AUDITED SEPARATE FINANCIAL STATEMENTS 2016

PHU NHUAN JEWELRY JOINT STOCK COMPANY Incorporated in the Socialist Republic of Vietnam AUDITED SEPARATE FINANCIAL STATEMENTS For the year ended 31 December 2016... PHU NHUAN JEWELRY JOI

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PHU NHUAN JEWELRY JOINT STOCK COMPANY (Incorporated in the Socialist Republic of Vietnam)

AUDITED SEPARATE FINANCIAL STATEMENTS For the year ended 31 December 2016

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PHU NHUAN JEWELRY JOINT STOCK COMPANY

170E Phan Dang Luu Street, Ward 3, Phu Nhuan District

Ho Chi Minh City, Vietnam

TABLE OF CONTENTS CONTENTS

STATEMENT OF THE BOARD OF DIRECTORS

INDEPENDENT AUDITORS’ REPORT

BALANCE SHEET

INCOME STATEMENT

CASH FLOW STATEMENT

NOTES TO THE SEPARATE FINANCIAL STATEMENTS

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STATEMENT OF THE BOARD OF DIRECTORS

The Board of Directors of Phu Nhuan Jewelry Joint Stock Company (the “Company”) presents this

report together with the Company’s separate financial statements for the year ended 31

December 2016

THE BOARDS OF MANAGEMENT, SUPERVISORS AND DIRECTORS

The members of the Boards of Management and Directors and Supervisors of the Company who

held office during the year and to the date of this report are as follows:

Board of Management

Ms Cao Thi Ngoc Dung Chairwoman

Ms Nguyen Thi Bich Ha Member

Ms Pham Vu Thanh Giang Member (resigned on 24 November 2016)

Ms Pham Thi My Hanh Member (appointed on 24 November 2016)

Mr Le Huu Hanh Member (appointed on 18 March 2016)

Mr Le Quang Phuc Member (appointed on 18 March 2016)

Board of Directors

Ms Cao Thi Ngoc Dung General Director

Ms Nguyen Thi Cuc Deputy General Director

Mr Nguyen Vu Phan Deputy General Director (resigned on 01 July 2016)

Ms Pham Thi My Hanh Deputy General Director

Board of Supervisors

Mr Nguyen Thanh Du Head of Board of Supervisors (appointed on 01 July 2016)

BOARD OF DIRECTORS’ STATEMENT OF RESPONSIBILITY

The Board of Directors of the Company is responsible for preparing the separate financial

statements, which give a true and fair view of the financial position of the Company as at 31

December 2016, and its financial performance and its cash flows for the year then ended in

accordance with Vietnamese accounting standards, accounting regime for enterprises and legal

regulations relating to financial reporting In preparing these separate financial statements, the

Board of Directors is required to:

e select suitable accounting policies and then apply them consistently;

* make judgments and estimates that are reasonable and prudent;

estate whether applicable accounting principles have been followed, subject to any material

departures disclosed and explained in the separate financial statements ;

* prepare the separate financial statements on the going concern basis unless it is

inappropriate to presume that the Company will continue in business; and

e design and implement an effective internal control system for the purpose of properly

preparing and presenting the separate financial statements so as to minimize errors and

frauds

The Board of Directors is responsible for ensuring that proper accounting records are kept, which

disclose, with reasonable accuracy at any time, the financial position of the Company and that

the separate financial statements comply with Vietnamese accounting standards, accounting

regime for enterprises and legal regulations relating to financial reporting The Board of Directors

is also responsible for safeguarding the assets of the Company and hence for taking reasonable

steps for the prevention and detection of frauds and other irregularities

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STATEMENT OF THE BOARD OF DIRECTORS (Continued)

The Board of Directors confirms that the Company has complied with the above requirements in preparing these separate financial statements

For and on behalf of the Board of T

20 March 2017

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a Deloitte Vietnam Company Ltd

District 1, Ho Chi Minh City, Vietnam

Tel :+848 3910 0751

Fax:+848 3910 0750 www.deloitte.com/vn

INDEPENDENT AUDITORS’ REPORT

Phu Nhuan Jewelry Joint Stock Company

We have audited the separate financial statements of Phu Nhuan Jewelry Joint Stock Company (the “Company”), prepared on 20 March 2017 as set out from page 5 to page 30, which comprise the separate balance sheet as at 31 December 2016, and the separate statement of income and separate statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information

