAL ASSETS 2.828.672.303.349 2.956.698.990.457

Ho Chi Minh City, Vietnam 30 March 2015 94 95 ANNUAL REPORT PNJ - 2014 SEEING THE QUALITY IN YOU

FINANCIAL STATEMENTS 2014

CONSOLIDATED BALANCE SHEET (continued) as at 31 December 2014 CONSOLIDATED BALANCE SHEET (continued) as at 31 December 2014 VND VND

Code RESOURCES Notes Ending balance Beginning balance Code ITEMS Notes Current year Previous year

300 A. LIABILITIES 1.532.149.329.780 1.550.680.871.025 01 1. Revenue from sale of goods and rendering of services 21.1 9.297.810.872.565 8.973.965.897.995 310 I. Current liabilities 1.394.564.947.680 1.415.480.783.876 02 2. Deduction 21.1 (98.592.775.013) (59.783.311.660) 311 1. Short-term loans 15 1.131.686.128.041 1.163.972.366.976 3. Net revenue from sale of goods 312 2. Trade payables 16 140.059.263.813 111.132.232.389 10 313 3. Advances from customers 10.577.252.253 8.483.360.904 and rendering of services 21.1 9.199.218.097.552 8.914.182.586.335 314 4. Statutory obligations 17 45.893.557.644 48.283.681.689 11 4. Costs of goods sold and services 315 5. Payables to employees 27.640.951.586 11.299.793.720 rendered 22 (8.309.982.541.638) (8.244.494.727.893) 316 6. Accrued expenses 4.188.467.510 3.524.676.090 20 5. Gross profit from sale of goods 319 7. Other payables 18 27.252.893.412 31.966.060.795 and rendering of services 889.235.555.914 669.687.858.442 323 8. Bonus and welfare fund 7.266.433.421 36.818.611.313 21 6. Finance income 18.739.496.430 23.797.867.875 330 II. Non-current liabilities 137.584.382.100 135.200.087.149 22 7. Finance expenses 21.2 (90.254.492.225) (84.970.680.816) 333 1. Other long-term liability 19 455.382.100 5.617.050.500 23 - In which:Interest expense (79.682.197.799) (83.525.727.307) 334 2. Long-term loans 137.129.000.000 129.583.036.649 24 8. Selling expenses (354.954.031.945) (262.496.218.357) 25 9. General and administrative expenses (129.618.733.552) (113.373.916.451) 400 B. OWNERS’ EQUITY 1.296.522.973.569 1.318.220.581.226 30 10. Operating profit 333.147.794.622 232.644.910.693 11. Other income 410 I. Capital 20 1.296.522.973.569 1.318.220.581.226 2.668.838.792 3.181.797.660 411 1. Share capital 755.970.350.000 755.970.350.000 31 12. Other expenses (1.586.537.533) (2.239.943.652) 412 2. Share premium 105.021.650.000 105.021.650.000 32 13. Other profit 1.082.301.259 941.854.008 414 3. Treasury shares (7.090.000) (7.090.000) 40 14. Share of profit (loss)of associates 803.613.002 (579.477.436) 4. Investment and development 417 45 15. Profit before tax 335.033.708.883 233.007.287.265 fund 418 166.070.897.000 126.070.897.000 50 16. Current corporate income tax 420 5. Financial reserve fund 66.734.153.783 57.634.153.783 6. Undistributed earnings 202.733.012.786 273.530.620.443 51 expense (79.455.050.132) (64.190.342.200) 52 17. Deferred income tax benefit 293.307.944 220.310.692 18. Net profit after tax 439 C. MINORITY INTERESTS 87.797.538.206 60 255.871.966.695 169.037.255.757 Attributable to: 61 Minority interests 13.376.498.721 5.866.063.304 TOTAL LIABILITIES AND 440 2.828.672.303.349 2.956.698.990.457 Equity holders of the Company OWNERS’ EQUITY 62 242.495.305.974 163.171.192.453 19. Basic and diluted earnings per 70 share (VND/share) 20.4 3.208 2.239 OFF BALANCE SHEET ITEM

ITEM Ending balance Beginning balance

Foreign currencies: United States dollar (“USD”) 8.382 58.203 Gold taels 6.409 6.770 Australian Dollar (“AUD”) 30.006 Duong Quang Hai Dang Thi Lai Cao Thi Ngoc Dung Preparer Chief Accountant General Director 30 March 2015

Duong Quang Hai Dang Thi Lai Cao Thi Ngoc Dung Preparer Chief Accountant General Director 30 March 2015 96 97 ANNUAL REPORT PNJ - 2014 SEEING THE QUALITY IN YOU

FINANCIAL STATEMENTS 2014

CONSOLIDATEDINCOME STATEMENT for the year ended 31 December 2014 CONSOLIDATED CASH FLOW STATEMENT (continued) for the year ended 31 December 2014

VND VND

Code ITEMS Notes Current year Previous year Code ITEMS Notes Current year Previous year

I. CASH FLOWS FROM OPERATING 50 Net (decrease) increase in cash and ACTIVITIES cash equivalents (235.516.409.109) 39.166.044.378 01 Profit before tax 335.033.546.883 233.007.287.265 Adjustments for: 60 Cash and cash equivalents at begin- 02 Depreciation and amortization 31.011.683.393 23.809.470.760 ning of year 507.821.745.184 468.655.700.806 03 Provisions 468.396.300 967.254.900 70 Cash and cash equivalents at 05 Profits from investing activities (16.087.701.495 ) (14.205.354.346) end of year 272.305.336.075 507.821.745.184 06 Interest expense 23 79.682.197.799 83.525.727.307

Operating profit before changes in 430.108.122.880 327.104.385.886 08 working capital (20.105.968.511) 1.257.008.085 09 (Increase) decrease in receivables (392.583.571.977) (296.208.235.977) 10 Increase in inventories 76.335.837.103 77.256.168.164 11 Increase in payables (6.200.444.610) (13.198.313.124) 12 Increase in prepaid expenses (79.682.197.799) (83.525.727.307) 13 Interest paid 25.2 (79.187.348.685) (43.806.298.357) 14 Corporate income tax paid - 30.001.580.000 Duong Quang Hai Dang Thi Lai Cao Thi Ngoc Dung 15 Other cash inflows from operating (47.174.283.526) (24.326.682.734) Preparer Chief Accountant General Director activities 16 Other cash outflows from operating 30 March 2015 activities 20 Net cash flows used in operating (118.489.855.125) (25.446.115.364) activities

II. CASH FLOWS FROM INVESTING ACTIVITIES (34.530.888.745) (56.559.512.129) 21 Purchase and construction of fixed assets 642.272.726 8.041.831.601 22 Proceeds from disposals of fixed assets 153.763.708.000 25 Payments for investments in other entities - - 26 Proceeds from sale of investments in other 9.149.322.084 entities 21.718.529.735 13.884.155.145 27 Interest and dividends received

30 Net cash flows (used in) from invest- (3,020,764,200) 119.130.182.617 ing activities

III. CASH FLOWS FROM FINANC- ING ACTIVITIES 35.992.000.000 32 Issuance of shares 6.042.963.679.870 4.889.634.614.815 33 Drawdown of borrowings (5.915.061.935.454) (4.886.547.452.190) 34 Repayment of borrowings (241.907.534.200) (93.597.185.500) 36 Dividends paid 20.2

40 Net cash flows used in financing activities (114.005.789.784) (54.518.022.875)

98 99 ANNUAL REPORT PNJ - 2014 SEEING THE QUALITY IN YOU

FINANCIAL STATEMENTS 2014

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) as at and for the year ended 31 December 2014 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) as at and for the year ended 31 December 2014

