Chairwoman s message

Transcription

1 ANNUAL REPORT 2010

2 2 Summary

3 Opening Summary COMPANY OVERVIEW BOARD OF DIRECTORS REPORT BUSINESS MANAGEMENT FINANCIAL REPORT 3 Chairwoman s message Opening Summary Chairwoman s message COMPANY OVERVIEW Company information Company history Vision Mission Business Philosophy Titles and Awards PNJ s analysis and ranking by Plimsoll World Portfolio Analysis Company structure 1. Board of Management 2. Board of Directors 3. Board of Supervisory 4. Company structure 5. Key managers 6. Subsidiaries and associations BOARD OF DIRECTORS REPORT Performance report Distribution network Competitive advantages Brands of PNJ BUSINESS MANAGEMENT Report from Board of Management Shareholders information Risk management 2011 activity orientation Investor relations Enterprise s culture FINANCIAL REPORT Independent auditor s report Extracted control activity report of PNJ in 2010 Financial report

4 4 Chairwoman s message Ms. Cao Thi Ngoc Dung Chairwoman - General Director of PNJ

5 opening Summary COMPANY OVERVIEW BOARD OF DIRECTORS REPORT BUSINESS MANAGEMENT FINANCIAL REPORT 5 Chairwoman s message Dear Shareholders, Despite the Vietnam economy in 2010 still remains many difficulties, the economy has achieved growth rate of 6.78%, which means 6.5% higher than the planned target; industrial production value increased 14%, which was 12% higher than the annual plan of total retail sales; total retail sales and consumer service revenue were more than 1,561.6 thousand billion, increased 24.5% compared with 2009, total export turnover reached more than 71,6 billion, increased 25.5% compared with Besides, Vietnam economy has faced many difficulties and challenges such as high inflation, interest rates and foreign exchange rate changed out of forecasting; poorly effective investments of stateown enterprises Especially, the year 2010 is marked by complex changes in gold price. Fear of a currency devaluation race takes place on global scale, making the world gold price increase continuously. In that trend, domestic gold price fluctuated constantly. Compared with the end of 2009, the gold price at the end of 2010 has increased 36%. State Bank has launched a series of measures to stabilize the gold market as banning trading-on-account gold, issued gold quotas for a number of businesses and issued policies on gold tariffs, issued Circular 22 regulating on the mobilization and use of capital in gold of commercial banks. In the context of the general difficulties of the economy and especially the uncertain impact of the macro factors have had a large effect to the business activities of jewelry enterprises in general and of PNJ in particular. However, with the outstanding advantages of brand, rich and varied design, which are in line with market demands, modern production technology, improved and professionalized management systems, along with the network was expanded in most key areas and the efforts of all PNJ staff, the performance results in 2010 have gained remarkable achievements. At the end of 2010, total assets of the company was more than 2,200 billion, equity was more than 1,000 billion, total revenue made in 2010 reached 13,077 billion VND, up 35% over the same period last year, total after-tax profit reached billion, exceeding 3% of the yearly plan, up 17.71% compared to Particularly, profit from operations of major brands contributed 72% of total profits Profit growth ( )

6 6 Chairwoman s message 13,077 9,625 Revenue growth ( ) 2,233 3,501 1,801 1,501 1, Growth rate was 6.78%, higher than proposed plan target 6.5% Industrial production value increased 14%, higher than the yearly plan 12% Total retailing and consuming service reached 1,561.6 thousand billion VND, increased 24.5% compared with 2009 Total revenue in 2010 was 13,077 billion VND, increased 35% compared with the same period last year Total profit after-tax reached billion VND, increased 17.71% compared with In 2010, PNJ company also won many awards such as the Quality Award in Asia - Pacific, Top 500 Retailers in Asia - Pacific, Top Jewelry Brand of the Vietnamese High-quality Goods voted by the consumers, Top 7 Largest Private Companies in Vietnam published by VNR 500, and especially the Plimsoll World, a leading international organization specializing in providing industrial reports which collect statistics, make evaluation and publish PNJ ranked the 16th out of 500 largest manufacturing jewelry companies in the world. Success of PNJ in 2010 is the result of a combination between a flexible, specificto-each-stage plan, with the professional production activities of PNJ s jewelry factory which is to ensure the goods are provided fully, timely and meets the highest requirements for customers. Together with a right, timely and effective strategic; activities in market research, market development, distribution development, and other activities in design, HR training, financial management... also contributed to the overall success of the company. Ladies and gentlemen, In 2011, the world economy in general and Vietnam economy in particular are forecast still facing difficulties and challenges, the risks of instability of the major economies like the U.S., the countries of the common European currency region... and the world gold price is also expected to set new peaks in Vietnam economy in the first months of 2011 still remains many uncertainties in the financial, monetary sectors; the complex changes in interest rates, exchange rates affect the operation of enterprises; the management policy in gold business is unclear, which create a psychological impact, investment decisions, consumer s purchasing decisions... Although facing many difficulties and challenges but we must always strive to affirm the spirit in many specific action programs, together with positive growth targets which are is to reach 8,400 billion of revenue, increased 15% (excluding 24K gold export revenue), after-tax profit reached 245 billion - increased 15%, total assets reached VND 2,700 billion, increased 22.7% compared with In order to achieve these targets, it requires the determination of the Board, executive

7 opening Summary COMPANY OVERVIEW BOARD OF DIRECTORS REPORT BUSINESS MANAGEMENT FINANCIAL REPORT 7 Chairwoman s message Success of PNJ in 2010 is the result of a combination between a flexible, specificto-each-stage plan with the professional production activities of PNJ s jewelry factory which is to ensure the goods are provided fully, timely and meets the highest requirements for customers. managers and all PNJ staff to implement the proposed development strategies, in order to maintain PNJ s leading position in the jewelry manufacturing and business in Vietnam and the region. PNJ takes the core business activity is gold jewelry as the priority, build retail system development plans stably and enlargedly, especially pays attention to the growing cities/provinces with rapid consuming growth. PNJ needs to invest in expanding production scale in time to meet domestic demand and export orders. PNJ also has to narrow and the restructure capital investments. Together with the upgrading of management systems towards more and more professional and a team of human resources which not only increases by number but also by greater knowledge and capacity... On behalf of the Board, we would like to thank the authorities, shareholders, partners, customers and the entire PNJ staff, who have trusted, supported, companied to make the success of Phu Nhuan Jewelry Joint Stock Company - PNJ today, and we hope to continue to receive more support and valuable partnership. Kindly regards, Chairwoman Cao Thi Ngoc Dung

8 Essence of heaven and earth coverage in each product

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10 10 Company information

11 opening COMPANY OVERVIEW BOARD OF DIRECTORS REPORT BUSINESS MANAGEMENT FINANCIAL REPORT 11 Company information Company history Vision Mission Business Philosophy Titles and Awards PNJ s analysis and ranking by Plimsoll World Portfolio Analysis Company structure overview: 1. Board of Management 2. Board of Directors 3. Board of Supervisory 4. Company structure 5. Keys managers 6. Subsidiaries and associations Total assets were billion VND, increased 27% compared with 2009 Name of company: PHU NHUAN JEWELRY JOINT STOCK COMPANY Abbreviation: PNJ Address: 170E Phan Dang Luu Street, Ward 3, Phu Nhuan District, HCMC Telephone: Fax: pnj@pnj.com.vn Type of business of the Registration Certificate: Place of issue: Department of Planning and Investment, Ho Chi Minh City First registered: 02/01/2004; Changed the 12th on 16/02/2011 Type of business: Joint stock company Legal representative: Ms. CAO THI NGOC DUNG Position: Chairman General Director Registered capital: VND Total assets: billions VND Type of business: Type of business of the Registration Certificate: No issued by Department of Planning and Investment, Ho Chi Minh City first registered on 02/01/2004 and changed the 12th on 16/02/2011. Business activities for gold, silver, precious metals, precious and semi-precious stones, jewelry, precious metal raw materials, souvenirs, handicrafts and fine art, fashion items and fashion accessories. Export and import of gold jewelry and fine art in gold, silver and other precious metals, diamonds, precious and semi-precious stones, gold bars, gold material. Export and import jewelry, imitation jewelry Production and processing jewelry. Production of ferrous metals and precious metals, gold bars. Sales of machinery and equipment of jewelry sector. Diamonds and gemstones testing services. Inspection services of gold, silver, other precious metals, semi-precious stones. Pawn service. Foreign currency exchange, receipt and payment of foreign currency service. Trading in real estate Trading in restaurants and other related services Trading in motorbikes, cars and other related services Transporting by road Vocational service

12 12 Company history COMPANY HISTORY On April 28th, Phu Nhuan Jewelry Trading Store was founded with an investment of only 14 million VND equivalent to only 9.0 tael of gold at that time and its first 20 employees The company was renamed Phu Nhuan Jewelry Joint Stock Company. This stage witnesses great changes with bold investment in Italian technology production line. In the same year, the company also co-founded Dong A Bank and formed a joint venture with Phu Nhuan House Trading and Development Company PNJ officially launches the Phoenix Gold bar, which contributes to market another payment and saving option in order to serve the investment needs of the people. In the special 15 years of company establishment anniversary with over 1000 employees, PNJ is honored to be awarded the 1st-class Labor Medal by the President, continuing to focus on the construction of company culture PNJ re-launched PNJSilver and launched a premium jewelry line CAO Fine Jewelry. PNJ also became a founding shareholder of An Cu DongA Company, the forerunner of DongA Land In order to meet the needs of the young people, PNJSilver is launched with a high-class silver jewelry line, which has affirmed its pioneering role in the jewelry industry PNJ is equitized into Phu Nhuan Jewelry Joint Stock Company. In this year, PNJ also achieved the title of Top 500 Leading Retailers in Asia - Pacific.

