SUSTAINABILITY REPORT 2016 - The PAN Group

www.thepangroup.vn

SUSTAINABILITY REPORT 2016

3SUSTAINABILITY REPORT |2 | THE PAN GROUP 32

THE PAN GROUP OVERVIEW

3 | TROPER YTILIBANIATSUS2

CONTENT

I. The Pan Group Overview

1. Company Profile2. Total asset, owner’s equity and revenue3. Milestones4. Core Business, Distribution Locations And Channels 5. Corporate Structure6. Subsidiaries & Affiliates 7. Supply Chain8. The Affiliate Industry Associations

1114202231353639

4445505656565757

676768

78787980

6972

I. Journey In 2016

1. Overall Assessment On Socio-environment And Economic Impacts.

1. Purpose Of The Report2. Sustainability Report 2016

PART I: OVERVIEW

MESSAGE FROM THE CHAIRMAN

PART II: SUSTAINABILITY IN THE PAN GROUP

II. OVERVIEW ON SUSTAINABILITY REPORT

2.1 Report’s Scope2.2 Methods Of Determining The Reported Contents 2.3 Stakeholders’ Participation2.4 Reporting Mechanism2.5 Members In Charge Of Writing The Report2.6 Contact Information Of Report2.7 Implementation Standards 2.8 External Guarantee

1.1 Economy1.2 Environment1.3 Society

2. Sustainability In Coperate Governance

3. Risk Management

2.1 Governance Structure2.2 Executive Governance Activities

3.1 Risk Management Objectives3.2 The PAN Group's Risk Management System3.3 Risk Management Process3.4 Risk Identification

919597

II. RESULT

1. Business Development2. Environment Protection

2.1 Energy2.2 Water 2.3 Waste

126127

III. Sustainability – Opportunities And Challenges

1. Opportunities And Challenges1.1 Opportunities1.2 Challenges And Solutions

104113116120

3. Social Contribution3.1 Labor Practices And Decent Work 3.2 Human Rights 3.3 Corporate Social Responsibilities3.4 Product Liability

129131

2. Objectives, Plans And Measures For 2017 2.1 Economy 2.2 Environment And Society

7ANNUAL REPORT |6 � TH� �AN GROU� � �ÁO CÁO TH��NG NI�N ��6

ĐÁNH GIÁ CỦA HỘI ĐỒNG QUẢN TRỊ VỀ HOẠT ĐỘNG CỦA CÔNG TY

THÔNG ĐIỆPCHỦ TỊCH HỘIĐỒNG QUẢN TRỊ

Kính gửi: Quý Cổ đông, Quý Khách hàng và các Đối tác!

Chúng ta đã trải qua năm 2016 với những bước tiếnmới trong lộ trình xây dựng Tập đoànPAN trở thànhtậpđoànhàngđầucủaViệtnamtrong lĩnhvựcNôngnghiệpvàThựcphẩm.

Năm2016làmộtnămkhókhănđốivớinềnkinhtếViệtnamkhichỉsốtăngtrưởngGDP6,7%doQuốchộiđặtrađãkhôngthểhoànthành,lạmphát4%,bàitoánvềnợxấungânhàngchưacólờigiảirõràng,gánhnặngdohiệuquảđầutưkémtiếptụcgâyảnhhưởngtiêucực.Vềthươngmại,tổngkimngạchxuấtkhẩuchỉđạt144tỷUSDtăng7,1%,tổngkimngạchnhậpkhẩuchỉđạt140,8tỷUSDtăng1,9%sovớinămtrướcvàthấphơnsovớikếhoạch.GiảingânFDIđạt12,7tỷUSDchỉtăng7,6%sovớicùngkỳ.SựkiệnBrexit,DonaldTrumptrúngcửTổngthốngMỹtráingượcvớinhữngdựđoáncủahầuhếtgiớicầmquyềncủacácnướctrênthếgiớiđãbuộccácquốcgiaphải thíchnghivới tìnhhìnhhiện tạikhichiếnlượcpháttriểntheohướnghộinhậpbịthayđổi.

Trongbốicảnhnhiềukhókhănvàđầybiếnđộngnhưvậy,mặcdùdoanhthuhợpnhất2.752tỷđồngvàlợinhuậnsauthuếhợpnhất337tỷđồngmàTậpđoànđãđạtđượctrongnăm2016chưaphảnánhđúngquymôcũngnhưtiềmnăngcủamộtTậpđoànsảnxuấtnôngnghiệpvàthựcphẩmhàngđầucủaViệtnamnhưngcũnglànhữngconsốđángtựhào.Vớiđộingũhơn7000cánbộ,nhânviên làm việc tại các công ty của Tập đoàn nhưPANFarm,PANFood,NSC,ABT,LAF,BBC,PAN-SALAD-BOWL(PSB)...(lànhữngcôngtyhàngđầucủaViệtNamtrongtừnglĩnhvựchoạtđộng)đãmanglạinhữngsảnphẩmchấtlượngcaođượckháchhàngtrongvàngoàinướctindùng,manglạihiệuquảkinhtếchoTậpđoàn,giúpngànhNôngnghiệpvàThựcphẩmViệtNamđộtphávềchấtlượngsảnphẩmvàkhôngkémphầnquantrọnglàmanglạilợiíchchocổđôngcủacôngty.

Vớitriếtlýtạomôitrườngđểhợptác3Nhà(Nhànông,NhàkhoahọcvàNhàdoanhnghiệp)vềchungmộtmái

nhà,lấythịtrườnglàmđịnhhướngđầutư,lấychấtlượngsảnphẩmlàmmụctiêugiatănghiệuquảkinhdoanh,hợptácvớinôngdânđểcùngnôngdântốiưuhoásửdụng đất đai để cùng phân chia lợi nhuận, dùng cácnguồntàichínhdàihạnvàứngdụngcáctiếnbộkhoahọcvàosảnxuất,kinhdoanhđãbướcđầutạoracácsảnphẩmmang thươnghiệuViệtNamnhưdưa lướixanhgiốngNhậtbản,hoacúc,hoacẩmchướngPAN-SALAD-BOWL,kẹoHuro,gạoBanMai,bánhcookiesBonAmi,hạtđiềuFunnutz,bánhtrungthuPANFoodđãkhẳngđịnhhướngđihiệuquả,vữngchắcvàđầynhânvăncủaTậpđoàn.

AntoànvệsinhthựcphẩmlàyếutốđầutiênmàTậpđoàn đã cam kết với thị trường, với khách hàng, vớiChính quyền và cả với môi trường sản xuất. Khôngchỉquan tâmtớiđảmbảovệsinhan toàn thựcphẩmtrongthựctiễntriểnkhaicáchoạtđộngsảnxuấtkinhdoanh,Tậpđoàncòntíchcựcthamgiacáctổchứcvàcácdiễnđànkhuvựcvàquốctếvềantoànvệsinhthựcphẩm.TậpđoàncũnglàcôngtyViệtNamduynhấtđượcWorldbankmờithamgiacácdiễnđàntìmkiếmcácgiảiphápvềantoànvệsinhthựcphẩmchoViệtNam,ChâuÁvàtoàncầu.

Sangnăm2017,TậpđoàntiếptụcpháttriểnthôngquaviệcđầutưmởrộngquymôsảnxuấtnhữngsảnphẩmhiệnchưađủđápứngđủnhucầuthịtrườngnhưhoànthànhcụmnhàmáyPANFoodManufacturing,tăngsốlượngsảnphẩmcũngnhưdiệntíchcanhtáccủaNSCvàcủaPSB,tăngvốnvàmởrộng584NhaTrang,hoànthànhvàđưavàosảnxuấtcácdựánkẹomềmHifatvàbánhCrackercủaBBC,thựchiệnM&Amộtsốcôngtymụctiêuđểmởrộngvàhoànthiệnchuỗigiátrị,hoànthànhviệchuyđộngvốnchoPANFarm,triểnkhaidựánpháttriểnvùngnguyênliệuđiều...phùhợpvớisứmệnh“sinhrađểnuôidưỡngthếgiới”củaTậpđoàn.

Chúngtacùngnhauchúcmừngnhữngthànhquảbướcđầuvàhyvọngvào tương lai sángngờicủaTậpđoànPANcủachúngta.XincámơncácQuýcổđôngđãtintưởng đồng hành cùng Tôi từ khi chiến lược của Tậpđoànmớichỉlàđềánbanđầu,cámơncácthànhviênHộiđồngquảntrịđãđónggóptrítuệ,kinhnghiệmvàcôngsứcchoTậpđoàn,cámơntoànthểcánbộnhânviêncủaTậpđoàn,cácbạnlàtàisảnquantrọngnhấtđểTậpđoàncóđượcnhữngthànhcônghômnayvàlànềntảngthựchiệnsứmệnhcủaTậpđoàntrongtươnglai,vàvôcùngcámơnkháchhàngsửdụngsảnphẩmcủaTậpđoàn,cácbạnlàânnhâncủachúngtôivàlàmụctiêuđểchúngtôiphụcvụ!

Xin chân thành cám ơn! 5SUSTAINABILITY REPORT |4 | THE PAN GROUP 54


Food safety issues have also caused concerns for both the public and government and monitoring mechanisms have become stricter in response to the increasing number and severity of food safety violations.

Against this backdrop The PAN Group has committed to and is implementing a sustainable development strategy that has helped the Group to overcome difficulties and maintain sustainable growth. The Group achieved a consolidated net revenue of VND2,753 billion, consolidated profit after tax of VND 336 billion, with net profit to its shareholders of VND257 billion, a 20% increase compared to 2015. The Group has become one of the largest agriculture and food companies in Vietnam with total assets of VND3,762 billion.

In addition to economic achievements, we also proud of the steps taken by The Group in 2016 in order to protect the environment and to respect social and community responsibilities:

• Protecting the environment by training and raising awareness of environmental issues as well as improving technology-based solutions and investing in facilities to prevent environmental pollution and avoiding the depletion of natural resources. Prominent examples would be the investment in environmental protection for agricultural production at PAN-SALADBOWL, improvements in the environmental protection system at Lafooco to minimize the emissions and efforts to maintain the environmental protection system at Bibica.

• Considering the material and spiritual needs of employees and building close relationships to maintain dedication and good will in the Group. This included efforts to maintain and raise benefits at Bibica, National Seed Company, Southern Seed Company and Lafooco. Despite being a newly established company facing many initial challenges, PAN-SALADBOWL has also implemented several activities to build relationships with workers and to take care of their material and spiritual needs. These policies provide more stable income, security and risk prevention measures for employees.

• Ensuring safety and security for workers and the community throughout investments in upgraded facilities, labor protection, safety equipment, labor training, monitoring compliance with Laws and company’s regulations. In particular, this included security investment at PAN-SALADBOWL to meet the stringent requirements of the Japanese partners and the Global GAP standards; also the implementation of safety and maintenance measures at Ben Tre Aqua

Product Import and Export Joint Stock Company meeting the international ASC, MSC, and Global GAP standards.

• Implementing community and social programs to support people in Central Vietnam after disaster losses, help people in difficulties and with critical illness at the National Institute of Hematology and Blood Transfusion, raise awareness of food safety for primary school pupils in Hanoi suburban. These programs represent the sincere wishes of The PAN Group, which motivate us to create a humanist and mutually beneficial society.

• Development and establishment of the internal management system, promoting the “PAN Production Principles” to establish food safety, environmental protection, social safety and security requirements and applying them consistently in the Group with the consensus of subsidiaries. These principles are intended to be guidelines for all the business and production activities of the Group.

In the year 2017, agriculture and food are still hot topics that are gaining more attention from the government and the public. It is expected that there will be increasing numbers of foreign investors, organizations and enterprises involved in the field of agriculture and food which will need to share and pursue sustainable development strategies. Therefore, we are ready to welcome and cooperate with them to develop and provide fresh, quality and traceable products from Vietnam for distribution all over the world. This is how we will build the brand name and reputation of The PAN Group and it is how we will expand our business working with our dedicated and professional partners.

As the Chairman of The PAN Group Joint Stock Company, I would like to express my sincere appreciation to those who have always trusted, cooperated and supported the sustainable development strategy of The Group. I believe that The Group will be successful in 2017 leading to a better future for farmers and for the agriculture and food sectors of Vietnam. Let’s create sustainable values together for the people of Vietnam and for people all over the world.

Thank you and best regards!

Dear EsteemedShareholders, Investors and Partners

We all wish a clean environment for our children and have try our best to contribute to the sustainable development of our community. Also, we want to create safe working environments for our workers and to provide safe, quality and traceable food supplied to Vietnam and the world. For The PAN Group sustainable development, environment protection and social stability are not only core values, they are the motivation to realize our vision of becoming a leading group in the field of agriculture and food in Vietnam and in the Asian region.

In 2016, The PAN Group entered a second stage of development after successfully building strong foundations in the field of agriculture and food. It was also a year which brought fluctuations, difficulties and challenges in this field. Natural disasters such as droughts, salinity intrusion and environmental pollution have seriously affected agriculture and farming. Additionally, foreign

importers now set higher standards and quality requirement for imported products.

NGUYỄN DUY HƯNGChairman



1. COMPANY PROFILE

2. TOTAL ASSET, OWNER’S EQUITY AND REVENUE

3. MILESTONES

4. CORE BUSINESS, DISTRIBUTION

LOCATIONS AND CHANNELS

5. CORPORATE STRUCTURE

6. SUBSIDIARIES & AFFILIATES

7. SUPPLY CHAIN

8. THE AFFILIATE INDUSTRY ASSOCIATIONS

“To build and develop agricultural sourcing areas”



1. COMPANY PROFILE

Tel: (84 - 8) 3510 6868

Fax: (84 - 8) 3510 6229

Email: [email protected]

Website: www.thepangroup.vn

Company name: Công ty Cổ phần Tập đoàn PAN Company business name: The PAN Group Joint Stock CompanyAbbreviation: THE PAN GROUPSecurities Symbol: PAN (listed on HOSE)

Business registration code No. 0301472704 on August 31st 2005 and revisions

Charter capital (as at 31/12/2016): VND 1,023,724,970,000(equal to: 46,199,060 USD)

Owner’s Equity: (as at 31/12/2016): 2,318,828,145,536(equal to 128,264,944 USDHead office: PAN Pacific Building, No.236/43/2 Dien Bien Phu street, Ward 17, Binh Thanh district, HCM City.

Hanoi branch: 15th Floor, ICON4 Tower, 243A De La Thanh, Dong Da District, Hanoi.

Chairman: Mr. Nguyen Duy HungCEO: Mr. Nguyen Khac Hai



VISION – MISSION – GUIDING PRINCIPLES

Vision

Our vision at The PAN Group is to leverage Viet Nam nation’s competitive advantage of a long-history agriculture, to become a leading regional agriculture and food group, creating value on behalf of our investors, employees, associates, our nation’s farmers and citizens.

Mission

“With our ambition to integrated agriculture and food under one roof, The PAN Group strive to develop and leverage Vietnam Agriculture by offering trusted, traceable products and innovative solutions within an integrated full value chain from Vietnam and for our world”.

To achieve such mission, we pursue sustainable development in corporate governance by focusing on best in class financial and risk management practices as well as affecting the highest standards of openness and transparency, based on our industry expertise in finance, excellence in execution and experience in marketing.

Guiding principles

We appreciate that a world-class agriculture and food product company increases Vietnam’s and the region’s food security.

We recognize that agriculture, including aquaculture, lies at the core of our country’s economy, traditions and the rhythm of daily life.

We strive constantly to raise the bar in quality and value of our services and offers.

We believe that improving the quality of farming inputs improves farmers’ livelihoods.

We promote business practices that are central to Vietnam’s sustainable development.

We offer a fair, professional and inspiring work environment, offering opportunities that benefit our people and their families.

We seek sustainable and profitable growth and value maximization for all key stakeholders.



2. TOTAL ASSET, OWNER’S EQUITY AND REVENUE

OUTSTANDING FINANCIAL NUMBERSNet profit margin. ROE and ROA

Agriculture

2012 2013 2014 2015 2016

0

50

100

150

200

250

300

350

400

450

8959

-17

62

193157

89

103

127

7857

TĂNG TRƯỞNG LỢI NHUẬN TRƯỚC THUẾ

Average growth: 44%

Others

Others

Food

Food

Agriculture

15%

38%

47%

2015

3%

49%

48%

2016

Nông nghiệp Thực phẩm Dịch vụ tiện ích

CƠ CẤU DOANH THU

PROFIT OVER YEARS (VND BILLION)

REVENUE STRUCTURE 2015 AND 2016

27%

50%

23%

2016

PROFIT BEFORE TAX STRUCTURE 2016

8942

183

362385

8121

160

315 336

81

-2

100

215257

-100

0

100

200

300

400

500

2012 2013 2014 2015 2016

LỢI NHUẬN THỰC HIỆN QUA CÁC NĂM (TỶ ÐỒNG)

Net profit before Tax Net profit after tax Net profit of PAN’s shareholders

-5%

0%

10%

20%

30%

2012 2013 2014 2015 2016

TỶ SUẤT LỢI NHUẬN GIAI ÐOẠN 2012-2016

Net profit margin ROE ROA

Tăng trưởng lợi nhuận Công ty mẹ BQ: 33%

Profit

Financial results

Caption Consolidated Parent Company PAN Food PAN Farm

Total assets 3,761 2,238 1,724 1,889

Owner equity 2,319 2,223 1,096 1,025

Total revenue 2,753 1 1,356 1,334

Profit before tax 385 135 89 193

Profit after tax 336 113 85 171

PROFIT MARGIN 2012-2016

0

100

200

300

400

Avarage growth on profit of PAN: 33%/year

81 81 89

2142

100

160183

215

315

362

257

336

385

-22012 2013 2014 2015 2016

PROFIT OVER YEARS (VND BILLION)

Net profit before Tax Net profit after tax Net profit of PAN’s shareholders

Agriculture OthersFood



During the period 2012-2016, The PAN Group had mobilized capital and make investment into potential companies in

Agriculture and Food; as a consequence, business result and financial position of those companies were consolidated to The PAN Group which leads to high growth in total asset.

