bctc TA HN 2015 audited

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Bao Viet Holdings

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CONTENTS

Generat information

Report of the Board of Directors Independent auditors’ report Consolidated balance sheet Consolidated income statement Consolidated cash flow statement

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Bao Viet Holdings GENERAL INFORMATION THE GROUP

Bao Viet Holdings (herein referred to as “the Holdings") was previously a state-owned company that was equitized and became a shareholding company pursuant to Business License approved by Hanoi Authority for Planning and investment on 15 October 2007 The Business License was subsequently modified eight times; the eighth amendment was on 12 August 2015

The Holdings is listed on Ho Chi Minh Stock Exchange (HOSE) and its entire chartered capital is listed thereon

Below is a summary of information extracted from the eighth modified Business License dated 12 August 2015:

Business License Number: Registered company name:

Head Office's address: Operating activities: Chartered capital: Number of registered shares: Founding shareholders: 0100111761 Bao Viet Holdings

8 Le Thai To Street, Hang Trong Ward, Hoan Kiem District, Hanoi Equity investments in subsidiaries and associates, financial services and other related services under Vietnamese Laws; and real estate

business; IT services and educational support services, etc VND 6,804,714,340,000

680,471,434

The Ministry of Finance, State Capital Investment Corporation ({SCIC), HSBC Insurance (Asia - Pacific) Holdings Limited Subsidiaries of the Holdings as at 31 December 2015 are as follows:

Percentage

Subsidiaries Address Principal activities owned

Bao Viet Insurance 35 Hai Ba Trung Street, General insurance 100% Corporation (“Bao Viet Trang Tien Ward, Hoan products, reinsurance, loss

Insurance”) Kiem District, Hanoi adjustment

Bao Viet Life Corporation Floor 37 Keangnam Life insurance products, 100% (‘Bao Viet Life”) Hanoi Landmark Tower, reinsurance

Pham Hung Street, Nam Tu Liem District, Hanoi

Bao Viet Fund Management 8 Le Thai To Street, Management of 100% Company (“BVF") Hang Trong Ward, Hoan investment funds and

Kiem District, Hanoi investment portfolios

Bao Viet Securities Joint 8 Le Thai To Street, Brokerage and custodian 59.92% Stock Company (“BVSC’”) Hang Trong Ward, Hoan services, proprietary

Kiem District, Hanoi trading, underwriting and

corporate finance and investment advisory service

Bao Viet Au Lac Limited Ha Lieu, Phuong Lieu, Vocational driving training 60% Company (“BV - Au Lac”) Que Vo District, Bac

Ninh Province

Bao Viet Investment Joint 71 Ngo Sy Lien, Van Real estate business, 95%

Stock Company ("BVInvest”) Mieu Ward, Dong Da construction investment District, Hanoi consulting, provision of

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Dependently accounted units of the Holdings are as follows:

Dependently accounted units Address

Bao Viet Training Centre

Infrastructure Construction Project Management Unit PMU")

Bao Viet Holdings Information Technology Center Branch

8 Le Thai To, Hang Trong Ward, Hoan

Kiem District, Hanoi

71 Ngo Sy Lien, Van Mieu Ward, Dong Da

District, Hanoi

71 Ngo Sy Lien, Van Mieu Ward, Dong Da

District, Hanoi

As at 31 December 2015, associates and joint ventures of the Holdings are as follows: Associates & Joint ventures

Associates

Bao Viet Tourism Hotel JSC (Baoviet Resort) International Investment & Construction Joint Stock Company (VIGEBA)

Long Viet Investments & Construction JSC (Long Viet)

Bao Viet SCIC Investment Limited Company (Bao Viet SCIC)

Bao Viet Joint Stock Commercial Bank (Baoviet Bank)

Joint ventures

Bao Viet Tokio Marine Insurance Limited Company (Bao Viet Tokio Marine) SIGNIFICANT EVENTS Chartered capital Contributed capital Ownership VND VND % 60,000,000,000 21,000,000,000 35 180,000,000,000 54,000,000,000 30 65,043/200,000 29,289,440,000 4 440,000,000,000 70,000,000,000 50 3,150,000,000,000 1,560,000,000,000 49.52 300,000,000,000 _ 153,000,000,000 51 1,887,269,440,000 During the period from 01 January 2015 to the date of this report, the Group had the following significant events:

» On 17 April 2015, Bao Viet Holdings successfully held 2015 Extraordinary General Meeting of Shareholders At the Meeting, the shareholders approved the election listing of supplementary and replaced members of the Board of Directors and the election listing of supplementary members of the Supervisory Board for the remaining period of 2012 — 2017 term of office » The Holdings’ 2015 Annual Genera! Meeting of Shareholders successfully convened on 17 April

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Bao Viet Holdings

GENERAL INFORMATION (continued)

THE BOARD OF DIRECTORS

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

Mr Dao Dinh Thi Mr Nguyen Quang Phi Mr Nguyen Duc Tuan Mr Nguyen Quoc Huy Mr, Yukihira Yoshiharu

Mr Muneo Sasagawa

Mr Shuichi Sakai

Mr Dau Minh Lam

Mr Phan Kim Bang Ms Than Hien Anh Mr Shinzo Kono Position Chairman Member Member Member Member Member Member Member Member Member Member THE SUPERVISORY BOARD Date of appointment 23 December 2014 25 June 2014 04 October 2007 23 September 2009 24 April 2013 02 July 2015 28 March 2016 23 December 2014 23 December 2014 23 December 2014 24 April 2013 Date of resignation 28 March 2016 01 July 2015

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

Name Position Date of appointment Date of resignation

Mr Nguyen Ngoc Thuy Mr Dang Thai Quy Mr Ong Tien Hung Ms Phi Thi Quynh Nga Mr Yagi Nobuyuki Chief of Supervisory Board Member Member Member Member THE BOARD OF MANAGEMENT 25 December 2014 29 November 2012 29 November 2012 17 April 2015 24 April 2013 02 July 2015

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

Name Position Date of appointment Date of resignation

Mr Nguyen Quang Phi Chief Executive Officer 25 June 2014 Mr Do Truong Minh Chief Operating Officer 07 April 2015 Mr Pham Ngoc Tu Deputy Chief Financial 18 May 2015

Officer in charge

Mr Nguyen Minh Chief Strategy and 01 September 2015

Hoang Investment Officer

Mr Nguyen Xuan Hoa Chief Accountant 13 January 2016

Mr Nguyen Thanh Hai Chief Accountant 03 March 2009 13 January 2016 Mr Dau Minh Lam Chief Investment Officer 25 December 2014 92 April 2015 Mr Phan Tien Nguyen Chief Human Resources 30 June 2008 02 April 2015 Officer Mr Nguyen Thanh Son Chief Property & Real Estate 11 July 2012 02 April 2015 Officer Ms Than Hien Anh Chief Strategy and Risk 26 August 2014 06 February 2015 Officer LEGAL REPRESENTATIVE

The legal representative of the Holdings during the year and at the date of this report is Mr Nguyen Quang Phi, Chief Executive Officer

AUDITORS

The auditors of the Holdings are Ernst & Young Vietnam Limited

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December 2015 and for the year then ended

MANAGEMENTS RESPOSIBILITY IN RESPECT OF THE CONSOLIDATED FINANCIAL STATEMENTS

The Board of Management of the Holdings (‘Management’) is responsible for the consolidated

financial statements of each financial year which give a true and fair view of the consolidated

financial position of the Group and its consolidated results of operation and consolidated cash flows

for the year In preparing those consolidated financial statements, Management is required to: » select suitable accounting policies and then apply them consistently;

» make judgments and estimates that are reasonable and prudent;

» state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the consolidated financial statements; and

» prepare the consolidated financial statements on the going concern basis unless it is

inappropriate to presume that the Group will continue its business

Management is responsible for ensuring that proper accounting records are kept which disclose,

with reasonable accuracy at any time, the consolidated financial position of the Group and to ensure

that the accounting records comply with the applied accounting system It is also responsible for

safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities

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

APPROVAL OF THE CONSOLIDATED FINANCIAL STATEMENTS

We hereby approve the accompanying consolidated financial statements These financial

statements give a true and fair view of the consolidated financial position of the Group as at 31

December 2015, the consolidated results of their operations and the consolidated cash flows for the

year then ended in accordance with Vietnamese Accounting Standards, Vietnamese Enterprise Accounting System and the statutory requirements relevant to preparation and presentation of consolidated financial statements

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=

EY Building a better

working world

Reference: 60780870/17122728-HN

INDEPENDENT AUDITORS’ REPORT

To: The Shareholders of Bao Viet Holdings

We have audited the accompanying consolidated financial statements of Bao Viet Holdings and its subsidiaries (collectively referred to as "the Group") as prepared on 30 March 2016 and set out on pages 07 to 106, which comprise the consolidated balance sheet as at 31 December 2015, and the

consolidated income statement and consolidated cash flow statement for the year then ended and the

notes thereto

Management's responsibility

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with Vietnamese Accounting Standards, Vietnamese Enterprise Accounting