1. CORPORATE INFORMATION 2.2 APPLIED ACCOUNTING DOCUMENTATION SYSTEM Phu NhuanJewelry Joint Stock Company (“the Company”) is a shareholding company incorporated un- The Group’s applied accounting documentation system is the General Journal system. der the Law on Enterprise of Vietnam pursuant to the Business Registration Certificate No. 0300521758 issued by the Department of Planning and Investment of Ho Chi Minh City on 2 January 2004, as 2.3 FISCAL YEAR amended. The Group’s fiscal year applicable for the preparation of its consolidated financial statements starts on The Company was listed on the Ho Chi Minh City Stock Exchange (“HOSE”) from 23 March 2009 pur- 1 January and ends on 31 December. suant to the Decision No. 129/DKNY issued by the General Director of HOSE on 26 December 2008. The current principal activities of the Company are to trade gold, silver, jewelry and gemstones, and to 2.4 ACCOUNTING CURRENCY import and export jewelry in gold, silver and gemstones. The consolidated financial statements are prepared in VND which is also the Group’s accounting currency. The Company’s head office is located at 170E Phan Dang Luu Street, Phu Nhuan District, Ho Chi Minh City, Vietnam. In addition, the Company also has one hundred and seventy four(174) retail shops lo- 2.5 BASIS OF CONSOLIDATION cated in various provinces in Vietnam. The consolidated financial statements comprise the financial statements of the Company and its sub- The number of the Group’s employees as at 31 December 2014was 2,494 (31 December 2013: 2,653). sidiariesfor the year ended31 December 2014. Subsidiariesare fully consolidated from the date of acquisition, being the date on which the Group ob- CORPORATE STRUCTURE tains control, and continued to be consolidated until the date that such control ceases. The Company’s corporate structure includes two subsidiaries, as follows: The financial statements of the subsidiaries are prepared for the same reporting year as the parent com- CAO Fashion Company Limited (“CFC”), a one-member limited liability company, was established un- pany, using consistent accounting policies. der the Law on Enterprise of Vietnam pursuant to the Business Registration Certificate No. 0309279212 All intra-company balances, income and expenses and unrealised gains or losses resulting from intra- issued by the Department of Planning and Investment of Ho Chi Minh City on 14 August 2009. CFC’s company transactions are eliminated in full. registered head office is located at 170E Phan Dang Luu Street, Phu Nhuan District, Ho Chi Minh City, Minority interests represent the portion of profit or loss and net assets not held by the Group and are Vietnam. CFC’s principal activities are to produce and trade fashion products, silver and gold jewelery, presented separately in the consolidated income statement and within equity in the consolidated bal- and art and craft products, and to import and export art and craft products. ance sheet, separately from parent shareholders’ equity. PNJ Laboratory Company Limited (“PLC”), a one-member limited liability company, was established under the Law on Enterprise of Vietnam pursuant to the Business Registration Certificate No. 0310521330 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES issued by the Department of Planning and Investment of Ho Chi Minh City on 16 December 2010. 3.1 CASH AND CASH EQUIVALENTS PLC’s registered head office is located at 205 Phan Dang Luu Street, Phu Nhuan District, Ho Chi Minh City, Vietnam. PLC’s principal activities are to provide jewelery inspection and consultancy services. Cash and cash equivalents comprise cash on hand, cash at banks, gold, and short-term, highly liquid investments with an original maturity of less than three months that are readily convertible into known 2. BASIS OF PREPARATION amounts of cash and that are subject to an insignificant risk of change in value. 3.2 RECEIVABLES 2.1 ACCOUNTING STANDARDS AND SYSTEM Receivables are presented in the consolidated financial statements at the carrying amounts due from The consolidated financial statements of the Company and its subsidiaries (“the Group”), expressed in customers and other debtors, after provision for doubtful debts. Vietnam dong (“VND”), are prepared in accordance with Vietnamese Enterprise Accounting System The provision for doubtful debts represents amounts of outstanding receivables at the balance sheet and Vietnamese Accounting Standardsissued by the Ministry of Finance as per: date which are doubtful of being recovered. Increases and decreases to the provision balance are re-  Decision No. 149/2001/QD-BTC dated 31 December 2001 on the Issuance and Promulgation corded as general and administrative expense in the consolidated income statement. of Four Vietnamese Accounting Standards (Series 1);  Decision No. 165/2002/QD-BTC dated 31 December 2002 on the Issuance and Promulgation 3.3 INVENTORIES of Six Vietnamese Accounting Standards (Series 2); Inventories are stated at the lower of cost incurred in bringing each product to its present location and  Decision No. 234/2003/QD-BTC dated 30 December 2003 on the Issuance and Promulgation condition, and net realisable value. of Six Vietnamese Accounting Standards (Series 3); Net realisable value represents the estimated selling price in the ordinary course of business less the  Decision No. 12/2005/QD-BTC dated 15 February 2005 on the Issuance and Promulgation of estimated costs to complete and the estimated costs necessary to make the sale. Six Vietnamese Accounting Standards (Series 4); and The perpetual method is used to record inventories, which are valued as follows:  Decision No. 100/2005/QD-BTC dated 28 December 2005 on the Issuance and Promulgation Merchandises, consumables, and raw materials of Four Vietnamese Accounting Standards (Series 5). - cost of purchase on a weighted average basis. Accordingly, the accompanying consolidated balance sheet, consolidated income statement, consoli- Finished goods and work-in process dated cash flow statement and related notes, including their utilisation are not designed for those who - cost of direct materials and labour plus attributable manufacturing overheads based on the are not informed about Vietnam’s accounting principles, procedures and practices and furthermore are normal operating capacity on a weighted average basis. not intended to present the financial position and results of operations and cash flows in accordance with accounting principles and practices generally accepted in countries other than Vietnam.

100 101 ANNUAL REPORT PNJ - 2014 SEEING THE QUALITY IN YOU

FINANCIAL STATEMENTS 2014

Provision for obsolete inventories its disposal. The difference between the net disposal proceeds and the carrying amount of the assets is An inventory provision is created for the estimated loss arising due to the impairment of value (through recognised in the consolidated income statement in the year of retirement or disposal. diminution, damage, obsolescence, etc.) of merchandise goods, raw materials, finished goods, and Transfers are made to investment properties when, and only when, there is a change in use, evidenced other inventories owned by the Group, based on appropriate evidence of impairment available at the by ending of owner-occupation, commencement of an operating lease to another party or ending of balance sheet date. construction or development. Transfers are made from investment properties when, and only when, Increases and decreases to the provision balance are recorded into the cost of goods sold account in there is change in use, evidenced by commencement of owner-occupation or commencement of de- the consolidated income statement. velopment with a view to sale. The transfer from investment property to owner-occupied property or inventories does not change the cost or the carrying value of the property for subsequent accounting at 3.4 FIXED ASSETS the date of change in use.

Tangible and intangible fixed assets are stated at cost less accumulated depreciation or amortization. 3.7 BORROWING COSTS The cost of a fixed asset comprises its purchase price and any directly attributable costs of bringing the fixed asset to working condition for its intended use. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrow- Expenditures for additions, improvements and renewals are added to the carrying amount of the assets ing of funds and are recorded as expense during the year in which they are incurred. and expenditures for maintenance and repairs are charged to the consolidated income statement as incurred. 3.8 PREPAID EXPENSES When fixed assets are sold or retired, their cost and accumulated depreciation or amortization are Prepaid expenses are reported as short-term or long-term prepaid expenses on the consolidated balance removed from the consolidated balance sheet and any gain or loss resulting from their disposal is in- sheet and are amortized over the year for which the amounts are paid or the year in which economic cluded in the consolidated income statement. benefits are generated in relation to these expenses. Land use rights The following types of expenses are recorded as long-term prepaid expenses and are amortised to the Land use right is recorded as an intangible fixed asset on the consolidated balance sheet when the consolidated income statement. Group obtained the land use right certificates. The costs of land use right comprise all directly attribut- Prepaid rental includes land and shop rental prepaid for many years under operating lease contracts able costs of bringing the land lot to the condition available for intended use. and are amortized over the lease term; Tools and consumables with large value issued in use and can be used for more than one year; and 3.5 DEPRECIATION AND AMORTIZATION Others are amortized to the consolidated income statement over 2 to 3 years. Depreciation of tangible fixed assets and amortization of intangible fixed assets are calculated on a straight-line basis over the estimated useful life of each asset as follows: 3.9 INVESTMENTS IN ASSOCIATES Buildings and structures 5 - 25 years Machinery and equipment 3 - 15 years The Group’s investment in its associates is accounted for using the equity method of accounting. An Motor vehicles 4 - 10 years associate is an entity in which the Group has significant influence that is neither subsidiaries nor joint Office equipment 3 - 8 years ventures. The Group generally deems they have significant influence if they have over 20% of the vot- Computer software 3 years ing rights. Under the equity method, the investment is carried in the consolidated balance sheet at cost plus post The useful life of the fixed assets and depreciation and amortization rates are reviewed periodically acquisition changes in the Group’s share of net assets of the associates. Goodwill arising on acquisition to ensure that the method and the period of the depreciation and amortisation are consistent with the of the associate is included in the carrying amount of the investment and is amortized over a 10-year expected pattern of economic benefits that will be derived from the use of fixed assets. year. The consolidated income statement reflects the share of the post-acquisition results of operation of the associate. 3.6 INVESTMENT PROPERTIES The share of post-acquisition profit (loss) of the associates is presented on face of the consolidated in- Investment properties are stated at cost including transaction costs less accumulated depreciation. come statement and its share of post-acquisition movements in reserves is recognized in reserves. The Subsequent expenditure relating to an investment property that has already been recognized is added cumulative post-acquisition movements are adjusted against the carrying amount of the investment. to the net book value of the investment property when it is probable that future economic benefits, in Dividends receivable from associates reduce the carrying amount of the investment. excess of the originally assessed standard of performance of the existing investment property, will flow The financial statements of the associates are prepared for the same reporting year and use the same to the Group. accounting policies as the Group. Where necessary, adjustments are made to bring the accounting policies in line with those of the Group. Depreciation of investment properties are calculated on a straight-line basis over the estimated useful life of each asset as follows: 3.10 BUSINESS COMBINATIONS AND GOODWILL Land use rights 10 years Buildings 10 years Business combinations are accounted for using the purchase method. The cost of a business combination is measured as the fair value of assets given, equity instruments issued and liabilities incurred or Investment properties are derecognised when either they have been disposed of or when the invest- assumed at the date of exchange plus any costs directly attributable to the business combination. Iden- ment properties are permanently withdrawn from use and no future economic benefit is expected from tifiable assets and liabilities and contingent liabilities assumed in a business combination are measured initially at fair values at the date of business combination.