13 opening COMPANY OVERVIEW BOARD OF DIRECTORS REPORT BUSINESS MANAGEMENT FINANCIAL REPORT 13 Company information Company history Vision Mission Business Philosophy Titles and Awards PNJ s analysis and ranking by Plimsoll World Portfolio Analysis Company structure overview: 1. Board of Management 2. Board of Directors 3. Board of Supervisory 4. Company structure 5. Keys managers 6. Subsidiaries and associations Together with branding strategy for PNJ professionally, the year 1995 also marked the first time PNJ exported jewelry and received the 3rd-class Labor Medal PNJ is awarded the 2nd-class Labor Medal by the President. PNJ is also certified the quality management system ISO by DNV organization Beginning to a strategic distribution system development nationwide, the PNJ Branch in Hanoi was established in PNJ is awarded the title of Vietnam High Quality Goods by Saigon Tiep Thi newspaper; this shows the trust of the consumers for PNJ. On April 3rd, PNJ launched new logo and re-launched gold bar trademark under a new name: Phoenix PNJ - Dong A Bank. PNJ is the jewelry sponsor of Miss Universe 2008 contest In July 2010, PNJ starts selling luxury watches of famous brands, and is the main jewelry sponsor for Miss Earth 2010 contest with impressive growth index Entering the USA export market, PNJ was ranked Top 200 Largest Enterprises in Vietnam by United Nations Development Programme (UNDP) and many other valuable awards are the evidence to all efforts of PNJ PNJ shares listed on HOSE increase its chartered capital to 400 billion VND. August 2009, the Fashion Company Limited CAO formally established.

14 14 Vision Mission Business Philosophy Philosophy Customer s rights is our commitment Vision We aim to become the leading jewelry fashion brand, with core attributes being Creativity, Fineness, and Trustworthiness.

15 opening COMPANY OVERVIEW BOARD OF DIRECTORS REPORT BUSINESS MANAGEMENT FINANCIAL REPORT 15 Company information Company history Vision Mission Business Philosophy Titles and Awards PNJ s analysis and ranking by Plimsoll World Portfolio Analysis Company structure overview: 1. Board of Management 2. Board of Directors 3. Board of Supervisory 4. Company structure 5. Keys managers 6. Subsidiaries and associations Mission Our mission is always to enhance customers satisfaction, by diversifying products and services at highest quality and reasonable price, by advancing management and manufacturing system, and improving craftsmen s skills.

16 16 Titles and Awards TITLES AND AWARDS Asia - Pacific s Quality Award 2010 PNJ ranked the 16 th of the Top 500 National Brand 2010 largest jewelry companies in the world, published by Plimsoll.

17 opening COMPANY OVERVIEW BOARD OF DIRECTORS REPORT BUSINESS MANAGEMENT FINANCIAL REPORT 17 Company information Company history Vision Mission Business Philosophy Titles and Awards PNJ s analysis and ranking by Plimsoll World Portfolio Analysis Company structure overview: 1. Board of Management 2. Board of Directors 3. Board of Supervisory 4. Company structure 5. Keys managers 6. Subsidiaries and associations Titles and Awards before 2010 Third-class Independent Medal (2008) First-class, second and third Labor Medal Government s Emulation Flag awarded through the years Certificate of Merit from the Prime Minister through the years Competitive Flag of the People s Committee awarded through the years. Top 500 Retailers in Asia Pacific Award ( ). Best Vietnamese Brand Award (2007) Vietnamese Golden Star Award ( ) Award of leading jewelry brand of Vietnam High Quality Goods - Customers' Choice ( ) Vietnamese record - First enterprise invests the most modern and largest jewelry-production technology in Vietnam (2007) National Quality Award ( ) Strong Brand Award ( ) Typical Saigon Businessman ( ) Ms. Cao Thi Ngoc Dung - Director of PNJ achieved the Second-class Labor Medal and the title of Vietnamese Entrepreneur (2008) Titles and Awards in 2010 Top 500 Retailers in Asia Pacific Award 1. PNJ Union was honored to receive the Third-grade Labor Medal 2. Ms. Cao Thi Ngoc Dung - General Director of PNJ achieved the Firstclass Labor Medal 3. PNJ received the National Quality Gold Award 4. Recognized by the Government as National Brand 5. Voted by consumers as the Number One Jewelry Brand of Vietnam High Quality Goods published by Saigon Tiep Thi Newspaper. 6. PNJ is 1 of 3 Vietnamese enterprises to receive the Asia - Pacific s Quality Award. 7. Award of Top 500 Retailers in Asia Pacific and be among the Top 3 leading retailer enterprises in Vietnam 8. Ranked at the 16th of the world s largest companies producing and trading jewelry published by Plimsoll.

18 18 PNJ s analysis and ranking by Plimsoll World Portfolio Analysis PNJ s analysis and ranking by Plimsoll World Portfolio Analysis

19 opening COMPANY OVERVIEW BOARD OF DIRECTORS REPORT BUSINESS MANAGEMENT FINANCIAL REPORT 19 Company information Company history Vision Mission Business Philosophy Titles and Awards PNJ s analysis and ranking by Plimsoll World Portfolio Analysis Company structure overview: 1. Board of Management 2. Board of Directors 3. Board of Supervisory 4. Company structure 5. Keys managers 6. Subsidiaries and associations I. About Plimsoll Plimsoll World Portfolio Analysis report provides analysis of industry and financial business all over the countries since This organization is based in England and gathered a group of experts working in various fields, providing a range of valued reports for all industries worldwide, which are constantly updated, accurate and easily access by country, continent and all over the world. Plimsoll World Portfolio Analysis is a famous brand in the world for the accuracy and reliability of the analysis reports on business operations, financial of companies and corporations worldwide. Plimsoll Report Analysis with about World Top 500 largest enterprises in the manufacturing jewelry industry has been announced as a typical example. Plimsoll Analysis Report about Top 500 leading manufacturing jewelry companies includes the following contents: Part 1: Best trading partners Section 2: Revenue and the Market Part 3: Profits Part 4: Analysis of individual enterprises Each company of Top 500 Jewelry Manufacturing Industry is evaluated as follows: a. Trading power b. Financial power II. Evaluation of PNJ by Plimsoll Plimsoll World Portfolio Analysis is created for the World Top 500 enterprises in the jewelry industry for 39 countries with a developed jewelry industry such as India, Italy, China, USA, Russia, South Africa... PNJ is the only enterprise in Vietnam in the World Top 500 Jewelry Manufacturing Industry. Moreover, PNJ is the only company in Vietnam and Southeast Asia to be listed on the World Top 16 leading companies in the jewelry industry in total revenue of the industry, increased 14 spots from last year. PNJ is also the only company in Vietnam and Southeast Asia excellently ranked the 23rd on pre-tax profit in the industry, up 9 spots from last year, and passed the leading countries in jewelry which were Thailand, Singapore, and Malaysia. PNJ ranked the 16th in World Top 500 leading jewelry enterprises in total revenue. According to Plimsoll Analysis Report, each PNJ staff s sale revenue was 258,000 USD, ranked higher than the industrial average 183,000 USD

20 20 PNJ s analysis and ranking by Plimsoll World Portfolio Analysis Top 10 largest jewelry companies in the world ranked by number of employees Simultaneously, PNJ was in Top 13 companies which have the fastest growth based on the proportion of revenue development

21 opening COMPANY OVERVIEW BOARD OF DIRECTORS REPORT BUSINESS MANAGEMENT FINANCIAL REPORT 21 Company information Company history Vision Mission Business Philosophy Titles and Awards PNJ s analysis and ranking by Plimsoll World Portfolio Analysis Company structure overview: 1. Board of Management 2. Board of Directors 3. Board of Supervisory 4. Company structure 5. Keys managers 6. Subsidiaries and associations Total revenue increased 145.1% in 2009, ranked higher than the average of the jewelry industry -9.8% According to the global analysis report of Plimsoll World about Top 500 enterprises in the jewelry manufacturing industry, in 2009, the average growth of Top 500 enterprises in the jewelry manufacturing has been declined -9.8%. On the contrary, PNJ, who is in the Top 16 of the leading enterprises of this industry, however, has been experienced the remarkable growth of 145.1%. Chart comparing total revenue of PNJ with the average level of Top 500. Chart comparing profit before tax of large enterprises, PNJ and Top 500 jewelry enterprises.