Board of Directors’ Responsibility for the Separate Financial Statements

The Board of Directors is responsible for the preparation and fair presentation of these separate financial statements in accordance with Vietnamese Accounting Standards, accounting regime for enterprises and legal regulations relating to financial reporting and for such internal control as the Board of Directors determines is necessary to enable the preparation of separate financial statements that are free from material misstatement, whether due to fraud or error

Auditors’ Responsibility

Our responsibility is to express an opinion on these separate financial statements based on our audit We conducted our audit in accordance with Vietnamese Standards on Auditing Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the separate financial statements are free from material misstatement

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the separate financial statements The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the separate financial statements, whether due to fraud or error In making those risk assessments, the auditors consider internal control relevant to the Company’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Board of Directors, as well as evaluating the overall presentation of the separate financial statements

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion

Opinion

In our opinion, the separate financial statements give a true and fair view of the financial position

of the Company as at 31 December 2016, and its financial performance and its cash flows for the year then ended in accordance with Vietnamese Accounting Standards, accounting regime for enterprises and legal regulations relating to financial reporting

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee

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Deloitte

INDEPENDENT AUDITORS’ REPORT (Continued) Emphasis of matter

We have reviewed adjustment entries presented in Note 3 of Notes to the financial statements

which were applied to restate the financial statements for the year ended 31 December 2015 In

our opinion, these adjustment entries are appropriately and properly presented

For and on behalf of

DELOITTE VIETNAM COMPANY LIMITED

20 March 2017

Ho Chi Minh City, S.R Vietnam

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III Short-term receivables

1 Short-term trade receivables

2 Short-term advances to suppliers

3 Other short-term receivables

4 Deficits in assets awaiting solution

IV Inventories

1, Inventories

V Other short-term assets

1 Short-term prepayments

2 Value added tax deductibles

3 Taxes and other receivables

from the State budaet

B, NON-CURRENT ASSETS

I Long-term receivables

1 Other long-term receivables

II Fixed assets

1 Tangible fixed assets

III Long-term assets in progress

1 Long-term construction in progress

IV Long-term financial investments

1 Investments in subsidiaries

2 Investments in associates

3 Equity investments in other entities

4, Provision for impairment of

long-term financial investments

V Other long-term assets

1 Long-term prepayments

2 Deferred tax assets

TOTAL ASSETS (270=100+200)

FORM B 01-DN Issued under Circular No.200/2014/TT-BTC dated 22 December 2014 of the Ministry of Finance BALANCE SHEET

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FORM B 01-DN Issued under Circular No.200/2014/TT-BTC dated 22 December 2014 of the Ministry of Finance

BALANCE SHEET (Continued)

As at 31 December 2016

Closing balance 2,092,223,670,982

2,026,224,469,738 325,581,536,057 55,810,213,794 86,322,377,598 26,829,393,326 6,354,714,739 27,167,081,033 1,457,954,945,047

40,204,208,144 65,999,201,244 628,026,000 58,994,000,000 6,377,175,244

1,498,831,363,922

1,498,831,363,922 982,745,770,000

982,745,770,000 (7,090,000) 144,087,556,918 372,005,127,004 372,005,127,004

Unit: VND

Opening balance

(Restated) 1,664,234,808,960

1,582,002,581,591 191,490,239,870 20,602,104,470 107,468,040,432 16,702,705,380 4,909,222,768 28,340,702,014 1,195,260,458,896 17,229,107,761

82,232,227,369 3,403,668,000 72,388,000,000 6,440,559,369 1,293,967,038,919

1,293,967,038,919 982,745,770,000 982,745,770,000

(7,090,000) 219,647,610,783 91,580,748,136 8,719,182,874 82,861,565,262

2 Short-term advances from customers 312

voting rights

the prior year end

Nguyen Thanh Dat

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PHU NHUAN JEWELRY JOINT STOCK COMPANY FORM B 02-DN 170E Phan Dang Luu Street, Ward 3, Phu Nhuan District Issued under Circular No.200/2014/TT-BTC

Ho Chi Minh City, Vietnam dated 22 December 2014 of the Ministry of Finance

INCOME STATEMENT For the year ended 31 December 2016

Unit: VND Prior year

1 Gross revenue from goods sold

3 Net revenue from goods sold

(60=50-51-52)

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PHU NHUAN JEWELRY JOINT STOCK COMPANY FORM B 03-DN

170E Phan Dang Luu Street, Ward 3, Phu Nhuan District Issued under Circular No.200/2014/TT-BTC