Expanding the market for current and potential future products, under The PAN Group’s brand or its subsidiaries’ brands. This strategy not only increases

The PAN Groups’ revenue but also diversifies the Company’s markets.



The PAN Group’s total asset CARG for period 2012-2016 was 79%, equity increased by 63% during the same period.

Inventories, fixed assets and goodwill had the highest growth, reflecting the strategy of business expansion via M&A targets.

• Transferred 80% equity interest of The Pan Group in the two 100% owned subsidiaries. PAN Services Hanoi and PAN Services HCM City to Nihon Housing Company Limited (Japan).

• Established PAN-SALADBOWL JSC. and PAN Farm JSC. Expanded the FARM area by investing in growing high-quality vegetables and flowers. successfully exported to Japanese market.

• PAN Food completed the acquisition of 22.4% of 584 Nha Trang Seaproduct JSC.

• Changed ownership rate of foreign investors up to 100% charter capital.

• Purchased 3,391,757 shares, equivalent to 23.03%, of Long An Food Processing Export JSC. (HOSE: LAF); as a result, LAF became an affiliate of PAN.

• Acquired 53.2% of National Seed Corporation (HOSE: NSC); as a result, NSC became PAN’s subsidiary.

• Increase charter capital to VND 605 billion.

• Established PAN Food Joint Stock Company with charter capital of VND 100 billion.

Completed the acquisition of 2.6 million shares, equivalent to 20.2%, of Agifish JSC’s charter capital (HOSE:AGF); as a result, AGF became an affiliate of PAN.

• Increased charter capital to approximately VND 1.009 billion. completed VND 753 billion privateoffering. increasing the company’s market capital to approximately USD 160 million.

• Completed the investment to hold 75% ofoutstanding shares of National Seed Company (HOSE: NSC).

• PAN Food completed the acquisition of 42.3% of Bien Hoa Confectionery Corporation (BIBICA)’s charter capital (HOSE: BBC) and 75.6% of Long An Food Processing Export JSC. (HOSE: LAF).

• Renamed into The PAN Group (instead of PANPacific Corp) and changed the brand identity.

• Increased charter capital to VND 200.5 billion.

• Acquired Aquatex Bentre (HOSE: ABT) as a subsidiary with 54.6% ownership; as a result, ABT became PAN’s subsidiary.

• Successfully divested from PAN Trading and Agifish JSC.

• Achieved “Asia’s 200 Best Under a Billion Award” by Forbes Asia and “Top 100 Vietnam Gold Star Award in 2013”.

2013 2015

2014

2012

2016

• PAN Trading JSC. was established with 80% ownership by PAN. PAN Trading became the licensed distributor of Nilfisk in Vietnam.

• Purchase the remaining 20% of PAN Services Ha Noi. increasing PAN’s ownership at Pan Services Hanoi to 100%.

• Purchased 80% of PAN Services Hanoi, enhancing the position of the company in services by consistent use of the Pan Pacific brand countrywide.

• INCREASED CHARTER CAPITAL FROM VND 20 BILLION TO VND 32 BILLION.

• Listed on Ha Noi Stock Exchange with ticker PAN.

Established with charter capital of VND 250 MILLION.

Established PANServices Ho Chi Minh Ltd. — 100% owned by PAN.

• Increased charter capital from VND 70 billion to VND 115.5 billion

• Delisted from Hanoi Stock Exchange to be listed on Ho Chi Minh Stock Exchange (HOSE) with ticker PAN.

2005 2007 2009

2006

1998

2008 2010

Transformed entity into joint stock company with charter capital of VND 6.2 BILLION.

I N C R E A S E D CHARTER CAPITAL FROM VND 32 BILLION TO VND 70 BILLION.



3. MILESTONES




4. CORE BUSINESS, DISTRIBUTIONLOCATIONS AND CHANNELS

The PAN Group operates on a holding model comprising parent company and its subsidiaries and associates,focusing on agriculture and food sector.

MAIN PRODUCTS AND SERVICES

Main agricultural products

Agricultural products are provided by NSC and its subsidiaries and affiliates.

Crop seeds

Rice seeds

Conventional rices: Conventional rice products arecross-breeding and selected by NSC with outstanding characteristics such asgood tasted after cooked, soft rice, long and white grain and high yield, meeting the high quality demand of domestic as well as exported markets.

� RVT – High quality conventional rice– A product of NSC� Thiên ưu 8 – A product of NSC� Tran Chau Huong – Product of NSC� Khang Dan mutation rice – A product of NSC� Pure rice T10 – A product of NSC

Other types of hybrid rice: Hybrid rice products from NSC and SSC, have strong growth ability, good disease resistance and are widely adapted with harsh cultivation conditions.

� Some hybrid rice varieties: TH3-4. Thuy Huong (NSC); Bac Uu 64, Bac Uu 903, Nhi uu 63, Nhi uu 838, PAC 807 (SSC).

Corn seeds

NSC and SSC corn seed lines focus on the research and selection of glutinous corn varieties that serve the needs of fresh consumption of the domestic market. At present, NSC and SSC’s glutinous corn varieties are dominating the market. NSC and SSC’s glutinous corn products are preferred by the market because of its waxy, sweetness, corn grain, high productivity and wide adaptability with many ecological zones.

� Purple sticky glutinous corn HN66 – A product of NSC� Hybrid glutinous corn HN88 – A product of NSC� Hybrid glutinous corn HN68 – A product of NSC� Single hybrid glutinous corn MX 10 – A product of SSC� Hybrid glutinous corn MX6 – A product of SSC

Vegetable and fruit seeds

There are several vegetable and fruit seeds products from NSC and SSC as their strategy is to focus on food crop seeds. However,their products are well received by consumers and maintained in the market for many years. Specifically, recently NSC has successfully chosen a number of melon varieties to diversify the list of Vietnamese vegetables and fruits.

� Garlia melon – A product of NSC� Heat-tolerant cucumber Sakura– A product of NSC� Rare chilly deli – A product of NSC� Hybrid bitter melon – a product of NSC� Hybrid tomatoes T56 – A product of SSC

Exported fishery products

Confectionary

Cashew and nuts

Fish sauces

AGRICULTURAL PRODUCTS

Rice seeds

Corn seeds

Vegetable seeds

Japanese Carnation

Garlia Melon

Packaged rice

Pangasius

Confectionary from PAN

Food

Confectionary from Bibica

Cashew nuts

584 Nha Trang Fish

sauce

Clams

Value added products

Japanesechysanthemums

FOODS

Fresh flowers by PAN-SALADBOWL

Agricultural products

Crop seeds



� BAN MAI Rice:

Ban Mai rice is grown from certified rice seeds, and is grown in strictly chose cultivated areas. PAN Food focuses on modern and closed production line with strict quality control process. The company committed to providing 100% clean and traceable products, without the use of odorants and bleach, which meet safety criteria for the health of consumers.

At present, PAN-SALADBOWL JSC is mainly growing two main kinds of flowers: chrysanthemum and carnation, which are completely exported to Japan. The flowers are beautiful in color and durable in whichthey can bloom for up to 20 days in the best environmental conditions.

� Chrysanthemum: About 20 kinds of daisies such as Japanese Alts, Kindly, Silvia, Celebrate, Olive, Lenior, Matissie, Colonge, Becky, Dante, etc.

� Carnation: About 10 kinds of carnations such as Sei Speide, Burning, etc.

Fresh flowers from PAN-SALADBOWL

Main products in food sector

Product of PAN Food

� Probiotics gummy HURO: This is the first gummy candy contains HU58 probiotics patented from UK in Vietnam market and with delicious taste from tropical fruits, strengthening the digestive system and immune system of Vietnamese children.

� BON AMI Cookies: Inspired by the traditional baking method combined with the premium butter ingredient, PAN Food focused on researching to produce a product that are distinctive in flavor and packaging. With 4 different flavors: traditional avocado, sweet grape, sunflower, and brownie taste, BON AMI Cookies bring many choices and experiences for consumers.

� FUNNUTZ cashew nut: Funnutz cashew kernels are selected and carefully filtered before being put into production in a closed process with the technology of non-fried drying and no preservatives during processing, PAN Food committed to bring high quality and rich in nutritional value products to customers. Flavors of cashew kernels available include wasabi, dried salted and non-salted.

25SUSTAINABILITY REPORT | 25



Products from Long An food processing export company

� Processed cashew nuts: Roasted cashew nuts with flavors including: Salt, honey, garlic, pepper. The products are distributed in domestic markets and exported to many large and picky international markets.

� Varieties of exported cashews includes: W450, W320, W240, DW, SW, LBW, WS, LP; Packed in 50lb bags, each package is either placed in a cardboard box or to customer’s specifications.

� Processed peanuts: Crispy roasted peanut with different flavors: honey, coffee and coconut...

Products of Bibica � Sponge cake: Includes 3 brands: Hura Deli, Hura Swissroll and Hura Layercake with butter, cereal, coconut, strawberry and orange flavors.These are products in high demand in the market.

� Biscuits and cookies: This product line includes 4 brands: Choco Chips, Clown, Creamy and Jamy with a variety of core flavors like coconut, grapes, orange, cashew nuts, strawberry and are packed in attractive package. � Pie cakes: Include Orienko Mike cake and Lotte Pie, with a wide range of flavors and packages, suiting with every customer’s demand. � Confectionery products: Include hard candies (Michoco, Calytos, Four seasons, Volcano, Welly, etc); Soft candies (Sumica, Cheery, etc), and Jelly candies (Zoo, Tropy). The quality, diversity and reasonable price of all candy products of Bibica are highly evaluated by the customers. � Mixed products and products for special occasions: With popular brands like Goody, Lac Viet, Wendy, Happy, Michoco, Phat Tai, etc, products of Bibica always attract many loyal customers to buy as presents in special occasions.

� Moon cakes: With a well-known brand, long experience in the market and diverse choice of nutritious and naturally derived product with a wide variety of new flavors and packaging options, Bibica increasingly consolidated its position as the top leader of the moon cake market.

� Nutritious products of Bibica: Include products for people with diabetes, pregnant women and nutrition products for infant babies.

� Other products:• Paste chocolate with mint, butter and cashew core.• Chocolate with nut core: Choco Bella heart shape 18 gram, 143 gram and 36 gram, Choco Bella HG 143 gram, Choco Bella rectangular shape 150 gram.• Lobaka bread with rice, butter and milk flavors.



Fish sauce lines of 584 Nha Trang

584 Nha Trang fish sauce is made from anchovies catch from Nha Trang sea. Raw materials are carefully selected to ensure the flavor of the essence of fish sauce. With the traditional method of fish sauce production process, 584 Nha Trang always follow a specific formula to ensure the high quality of the product with good and rich taste; yellow honey color. 584 Nha Trang fish sauce is not only delicious but also ensure the absolute safety food hygiene, protecting the health of consumers.

Major product lines of 584 Nha Trang fish sauce:

� Traditional product line branded 584 Nha Trang with a variety of protein choices.

� Huong Bien fish sauce is distilled from the essence of anchovy in Nha Trang sea.

� The fish sauce line supplemented with iron nutrition for the purpose of preventing fighting iron deficiency anemia, which is common among women and children.

� The less salty fish sauce lines namely Vi Ngon and Bien Bac are different in the lower level of salinity and the more fragrant taste.

Exported seafood products of Aquatex Ben Tre

Pangasisus:

Freshwater fish from the Mekong Delta, Vietnam with consistent supply all year round and was certificated with G.L.O.B.A.L G.A.P and ASC. Pangasius was processed into many different products in accordance with customer’s demand such as Frozen pagasius fillet, Frozen Pangasius Fillet Welltrimmed Portion Cut, Frozen Pangasius Fillet Well Trimmed breaded, Frozen Pangasius Fillet Welltrimmed Portion breaded.

Packaging: Frozen using the IQF method in small packages weighing 1kg, 5kg or 10 kg, depending customer’s demand.

Clams:

Premium materials are carefully selected from clean material regions in Vietnam. Products from clams are well processed and of high value added such as steamed clam, clam steamed with garlic, clams steamed with yum shrimp. The supply chain of clams is awarded with MSC certificate.



5. CORPORATE STRUCTURE

CORPORATE MODEL

1,500 distributors in most provinces. Exported to China, Laos, Thailand, Cambodia, Myanmar.

3,000 selling points over the country.

117 distributors, nearly 100,000 selling points nation-wide.

primary market: Japan, America, EU, Canada, Australia, Singapore, Korea. ABT also has customers from South America, Middle East and North Africa.

America, Australia, Holland, Hong Kong, England, Germany, Canada, China.

Japan.

DISTRIBUTION CHANNELS:

The Company’s products are widely distributed in both national and international markets, thanks to the huge distribution networks of over 150 distributors to 132,000 selling points in 63 provinces. Products like rice, aquaproducts, flowers, cashews and seeds are also spread across many important global markets such as China, Japan, Europe, America, Canada, Australia, Hong Kong, Middle East, etc.

BUSINESS AREAS AND DISTRIBUTION CHANNELS

The company has nation-wide business areas. Parent company, The PAN Group, operates through the Hochiminh City Head Office and Hanoi branch office. PAN’s subsidiaries and affiliates also work on a national scale, specifically:

Agricultural companies:

• PAN Farm has a head office in Hanoi and 2 subsidiaries, National Seed Company (NSC) and PAN-SALADBOWL JSC.

• NSC: The Company has a Hanoi Head Office, 1 representative office in Laos, 1 representative office in Tay Ninh; 6 branches at Ha Nam, Thanh Hoa, Thai Binh, Nghe An, Tay Nguyen, Mekong Delta; 4 consolidated subsidiaries in Ha Dong (Ha Noi), Ha Nam, Quang Nam and HCM City; 3 research centers and processing factories in Ha Noi and Hung Yen.

• PAN-SALADBOWL JSC.: Business areas mainly at Lam Dong. The Company has 3 farms at Lam Ha, Don Duong and Lac Duong.

Food processing companies:

• PAN Food has a Headquarter in HCM City and various subsidiaries and affiliates located as below:

• Ben Tre Aquaproduct Import and Export JSC.(Aquatex Bentre – ABT): has a nurturing farm at Chau Thanh, 4 fish farms at Chau Thanh and Giong Tom, 2 workshops inside company’s Headquarter at Chau Thanh and Ben Tre.

• Long An Food Processing Export JSC. (Lafooco – LAF): Branches in Long An, Binh Phuoc, Vung Tau and an affiliate in Can Tho.

• Bibica Corporation: 3 factories at Bien Hoa, Dong Nai; Binh Duong and Sai Dong Industrial Zone, Ha Noi.

• 584 Nha Trang Seaproduct JSC.: 2 branches and selling groups in Hanoi, HCM City and 3 production units in Ninh Thuan, Binh Thuan and Khanh Hoa.

PAN FARM PAN FOOD

FAMRINGSOLUTIONS PLANTATION DAILY FOOD CONFECTIONERY

& CASHEWS

99.99%

75% 63.8%

72.8%

43.7%

80.5%

99.95%22.4%

99.99%

SUPERVISORY BOARD

Driver Agricultural Analyst

BD Officer (Agriculture)

BD Officer(Food)IT SpecialistLegal Advisor

BOARD OF DIRECTORS’ SECRETARY

BOARD OF DIRECTORS

BOARD OFSHAREHOLDERS

CEO

ADMINISTRATION- HUMANRESOURCES DEPARTMENTHuman Resources Director

Human Resources Executive

AdministrativeExecutive

INFORMATION TECHNOLOGY (IT)

Dept Head

LEGALDEPARTMENTLegal Director

BUSINESS DEVELOPMENTDEPARTMENT

Business Development Director

Financial Analyst

EHS Specialist R & D Specialist

Communications Officer

ProjectSpecialist

ProjectSpecialistAccountant

FINANCEMANAGER

CHIEF ACCOUNTANT

MANAGEMENT STRUCTURE

FINANCE & ACCOUNTINGDEPARTMENT

CFO

PROJECTDEPARTMENT

RETAIL PROJECTProject Manager

OTHERPROJECTS

Project Manager

COMMUNICATIONS DEPARTMENT

Head of Department

RESEARCH & DEVELOPMENT DEPARTMENTR & D Director

3332 3333SUSTAINABILITY REPORT |32 | THE PAN GROUP 3332






No Company Address Industry Charter Capital (VND)

PAN’sownership

(direct or indirect via

subsidiaries)

Agricultural Companies (PAN Farm)

1 PAN Farm JSC.

15th Floor, ICON4 Tower, 243A De La Thanh, Dong Da district, Hanoi.

Agriculture 1,000,000,000,000 99.99%

2 National Seed Company (NSC)

No 1 Luong Dinh Cua Street, Phuong Mai Ward, Dong Da District, Hanoi.

Research, selection, production, trade, export-import of seeds; production, trade, export-import of agricultural products and materials.

152,950,000,000 75%

3 PAN-SALADBOWL JSC.

Tan Lap, Tan Van, Lam Ha, Lam Dong, Viet Nam.

Production and trade of vegetables and flowers.

28,146,552,240 63.8%

Food Companies (PAN Food)

1 PAN Food JSC

236/43/2 Dien Bien Phu, 17th Ward, Binh Thanh District, HCM City.

Production and trade of farming, livestock, food processing, and transport products and services.

1,000,000,000,000 99.99%

2

Ben Tre Aquaproduct Import and Export JSC. (ABT)

Tan Thach Village, Chau Thanh District, Ben Tre Province.

Nurturing, processing and exporting fisheries. 141,072,070,000 72.8%

3Long An Food Processing Export JSC (LAF)

81B Avenue 62, Tan An city, Long An Province.

Production, trade, process of fisheries, agricultural products, and victuals.

147,280,190,000 80.5%

4 Bibica JSC.443 Ly Thuong Kiet, 8th Ward, Tan Binh District, HCM City.

Production and trade of confectionaries, nutritional, malt and milk products.

154,207,820,000 43.7%

5 584 Nha Trang Seaproduct JSC.

584 Le Hong Phong, Nha Trang, Khanh Hoa.

Aquaproducts & fish sauce processing; fish sauce quality testing.