22 22 Board of Management Board of Management Board of Management 1. Ms. Cao Thi Ngoc Dung Chairwoman 2. Ms. Nguyen Thi Cuc Board Member 3. Mr. Nguyen Vu Phan Vice Chairman Ms. Nguyen Thi Ngo Board Member 5. Mr. Bui Viet Board Member

23 opening COMPANY OVERVIEW BOARD OF DIRECTORS REPORT BUSINESS MANAGEMENT FINANCIAL REPORT 23 Company information Company history Vision Mission Business Philosophy Titles and Awards PNJ s analysis and ranking by Plimsoll World Portfolio Analysis Company structure overview: 1. Board of Management 2. Board of Directors 3. Board of Supervisory 4. Company structure 5. Keys managers 6. Subsidiaries and associations Ms. Cao Thi Ngoc Dung Chairwoman Bachelor Ms. Nguyen Thi Cuc Board Member Master Ms. Nguyen Thi Ngo Board member Bachelor Mr. Bui Viet Board member Ph.D Mr. Nguyen Vu Phan Vice Chairman Master

24 24 Board of Directors & Board of Supervisory Boad Of Directors Ms. Cao Thi Ngoc Dung General Director 2. Ms. Nguyen Thi Cuc Vice General Director of Finance 3. Mr. Nguyen Vu Phan Vice General Director of Technology and Production 4. Mr. Le Huu Hanh Vice General Director of Sale 5. Mr. Nguyen Tuan Quynh Vice General Director of HR and Marketing

25 opening COMPANY OVERVIEW BOARD OF DIRECTORS REPORT BUSINESS MANAGEMENT FINANCIAL REPORT 25 Company information Company history Vision Mission Business Philosophy Titles and Awards PNJ s analysis and ranking by Plimsoll World Portfolio Analysis Company structure overview: 1. Board of Management 2. Board of Directors 3. Board of Supervisory 4. Company structure 5. Keys managers 6. Subsidiaries and associations Board Of Supervisory 1. Ms. Truong Nguyen Thien Kim Head of Supervisory Board Mr. Vo Nhu To Member of Supervisory Board 3. Mr. Tran Van Dan Member of Supervisory Board

26 26 Company structure Company structure BOARD OF SUPERVISORY BOARD OF DIRECTORS OFFICE LEADERSHIP REPRESENTATIVES (ISO) VICE GENERAL DIRECTOR OF SALES SALES DEPARTMENT VICE GENERAL DIRECTOR OF FINANCE ACCOUNTING DEPARTMENT VICE GENERAL DIRECTOR OF TECHNOLOGY & PRODUCTION QUALITY CONTROL DEPARTMENT AN DONG JEWELRY CENTRE IT DEPARTMENT PNJ JEWELRY FACTORY JEWELRY CENTRE / GOLD (SILVER) STORES INTERNAL CONTROL DEPARTMENT BRANCHES ERP DATA GROUP GOLD SALES DEPARTMENT IMPORT/EXPORT DEPARTMENT DESIGNING DEPARTMENT

27 opening COMPANY OVERVIEW BOARD OF DIRECTORS REPORT BUSINESS MANAGEMENT FINANCIAL REPORT 27 Company information Company history Vision Mission Business Philosophy Titles and Awards PNJ s analysis and ranking by Plimsoll World Portfolio Analysis Company structure overview: 1. Board of Management 2. Board of Directors 3. Board of Supervisory 4. Company structure 5. Keys managers 6. Subsidiaries and associations Board of Management BOARD OF DIRECTORS GENERAL DIRECTORS VICE GENERAL DIRECTOR OF HUMAN RESOURCE & MARKETING PROJECT MANAGEMENT UNIT MARKETING DEPARTMENT HUMAN RESOURCE DEPARTMENT ADMINISTRATION DEPARTMENT Total employees: 2.158

28 28 Keys MANAGERS Keys MANGAGERS

29 opening COMPANY OVERVIEW BOARD OF DIRECTORS REPORT BUSINESS MANAGEMENT FINANCIAL REPORT 29 Company information Company history Vision Mission Business Philosophy Titles and Awards PNJ s analysis and ranking by Plimsoll World Portfolio Analysis Company structure overview: 1. Board of Management 2. Board of Directors 3. Board of Supervisory 4. Company structure 5. Keys managers 6. Subsidiaries and associations

30 30 Subsidiaries and associations Subsidiaries and associations DONG A LAND JOINT STOCK COMPANY In the past, it was An Cu Dong A Joint Stock Company, established in 2003 with the motto : A comprehensive solution for settlement. International name: Dong A Land Joint Stock Company Abbreviation: Dong A Land JSC Head office: 43R/12 Ho Van Hue, Ward 9 Phu Nhuan District, HCMC Telephone: (08) Fax: (08) doda@diaocdonga.com Website: SAIGON FUEL CORPORATION On 01st January, 2000, HCMC Petrol Company officially renamed Saigon Fuel Corporation. In 2010, SFC was honored to be rewarded 3rd Class Labor Medal. International name: SAIGON FUEL CORPORATION Abbreviation: SFC Head office: 1A Pham Ngoc Thach, Ben Nghe Ward District 1, HCMC Telephone: (08) Fax: (08) Website:

31 opening COMPANY OVERVIEW BOARD OF DIRECTORS REPORT BUSINESS MANAGEMENT FINANCIAL REPORT 31 Company information Company history Vision Mission Business Philosophy Titles and Awards PNJ s analysis and ranking by Plimsoll World Portfolio Analysis Company structure overview: 1. Board of Management 2. Board of Directors 3. Board of Supervisory 4. Company structure 5. Keys managers 6. Subsidiaries and associations DAI VIET ENERGY JOINT STOCK COMPANY Established since June 2007, Dai Viet Co. is currently has more than 200 General Agents, 2,000 1st and 2nd level Agents, 500 industrial customers stretching from the South to Nha trang. International name: Dai Viet Energy Joint Stock Company Abbreviation: Dai Viet Energy Head office: Block A, 87/1 Street 5 Vinh Loc industrial centre, HCMC Telephone: (08) Fax: (08) info@nangluongdaiviet.com Website: CAO FASHION COMPANY LIMITED In August, 2009, PNJ established CAO Fashion Limited Company. After 2 years of development, CAO Fine Jewelry has 19 stores nationwide. International name: CAO Fashion Company Limited Abbreviation: CAF Head office: 1170E Phan Dang luu, Ward 3 Phu Nhuan District, HCMC Telephone: (08) Fax: (08) Website: PNJ LABORATORY LIMITED COMPANY Established on 11th January, 2011, PNJ Laboratory Company was and is strengthen its position through the most stringent testing standards of the world. Head office: 205 Phan Dang Luu, Ward 1 Phu Nhuan District, HCMC Telephone: (08) Fax: (08) Website:

32 is the Number 1 Jewe of the Vietnamese

33 lry Brand High Quality Goods, Customer's Choice

34 34 Performance report BOARD OF DIRECTORS REPORT Total revenue was billion VND, increased 35,87% compared with 2009

35 opening COMPANY OVERVIEW BOARD OF DIRECTORS REPORT Performance report Distribution network Competitive advantages Brands of PNJ BUSINESS MANAGEMENT FINANCIAL REPORT 35 Performance report The year 2010 was the record year of gold when gold price per "chi" in Vietnam increased 9.5 times due to the increase over 300 US Dollar each ounce of the global gold price, from 1,100 US Dollar to the peak 1,400 US Dollar per ounce. The fluctuation of gold price significantly effected on the manufacture and business activities of all companies including jewelry companies. However, the business of PNJ still had more goods results than expected target. Revenue structure The annual plan s result At the end of the financial year 2010, total asset reached to billion VND, increased by 27% compare to the end of Annual average growth rate was 25%. Total revenue was trillion VND, increased by 25% compare to business plan and by 35.87% compare to Earnings before tax (unconsolidated) were 257,918 billion VND, increased by 5% compare to business plan and by 16.28% compare to Earnings after tax (unconsolidated) were 206,555 billion VND, increased by 3% compare to business plan and by 17,71% compare to Earnings before tax (consolidated) were 263,892 billion VND, equivalent to 95,98% of Earnings after tax (consolidated) were 212,018 billion VND, equivalent to 104% of Earnings per share were VND, increased by 17,5% compare to Increased equity by issuing bonus shares to existing shareholder in the ratio 2:1, PNJ accordingly issued from its surplus capital approximately 20 million bonus shares of VND each, increase its equity by nearly 600 billion VND. Dividend payout ratio in the year 2010 was 25% PNJ s equity 2. The specific operation s result a. Developing human resources of business system firmly, orientating PNJ a leading professional retailer. In 2010, our company focused on training and improving skills and ability for over 700 sale person and supervisor teams in the system. Especially, the reconstructing of the business system to manage nearly 140 retail stores take an important role. b. Reorganizing jewelry factory, making a breakthrough in manufacturing and processing jewel. PNJ pays attention to train, improve skills for part of goldsmiths and enforce the professional workers. Moreover, PNJ engineers not only enhanced technology to apply in producing process but also fabricate themselves some machines in order to augment industrial rate in jewel manufacturing process, increase material retrieving capacity, loss saving rate for all process up to 30% in comparison with itself in 2009, particularly 2,372 "chi" of bullion, equivalent to 7 billion VND, saving mainly manufacturing cost, narrowing down stages, improve productivity, reducing cost in parallel with increasing worker salary while input cost on the way to raise, output in 2010 reached 2,3 million products, increase 15,6 %. Totally and scientifically improving administrative action in factory, establishing a foundation to divide Factory into an independent until the completion of construction at Go Vap in 2011.