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After initial recognition, goodwill is measured at cost less accumulated amortisation. Amortisation of 3.17 EARNINGS PER SHARE goodwill is calculated on a straight-line basis over 10 years during which the source embodying eco- Basic earnings per share amounts are calculated by dividing net profit after tax for the year attributable to nomic benefits are covered by the Group. ordinary shareholders of the Company (after adjusting for interest on the convertible preference shares) by the weighted average number of ordinary shares outstanding during the year. 3.11 INVESTMENTS IN SECURITIES AND OTHER INVESTMENTS Diluted earnings per share amounts are calculated by dividing the net profit after tax attributable to ordinary equity holders of the Company (after adjusting for interest on the convertible preference shares) by the weighted average Investments in securities and other investments are stated at their acquisition costs. number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares. 3.12 PROVISION FOR INVESTMENTS 3.18 REVENUE RECOGNITION Provision is made for any diminution in value of the investments at the balance sheet date in accordance with the guidance under the Circular No. 228/2009/TT-BTC issued by the Ministry of Finance on Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and 7 December 2009 and the Circular No. 89/2013/TT-BTC issued by the Ministry of Finance on 28 June the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received or 2013. Increases and decreases to the provision balance are recorded as finance expenses in the con- receivable, excluding trade discount, rebate and sales return. The following specific recognition criteria must solidated income statement. also be met before revenue is recognised: Sale of goods 3.13 PAYABLES AND ACCRUALS Revenue is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer, usually upon the delivery of the goods. Payables and accruals are recognised for amounts to be paid in the future for goods and services received, whether or not billed to the Group. Rendering of services Revenue is recognised when the service has been rendered. Interest 3.14 FOREIGN CURRENCY TRANSACTIONS Revenue is recognised as the interest accrues unless collectability is in doubt. Transactions in currencies other than the Group’s reporting currency of VND are recorded at the exchange rates ruling at the date of the transaction. At the end of the year, monetary assets and liabilities 3.18 REVENUE RECOGNITION(continued) denominated in foreign currencies are translated at buying exchange rate announced by the commer- Dividends cial bank where the Group maintains bank accounts ruling at the balance sheet date. All realised and Income is recognised when the Group’s entitlement as an investor to receive the dividend is established. unrealised foreign exchange differences are taken to the consolidated income statement.

3.15 TREASURY SHARES Own equity instruments which are reacquired (treasury shares) are recognised at cost and deducted from equity. No gain or loss is recognised in profit or loss upon purchase, sale, issue or cancellation of the Group’s own equity instruments.

3.16 APPROPRIATION OF NET PROFITS Net profit after tax is available for appropriation to shareholders after approval in the shareholders’ meeting, and after making appropriation to reserve funds in accordance with the Group’s Charter and Vietnam’s regu- latory requirements. The Group maintains the following reserve funds which are appropriated from the Group’s net profit as proposed by the Board of Directors and subject to approval by shareholders at the annual general meeting.  Financial reserve fund This fund is set aside to protect the Group’s normal operations from business risks or losses, or to prepare for unforeseen losses or damages for objective reasons and force majeure, such as fire, economic and financial turmoil of the country or elsewhere.  Investment and development fund This fund is set aside for use in the Group’s expansion of its operation or in-depth investments.  Bonus and welfare fund This fund is set aside for the purpose of pecuniary rewarding and encouraging, common benefits and im- provement of the employees’ benefits and,and presented as a liability on the consolidated balance sheet.

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3.19 TAXATION 3.20 FINANCIAL INSTRUMENTS Current income tax Financial instruments – initial recognition and presentation Current income tax assets and liabilities for the current and prior yearsare measured at the amount expected to Financial assets be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount Financial assets within the scope of the Circular No. 210 /2009/TT-BTC dated 6 November 2009 issued by the are those that are enacted as at the balance sheet date. Ministry of Finance providing guidance for the adoption in Vietnam of the International Financial Reporting Current income tax is charged or credited to the consolidated income statement, except when it relates to Standards on presentation and disclosures of financial instruments (“Circular 210”) are classified, for disclo- items recognised directly to equity, in which case the current income tax is also dealt with in equity. sures in the notes to the consolidated financial statements, as financial assets at fair value through profit or loss, Current income tax assets and liabilities are offset when there is a legally enforceable right for the Group to held-to-maturity investments, loans and receivables or available-for-sale financial assets as appropriate. The offset current income tax assets against current income tax liabilities and when the Group intends to settle its Group determines the classification of its financial assets at initial recognition. current income tax assets and liabilities on a net basis. All financial assets are recognised initially at cost plus directly attributable transaction costs. The Group’s financial assets include cash, cash equivalents,trade and other receivables. Deferred income tax Financial liabilities Deferred income tax is provided using the liability method on temporary differences at the balance sheet date between the tax base of assets and liabilities and their carrying amounts for financial reporting purposes. Financial liabilities within the scope of Circular 210 are classified, for disclosures in the notes to the consolidated financial statements, as financial liabilities at fair value through profit or loss or financial liabilities Deferred income tax liabilities are recognised for all taxable temporary differences, except where the deferred measured at amortised cost as appropriate. The Group determines the classification of its financial liabilities income tax liability arises from the initial recognition of an asset or liability in a transaction which at the time at initial recognition. of the related transaction affects neither the accounting profit nor taxable profit or loss. All financial liabilities are recognised initially at net of directly attributable transaction costs. Deferred income tax assets are recognised for all deductible temporary differences, carried forward unused The Group’s financial liabilities include trade and other payables, and loans. tax credit and unused tax losses, to the extent that it is probable that taxable profit will be available against Financial instruments – subsequent re-measurement which deductible temporary differences, carried forward unused tax credit and unused tax losses can be uti- There is currently no guidance in Circular 210 in relation to subsequent re-measurement of financial instru- lised, except where the deferred income tax asset in respect of deductible temporary difference which arises ments. Accordingly, the financial instruments are subsequently re-measured at cost. from the initial recognition of an asset or liability which at the time of the related transaction, affects neither Offsetting of financial instruments the accounting profit nor taxable profit or loss.The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit Financial assets and financial liabilities are offset and the net amount reported in the consolidated balance will be available to allow all or part of the deferred income tax asset to be utilised. Previously unrecognised sheet if, and only if, there is a currently enforceable legal right to offset the recognised amounts and there is an deferred income tax assets are re-assessed at each balance sheet date and are recognised to the extent that intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously. it has become probable that future taxable profit will allow the deferred income tax assets to be recovered. 3.21 SEGMENT INFORMATION Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled based on tax rates and tax laws that have been enacted at A segment is a component determined separately by the Group which is engaged in providing products or the balance sheet date. related services (business segment), or providing products or services in a particular economic environment (geographical segment), that is subject to risks and returns that are different from those of other segments. Deferred income tax is charged or credited to the consolidated income statement, except when it relates to items recognised directly to equity, in which case the deferred income tax is also dealt with in the equity account. Deferred income tax assets and liabilities are offset when there is a legally enforceable right for the Group to offset current income tax assets against current income tax liabilities and when they relate to income taxes levied by the same taxation authority on either the same taxable entity or when the Group intends either settle current income tax liabilities and assets on a net basis or to realise the assets and settle the liabilities simultaneously, in each future year in which significant amounts of deferred income tax liabilities or assets are expected to be settled or recovered.

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4. DISPOSAL OF EQUITY INTEREST Details of movements of provision for doubtful debts VND On 23 September 2014, the Company disposed allshares in Sai Gon Fuel Joint Stock Company to Ms Tran Thi Thu Phuong and Sai Gon Transport Agency Joint Stock Company in accordance with the Share Current year Previous year Transfer Agreements dated 23 September 2014 at the selling price of VND 174,453,518,000. Accord- ingly, the Group incurred a loss of VND 1,667,321,778 from this transaction,and was recognised in the consolidated income statement (Note 23). At beginning of year 8.719.473.559 7.752.218.659 Add: Provision during the year - (967.254.900) Less: Disposal of a subsidiary (931.927.300) 5. CASH AND CASH EQUIVALENTS At end of year 7.787.546.259 8.719.473.559 VND

Ending balance Beginning balance

Cash on hand 29.251.327.486 33.096.471.915 7. INVENTORIES Cash at banks 6.653.427.710 18.313.361.447 VND Cash in transit 1.801.316.000 2.505.358.889 Ending balance Beginning balance Cash equivalents 234.599.264.879 453.906.552.933

TOTAL 272.305.336.075 507.821.745.184 Merchandise goods 1.252.394.534.919 974.547.900.904 Finished goods 129.280.128.300 34.000.318.883 Work in process 25.709.641.474 23.435.085.328 Tools and supplies 19.923.350.233 15.249.323.609 6. CURRENT ACCOUNTS RECEIVABLE VND Raw materials 9.498.967.373 35.727.945.679 Goods in transit 608.973.823 4.383.788.692 Ending balance Beginning balance TOTAL 1.437.415.596.122 1.087.344.363.095

Trade receivables 43.282.823.370 52.341.746.512 In which: Inventories of VND 570,000,000,000 were pledged as collateral for short-term loans obtained from com- Due from third parties 43.282.823.370 52.341.746.512 mercial banks (Note 15).