25,723,330,000 22.4%

6PAN Food Manufacturing JSC. (PFM)

A1/1-9, VL3 Road, Vinh Loc 2 Industrial Zone, Long Hiep, Ben Luc, Long An, Viet Nam.

Production, process, trade of confectionaries, alcohols, soymilk, beverages, meat products, aquaproducts, other agricultural products and real estate trading.

200,000,000,000 99.95%

34 | THE PAN GROUP 34

6. SUBSIDIARIES & AFFILIATES



7. SUPPLY CHAIN

Consistent with the policy of sustainable development, complete value chain integration, The PAN Group continues to build and accomplish the group’s structure following the model of Farm - Food - Family, closed and complete value chain. PAN’s top criteria for the supply chain are safe materials, proven originality, the application of advanced technology process to generate high - quality products that are in line with the international standards. The PAN Group is taking firm steps in its journey:

The PAN Group focuses on the available strengths to build and comprehensively control the supply chain, towards the sustainability and the outstanding competitive advantages in the market.

This is also how we create the added value, enhancing the product’s values, and bring about greater benefits to the company, the shareholders and the stakeholders participating in the supply chain.

The ABT’s clam farming areas in Thai Binh and Ben Tre have been certified MSC.

Set up delivery channels

- Professional toconnect to customer.

Create raw materialssupply chain - Safety, - High quality, - Traceability.

Implement processing - Ensure food safety,

- Apply modern production technologyand improve the value of the product,

- Implement the advanced managementsystem.

PAN Farm Joint Stock CompanyInvest and implement all activitiesin agriculture

PAN-SALADBOWL Joint Stock CompanyProduction and primary processing high-tech agricultural products:chrysanthemum, carnations and vegetable

Vietnam National Seed Company (NSC)Research and production of seeds, especially rice, corn and vegetables and rice processing

Southern Seed Company (SSC)Research and production of seed, mainly rice, corn and vegetables

Delivery ProjectThe goal of the project is to distribute and provide high quality products of The PAN

Group to the consumer

Bien Hoa Confectionary Corporation (BIBICA)

Producing confectionary products

BEN TRE Aqua Product Import And Export Joint Stock Company (ABT)

Aquaculture, processing and exporting products from pangasius and clams

Long An Food Processing Joint Stock Company (LAFOOCO)

Processing and Exporting cashew nut

PAN Food Joint Stock CompanyProducing and processing food

Take the initiative in seed/ high quality

raw materials

The production process ensures

strictly food safety requirements

Financial background and management

experience

Set up delivery channels

- Professional toconnect to customer.

Create raw materialssupply chain - Safety, - High quality, - Traceability.

Implement processing - Ensure food safety,

- Apply modern production technologyand improve the value of the product,

- Implement the advanced managementsystem.



Products of Bibica produced from modern production lines ensuring food safety and environmental friendly requirements.

High-tech production zone for chrysanthemum and high quality seeds originated from Japan of PAN-SALADBOWL in Lam Dong.

8. THE AFFILIATE INDUSTRY ASSOCIATIONS

The PAN Group and its member companies actively engage domestic and international manufacturers and partners to promote their strengths and influences, thereby fostering the growth.

• The PAN Group is the first and only private member of the Food Safety Working Group in Vietnam. Established in 2015, the Working Group is comprised of key government agencies (headed by the Office of the Government), development partners (World Bank representatives) and related stakeholders, gathering to assist the government in developing policies on Food Safety issues. The overall objective of the working group is to assist the government in developing policies that contribute to improving food safety in Vietnam and increasing the competitiveness of Vietnamese food products for domestic consumption and international commerce.

In addition, The PAN Group together with a number of ministerial and Vietnam’s representative agencies attended the summit of the Global Green Growth Forum (3GF) at the invitation of the Prime Minister of Denmark. The Global Green Growth Forum (3GF) aims to promote green growth solutions that can be replicated through the exchange of strategic ideas on green growth, the sharing of new evidence as well as promoting innovative partnerships in green growth of decision-makers in governments, businesses, financial institutions, civil social organizations and international organizations. 3GF was initiated by the Danish Government in 2011 in cooperation with South Korea and Mexico. Since then, China, Kenya, Qatar and Ethiopia have joined the forum. In 2016, Vietnam and Chile became official members of 3GF. The PAN Group is honored to join the Vietnamese governmental representatives in this forum.

• LAF is a member of the Vietnam Cashew Association (Vinacas), the American Food Industries Association (AFI), the Combined Edible Nut Trade Association (CENTA), Vietnam – Laos – Cambodia Association for Economic Cooperation Development, Vietnam Food Safety Association.

• ABT is a member of the Vietnam Association of Seafood Exporters and Producers (VASEP), a member of Vietnam Pangasius Association.

• NSC is a member of the Asia & Pacific Seed Association (APSA), Vietnam-Laos-Cambodia Association for Economic Cooperation, the Vietnam Seed Trade Association (VSTA).

• SSC is a member of the Vietnam Seed Trade Association, the Vietnam Plant Seed Association, the Asia & Pacific Seed Association (APSA) and is in the partnership with many research institutes, universities, organizations and scientists in the country and internationally.

The participation and membership of many organizations and association will help The PAN Group to take full advantages of its resources, strengths and the influences on the agricultural and food processing sectors. These are also strategic steps towards the goal of “Becoming a leading group in the sectors of agriculture and food” and carrying out the mission of “Enhancing Vietnam’s agricultural sector”.

1. PURPOSE OF THE REPORT

2. SUSTAINABILITY REPORT 2016

“To elevate Vietnamese brands”


OVERVIEW ON SUSTAINABILITY REPORT

Sustainable development is always in The PAN Group’s development strategy. In addition to the economic growth, the PAN’s reporting system also comprehensively presents the issues related to the environment, food safety and community and social security. Maintaining the Sustainability report is one of the measures for The PAN Group to self-complete, improve, deliver the message and commitment to achieving sustainable development goals to its stakeholders.

In 2013 and 2014: The sustainability report integrated in the annual report describes the foundational activities and initial orientation for the long-term strategy in the agricultural and food sectors.

In 2015: The theme on “Raising the community’s awareness of sustainability”.

This is the first time an independent report on Sustainability report has been made. The 2015 theme

targets the readers who are the partners, member companies, internal employees and the social community. The activities the Group strove to deploy in 2015 considered the sustainable development content as one of the issues which the stakeholders need to take into a serious consideration and develop a fully responsive plan.

2016: The theme on “Food Safety”.

Continue to maintain independent Sustainability report with the contents focusing on the activities for the parent company’s production enhancement. Throughout the activities in 2016 is the application of stringent requirements on the food safety, the application of international standards to the business operation. The food safety issue is not only limited within the group but also widely communicated with the expectation of increasing the positive influences. The PAN Group deployed many community activities and participated in the forum on food safety in 2016.

1. PURPOSE OF THE REPORT 2. SUSTAINABILITY REPORT 2016

“The PAN Group strives to reach the highest standards of the openness and transparency of the corporate governance”

Quoted from “Mission of The PAN Group”

In 2016, The PAN Group continued to have strong implementation activities in the sectors of agriculture and food in the set development strategy. At the same time, The PAN Group is committed to the sustainable development, including the implementation of report in line with the GRI-G4 guideline. The PAN Group’s Sustainability report is aimed at disclosing information to the interested parties, including shareholders, partners, customers and surrounding community,

providing them with sufficient information and assessment on The PAN Group’s operations. The PAN Group also relies on the obtained results to make necessary adjustments, improving the operations. Besides, the pressure on disclosure of the information and transparent reports in accordance with the international standards also impels The PAN Group to improve, and carry out better activities.

SHAREHOLDERS CUSTOMER

COMMUNITY

PARTNER

INTERNAL

SUSTAINABILITY REPORT 2016



2.1 REPORT’S SCOPE

The units whose activities are mentioned within the scope of this report include:

- The PAN Group

- PAN Farm Joint Stock Company

Vietnam National Seed Company (NSC)

Southern Seed Company (Major subsidiary of NSC)

PAN-SALADBOWL Joint Stock Company

- PAN Food Joint Stock Company includes the following member companies and affiliates

Long An Food Processing Joint Stock Company BEN TRE Aqua Product Import And Export Joint Stock Company

Bien Hoa Confectionary Joint Stock Company

2017: The theme on “Good Agricultural Practices and Food Safety”.

Key activities:

Adopting good agricultural practice standards (Viet GAP, Global GAP) in the PAN farms and in the associated farmer households.

Develop quality management system from the corporate level to the member companies.

Continue to innovate technology, upgrade the quality management system in factories.

In which

The PAN Group’s operations will be fully reported.

The act iv i t ies related to the two subsidiary companies: PAN Farm Joint Stock Company and PAN Food Joint Stock Company will be selectively presented in the report, mainly including: key activities of each company; the critical contents defined in this report, and the influences on The PAN Group. In particular, the key activities of The PAN Group, PAN Farm and PAN Food are financial investment, business coordination and development, and project implementation.

The activities of the other member companies are limitedly reported to illustrate the impacts and key activity outcomes under the orientation of The PAN Group. The PAN Group has not been significantly engaged into the management and business of Fisheries Joint Stock Company 584 Nha Trang (due to new acquisition and the ownership ratio is not yet high), therefore this company’s activities have not been presented in this report.

Topics Aspects Disclosures on Management Approach + Indicators

STEP1IDENTIFICATION

STEP2PRIORITIZATION

STEP4REVIEW

STEP3VALIDATION

SustainabilityContext

Sustainability Context

Materiality

Stakeholder Inclusiveness

Stakeholder Inclusiveness

Completeness

The activities of the companies unlisted as the PAN’s key and focused sectors, i.e Agriculture and Food in line with the orientation of the General Shareholders’ meeting and Board of Managers have not been reported (PAN Service).

The report content focuses on agriculture and food industry within the territory of Vietnam because The PAN Group activities outside the territory of Vietnam have not been significant.

The report scale and contents are changed from those of 2015, focusing more on The PAN Group (parent company) due to the changes of The PAN Group structure and ownership in 2016.

2.2 METHODS OF DETERMINING THE REPORTED CONTENTS

The sustainable development strategy is determined based on The PAN Group defined overall development objectives, strategy and action plan, the level of influence on PAN’s operation and the interest of the stakeholders. The process of determining the report content of The PAN Group also follows the GRI guidance to describe the outlined comprehensive strategy.



The activities in supply chain.

The activities in member companies.

The activities within The PAN Group.

Identify the Socio – Environmental - Economic impacts

The PAN Group considers, and identifies relevant environmental and social themes based on the magnitude of the Socio – Environmental – Economic impacts and the influence on the stakeholders’ decision. The PAN Group also reviews specific activities to define the scale and scope of the impacts (boundaries) for appropriate solutions. Thereafter, the limited topics can be within the following scope:

CONSULTATION MEASURES FOR STAKEHOLDERS

Priority ranking Based on the list of above-mentioned topics, the responsible departments identify the areas considered as the significantly influential ones and collect the opinions, interview, coordinate and communicate with the relevant stakeholders in order to identify the critical areas to be presented in the Sustainability Report. The two basic principles applied when analyzing the information are:

The importance of the influential areas to The PAN Group and its member companies.

The influences of that area on the assessment and decision by the relevant stakeholders.

PAN’s defined critical areas are also considered based on the close link to the United Nations sustainable development goals.

17 sustainable development goals of the United Nations

SUPPLYCHAIN

Waste

WasteEconomy

Corruption

Safety

Safety

Child labor

Child labor

Water

Water

MEMBERCOMPANIES

The PAN Group

(*) With the investment company model, holding shares and supporting the development strategy, The PAN Group does not have direct customers and products. Customer surveys will be conducted by member companies.

- Shareholders’ s Meeting - Board of Directors - E-media- Survey and evaluation and direct working sessions

- Via direct consultation in meetings or conferences that PAN participated - Via reporting and prescribeddisclosure information system - Via inspection of state agencies.

The PAN Group just has small direct impact on the local community due to all of its activities are inside the office and mainly in Hanoi branch’s office. Thus, community’s activities have been done at member companies for more efficient. Through these supervision activities, The PAN Group will make suitable plans and operations.

- Via survey, evaluation and directworking to find out investment orcooperation opportunities. - Prescribed disclosure information - Contact via email and telephone - Via forums and conferences that PAN organized or participated.

- Weekly report system has been applied since the beginning of 2016. - Monthly meetings between managers and heads of department in the company - Employee satisfaction survey via website - “Internal complaints handling procedures” has been published in website

- Pan’s surveys and evaluations at member companies in various sectors: Financial, food safety, research, environment and social. - Reports of the Board of Directors, Board of Supervisory of member companies to PAN including information of business plan and other objectives performance.- The PAN Group’s personnel involved in the Board of Directors and Board of Supervisory of the member companies to support activities and proactively assess information.

Shareholders/Investors State Agencies

Community

Employees

Member companies

Partners/Suppliers



In 2016, The PAN Group and its member companies conducted numerous dialogues, information exchange and the studies of needs for production system management, environmental and social requirements to build “PAN Production Principles”, step by step applied consistently in The PAN Group and its member companies. These are the principles aimed at developing a

production system ensuring high quality products, food safety, associated with the labor safety requirements, ensuring environmental and social issues. The material’s content is presented based on the consultation of prestigious experts, and organizations as well as with the reference to the international documents, and standards to ensure the relevance.

SIGNIFICANCE IMPACT ON THE PAN GROUP

ABT BBC LAF PAN FOOD ALL SSC NSC PAN FARM PAN-SALADBOWL

SIG

NIF

ICAN

CE IM

PACT

ON

TH

E PA

N G

RO

UP

HighLow

CLEAN WATERAND SANITATION

AFFORDABLE AND CLEAN ENERGY

NO POVERTY

DECENT WORK AND ECONOMIC GROWTH

QUALITYEDUCATION

GENDEREQUALITY

REDUCEDINEQUALITIES

REDUCEDINEQUALITIES

NO POVERTY


NO POVERTY


RESPONSIBLECONSUMPTION AND PRODUCTION

GOOD HEALTHAND WELL-BEING

SUSTAINABLE CITIES AND COMMUNITIES

SUSTAINABLE CITIES AND COMMUNITIES

PARTNERSHIPSFOR THE GOALS

LIFE BELOW WATER

LIFE ON LAND

VIETNAM LAW

FOOD SAFETYASSESSMENT

GUIDELINES OF GFSI

ENVIRONMENTALAND SOCIAL

PERFORMANCESTANDARDS (IFC)

HACCP PRINCIPLES

THE WHORECOMMENDED CLASSIFICATION OF PESTICIDES

BY HAZARD

INDIRECT ECONOMIC IMPACT ECONOMIC PERFORMANCE COMPLIANCE

OCCUPATIONAL HEALTH AND SAFETY

CONTRACTORS AND SUPPLIERSEVALUATION OF ENVIRONMENT AND SOCIETY

COMPLAINTS HANDLING MECHANISM

LOCAL COMMUNITY

MARKET PRESENCE

EDUCATION AND TRAINING

DIVERSITY AND EQUAL OPPORTUNITY

ANTI-CORRUPTION

EMPLOYMENT

LABOR/MANAGEMENT RELATIONS

ENERGY

EFFLUENT

WASTE



Confirm the material aspects

After the consultation, the list of critical areas was submitted to Board of Managers for review once again to confirm the reported areas, preparation for the process of identifying the indexes, income and presenting relevant information. The review is based on 3 criteria: Scope, time and limit (as GRI’s guidance).

2.3 STAKEHOLDERS’ PARTICIPATION

The stakeholders play an important role in The PAN Group development strategy. Therefore, we maintain the communication, receiving and handling all the information from all parties to develop relationships, take timely measures, and establish close cooperation based on the mutual interests.

The support of the relevant stakeholders is also the deciding factor to the company’s success, especially in the context of the agricultural and food sectors in which PAN is running business.

Concern PAN actions

High and sustainable profits and business growth.

The PAN Group concentrates all the resources to promote the growth, maximizing the highest profits for the shareholders. In addition to M&A, seeking for the opportunities and investors, PAN is also engaged more in the production and business activities of the member companies to increase the support, proactively receive the information and give timely solutions if necessary. In 2016, The PAN Group continued to expand its business areas such as the products of fish sauce, vegetables and flowers, etc., merged with Fisheries Joint Stock Company 584 Nha Trang, attracted more investment capital from big partners (IFC, Daiwa), closer involvement into the Board of Directors in its member companies.

Compliance andinformationtransparency,protection of equal interests forshareholders.

Established The PAN Group Legal Department in order to ensure the legal compliance. PAN appointed the group’s chief legal director to be in charge. Regularly update new legal regulations and communicate the information with its member companies to ensure the compliance. Carry out the environmental – social outcome monitoring and assessment of the Group’s member companies to ensure the compliance with the legal regulation on finance, environment, safety, labor and society. Comply with the regulation on information disclosure. In 2016, PAN complied with 100% the regulations on information disclosure and there was zero violation. Regularly update the website with a convenient and billingual interface (Vietnamese and English). Provide sufficient information to the shareholders and give timely feedbacks to the inquiries: All the information, from the invitation to the General Shareholders Meeting and adhoc meetings directly sent to the registered email address of each shareholders, attached with the meeting agenda, the contents for voting, power of attorney in case the shareholder cannot attend, the information on capital mobilization, dividend payment date and ratio, information on the bonus share time, information on the company’s performance outcomes, the change of senior staff, they are all well informed to the shareholders and investors.

Act with highresponsibility and apply the social ethnical standards.

Apply the PAN Production Principles to stipulate the standards for food safety, ethnics, environment and society in the production of member companies. Develop internal guidelines to regulate the codes of conducts and action plan of The PAN Group, applicable to all the individuals, divisions and disclosured to all the parties. Work directly with the member companies to deploy sustainable development program 2016, which directly evaluates the year-end results. Collect the reports, performance results and evidences for compliance with the requirements for sustainable development, monitor the implementation processes in the member companies.