System and the statutory requirements relevant to preparation and presentation of consolidated financial

statements, and for such internal control as management determines is necessary to enable the preparation and presentation of consolidated 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 consolidated 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 consolidated financial statements are free from material misstatement

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements The procedures selected depend on the auditor's judgment,

including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error In making those risk assessments, the auditor considers internal control

relevant to the entity's preparation and fair presentation of the consolidated financial statements in order

to design audit procedures that are appropriate in the circumstances, but not for the purpose of

expressing an opinion on the effectiveness of the entity's internal control An audit also includes

evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements

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

our audit opinion

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working world

Opinion

In our opinion, the consolidated financial statements give a true and fair view, in all material respects, of

the consolidated financial position of the Holdings as at 31 December 2015, and of the consolidated

results of its operations and its consolidated cash flows for the year then ended in accordance with

Vietnamese Accounting Standards, Vietnamese Enterprise Accounting System and the statutory

requirements relevant to preparation and presentation of consolidated financial statements Ernst & Young Vietnam Limited

Trinh Hoang Anh

Auditor

Audit Practising Registration Audit Practising Registration

Certificate No 2036-2013-004-1 Certificate No 2071-2013-004-1 Hanoi, Vietnam

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Bao Viet Holdings B01-DN/HN

CONSOLIDATED BALANCE SHEET as at 31 December 2015 Currency: VND Code | ASSETS Notes 31 December 2015 31 December 2014 100 | A CURRENT ASSETS 22,163,065,317,844 20,746,692,302,304 110 | 1 Cash and cash equivalents 5 2,256,691,436,043 1,424,818,218,079 111 1 Cash 794,330,869,093 888,582,238,243 112 2 Cash equivalents 1,462,360,566,950 536,235,979,836 120 | i Short-term investments 14,882,101,197,172 14,287,017,825,862 121 + Held-for-trading securities 14.1 1,747,304,210,969 1,800,946,274,580 122 2 Provision for held-for-trading securities 14.1 (404,600,653,219) (434,945,963,067) 123 3 Held-to-maturity investments 14.2 13,539,397,639,422 42,921,017,514,349 130 | Hi Current accounts receivable 6 3,500,291 ,385,982 3,207,037,379,135 131 1 Short-term trade receivables 2,775 ,359,664,688 2,541 662,112,710

131.4 1.1 Receivables from insurance activities 996, 104,945,231 1,024,350,822,043 131.2 1.2 Receivables from investment activities 1,779,254,719,457 1,817,311,290,667 132 2 Short-term advances to suppliers 23,739,842,786 38,232,919,846

135 3 Short-term loan receivables 800,636,014,909 691 200,395,207

136 4 Other short-term receivables 268,834,491 ,340 245,165,457,835

137 5 Provision for doubtful short-term

receivables (368,491 ,592,709) (309,436,471,431) 139 6 Shortage of assets waiting for

resolution 212,964,968 212,964,968

140 | IV Inventories 7 103,010,911,121 175,834,608,041 150 | V Other current assets 414,130,578,088 479,292,448,796 181 4 Short-term prepaid expenses 352,618,039,974 355,830,387 ,676 151.7 4.1 Unallocated commission expenses 8 307,028,258,408 294,424,.717,991 151.2 4.2 Other short-term prepaid expenses 45,589,781, 569 61,405, 669,685 182 2, VAT deductible 2,338,528,906 292,081,594

155 3 Other current assets 9 59,174,009,208 123,169,979,526

190 | VI Reinsurance assets 1,006,839,809,438 1,172,691 ,822,397

191 1 Reinsurance assets from

unearned premium reserves 22.1 516,636,365,145 551,077,133,757

192 2 Reinsurance assets from claim

reserves 22.2 490,203,444,293 621 614,688,634

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Code | ASSETS Notes 31 December 2015 31 December 2014 200 | B NON-GURRENT ASSETS 36,389,499,190,933 26,821,773,239,668 210 | 1 Long-term receivables 40,044,256,836 38,315,757,679 216 1 Other fong-term receivables 40,044,256,836 38,315,757, 679 216.1 1.1 Insurance deposits 18, 862,496,457 18, 862,496,457 216.2 1.2 Deposits to Setttement Assistance Fund 21,181,760,379 19,453,261,222 220 | i Fixed assets 1,678,491 ,603,232 1,613,381,769,352 221 1 Tangible fixed assets 10 840,816,714,658 828,237,324,885 222 Cost 1,790,944,079,137 1,675,503,708,489 223 Accumulated depreciation (950,127,364,479) (847,266 ,383,604) 227 2 Intangible fixed assets 1 837,674,888,574 785, 143,844,467 228 Cost 1,102,012,336,024 1,002,787 ,585,824 229 Accumulated amortization (264 337 447,450) (217 843,741,357) 230 | Hi Investment properties 12 23,448,947,000 23,448,947,000 240 | IV Long-term assets in progress 191,987,610,818 307,501,420,979 242 1 Construction in progress 13 191,987,810,818 307,501,420,979 250 | V Long-term investments 34,352,193,347,678 24,782,748,896,431 282 1 Investments in associates and

jointly controlled entities 14.3.1 2,091 ,160,536,985 2,131 ,508,558,580 253 2 Investments in other entities 14.3.2 563,527, 138,423 365,928,261,225 254 3 Provision for long-term

investments 14.3.2 (64,239,974,693) (43,068, 720,189) 255 4 Held-to-maturity investments 14.2 31,751 ,745,646,963 22,298,380,796,815 260 | Vi Other long-term assets 103,333,425,369 86,377,048,227 261 1 Long-term prepaid expenses 48,518,305,909 42,072,590,174 262 2, Deferred tax assets 16.2 32,909,174,875 21,056,965,443 268 3 Other long-term assets 21,905,944,585 23,247,492,610

270 | TOTAL ASSETS §8,552,564,508,777 47,568,465,541,972

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Bao Viet Holdings

311 1 Short-term trade payables 18.1 1,126,082,627,920 1,056,835,762,377

312 2 Short-term advances from

customers 18.2 8,228,873,607 10,223,801 ,033

313 3 Statutory obligations 16 96,679,287,168 90,998,179,270 314 4 Payables to employees 621 422,411,172 465, 165,061,497

315 5, Short-term accrued expenses 51,159,635,780 47,777 ,057,235

318 6 Short-term unearned revenues 58,895,268,900 63,016,058,656

318.1 7 Unearned commission revenues 17 95,318,882,134 88,354,037,365

319 8 Other short-term payables 18 405,716,995,604 360,782,231,289

320 9 Short-term loans and finance

lease obligations 19 29,800,759,917 2,423,774,546

322 10 Bonus and welfare fund 20 109,969,996,853 129,099,449,921

324 11 Government bonds held for

repurchase 21 8,252,448,348,262 3,764,120,833,382 330 | fl Non-current liabilities 81,118,140,928 61,842,683,283 337 1 Other long-term liabilities 74,806,099,908 60,748,933,283 338 2 Long-term loans and finance lease

obligations 19 1,360,550,000 1,093,750,000

341 3 Deferred tax liabilities 16.2 4,951,497,020 ¬

350 | iif Statutory Insurance Reserves 22 34,417,532,027,684 | 28,611,005,539,105

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411a - Common shares with voting rights 6,804, 714,340,000 6,804, 714,340,000 411b - Preference shares = = 412 2 Share premium 3,184,332,381,197 3,184,332,381,197 417 3 Foreign exchange differences reserve 16,075,608,000 16,075,608,000

418 4 Investment and development fund 142,369,277,946 21,712,503,565

420 5 Other funds belonging to owners' equity 103,568,802,818 103,568 ,802,818 421 6 Undistributed earnings 2,038,471,565,269 1,867,073,385,965 421a - Undistributed earnings of prior years 912,957, 536,284 576, 705,528,175 421b - Undistributed eamings of current year 1,125,514,028,985 1,290,367,857,790 423 7, Statutory reserves for insurance operations 292,449,189,772 246,015,752,941 429 8 Non-controlling interests 616,210,081,846 573,328,298,527 440 | TOTAL LIABILITIES AND OWNERS’ EQUITY 58,552,564,508,777 | 47,568,465,541,972 oe

Mr Nguyen Xuan Hoa Mr Pham Ngo

Preparer Deputy Chief Financial Officer

Chief Accountant in charge

Hanoi, Vietnam 30 March 2016

c Tu

10

Mr Nguyen Quang Phi Chief Executive Officer

we

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CONSOLIDATED INCOME STATEMENT

for the financial year ended 31 December 2015

Currency: VND

Code | ITEMS Notes For the year ended For the year ended 31 December 2015 31 December 2014

01 Insurance premium (01 = 02 + 03 + 04} 24 16,206,341,123,766 13,908,570,112,354

02 Direct written premium 24.1 15,943,461,828,362 13,813,450,590,452

03 Reinsurance premium assumed 24.2 338,994,106,846 337,831 ,262,703

04 Increase in gross unearned premium

reserve (76,114,811,442) (42,711,740,801)