36 36 Performance report 2,158 Human resource growth ( ) 1,860 1,802 1,790 1,620 1,595 1, c. Professionalizing financial management: - Financial management and control have to implement in every department, every store, branch; supervise frequently, adjust and update in time suitable process or regulations responding to actual activities, manage closely revenue, cost, improve the effect of company operation - The company concentrated on organizing internal examination system in terms of regional model, aiming to control the implementation of processes, regulations and government policies at all units, subsidiaries. - PNJ has executed good mobilization of capital, managed closely cash flow to meet production-business demand, invested in stores chain, branches and subsidiaries, ensure to balance capital effectively and optically. It also evaluated frequently the effectiveness of using capital, machines, fixed assets, make sure all resource of the company utilized effectively. - With the target of computerizing all activities, in 2010, the company has built the ERP - system management program which is anticipated that executing application for all system in the third quarter of 2011, meeting the demand of quick, in time and effective management d. Special products designed and made by PNJ got Vietnamese Records Experts of design were trained and improved skills to apply technology in designing and creating prototype. PNJ designer team has been focused on improving profession suitable to each product line, enhancing the process in collaborating with business system and marketing operation based on model and market trend. The total number of designed jewelry has increased 30% (in comparison with 2009), the number of product gained both in quantity and quality. PNJ experts has designed 2 products which were famous and got Vietnamese Record: Gold Sim and 2 gold Artichoke (produced by fine gold). e. Developing new product lines, pushing dealing with bullion and expanding the market. In the first quarter of 2010, CAO has launched the new product line named Jemma to the market, which was designed in a trendy and dynamic style to serve the high-income office people. The watch sector was run since July 2010, and it now starts to sell in retails some of the well-known watch brands in its area, the business is good so far. In 2010, in exporting activities, the company has got 4 more new partners and expanded business to Japan and Canada. Moreover, PNJ promoted advertising and increased revenue in doing business on PNJ gold bullion with encouraged result, consuming rate occupied 74% the total consuming output of the whole PNJ system (increase 22% in comparison with the period in 2009). This result proves the liquidation and the brand of Phuong Hoang PNJ - DongA bank gold bar implanted clearly in the market. f. PNJ Brand is the pride of Vietnamese jewelry industry due to its reputation, high-ranking and positive brand s image in the view of customer. With the message about the beauty of the Five Basic Elements Metal Wood Water Fire Earth according to the Eastern philosophy in jewelry, the PNJ TV commercial had impressed many audiences all the country. The website was improved

37 opening COMPANY OVERVIEW BOARD OF DIRECTORS REPORT Performance report Distribution network Competitive advantages Brands of PNJ BUSINESS MANAGEMENT FINANCIAL REPORT 37 to the more professional face and functions, so that it can help PNJ serve it customer more effectively. Furthermore, PNJ have many events and sponsored program such as: Miss Earth 2011 (Miss Ecuador, the 1st Runner-up of this contest is also Miss PNJ), Miss PNJSilver Contest, "Sparking Dreams" online karaoke contest, establishing fanclub these marketing activities had made an important role to build up the PNJ s reputation on the market. g. PNJ has gained a firm foothold on Vietnamese market through many years with the largest jewelry retail chain stores around the country in the year 2010, increasing 10 stores in comparison with the year The develop of PNJ s branches in some large cities in Vietnam such as Ha Noi, Da Nang, Can Tho is the proof for the rigid growth of PNJ. PNJ always wants to give its customer a luxury, modern and comfortable shopping space. Online sales of PNJ had a rapid grow in the past few year, especially in the year 2010, PNJ served 2,567 customers successfully, increased 83% compare to 2009 and the revenue billion VND, increased 338% compare to the year h. Unlimited Dream of CAO Fine Jewellery after 5 years came true. The year 2010 was the fifth anniversary of the brand CAO Fine Jewellery (now is a luxury brand of CAO Fashion Company a subsidiary of PNJ, established in August 2009). With the dream to be a luxury jewelry brand of Vietnam, and can compete with other famous brand and go to the world market, after 5 years, CAO had realize its unbounded dream. In 2011, CAO presented Ms. Stephen Pamali, Miss Ecuador, also Miss Air of the Miss Earth contest 2010 as CAO's Ambassador. Over 15 years, since 1996, PNJ Verification Center, now is PNJ Laboratory Limited Company, with experts in jewelry industry, latest technology according to international standards, has affirmed its reputation and become the leading company in gold and jewelry testing of Vietnam. i. Corporate culture The PNJ house continuously consolidates and develops through many corporate inside activities such as Family Festival PNJ House, cultural and sport activities, Especially, the born of PNJ Forum like an open house where members can share, listen and sympathy their feelings and thoughts to each other. Besides, PNJ always takes care to the charity and social sponsorship such at: scholarship Fly to dream, the program Walk for the poor, assist women who have cancer in the Centre area of Vietnam, flood in Quang Binh province, bidding CAO jewelry to help the poor, j. The reputation, high-ranking and positive brand s image of PNJ have been recognized by national as well as international through many large and prestigious prizes such at: National Quality, National Brand, The leading jewelry brand of Vietnam Customers choice, and recently, PNJ has rewarded 2 international prizes: PNJ is 1 of 3 Vietnamese enterprises which rewarded the prize Asia Quality in 2010 and the TOP 500 Retailers of Pacific Asia Award. Especially, PNJ was evaluated by PLIMSOLL and ranked the 16 th in 500 largest jewelry companies in the world, PNJ is the only Vietnamese company in this ranking list.

38 38 Performance report Profit after tax was 206,555 billion VND increased 17,71% compared with financial investment result: Note: PNJ has provision 10.8 billions VND for decrease in value of Que Huong Liberty's shares - In the year 2010, PNJ transferred 100% its share in Saigon Seafood Company. Other additional investments: invested 2,203 million in SFC shares valued at 97,789 billion VND, increased its share in SFC to 49,99%; invested 2,18 million shares in Dong A Land Company, increased its share in this company to 30,62%; invested 8,469 million in DAB shares valued at 84,69 billion VND. - Saigon Fuel joint-stock Company (SFC) had an impressive business outcome. SFC revenue was billion VND which was 6% more than that in the business plan; earnings before tax were 73,18 billion VND, increased 22% than that in business plan; earnings after tax were 55,06 billion VND, increased 23,87% than that of 2009 and 21,25% than that in business plan. - Dat Viet Energy joint-stock Company: the year 2010 was considered a year of hardship for either the Gas Industry in general and Dai Viet Company in particular. Gas prices kept fluctuating, the big gas companies kept competitive, fake gas was complicatedly rampant. Consequently, although Dat Viet s revenue was 568 billion VND which was 3,27% more than that in business plan and 75% more than that of 2009, the company still observed the lost of 3,4 billion VND. - Dong A Land Company: Because of many difficulties in the real estate market which badly influenced the speed of implementation of Golden Square and Phu Thuan Residence in District 7, the company s two key projects, Dong A Land s business outcome was predominantly earned from construction and advisory services. Total revenue in 2010 was 72 billion VND, earnings after tax were 2,9 billion VND.

39 opening COMPANY OVERVIEW BOARD OF DIRECTORS REPORT Performance report Distribution network Competitive advantages Brands of PNJ BUSINESS MANAGEMENT FINANCIAL REPORT The elements which effect to the business s results: a. The market research, evaluation and development are always done frequently and effectively. Marketing and promotion campaigns have been run timely, so that these activities can stimulate customer s demand. b. The system of retailing stores is frequently improved which aims to build up a good image and homogeneous identity system. This is one of main effects which brings a huge amount of customer to PNJ. c. PNJ also focuses on the style and design through the investment in human resource, equipment, technology, to meet the demand and consumption of the customer. PNJ often launches new products and catalog with the objective to lead the market trend and meet the customer s need in different sales periods of year. d. PNJ always invests in new equipment, technology to well serve the manufacture ensure the technology requirements of luxury products, improve the productivity, ensure the profit proportion, timely respond all customer' orders. e. The salesperson of PNJ are always trained communication skill, selling skill, provided information about new product line, technology to give the customer their best consultant. f. The selling, exchanging and warranting policy of PNJ always make their customer happy because it balances between customer and company benefit. This policy is used in all PNJ retailing stores, it not only make the customer convenience, but also create the trust about PNJ brand in their mind.

40 40 Distribution network retail distribution system Largest in Vietnam with 142 retail stores.