The stakeholders’ interest and The PAN Group actions

Shareholders and potential investors

Shareholders are actual business owners, the ones who trust and support the company’s development and op-erations policies. Therefore, The PAN Group will do everything with the utmost responsibility to ensure the trans-parency and fair rights for all shareholders.



Employees

Human resource is an important assets to The PAN Group. We strive for long-term support, devotion andcooperation with the employees through the attention and empowerment for each individual.

Concern PAN’s actions

Deliver the training on the knowledge,improving the soft skills and professional working styles for the employees.

Managerial and senior personnel: Provide training on general management skills, soft skills and advanced specialized knowledge for the technological innovation and production management.Team leader and employees: Training on the team leader management skills and job management skills; Professional knowledge of the product and production for daily work. Training for new employees, training on the internal processes for the company’s employees to understand the working environment and fulfill the assigned tasks.Conduct periodical employee performance assessment to record their efforts, achievement and help the employees for self-improvement.

Create a friendly working environment, build relationships between employees and develop the corporate culture.

Organize extracurricular activities, arts, sports exchanges between employees, advocates of developing the corporate culture. Develop human resource policy, dialogue mechanism between employees and board of managers to listen to and appropriately handle the feedbacks from employees. Promulgate clear regulations on recruitment activities, evaluations and promotion for employees. Support the establishment of groups and organizations within the company such as trade union, football teams, Japanese classes ...

Ensure goodremuneration andcompensation.

Established the trade union, sign collective labor agreement for the employees to be able to negotiate and understand their rights (applied at PAN and 100% member companies).Develop human resource policies, financial statute, allowances, remuneration and incentives for employees.Care for the employees through the activities such as health care insurance, periodical health check, organization of team activities (football, visiting), providing the conditions for the employees to use the internal products and services with many preferential policies (food products such as vegetables, flowers, cashew nuts, confectionery...).

Partners

Partners are closely involved in the projects and activities of the company, including: contractors, product and service providers; Individuals and organizations participating in joint ventures in projects; Partners in research, production, distribution. The PAN Group always seeks and welcomes the cooperation with all parties with the same vision and capacity to take advantages, increase the influence to bring about the highest value.


Strictly implement the signed terms and conditions, be open and transparent in cooperation.

Developed the internal guidelines, state The PAN Group’s commitment to the code of conduct in all the activities. Consult with the Legal Department about the terms and conditions in any agreement or contract to ensure the compliance of all the stakeholders. Encourage the integrity, support, openness, and transparency in all employee activities; Monitor and correct the mistakes.

Provide policy, financial, technical support to work effectively,promote thedevelopment and bring about more benefits to the stakeholders.

The PAN Group provides the management consultancy, and technical training to the partners to deploy the quality management systems, raises the awareness, trains the human resource, develops the action plan with its member companies. In 2016, The PAN Group financed the costs of hiring consultants and certification body to apply the Global GAP standards to PAN-SALADBOWL and its business partner – Tan Tien, a cooperative in Lam Dong. The Group also organized a training program on IFC’s social environment standards for all the member companies.

Developing an appropriate policy on the purchase of goods, services and cooperation agreements which are beneficial to all parties based on the open consultancy, with fair terms and conditions. This issue is particularly significant for small producers and farmer households who join the associated production with the group.



Member companies

The activities related to the agricultural and food sectors of PAN are carried out by its member companies. Main-taining a close connection with the member companies is a top-prioritized concern of The PAN Group in order to achieve sustainable successes and opportunities for the future, as well as towards the goal of “Closing the complete value chain”.


High and sustainable growth.

Support the connection with the partners, seeking investment capital for thecompany.Support in developing the financial plans and financial management training.Regularly monitor the executive management to take timely support measures.

Access to the source of information good for the production and business.

The PAN Group facilitates the connection with the organizations and experts to get their support for understanding and consultancy on effecient productions methods and business.Delegate the group’s specialists to directly participate in specific projects of the member companies.

Legal compliance. Develop the management system for the issues subject to the laws which the company has little information on, such as environmental management system, labor safety, fire prevention and protection...Support the development of the review procedures and guideline for implementation as the legal regulations.

Have humanresources whoare well-matched and long-term committed.

Provide high-quality specialists and human resources to join in its membercompanies.Look for and provide appropriate personnels.Support the development of the policies which helps to retain the employees.

Effective business operation andgovernance.

Monitor the activities and the performance in order to have timely support.Study and introduce appropriate and realistic management system and methods for application.Organize the joint training programs with the member companies’ participation.

State agencies

State agencies are the party responsible for managing, ensuring the business environment and indirectly supporting the businesses’ development, including The PAN Group. All the decisions by the government, thereby, have a macroeconomic impact on the economy as well as on the enterprise itself.

Community

The PAN Group fully understands that the community’s support and trust plays a crucial role for it to achieve the ultimate successes. On the other hand, the operation of agricultural and food sector also exerts considerable impacts on the surrounding community, requiring the PAN’s specific control actions.


Comply with the legal regulations, support the State’s policies and calls.

Completely fulfill the enterprise’s obligations such as tax payment, participation in insurance.Comply with the regulations on information disclosure. Participate in the social and community support movements and programs launched by the government.Assign the Legal Department to make a list and update the legal documents on the areas related to the operations of the member companies, such as: Law on Environment Protection, Labor Law, Law on Food Safety, Law on Chemical and Pesticide, Law on Fire Prevention and Protection...


Protect the natural environment and the habitat for the community, ensuring food safety and good health for the employees and the community.

Develop a package of internal guidelines and PAN Production Principles (pilot application in 2016 and official issuance in March/2017), including the terms on environment, society, food safety applied to all the member companies.Require, provide guidelines and supervise the environmental and social activities at the member companies.

Local economicdevelopment.

Directly and indirectly generate the employment opportunities for the communities, helping to bring about the income and welfare.

Carry out the social and communityactivities, supporting the people in difficulties or limited conditions.

In 2016, together with the people in the entire nation, The PAN Group participated in helping the people in the Central region with essential goods, overcoming the flood and storm’s consequences. (For details, please see the social results report in this report)PAN also conducts an action plans on nutrition and food safety, awareness training and clean food sponsor to 05 schools in the suburbs of Hanoi to raise the awareness of food safety.

With the main activities of connecting, supporting and carrying out the investment attraction activities, M&A, The PAN Group is not directly engaged in the product sales and supply. Therefore, The PAN Group does not have customers of direct sales. All the transactions with customers will be made through the member companies.



2.4 REPORTING MECHANISM

The PAN Group Sustainability report will be continually made on an annual basis, the report for 2016 is also made separately from the annual report. The data in this report have been prepared for the annual period from 1/1/2016 to 31/12/2016, consistent with the period for the Annual Report 2016.

2.5 MEMBERS IN CHARGE OF WRITING THE REPORT

2.6 CONTACT INFORMATION OF REPORT

For the report information, please contact:

Sub-committee on Social environment and Sustainability, The PAN Group Joint Stock Company.

Address: Pan Pacific Building, No. 236/43/2 Dien Bien Phu Street, Ward 17, Binh Thanh District, HCM City.

Telephone: (84 - 8) 3510 6868.

Hanoi Branch: 15 Floor, ICON4 Building, 243A De La Thanh, Dong Da District, Hanoi city.Telephone: (84 - 4) 3760 6190.

Email: [email protected]

2.8 EXTERNAL GUARANTEE

The PAN Group strives to ensure the truthful and sufficient information, and data, based on the actual results and objective assessment by the independent parties. During the reporting process, the external guarantee is made in accordance with the GRI’s guidelines for “External Guarantee for Sustainability report”. The PAN Group Financial Statements are audited by Ernst and Young Vietnam.

Quality Management System (ISO 9001), Sustainability Management (ASC, MSC, Global GAP), Food safety (BRC, HACCP, ISO 22000…), Laboratory Capacity Accreditation (Vilas) of the member companies are certified by international organizations, international certificates such as BoA, BVC, TUV-SUD, Union Control…

The environment monitoring results, product and material test and assessment results, legal compliance assessment, etc… are carried out by the state-owned capable agencies or the nominated and licensed regulatory agencies.

2.7 IMPLEMENTATION STANDARDS

This report is made based on the Guidelines for Sustainability Report issued by the State Securities Commission (SSC) in cooperation with the International Finance Corporation (IFC). The report content also complies with the Global Reporting Initiative (GRI) guideline version G4. We selected the option of information disclosure in line with the Appropriateness Core Standards with the report contents focusing on the key areas and thoroughly describing The PAN Group relationship with the related parties.

The annual audit is a program implemented on a yearly basis in all the member companies, since 2016. The assessment is done by the group’s experts with the

purpose of assessing the compliance, performance outcomes, then finalizing the corrective and improvement action plans in the next phase towards to sustainable development goals. The assessment content covers the issues of food safety, environment and society in accordance with the following assessment criteria:

The Vietnamese Law- the International Financial Corporation’s Environmental and Social Performance Standards (IFC).

The PAN Production Principles (based on IFC Environmental and Social Performance Standards, HACCP principles and Global Food Safety Initiative (GFSi) Organization’s guideline on food safety assessment.

No Name Position

1 Mr. Do Quoc Thinh Sustainability Officer

2 Ms. Vu Le Ha Senior Communication Officer

3 Ms. Dinh Thu Huong Research and Development Officer

4 Mr. Nguyen Trung Anh Research and Development Director

5 Mr. Nguyen Tuan Anh Chief Financial Officer

6 Mr. Nguyen Viet Hung COO: Review the content

7 Mr. Nguyen Khac Hai CEO: Approve the report

59SUSTAINABILITY REPORT | 58 | THE PAN GROUP

60 | THE PAN GROUP

1. OVERALL ASSESSMENT ON SOCIO

- ENVIRONMENT AND ECONOMIC IMPACTS

2. SUSTAINABILITY IN COPERATE GOVERNANCE

3. RISK MANAGEMENT

SUSTAINABILITY REPORT | 61

“To invest in and apply high technology, preserving natural beauty”



JOURNEY IN 2016

JOURNEY IN 2016

Consistent with the set strategy, The PAN Group continues to go more extensively and intensively into the agricultural and food sectors, closely following sustainable development strategy. In 2016, The PAN Group has established more concrete foundations for the full value chain, such as: Building infrastructure for production, developing production technology in line with the highest international standards, scale expansion and product quality improvement.

The PAN Group also closely has updated the international trends of sustainable development, the global goals and solutions in 2016. The global achievements in sustainable development are also the source of encouragement and advantages for The PAN Group to complete its 2016 plan and make orientation for the next phase.

The PAN Group CEO Mr. Nguyen Khac Hai attended the conference on “Building trust and capacity for food safety in Asia” in Singapore organized by Global Food Safety Partnership, under World Bank in cooperation with Food Industry Asia.

With the theme of “Food Safety” in 2016, The PAN Group wishes to raise the essential and pressing issue which is the concern of the entire society, propose the solutions as well as proactively promote the implementation with the related parties.


JOURNEY IN 2016


Highlighted events in 2016

2/2016 8/2016 11/20167/2016 10/2016

Establishment of PAN-SALADBOWL Joint Stock Company

Deploying the production of vegetables and flowers in Lac Duong, Lam Ha districts, Lam Dong province.

Flowers are produced under the guidance of Japanese experts. The production procedure is strictly complied with Global GAP standards.

Concentrate on developing the core business in Agriculture and Food

Transferred 80% equity interest of The PAN Group in the two 100% owned subsidiaries, PAN Services Hanoi and PAN Services HCM City to Nihon Housing Company Limited (Japan).

QI/2016: PAN Food increased the ownership rates in the subsidiaries in food sector: ABT (73%), LAF (80,5%), BBC (43,7%).

Establishment of PAN Food Manufacturing Joint Stock Company

Manufacturing plant is being built in Long An province. It will be one of the most modern and high technology factories in the region, and will produce nutritious, high quality and eco-friendly food products.

Establishment of PAN Farm Joint Stock Company

PAN Farm Joint Stock Company plays a fundamental role in the field of agricultural production, development and implementation of agricultural projects and activities.

Important shareholders participated in PAN Farm at the beginning such as International Financial Institutions (IFC), Daiwa Group (Japan).

Implementing Hi-tech agriculture project in Co Dong, Son Tay District, Hanoi

Agricultural products and high production technologies of the group will be tested and demonstrated in Co Dong farms.

PAN GALA Event

With the theme “The talents meet”, PAN Gala is an internal cultural event organized for the talented management team of the Group and its affiliates, thereby greatly inspire the sustainable development of the Group.

Appointment of The New CEO

The PAN Group’s Board of Director decided to appoint Mr. Nguyen Khac Hai as Chief Executive Officer from the 15th of November, 2016.

6/2016

Successfully bought 22.4% stake of Fisheries Joint Stock Company 584 Nha Trang

June 2016, PAN Food successfully bought 22.4% stake of Fisheries Joint Stock Company 584 Nha Trang, which officially became one of The PAN Group’s affiliates.

The company owns the brand name of 584 Nha Trang fish sauce, the leading brand in the field of traditional fish sauce. Company products continuously won the title of Vietnam High Quality Goods from 2010.



JOURNEY IN 2016

In addition to the activities of the member company establishment, expansion or production facility construction, The PAN Group also undertake intensive activities, such as implementing research projects, updating new technology for added values. Especially that PAN established the Research and Development division in order to promote the research cooperation activities such as the collaboration program with local experts (RIA2 and Biotechnology Centre of HCMC) and international ones (The Kingdom of Belgium, Netherlands, Israel), technological renovation, disease control in pangasius farming (producing health and disease-free breeds), improving the processed product’s quality and especially minimizing the adverse impacts on the environment.

With the objective of boosting the research activities, The PAN Group, Vietnam National University of Agriculture and CSC Edu jointly organized a seminar on 21/12/2016.

The seminar is aimed at creating the exchange opportunities for the local and international scientists, enterprises as well as the sponsor agencies to fund the research and technology transfer. In this seminar, thet leading experts in post-harvest technology in Belgium and Vietnam, namely Professor Bart Nicolai – Dean of Biology Department, Director of Flanders Postharvest Technology Center, University of K.U.Leuven, Kingdome of Belgium; Associate Professor Tran Thi Dinh – Head of Department for Processing Technology, faculty of Food, Vietnam National University of Agriculture have participated. In addition, the seminar also brought together the leaders of member companies in the Group, researchers from the universities and research institutes and research funding agencies in the sector of food agriculture from the Ministry of Science and Technology (NATIF, NAFOSTED) and representatives from the Belgian and Dutch embassies.

1.1 ECONOMY

The PAN Group activities of investing, expanding and closing agricultural and food value chains are not out of the world and regional economic development trend. The growth of the economic institutions, distributors and partners has also brought about the advantages and disadvantages to The PAN Group strategies, i.e. the issues of labor and labor quality, employment and partner capacity, etc... In the current context, there is no longer thinking of economic growth and acceptance to trade off the growth at all costs, PAN is also demonstrating its views and specific actions in order to achieve the rapid and sustainable growth. PAN and its member companies are focusing on the investment projects and production activities which not only make profits but also ensure the requirements of environmental protection, contributions to the community and sharing of economic values with the related parties. The economic development obligations are currently linked to the corporate social responsibilities (CSR), especially in the present context when the enterprise’s development largely depends on the support of the community, the residents nearby, local laborers, market, authority agencies… The company must maintain good relationship by creating greater economic values and better material life for the society.

Among the missions, economic develop is always the primary task of The PAN Group, directly making profits for the shareholders, income for the employees and other economic values for the society. Given Vietnam’s current economic difficulties, this task is more and more crucial. Over the past years, The PAN Group has maintained high and stable growth, facilitating the development of the member companies’ production and business, thereby bringing about considerable economic outcomes. Good business and production outcomes also provide substantial financial benefits for the group’s and its member companies’ employees, increasing their contribution to the community and local economy. For specific results on the Group’s economic growth and economic value contribution, please see the section of Economic Results in this report.

1.2 ENVIRONMENT

The environment is currently the top concern of all nations and humanity around the world: The COP 22 conference held from November 7, 2016 to November 18, 2016, continues to receive the people’s attention on the climate change. In addition, the requirements for natural resource saving, environmentally friendly and responsible actions, emission and pollution reduction require the group’s activities to always set itself in an organic relationship with environmental issues, ensuring the legal compliance and international standards. The change in perception and concern for the environment on the one hand poses a requirement for the companies to change their habits and to carry out the work responsibly based on a comprehensive review of the issues. On the other hand, it also helps the companies to have a good governance, fully assess the risks and maintain the company’s sustainable and good operations. Consistent with the outlined sustainable development strategy, The PAN Group has made many moves to raise the awareness of its employees, to assist its member companies in implementing responsible and environment-friendly production programs, and to increase the community’s interest in the environment. These efforts are reflected in projects that brought about specific and positive results in environmental protection, such as adopting sustainable farming practices, limited use of chemical, antibiotics, pesticides to avoid adverse impacts on the environment, minimizing and recycling the waste from the production process, upgrading the production infrastructure and facilities towards economic, less toxic and environmentally friendly production. Besides the achieved specific outcomes, The PAN Group also develop the environment protection practices and principles associated with the production in its operation, requiring the member companies to comply with and apply seriously. At present, each company within the group must set up functional unit in charge of managing the environmental issues, applying the environmental requirements by law, IFC’s standards for environmental and social actions, the PAN Production Principles. Thereby, the member

Agriculture and food are the strengths of the Vietnamese economy. With the advantages of natural resources and conditions, Vietnam is striving to develop its potentials to thrive on the economic front. However, under the pressure of the environmental issues, climate changes, and social issues, The PAN Group developed a sustainable development strategy to cope with external influences. This is an inevitable trend for the world and Vietnam in the development journey. Analysis on the impacts from the socio-environmental and economic issues in the global context of moving towards sustainable development is aimed at recognizing The PAN Group challenges and opportunities, thereby building and timely adjusting sustainable development strategy for certain period of time.

1. OVERALL ASSESSMENT ON SOCIO-ENVIRONMENT AND ECONOMIC IMPACTS

The seminar on “Postharvest Technology and Applications in Agriculture” organized by The PAN Group.