Ho Chi Minh City, Vietnam dated 22 December 2014 of the Ministry of Finance

CASH FLOW STATEMENT For the year ended 31 December 2016

Unit: VND

Prior year

I CASH FLOWS FROM OPERATING ACTIVITIES

II CASH FLOWS FROM INVESTING ACTIVITIES

1 Acquisition and construction of fixed assets 21 (85,508,117,129) (69,216,587,907)

instrument of other entities

III, CASH FLOWS FROM FINANCING ACTIVITIES

Net cash generated by/(used in) by financing activities 40 1,739,161,436 (23,845,566,945)

Cash and cash equivalents at the end of the year

20 March 2017

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

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PHU NHUAN JEWELRY JOINT STOCK COMPANY FORM B 09-DN

170E Phan Dang Luu Street, Ward 3, Phu Nhuan District Issued under Circular No.200/2014/TT-BTC

NOTES TO THE SEPARATE FINANCIAL STATEMENTS

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

Structure of ownership

Phu Nhuan Jewelry Joint Stock Company (the “Company”) was incorporated in Vietnam,

under 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 has been listed on the Ho Chi Minh City Stock Exchange (“HOSE”) with PNJ

code from 23 March 2009 pursuant to Decision No.129/DKNY issued by the General

Director of HOSE on 26 December 2008

The number of employees as at 31 December 2016 was 3,951 (as at 31 December 2015:

3,274)

Operating industry and principal activities

The Company's principal activities are to trade gold, silver, jewelry and gemstones, and

to import and export jewelry in gold, silver and gemstones

Normal production and business cycle

The Company’s normal production and business cycle is carried out for a time period of

12 months or less

The Company’s structure

The Parent Company’s head office is located at 170E Phan Dang Luu Street, Ward 3, Phu

Nhuan District, Ho Chi Minh City, Vietnam In addition, the Company also has has two

hundred and sixteen (216) retail shops located in various provinces and cities in Vietnam

As at 31 December 2016, the Company’s subsidiaries were:

- CAO Fashion Company Limited - Subsiadiary

- PNJ Laboratory Company Limited - Subsiadiary

As at 31 December 2016, the Company also fourty three (43) branches located in various

provinces and cities in Vietnam, in which, the big branches were:

- Branch of Phu Nhuan Jewelry Joint Stock Company- Bien Hoa Branch

- Branch of Phu Nhuan Jewelry Joint Stock Company- Hue City

- Branch of Phu Nhuan Jewelry Joint Stock Company- Vinh Long Branch

- Branch of Phu Nhuan Jewelry Joint Stock Company- Nha Trang Branch

- Branch of Phu Nhuan Jewelry Joint Stock Company- Da Nang Branch

- Branch of Phu Nhuan Jewelry Joint Stock Company- Ha Noi Branch

- Branch of Phu Nhuan Jewelry Joint Stock Company- Can Tho Branch

- Branch of Phu Nhuan Jewelry Joint Stock Company- Tay Nguyen Branch

Disclosure of information comparability in the separate financial statements

Comparative figures are the figures of the audited separate financial statements for the

year ended 31 December 2015 which is restated

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The accompanying separate financial statements are presented to reflect the balance sheet as at 31 December 2016, the income statement and separate cash flow statements

for the year then ended Therefore, the Company does not consolidate the investments in subsidiaries in the separate financial statements The Company’s investments are recognized under the accounting policies presented un Note 5 below

The accompanying separate financial statements are not intended to present the financial position, results of operations and cash flows in accordance with accounting principles and practices generally accepted in countries and jurisdictions other than Vietnam

Financial year

The Company’‘s financial year begins on 01 January and ends on 31 December

RESTATEMENT OF PRIOR YEAR SEPARATE FINANCIAL STATEMENTS

During the year, the Board of Directors decided to restate the financial statements for the year ended 31 December 2015 to carry out some adjustments related to the re- calculation of corporation income tax which the Company must supplement relating to provision for impairment of the investments in Dong A Joint Stock Commercial Bank and finalizse corporate income tax, value added tax, personal income tax and withholding tax for the period from 2014 to 2015 under Decision No 2448/QD-TCT dated 9 December

2016 issued by Tax Department The preparation and restatement of prior year financial statements have been performed in accordance with Vietnamese Accounting Standard

No 29 - “Change in accounting policies, accounting estimates and errors”

Details of the impact of these restatements on the prior year financial statements are as follows:

Balance sheet as at 31 December 2015 Codes As previously reported As restated Changes

prior year end

- Retained earnings of the current year 421b 159,618,661,348 82,861,565,262 (76,757,096,086)