Advances to suppliers 16.213.997.161 8.912.739.502 In which: Due from third parties 16.213.997.161 8.912.739.502 8. OTHER CURRENT ASSETS VND Other receivables 19.615.577.417 23.485.827.790 In which: Ending balance Beginning balance Due from third parties 19.615.577.417 23.485.827.790

Provision for doubtful debts (7.752.218.659) (8.719.473.559) Short-term rental deposits 13.588.573.996 11.685.238.240 Advances to employees 644.633.055 948.490.580

NET 71.324.851.689 76.020.840.245 TOTAL 14.233.207.051 12.633.728.820

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FINANCIAL STATEMENTS 2014

9. TANGIBLE FIXED ASSETS 10. INTANGIBLE FIXED ASSETS VND VND Buildings and Machinery and Motor vehicles Office equip- Total Land use rights Computer software Total structures equipment ment

Cost: Cost: Beginning balance Beginning balance 147.284.311.942 111.093.495.287 13.374.704.748 18.503.462.515 290.255.974.492 Additions 291.340.705.353 1.112.471.613 292.453.176.966 Additions 3.855.569.925 28.312.584.378 3.578.453.727 570.841.192 36.317.449.222 Decrease due to disposal of a - 6.826.215.970 6.826.215.970 Decrease due to disposal of (27.516.251.371) (17.901.134.848) (1.570.039.031) (1.240.563.717) (48.227.988.967) subsidiary (6.157.436.365) - (6.157.436.365) a subsidiary (3.065.337.514) (4.505.491.463) (4.945.665.483) (308.326.073) (12.824.820.533) Ending balance 285.183.268.988 7.938.687.583 293.121.956.571 Disposals Accumulated amortization: Ending balance 120.558.292.982 116.999.453.354 10.437.453.961 17.525.413.917 265.520.614.214 Beginning balance In which: Amortization for the year (1.029.617.114) (767.749.389) (1.797.366.503) Fully depreciated 101.262.000 40.096.488.007 3.037.674.490 2.364.791.157 45.600.215.654 Decrease due to disposal of a (123.262.190) (1.104.528.926) (1.227.791.116) Accumulated depreciation: subsidiary 1.152.879.304 - 1.152.879.304 Ending balance - (1.872.278.315) (1.872.278.315) Beginning balance (23.962.054.915) (70.618.706.336) (10.043.223.644) (11.098.268.814) (115.722.253.709) Depreciation for the year (6.265.492.687) (11.795.555.747) (843.260.685) (3.315.942.923) (22.220.252.042) Net carrying amount: Decrease due to disposal of Beginning balance 290.311.088.239 344.722.224 290.655.810.463 a subsidiary 10.862.804.631 8.282.131.173 537.940.054 672.853.956 20.355.729.814 Ending balance 285.183.268.988 6.066.409.268 291.249.678.256 Disposals 3.065.337.514 3.903.800.612 5.259.110.533 317.501.063 12.545.749.722 Ending balance (16.299.405.457) (70.228.330.298) (5.089.433.742) (13.423.856.718) (105.041.026.215) Net carrying amount: Land use rights with the carrying amount of VND 69,152,139,738 were pledged to obtain loans from Beginning balance 123.322.257.027 40.474.788.951 3.331.481.104 7.405.193.701 174.533.720.783 commercial banks (Note 19). Ending balance 104.258.887.525 46.771.123.056 5.348.020.219 4.101.557.199 160.479.587.999

11. INVESTEMENT PROPERTIES Buildings and machineries with the carrying amount of VND 15,234,478,078 were pledged to obtain VND loans from commercial banks (Note 19). Land use right Building Total

Cost: Beginning balance 77.157.702.364 316.237.500 77.473.939.864 Decrease from disposal of a subsidiary (77.245.002.199) (316.237.500) (77.561.239.699) Reclassified 87.299.835 - 87.299.835 Ending balance - - -

Accumulated amortization: Beginning balance (1.499.089.869) (271.300.638) (1.770.390.507) Depreciation for the year (360.993.942) (492.967.391) (853.961.333) Decrease from disposal of a subsidiary 2.183.328.747 764.268.029 2.947.596.776 Reclassified (323.244.936) - (323.244.936) Ending balance - - - Net carrying amount: Beginning balance 75.658.612.495 44.936.862 75.703.549.357 Ending balance

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FINANCIAL STATEMENTS 2014

12. LONG-TERM INVESTMENTS 12.2 OTHER LONG-TERM INVESTMENTS VND 12.1 INVESTMENT IN ASSOCIATE Name Ending balance Beginning balance

Number of shares Cost of investment Number of shares Cost of investment VND VND Name Ending balance Beginning balance

Cost of investment % of Cost of investment % of Dong A Joint Stock 38.496.250 395.271.613.400 38.496.250 395.271.613.400 VND interest VND interest Commercial Bank (DAB) (i) Saigon M&C Real Estate 2.615.215 65.380.375.000 2.615.215 65.380.375.000 Joint Stock Company Quehuong Liberty Joint Dong A Land Joint Stock - 916.662 42.499.920.000 Company 81.456.342.588 30,62 80.652.729.586 30,62 Stock Company Hoang Minh Giam project - 10.089.500.000 Gia Dinh Development VND Investment Corporation - 625.000 10.000.000.000 Ending balance Beginning balance Petec Coffee Joint stock Company - 29.200 296.000.000 Cost of investment in associates 91.866.300.000 91.866.300.000 Others 65.000.000 65.000.000 Accumulated lossof the associate (8.540.632.787) (9.344.245.789) Dividends received (1.869.324.625) (1.869.324.625) TOTAL 460.716.988.400 523.602.408.400

Provision for long-term TOTAL 81.456.342.588 80.652.729.586 investments (10.308.951.400) (14.550.000.000)

NET 450.408.037.000 509.052.408.400 Dong A Land Joint Stock Company (“DAL”) is a shareholding company incorporatedunder the Law on Enterprise of Vietnam pursuant to the Business Registration Certificate No. 4103001739 issued by the Department of Planning and Investment of Ho Chi Minh City on 24 July 2003. DAL’s registered head of- (i) DAB’s shares were pledged to obtain loans from commercial banks (Note 15). fice is located at 43R/12, Ho Van Hue Street, Ward 9, Phu Nhuan District, Ho Chi Minh City, Vietnam. DAL’s principal activities are to provide design services, project management, construction services, to provide real estate consulting services and real estate agency, and to trade houses and interior products.

12.3 PROVISION FOR LONG-TERM INVESTMENTS VND

Current year Previous year

At beginning of year 14.550.000.000 10.800.000.000 Add: Provision created during the year - 3.750.000.000 Less: Decrease due to disposal of a subsidiary (4.241.048.600) -

At end of year 10.308.951.400 14.550.000.000

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FINANCIAL STATEMENTS 2014

13. GOODWILL 15. SHORT-TERM LOANS VND Movements in goodwill during the year are as follows: VND Ending balance Beginning balance Cost: Beginning balance 89.462.385.361 Short-term loans from banks (i) 804.324.426.041 921.080.789.816 Decrease from disposal of a subsidiary (89.462.385.361) Short-term loans from individuals (ii) 317.316.702.000 234.315.577.160 Current portion of long-term loans (Note 19) 10.045.000.000 8.576.000.000 Ending balance - TOTAL 1.131.686.128.041 1.163.972.366.976

Accumulated amortisation: (4.473.119.268) Beginning balance (6.709.678.902) Amortisation for the year (11.182.798.170) Decrease from disposal of a subsidiary HOW TO MAKE PURE GOLD 24K

Ending balance -

Net carrying amount: Beginning balance 84.989.266.093

Ending balance -

14. LONG-TERM PREPAID EXPENSES VND Ending balance Beginning balance

Office and retail shop renovation costs 4.158.587.626 6.831.856.742 Retail shop rentals 3.198.215.073 3.670.835.189 Tool and supplies 5.190.345.181 3.198.868.997

TOTAL 12.547.147.880 13.701.560.928

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FINANCIAL STATEMENTS 2014

(i) Details of short-term loans with floating rate from commercial banks to finance the Group’s work- (ii) Details of individual loans with floating rate to finance the Group’s working capital requirements are ing capital requirements are as follows as follows:

VND Banks Ending balance Maturity date Interest Collateral % p.a. VND Lender Ending balance VND Maturity date Interest Collateral % p.a. Asia Commercial Joint Stock 208.300.000.000 From 9 January 2015 From 6 The Group's Bank - Main Transaction Office to 26 March 2015 to 6.5 DAB shares Individuals 317.316.702.000 2 July 2015 From 1 Unsecured to 5 Vietnam Joint Stock Com- 138.453.326.647 From 6 January 2015 From 2.8 Inventories mercial Bank for Industry and to 30 March 2015 to 5.9 Trade - Ho Chi Minh Branch 16. TRADE PAYABLES Joint Stock Company Bank for 122.893.085.681 From 3 January 2015 From 2.8 Unsecured VND Foreign Trade of Vietnam – to 23 March 2015 to 5.9 Ending balance Beginning balance Ho Chi Minh Branch

Southeast Asia Commercial 90.000.000.000 From 11 March 2015 6,5 Unsecured Due to third parties 140.059.263.813 109.627.278.389 Due to a related party 1.504.954.000 Joint Stock Bank to 29 March 2015 -

Petrolimex Group Commer- 70,000,000,000 From 27 February 6 Inventories TOTAL 140.059.263.813 111.132.232.389 cial Joint Stock Bank - Ho Chi 2015 to 9 March 2015 Minh Branch

CTBC Bank Company Limtied 63,000,000,000 From 10 January 2015 From 5.2 Unsecured 17. STATUTORY OBLIGATIONS – Ho Chi Minh Branch to 30 January 2015 to 5.5 VND Ending balance Beginning balance Shinhan Bank Vietnam Lim- 60,000,000,000 From 10 January 2015 From 5 Unsecured ited – Ho Chi Minh Branch to 30 to 5.5 Corporate income tax (Note 25.2) 32.257.181.576 34.652.596.198 Value-added tax 13.079.594.203 7.371.279.970 556.781.866 6.259.805.521 Military Commercial Joint 20,393,013,713 From 25 January 2015 4.7 Inventories Others Stock Bank – Ho Chi Minh to 28 February 2015 Branch

Ho Chi Minh City Housing 15,900,000,000 09 January 2015 5.7 Inventories TOTAL 45.893.557.644 48.283.681.689 Development Commercial Joint Stock Bank – Ho Chi Minh Branch

Vietnam Prosperity Joint Stock 15,385,000,000 19 February 2015 4.5 Inventories Commercial Bank – Ho Chi Minh Brach

TOTAL 804.324.426.041

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FINANCIAL STATEMENTS 2014

18. OTHER PAYABLES Details of the long-term loans with floating rate from the commercial banks to finance the Group’s working capital requirements are as follows:

VND VND Ending balance Beginning balance Banks Ending balance Maturity date Interest Collateral VND % p.a. Trade union fees 4.912.336.783 577.634.092 Social and health insurance 5.824.124.515 - 25.564.302.188 Others 22.340.556.629 Dong A Commer- 78.128.000.000 29 April 2016 6 Land use right of land cial Joint Stock lot located at 577 Nguy- Bank - Head en Kiem, Ward 9, Phu TOTAL 27.252.893.412 31.966.060.795 Office Nhuan District, Ho Chi Minh City; house located at 52A- 52B Nguyen Van TroiStreet, Ward 15, Phu 19. LONG-TERM LOANS Nhuan District, Ho Chi Minh City and building VND and structures located at Le Thanh Ton Street , Ben Ending balance Beginning balance Thanh Ward , District 1, Ho Chi Minh City Loans from banks 147.174.000.000 138.159.036.649

Land use right of land In which: Asia Commercial 59.001.000.000 29 April 2016 6,5 lot located at 16-18 Thu Current portion (Note 15) 10.045.000.000 8.576.000.000 Joint Stock Bank - 31 December Khoa Huan street, District Non-current portion 137.129.000.000 129.583.036.649 Main Transaction 2020 1, Ho Chi Minh CityLand Office use right of land lot located at 2 Duong Quang Ham street, Binh Thanh District, Ho Chi Minh City

TOTAL 137.129.000.000

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FINANCIAL STATEMENTS 2014

20. OWNERS’ EQUITY 20.2 CAPITAL TRANSACTIONS WITH OWNERS AND DISTRIBUTION OF DIVIDENDS 20.1 MOVEMENTS IN OWNERS’ EQUITY VND Current year Previous year - -

VND Contributed share capital Beginning balance 755.970.350.000 719.978.350.000 35.992.000.000 Increasein year - 35.992.000.000

Total (93.597.185.500) (29.084.442.000) (22.285.541.431) 242.495.467.974 163.171.192.453 1.318.220.581.226 1.296.522.973.569 (241.907.534.200) 1.318.220.581.226 1.241.739.016.273 Ending balance 755.970.350.000 755.970.350.000

Dividends paid 241.907.534.200 93.597.185.500 Dividends declared 241.907.534.200 93.597.185.500 Undistributed earnings 273.530.620.443 202.733.012.786 274.298.476.490 - 163.171.192.453 (93.597.185.500) (41.257.421.000) (29.084.442.000) 273.530.620.443 242.495.467.974 (241.907.534.200) (49.100.000.000) (22.285.541.431) 20.3 SHARES – ORDINARY SHARES

Ending balance Beginning balance Number of shares Number of shares 66.734.153.783 Financial reserve fund 57.634.153.783 46.376.732.783 - - - 11.257.421.000 - 57.634.153.783 - - 9.100.000.000 -

Shares authorised to be issued 75.597.035 75.597.035 Shares issued and fully paid Ordinary shares 75.597.035 75.597.035 Treasury shares (709) (709) Investment and development fund 126.070.897.000 166.070.897.000 96.070.897.000 - - - 30.000.000.000 - 126.070.897.000 - - 40.000.000.000 - Ordinary shares Shares in circulation 75.596.326 75.596.326 Ordinary shares

(7.090.000) (7.090.000) - - - - - (7. 09 0.000) - - - - (7.090.000) Treasury shares ̃

20.4 EARNINGS PER SHARE

The following table shows the income and share data used in the basic and diluted earnings per share calculations: VND 105.021.650.000 105.021.650.000 105.021.650.000 - - - - - 105.021.650.000 - - - - Share premium Current year Previous year

Net profit attributable to ordinary equity holders of the Company 242.495.467.974 163.171.192.453 Weighted average number of ordinary shares Share capital 755.970.350.000 755.970.350.000 719.978.350.000 35.992.000.000 - - - - 755.970.350.000 - - - - during the year for basic earnings per share 75.596.326 72.877.150

Basic and diluted earnings per share 3.208 2.239

There have been no dilutive potential ordinary shares during the year and up to the date of these consolidated financial statements. Previous year Beginning balance Capital increase Net profit for the year Dividends paid Profit appropriation Transfer to bonus and welfare fund Ending balance Current year Beginning balance Net profit for the year Dividendspaid Profit appropriation Transfer to bonus and welfare fund Ending balance 120 121 ANNUAL REPORT PNJ - 2014 SEEING THE QUALITY IN YOU

FINANCIAL STATEMENTS 2014

21. REVENUE 22. COSTS OF GOODS SOLD AND SERVICES RENDERED 21.1 REVENUE FROM SALE OF GOODS AND RENDERING OF SERVICES VND VND Current year Previous year Current year Previous year Cost of gold, silver and gemstone 6.406.635.018.755 6.949.345.429.458 Gross revenue 9.297.810.872.565 8.973.965.897.995 Cost of oil, gasoline 1.889.614.030.755 1.276.501.528.129 Of which: Cost of accessories 10.339.492.458 8.316.439.999 Sale of gold, silver and jewelry 7.293.513.471.782 7.611.715.510.190 Cost of rendering of services 3.393.999.670 3.241.020.899 Sale of oil, gasoline 1.968.961.904.427 1.313.994.762.889 Cost of investment properties - 7.090.309.408 Rendering of services 20.613.001.351 29.913.547.651 Sale of accessories 14.722.495.005 10.455.218.391 TOTAL 8.309.982.541.638 8.244.494.727.893 Sale of investment properties - 7.886.858.874 Less: (98.592.775.013) (59.783.311.660) Sales return (16.390.474.227) (11.963.078.881) Value-added tax applying direct method (82.202.300.786) (47.820.232.779) 23. FINANCE EXPENSES VND Net revenue 9.199.218.097.552 8.914.182.586.335 Current year Previous year Of which: Sale of gold, silver and jewelry 7.195.380.287.678 7.551.932.198.530 Interest expense 79,682,197,799 83,525,727,307 Sale of oil, gasoline 1.968.502.313.518 1.313.994.762.889 Loss from disposal of its investment 6,772,956,000 - Rendering of services 20.613.001.351 29.913.547.651 Loss from disposal a subsidiary 1,667,321,778 - Sale of accessories 14.722.495.005 10.455.218.391 Realised foreign exchange losses 964,406,647 530,688,195 Sale of investment properties - 7.886.858.874 (Reversal provision) provision for investments (490,724,600) 914,265,314 Others 1,658,496,601 -