JOURNEY IN 2016

Name Title Period

Mr Nguyen Duy Hung Chairman 2013 - 2017

Ms Nguyen Thi Tra My Deputy Chairman 2013 - 2017

Mr Tran Dinh Long Member of independent management sub-committee 2013 - 2017

Mr Dang Kim Son Member of independent management sub-committee 2013 - 2017

Ms Le Thi Le Hang Member of non-executive board 2013 - 2017

Ms Ha Thi Thanh Van Member of non-executive board 2013 - 2017

Mr Michael Sng Beng Hock Member of non-executive board 2013 - 2017

Mr Nguyen Van Khai Member of executive board 2013 - 2017

Number of members by the time of December 31st 2016 8

Based on sexuality

+ Male 5

+ Female 3

Based on the independency of execution

+ Executive Board member 1

+ Non-executive Board member 4

+ Independent Board member 3

Based on specialty and experience

+ Agriculture/Food 3

+ Financial/Management 5

companies also set up a comprehensive production system, raising the awareness of all employees, and carrying out the activities that have a positive impact on the environment. Taking environmental protection requirements into account when conducting business practices is the most significant result that The PAN Group achieves and expects to deliver positive and long-term outcomes.

1.3 SOCIETY

Together with the economy and the environment, social issues have had a significant impact on The PAN Group and its member companies’ operations. The issues of labor, income, welfare, discrimination, anti-abuse, community responsibility, product liability have gradually become indispensable criteria in the requirements of global investment and cooperation. The ever-increasing community’s concern about the social security also requires the production and business operations to change toward the tendency of paying more attention to social impact. Recognizing these requirements, as well as assessing the importance and benefits of the compliance, The PAN Group has actively and proactively fulfilled the requirements by the related parties, developing the group’s own standards applicable to the group, its member companies and supply chain. At present, all member companies are able to guarantee such issues as income for living

costs, human rights, safe working conditions, career growth and promotion opportunities. The mechanism of dialogue with workers and the community is also a mandatory subject to maintain a balance of interests between the parties. Charity and community programs are also part of the Group’s annual plan to realize the corporate social responsibility, sharing the values with the community.

Implementing the above activities, The PAN Group established a management system to handle social issues at the group and in each member company, ensuring the production process to be balanced and responsible for the society. The PAN Group applies a number of standards and principles for social issues to guide and use as the basis to assess the social activities, including Legal requirements, IFC’s Standard for Socio – Environment actions and the PAN Production Principles.

With the present trend and pressures, other businesses and economic organizations need to have long-term strategies and approaches suitable for ever-changing business environment, to operate actively and in harmony with the social elements, and create benefits for all. Recognizing this issue, The PAN Group not only satisfies full requirements but also proactively promoted the activities to make greater achievements, building better corporate brand name in the market and to the community.

Board of Directors structure of The PAN Group until December 31st, 2016 includes:

Appoint BOD members

In 2016, PAN additional appointed a member of independent management sub-committee, Mr Dang Kim Son at Resolution No 02-07/2016/NQ-HĐQT in July 25th, 2016 and will be approved in the next Shareholder Meeting.

2.1 GOVERNANCE STRUCTURE

Board of Directors

2. SUSTAINABILITY IN CORPORATE GOVERNANCE

Labor EmploymentTraining

Substainabledevelopment

Social responsibility

Production process

Community contributions

Product

Investment in technology,infrastructure and equipment

Please refer to details on Board of Directors (BOD) and BOD’s activities on 2016 Annual Report of The PAN Group

Above are a few key highlights on The PAN Group socio – environmental performance in 2016, the fundamental activities and impacts of The PAN Group and its member companies. The specific contents on the activities and outcomes are presented with more details in the section of Result Report of this document.

Disclosure of information



JOURNEY IN 2016

Chairman and not CEO

The separation of Chairman and CEO (Acting CEO in the case of the PAN) expressed a clear division of responsibilities between the Chairman and Acting CEO to ensure the independence between the BOM and the BOD. This also ensures the power division, which improves the responsibility and independence in the BOD’s decision making.

Sub-committee under BOD

According to Resolution No 01-04/2016/NQ-HĐQT of Board of Directors issued in April 5th ,2016, The PAN Group restructure sub-committees under BOD as the followings:

i. Human Resource sub-committeePersonnel including:

Responsibilities:

The sub-committee operating under the delegation of the BOD as specified in paragraph 15, 16, Article 28 of the Company’s Charter;

Review and develop remuneration policy under the of BOD’s orientation.

Consider rewarding and disciplines for BOD members, and senior managers.

Responsibilities:

The sub-committee operating under the delegation of the BOD as specified in paragraph 15, 16 of Article 28 of the Company’s Charter;

Identifying and developing strategies for the issues relating to corporate social responsibility (issues about corporate governance, environmental social impacts) being able to affect the company’s business, image and reputation of the company;

Supervising and evaluating the company’s implementation of the social responsibility in line with the framework of social awareness;

Considering and making recommendations relating to the scale and needs relevant to the BOD.

Building consistent Sustainable Development policies for PAN and its member companies.

Advising and supporting PAN and its member companies’ s BOM on issues relating to the management of health safety, environmental protection, social responsibility implementation in production business. Promoting the building of environmental and social management systems for PAN and its member companies.

Supervising and evaluating the compliance level of laws and other regulations on safety, environment, emergency response and social responsibility of each company.

Promoting the connection and collaboration among companies in the Group and connect with external organizations on environmental – social issues.

Responsibilities:

• Supervise the M&A activities: Building, evaluating and approving the process of investment transactions.

• Supervise the compliance: Building, Supervising and evaluating the compliance with the regulations and procedures relating to the Administration, Finance and Accounting of the Company.

• Supervise the after- investment: Developing the criteria and evaluating the performance of Member Company.

No. Name Position

1 Mr Nguyen Duy Hung Head

2 Ms Nguyen Thi Tra My Member

3 Mr Nguyen Van Khai Member

4 Ms Le Thi Le Hang Member

ii. Independent sub-committee

Personnel including:

iii. Environmental, social and Sustainability sub-committee (Merged of Corporate social responsibility sub-committee and Sustainability sub-committee in the past)Personnel including:

No. Name Position

1 Mr Tran Dinh Long Head

2 Ms Ha Thi Thanh Van Member

No. Name Position

1 Ms Nguyen Thi Tra My Head

2 Mr Tran Dinh Long Member

3 Mr Nguyen Van Khai Member



JOURNEY IN 2016

Board of management

No. Position Name Tenure of office

1 Acting Chief Executive Officer Nguyen Van Khai 8/2015 - 10/2016

2 Chief Executive Officer Nguyen Khac Hai 11/2016 - to present

3 Chief Financial Officer Nguyen Tuan Anh 8/2015 - to present

4 Chief Operating Officer Nguyen Viet Hung 8/2015 - 12/2016

5 Chief Accountant Vu Thi Lan Anh 4/2016 - to present

Name Position Degree of independence Notes

Mr Nguyen Duy Hung Head Not an employee of the company

Ms Nguyen Thi Thanh Ha Member Not an employee of the company

Mr Nguyen Duy Tuan (*) Member Not an employee of the company Appointed in April 26th 2016

Board of Supervisory

The Supervisory Board currently has 3 members. All members of the Supervisory Board are eligible for and fully capable of performing their respective duties.

The Supervisory Board’s Members at the particular time in 2016 as follows:

In 2016, the Board of Directors monitor, supervise and ensure the legitimate interests of shareholders in accordance with the functions, powers and duties to realize the business plan. In addition to implementing the contents presented in the resolution of the Annual General Meeting of Shareholders in 2016, the BOD’s activities in 2016 focus on the following points:

Planning and monitoring the development orientation and strategies of the entire group.

Directing and supervising the issues related to the Group’s production, business, capital and asset.

Completing the procedures to get approval by the state management agencies of removing the ownership limit of foreign investors at The PAN Group.

Supervising the activities of Board of Directors and senior managerial personnel.

Disclosing information in line with the law on securities, ensuring the publicity, transparency, promptness and accuracy.

Protecting the legitimate rights and interest of shareholders.

All the BOD’s activities are carefully reviewed, in compliance with the Law on Enterprises, the current law as well as the internal regulations of The PAN Group, ensuring the objectivity and transparency based on the rights, responsibilities prescribed by law, respecting the legitimate rights and interests of shareholders.

In 2016, complying with the internal regulations as well as satisfying the Group’s development needs, BOD maintains face-to-face meetings on a quarterly basis to discuss, review and agree on the decision under the BOD decision-making authority in order to promptly provide the directives in executing the Group’s business in line with market movements.

Accordingly, in 2016, BOD conducted 10 scheduled and ad-hoc meetings in the approaches of face-to-face meeting, telephone – conference, and emails, issued 16 resolutions / decisions on the Group’s strategy and action plan with the participation of all the members. The BOD meetings are organized and conducted in accordance with the Company’s Charter, Minutes, Resolutions, and Boards’ Decisions based on the agreement of all members, filed in compliance with the regulations.

The members of BOD actively participated, contributing their opinions and voting for decisions when more than a half (1/2) of total attending members of BOD approved. All the direct meetings of BOD are attended by Head of Supervisory Committee and/ or Supervisory Committee’s members as the observer, and all the information exchanges and meetings with opinion expression in writing are witnessed by Head of Supervisory Committee. In addition, the functional sub-committees BOD actively carry out their duties to assist BOD. For the details of BOD activities (details shown in The PAN Group Annual Report 2016).

Activities of The Board of Management

The Board of Management is responsible for making managing business plan towards the revenue and profit growth over the years, ensuring the Group continuous growth in accordance with the orientation of the General Shareholders Meeting and Board of Directors. The programs aimed at realizing the PAN’s strategic objectives are seriously implemented following the planned roadmap with the adjustments in line with the macro-economic conditions and competition in the industry.

The PAN Group production and business results in 2016: Although the activities of the Group’s key member companies during the year faced so many difficulties due to negative impacts of the climatic changes, yet, thanks to the strategy of drastic transformation to high-tech products which resist the climate changes and its focus on production and business management in the core sectors of agriculture and food, The PAN Group business results in 2016 has achieved many positive results with the business targets’ growth over the same period of 2015.

Coordinate with its member units in investment and M & As activities in the agriculture and food sectors. These processes are carried out properly, legally and in line the long-term development strategy of the Company:

M&A to increase its ownership shares at the member companies in the food sectors, such as ABT, LAF, BBC and Fisheries Joint Stock Company 584 Nha Trang.

Establishing new member companies such as PAN Farm Joint Stock Company, PAN-SALADBOWL Joint Stock Company, PAN Food Processing Joint Stock Company.

Successful divestment from the sanitation sector at PAN Services, which is no longer in the development strategy, to mobilize resources on the key sectors.

Developing the human resources, building a strong corporate governance system to maintain its leading position and to achieve sustainable growth that ensures a balance between economic, social and environmental factors.

Accomplishing and improving the internal management quality toward the sustainable development of the

2.2 EXECUTIVE GOVERNANCE ACTIVITIES

Activities of the Board of Directors

(*) Mr Nguyen Duy Tuan was appointed a member of the Supervisory Board to replace Mr Nguyen Tuan Anh who resigned in July, 2015 according to Resolution No 01-04/2016 of Shareholders Meeting in April 26th, 2016.

In the above list, only Mr Nguyen Van Khai, a member of BOD, is also in the management team with position of Acting CE) from 8/2015 to 10/2016.



JOURNEY IN 2016

Group: deploying the staff evaluation at all levels, standardize the job position and the remuneration and allowances for the employees commensurate to their contribution. Improve the practice of issuing the internal document, increasing the review and accomplishment of regulations to create legal and administrative corridors for the activities of The PAN Group and member companies, well performing the role of risk control at all levels, and in all units.

Complying with the regulations of Law on Enterprise, current Laws as well as The PAN Group internal statutes and regulations, ensuring the objectivity and transparency based on the prevention of interest conflict between the company with the members of BOD, BOM, Supervisory Committee and related people, respecting the legitimate interest and benefits of the shareholders.

Continue to accomplish the risk management system to minimize any negative impacts on The PAN Group business performance and sustainable development. At the same time, the promoted investment in the information technology infrastructure must be ensured and continually trained at the advanced level to satisfy the business’s requirements.

Coordinating with the Board of Managers at the member companies in managing the business activities towards the sustainable development and ensuring the interests of each company as well as the common interest of the entire group.

Activities of Board of Supervisory

The Board of Supervisors performs the functions and duties as stipulated in the Charter of The PAN Group. In 2016, Board of Supervisors monitored the compliance with the regulations on managing, and directing the production and business activities in 2016 of the Company in the key areas including strategy, operation and finance.

The effectiveness of the compliance monitoring has been enhanced through the activities of the Board of Supervisors:

Review the appropriateness of the Decisions by Board of Directors, Board of Managers in the management, and direction to ensure the compliance with the law and the company’s operation charter.

Representative from Board of Supervisors attended and gave the opinions at all the meetings of Board of Directors, checking and supervising the execution of

the resolutions of the General Shareholder Meeting to Board of Directors, Board of Managers.

Control the compliance with the Charter and Resolutions of the General Shareholder Meeting.

Monitor the execution and information disclosure of the Company in accordance with the law on Securities and other related legal documents.

Review the periodical reports prepared by Board of Managers, check the quarterly, semi-annual, annual financial reports of The PAN Group in order to assess the truthfulness and appropriateness of the financial data. At the same time, coordinate with the Independent Auditor, reviewing the impacts of the accounting errors and critical audit on Financial Statements.

Assess The PAN Group’s investment into the member companies, associated companies and the companies which it contributes long-term investment. Periodically review the quarterly, semi-annual and annual financial reports of these companies to recommend and propose the solutions in order to increase the efficiency of the use of The PAN Group investment capital.

Control the issuance of shares under the Employee Stock Option Plan in Quarter IV/2016.

Check the fulfillment of The PAN Group’s obligations in accordance with the law, including tax, social insurance and other financial obligations.

Supervising the operation efficiency

The supervising monitoring of the PAN’s governance body’s efficiency is as follows:

The General Shareholder’s Meeting supervises Board of Directors through the targets and plans approved at the Annual General Shareholder’s Meeting and extraordinary General Shareholders’ meeting. The results in the previous year were reported in detail in the next year’s session.

Board of Directors (BOD) supervise the performance of Board of Managers (BOM) through the financial and non-financial targets approved by General Shareholders’ Meeting, which may be adjusted by BOD. Besides, BOD also required BOM to supplement other financial indicators to monitor closely based on the annually approved detailed business plan. With the non-financial indicators such as management, governance and compliance, BOD supervises through

Subcommittee on Social Environment and Sustainability

In the current development trend, economic growth is no longer a top priority and traded off at all costs. Economic benefits are placed in a balance relationship with other requirements. Since the end of 2014, when The PAN Group restructured the sectors of activities, increasing the investment cooperation activities with many international partners, customers and investors, the issues related to environment and society received much more attention. According to the Resolution No. 01-04 / 2016 / NQ-HDQT issued by BOD on 05/04/2016, the sub-committee on Social Environment and Sustainability was merged to unify the tasks and coordinate better to implement the programs on social environment. Members of the subcommittee are those who have been engaged, had a good understanding of the activities, experienced in the social environment, and are fully empowered, which helps to create a more favorable and effective operating mechanism.

In order to enhance the spread of influence, deploy the practical and quick activities for the Subcommittee, The PAN Group continues to maintain a network of coordinators at the member companies to implement the related programs. In comparison with 2015, the network members have made proper changes, the updated list up to 31/12/2016 is as the following:

No Name Company Position Email contact

1 Mr. Chau Quang ChanhBen Tre Aqua Product Import And Export Joint Stock Company

HR [email protected]

2 Mr. Tran Ngoc Vu HuyBien Hoa Confectionary Joint Stock Company

QA Director [email protected]

3 Mr. Tran Van ReLong An Food Processing Joint Stock Company

HR supervisor [email protected]

4 Mr. Pham Trung Dung Vietnam National Seed Company HR Manager [email protected]

5 Mr. Le Ngoc SonPAN-SALADBOWL Joint Stock Company

QA Officer [email protected]

6 Ms. Nguyen Thai Hanh Linh PAN Food Joint Stock Company CFO [email protected]

7 Mr. Le Thai Binh Southern Seed Company HR Manager [email protected]

(*) Mr Tran Van Re has stopped joining the membership network due to retirement. The current person in charge at Lafooco is Mr. Nguyen Phan Trung Hieu - Production and QA Manager.

the internal periodical reports, report by Board of Supervisors, internal audit, report and check by the functional agencies. BOD maintains the face-to-face meetings on a quarterly basis to discuss, and agree on the decision under BOD’s decision-making authority to promptly provide directives in managing the Company’s business performance in a response to the moves of the market.

Reporting system:

Quarterly, Semi-Annual and Annual financial reports are submitted to State Securities Commission of Vietnam (SSC) and widely disclosed on the website and sent to shareholders.

Semi-annual and annual management reports in accordance with the regulation on the information disclosure and other ad-hoc reports.

Report by BOD and Board of Supervisors on annual basis at the Annual General Shareholders’ Meeting, periodical BOM and BOD meetings.

Assessment report on Environment – Society – Food safety: reports are made after the annual assessment report in all the member companies, periodically updated with the latest data every 6 months.



JOURNEY IN 2016

The Subcommittee on Social Environment and Sustainability is a unit in charge of researching and proposing the ideas and action plans related to sustainable development strategies in long term, not only limited within The PAN Group, but also influents to the changes in member companies, partner and suppliers in the supply chain. As a core and key force in the strategic planning and deployment, in 2016, the subcommittee implemented the activities to change the Group’s overall awareness and activities of the stakeholders to specific activities in the member companies:

Develop The PAN Production Principles: This is a set of principles presenting the criteria for a sustainable production system, ensuring the critical issues including environment protection, laborers, labor safety and food safety, social security, corporate community responsibility. The principles are applied to The PAN Group, member companies and all the related business partner and contractors. The implementation will be carried out with the guidance and result monitoring. The principles were officially issued in March/2017.