41 opening COMPANY OVERVIEW BOARD OF DIRECTORS REPORT Performance report Distribution network Competitive advantages Brands of PNJ BUSINESS MANAGEMENT FINANCIAL REPORT 41 Canada U.S.A Germany Denmark Japan Vietnam Australia Export market in 2010 RETAIL DISTRIBUTION SYSTEM WHOLESALERS HCM CITY District 1: 174 Le Thanh Ton St. Vincom Center (floor L1) 292 Hai Ba Trung St. TAX Shopping Mall- Nguyen Hue St. Citi Plaza - Nguyen Trai St. Nowzone - Nguyen Van Cu St. Phu Nhuan District: 52 Nguyen Van Troi St. 159 Phan Dang Luu St. Co.opMart Nguyen Kiem St. District 3: 652 Nguyen Dinh Chieu St. 4A Cao Thang St 32 Cach Mang Thang Tam St. District 5: 7 An Duong Vuong St. Parkson Hung Vuong District 6: 255A - 255B Hau Giang St. District 7: Lotte Mart District 9: Co.opMart Ha Noi High Way District 10: Maximark 3/2 District 11: Parkson Flemington - Le Dai Hanh St. Lotte Everich - Le Dai Hanh St. District Tan Binh: Ly Thuong Kiet 230B Le Van Sy Maximark Cong Hoa Tan Son Nhat Airport Tan Phu District: BigC Phu Thanh Go Vap District: 362A Nguyen Van Nghi 21/3 Quang Trung Binh Thanh District: 127A Dinh Tien Hoang Thu Duc District: 141 Vo Van Ngan HA NOI Hai Bà Trưng District: 37B Tran Nhan Tong TTTM Trang Tien Vincom Center Cầu Giấy District: BigC Đống Đa District: 129 Chua Boc HAI PHONG Parkson Hai Phong - TD Plaza BigC Hai Phong VINH CITY BigC Vinh DA NANG Tran Phu - Hai Chau 123 Hung Vuong Co.opMart Đa Nang HUE CITY Co.opMart Hue BIEN HOA CITY BigC Bien Hoa VUNG TAY CITY Co.op Mart Vung Tau LONG AN Co.opMart Long An CAN THO CITY 46 Ngô Quyền Co.opMart Cần Thơ LONG XUYEN CITY Co.opMart Long Xuyên KIEN GIANG 38 Hoang Hoa Tham Co.opMart Kien Giang An Giang Bac Giang Bac Lieu Bac Ninh Ben Tre Binh Đinh Binh Duong Binh Phuoc Binh Thuan Ca Mau Can Tho Da Nang Dac Lac Dong Nai Dong Thap Gia Lai Ha Giang Ha Nam Ha Noi Ha Tinh Hai Duong Hai Phong HCM Hoa Binh Hue Hung Yen Khanh Hoa Kien Giang KonTum Lam Đong Lang Son Lao Cai Long An Nam Đinh Nghe An Ninh Binh Ninh Thuan Phu Tho Phu Yen Quang Binh Quang Nam Quang Ngai Quang Ninh Quang Tri Soc Trang Son La Tay Ninh Thai Binh Thai Nguyen Thanh Hoa Tien Giang Tra Vinh Tuyen Quang Vinh Long Vinh Phuc Vung Tau Cambodia Thailand Putting the priority in developing the distribution system nationwide as a strategy, PNJ currently has 142 sole retail stores nationwide, and nearly 3,000 wholesalers, which concentrated in 56 cities around the country. All of the retail chain locations are designed by a unique style, stand out and sell PNJ products only. This is the key channel creating the PNJ brand, and is the superior advantage of the company, making the major contribution for the sustainable development of the company EXPORTING MARKET In 2010, PNJ has more than 4 partners and expanded to Japan and Canada. Currently, PNJ is the biggest jewelry exporters in Vietnam

42 42 Competitive advantages COMPETITIVE ADVANTAGES 1. Human resource & Enterprise culture: is the first key, and most important competitive advantage of PNJ. PNJ is proud of its human resource which is large in number, strong in quality and perfect in all important areas. During 23 years of development, PNJ always respected its human resource element with the following criteria: enthusiastic and whole-hearted with his/her job, united and cooperative in teamwork, having knowledge and high professional skills. PNJ has more than 1,000 skilled workers, dozens of engineers, specialists, and a dynamic managing team who have knowledge in all areas from designing, making jewelry to marketing, sales and professional management with the humanity culture PNJ Common Roof. Throughout regularly annual trainings as well as social activities, every member is linked together to become a dynamic and creative unite. 2. Advanced technology and modern equipment/mechanical systems: Currently, PNJ is mastering the most advanced technology of manufacturing jewelry in the world in all fields such as machine-made chain, casting jewelry, stamping jewelry and hand-made jewelry. This technology is supported by the most modern mechanical systems such as Laser & UV prototyping machines, CNC machines, plating machines and other machines which are used by a team of excellent engineers and skilled-workers. Through strategic relationships with suppliers and well-known customers around the world, these technology systems and equipment are always upgraded and added annually to keep up with the latest technical advances. 3. Logical management system: All human resources, technology and equipments of PNJ are operated with a modern and logical management system which includes quality management system according to the international standard ISO ; environmental management system ISO ; flexibly, tightly financial management and risk management systems. All management systems are integrated into a unified, streamlined and efficient system of management, so they are able to promote their maximum strength of human resources as well as the technology and modern equipment systems. With the criteria overcome - prevent and non-stop improve, the management system of the company are timely reviewed and improved every year. 4. Reputation, brand and market: Throughout 23 years of building and development, PNJ has become a leading brand in the jewelry industry in Vietnam, also has created an enviable reputation in the consumer s mind. PNJ is a brand of reliable quality, subtlety and creativity of the designs and products. PNJ s brands such as PNJGold, PNJSilver, CAO Fine Jewellery, Jemma, Phoenix PNJ EAB Gold Bar have always been a high trust for consumers, and are a significant advantage of PNJ on domestic market. Moreover, PNJ also creates a good reputation with foreign customers from the U.S., Germany, Japan, Australia, which are a solid foundation for the development of export markets of PNJ. The network of 142 retail stores and nearly 3,000 wholesale-customers nationwide of PNJ is the condition to ensure for both of the product consumption and the best advertising tool for PNJ in business. In general: The internal strengths (human resources, technology and modern equipment, advanced management system) and external strengths (reputation, brand and market) are combined together to create a strong and sustainable competitive advantage for PNJ. Maintaining and developing those strengths is the key to success.

43 opening COMPANY OVERVIEW BOARD OF DIRECTORS REPORT Performance report Distribution network Competitive advantages Brands of PNJ BUSINESS MANAGEMENT FINANCIAL REPORT 43

44 44 Brands of PNJ BRANDS OF PNJ A team of nearly 1000 skillful goldsmiths

45 opening COMPANY OVERVIEW BOARD OF DIRECTORS REPORT Performance report Distribution network Competitive advantages Brands of PNJ BUSINESS MANAGEMENT FINANCIAL REPORT 45 Phoenix PNJ DongA Bank Gold Bar With the prestige of the two brands in gold business and banking in Vietnam: the Phu Nhuan Joint Stock Company - PNJ and the Commercial Bank of DongA, together with the commitment of ensuring the quality of fine gold, Phoenix PNJ DongA Bank Gold Bar was re-launched in April, 2008 and has quickly become popular, has met the needs of the domestic market. The Phoenix PNJ DongA Bank Gold Bar with several types of highvalue gold bars as 1 "chi", 2 "chi", 5 "chi" and 1 "tael" with the advantages of safety, convenience in saving, flexibility in exchange, transporting... with high liquidity, nationwide trading system, attractive and competitive procurement policy to other brands.

46 46 Brands of PNJ Officially presented in Vietnam market in 1989, PNJ gold jewelry brand always endeavor in the position of a pioneer, a leader in the investment in modern equipment, high-skilled human resource contributes to the development and professionalization of the traditional jewelry industry of Vietnam. Throughout nearly 23 years of hard work and constant innovation, PNJ gold jewelry brand continuously has released hundreds of new collections with breakthroughs in design, style, and material initiating new fashion trends. Based on the 10k, 14k, 18k, 24k sterling gold with a full line of wedding jewelry named Golden Happiness, diamond jewelry, color stone jewelry and other categories such as necklace, pendant, earrings, ring, bracelet... which make a contribution to celebrate the beauty, elegance and grade for Vietnamese consumers, as well as an evidence connecting love of couples. Total revenue in 2010 made of PNJ gold jewelry brand reached 2934 billion, up 36.58% over the same period.

47 opening COMPANY OVERVIEW BOARD OF DIRECTORS REPORT Performance report Distribution network Competitive advantages Brands of PNJ BUSINESS MANAGEMENT FINANCIAL REPORT 47 The establishment of the silver jewelry brand in PNJSilver - marked a new breakthrough in serving the needs of young customer segment - an open market at that time. In 2005, with a new identified system based on the pink key color and slogan Sparkling Dreams, PNJSilver brand has created a new consumption trend for Silver jewelry for this type of customer target. Besides bringing in jewelry products made by 92.5% pure silver plated by a Rhodium protection layer, with modern, young design for young people, PNJSilver also created many helpful playgrounds with a desire to accompany young Vietnamese s dreams. Most recently, the Miss PNJSilver contest has created a powerful influence within the students with a message as Be confident and strive hard to make dreams come true. Total gross profit of PNJSilver in 2010 is billion, up 37.85% over the same period and gross profit rate reached 71.63% of revenue.

48 48 Brands of PNJ CAO Fine Jewelry a luxury Jewelry brand was introduced to the market in 2005 with an orientation of improving the production technology and creating jewelry to a new level. Every CAO Fine Jewelry product is considered a unique masterpiece that the craftsman has cleverly created sophisticate details on the precious metals background and precious natural stones. In 2009, CAO Fine Jewelry officially become one of the subsidiary of PNJ with the development orientation is a high-class fashion company with high-class fashion labels in local and overseas markets. With this position, the CAO Fine Jewelry gradually expands its distributional system nationwide; claiming its grade in direct competition with high-class international jewelry brands which have been presented in Vietnam.