TOTAL 90.254.492.225 84.970.680.816

24. PRODUCTION AND OPERATING COSTS 21.2 FINANCE INCOME VND VND

Current year Previous year Current year Previous year

Raw materials 8.318.149.954.817 6.872.839.994.572 Interest income 9.907.458.935 8.910.778.895 Labour costs 196.647.826.741 206.253.924.347 Dividends earned 8.422.164.000 4.973.376.250 Depreciation and amortization 31.011.683.393 23.809.470.760 Foreign exchange gains 409.104.517 9.913.712.730 Expenses for external services 140.630.305.595 60.407.074.545 Others 768.978 Others 7.691.926.404 33.189.953.509

TOTAL 18.739.496.430 23.797.867.875 TOTAL 8.694.131.696.950 7.196.500.417.733

122 123 ANNUAL REPORT PNJ - 2014 SEEING THE QUALITY IN YOU

FINANCIAL STATEMENTS 2014

25. CORPORATE INCOME TAX A reconciliation between the profit before tax and taxable profit is presented below: The Group has the obligation to pay corporate income tax ("CIT") at the rate of 22% of taxable profits. VND

The tax returns filed by the Group are subject to examination by the tax authorities. As the application Current year Previous year of tax laws and regulations is susceptible to varying interpretations, the amounts reported in the consolidated financial statements could change at a later date upon final determination by the tax authorities. Profit before tax 335.033.708.883 233.007.287.265 Adjustments: Disposal of a subsidiary 37.536.997.255 - 25.1 CIT EXPENSE Amortised goodwill 6.709.678.902 4.473.119.268 VND Non-deductible expenses 3.992.383.321 3.850.640.125 Change in accrued expenses 998.238.764 1.142.984.543 Current year Previous year (Reversal of provision)provision for investments Unrealised foreign exchange losses (13.323.210.310) 15.390.245.680 Current CIT expense 79.455.050.132 63.397.865.936 Dividends earned - 121.085.676 Adjustment for under accrual of tax from prior years 792.476.264 - Share of losses (profits) of associates (8.422.164.000) (4.973.376.250) (803.613.002) 579.477.436 TOTAL 79.455.050.132 64.190.342.200

Estimated current taxable profit 361.722.019.813 253.591.463.743 25.2 CURRENT CIT Estimated current CIT 79.455.050.132 63.397.865.936 The current tax payable is based on taxable profit for the current year. The taxable profit of the Group Increase from acquisition of a subsidiary - 2.065.090.141 for the year differs from the profit as reported in the consolidated income statement because it excludes Decrease due to disposal of a subsidiary (2.648.752.294) items of income or expense that are taxable or deductible in other years and it further excludes items Adjustment for under accrual of CIT from prior years - 792.476.264 that are not taxable or deductible. The Group’s liability for current tax is calculated using tax rates that CIT payable at beginning of year 34.638.232.422 12.203.462.214 have been enacted at balance sheet date. CIT paid during the year (79.187.348.685) (43.806.298.357)

CIT payable at end of year 32.257.181.575 34.652.596.198

25.3 DEFERRED CIT The following are the deferred tax assets and liabilities recognized by the Group, and the movements thereon, during the current and prior reporting year VND

Consolidated balance sheet Consolidated income statement

Ending Beginning balance balance Current year Previous year

Accrued expenses 921.462.852 701.850.324 293.307.944 220.310.692

124 125 ANNUAL REPORT PNJ - 2014 SEEING THE QUALITY IN YOU

FINANCIAL STATEMENTS 2014

26. TRANSACTIONS WITH RELATED PARTIES

Significant transactions with related parties during the year were as follows: VND VND

Related parties Relationship Nature of transaction Amount 3.999.452.578 1.885.914.261 34.519.326.833 18.739.496.430 255.871.804.695 (98.436.517.013) 889.418.320.914 (90.254.654.225) 335.033.546.883 (79.161.742.188) 9.211.257.833.817 2.828.672.303.349 1.532.279.527.042 (484.755.530.497) Dong A Joint Stock Com- Related party Dividends received 7,699,250,000 9.309.694.350.830 2.824.672.850.771 1.497.760.200.209

mercial Bank Total

Dong A Land Joint Stock Associate Services rendered 5,313,662,665 Company (6.058.769.841) (6.058.769.841) - (21.996.805.575) (22.060.674.626) Elimination (215.499.997

Remuneration to members of the Board of Directors, the Board of Supervision and Management: - VND Current year Previous year 55.352.296 55.352.296 - 52.150.619.987 Others Salaries and bonus 8.445.600.000 7.352.559.205 8.735.699.093

27. OPERATING LEASE COMMITMENTS

The Group leases shopsand outlets under operating lease arrangements.The minimum lease commitment 20.557.649.055 20.557.649.055 - 18.553.582.157 1.625.018.416 8.483.302.588 as at 31 December 2014 under the operating lease agreement is as follows: Jewellery inspectionservices VND

Ending balance Beginning balance

Within 1 year 14.095.891.829 17.480.110.344 From 1 to 5 years 34.668.159.280 32.573.796.164 Oil, gasoline 78.888.282.763 Over 5 years 6.356.902.800 1.968.961.904.427 (459.590.909)

36.271.432.000 1.968.502.313.518 -

TOTAL 85.035.483.109 56.410.809.308 Accessories 14.722.495.005 4.383.002.547 28. SEGMENT INFORMATION 14.722.495.00 - 5.450.124.840 The primary segment reporting format is determined to be business segments as the Group’s risks and rates of return are affected predominantly by differences in the products and services produced. The operating businesses are organized and managed consolidated according to the nature of the products and services provided, with each segment representing a strategic business unit that offers different products and serves

different markets. Gold, silver and gemstone 7.213.478.793.784 2.822.665.949.349 1.518.195.856.419 The Group is principally engaged in trading gold, silver, jewelry, accessories and gemstone; provision of 7.311.455.719.888 (97.976.926.104) 789.143.533.92 jewelry inspection service, investment property, oil, and gasoline. The following tables present revenue and profit certain assets liabilities information regarding the Group’s business s egment. Transfer prices between business segments are set on an arm’s length basis in a manner similar to transactions with third parties. Segment revenue, segment expense and segment results include transfers between business segments. Those transfers are eliminated in preparation of consolidated financial statements. The Group operates in one geographical segment which is Vietnam. For the year ended 31 December 2014: Revenue Sale to external customers Sale deduction Total revenue Results Segment gross profit Unallocated expenses Finance income Finance expenses Other profit Net profit before CIT CIT expense Net profit for the year Assets and liabilities Segment assets Unallocated assets Total assets Segment liabilities Unallocated liabilities Total liabilities 126 127 ANNUAL REPORT PNJ - 2014 SEEING THE QUALITY IN YOU

FINANCIAL STATEMENTS 2014

29. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES VND The Group’s principal financial liabilities comprise loans, trade and other payables. The main purpose of Total these financial liabilities is to finance the Group’s operations. The Group has trade and other receivables, cash, cash equivalents and short-term deposits that arise directly from its operations. The Group does not hold 362.376.572

4.003.428.418 or issue any derivative financial instruments. 23.797.867.875 68.784.672.108 169.037.255.757 669.687.858.442 (84.970.680.816) 233.007.287.265 (63.970.031.508) (59.783.311.660) 8.914.182.586.335 2.956.698.990.457 1.550.680.871.025 (375.870.134.808) 8.973.965.897.995 2.952.695.562.039 1.481.896.198.917 The Group is exposed to market risk, credit risk and liquidity risk.

Management reviews and agrees policies for managing each of these risks which are summarized below.

MARKET RISK Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of

Elimination changes in market prices. Market prices comprise four types of risk: interest rate risk, currency risk, commodity (557.022.726) (14.394.433.983) - (14.394.433.983) (85.595.995.411) (17.913.615.563) price risk and other price risk, such as equity price risk. Financial instruments affected by market risk include loans, depositsand available-for-sale investments. The sensitivity analyses in the following sections relate to the position as at 31 December 2014and 31De- cember2013. Interest rate risk Investment property 796.549.466 - 7.886.858.874 - 52.150.619.987 7.886.858.874 Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Group’s exposure to market risk for changes in interest rate relates primarily to the Group’s loans, deposits with floating interest rates. The Group manages its interest rate risk by keeping close watch on relevant market situation, in order to con- template and adapt its leverage level as well as financing strategies to the prevailing situation. Interest rate sensitivity Jewellery inspection services 17.425.807.049 20.666.827.948 - 13.803.186.625 1.816.120.546 20.666.827.948 The following table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion of loans. With all other variables held constant, the Company’s profit before tax is affected through the impact on floating rate borrowings as follows: Gasoline VND 1.323.241.482.592 46.739.954.463 393.867.103.742 270.352.381.181 1.323.241.482.592 Increase/decrease Effect on in basis points profit before tax

Current year 10.455.218.391 - 6.733.246.387 10.455.218.391 - Accessories 2.138.778.392 VND +200 (2.742.580.000) VND -200 2.742.580.000