Finalize and promulgate The PAN Group’s internal code of conduct, appreciating the sincerity, integrity, transparency and ethics in behaviors.

Step by step establish the quality management mechanism at the corporate level, ensuring The Group’s safe products supplied to the market, creating many benefits for the customers as well as sharing the social and economic values.

Assess and monitor the performance of the environment, society and food safety of its member companies in 2016. This is the first year that The PAN Group deployed the official assessment of the above content in line with requirements of related parties as well as with The PAN Group’s sustainable development strategies. The assessment criteria are

based on the materials, standards and principles which The PAN Group is applying and declare its compliance, including: The PAN Production Principles; IFC’s Environmental and Social Practice Standards and the current legal regulations. This is a part of the annual plan and will be continually maintained in the following years, the assessment program is applied to all the member companies within the Group.

The PAN Group expects that its standardized activities deployed with serious and committed efforts will bring about the changes in awareness and actions, making The PAN Group one of the first Vietnamese companies to effectively apply the international standards on sustainable development.

Continue to maintain effective contact and information communication with the network of coordinators, promoting the deployment of practical activities which exert positive impacts in order to achieve the goals of the environment, society and sustainable development.

Organize the activities of training, and guidance on the environmental and social action standards;

Accomplish and apply the environmental and social materials and guidelines;

Periodically assess and review the environmental impacts caused by production and business activities, thereby developing the response solutions and mitigating the negative impacts;

Connect and exchange the information within The PAN Group’s network of Sustainability coordinators, maintaining the continuous communication of information and the consistency in actions; update the legal documents, related requirements and communicate the information within the Group.



Agriculture

Food

Agriculture

Seafood

JOURNEY IN 2016

3. RISK MANAGEMENT

3.1 Risk management objectives

The BOD and BOM have identified risk management as one of the most important corporate governance principles to be focused on. BOM has proposed and implemented measures to prevent or minimize negative effect of risks on business activities.

Risk management aims to:

Timely define risks and utilize opportunities, optimize operation efficiency.

Build capacity in decision making, planning and prioritizing tasks on the basis of thorough and thorough understanding company operation, business environment, opportunities and threads.

Protect and strengthen assets as well as PAN’s image.

Clearly identify ownership and risk management, develop a continuous monitoring and regularly reporting risks.

The Company has established a risk management system based on international practices and standards and applied flexibly in accordance with its operation model and business environment in Vietnam.

3.2 THE PAN GROUP’S RISK MANAGEMENT SYSTEM

3.3 RISK MANAGEMENT PROCESS

The PAN Group adopts an international standard risk management model that provides transparent, systematic and reliable risk management principles, frameworks, and formats within its operational environment.

RM Comittee

Characteristic Risk

Managment

M&A Risks Management

Legal Risks Management

Market risks Management

Liquidity Risk Managment

Brand risk management

Credit risks Managment

M&A Risks Management

Other Risk Managment

BOD

Supervisory BoardBoard of Management

Risk treatment

Com

mun

icat

ion

and

cons

ulta

tion

Monitor and review

Risk analysis

Risk evaluation

Risk Identification

Establish the context

Share Price Risk Compliance Risk

Commodity Price risk Human Resource Risk

Interest Risk

Exchange rate Risk

(*) Risks management is under the Independent Management Subcommittee.



JOURNEY IN 2016

Highlights in the group’s management policy 2016 and governance efficiency enhancement plan 2017

a. Establish PAN Farm Joint Stock company – the unit in charge of the Group’s entire Agriculture sector (with the same structure of PAN Food), accomplishing the specialized management of the two sectors: FARM and FOOD at the Group.

With this new structure, The PAN Group directly manage the two sectors of Agriculture and Food through its two holding subsidiary companies: PAN Farm and PAN Food. The benefits of this structure accomplishment to The PAN group’s sustainable development goals are as follows:

The sustainable development activities in Agriculture and Food have some different characteristics that require the specialized operation apparatus.

Providing more experienced personnel at PAN Farm and PAN Food will help the sustainable development activities to be intensively deployed and better support the member companies in each sector.

It is easier to attract the investment capital, theinvestors, and partners having interest in sustainable development. In reality, many investors and potential

partners are more interested in the group’s Agriculture and Food sectors rather than the other businesses. This structure will enable the investors and partners to take advantage of the strengths to best support each sector of The PAN Group.

b. Supplement and accomplish the BOD of The PAN Group:

Among the appointed members is an independent member of BOD – Mr. Dang Kim Son. Mr. Dang Kim Son is the former Director General of Institute of Policy and Strategy for Agriculture and rural Development under Vietnamese Ministry of Agriculture and Rural Development – one of the prestigious specialist on the agricultural development policy. The appointment of an independent BOD member who is a specialist on agriculture demonstrates the desire to effectively and transparently monitor the group’s management activities.

3.4 RISK IDENTIFICATION

The risks and impacts have been determined by the BOD for appropriate governance. Based on the causes, The PAN Group divided risks into two groups to allocate management resources and take effective preventive measures:

In the current context, when the environmental and social issues are increasingly affecting every business activity, the risk management related to these issues has become pressing. This requires the investment in finance, human resources and efforts. The PAN Group’s Sustainable Development Strategy is also developed based on these demands. The PAN Group’s risk management activities are specifically described in PAN’s Annual Report 2016.

THE PAN GROUP JOINT STOCK COMPANY

Southern Seed

Company (SSC)

BEN TRE Aqua Product

Import And Export Joint Stock Company

PAN-SALADBOWL Joint Stock Company

Bien Hoa Confectionary

Joint Stock Company

Vietnam National

Seed Company

(NSC)

Long An Food

Processing Joint Stock Company

PAN Food Joint Stock Company PAN Farm Joint Stock Company

Econ

omic

ris

ks

M&A risks

Exchange rate risk

Interest rate risk

Commodity price risk

Credit risk

Other risks

Share price risk

Liquidity risk

Envi

ronm

enta

l and

soc

ial r

isks

Legal risks

Compliance risks

Weather risk

Agriculture land risk

Brand risk



JOURNEY IN 2016

RETAIL PROJECTProject Manager

FINANCE MANAGER

OTHER PROJECTSProject Manager

CHIEF ACCOUNTANT

Human Resources Excutive

Administration Excutive

Information Technology (IT)Dept Head

LEGAL DEPARTMENT

Legal Director

RESEARCH AND

DEVELOPMENT DEPARDMENT

R&D Director

FINANCIAL AND ACCOUNTING

DEPARTMENT

CFO

PROJECT DEPARTMENTBUSINESS DEVELOPTMENT

DEPARTMENT

Business Developtment

Director

ADMINISTRATION HUMAN RESOURCES DEPARTMENT

Human Resources Director

COMMUNICATION DEPARTMENT

Head of Department

SUPERVISORY BOARD

BOARD OF DIRECTOR’SECRETARY

BOARD OF SHAREHOLDERS

CEO

BOARD OF DIRECTORS

e. Implement the annual environmental, social and food safety review program: The objective of establishing and deploying the assessment mechanism is to promote the compliance with the legal regulations, principles and standards which the company voluntarily committed to practice, and to perform the improvement activities. 2016 is the first year to deploy the review program. This is the measure to raise the awareness, the interest as well as to evaluate the results of implementing the sustainable development strategies in member companies.

c. Establish the Research and Development division (R&D) in the operation structure of the Group. R&D division helps The PAN Group to strengthen its research capacity, gathering the R&D strengths of the member companies to enhance the resonance values of each unit. R&D is not only aimed at the activities bringing about economic values but also concerned about the sustainable development issues, helping The PAN Group to have more initiatives for the social and environmental activities.

d. Issue the new policies and regulations on The PAN Group’s sustainable development strategies, the common development orientation of its member companies. In particular, the group consistently applied environmentally friendly and high technology in all the agricultural production activities, especially applied to all new projects; Deploying the food safety and quality management system in a professional and systematic manner under the supervision and consultancy of

prestigious certification organizations in accordance with the standards of FSSC 22000, GFSi, IFC. The PAN Group issued “The PAN Production Principles” which is the material orienting and guiding the details of the activities related to food safety, environment and society and gradually apply them to the member companies.

The application of the PAN Production Principles will help the member companies step by step develop the solid foundation for the next stages of development, the brand name and images in Vietnam, as well as around the world.

The contents of the PAN Production Principles were developed based on the globally accepted materials and guidelines, in compliance with the Vietnamese laws. The development and application of the above principles demonstrate The PAN Group’s initiatives in the orientation for sustainable development, and harmony with the international standards.

Financial Analyst

EHSSpecialist

R&DSpecialist Legal Advisor Project

SpecialistProject

SpecialistAccountant Driver AgriculturalAnalyst

BD Officer(Agricultural)

BD Officer(Food)IT SpecialistCommunications

Officer

Infrastructure and management system requirementsProduct requirements

Environmental and social requirements

Other requirements

PAN Production Principles

Vietnam Law

Environmental, Health, and Safety General Guidelines

of IFC

Environmental and Social

Performance Standards

of IFC

International Organization For Standardization

(ISO)

Food safety assessment guidelines of

GFSi

1. BUSINESS DEVELOPMENT

2. ENVIRONMENT PROTECTION

3. SOCIAL CONTRIBUTION

“To create the innovative brands”


RESULT

No Indicator 2016 Actual 2015 Actual % Change

1 Consolidated net revenue 2,753 2,650 104%

2 Consolidated profit before tax 385 362 106%

3 Consolidated profit after tax 336 315 107%

4 Net profit to PAN’s shareholders 257 215 120%

5 EPS (VND/share) 2,489 2,513 99%

The results of implementing sustainable development strategies are summarized as guided in the GRI’s Sustainability Report guideline. The information including the member companies’ information on the areas which, albeit having little direct impacts on The PAN Group, has indirect, comprehensive and considerable impacts on the member companies. The data are collected by the socio-environmental coordinators at member companies and through the results of the annual socio-environmental assessment organized by The PAN Group.

The results are the basis for The PAN Group to plan for the next phase. Due to the specific characteristics of the Group which has many member companies operated in diversified segments in the field of agriculture and food, therefore, the topics of concern of each company are different. The member companies have a long history of doing business, have their own way of tracking data, so when synthesizing data, they have to come up with a method to compare and evaluate the level of performance. In addition, the corporation also has different levels of interest, policy and support depending on the extent of the impact on each sector of the company.

In 2016, The PAN Group has continuously carried out the transformation, restructure and reorganization of its main business segment in order to optimize the operation and improve the efficiency in production and man-agement. Currently, the PAN’s core businesses include:

1.1 2016 BUSINESS RESULT (2016 VS. 2015)Unit: VND Billion

0

100

200

300

400

NI to PAN’s shareholders CAGR: 33%

81 81 89

2142

100

160183

215

315

362

257

336

385

-22012 2013 2014 2015 2016

COMPANY’S PROFIT OVER YEARS (VND BILLION)

Net profit before taxNet profit after taxNet profit to PAN’s Shareholder

1. BUSINESS DEVELOPMENT

In 2016, The PAN Group continues to consolidate its foundation and expand its focus on business in the Food and Agriculture sector. On the one hand, PAN continues to realize its goal of becoming a regional leader in the field of agriculture and food by increasing its ownership in the leading-in-sector companies. On the other hand, the Group has restructured existing foundation and invested in more potential business segments in the industry by strategically taking advantage of current strengths, clearly identifying market potential, making Joint venture with partners.

In 2016, though, the production and business activities of the key member companies of The PAN Group are facing many difficulties due to the very negative impact of climate change that causes heavy losses on a large scale with all

sectors from animal husbandry to crop production. However, due to enhancing R&D investment in new products, the drastic transformation to high-tech products, climate change resistance and focusing the production and business activities in the core Agriculture and Food sectors, the PAN consolidated business has achieved good results that met all targeted growth criteria. This is a remarkable achievement because from March 2016 PAN has not merged revenue of PAN services (in 2015, PAN services contributed VND 390 billion to The PAN Group’s revenue): Both revenue and profit after tax increased in comparison with those of 2015 reached VND 2,753 billion and VND 336 billion, respectively. Revenue, profit before tax and after tax, profits of shareholders have grown. Consolidated earnings per share (EPS) was reported VND2,489 per share compared to VND2,513 per share in 2015.

(i) Agriculture segment - conducted through PAN Farm JSC which includes National Seeds JSC (NSC) and PAN-SALADBOWL JSC; and indirect subsidiary: Southern Seed JSC.

(ii) Food segment - managed and coordinated by PAN Food JSC (PAN Food) and PAN Food Manufacturing (PFM) in which the main business areas are Confectionery, conducted through PFM and BBC; Fishery and processing, led by AQUATEX Ben Tre (ABT); Food processing, led by LAF and 584 Nha Trang; and

(iii) Cleaning services segment - performed by PAN Services was no longer the key service of PAN due to liquidity transaction in March 2016.

(iv) Besides the business results of The PAN Group were also contributed by other income from financial activities, dividends, etc..

(*): Bibica Corporation (BBC) and 584 Nha Trangare associates of PAN Food JSC – PAN Food owns 43.7% and 22.4% of chartered capital, respectively; PAN Services is an associate of The PAN Group. Therefore, revenue of BBC, 584 Nha Trang and PAN Services were not consolidated into the income statements of PAN but the profit was added to the consolidated profit by the equity method.


RESULT

Average growth rate of consolidated revenue from 2012 to 2016 was reported at 76%. The revenue structure shows a clear shift in business development which was focus primarily on the agriculture and food segments.

1.2 REVENUE STRUCTURE AND GROWTH OVER YEARS

Agriculture

Agriculture

Food

Food

Other

Other

1.3 CONSOLIDATED PROFIT BEFORE TAX

From 2012 to 2016, The PAN Group maintained a sustainable growth in consolidated profit before tax with an average annual growth rate of 44%, in which the profit structure tends to shift to the core business segments: Agriculture and Food. The contribution to consolidated profit before tax for by segment for the period 2012-2016 is as follow:

Note: Detail information of business operation can be found in Annual report 2016 of The PAN Group.

1.4 MAIN BUSINESS SEGMENTS

AGRICULTURE

The business and production in the agriculture sector are conducted through PAN Farm JSC, which was founded in July 2016, including 2 subsidiaries: National Seed JSC (NSC) and PAN-SALADBOWL JSC which was established in February 2016.

NSC is a leading company in seeds industry in Vietnam with a healthy financial situation and steady and sustainable growth. In 2016, NSC established Ha Nam High-Tech Agriculture Development and Investment JSC to pursuit NSC’s development strategy for period from 2016-2020. The company trade and transfer technologies for premium melon and vegetable planting for domestic and foreign markets. At the same time, large-scale intensive and high tech farming are formed based on cooperation with farmers. With strong capacity in R&D and production, NSC has continued to maintain business growth and dominantly contributed to the overall business results of The PAN Group in 2016 (48% of revenues and 50% of profit before tax).

In 2016, PAN-SALADBOWL focus on planting and exporting flowers. The area for flower growing is expected to increase to 200 ha in next 5 years, including contract farming. Recently, the Company concentrates on Chrysanthemum and Carnation to export to Japan market. Moreover, Company is in trial stage for premium vegetable and plans to produce in large scale since 2017.

FOOD

The business and production in the food sector are conducted through PAN Food and its subsidiaries. The business includes 3 main sub-sector: fishery, food processing and confectionary.

Fishery

Fishery and processing:

In 2016, while other companies in seafood sector suffered a slump in production, revenue and profit due to mentioned difficulties such as: harsh weather conditions; salinity intrusion; Several quality management policies of the State has been announced and applied in a short notice and then have bad influence to the purchasing of raw materials; The

increase of technical barriers of main export market like EU and USA and ac increase in production of the alternative products such as salmon, pollock, etc… leading to the high competiveness of pangasius products for export… ABT still maintained good revenue and profit before tax at VND 422 billion and 54.1 billion respectively, dividend of 2016 is 52%. Moreover, ABT maintained good financial position with high liquidity, cash balance as of 31 December 2016 was reported at VND 405 billion. In 2017, ABT will continue concentrate on technology innovation to meet the market demand, creating competitive advantages and flexibility to market changes.

Cashew nuts:

The traditional key activities of Lafooco are cashew nut processing and added value producing. In 2016, LAF reached VND876 billions of net income and VND24.8 billion of after tax profit. Business result of 2016 remained stably thank to the increased demand for cashew and products from cashew in the world and, especially, the aggressive restructuring made by new board of management.

CAGR: 76%

0

500

1000

1500

2000

2500

3000

284 324

294449

332

341 396

1.008

1.246

72

1.356

1.325

REVENUE STRUCTURE AND GROWTH (VND BILLION)

PROFIT BEFORE TAX STRUCTURE, BY SEGMENT (VND BILLION)

2012 2013 2014 2015 2016

0

100

200

300

400

8959

-17

193

89

103

157

127

78

62

64

57

CAGR: 44%

Other income in 2016 sharply increase mainly due to The PAN Group’s liquidation transaction of 80% shares of PAN Services to Nihon Housing.


RESULT

Fish sauces:

In April 2016, PAN Food JSC bought 22.4% shares of 584 Nha Trang Fishery JSC. It marked 584 Nha Trang officially become an associated company of The PAN Group. In 2016, although, traditional fish sauce is fiercely competed by industrial one as well as fishery resources are gradually exhausted as a result of uncontrolled exploiting, 584 Nha Trang still has improved the production, maintained the brand, products quality and expanded the distribution system. Therefore, its revenue and profit before tax was reported at VND 241 billion and VND 15 billion respectively, it correspondingly growth by 23% and 33% in comparison to 2015. 584 Nha Trang has contributed 2.5% to PAN consolidated profit.

Confectionary

Confectionary Segment was conducted through: PAN Food Parent, PFM and BBC.

BBC: The BBC’s business performance in 2016 were strong while after tax profit has reached beyond the plan by 25% (at VND 81.3 billion). Although BBC is only an associate, it has contributed VND 32 billion in pre-tax profit of PAN Food. In the next period, PAN Food will support BBC to accelerate the marketing activities and distribution of products by modern trade channels in order to maximize the growth potential of the Company.