05 Reinsurance premium ceded

{05 = 06 + 07) (1,110,122,686,264) (1,244,456,862,694)

06 Reinsurance premium ceded 25 (1,075,681,917,652) {1,101,757,421,476)

07 Increase/(decrease) in ceded unearned

premium reserve (34,440,768,812) {142,898,441 218)

08 Net insurance premium (08 = 01 + 05) 15,096,218,437,502 12,664,114,249,660

09 Commission on reinsurance ceded and

other insurance ineome {09 = 10 + 11) 230,334,708,024 118,491 032,024

10 Commissions on reinsurance ceded 188,040,634,200 103,710,467,297

11 Other insurance income (11 = 12 + 13 + 14) 42,294,073,824 14,780,564,727 12 income on reinsurance assumed 16,663,303, 127 2,253,353, 476

13 | Income on reinsurance ceded 460,048,248 629,605,516

14 income from other activities 25,170,722,449 11,897, 605,736 15 Total net revenue from insurance

business (15 = 08 + 09) 16,326,553,145,526 12,782,605,281,684

16 Claim and maturity payment expenses 26.1 {5,908,181,291,969) (5,857,997,058,548) 17 Claim expenses for reinsurance

assumed 26.2 {175,660,994,859) (191, 531,688,856)

18 Deductions (18 = 19 + 20) 32,020,103,108 3,753,347,011

19 Subrogation recoveries 29,159,452,809 2,352,656,590

20 Salvages 2,860,650,299 1,400,688,421

21 Recoveries from reinsurance ceded 26.3 412,871,394,428 §90,688,073,583

22 Increase in mathematical reserve {6,721,738,486,144) (4,078,011,210,613)

23 Increase In gross claims reserve 115,328,143,112 (124,848,656,545)

24 {Decrease)lincrease in reinsurance

ceded claims reserve (131,411,244,341) 31,005,598,951

25 Claim expenses on retained risks

(25 = 16 + 17 + 18 + 21 + 22 + 23 + 24) (11,378,772,376,665) (9,626,941,595,017)

26 Claim expenses using catastrophe

reserve 46,000,000,000 -

27 Provision for catastrophe reserve (101,964,761,130) (97,921,509,054)

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Currency VND Code | ITEMS Notes For the year ended For the year ended 31 December 2015 31 December 2014 29 Other underwriting expenses (29 = 30 + 31 + 32 + 33 + 34) (3,391,262,938,375) (2,806,420,005,492) 30 Commission expense (1,590, 676,319,790) (1,180,412, 549,080) 37 Risk minimization expenses (77,851,626,985) (75, 881,635,697) 32 Loss adjusting fee, risk assessment and

others (283,349, 127,698) (168,267, 739,689)

33 Selling expenses (603,548,774, 126) (S12,755,070,237)

34 Other insurance operating expenses (835,837,086, 776) (869, 103,010,789)

35 Other reinsurance assumed expenses (76,733,945,577) (4,091 689,038) 36 Other reinsurance ceded expenses (2,114,124,395) (14,587,588,652) 37 Total direct insurance operating

expenses (37 = 25 + 26 + 27 + 28) (14,902,848,143,142) (12,549.962,367,263)

38 Gross insurance operating profit

{38 = 15 + 37) 423,705,002,384 232,642,894,434

39.1 | Income from banking activities - 756,312,526,915 39.2 | Expenses from banking activities - (656,841,581,888)

39 Net operating income from banking

activities (39 = 39.1 + 39.2) : 199,470,945,027

40.1 | Revenue from other activities 380,720,387,095 381,022,877,626 40.2 | Expenses from other activities (311,841,951,585) (313,054,604,311)

40 Net operating income from other activities (40 = 40.1 +40.2) 27 68,878,435,510 87,968,273,315 41 General and administrative expenses (41 = 41.4 + 41.2 + 41.3) 28 (2,011,740,532,968) {1,887,130,943,926) 41.1 General and administrative expenses of insurance operation (1,642,896,766,177) (1,473,465, 751,814) 41.2 | General and administrative expenses of banking operation - (120,204,588,097) 41.3 | General and administrative expenses of other operations (368,843,766,791) (293,460,604,015) 42.1 | Net operating loss from insurance operation (42.1 = 38 + 41.1) (1,219,191,763,793) {1,240,822,857,383) In which:

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Bao Viet Holdings

CONSOLIDATED INCOME STATEMENT (continued) for the financial year ended 31 December 2015 B02-DN/HN Currency: VND Code | ITEMS Notes For the year ended For the year ended 31 December 2015 31 December 2014 46 | Other income 9,722,047,264 15,348,571,228 47 Other expenses (4,754,363,380) (5,475,388,777)

48 Net other profit (48 = 46 + 47) 30 4,967,683,884 9,873,182,451 49 | Share of the profit in associates and joint

ventures 93,205,829,716 148,260,435,519

50 PROFIT BEFORE TAX

(50 = 42.1 + 42.2 + 42.3 + 45 + 48 + 49) 1,468,891,856,638 1,627,305,425,297

51 Equalization reserve (8,175,021,006) (7,550,598,372)

52 Current corporate income tax (292,686,127,870) (299,585,828,339) 53 Deferred income tax income 6,900,712,412 11,099,556,842 54 PROFIT AFTER TAX

(54 = 50 + 51 + 52 +53) 1,174,931,420,174 1,331,268,555,428

55 Non-controlling interests 46,924,275,754 72,711,673,813

56 NET PROFIT ATTRIBUTABLE TO SHAREHOLDERS OF THE HOLDINGS (56 = 54 - 55) 1,128,007,144,420 1,258,556,881,615 57 Basic earnings per share 32 1,658 1,718 b ⁄9/ S <<

Mr Nguyen Xuan Hoa Mr Pham Ngoc Tu MỀÑguyen-đũang Phi

Preparer Deputy Chief Financial Officer Chief Executive Officer

Chief Accountant in charge

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Currency: VND Code | ITEMS Notes Forthe yearended| For the year ended 31 December 2015| 31 December 2014 | CASH FLOWS FROM OPERATING ACTIVITIES 01 1 Accounting profit before tax 1,488,891 ,856,638 1,627,305,425,297 2 Adjustments for: 2,928,578,290,862 1,186,648,076,922 02 - Depreciation and amotization of fixed assets 158,323,745,833 148,559,426,441 03 - Provisions 5,983,182,996,807 4,448,320,231,841 04 - Unrealised foreign exchange gains (4,782,030,076) {2,808,710,751) 05 - Profits from investing activities (3,431 ,723,815,825) | (3,640,010,063,211) 06 - Interest expenses 223,577,394,123 232,387,192,602 08 3 Operating profit before changes in working capital 4,397,470,147,500 2,813,953,502,219 098 - (Increase)/Ðecrease in receivables 118,470,490,972 | (2,060,607,894,851) 10 - Increase in inventories (94,009,033,080) (13,609,008,852) +1 - Increase in payables (other than

interest, corporate income tax) 218,102,147,001 6,964,345,916,736

12 - Increase in prepaid expenses (3,233,368,033) (285,074 667,415)

13 - Decrease in held-for-trading

securities 312,366,066,141 95,751 322,003

14 - Interest paid (167,024,839,413) (239,517,144,210)

15 - Corporate income tax paid (274,892,086,257) (359,348,577,046)

17 ~ Other cash outflows from

operating activities (114,407,606,966) (154,096,070,568) 20 | Net cash flows from operating activities 4,192,841,907,865 6,761,797,378,016

II CASH FLOWS FROM

INVESTING ACTIVITIES

21 1 Purchase and construction of fixed

assets and other long-term assets (108,040,074,269) (145,508,165,710) 22 2 Proceeds from disposals of fixed

assets and other long-term assets 1,055,555,257 4,971,525,933 23 3 Loans to other entities and payments

for purchase of debt instruments of

other entities (13,542,772,264,140) | (9,058,381,027,193) 24 4 Collections from borrowers and

proceeds from sale of debt

instruments of other entities 3,534,899,361,649 2,193,775,256,163 25 §, Payments for investments in other

entities (197,598,877,198) -

27 6 Interest received, coupon and

distributed profits 3,107,618,426,268 3,474,335,713,100 28 7 Adjustment due to change in

accounting method for the

investment in BaovietBank {7,670,212,570,700)

30 | Net cash flows used in investing activities (7,204,837,872,433) | (11,201 ,019,268,407)

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CONSOLIDATED CASH FLOW STATEMENT (continued)

for the year ended 31 December 2015 Currency: VND Code | ITEMS Notes For the year ended For the year ended 31 December 2015 31 December 2014 lll CASH FLOWS FROM FINANCING ACTIVITIES 32 1 Capital redemption - (39,013,395,859) 33 2 Drawdown of borrowings (including repo activities) 16,897,026,534,657 17,879,010,021,796 34 3 Repayment of borrowings

(including repo activities) (12,373,735,516,055) | (18,230,628,390,000)