Income Statement For the year ended 31 December 2015

Codes _ As previously reported As restated Changes

services rendered

Hs ee from goods sold and services 4g 7,665,175,229,636 — 7,662,857,758,848 — (2,317,470,788)

oo from goods sold and services 49 1,138,349,549,215 1136,032078427 (2,317470,788)

Loss from other activities 40 (2,602,836,053) (10,496,954,071) — (7,894,118,018) Accounting profit before tax 50 200,173,218,539 189,961,629,733 (10,211,588,806)

Deferred corporate income tax 52 (1,575,489,218) (1,941,616,332) (366,127,114)

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NOTES TO THE SEPARATE FINANCIAL STATEMENTS (Continued) FORM B 09-DN

Cash Flow Statement For the year ended 31 December 2015 Codes As previously reported As restated Changes

working capital

Increase in account payables 11 40,246,437,507 50,458,026,313 10,211,588,806

Net cash generated by operating activities 20 65,711,729,610 65,711,729,610 x

ADOPTION OF NEW ACCOUNTING GUIDANCE

On 21 March 2016, the Ministry of Finance issued Circular No 53/2016/TT-BTC (“Circular

53”) amending and supplementing certain articles of Circular No.200/2014/TT-BTC dated

22 December 2014 of the Ministry of Finance guiding the accounting regime for

enterprises Circular 53 is effective for the financial years beginning on or after 01

January 2016 The Board of Directors has adopted Circular 53 in the preparation and

presentation of the Company’s financial statements for the year ended 31 December

2016 However, the adoption of Circular 53 does not have significant impact on the

comparability of the figures in the Company's financial statements

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies, which have been adopted by the Company in the

preparation of these separate financial statements, are as follows:

Estimates

The preparation of separate financial statements in conformity with Vietnamese

Accounting Standards, accounting regime for enterprises and legal regulations relating to

financial reporting requires management to make estimates and assumptions that affect

the reported amounts of assets, liabilities and disclosures of contingent assets and

liabilities at the date of the separate financial statements and the reported amounts of

revenues and expenses during the financial year Although these accounting estimates

are based on the management's best knowledge, actual results may differ from those

estimates

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand, demand deposits and short-term,

highly liquid investments that are readily convertible to known amounts of cash and

which are subject to an insignificant risk of changes in value

Financial investments

Held-to-maturity investments

Held-to-maturity investments comprise investments that the Company has the positive

intent or ability to hold to maturity, including term deposits

Investments in subsidiaries, joint ventures, associates

Investment in subsidiaries

A subsidiary is an entity over which the Company has control Control is achieved where

the Company has the power to govern the financial and operating policies of an investee

enterprise so as to obtain benefits from its activities

Investments in associates

An associate is an entity over which the Company has significant influence and that is

neither a subsidiary nor an interest in joint venture Significant influence is the power to

participate in the financial and operating policy decisions of the investee but not control

or joint control over those policies

=< = =

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Interests in subsidiaries, joint ventures and associates are initially recognised at cost The

Company’s share of the net profit of the investee after acquisition is recognised in the

income statement Other distributions received other than such profit share are deducted

from the cost of the investments as recoverable amounts

Investments in subsidiaries, joint ventures and associates are carried in the balance

sheet at cost less provision for impairment of such investments (if any)

Equity investments in other entities

Equity investments in other entities represent the Company’s investments in ordinary

shares of the entities over which the Company has no control, joint control, or significant

influence

Equity investments in other entities are carried at cost less provision for impairment

Provisions for impairment of investments

Provisions for impairment of investments in subsidiaries, joint ventures and associates

are made in accordance with Circular No 228/2009/TT-BTC dated 7 December 2009

issued by the Ministry of Finance on “Guiding the appropriation and use of provisions for

devaluation of inventories, loss of financial investments, bad debts and warranty for

products, goods and construction works at enterprises”, Circular No 89/2013/TT-BTC

dated 28 June 2013 by the Ministry of Finance amending and supplementing Circular No