49 opening COMPANY OVERVIEW BOARD OF DIRECTORS REPORT Performance report Distribution network Competitive advantages Brands of PNJ BUSINESS MANAGEMENT FINANCIAL REPORT 49 Being a brand of a high-class jewelry and fashion accessories company as CAO Fashion Company - a subsidiary of PNJ, JEMMA brings in a new choice for young ladies, especially female officers in renewing themselves and affirming user s personality. JEMMA consists of two main lines which are jewelry - accessories and handbags. All products are designed by Korean and Italian designers, and based on the latest fashion trends in the fashion centers around the world. With raw materials imported from overseas, together with the modern production/ technology processes which are under strictly quality control, every JEMMA s product was not only catch up the fashion trends but also is a symbol of class and luxury.

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51 is the Vietnam's largest jewelry exporter

52 52 REPORT FROM BOARD OF MANAGEMENT REPORT FROM BOARD OF MANAGEMENT Increase share capital to billion VND

53 opening COMPANY OVERVIEW BOARD OF DIRECTORS REPORT BUSINESS MANAGEMENT Report from Board of Management Shareholders information Risk management 2011 activity orientation Investor relations Enterprise s culture FINANCIAL REPORT 53 REPORT FROM BOARD of management Board of Management: PNJ s Board of Management in 2010 has 5 members, including Chairman and 4 members, which has Ms. Cao Thi Ngoc Dung as Chairman and also General Director of the Company. There are 3 Board members work at PNJ and 2 members do not work in the company. Mr. Dang Phuoc Dua resigned from the Board on 25/02/2011 due to family issue and the Board has approved his resignation on 08/03/2011. After that, the Board assigned Mr. Bui Viet as the Board s Commissioner of the tenure from 2007 to 201. Board of Supervisory: Board of Supervisory consists of 3 members, including a Head and 2 members by Truong Nguyen Thien Kim as the Head, in which, a member works directly at the company and 2 other members do not directly work at PNJ. Performance task in 2010: Production and business results of the company in 2010: After the Annual Shareholders General Assembly 2010 approved the Resolution, including the orientation of production and business of the company in 2010 and delivered to the Board of Management to organize the implementation of the Resolution, the Board has determined the strategies, objectives of business development and delivered to General Director to execute. In the past year, the Board of Management implemented the supervisory function to ensure that results obtained from the management task of the General Director in accordance with the planned objectives, orientation and plan. Simultaneously, the Board has a policy to promptly solve practical problems and difficulties. The achieved production and business results in 2010 of PNJ Company as followings: Sales reached 13,077 billion, exceeding 18.8% higher than 2010 plan and increasing 35.87% compared to Profit before tax was billion, exceeding 5.26% higher than 2010 plan and increasing 16.69% compared to The average income of employee was 5.2 million VND per month. Report on The implementation of Resolution of the Shareholder Meeting in 2010: Adjust the business trade: On 19/07/2010, according to the Certificate of business registration provided by the Department of Planning and Investment of Ho Chi Minh City, PNJ has revised and supplemented a number of business lines. Also, PNJ has edited charters to suit the adjusted business trade. Issuing the bonus shares to increase charter capital: from 399,999,210,000 VND to 599,991,420,000 VND by the execute right s ratio 2:1 and additional listing of shares issued. It has been completed on 11th August, Issuing the convertible bond in 2010: Board of Management implemented procedures to stop issuing 1,000,000 convertible bonds to the existing shareholders and outside investors under the Resolution of the 13th General Shareholder Meeting - No. 1331/2010/NQ- DHDCD-CTY on 01st November Equitizing the CAO Fashion Limited Company: Board of Management did not make the decision of equitizing CAO Fashion Limited Company by the Resolution of the 13th General Shareholder Meeting - No. 1331/2010/ NQ-DHDCD-CTY on 01st November Establishing the PNJ Laboratory Limited Company and authorize Chairman to decide the consistent time of execution, authorize Chairman to rename the company or make adjustment appropriate to the law. Board of Management of Management has established the PNJ Laboratory Limited Company by the Resolution of the 13th General Shareholder Meeting - No. 1331/2010/ NQ-DHDCD-CTY on 01st November 2010, results as follows: - Company Name: PNJ Laboratory Limited Company - Name in Vietnamese: Công ty TNHH Một thành viên Giám định PNJ - Name in English: PNJ Laboratory Company Limited - Abbreviation: PNJL Co., Ltd. - Certification of Business Registration No.: by the HCMC Department of Planning and Investment issued on 16th December, Address: 205 Phan Dang Luu, Ward 1, Phu Nhuan District, HCM City - Lines of business: Testing services: diamonds, gold, gold alloy, silver, precious metals, color metals, precious stones, semiprecious stones and minerals, and other color stones, jade. Retailing/wholesaling machinery, equipment and materials of appraisal industry, gemstones and

54 54 Report from Board of Directors - Shareholders information Basic earnings per share were VND increased 17,5% compared with 2009 semiprecious stones industry. Consulting about diamonds, gemstones, semiprecious stones, gold, silver, color metals and precious metals. Engraving on diamonds, gemstones, semi-precious stones, gold, silver, color metal and precious metals. Vocational training. - Capital: 10,000,000,000 (ten billion) VND. - Authorized representative: Mr. Le Huu Hanh - Chairman of the Company. - Legal representative: Company Chairman. - Starting: from 01st January, Organizing Board Assemblies: - In 2010, the Board of Management organized 56 business meetings, through which issued 31 Board Resolutions. The meetings were conducted in the correct order and procedures prescribed by the Company Charter and the Enterprise Law to promptly solve the arising problems. - Minutes of Board meetings were signed by all Board members participated in those meetings, ensuring the proper form as prescribed by the law; records and documents were sent to all participating members for reference, previous studies under the regulations. - The Board members have a sense of solidarity and have shown all responsibility and implementation of the rights and obligations of a Board member under the provisions of the regulation.

55 opening COMPANY OVERVIEW BOARD OF DIRECTORS REPORT BUSINESS MANAGEMENT Report from Board of Management Shareholders information Risk management 2011 activity orientation Investor relations Enterprise s culture FINANCIAL REPORT 55 Shareholder information 1. The rate of owning share and the change of it in management broad: 2. Big shareholders (owning from 5% charter capital and above): 3. Domestic shareholder: 4. Foreign shareholder

56 56 Risk management The management systems, which are modern, logic, flexible, tight, and having highly specific nature, will unify into a streamlined, efficient and united management system, built on the following criteria: overcoming - preventing and upgrading continuously.

57 opening COMPANY OVERVIEW BOARD OF DIRECTORS REPORT BUSINESS MANAGEMENT Report from Board of Management Shareholders information Risk management 2011 activity orientation Investor relations Enterprise s culture FINANCIAL REPORT 57 RISK MANAGEMENT Market risks: Increasing competition, including the unfair competition of some jewelry enterprises do not keep products with proper quality, however there is no agency to verify and handle. Between businesses declare fair taxes with business pay poll taxes. Foreign jewelry products smuggle into Vietnam are increasing, however the government may not have proper preventions as well as quality controls. Remedies: make absolute commitment and maintaining quality of products and sterling gold. Product designs are diversity for many target customers, and take quality, design and price as competitive advantages. Applying modern technology and logical management to reduce costs to ensure the benefits of consumers, tax norms, and adequate profits for enterprise. Gold price and foreign currency risks: Gold price risk is the biggest risk in business because gold price changes every hour currently. Foreign currency prices also change frequently. Precautions: - PNJ has no speculation policy in the gold business. - There are a specific division always monitoring changes in gold prices and a networking system throughout the organization to timely balance the volume of daily purchases. Always ensure to balance inventory in the entire system with the loan gold of the Banks. - Foreign currency is balanced by buying contracts. Risks of fire, theft, fraud: Precautions: - Fully equip fire protection equipments, regularly coaching, training and raising awareness about fire protection at every unit. - Buy a full range of insurance, to prevent break-downs. - Fully issued rules and processes on management of goods in shops, warehouses and transportation to bind personal responsibility and build a strong internal control division manage risks. Risks of technology, product quality and uncommitted services: Remedies: Establish an advanced and strong quality management system to control before, during and after the process. The customer service division always listens to feedback from customers to overcome the shortcomings. Investment risks: Risk of investments caused by the influence of the financial market and policy. Remedies: - No short-term financial investments. - No investments in areas where PNJ does not have the experience and advantage. - Have plans to liquidate ineffective investments. Human resource risks: As a special business, PNJ s human resources mostly have practical trainings at PNJ within a long time (from workers to managers) to be able to promote their capacity. The jewelry industry in Vietnam is on the rise in the present and also in the future, many new businesses enter the market, lack of experienced labor force; hence it tends to attract human resources from PNJ by wages and treatment regime. Precautions: - Strengthening corporation culture, - Improve working environment. - Pay attention to wage policy and timely encourage/reward. - Recruit and prepare additional trainings.

58 activity orientation ORIENTED ACTIVITIES IN 2011 In 2011, the world economic situation is predicted still not out of crisis, our country s economy in 2011 still maintains many uncertainties, especially in the financial sector, monetary. Interest rate is still too high, beyond the endurance of the enterprises. Purchasing power is dropping, the situation of foreign currencies and gold price continue to fluctuate complicatedly. Policies of gold industry have not been determined clearly. However, PNJ claims to continue accelerate in all activities to maintain and strengthen its leading position in the jewelry industry in Vietnam, with the action plans and specific goals: Quality goals: - Empowering in local and foreign market with professionalism and creativity in all activities, improving the quality of human resources, synchronization quality of operations of other fields and units. - Maximize profits; combine improving PNJ staff s quality of life and shareholders benefits. Planning targets: The overall growth across the company Profit before tax (unincorporated) Profit after tax (unincorporated) Profit before tax (incorporated) Profit after tax (incorporated) Dividends in % 295 billion VND, increase 15% 237 billion VND, increase 15% 303 billion VND, increase 15% 245 billion VND, increase 15% 25% Action programs 1. Strengthen the management systems, improve the quality of customer service, continue to develop and invest in retail systems, take priority to develop large stores in the fashion and shopping centers in big cities. Particularly pay attention to the development of provinces/cities with high growth rates of consumption. Make investment in upgrading existing stores in order to create luxury and modern shopping spaces to meet increasing demands of customers. Taking developing gold jewelry retail system as key task.