36 4 Dividend paid to shareholders

and non controlling interest (681,281,899,550) (1,063,159,934,400) 40 Net cash flows from/(used in)

financing activities 3,842,009,119,052 (1,453,791,698,463) 50 Net change in cash and cash

equivalents 830,013,154,484 | (5,893,013,588,854)

60 Cash and cash equivalents at

beginning of the year 1,424,818,218,079 7,318,047,598,296

61 Impact of exchange rate fluctuation 1,860,063,480 (215,791,363)

70 Cash and cash equivalents at end of the year 5 2,256,691,436,043 1,424,818,218,079 eS LN Br OY

Mr Nguyen Xuan Hoa Mr Pham Ngoc Tu Mr Nguyen Quang Phi

Preparer Deputy Chief Financial Officer Chief Executive Officer

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Bao Viet Holdings (herein referred to as “the Holdings”) was previously a state-owned company that was equitized and became a shareholding company pursuant to Business License approved by Hanoi Authority for Planning and Investment on 15 October 2007 The Business License was subsequently modified eight times; the eighth amendment was on 12 August 2015

The Holdings is listed on Ho Chi Minh Stock Exchange (HOSE) and its entire chartered capital is listed thereon

Below is a summary of information extracted from the eighth modified Business License dated 12 August 2015:

Business License Number: 0100111761

Registered company name: Bao Viet Holdings

Head Office's address: 8 Le Thai To Street, Hang Trong Ward, Hoan Kiem District,

Hanoi

Operating activities: Equity investments in subsidiaries and associates; financial services and other related services under Vietnamese Laws; and real estate business; IT services and educational support services, etc

Chartered capital: VND 6,804,714,340,000

Number of registered shares: 680,471,434

Founding shareholders: The Ministry of Finance, State Capital Investment Corporation (SCIC}, HSBC Insurance (Asia - Pacific) Holdings Limited

Legal representative: Mr Nguyen Quang Phi - Chief Executive Officer The structure of the Holdings’ shareholdings as at 31 December 2015 is as follows:

Shareholders No of shares — Percentage (%)

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Bao Viet Holdings B09-DN/HN NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

as at 31 December 2015 and for the year then ended 1 CORPORATE INFORMATION (continued)

The Holdings as at 31 December 2015 has the following subsidiaries, dependently accounted units:

Subsidiaries

Percentage

Subsidiaries Address Principal activities owned

Bao Viet Insurance 35 Hai Ba Trung Street, General insurance 100% Corporation (“Bao Viet Trang Tien Ward, Hoan products, reinsurance,

Insurance”) Kiem District, Hanoi loss adjustment

Bao Viet Life Corporation Floor 37, Keangnam Life insurance products, 100% (‘Bao Viet Life”) Hanoi Landmark Tower, reinsurance

Pham Hung Street,

Nam Tu Liem District, Hanoi

Bao Viet Fund 8 Le Thai To, Hang Management of 100%

Management Company = Trong Ward, Hoan Kiem investment funds and

(“BVF”) District, Hanoi investment portfolios

Bao Viet Securities Joint 8 Le Thai To, Hang Brokerage, securities 59.92% Stock Company (“BVSC”) Trong Ward, Hoan Kiem trading, underwriting,

District, Hanoi consulting and securities

placement

Bao Viet Au Lac Limited Ha Lieu, Phuong Lieu, Vocational driving training 60% Company ("Bao Viet-Au Que Vo District, Bac

Lac’) Ninh Province

Bao Viet Investment Joint 71 Ngo Sy Lien Street, Real estate business, 95%

Stock Company Van Mieu Ward, Dong construction investment (BVInvest') Da District, Hanoi consulting, provision of

machinery and equipment

Bao Viet Insurance was established on 21 dune 2004 in accordance with Decision No.1296/QD/BTC issued by the Ministry of Finance and Business License No.01/GPDC3/KDBH issued by the Ministry of Finance on the same date On 23 November 2007, the Ministry of Finance approved the re-establishment of Bao Viet Insurance in pursuant to the Establishment and Operating License No.45GP/KDBH As at 31 December 2015, Bao Viet Insurance has a chartered capital amounting to VND

2,000 billion

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Subsidiaries (continued)

BVF was established on 22 August 2005 in accordance with Decision No,911/2005/QD/HDQT-BV by the Holdings’ Board of Directors and operating in accordance with Business License No.0104000256 issued on 22 August 2005 by Hanoi

Authority for Planning and Investment and modified business registration No.27/UBCK-

GPDCAQLQ issued on 22 September 2015 by the State Securities Commission As at 31

December 2015, the chartered capital of BVF is VND 100 billion

» BVSC was established on 01 October 1999 in accordance with Incorporation License No.4640/GP-UB issued by the Hanoi People’s Committee and Operating License No.01/GPHDKD dated 26 November 1999 issued by the State Securities Commission The original chartered capital of BVSC is VND 43 billion As at 31 December 2015, the

chartered capital to VND 722,339,370,000

Bao Viet - Au Lac was established on 18 February 2009 under the License

No.2300373648 granted by Bac Ninh Authority for Planning and Investment As at 31

December 2015, the chartered capital of Bao Viet - Au Lac is VND 60,660,000,000

BVinvest was established on 09 January 2009 in accordance with Business License No.0103034168 granted by Hanoi Authority for Planning and Investment As at 31

December 2015, the chartered capital of BVInvest is VND 200 billion

Accordingly, direct and indirect investments of Bao Viet Holdings in BVInvest are as follows:

Committed % of

contributed chartered Contributed

capital capital capital

VND VND

Direct investment of the Holdings 165,000,000,000 55 110,000,000,000 Indirect investment via subsidiaries 120,000,000,000 40 80,000,000,000

- Bao Viet Life 60,000,000, 000 20 40,000,000,000

- Bao Viet Insurance 60,000,000, 000 20 _ 40,000,000,000 285,000,000,000 95 190,000,000,000 Bao Viet Value investment Fund (BVIF)

BVIF is a closed-end member fund incorporated in Vietnam in accordance with the License No 233/UBCK issued by the State Securities Commission on 20 October 2015 The Fund

was originally licensed to operate for a period of eight years

The Fund is managed by BVF, a subsidiary of the Holdings The custodian bank of the Fund is Bank for Investment and Development of Viet Nam JSC - Ha Thanh Branch

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as at 31 December 2015 and for the year then ended 1 CORPORATE INFORMATION (continued)

Bao Viet Value Investment Fund (BVIF) (continued)

As at 31 December 2015, direct and indirect investments of Bao Viet Holdings in BVIF are as follows:

Direct investment of the Holdings

Indirect investment via subsidiaries

- Bao Viet Life - Bao Viet insurance - BVSC

Dependently accounted units Name

Bao Viet Training Centre

Infrastructure Construction Project

Management Unit (“PMU”)

Bao Viet Holdings Information Technology Center Branch

Associates and joint ventures % of chartered Contributed capital capital VND 420,000,000,000 42% 350,000,000,000 35% 150,000,000,000 15% 80,000,000,000 8% 1,000,000,000,000 100% Address

8 Le Thai To Street, Hang Trong Ward,

Hoan Kiem District, Hanoi

71 Ngo Sy Lien, Van Mieu Ward, Dong Da District, Hanoi

71 Ngo Sy Lien, Van Mieu Ward, Dong

Da District, Hanoi

Associates and joint ventures of the Holdings as at 31 December 2015 are as follows: Associates & Joint ventures

Associates

Bao Viet Tourism Hotel JSC (Baoviet Resort)

International Investment &

Construction Joint Steck Company

(VIGEBA)

Long Viet Investments & Construction JSC

Bao Viet SCIC Investment Limited

Company (Bao Viet SCIC) Bao Viet Joint Stock Commercial

Bank (Baoviet Bank)

Joint ventures

Bao Viet Tokio Marine Insurance

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27

2.2

Accounting standards and systems

The consolidated financial statements of the Holdings and its subsidiaries expressed in Vietnamese Dong (“VND”), are prepared in accordance with the Vietnamese Enterprise Accounting System and Vietnamese Accounting Standard issued by the Ministry of Finance as per:

» Decision No.149/2001/QD-BTC dated 31 December 2001 on the Issuance and Promulgation of Four Vietnamese Standards on Accounting (Series 1);

» Decision No.165/2002/QD-BTC dated 31 December 2002 on the Issuance and

Promulgation of Six Vietnamese Standards on Accounting (Series 2);

» Decision No.234/2003/QD-BTC dated 30 December 2003 on the Issuance and Promulgation of Six Vietnamese Standards on Accounting (Series 3);

» Decision No.12/2005/QD-BTC dated 15 February 2005 on the Issuance and Promulgation of Six Vietnamese Standards on Accounting (Series 4); and

» Decision No.100/2005/QD-BTC dated 28 December 2005 on the Issuance and Promulgation of Four Vietnamese Standards on Accounting (Series 6)