PAN Food: In 2016, PAN Food achieved a revenue of 61 billion VND, a remarkable growth and 14 times higher than the same period of 2015. In June 2016, PAN Food established Pan Food Manufacturing JSC (PFM) with chartered capital of VND 200 billion (PAN Food owns 99.95% shares of PFM). Objectives of PFM is consolidating resources, R&D activities from PAN Food’s members.

To prepare for distribution network for PMF, PAN Food concentrated on building up new food distribution channels and via them, launched several products from R&D team such as: Gummy candy Huro, Pan Food Moon cakes, Snack Funutz, Bon Ami biscuits, Ban Mai rice, etc…

2. ENVIRONMENT PROTECTION

The PAN Group plays the key role of the parent company in supporting, linking and not participating directly in the production and business, thereby its direct impact on the environment is trivial. In reality, the Group’s key activities are mainly within the office and on the business trips. However, given indirect impacts through member companies, environment is considered as one of the sectors requiring the evaluation commensurate to the actual influence of the group. Thus, the report on the environment as below will describe all the considerable impacts from The PAN Group and its member companies.

In order to manage the environmental issues without involving in the direct activities of the member companies, The PAN Group focuses on supporting the implementation and monitor of the results through the management information, reports to assess the compliance and effectiveness of activities. In the information control measures, The PAN Group’s social environment assessment mechanism is an effective and proactive solution for obtaining reliable information to ensure consistent performance with its vision, mission and strategy for sustainable development.

2.1 ENERGY

TTTThe PAN Group is aware of the need to save and effectively use energy resources, thereby also applying appropriate measures to the context and its activities.

Orientation

Economical usage: Reduce the energy consumption in the usage.

Efficient usage: Enhances performance and delivers the highest value per unit of energy use.

Raise awareness and spread of influence: Training the users, including internal (employees, member companies) and outside (contractors, suppliers, partners, communities) to make energy use more and more rational.

Raise the employees’ awareness of energy saving

The primary type of energy used by The PAN Group is electricity, due to the focus on office operations, financial control, investment, coordinating projects ... The PAN office is located in a building for rent located in the center of Hanoi, not large area and well equipped.Electricity is mainly used for lighting, air-conditioning, and for office equipment such as printers, computers and photocopiers… The monthly electricity consumption is not much but the monthly consumption of electricity is monitored and informed by the building management unit to know about the electricity usage.

The consumption of electricity for the office operation reported in 2016:Unit: KW.h

UTILITY SERVICES

In March 2016, The PAN Group liquidated 80% its shares of PAN Services to Japanese partner. PAN Services is now a PAN’s associateBusiness result of utility services for period 2012-2016 is stable. The average annually growth – rate of revenue and profit before tax was from 10% -15% respectively.

OTHER ACTIVITIES include the profit/ (loss) from financial activities, office rental and others sundry income.

Type Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Electricity for Air-conditioner

1042 921 1173 1320 1498 1592 1544 1563 1521 1495 1103 1066

Electricity for light and others

406 323 420 432 417 398 415 409 421 404 422 413


RESULT

The electricity usage is monthly monitored and reported as requested by The PAN Group, although the electricity cost is fixed and included in the monthly service costs. Significant increase of electricity consumption, if any, is timely reported to all the employees for reasonable adjustments in order to use it economically. In addition, The PAN Group applies many other measures to raise the employees’ awareness as follows:

Making visual announcements and stickers to guide the employees.

Using emails to inform requests, trainings and remind people to comply with the regulations including the usage of electricity in the office.

Communicate the group’s sustainable development strategy to raise the awareness and then change the habit and behaviors.

In order to increase its far-reaching activities to member companies and the community, thereby fostering the awareness and changing the behaviors, The PAN Group encourages and supports the application of measures for economical and efficient energy usage, including the support for finding technical solutions, promoting the introduction of new technologies into production, proposing the application of appropriate environmental management systems.

Issue the principles in the environment protection including the energy issue to be applied at the member companies.

Apply the performance results monitoring and auditing mechanism at the companies within the group.

Assist and promote the introduction of technology to the productions, making full use of the wastes to supply the energy for the factory operation: cashew shell, rice husk and straws, corn cobs.

In the environment activities at the group level, in June 2016, the top leaders of The PAN Group (including Chairman and Vice-chairman) attended the Global Green Growth Forum on the issue of water and green goods. The business trip at the invitation of the Danish Prime Minister, along with the presence of leaders from several relevant ministries in Vietnam, led by Minister of Natural Resources and Environment – Mr. Tran Hong Ha, accompanied by the representatives from Ministry of Planning and Investment, Ministry of Construction, Vietnam Chamber of Commerce and Industry 3GF was initiated by the Danish Government in 2011 in cooperation with South Korea and Mexico. Since then, China, Kenya, Qatar and Ethiopia have joined the forum.

By signing the Memorandum of Understanding (MOU) for the official cooperation on 9th November 2015 (between the Vietnamese Ministry of Natural Resources and Environment and the Danish Ministry of Environment and Food), Vietnam became the 8th core member of the Global Green Growth Forum.

Ms. Nguyen Thi Tra My - Vice Chairwoman of The PAN Group attended the Global Green Growth Forum (3GF) and Dr. Andrew Steer – the President and CEO of the World Resources Institute.

Member companies support the energy saving practice

The PAN Group makes the requirements on efficient energy usage and saving (one content in The PAN Production Principles). The application and compliance will be monitored and specifically assessed in each member company to ensure the practical efficiency. Besides, the following activities are implemented if suitable for the context of each company.

Activities Objectives

Improving and upgrading infrastructure, equipment, and applying advanced technologies to production.

Saving and efficiently using energy in production to reduce waste.

Energy management system is applied ISO 50001 and MFCA environmental management standards.

Methodically manage, monitor and improve the use of energy to gain better efficiency.

Issue and apply the PAN Production Principles, and implement the periodic compliance assessment.

Promote the application of efficiently energy saving criteria in production.

Carry out report on energy usage for the board of directors of the company.

Update the energy usage and make a suitable improvement plan.

Requirements on efficient and economical energy usage have been included in the content of BOD’s meeting and have been made a detailed action plan.

Promote efficient energy programs and targets, setting pressure on stakeholders to comply.

Reuse and utilize energy resources (fuel, heat, etc…).

Save and use energy efficiently in production and reduce waste.

ABT BBC LAF PAN FOOD ALL

SSC NSC PAN FARM PAN-SALADBOWL

PAN-SALADBOWL applying high

technology and environmentally

friendly production method which

help saving energy and water.


RESULT

2.2 WATER

Today, the protection of water resources is becoming increasingly urgent under the increasingly common pollution and depletion.The large-scale water usage may affect the lives and livelihood of the surrounding community. The PAN Group, in addition to internal awareness raising, also set the target of promoting the economical water usage at its member companies. The indirect impacts on the water-using activities such as aquaculture and cultivating will be more effective and meaningful, especially when the production scale is more and more expanded.

Orientation

Economical usage: Reduce the water consumption.

Efficient usage: Enhances efficiency and delivers the highest value per unit of water used.

Raise awareness and spread of influence: Training the users, including internal (employees, member companies) and outside (contractors, suppliers, partners, communities) to make the use of water more and more rational.

Usage of water at The PAN Group

At The PAN Group (parent company), water is primarily used for daily hygiene purposes, so the usage is not much. The management of appropriate water usage is mainly through reminding and issuing the usage guideline for its employees. In addition, step by step the Group makes the official requirements, issues guidelines including the water usage to stakeholders in order to create indirect impacts on promoting the efficient water usage.

The consumption of energy of member companies in 2016

Bibica applying MFCA method to all the production lines in its factories to continuously improve production efficiency reducing raw material input cost including energy cost.

Items Energy Number of product

Coal (kg) Gas (kg) Oil (liter) Electricity (KwH)

Gasoline (liter)

Others

ABT 0 0 FO: 236,000 7,097,400 7,37 0

Claw: 4368 tons;Pangasius: 3315 tons;Value added products: 290 tons

BBC 4,735,770 63,379 DO: 439,820 8,886,166 24,032 Husk:

161,530 kg

Biscuits: 8.556 tons;Candy: 7.106 tons;Malt: 5.641 tons

LAF 0 4920 FO: 21,187 642,048 9,029

Cashew shells:

351,269 kg

Cashew nut for export: 3.378,1 (tons);Value added products: 542,5 (ton)

NSC 29,58 0 DO: 6714 838,998 8,744 Husk: 605,097 kg

Rice 27.500 tons; Commercial rice: 1500 tons; Paddy: 1500 tons; Corn: 2500 tons; Vegetables: 150 tons

SSC 0 0 0 1,333,614 621 Husk: 488,726kg

Corn: 600 tons; Rice: 9800 tons; Beans: 655 tons; Vegetables: 6,5 tons

PAN-SALADBOWL 0 0 DO:

32,948 68,472 162 0Chrysanthemum: 360.760 pieces;Carnation: 27.855 pieces.


RESULT

Member companies support the water protection and saving

The agricultural and aquaculture productions are the two considerable water-consuming activities and may have significant impacts on the water source of the nearby regions and in the long run will have reverse impacts on the company business operations . Therefore, The PAN Group and its member companies proposed the packages of solutions and the action plans:

NSC’s water consumption increased by only 5% compared to the production scale increase by 15%, thanks to the adoption of sustainable farming practices such as SRI, “3 down, 3 up” measure, “1 must 5 reduction” measures. In particular, the economic efficiency has been constantly increasing, demonstrating the correct application of these measures in the agricultural production. The effectiveness of NSC’s water management is gradually being applied at SSC, a subsidiary with the similar operation.

ABT’s average water consumption is ensured to be below 5000m3 per ton of product as defined by the ASC standards, and this company is studying other measures to reduce the water consumption such as recirculating aquaculture system.

The newly established PAN-SALADBOWL Company has adopted a high-tech farming method, in which many technical measures aimed at reducing water used consumption such: Planting in a greenhouse, drip irrigation, moisture and light control for proper irrigation. At the same time, PAN-SALADBOWL has applied Global GAP standards for comprehensive environmental management in line with the international practices, including the water usage.

Regarding BBC and LAF, the production process is the trivial water usage, thus the water usage management focuses on raising the awareness and efficient usage of domestic water.

Agricultural activities and food production generate a significant amount of waste, including solid waste, waste water and emissions into the environment. Although most of the waste is not in the high toxicity category, waste management is still a critical issue in order to minimize and make the use of wastes, and to protect the environment. The PAN Group has applied the regulations in the IFC Performance Standards, the Vietnamese legal regulations on waste management, which are applied to all the member companies in parallel with the guidance and monitoring activities.

Orientation:

Waste limitation: Efforts to reduce waste discharged into the environment can be made through a number of possible measures such as adoption of new technologies, investment in the equipment and infrastructure, optimization of production process, selection of environmentally friendly products and production process…

Recycle: Use the waste as a raw material for other process, thereby creating the products that can be used for other purposes.

Re-use: Find the ways to lengthen the time of usage and re-use the waste in production.

Waste treatment: Make an impact on the source of wastes to reduce the negative impacts on the surrounding environment, such as the construction of treatment system, the collection of toxic substances before being discharged into the environment, the application of management measures to segregate the wastes.

Raise the internal awareness and increase the influence on waste reduction

Regularly remind the employees to put the garbage in the designated area, utilize - recycle the materials that can be re-used to reduce the waste (one-sided paper, nylon packaging, no use of the stationery in a wasteful way ...).

Establish the criteria and principles of environmental protection including the regulation on waste management, step by step apply them to the member companies.

Carry out the assessment on the implementation and compliance with the regulations and standards in member companies.

2.3 WASTE

Activities Goals

Innovate, upgrade the production equipment and technology (high density fish farming system, water recirculation and drip irrigation).

Economical and efficient usage of water.

Apply the international management system and standards to the production: ASC, MSC, Global GAP…

Manage professionally, monitor and improve the use of water in line with the international standards.

Disseminate, train and guide The PAN Group’s production standards.

Promote the application of the criteria for using and protecting the water source.

Report on the water consumption in the company’s periodical reports.

Update the use of water and make relevant innovation plan.

Input the requirements on economical water usage and protection into the company’s annual socio- environmental program plans/ work plans reviewed and approved by the company’s BOM.

Promote the effective implementation of the water saving program.

Re-use and make full use of water if possible (water circulation, waste water treatment and collection for re-use…).

Reduce the water consumption.

Exploit the source of water under the planning and permit of the authority.

Minimize the adverse impacts on the surrounding community.

ABT BBC LAF PAN FOOD All

SSC NSC PAN FARM PAN-SALADBOWL

ABT BBC LAF NSC SSCPAN-

SALADBOWL

Total used water in 2016

71.296 m3 (for processing);

6.022.500 m3

(for aquaculture).

140.102 m3 7.291 m3 26.520.000 m3

9.011.000 m3

18.000 m3


RESULT

Member companies support the clean production and waste reduction program

The most prominent environmental protection activity in production is the waste management and treatment. At food production companies, the waste management is aimed at creating a safe production environment that provides clean products to the market. Therefore, waste management is implemented in positive manner in all the companies.

In 2016, Lafooco has implemented the technological and process improvement measures to recover and recycle wastes in the production process, including hard cashew shell, cashew nut shell, cashew dust, used cashew frying oil. The total saved value is VND 5,720,360,866. The company has also completed and put into operation a new production process that can treat entire source of waste - a long-standing complex issue which are concerned by many related parties, including:

The BBC has also taken measures to reduce waste in particular and to protect the environment in general. The company has adopted the MFCA method for many years. In 2016, the MFCA index decreased from 1.68% to 1.55%, the total saved value was 558,000,000 VND. The Eastern Bibica factory also invested two wastewater treatment systems of 130m3 / day and 30m3 / day with a total value of VND 3.438 billion. The company also won the Certificate of Merit and Commendation Cup as one of the enterprises to make the achievements of environmental protection in the period 2011 - 2016 awarded by Binh Duong People’s Committee in the province’s green book program.

Regarding NSC, the wastes in the production process are mainly by-products, defected products in the package process (corn cobs, rice husks) partly converted into fuel for the kiln which is later burned to ashes to compost manure, most of which are purchased by the parties for fertilizer and animal food, so that they are not discharged into the environment. These measures help to overcome the situation of burning agricultural waste after the harvest season

Activities Goals

Build collection and sorting systems for common waste and harmful waste for proper treatment.

Sort, collect the preserve waste safely, avoiding the environmental and product pollution.

Sign the contract on waste collection with a qualified party, record the owner of waste source (if necessary), record the waste transportation history.

Comply with the state regulation on waste collection.

Make regulations on sorting, collecting and disposing the waste.

Guide, raise the employees’ awareness of waste management.

Promulgate the guidelines, improve the processes and methods to recycle, utilize, minimize waste to be discharged to the environment.

Optimize the production processes, utilize the resources from waste.

Build, and maintain the system of exhaust gas treatment, dust filter to be suitable for the plant operation.

Protect the surrounding air environment, comply with Vietnam’s standards on emissions.

Build, and maintain a wastewater treatment system which is suitable for the operation of the plant.

Protect the soil environment, water resources, comply with Vietnam standards on waste water.

Review the level of compliance in implementing the regulations and the achieved results. Deploy the monitoring activities and audit mechanism by The PAN Group at its member companies.

Identify operational risks, continually improve the waste management at the member companies.

Waste and Effluents 2016

ABT BBC LAF NSC SSCPAN-

SALADBOWL

Waste 405,7 tons 491,89 tons 18,09 tons - - 1500 tons

Effluents 4800 m3/ year(from processing)

1600 m3/ day (from aquaculture)

34290 m3 5915 m3 - 4000 m3 (mainly from

Tan Hiep farm)

3693 m3/day

* Note: Some information on waste and effluents has not been tracked for many reasons. For example: NSC and SSC’s agricultural waste has been 100% used for sales, composted into fertilizers or burned, which reduces the burden of waste disposal and benefits the company. The amount of domestic waste remains negligible.

Waste management (cashew shell) Effuents management (from production process)

• Completing safe storage and preservation measures.• Developing a safe, non-hazardous burning process

for the environment and health.

• Using steaming technique instead of oil roasting technique.

• Completing the waste water treatment system.

creating smoke and dust that cause environmental pollution. In the production, the company also focuses on researching the varieties of trees which are drought-, flood-, saline-tolerant, and pest-resistant to save land resources, restrict the use of pesticides, fertilizers. Research has always been a strength of the company in many years, proven by many high quality varieties and favored by farmers. Especially, in 2016, the company implemented a number of hi-tech agricultural projects (in Dong Van, Ha Nam and Khoai Chau, Hung Yen) for production organization towards the clean, organic and chemical fertilizers – and insecticide-free agriculture to ensure sustainable agricultural development, environmental and public health protection. The cost of investment in environmental protection activities such as the installation of dust collectors for the plant, solar energy systems, packaging and material changes, or technological upgrades in 2016 increased to VND 17 billion. SSC (a subsidiary of NSC) also applies the similar measures, especially focusing on treating waste sources of defected products, organic by-products and ash as fertilizer for soil.


RESULT

ABT farms arranged accumulating ponds, treating sludge and decontaminating the water before being discharged into the environment.

PAN-SALADBOWL company applies hi-tech agricultural cultivation to minimize the use of pesticides and chemical fertilizers, reducing the risk of environmental pollution.

In 2016, PAN-SALADBOWL agreed to apply the Global GAP standards for all of its flowers and vegetable farms in Lam Dong. The goal is to implement sustainable farming practices that are relevant to the current context. When deployed, one of the issues that will be significantly improved is the discharge into the environment. PAN-SALADBOWL expects to complete the operation of compost fertilizer production in the second half of 2017 to meet the current production demand. Global GAP is also encouragingly

Sections Requirements

Water usage Does not exceed 5000m3/ ton of fish.

Pollution The total phosphorus in the food released to the environment is not over 7,2kg/ ton of fish, the protein does not exceed 27,5kg/ ton of fish, dissolved oxygen in waste water does not exceed 3mg/liter.

Genetics Do not use wildly caught breed sources, hybrid or genetically modified.