Previous year VND +200 (2.591.660.733) VND -200 2.591.660.733 2.571.737.400.709 1.227.641.312.753 7.566.326.632.513 7.626.109.944.173 (59.783.311.660) 603.143.791.798 Gold, silver and gemstone For the year ended 31 December 2013: Results Total revenue Segment gross profit Unallocated expenses Finance income Finance expenses Other profit Net profit before CIT CIT expense Net profit for the year Assets and liabilities Segment assets Unallocated assets Total assets Total assets Segment liabilities Unallocated liabilities Total liabilities Revenue Sale to external customers Sale deduction Total revenue 128 129 ANNUAL REPORT PNJ - 2014 SEEING THE QUALITY IN YOU

FINANCIAL STATEMENTS 2014

MARKET RISK Liquidity risk

Foreign currency risk The liquidity risk is the risk that the Group will encounter difficulty in meeting financial obligation due to Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate shortage of funds. The Group’s exposure to liquidity risk arises primarily from mismatches of maturities of because of changes in foreign exchange rates. The Group’s exposure to the risk of changes in foreign ex- financial assets and liabilities. change rates relates primarily to the Group’s operating activities. The Group monitors its liquidity risk by maintaining a level of cash, cash equivalents and bank loans deemed The Group does not employ any derivative financial instruments to hedge its foreign currency exposure. adequate by management to finance the Group’s operations and to mitigate the effects of fluctuations in cash No analysis on foreign currency sensitivity was performed for the year ended 31 December 2014 since the flows. Group’s exposure to foreign currency changes for all other currencies is not material. The table below summarizes the maturity profile of the Group’s financial liabilities based on contractual Equity price risk undiscounted payments: The Group’s listed and unlisted equity securities are susceptible to market price risk arising from uncertainty about future values of the investment securities. The Group manages equity price risk by placing a limit on VND equity investments. The Board of Directors reviews and approves all equity investment decisions. As at 31 December 2014, the exposure to listed and unlisted equity securities at fair value was Less than 1 year From 2 to 5 years Total VND450,342,875,000 460,651,988,400 (31 December 2013: VND 503,151,908,400513,447,908,400). A decrease of 10% in the value of the listed and unlisted securities could have an impact of approximately Ending balance VND 45,034,287,50046,065,198,840(31 December 2013: VND 50,315,190,84051,344,790,840) on the Loans 1.131.686.128.041 137.129.000.000 1.268.815.128.041 Group’s profit before tax, depending on whether or not the decline is significant or prolonged. An increase Trade payables 140.059.263.813 - 140.059.263.813 of 10% in the value of the listed and unlisted securities would increase Group’s profit before tax by VND Other payables, and accrued 45,034,287,500 46,065,198,840(31 December 2013: VND 50,315,190,84051,344,790,840). expenses 31.441.360.922 - 31.441.360.922

Commodity price risk The Group exposes to commodity price risk in relation to purchase of certain commodities. The Group man- TOTAL 1.303.186.752.776 137.129.000.000 1.440.315.752.776 ages its commodity prices risk by keeping close watch on relevant information and situation of commodity market in order to properly manage timing of purchases, production plans and inventories level. The Group Beginning balance does not employ any derivative financial instruments to hedge its commodity price risk. Loans 1.163.972.366.976 129.583.036.649 1.293.555.403.625 Trade payables 111.132.232.389 - 111.132.232.389 Credit risk Other payables, and accrued Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer expenses 35.490.736.885 - 35.490.736.885 contract, leading to a financial loss. The Group is exposed to credit risk from its operating activities (primarily for trade receivables) and from its financing activities, including deposits with banks. Trade receivables TOTAL 1.310.595.336.250 129.583.036.649 1.440.178.372.899 Customer credit risk is managed by the Group based on its established policy, procedures and control. The Group’s exposure to credit risk in relation with receivables is mainly influenced by the individual characteristics of each customer. The Group mostly has cash sale which are not exposured to the credit risk. COLLATERAL The Group has pledged its inventories, fixed assets and DAB’s shares in order to fulfil the collateral require- Bank deposits ments for loans obtained from commercial banks (Notes 15 and 19). The Group's bank balances are mainly maintained with well-known banks in Vietnam. Credit risk from The Group did not hold any collateral at 31 December 2014and 31 December 2013. balances with banks is managed in accordance with the Group’s policy. The Group’s maximum exposure to credit risk for the components of the consolidated balance sheet at each reporting dates are the carrying amounts as illustrated in Note 4. The Group evaluates the concentration of credit risk in respect to bank de- posit as low.

130 131 ANNUAL REPORT PNJ - 2014 SEEING THE QUALITY IN YOU

FINANCIAL STATEMENTS 2014

30. FINANCIAL ASSETS AND FINANCIAL LIABILITIES VND VND 52.341.746.512 14.766.354.231 509.052.408.400 507.821.745.184 1.083.982.254.327 Beginning balance 4.483.046.000 35.490.736.885 106.649.186.389 1.440.178.372.899 Fair value 1.293.555.403.625 Beginning balance Ending balance 450.408.037.000 43.282.823.370 11.828.031.158 272.305.336.075 777.824.227.603 Ending balance 1.268.815.128.041 140.059.263.813 - 31.441.360.922 1.440.315.752.776 Provision (14.550.000.000) - (8.719.473.559) - (23.269.473.559) Beginning balance Beginning balance 1.293.555.403.625 106.649.186.389 4.483.046.000 35.490.736.885 1.440.178.372.899 Cost 523.602.408.400 52.341.746.512 23.485.827.790 507.821.745.184 1.107.251.727.886 Carrying amount Carrying amount Provision Ending balance 1.268.815.128.041 140.059.263.813 - 31.441.360.922 1.440.315.752.776 (10.308.951.400) - (7.787.546.259) - (18.096.497.659) Ending balance Cost 460.716.988.400 43.282.823.370 19.615.577.417 272.305.336.075 795.920.725.262 Financial liabilities Loans Trade payables Payables to related parties Other payables, and accrued expense TOTAL TOTAL Financial assets Other long-term invest - ments Trade receivables Other receivables equiva - and cash Cash lents Set out below is a comparison by class of the carrying amounts and fair value Group’s financial instruments that are car ried in consolidated finan - cial statements. 132 133 ANNUAL REPORT PNJ - 2014 SEEING THE QUALITY IN YOU

FINANCIAL STATEMENTS 2014 PNJ DISTRIBUTION NETWORK

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) as at and for the year ended 31 December 2014