59 opening COMPANY OVERVIEW BOARD OF DIRECTORS REPORT BUSINESS MANAGEMENT Report from Board of Management Shareholders information Risk management 2011 activity orientation Investor relations Enterprise s culture FINANCIAL REPORT Implement research programs on consumer behaviors and jewelry trends in domestic and abroad to better meet customer needs. At the same time, develop marketing programs appropriating to each time in the year, creating the impression for the product lines and the PNJ brand. 3. In design field, confirm the subtlety and creativity; make researches to release new product lines, which in line with consumer trends and the needs of particular customer target in order to diversify product lines of PNJ and meet the diverse needs of the market. 4. Make investment in building new jewelry factory which ensure doubled-productivity in scale and modern technology processes. Consolidate operating systems by using management tools such as ISO, TQM, 5S, and thoroughly implement LEAN project. 5. Make investment to improve the quality of human resources, especially middle and high management level. Salary/reward policies will be adjusted to ensure to be compatible with the common ground, to attract and develop talents. Focus on training the salesperson to become a professional sales force - worthy as ambassadors of PNJ on the entire system. Hire consultants to evaluate and improve the salary policy. Run training programs to improve the leadership for managers by international standards. Estimated budget for the training programs is 3 billion by the end of Standardize operating procedures to help to develop applications in the ERP management program for all the units on the entire system. Intensify inspection, supervision and efficiently use of capitals, ensuring the company s resources are used optimally and best. 7. Focus all resources for production, restructure the investment portfolio, and assign a number of investments in appropriate time. 8. Complete the Tourist Shopping Centre project.

60 60 Investor relations INVESTOR RELATIONS

61 opening COMPANY OVERVIEW BOARD OF DIRECTORS REPORT BUSINESS MANAGEMENT Report from Board of Management Shareholders information Risk management 2011 activity orientation Investor relations Enterprise s culture FINANCIAL REPORT 61 More than 50 investors have visited and work with PNJ in 2010 PNJ maintains effective and timely channels of communication information to investors through the Shareholder General Assembly which is held annually. The function of the investor relations department - IR of PNJ was established in early 2010 with members as follow: 1. Ms. Nguyen Thi Cuc Vice General Director as Head of IR Dept 2. Mr. Nguyen Tuan Quynh Vice General Director of Investment as Vice of IR Dept 3. Mr. Pham Ngoc Hung Deputive Director of Accounting as Member of IR Dept 4. Mr. Huynh Van Tan Deputive Director of Marketing as Member of IR Dept 5. Ms. Trinh Thi Ngoc Hieu Secretary of Board of Management and Board members as Member of IR Dept The IR Dept. has the function to deliver information to local and foreign investors periodically and regularly business results of PNJ by month, quarter, and year; provide important information about development strategies; answer, listen to, update and process information and issues that investors interested in, together with activities that involved contact with many potential investors. In 2011, IR Dept. has welcomed and worked with nearly 50 investors as securities companies, local and foreign investment funds as well as individuals. At the same time, IR department also attend seminars of domestic and foreign organizations such as Gate Way to Viet Nam seminar by the SSI organization to disseminate information about PNJ to many big local and foreign investors. As the result, many big professional investors in Vietnam and abroad have learnt, visited and decided to become shareholders of the company. Besides, the information on business results and other important information of PNJ are also updated in time to PNJ s homepage the media, HOSE websites... PNJ maintains providing information to investors via s and phone calls.

62 62 Enterprise s culture ENTERPRISE S CULTURE

63 opening COMPANY OVERVIEW BOARD OF DIRECTORS REPORT BUSINESS MANAGEMENT Report from Board of Management Shareholders information Risk management 2011 activity orientation Investor relations Enterprise s culture FINANCIAL REPORT 63 PNJ S CULTURE AS COMMON ROOF Prestige and quality of products is our top priority. Human resource is our treasure, and making the best out of our HR is one of our most important tasks. Creativity is encouraged and highly appreciated. All employees are encouraged to improve their academic, professional and managerial skills through training courses both in-house and out-sourced. Their effort in improving their competence and contributing to the organization would be fairly awarded with bonuses, and promotion. Social activities With the business philosophy "PNJ put our customer and community s benefits within the benefits of the enterprise", besides the production and business activities as well as the work of caring for the spiritual and material for all employees in the company, annually, PNJ also spends a lot of care for community activities such as arrange relief operations for natural disasters affected-people; Tet care for the poor; blood donation activities, health care for the poor, scholarships, financial aid programs to detect new talents, take care of poor children with disabilities, building houses of gratitude... with a total expenditure in 2010 was over 3.5 billion. This is the shared sense of depth and humanity of the whole PNJ employees, showing a very high sense of responsibility towards the community and society.

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66 66 Independent auditor s report INDEPENDENT AUDITOR S REPORT KPMG Limited 10th Floor, Sunwah Tower 115 Nguyen Hue Street District 1, Ho Chi Minh City Vietnam Tel: Fax:

67 opening COMPANY OVERVIEW BOARD OF DIRECTORS REPORT BUSINESS MANAGEMENT FINANCIAL REPORT Independent auditor s report Extracted control activity report of PNJ in 2010 Financial report 67 To the Shareholders Phu Nhuan Jewelry Joint Stock Company and its subsidiaries Scope We have audited the accompanying consolidated balance sheet of Phu Nhuan Jewelry Joint Stock Company and its subsidiaries ( the Group ) and the separate balance sheet of Phu Nhuan Jewelry Joint Stock Company ( the Company ) as of 31 December 2010 and the related statements of income, changes in equity and cash flows for the year then ended and the explanatory notes thereto which were authorise for issue by the Company s management on 30 March These financial statements are the responsibility of the Company s management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Vietnamese Standards on Auditing. Those standards require that we plan and perform the audit to obtain reasonable assurance that the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. Audit opinion In our opinion, the consolidated and separate financial statements give a true and fair view of the financial position of Phu Nhuan Jewelry Joint Stock Company and its subsidiaries as at 31 December 2009 and of their results of operations and their cash flows for the year then ended in accordance with Vietnamese Accounting Standards, the Vietnamese Accounting System and the relevant statutory requirements.

68 68 Extracted control activity report of PNJ in 2010 EXTRACTED CONTROL ACTIVITIES REPORT OF PNJ IN 2010 Total deduction expenditure of dividends were 25% equal to VND

69 opening COMPANY OVERVIEW BOARD OF DIRECTORS REPORT BUSINESS MANAGEMENT FINANCIAL REPORT Independent auditor s report Extracted control activity report of PNJ in 2010 Financial report 69 In 2010, the situation of the world economy and the economy in Vietnam continue to face obstacles such as gold and foreign currency fluctuations, rising interest rates... These difficulties affect quite seriously to the production and sales of enterprises that do business on gold, silver and gemstone jewelry such as PNJ. However, the Board of Management, Board of Directors, and all of the entire staff of PNJ have made great efforts to achieve excellent business results as the analysis and evaluation mentioned above. Besides, through the control and evaluation the activities of all aspects of PNJ, the Control Board has a number of recommendations to the Board of Management and the Board of Directors as follows: Mobilization and use of funds: Currently, PNJ has been effectively exploiting financial leverage and still control the risks. However, PNJ also plans to mobilize appropriate source of funds to balance the operating funds, which meet long-term investment needs, ensuring long-term and sustainable growth objectives of PNJ. The stock market recently has many changes and may also affects stock prices of PNJ. Therefore, when there is appropriate funds, Board should make consideration about the purchase of treasury shares at appropriate time and reasonable price to create stability in price of PNJ stocks and create peace of mind for investors. About the organization, management and business operations: In recent years, PNJ has expanded its operations in many areas and also has many policies to improve and strengthen the organization and management. However, we respectfully request Board of Management and Board of Directors improve some more strategies in order to reinforce the appropriate income policy to avoid the labor changes, building trust for employees to make steady development together with PNJ. Also, the Board of Directors should develop training policies to encourage workers constantly improve their labor skills, building a team of skilled craftsmen with reputation and enthusiasm to donate more to the development of production of PNJ. In 2010, PNJ continue to promote and focus investment on retailing. Therefore, request Board of Management to continue looking for locations that have the advantage for business in the provinces / cities that PNJ is capable or has opened stores / branches in order to expand the business system. Besides, PNJ needs to make investment in building new factory in Go Vap to help increase production capacity, creating tremendous growth opportunities in the following years. Also, we propose Board of Directors has efficient exploitation for the existing office after moving PNJ jewelry to new location. At the present, PNJ continue the ERP implementation project by collaboration with new partners as FBS (Phuong Bac Company) - this is a big project, need more time and is complex to implement and carry on for a large-scale enterprise as PNJ. In the opinion of the Control Board, a change in consultant and software provider as well as narrowing the scope of the project are in line with reality. However, it should accelerate the implementation and apply soon for a more efficient management of production. Through analysis and evaluation of the Board of Control, the rate of profit on revenue from the PNJ gold jewelry wholesale operations is very low (about 2%) compared with retail operations (more than 22.5%), although the sales of wholesaling and retailing are equal. So kindly request the Board of Directors to adjust the construction of appropriate policies to improve profits from wholesale activities. Above are the extracts of the Control Board report for the Annual General Meeting in By the way, the Control Board would also like to thank the Board of Management, the Board of Directors, the Divisions and Departments of PNJ has created good conditions for the Control Board to complete the tasks. On behalf of Board of Supervisory Truong Nguyen Thien Kim Head of Board of Control