228/2009/TT-BTC and prevailing accounting regulations

Receivables

Receivables represent the amounts recoverable from customers or other debtors and are

stated at book value less provision for doubtful debts

Provision for doubtful debts is made for receivables that are overdue for six months or

more, or when the debtor is in dissolution, in bankruptcy, or is experiencing similar

difficulties and so may be unable to repay the debt

Inventories

Inventories are stated at the lower of cost and net realisable value Cost comprises direct

materials and where applicable, direct labour costs and those overheads that have been

incurred in bringing the inventories to their present location and condition Cost is

calculated using the weighted average method Net realisable value represents the

estimated selling price less all estimated costs to completion and costs to be incurred in

marketing, selling and distribution

The evaluation of necessary provision for inventory obsolescence follows current

prevailing accounting regulations which allow provisions to be made for obsolete,

damaged, or sub-standard inventories and for those which have costs higher than net

realisable values as at the balance sheet date

Tangible fixed assets and depreciation

Tangible fixed assets are stated at cost less accumulated depreciation The costs of

purchased tangible fixed assets comprise their purchase prices and any directly

attributable costs of bringing the assets to their working condition and location for their

intended use

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Tangible fixed assets are depreciated using the straight-line method over their estimated

useful lives as follows:

Current year (Years)

Gain or loss resulting from sales and disposals of tangible fixed assets is the difference

between profit from sales or disposals of assets and their residual values and is

recognised in the income statement

Leasing

Leases where substantially all the rewards and risks of ownership of assets remain with

the leasing company are accounted for as operating leases Rentals payable under

operating leases are charged to the income statement on a straight-line basis over the

term of the relevant lease

Intangible assets and amortization

Intangible assets represent computer software that is stated at cost less accumulated

amortisation and is amortized on the straight-line basis over their estimated useful lives

of 3 years

Land use rights are recorded as an intangible asset on the balance sheet when the

Company received the certificate of land use rights Historical cost of land use rights

include all costs directly related to transfer of assets into ready for use status and are not

amortized because land use rights have long usage time

Construction in progress

Properties in the course of construction for selling, are carried at cost Cost includes land

use rights and construction cost for trade centers and stores in accordance with the

Company's accounting policy Depreciation of these assets, on the same basis as other

assets, commences when the assets are ready for their intended use

Prepayments

Prepayments are expenses which have reported as short-term or long-term prepayments

in the balance sheet and are amortized over the period for which the amount are paid or

the period in which economic benefits are generated in relation to these expenses

2

`

The following types of expenses are recorded as long term prepayments:

- Prepaid rental includes land and shop rental prepaid for many years under operating

lease contracts which are amortized over the lease term;

- Tools and consumables with large value issued in use which can be used for more than

one year, and others which are amortized to the income statement over 2 to 3 years

Borrowing costs

Interest expense includes interest and other costs incurred related to the loans of the

Company and is recorded to the expenses incurred during the year

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(c) the amount of revenue can be measured reliably;

(d) it is probable that the economic benefits associated with the transaction will flow to the Company; and

(e) the costs incurred or to be incurred in respect of the transaction can be measured reliably

Revenue of a transaction involving the rendering of services is recognised when the outcome of such transactions can be measured reliably Where a transaction involving the rendering of services is attributable to several periods, revenue is recognised in each period by reference to the percentage of completion of the transaction at the balance sheet date of that period The outcome of a transaction can be measured reliably when all four (4) following conditions are satisfied:

(a) the amount of revenue can be measured reliably;

(b) it is probable that the economic benefits associated with the transaction will flow to the Company;

(c) the percentage of completion of the transaction at the balance sheet date can be measured reliably; and

(d) the costs incurred for the transaction and the costs to complete the transaction can

be measured reliably

Interest income is accrued on a time basis, by reference to the principal outstanding and

at the applicable interest rate

Dividend income from investments is recognised when the Company’s right to receive payment has been established

Severance allowance payable

The severance allowance for employees is accrued at the end of each reporting period for all employees having worked at the Company for full 12 months and above Working time serving as the basis for calculating severance allowance shall be the total actual working time subtracting the time when the employees have made unemployment insurance contributions as prescribed by law, and the working time when severance allowance has been paid to the employees The allowance made for each year of service equals to a half

of an average monthly salary under the Vietnamese Labour Code, Social Insurance Code and relevant guiding documents The average monthly salary used for calculation of severance allowance shall be adjusted to be the average of the 6 consecutive months nearest to the date of the financial statements at the end of each reporting period The increase or decrease in the accrued amount shall be recorded in the income statement Foreign currencies

Transactions arising in foreign currencies are translated at exchange rates ruling at the transaction date The balances of monetary items denominated in foreign currencies as at the balance sheet date are retranslated at the exchange rates on the same date Exchange differences arising from the translation of these accounts are recognised in the income statement

Payable provisions

Payable provisions are recognised when the Company has a present obligation as a result

of a past event, and it is probable that the Company will be required to settle that obligation Provisions are measured at the Board of Directors’ best estimate of the expenditure required to settle the obligation as at the balance sheet date

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