The fair values of the financial assets and liabilities are included at the amount at which the instrument could HO CHI MINH CITY DISTRICT 1: be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. PNJ JEWELRY CENTER, 174 Le Thanh Ton Vincom Dong Khoi (Level 1) Parkson Saigon Tourist, 35Bis - 45 Le Thanh Ton The fair values of the financial assets and liabilities had not yet been formally assessed and determined as at PNJ JEWELRY CENTER, 292 Hai Ba Trung 31 December 2014 and 31 December 2013. However, management assessed that the fair values of these PNJSilver Store, 21 Tran Quang Khai Nowzone, Ground Floor, 235 Nguyen Van Cu financial assets and liabilities were not materially different from their carrying value as at balance sheet date. Co.opmart Cong Quynh, 189C Cong Quynh PHU NHUAN DISTRICT: PNJ JEWELRY CENTER, 52A - 52B Nguyen Van Troi PNJ JEWELRY CENTER, 159 Phan Dang Luu PNJSilver Store, 338 Phan Dinh Phung Co.opmart Nguyen Kiem, 571 Nguyen Kiem Big C Hoang Van Thu, 202B Hoang Van Thu Co.opmart Rach Mieu DISTRICT 2: Parkson Cantavil, Hanoi Highway, An Phu Ward 31. EVENTS AFTER THE BALANCE SHEET DATE DISTRICT 3: PNJ JEWELRY CENTER, 666 Nguyen Dinh Chieu There have been no significant events occurring after the balance sheet date which would require adjustments PNJSilver Store, 305 Nguyen Dinh Chieu PNJ JEWELRY CENTER, 132 Cach Mang Thang Tam or disclosures to be made in the consolidated financial statements. Co.opmart Nguyen Dinh Chieu, 168 Nguyen Dinh Chieu DISTRICT 5: PNJ JEWELRY CENTER, 7 An Duong Vuong Parkson Hung Vuong, 126 Hung Vuong DISTRICT 6: PNJ JEWELRY CENTER, 255A - 255B Hau Giang DISTRICT 7: Lotte Mart, 469 Nguyen Huu Tho DISTRICT 8: Coopmart Tuy Ly Vuong, 40-54, Tuy Ly Vuong DISTRICT 9: Coopmart Hanoi Highway, 191 Quang Trung DISTRICT 10: Maximark 3/2, 3-3C, 3rd of February street Coopmart Ly Thuong Kiet, 497 Hoa Hao PNJSilver Store, 127 - 3rd of February street PNJSilver Store, 477 Nguyen Tri Phuong Big C Mien Dong, 268 To Hien Thanh DISTRICT 11: PNJ JEWELRY CENTER, 71 Ong Ich Khiem PNJSilver Store, 140 Ong Ich Khiem Duong Quang Hai Dang Thi Lai Cao Thi Ngoc Dung Parkson Flemington, 184 Le Dai Hanh Co.opmart Phu Tho, Phu Tho - Lu Gia Apartments Preparer Chief Accountant General Director DISTRICT 12: Coopmart Nguyen Anh Thu, 167/2, Nguyen Anh Thu 30 March 2015 TAN BINH DISTRICT: PNJ JEWELRY CENTER, 300 Hoang Van Thu PNJ JEWELRY CENTER, 510 Ly Thuong Kiet PNJ JEWELRY CENTER, 230B Le Van Sy PNJSilver Store, 139 Cach Mang Thang Tam PNJSilver Store, 459 Truong Chinh Parkson C & T Tan Son Nhat, 60A Truong Son Maximark Cong Hoa, 15-17 Cong Hoa Tan Son Nhat International Airport, International Terminal TAN PHU DISTRICT: PNJ JEWELRY CENTER, 237 Nguyen Son BigC Phu Thanh, 53 Nguyen Son BigC Pandora, 1/1 Truong Chinh AEON shopping center, 30 Bo Bao Tan Thang GO VAP DISTRICT: PNJ JEWELRY CENTER, 362A Nguyen Van Nghi PNJ JEWELRY CENTER, 21/3 Quang Trung PNJ JEWELRY CENTER, 403 Thong Nhat Big C Go Vap, Co.opmart Phan Van Tri, 543/1 Phan Van Tri Co.opmart Quang Trung, 304 Quang Trung BINH THANH DISTRICT: PNJ JEWELRY CENTER, 127A Dinh Tien Hoang PNJ JEWELRY CENTER, 60 Xo Viet Nghe Tinh PNJSilver Store, 76 No Trang Long PNJSilver Store, 131 Hoang Hoa Tham PNJSilver Store, 201 Xo Viet Nghe Tinh PNJSilver Store, 732 Xo Viet Nghe Tinh BINH TAN DISTRICT: Big C An Lac, 1231 National Highway 1A Coopmart Binh Tan, 158 No.19 Street, Binh Tri Dong B THU DUC DISTRICT: PNJ JEWELRY CENTER, 141 Vo Van Ngan CoopXtra, National Highway 1A, Linh Trung Ward Vincom Thu Duc, 216 Vo Van Ngan HOC MON DISTRICT: PNJ JEWELRY CENTER, 143/6 Nguyen Anh Thu CU CHI DISTRICT: Coopmart Cu Chi, 357 Highway 22

134 135 ANNUAL REPORT PNJ - 2014 SEEING THE QUALITY IN YOU

PNJ DISTRIBUTION NETWORK DISTRIBUTION SYSTEM MAP OF PNJ

HA NOI AND NORTHERN REGION SOUTH EASTERN REGION HAI BA TRUNG DISTRICT: PHAN THIET: Coopmart Phan Thiet, 01 Nguyen Tat Thanh PNJ JEWELRY CENTER, 6A Tran Nhan Tong; BINH PHUOC: Coopmart Binh Phuoc Vincom, 191 Ba Trieu BIEN HOA: PNJSilver Store, 548 Bach Mai PNJ JEWELRY CENTER, 97 30th of April Street PNJSilver Store, 26 Tran Dai Nghia PNJ JEWELRY CENTER, 482 Pham Van Thuan CAU GIAY DISTRICT: PNJSilver Store, 105 National Highway 1A PNJ JEWELRY CENTER, 334 Cau Giay BigC Bien Hoa, Long Binh Tan Ward PNJSilver Store, 256 Cau Giay BINH DUONG: Big C in Hanoi, 222 Tran Duy Hung PNJ JEWELRY CENTER, 3A Hung Vuong DONG DA DISTRICT: AEON Binh Duong, Coopmart Binh Duong, PNJ JEWELRY CENTER, 129 Chua Boc BigC Di An PNJSilver Store, 136 Ton Duc Thang BA RIA: Co.opmart Ba Ria, Nguyen Huu Tho PNJSilver Store, 5B10 Pham Ngoc Thach VUNG TAU: BA DINH DISTRICT: PNJ JEWELRY CENTER, 380 Le Hong Phong PNJSilver Store, 30 Doi Can Coopmart Vung Tau, 36 Nguyen Thai Hoc PNJSilver Store, 263 Kim Ma TAY NINH: HA DONG DISTRICT: Coopmart Tay Ninh Coopmart Ha Dong Coopmart Trang Bang PNJSilver Store, 87A Quang Trung PNJ JEWELRY CENTER, 877 Cach Mang Thang Tam DISTRICT LONG BIEN : LONG AN: PNJSilver Store, 345 Ngoc Lam Coopmart Long An, An TP.Tan Big C Savico, 7-9 Nguyen Van Linh PNJ JEWELRY CENTER, 51 Truong Dinh, Tan An City PNJSilver Store, 383 Ngo Gia Tu THANH XUAN DISTRICT: SOUTH WESTERN REGION Vincom Royal, 172 Nguyen Trai TIEN GIANG: Coopmart My Tho HAI PHONG: PNJ JEWELRY CENTER, 188 Ap Bac - My Tho 18A Lach Tray, Hai Phong BEN TRE: Co.opmart Ben Tre Parkson - Thuy Duong Plaza CAN THO CITY: BigC Hai Phong, Floor 1, Le Hong Phong PNJ JEWELRY CENTER, 46 Ngo Quyen VINH CITY: BigC Vinh, 2 Quang Trung Sense Can Tho City, 01 Hoa Binh Highway VINH PHUC: PNJSilver Store, 80A Le Xoay PNJSilver Store, 114 Hai Ba Trung NAM DINH: BigC Nam Dinh PNJSilver Store, 88A Mau Than THANH HOA: BigC Thanh Hoa TRA VINH: Co.opmart Tra Vinh QUANG NINH: Vincom Ha Long DONG THAP: Co.opmart Cao Lanh HAI DUONG: Big C shopping center PNJ JEWELRY CENTER, 86 Nguyen Hue, Cao Lanh City HA TINH: Co.op Mart Ha Tinh AN GIANG: PNJ JEWELRY CENTER, 63 Hai Ba Trung CENTRAL REGION Coopmart Long Xuyen, 12 Nguyen Hue HUE: SOC TRANG: Coopmart Soc Trang PNJ JEWELRY CENTER, 10 Hung Vuong BAC LIEU: Co.opmart Bac Lieu Co.opmart Hue, 06 Tran Hung Dao, Phu Hoa Ward KIEN GIANG: Co.opmart Kien Giang Big C Hue, 181 Ba Trieu PNJ JEWELRY CENTER, 38 Hoang Hoa Tham PNJSilver Store, 10 Hung Vuong VINH LONG: DANANG: PNJ JEWELRY CENTER, 1F Hoang Thai Hieu PNJ JEWELRY CENTER, 70-72 Tran Phu Coopmart Vinh Long PNJ JEWELRY CENTER, 123 Hung Vuong LONG XUYEN: Co.opmart Long Xuyen PNJ JEWELRY CENTER, 359 Phan Chu Trinh CA MAU: Coopmart Ca Mau PNJSilver Store, 77 Phan Chu Trinh PNJ JEWELRY CENTER, 4A Hung Vuong Big C Danang, 225 Hung Vuong HOI AN: TAY NGUYEN REGION PNJ JEWELRY CENTER, 633 Hai Ba Trung GIA LAI: QUANG NGAI: PNJ JEWELRY CENTER, 14 Hoang Van Thu, Pleiku city PNJ JEWELRY CENTER, 36 Hung Vuong Coopmart Pleiku Co.opmart Quang Ngai BUON MA THUOT: QUY NHON: PNJ JEWELRY CENTER, C1-C2 Dien Bien Phu 334-336 Tran Hung Dao Coopmart Buon Ma Thuoc Big C Quy Nhon, Co.opmart Quy Nhon LAM DONG: NHA TRANG: PNJ JEWELRY CENTER, 08 Hoa Binh area, Da Lat PNJ JEWELRY CENTER, 19A Quang Trung Coopmart Bao Loc, Water Tower, Tran Phu street, Bao Loc Co.opmart Nha Trang, Maximark Nha Trang BigC Da Lat, Ho Tung Mau

By the end of 2014, the retail system has had 169 stores, including 78 gold jewelry stores (gold only jewelry stores and mixed stores), 83 silver jewelry stores and 8 Cao Fine Jewellery stores. Besides, PNJ also has nearly 3,000 wholesale customers nationwide, PNJ jewelry has been exported to the US, Canada, Denmark, Germany, Australia, Japan ...

136 137 PHU NHUAN JEWELRY JOINT STOCK COMPANY 170E Phan Dang Luu Street, Ward 3, Phu Nhuan District, HCMC