70 70 Financial report Financial report Total revenue increased 35.87% compared with 2009

71 opening COMPANY OVERVIEW BOARD OF DIRECTORS REPORT BUSINESS MANAGEMENT FINANCIAL REPORT Independent auditor s report Extracted control activity report of PNJ in 2010 Financial report 71 Phu Nhuan Jewelry Joint Stock Company and subsidiaries Consolidated Balance sheet for the year ended 31st December, 2010

72 72 Financial report Phu Nhuan Jewelry Joint Stock Company and subsidiaries Consolidated Balance sheet for the year ended 31st December, 2010 (continued)

73 opening COMPANY OVERVIEW BOARD OF DIRECTORS REPORT BUSINESS MANAGEMENT FINANCIAL REPORT Independent auditor s report Extracted control activity report of PNJ in 2010 Financial report 73 Phu Nhuan Jewelry Joint Stock Company and subsidiaries Consolidated Balance sheet for the year ended 31st December, 2010 (continued)

74 74 Financial report Phu Nhuan Jewelry Joint Stock Company and subsidiaries Consolidated Balance sheet for the year ended 31st December, 2010 (continued) Prepared by Approved by Dang Thi Lai Chief Accountant Cao Thi Ngoc Dung General Director

75 opening COMPANY OVERVIEW BOARD OF DIRECTORS REPORT BUSINESS MANAGEMENT FINANCIAL REPORT Independent auditor s report Extracted control activity report of PNJ in 2010 Financial report 75 Phu Nhuan Jewelry Joint Stock Company and subsidiaries Consolidated Statement of income for the year ended 31st December 2010 Corporation Công ty Code Note 2010 VNĐ 2009 VNĐ 2010 VNĐ 2009 VNĐ Total revenue Less sales deductions 02 3 ( ) ( ) ( ) ( ) Net sales Cost of sales 11 3 ( ) ( ) ( ) ( ) Gross profit Financial income Financial expenses ( ) ( ) ( ) ( ) Selling expenses 24 ( ) ( ) ( ) ( ) General and administration expenses 25 ( ) ( ) ( ) ( ) Net operating profit Results of other activities 40 Other income Other expenses ( ) ( ) ( ) ( ) Share of profit in associates

76 76 Financial report Phu Nhuan Jewelry Joint Stock Company and subsidiaries Consolidated Statement of income for the year ended 31st December 2010 (continued) Corporation Công ty Code Note 2010 VNĐ 2009 VNĐ 2010 VNĐ 2009 VNĐ Profit before tax Income tax expense - current ( ) ( ) ( ) ( ) (Income tax (Expense)/benefit - deferred ( ) ( ) Net profit Attributable to: Minority interest ( ) Equity holders of the company Earnings per share Basic earnings per share Prepared by Approved by Dang Thi Lai Chief Accountant Cao Thi Ngoc Dung General Director

77 opening COMPANY OVERVIEW BOARD OF DIRECTORS REPORT BUSINESS MANAGEMENT FINANCIAL REPORT Independent auditor s report Extracted control activity report of PNJ in 2010 Financial report 77 Phu Nhuan Jewelry Joint Stock Company and subsidiaries Consolidated Statement of changes in equity for the year ended 31st December 2010 Corporation Total VNĐ Retained profits VNĐ Financial reserves VNĐ Investment and development funds VNĐ Treasury shares VNĐ Capital surplus VNĐ Share capital VNĐ Balance at 1 st January 2009 ( ) - ( ) Bonus shares issued ( ) Net profit for the year Acquisition of treasury shares - - ( ) ( ) Appropriation to equity funds ( ) ( ) Funds transfer to retained profits ( ) Dividends ( ) ( ) Utilization of funds ( ) ( ) - ( ) Appropriation to non ( ) ( ) owner s equity funds Reduction by operation disposals ( ) Balance at 1st January 2010 Balance at 1 st January ( ) Bonus shares issued ( ) Net profit for the year Acquisition of treasury shares ( ) Appropriation to equity funds ( ) ( ) Appropriation to nonowner s ( ) ( ) equity funds Reduction by operation ( ) ( ) - ( ) disposals ( ) Balance at 31st December 2010

78 78 Financial report Phu Nhuan Jewelry Joint Stock Company and subsidiaries Consolidated Statement of changes in equity for the year ended 31st December 2010 (continued) Company Share capital VNĐ Capital surplus VNĐ Treasury shares VNĐ Investment and development funds VNĐ Financial reserves VNĐ Retained profits VNĐ Total VNĐ Balance at 2st January Bonus shares issued ( ) Net profit for the year Acquisition of treasury shares - - ( ) ( ) Appropriation to equity funds ( ) ( ) Dividends ( ) ( ) Utilization of reserved funds Appropriation to nonowner s equity funds ( ) - ( ) ( ) ( ) Balance at 1 st January ( ) Balance at 1 st January ( ) Issuing bonus shares ( ) Net profit for the year Dividends ( ) ( ) Balance at 31 st December ( ) Prepared by Approved by Dang Thi Lai Chief Accountant Cao Thi Ngoc Dung General Director

79 opening COMPANY OVERVIEW BOARD OF DIRECTORS REPORT BUSINESS MANAGEMENT FINANCIAL REPORT Independent auditor s report Extracted control activity report of PNJ in 2010 Financial report 79 Phu Nhuan Jewelry Joint Stock Company and subsidiaries Consolidated Statement of changes in equity for the year ended 31st December 2010 (continued) Corporation Company Code Note 2010 VNĐ 2009 VNĐ 2010 VNĐ 2009 VNĐ CASH FLOWS FROM OPERATING ACTIVITIES Profit before tax Adjustments for Depreciation and amortisation Reserves Loss from unrealised foreign exchange Interest from fixed assets liquidation 05 ( ) ( ) ( ) ( ) Interest from transfer of assets to subsidiaries ( ) ( ) Interest from securities investment 05 - ( ) - ( ) Interest from subsidiaries liquidation 05 ( ) ( ) ( ) ( ) Income from deposits interest and dividends 05 ( ) ( ) ( ) ( ) Investment earnings from trust funds 05 ( ) ( ) ( ) ( ) Profits from associations 05 ( ) ( ) - - Interest expense Operating profit before changes in working capitals Change in receivables and other current assets ( ) ( ) Change in inventories 10 ( ) ( ) ( ) ( ) Change in payables and other liabilities ( )

80 80 Financial report Phu Nhuan Jewelry Joint Stock Company and subsidiaries Consolidated Statement of changes in equity for the year ended 31st December 2010 (continued) Corporation Company Code Note 2010 VNĐ 2009 VNĐ 2010 VNĐ 2009 VNĐ Interest paid 13 ( ) ( ) ( ) ( ) Corporation income tax paid 14 ( ) ( ) ( ) ( ) Other payments for operation activities 16 ( ) ( ) ( ) ( ) Cash flows from operating activities ( ) CASH FLOWS FROM INVESTING ACTIVITIES Payments for additions to fixed assets and other long-term assets 21 ( ) ( ) ( ) ( ) Proceeds from disposals of fixed assets Payments for investment to other companies 25 ( ) ( ) ( ) ( ) Payments for investments in other entities Receipts of interests and dividends Receipts from investments to trust fund Disposal of businesses for non-cash considerations Cash flows from investing activities 30 ( ) ( ) ( ) ( )

81 opening COMPANY OVERVIEW BOARD OF DIRECTORS REPORT BUSINESS MANAGEMENT FINANCIAL REPORT Independent auditor s report Extracted control activity report of PNJ in 2010 Financial report 81 Phu Nhuan Jewelry Joint Stock Company and subsidiaries Consolidated Statement of changes in equity for the year ended 31st December 2010 (continued) Corporation Company Code Note 2010 VNĐ 2009 VNĐ 2010 VNĐ 2009 VNĐ CASH FLOW FROM FINANCING ACTIVITIES Share repurchases 31 - ( ) - ( ) Proceeds from short-term and long-term borrowings Payments to settle debts 34 ( ) ( ) ( ) ( ) Payments of dividends to minority shareholders 35 ( ) ( ) - - Payments of dividends 36 ( ) ( ) ( ) ( ) Net cash generated from financing activities Net cash flow during the year Cash and cash equivalent at the beginning of the year Effects of exchange rate fluctuations on cash and cash equivalents ( ) Cash and cash equivalents at the end of the year Prepared by Approved by Dang Thi Lai Chief Accountant Cao Thi Ngoc Dung General Director

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83 Unlimited Dream