Bao Viet Holdings is a company operating in financial investments and preparing its financial statements according to Circular No.200/2014/TT-BTC providing guidance on the Vietnamese Corporate Accounting System dated 22 December 2014 issued by the Ministry of Finance ("Circular 200") However, as the Holdings and its subsidiaries have major operations in insurance services, the consolidated financial statements of the Group are prepared in accordance with Circular 200, Circular No.202/2014/TT-BTC providing guidance on preparation of consolidated financial statements (‘Circular 202”) and modified to follow the Vietnamese Enterprise Accounting System for life insurance companies issued by the Ministry of Finance in Decision No.1296 TC/QD/CDKT dated 31 December 1996 and Decision No.150/2001/QD-BTC dated 31 December 2001 on amended accounting policies for insurance companies and Circular 232/2012/TT-BTC dated 28 December 2012 issued by the Ministry of Finance guiding accounting regime applied for non-life insurance, reinsurance and branches of foreign non-life insurance enterprises (“Circular 232”)

Basis of consolidation

The consolidated financial statements comprise the financial statements of the Holdings (the parent company), its subsidiaries and BVIF (collectively referred to as the “Group”) for the year ended 31 December 2015

Subsidiaries are fully consolidated from the date of acquisition, being the date on which the

Holdings obtains control, and continues to be consolidated until the date that such control

ceases Control exists when the Holdings has direct or indirect power to govern the financial and operating policies of a company so as to obtain benefits from its activities

The financial statements of the subsidiaries are prepared for the same reporting period as the parent entity, using consistent accounting policies

All intra-group balances, income and expenses and unrealized gains or losses arising from

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as at 31 December 2015 and for the year then ended

22

23

24

25

BASIS OF PREPARATION (continued) Basis of consolidation (continued)

Non-controlling interests represent the portion of profit or loss and net assets of the subsidiaries not held by the Group and are presented separately in the consolidated income statement and within equity in the consolidated balance sheet, separately from parent shareholders’ equity

Impact of change in the ownership interest of a subsidiary, without a loss of control, is recorded in undistributed earnings

Applied accounting documentation system

The Group's applied accounting documentation system is the General Journal Voucher

system

Accounting currency

The consolidated financial statements are prepared in Vietnam Dong ("VND") Fiscal year

The Group's fiscal year applicable for the preparation of its consolidated financial statements starts on 1 January and ends on 31 December

The Group also prepares its quarterly consolidated financial statements

STATEMENT ON THE COMPLIANCE WITH VIETNAMESE ACCOUNTING STANDARDS AND SYSTEMS

The Board of Management confirms that the Group has complied with the Vietnamese Accounting Standards and Vietnamese Enterprise Accounting Systems in preparing the

consolidated financial statements The Group has also followed the accounting policy for the

recognition of the revalued land use rights as set out in Note 4.6

The accompanying consolidated balance sheet, consolidated income statement, consolidated cash flow statement and notes to the consolidated financial statements, including their utilisation are not designed for those who are not informed about Vietnam's accounting principles, procedures and practices and furthermore are not intended to present the financial position and results of operations and cash flows in accordance with accounting principles and practices generally accepted in countries other than Vietnam

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44

42

Changes in accounting policies and disclosures

The accounting policies adopted by the Group in preparing the consolidated financial statements are consistent with those followed in the preparation of the Group’s annual consolidated financial statements for the year ended 31 December 2014, except for the following changes:

Circular No 200/2014/TT-BTC providing guidance on enterprise accounting system

On 22 December 2014, the Ministry of Finance issued the Circular No 200/2014/TT-BTC providing guidance on enterprise accounting system (“Circular 200”) replacing Decision No 15/2006/QD-BTC dated 20 March 2006 ("Decision 15”) and Circular No 244/2009 / TT-BTC dated 31 December 2009 of the Ministry of Finance (“Circular 244”) Circular 200 is effective for the financial year beginning on or after 1 January 2015

The Group reclassified and restated certain corresponding figures of prior year following the presentation of the current year’s consolidated financial statements in accordance with Circular 200 as disclosed in Note 39

Circular No 202/2014/TT-8TC providing guidance on preparation and presentation of consolidated financial statements

On 22 December 2014, the Ministry of Finance issued the Circular No 202/2014/TT-BTC providing guidance on preparation and presentation of consolidated financial statements (‘Circular 202”) replacing section XIII of Circular No 161/2007/TT-BTC dated 31 December 2007 Circular 202 is effective for the preparation and presentation of consolidated financial statements for the financial years beginning on or after 01 January 2015

The effects of the change in accounting treatment in accordance with Circular 202 are

applied on a prospective as this Circular does not require retrospective application

Circular 194/2014/TT-BTC amending and supplementing a number of articles of Circular

No, 124/2012/TT-BTC dated 30 July 2012 of the Ministry of Finance

On 17 December 2014, the Ministry of Finance promulgated the Circular No 194/2014/TT- BTC (‘Circular 194), which amends and supplements a number of articles of Circular No 124/2012/TT-BTC dated 30 July 2012 and Circular No 125/2012/TT-BTC dated 30 July 2012 of the Ministry of Finance providing guidance on the financial regime applicable to

insurers, reinsurance businesses, insurance brokers and branches of foreign non-life

insurers

In accordance with Circular 194, premium payments period shall not exceed 30 days from inception date For instalment contract, non-life insurers are required to record revenue from insurance premium of the first instalment as of the insurance contract's effective date and record revenue from premium of the following instalment only when the policy holder makes full premium payment under the agreement of the contract If policy holder cannot make full premium payment as agreed in the contract, insurance contract shall be automatically terminated after contractual premium payment date

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand, cash at banks, term deposits and short- term, highly liquid investments with an original maturity of three months or less which are readily convertible into known amounts of cash and that are subject to an insignificant risk of change in value

22

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44

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Accounts receivable

Receivables are presented in the consolidated financial statements at the carrying amounts

due from customers and other debtors, after provision for doubtful debts

Provision for impairment of receivables will be made based on their overdue ages For

receivables that are undue and owed by debtors who have become bankrupt or are

undergoing dissolution procedures, are missing, have absconded, are prosecuted, detained or tried by law enforcement bodies, are serving sentences or have deceased, provision should be estimated based on the amount of expected loss The increase or decrease to the provision balance is recorded as an administrative expense in the separate income

statement

The Group uses the provision rates as stipulated in Circular No 228/2009/TT-BTC issued on 07 December 2009 by the Ministry of Finance, as follows:

Overdue receivables age Allowance ratio

Overdue from six (06) months to less than one (01) year 30%

Overdue from one (01) to less than two (02) years 50%

Overdue from two (02) to jess than three (03) years 70%

Overdue over three (03) years 100%

Inventories

Inventories of the Group mainly include pre-printed certificates of the insurance subsidiaries and real estate inventories of BVinvest, which are carried at the lower of cost and net

realisable value,

Net realisable value represents the estimated selling price in the ordinary cource of business less the estimated costs to complete and the estimate costs necessary to make the sale

The perpetual method is used to record inventories

Provision for obsolete inventories

An inventory provision is created for the estimated loss arising due to the impairment of value (through diminution, damage, obsolescence, etc.) inventories owned by the Group, based on appropriate evidence of impairment available at the balance sheet date Increases and decreases to the provision balance are recorded into the cost of goods sold account in the consolidated income statement

inventory property of BVinvest

Property acquired or being constructed for sale in the ordinary course of business of BvVinvest, rather than to be held for rental or capital appreciation, is held as inventory property and is measured at the lower of cost and net realizable value

Cost includes:

» Freehold and leasehold rights for tand;

» Amounts paid to contractors for construction; and

» Borrowing costs, planning and design costs, costs of site preparation, professional fees for legal services, property transfer taxes, construction overheads and other related

costs;

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4.4 45 | | 4.6 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) inventories (continued)

Non-refundable commissions paid to sales or marketing agents on the sale of real estate units are expensed when paid

Net realisable value is the estimated selling price in the ordinary course of the business, based on market prices at the reporting date and discounted for the time value of money if material, less costs to completion and the estimated costs of sale

The cost of inventory property recognised in profit or loss on disposal is determined with

reference to the specific costs incurred on the property sold and an allocation of any non- specific costs based on the relative size of the property sold

Tangible fixed assets

Tangible fixed assets are stated at cost less accumulated depreciation

The cost of a tangible fixed asset comprises of their purchase price and any directly attributable costs of bringing the tangible fixed assets to working condition for their intended

use

Expenditures for additions, improvements and renewals are added to the carrying amount of the assets and expenditures for maintenance and repairs are charged to the consolidated income statement as incurred

When tangible fixed assets are sold or retired, any gain or loss resulting from their disposal (the difference between the net disposal proceeds and the carrying amount) is included in the consolidated income statement

intangible fixed assets

Intangible fixed assets are stated at cost less accumulated amortization

The cost of an intangible fixed asset comprises of its purchase price and any directly attributable costs of preparing the intangible fixed asset for their intended use

Expenditures for additions, improvements are added to the carrying amount of the assets and other expenditures are charged to the consolidated income statement as incurred When intangible fixed assets are sold or retired, any gain or loss resulting from their disposal (the difference between the net disposal proceeds and the carrying amount) is included in the consolidated income statement

Land use rights

Land use rights are recognised as intangible fixed assets based on the revalued amount as

determined by an independent valuer for the land areas that the Group had land use right

certificates, or was in the process of obtaining the land use right certificates, as at 31 December 2005 for the equitization purpose of the Holdings

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47

48

Depreciation

Depreciation of fixed tangible and amortization of intangible assets are calculated on a straight-line basis over the estimated useful life as follows:

Buildings and structures 06 - 50 years

Machinery and equipment 03 - 07 years

Means of transportation and transmission 06 - 08 years

Office equipment 03 - 06 years

Other tangible fixed assets 04 years

Computer software 03 - 05 years

Other intangible assets 03 years

Land use rights with definite term According to the term specified on the land use right certificate Land use rights with indefinite terms are not amortised in accordance with Circular No 45/2013/TT-BTC

investment properties

investment properties are stated at cost including transaction costs less accumulated depreciation Investment properties held for capital appreciation are not depreciated but subject to impairment review

Subsequent expenditure relating to an investment property that has already been recognized is added to the net book value of the investment property when it is probable that future economic benefits, in excess of the originally assessed standard of performance of the existing investment property, will flow to the Group

Depreciation and amortisation of investment properties are calculated on a straight-line basis over the estimated useful life of each asset as follows:

Land use rights According to the term specified on the land use right certificate

Buildings 06 - 50 years

Others 05 - 10 years

Investment properties are derecognised when either they have been disposed of or when the investment properties are permanently withdrawn from use and no future economic benefit is expected from its disposal The difference between the net disposal proceeds and the carrying amount of the assets is recognised in the consolidated income statement in the

year of retirement or disposal

Transfers are made to investment properties when, and only when, there is a change in use, evidenced by ending of owner-occupation, commencement of an operating lease to another party or ending of construction or development Transfers are made from investment properties when, and only when, there is change in use, evidenced by commencement of

owner-occupation or commencement of development with a view to sale The transfer from

investment property to owner-occupied property or inventories does not change the cost or the carrying value of the property for subsequent accounting at the date of change in use

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4.10

Borrowing costs

Borrowing costs consist of interest and other costs that are incurred in connection with the borrowings of the Group

Borrowing costs are recorded as an expense during the year in which they are incurred, except to the extent that they are capitalized

Borrowing costs that are directly attributable to the acquisition, construction or production of an asset that necessarily take a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective asset

investments

Investments in associates

Investments in associates over which the Group has significant influence and which is neither a subsidiary nor a joint venture (typically those that the Group owns over 20% of voting rights) are accounted for using the equity method of accounting

Under the equity method, the investment is initially recorded at cost and the carrying value is increased or decreased to recognize the Group’s share of the net assets in the associate after the date of acquisition The consolidated income statement reflects the share of the post-acquisition results of operation of the associate

The share of post-acquisition profit/(loss) of the associates is presented on face of the consolidated income statement and its share of post-acquisition movements in reserves is recognised in reserves The cumulative post-acquisition movements are adjusted against the carrying amount of the investment Dividend/profit sharing received or receivable from associates reduces the carrying amount of the investment

The financial statements of the associates are prepared for the same reporting period and use the same accounting policies as the Group Where necessary, adjustments are made to bring the accounting policies in line with those of the Group

A listing of the Group's associates is shown in Note 14.3.1

investment in jointly cantralied entities

The Group's investment in jointly controlled entity is accounted for using the equity method of accounting Under the equity method, the investment is carried in the consolidated balance sheet at cost plus post joint venture changes in the Group's share of net assets of the jointly controlled entity The consolidated income statement reflects the share of the post-acquisition results of operation of the jointly controlled entity

The share of profit/(loss} of the jointly controlled entity is presented on the face of the consolidated income statement and its share of post-acquisition movements in reserves is recognized in reserves The cumulative post-acquisition movements are adjusted against the carrying amount of the investment Dividend/profit sharing received or receivable from

jointly controtled entities reduce the carrying amount of the investment

The financial statements of the jointly controlled entity are prepared for the same reporting period as the Group Where necessary, adjustments are made to bring the accounting policies in line with those of the Group

26

1 NHL

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4.10

investments (continued)

Interests in jointly controlled assets

The Group’s interest in the jointly controlled assets is recognized in the consolidated financial statements by including the amount of:

> the Group's share of the jointly contralled assets, classified according to the nature of the

assets;

any liabilities which the Group has incurred;

the Group’s share of any liabilities incurred jointly with other venturers in relation to the joint venture; income from the sale or use of the Group's share of the output of the joint venture and share of expenses incurred; any expenses that the Group has incurred in respect of the Group’s interest in the joint venture

Securities and other investments

Based on the holding purposes, securities and other investments are classified as held-for- trading securities, held-to-maturity investments and investments in other entities

» Held-for-trading securities: include securities listed on the securities market and other securities and financial instruments which are held for trading purpose Held-for-trading securities are stated at costs less provision for impairment losses

Held-to-maturity investments: include Government bonds, corporate bonds, term deposits, term loans and other investments which will be held until maturity After initial recognition at acquisition cost, held-to-maturity investments are measured at recoverable amount Any impairment loss incurred is recognised as expense in the consolidated financial statements and deducted against the value of such investments Investments in other entities: include equity investments in other entities that the Holdings does not have control, joint control or significant influence These investments are stated at their acquisition costs less provision for impairment losses

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4.70 investments (continued) Provision for investments Held-for-trading securities

The primary source of reference for impairment provisioning is Circular No 228/2009/TT- BTC dated 07 December 2009 issued by the Ministry of Finance (“Circular 228") and Circular No 89/2013/TT-BTC dated 28 June 2013 amending and supplementing clause 2

Article 5 of Circular 228 (“Circular 89”), Circular No 146/2014/TT-BTC guiding the financial

regime for securities companies and fund management companies (‘Circular 146") and other related regulations Details of the basis of determination of impairment of investment are as follows:

Number of Market value

impaired Carrying value of securities Provision amount = securities as at x | of securities - as at

balance sheet balance

date sheet date

» For securities listed on the Hanoi Stock Exchange, Ho Chi Minh Stock Exchange and securities which are registered for trading on UPCOM, their market prices are their closing prices on the trading day preceding the date of setting aside the provision » The market price for unlisted securities and securities unregistered for trading used as a

basis for setting aside the provision is the average of actual trading prices quoted by 03 securities companies conducting transactions within one month before the date of setting aside the provision

If no transaction is conducted for such securities within that time limit, or the Group is

unable to collect 03 quotations for OTC securities which had been made provision before, no additional provision is made

» For the delisted securities and suspended trading securities from the sixth day afterward, their prices are the book value at the latest financial report date

28

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as at 31 December 2015 and for the year then ended 4.10 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) investments (continued} Provision for investments (continued) Held-to-maturity investments

Provision for impairment of held-to-maturity financial investments is made based on guidance of Circular 228 The Group will assess the recoverability of the investment and in the case there are evidences that a part or the whole of the investment is not recoverable, the Group will recognized the estimated loss into the expense of the year

For investments in bonds issued by the Vietnam Shipping Industry Corporation (“Vinashin” — now known as SBIC), based on the interest and principal payment history, the Group has stopped recording accrued interests from Vinashin bonds, made 100% provision for such interest accrual and monitored the accruals off-balance sheet The Holdings has made

provision fer the bonds, which will mature in 2017, on 100% outstanding balance based on

straight line method over the period of 5 years starting from 2015 and at the same time moved previously-recorded interest accrual and related provisions to off-balance sheet

For investments in term deposits at Vinashin Finance Company (“VFC") and Agribank

Leasing Company No Il ("ALCII’), based on the ALCII and VFC's corporate financial situation and the interest and principal payment history, the Holdings has made 100% provision for principal in accordance with Circular 228; and has stopped recording accrued deposit interests and monitored subsequent accruals off-balance sheet Since 2015, the Holdings moved previously-recorded interest accrual and related provisions to off-balance sheet

Investments in other entities

For equity investments in other entities set up under law and other long-term investments, a provision for devaluation is set up if the investees are suffering from loss (except where such loss has been already included in their business plans prior to the investment) according to Circutar 228 and Circular 89

The amount of provision for each investment shall not exceed the invested capital and is calculated according to the following formula given in Circular 89:

Investment capital of

Actual capital Actual the Group

isi ibuti owners’ ——Ừ———

Provision amount = contributions of _ mr nen x cual Capel in the investee contributions of investors

in the investee The basis for setting up the provision is the positive difference between the investors’ actual capital contributions and the actual amount of owners’ equity in the investee's financial

statements at the balance sheet date

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4.41

4.12

4.13

4.14

Advances on surrender value

Policyholders who have fulfilled their premium payment obligations for at least 24 months are entitled to an advance on the surrender value, with the advance amount at a maximum of 80% of the surrender value and accumulated un-withdrawn dividend for the relevant policy

Advances on surrender values are carried at cost and are recorded under “Long-term

investments” item on consolidated balance sheet The interest rate applied for each policy will be announced periodically The interest income arising from advances on surrender value will be recorded as financial income in consolidated income statement for the year

Securities sold under agreement to repurchase (“repo”)

Securities sold under agreements to repurchase at a specified future date (“repo”) are not derecognized from the consolidated financial statements The corresponding cash received is recognized as a liability in the consolidated balance sheet The difference between the selling price and repurchasing price is allocated to expense in the consolidated income statement over the life of the agreement using straight-line method

Payables and accruals

Payables and accruals are recognized for amount to be paid in the future for goods and

services received, whether or not billed to the Group

Employee benefits Post employment benefits

Post-employment benefits are paid to retired employees of the Holdings by the Vietnam Social Insurance Agency The Holdings is required to contribute to these post-employment benefits by paying social insurance premiums to the Vietnam Social Insurance Agency at the rate of 18% of employee basic salaries on a monthly basis since 01 January 2014, The Holdings also contributes 3% of employee basic salaries to pay health insurance premiums The Holdings has no further obligation concerning post-employment benefits for its employees other than this

Voluntary resignation and retrenchment benefits

» Voluntary resignation benefits: the Holdings has the obligation, under Article 42 of the Labor Code No 10/2012/QH13 dated 18 June 2012, to pay an allowance to voluntarily resigning employees, equal to half of one-month’s basic salary for each year of employment plus wage allowances (if any) until 31 December 2008 Commencing 01 January 2009, the average monthly salary used in this calculation will be revised at the end of each reporting period based on the average monthly salary of the most recent 06

months up to the balance sheet date;

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4.14

4.15

4.45.1

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Employee benefits (continued)

Unemployment insurance Fund

According to the Social insurance Law No.71/2006/QH11 issued on 29 June 2006, and Decree No 127/2008/ND-CP issued on 12 December 2008 by the Government, employees and employers are required to contribute 1% each of employee basic salary to the unemployment insurance fund, with effect from 01 January 2009 Further, the Government will also contribute 1% of the basic salary of each employee to this fund Vietnam Social Insurance Agency is responsible for the collection, distribution and management of the fund

Technical reserves

Technical reserves are established in accordance with Circular No.125/2012/TT-BTC (‘Circular 125”) dated 30 July 2012 The Group's technical reserves include:

Life insurance services General insurance services

Mathematical reserve Unearned premium reserve

Unearned premium reserve Claims reserve

Claims reserve Catastrophe reserve

Dividend reserve Equalization reserve

Details on the reserve calculation method are as follows: Life insurance reserves

» Mathematical reserve is the difference between the present value of total insurance outgo payable in the future, and the present value of the net level premiums with Zillmer adjustment for insurance premiums receivable in the future Mathematical reserve is calculated for products more than one (1) year term with specific actuarial formula and factors for each type of products as registered and approved by the Ministry of Finance Bao Viet Life estimates the mathematical reserve for universal life products in accordance with the provisions and instructions of the Ministry of Finance’s Decision No 96/2007/QD-BTC dated 23 November 2007 as amended by Circular 125/2012/TT- BTC dated 30 July 2012 and with actuarial principles and methods which are widely

recognized in international practice Furthermore, the methodology and actuarial

principles used to estimate these universal life reserves have been registered and approved by the Ministry of Finance

» Unearned premium reserve is the provision for unearned revenue as at the balance sheet date, and is calculated for all outstanding policies having period less than or equal to one year which are in-force at the financial reporting date

» Claim reserve includes the reserve for outstanding claims and for claims incurred but

not reported

- Outstanding claim reserve is the provision for claims submitted but still in the course of settlement as at the balance sheet date

- Reserve for incurred but not reported claims for which the insurer is liable (IBNR) is

applied for only policies having period less than or equal to one (01) year

» Dividend reserve is the provision for accumulated unpaid dividends for participating policies, which is established on the variances of actual rate of return announced for participating policies and the respective nominal interest rate

» Equalization reserve is made at one percent (1%) of profit before tax Annual contributions shall be made up until the time when this reserve is equal to five percent (5%) of the premiums collected in the fiscal year of an insurer

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4.15 4.15.2

Technical reserves (continued) General insurance reserves () Unearned premium reserve

Unearned premium reserve is calculated as a percentage of total premium or in accordance

with a coefficient of the insurance contracts’ terms as such:

» For cargo insurance, unearned premium reserve is made at 25% of the premium » For other insurance lines, unearned premium reserve is calculated based on the 1/8

method This method assumes that premiums for all insurance contracts issued in a quarter equally spread along the quarter In other word, all insurance contracts of a particular quarter are assumed to be effective at that mid quarter Unearned premium reserve is calculated based on the following formula:

Unearned Unearned premium reserve p = Premiums em x premium rate

» For the insurance policies with period cover is more than one year, unearned premium

reserve is calculated based on the daily method, following the formula:

Premiums x Remaining day of insurance policy Unearned premium

reserve

» Unearned premium reserve direct and inward insurance, catastrophe reserve are presented as liabilities; Unearned premium reserve of outward insurance are presented

as reinsurance asset

(i) Claim reserve

Claim reserve includes the reserve for outstanding claims and for claims incurred but not reported

» Outstanding claim reserve is calculated based on the estimated claim payments for each claim for which the insurer is liable for, which is either notified to the insurer or requested for payment but is still unresolved at the end of the fiscal year, and

» Reserve for incurred but not reported claims (IBNR) is calculated based on the formula in accordance with Circular 128/2012/TT-BTC:

Tota! indemnity for

claims incurred but not Operating Net Average delay in reporting

Reserve for reported at the end of f lai f

payment of the last three „ rent fi a I e male

losses which consecutive fiscal indemnity _ Xu ee ai nce

have incurred = years x atisingin x y ¥

but not yet ~ Net

reported for the Total indemnity for the current operating Average Ho current fiscal losses arising in the y revenue of sim s of

year last three consecutive the revious fiscal

fiscal years previous p ar

fiscal year ye

» Claim reserve of direct and inward insurance, catastrophe reserve are presented as liabilities; claim reserve of outward insurance are presented as reinsurance asset

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4.15

4.15.2

4.16

Technical reserves (continued) General insurance reserves (iii) Catastrophe reserve

» Catastrophe reserve is accrued annuaily until such reserve reaches 100% of the

retained premiums of the current fiscal year based on retained premiums Bao Viet

Insurance uses Catastrophe reserve to settle claims when there are large fluctuations in losses or when large losses occur that the total premiums retained for the financial year, after deduction of the unearned premium reserve and the outstanding claim reserve, are insufficient to pay claims under Bao Viet Insurance's liability

Reserve regulation under Vietnamese Accounting Standard on Insurance Contract (VAS 19)

On 28 December 2005, the Ministry of Finance issued Decision No.100/2005/QD-BTC governing the publication of four new accounting standards, one of which is Vietnamese Accounting Standard (“VAS”) 19 - Insurance Contract Following the issuance of this Standard, starting from January 2006, the provision of catastrophe reserve and equalization reserve are no longer required since they represent “possible claims under contracts that are not in existence at the reporting date” However, since the Ministry of Finance has not issued detailed guidance for the implementation of VAS 19 and in accordance with the

provision set out in Decree No 46/2007/ND-CP issued by the Government of Vietnam on 27

March 2007 regarding financial regulations for insurance enterprises, the Group has elected to adopt the policy of providing for the catastrophe reserve at 2.0% of total retained premium

in accordance with Circular 125 and equalization reserve is made at 1.0% of profit before tax periodically

Statutory reserves

The below statutory reserve funds are made in accordance with the regulations applicable to specific industries that the Group is operating in:

Insurance operation

The compulsory reserve fund is established in order to supplement the contributed capital of Bao Viet Life and Bao Viet Insurance and ensure solvency Appropriation to the compulsory reserve fund is made annually at 5% of after-tax profits until it reaches 10% of contributed capital in comptiance with Decree No 46/2007/ND-CP dated 27 March 2007 For year ended 31 December 2015, Bao Viet Life and Bao Viet Insurance allocated 5% of profit after

tax to statutory reserves

Securities operation and fund management operation

BVSC and BVF, the Group's subsidiaries operating in securities operations and fund management operation, use annually profit after tax to create reserves in accordance with Circular No.146/2014/TT-BTC issued by the Ministry of Finance dated 06 October 2014 as follows:

Percentage of profit

after tax Maximum level

Capital Supplementary Reserve 5% 10% of chartered capital

Financial and Operational risk Reserve 5% 10% of chartered capital

33

iS

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Revenue recognition

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured The following specific recognition criteria must also be met before revenue is recognized:

Gross written premium Life insurance

Gross written premiums are recognized in accordance with Circular 125 Premiums from life insurance contracts are recognized as revenue when payable by the policyholder For single premium business, revenue is recognized on the date from which the policy is effective Premiums due after the reporting period but received before the end of the financial year are shown as "Premium in advance" and included in the “Short-term advances from customers” in the consolidated balance sheet

Total premium received from Universal Life policyholders are recorded as revenue

Policyholders account value is calculated by actuaries and recorded under “Statutory Insurance Reserves” in the consolidated balance sheet

General insurance

Gross written premiums are recognized in accordance with Circular No 125/2012/TT/BTC (‘Circular 125”) issued by the Ministry of Finance dated 30 July 2012 guiding financial

regime to applicable to insurers, reinsurance businesses, insurance brokers and branch of

foreign non-life insurers and Circular No 194/2014/TT-BTC (‘Circular 194”) on amending and supplementing a number of articles of the Circular 124/2012/TT-BTC dated 30 July 2012 and Circular 125

Specifically, gross written premium is recognized as revenue at the point of time when the

following conditions are met: (1) the insurance contract has been entered into by the insurer

and the insured; and (2) the premium has been paid by the insured or (3) there is agreement between the insurer and the insured for delayed payment of insurance premium If the insurer and its customers mutually agree a method of insurance premium payment on an instalment basis, only the insurance premium which is due in accordance with the instalment contract shall be taken to revenue for the period In accordance with Circular 194, premium payment period shall not exceed 30 days from policy inception date, For instalment contracts, non-life insurers are required to record revenue from insurance premium of the first instalment as of the insurance contract's effective date and record revenue from premium of the following instalment only when the policy holder makes full premium payment under the agreement of the contract If policyholder cannot make full premium payment as agreed in the contracts, insurance contract shall be automatically terminated after contractual premium payment date

Prepaid premium before due date is recorded as “Short-term uneamed revenues” or “Long- term unearned revenues” in the consolidated balance sheet

Interest

Revenue is recognized as interests accrue (taking into account the effective yield on the asset) unless recoverability is in doubt

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

417

4.18

Revenue recognition (continued)

Interest (continued)

Interest revenue from bond is recognized on an accrual basis Interest revenue also includes the amount of amortization of any discount, premium or other difference between the initial carrying amount of a bond and its amount at maturity and allocated using straight- line method When unpaid bond coupon interest has accrued before the acquisition of a bond, the subsequent receipt of coupon interest is allocated between pre-acquisition and post-acquisition period Only post-acquisition bond coupon interest is recognized as revenue Pre-acquisition bond coupon interest is deducted from the cost of the bond

Fees from rendering of services

Fees from rendering of services include fund management fees, placement fees, incentive fees, brokerage, underwriting activities, etc which are recognized when services are performed and the revenue can be reliably measured

Where the contract outcome cannot be reliably measured, revenue is recognised only to the extent of the expenses recognised which are recoverable

Gains from securities trading

Gains from securities trading are the excess of selling prices over the weighted average cost of securities sold

Dividends and appropriated profits

Income is recognized when the Group's right to receive the cash dividend or the appropriated

profit is established Stock dividend and bonus shares received are not recognized as income of the Group and the respective increase in number of shares are only updated off balance sheet in accordance with Circular No 200/2014/TT-BTC

Other income

Revenues from irregular - activities other than turnover-generating activities are recorded to other incomes as stipulated by VAS 14 - “Revenue and other income’, including: Revenues from asset liquidation and sale; fines paid by customers for their contract breaches;

collected insurance compensation; collected debt which had been written off and included in

the preceding period expenses; payable debts now recorded as revenue increase as their

owners no longer exist; collected tax amounts which now are reduced and reimbursed; and

other revenues

Expense recognition

Claim and maturity payments

Claim and maturity payment expenses for life insurance are recognized when the liability to

the policyholder under the policy has been determined

For general insurance, claim expenses recognized at the point of time when the claim documents are completed and approved by authorized persons In case that the final claim

amount has not been finalized but Bao Viet Insurance is certain that the loss is within its

insured liabilities and has paid an advance to the customer as per their request, such

advance would also be recognized as claim expenses Any claim that is not yet approved by

authorized persons is considered an outstanding claim and inctuded in claims reserve

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4.18

4.19

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Expense recognition (continued)

Commission

For life insurance, commission expenses are calculated as the percentage of premium revenue and are recognised in the current consolidated income statement Commission is calculated for all products with specific percentages for each type of products, and in accordance with Circular No 124/2012/TT-BTC dated 30 July 2012 issued by the Ministry of Finance providing guidelines for implementation of Governmental Decree No 45/2007/ND-

CP dated 27 March 2007 on Law on Insurance (“Circular 124”)

For general insurance, the Group calculates the commission payables for each product category of direct insurance with stipulated percentage in Circular 124 and only recognises the portion which matched with earned premium of direct insurance in Insurance expense this period The unatlocated commission will be recorded as prepaid expense and expensed in subsequent periods

Costs of transferred land use right

Cost of transferred land use right comprises all costs that are directly attributable to development activities or that can be allocated on a reasonable basis to such activities including:

» All costs incurred for land and land development activities;

» Mandatory and non-saleable costs associated to property development activities that would be incurred for existing and future land development of the project

Leased assets

Rentals paid under operating leases are charged to the consolidated income statement on a straightline basis over the term of the lease

Recognition of reinsurance activities of general insurance {i) Reinsurance ceded

Reinsurance premiums ceded under treaty reinsurance agreements are recognized when gross written premiums within the scope of the treaty agreements are recognized

Reinsurance premiums ceded under facultative reinsurance agreement is recognized when the facultative reinsurance agreement has been entered into by the Group and when gross

written premiums within the scope of the facultative agreements are recognized

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4.19

4.20

Recognition of reinsurance activities of general insurance (continued)

(i) Reinsurance assumed

Reinsurance assumed under treaty arrangement:

» Income and expenses relating to reinsurance assumed under treaty arrangements are recognized when the statement of account is received from the cedants As at the reporting date, income and expenses relating to reinsurance assumed under treaty arrangements but for which the cedants have not sent their statement of accounts are estimated based on statistical data and based on the Bao Viet Insurance's own estimate

Reinsurance assumed under facultative reinsurance arrangement:

» Reinsurance premium assumed is recognized when the facultative reinsurance

agreement has been entered into by Bao Viet Insurance and a statement of account (for

each facultative reinsurance agreement) has been received from the cedants;

>» Claim expenses for reinsurance assumed is recognized when there is evidence of

liability of Bao Viet Insurance and when a statement of account has been sent to Bao

Viet Insurance; and

» Reinsurance commission is recognized when the reinsurance premium is ceded and when a statement of account has been sent to Bao Viet Insurance At the end of the accounting period, the part of reinsurance commission which is not included in expense

of the period corresponding to unearned premium of reinsurance assumed shall be

determined and allocated in the subsequent periods based on registered method for

unearned premium reserve

Construction contracts

Where the outcome of a construction contract can be estimated reliably, revenue and costs are recognised by reference to the stage of completion of the contract activity at the balance sheet date, as measured as the proportion of contract costs incurred for work performed to

date bear to the estimated total contract costs, except where this would not be

representative of the stage of completion Variations in contract work, claims and incentive payments are included to the extent that they have been agreed with the customer

Where the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised to the extent of contract costs incurred that it is probable will be recoverable Contract costs are recognised as expenses in the period in which they are incurred

Difference between the cumulative revenue of a construction contract recognised to date

and the cumulative amount of progress billings of that contract is presented as construction contract receivable/payable based on agreed progress

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4.21 Corporate income tax Current income tax

Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted as at the balance sheet date

Current income tax is charged or credited to the consolidated income statement, except when it relates to items recognized directly to equity, in which case the deferred current income tax is also dealt with in equity

Current income tax assets and liabilities are offset when there is a legally enforceable right for the Group to set off current tax assets against current tax liabilities and when the Group

intends to settle its current tax assets and liabilities on a net basis

Deferred tax

Deferred tax is provided using the liability method on temporary differences at the balance sheet date between the tax base of assets and liabilities and their carrying amount for financial reporting purposes

Deferred tax liabilities are recognized for all taxable temporary differences, except:

» where the deferred tax liability arises from the initial recognition of an asset or liability in

a transaction which at the time of the related transaction affects neither the accounting profit nor taxable profit or loss; and

» in respect of taxable temporarily differences associated with investments in subsidiaries

and associates, and interests in joint ventures where timing of the reversal of the

temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future

Deferred tax assets are recognized for all deductible temporary differences, carried forward

unused tax credit and unused tax losses, to the extent that it is probable that future taxable

profits will be available against which these deductible temporary differences, carried forward unused tax credit and unused tax losses can be utilized, except:

» where the deferred tax arises from the initial recognition of an asset or liability in a

transaction which at the time of the transaction affects neither the accounting profit nor

taxable profit or loss;

» in respect of deductible temporarily differences associated with investments in

subsidiaries, associates, and interests in joint ventures, deferred tax assets are

recognized only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilized

The carrying amount of deferred income tax assets is audited at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilized Previously unrecognized deferred income tax assets are reassessed at each balance sheet date and

are recognized to the extent that it has become probable that future taxable profit will allow

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