Feed managementFishes used as feed are not listed in the threatened list (IUCN) and extinct list (CITES). Fish powder and fish oil used as feed must be ISEAL certified. FCR does not exceed 1,68 in the culture cycle.

Health and chemicals management Mortality rate must not exceed 20%, must use chemicals in the list, the average growth rate is at least 3,85g/day/fish, and maximum density is 38 kg/m2.

In aquaculture activities, the protection of water resources is of primary concern. Pollution often arises from the leftovers and waste of fish farming as well as from the sources of disease in the farming environment. ABT’s fish farming has been well controlled and continues to maintain ASC, MSC, Global GAP certificates. In order to achieve these certificates, ABT has fulfilled the following strict requirements:

implemented in associated farmer households, at minimum requirement that is compliance with the law. Tan Tien Cooperative, one of PAN-SALADBOWL’s major vegetable cooperative partners, is also accredited with the company’s Global GAP certification. This is a leading large and prestigious farm in Da Lat, which is supplying vegetables for famous brands such as KFC, Lotteria ... The cost of consulting and certification in this project was covered by The PAN Group.


RESULT

Parameters ABT BBC LAF PAN-SALADBOWL

NSC SSC QCVN 11:2008/

BTNMT

QCVN 40:2011/

BTNMT

Input waste water

standards of Lợi Bình

Nhơn industrial

zone

Applying Standards

QCVN 11:2008/

BTNMT (Standard of seafood

processing industry

waste water)

QCVN 40:2011/

BTNMT(Standard

of industry

waste water)

Input waste water

standards of Loi

Binh Nhon industrial

zone

QCVN 40:2011/

BTNMT

QCVN 40:2011/

BTNMT

QCVN 40:2011/

BTNMT

pH 7,63 6,29 7,04 7,2 6,8 6,8 6 - 9 6 - 9 5-9

BOD5 (mg/l) 18 12,5 55,4 29 22 23 30 30 100

COD (mg/l) 34 20,8 147 55 110 107 50 75 400

Suspended solid (mg/l) 7 6,0 57,5 25 20 23 50 50 200

Total N (mg/l) 16 1,35 7,34 12,3 6,7 18,4 30 20 60

Total P (mg/l) 1,5 0,76 2,06 1,8 3,2 3,1 - 4 8

Fat and oil (mg/l) 1,2 3,23 0,6 0 0,5 10 5 30

Grease (mg/l) - - 1,45 - 0 0,5 - 5 5

Chlorine residual (mg/l)

KPH KPH KPH KPH KPH KPH 1 1 2

Ammoniu (mg/l) 0,02 0,96 3,18 3,4 0.01 0,07 10 5 10

Coliform (MNP/100ml)

2000 2400 4800 1900 1700 2,1 x 103 3.000 3.000 -

Temperature (oC) - 28 31 25 28 30 - 40 45

Parameters ABT BBC LAF NSC QCVN 19:2009/BTNMT

(Inorganic substances in

industrial exhaust gas)

QCVN 19:2009/BTNMT

(Inorganic substances in industrial exhaust gas)

Dust (mg/Nm3)

NOx (mg/Nm3)

SO2 (mg/Nm3)

CO (mg/Nm3)

Phenol (mg/Nm3)

Temperature

52,6

273

124

680

-

92,4

58,7

1

<1

12

-

-

71,8

229,3

131

401,28

7,99

-

6,4

<10

<1

200

KPH

42

200

850

500

1,000

-

-

-

-

-

-

19

-

Boiler’s exhaust gas emission monitoring results:

ABT: Sample of exhaust gas emitted from the boiler chimney at Tan Thach factory, Chau Thanh District in July/2016.

BBC: Sample of exhaust gas from the boiler chimney at Bibica Bien Hoa Factory in December/2016.

LAF: Sample of exhaust gas from the boiler’s chimney in Loi Binh Nhon industrial cluster, taken in December/2016. The exhaust gas was treated through the filter equipment, smoke filter pond, mist spray system before being emitted into the environment.

NSC: Sample of exhaust gas from the boiler’s chimney at Ha Nam plant in November/2016.

PAN-SALADBOWL and SSC: There are no exhaust gas chimney system.

Testing results on the surrounding area:

ABT: Sample of the air behind the production area- End of wind direction at Tan Thach factory, Chau Thanh District, Ben Tre. (Taken in July/2016).

BBC: Same of the air at the end of wind direction of Choco-pie factory (Taken in December/2016), Eastern Bibica factory.

LAF: Sample of the air in the area near the production area of the factory in Loi Binh Nhon industrial cluster (Taken in December/2016).

NSC: Sample of the air at the end of wind direction of Ha Nam factory (taken in November/2016).

PAN-SALADBOWL: Sample of the air taken at the end of the wind direction at Lam Ha Farm, Lam Dong.

SSC: Sample of the air at the main gate (taken on 25/08/2016) at Cu Chi Farm, HCM City.

Waste water quality monitoring results:

ABT: Sample of waste water collected at the factory in Tan Thach Commune, Chau Thanh District, Ben Tre in July/2016.

BBC: Sample of waste water collected at Bibica Bien Hoa Factory, after the septic tank in December/2016.

LAF: Sample of waste water collected at the production factory in Loi Binh Nhon industrial cluster in December/2016.

NSC: Sample of waste water collected at the seed processing factory in Ha Nam in November/2016.

PAN-SALADBOWL: Waste water sample taken at the outlet of domestic waste water system at Lam Ha farm in 12/2016.

SSC: Waste water sample collected at Tan Hiep farm, Phu Giao, Binh Duong in December 2016


RESULT

Parameters ABT BBC LAF PAN -SALABOWL

NSC SSC QCVN 05:2013/BTNMT

(Surrounding air quality)

QCVN 26:2010/BTNMT

(Surrounding noise)

Dust (mg/m3)

SO2 (mg/m3)

NO2 (mg/m3)

Pb (mg/m3)

CO (μg/m3)

Temperature (oC)

Noise (dBA)

0,05

0,04

0,04

KPH

3790

27

62,3

0,094

0,020

< 0,028

KPH

2740

29,7

51,2

0,852

0,112

0,123

KPH

5,580

32

66

0,159

0,051

0,060

KPH

< 5000

28

32

54

13

20

KPH

10000

33

60

33

10

21

KPH

120

10

38

300

350

200

1,5

30.000

-

-

-

-

-

-

-

-

70

3. SOCIAL CONTRIBUTION

Similar to the aspect of environment, The PAN Group’s social impacts are shown in the operation of member companies. The content of this report on the social aspect below will mainly mention the business operation of the member companies when considering the significant social impacts.

In order to manage the environmental issues, The PAN Group undertakes not to participate in the direct activities of the member companies but to support the implementation and monitor of the results through the management information, reports to assess the compliance and effectiveness of activities. In the information control measures, The PAN Group’s social environment assessment mechanism is an effective and proactive solution for obtaining reliable information to ensure consistent performance with its vision, mission and strategy for sustainable development.

3.1 LABOR PRACTICES AND DECENT WORK

The PAN Group understands that the Company’s activities not only bring about shareholder’s values and benefits, but also create the material and spiritual values to direct and indirect employees in the supply chain. Thus, in all the decisions, we are clearly aware of the responsibilities and implications for the issues of labor and employment, especially in the context of labor-intensive agriculture and food sectors including female and manual workers. The PAN Group undertakes engaging the company benefits to employees as an important social obligation in its business strategy. The Group also consider the respect and fair treatment for its employees as the basis of long-term cooperation, promoting the employees’ ability and devotion, thereby generating the benefits for all the related parties.

Orientation

The Football team of The PAN Group - PAN Food participated in the SSI Open Football Tournament in June/2016.

Create jobs and livehoods

Create a sustainable income source for workers, local people from company’s activities.

Improve working capability and create value

Workers are trained, guided and provided with opportunities to develop and improve their capability, work quality, and contribution to obtain better results and position as well as maximize their working capacity, thereby create more benefits and value for themselve and for the company.

Expand to the supply chain

Supply chain is an indispensable component of the production and business activities. It directly affects the performance of the company, its reputation and trade mark. The PAN Group and its subsidiaries, therefore, develop Common Codes of Conduct extended to the whole supply chain to ensure good labour and employment pratices consistently applied.


RESULT

The PAN Group’s labor structure:

THE PAN GROUP’S LABOR STRUCTURE

LABOR IN MEMBER COMPANIES

Structure Quantity

Total 26

Age Under 25 5

25-30 7

30-40 7

Over 40 7

Gender Male 15

Female 11

Education level Master and Doctor 10

Bachelor 14

Vocational school 2

High school 0

Newcomer 18

Resigned staff in reporting period 6

Parameters ABT BBC LAF PAN Food

NSC (Consolidated data

in subsidiaries, including SSC)

PAN-SALADBOWL

Total 858 1737 339 125 720 58

Gender ratio 405/453 915/822 105/234 92/33 216/504 20/38

Age

Under 2025 – 3030 – 40Over 40

120455211

62

300401646390

316

126194

234449

9

144324216

36

241611

6

Education Doctor & masterBachelorVocational schoolHigh school

17756

724

2250629856

031

1307

2602241

43482

72123

014

440

Newcomers in reporting period 185 121 5 219 59 4

Resigned staff in reporting period 284 142 194 100 14 3

Company

Occupational health and safety regulations

By Vietnamese Law

By company regulation Voluntary standards and customer standards.

ABT X X Safety requirements of the ASC, MSC, Global GAP standards, IFC Performance Standards.

BBC X X IFC Performance Standards.

LAF X X SEDEX standard, Costco social environment standards, IFC Performance Standards.

PAN-SALADBOWL

X X Safety requirements of the Global GAP standards, IFC Performance Standards.

NSC X X Regulations in Integrated Pest Management (IPM), Global GAP standards, IFC Performance Standards.

SSC X X Regulations in Integrated Pest Management (IPM), Global GAP standards, IFC Performance Standards.

It is obvious that the employees’ long-term commitment is one issue faced by many companies and requires long-term solution, not only for The PAN Group but for all companies in Vietnam. Given the current economic context, the culture and academic background, the personnel shuffle still goes on for a period of time. Recognizing these difficulties, The PAN Group and its member companies have been focusing on business operation improvement to increase the employees’ income and make the commitment on the remuneration, insurance and welfare. This has been effective in retaining senior employees at the Group. By adopting the international socio-environmental standards and commitment to the corporate social responsibilities, the companies under The PAN Group have demonstrated its advantages in attracting the labor force and their long-term commitment.

Occupational health and safety

In the area of occupational health and safety - the top priority for every company, many measures are combined to ensure the optimal health and safety for

the employees. Regular assessment and monitoring are an important part to help the companies to continually complete and upgrade the occupational health and safety condition. The companies under the Group are applying the international standards and internal regulations on safety. Occupational health and safety assurance is defined in the following activities:

Upgrade the infrastructure.

Safety protection equipment and tools.

Deliver the training, raise the awareness and safe working skills.

Expand the control of occupational health and safety of the supply chain.

Establish the occupational health and safety management system.

The standards on the corporate social responsibility applied by The PAN Group:

In 2016, The PAN Group has recruited a number of positions to serve its expanding operations. The PAN Group has also appointed several position from PAN parent to work at some projects and member companies. This is the reason for the fluctuation in the number of employees of the Group.


RESULT

Each company has established a committee on labor safety in accordance with the law. This committee is responsible for assessing the company’s safety and supervising the correction and compliance with the occupational safety regulation.

The network of members and organizers of the Committee on Labor Safety and Fire Prevention & Protection at The PAN Group and its member companies.

Other safety information of the Group and its member companies

Training

The PAN Group conducts the training aimed at the two key purposes:

Training to raise the awareness and skills for employees.

The training programs are conducted in a specialized manner, tailored for each specific case and based on the work demand. In 2016, there are training programs with the following contents:

Training course on Project Management for senior staff with the US criteria delivered by KPS.

Training on Brand Name Recognition for all the company’s employees.

Training program on Farm Management Trainees 2016 invested by The PAN Group, combined with the specialized training in Japan to provide high-level human resources for the Group in the future.

Training course on Integration: Trans-Pacific Partnership Agreement (TPP) and new Free Trade Agreements.

Intensive Training Program on international sustainable development standards: IFC’s Socio-Environmental Standards, Global GAP standards.

In particular, the effectively and continuously applied form of training at The PAN Group is on-job training (OJT). The leaders, managers, team leaders constantly work and guide the subordinates to improve the work knowledge and skills. This is a critical form of training, which directly brings about the efficiency in the daily work, improving the staff’s capacity without costs. Over the past years, The PAN Group has promoted a number of employees to senior manager positions thanks to the capacity-enhancing training, enabling them to undertake the key responsibilities.

Training to support the member companies toward the Group’s orientation.

In 2016, The PAN Group held the training on the socio-environmental management program in all the member companies. The instructor is the Socio-Environmental specialist from International Financial Corporation (IFC), Mr. Louis Philippe Mousseau. All the personnel in charge of socio-environmental issues at member companies attended. Especially, there was presence of Mr. Nguyen Van Khai - Acting CEO of The PAN Group and Mr. Patrik Ho – CEO of PAN Food.

PROCESS OF IDENTIFYING AND CONTROLLING SAFETY RISKS AT THE PAN GROUP

ENVIRONMENT-SOCIETY AND SUSTAINABILITY SUB-COMMITTEE - THE PAN GROUP

Aquatex Ben Tre

60 members 132 members 10 members 32 members 14 members 20 members

Bibica Lafooco Vinaseed(NSC)

PAN-SALADBOWL

Southern Seed (SSC)

Identify appropriate precautions

Implement and monitor results

Collect and evaluate safety data

Update risk

0188

Number of fatal accidents ( severe injuries, death)

Number of accidents causing injury and requiring off working days to have medical treatment (LTIs)

Total off working days cause of accident

Average off working days/ accident (SR)

Labor unsafety risk assessment

SAFETYFIRST


RESULT

Louis Philippe Mousseau, IFC’s socio-environment specialist, delivers the training on the IFC Performance Standards to The PAN Group.

For the member companies, the training activities are developed based on the work demand and the actual context of the company. The PAN Group concentrates on assessing the member companies’ training activities based on the actual conditions and the levels of satisfying the requirements of the related parties, ensuring the following criteria:

Comply with the training requirements by law: Training to use, operate the equipment which has the strict requirement on safety (boiler, forklift truck); Training and practice on Fire Prevention and Protection; Training on Occupational Hygiene and Safety; Training on Food Safety knowledge (for food production enterprises); Training on Sustainable Farming such as SRI, cultivation “3 down 3 up”, “1 must 5 reduction”, training on consolidated disease management.

Provide the knowledge which the employees need to complete the work: On-the-job training, Technical training for the employees, training for the contractors, and cooperative production farmers…

Provide the information on the employees’ individual interests, information on health and safety in the employment process: Information and communication

Employee assessment

At The PAN Group, the employee assessment is conducted at the beginning of each year based on the criteria set by the human resource department in the two groups:

Professional work performance.

Soft skills and work attitude.

Performance assessment results are the basis to adjust the salary, bonus and promotion opportunities.

The companies’ Board of Managers participated the training program delivered by IFC’s Socio-Environmental Specialist. The training program was attended by the representatives from all the member companies.

Annually, the Group applies the calculation of year-end bonus based on the level of work completion (calculated based on KPI). Because the number of employees at the parent company is not big, which is convenient for the Board of Managers to pay attention, have close and specific assessment on each employee through the daily work. The timely and accurate information about the employees also help the Board of Managers provide the training and support to the employee having difficulties at work and work out the promotion plan for the capable and well performed individuals.

964369

31211

Number of training courses in 2016

Number of turns of training

Total training hours

on the laborers’ rights, the company’s internal labor regulations and welfare; Training on health and safety in the production conditions.

Enhance the management skills and capacity, facilitating the development conditions for the employees: Leadership and management skills; Job Monitoring knowledge and skills; Advanced knowledge and skills.

Raise the employees’ and the community’s awareness of the environment and society: Environment protection, social responsibilities, community contribution; Training on applying the international socio-environmental standards such as food safety standards, Global GAP, ASC, MSC standards, and IPM training.With the above requirements, the Group’s training activities are assessed through an annual socio-environmental audit. The audit result is the basis for The PAN Group to support the development of the training plan for the following year.

Summary of information on the training of The PAN Group and its member companies:


RESULT

During the two foundational development years of 2015 and 2016, The PAN Group not only recruited but also promoted and appointed many personnel to senior and critical positions in the Group or its member companies, such as CEO, COO, CFO and CA. The proper assessment on the employees’ capacity and promotion opportunities for staff helped to motivate employees to work, to enhance the remuneration, thereby strengthening the employees’ long-term commitment, attracting more high-quality personnel in the next stage.

In some companies, the average income decreased against 2015 due to the increase in scale, the number of employees increased (PAN Food, NSC). However, there were some cases in which the company had difficulties in production and business, resulting in low revenues/ profits (For example: ABT, in 2016 encountered many natural disasters and climate changes which had negative impacts on the production process).

Company Average wage(VND)

Regional minimum wage in 2016

(VND)

Wage increase rate (2016 vs 2015)

ABT 5,309,000 2,700,000 (Region 3) -3%

BBC 9,900,000 3,500,000 (Region 1) 20%

LAF 5,028,000 3,100,000 (Region 2) 13%

NSC 12,000,000 3,500,000 (Region 1) -18%

SSC 7,356,000 3,500,000 (Region 1) 13%

PAN Food 16,098,000 3,500,000 (Region 1) -11%

PAN-SALADBOWL 6,500,000 2,700,000 (Region 3) Newly established

The PAN Group’s headquarter

19,150,000 3,500,000 (Region 1) 4,9%

3.2 HUMAN RIGHTS

The PAN Group’s interests and goals in the human rights issues:

Ensuring the human rights is considered by The PAN Group as the prerequisite and the most fundamental condition in every business and production activity. This is clearly demonstrated in The PAN Group’s vision, mission and fundamental philosophy towards the delivery of benefits to the laborers and the farmers in Vietnam. The PAN Group is aimed at meeting the stringent requirements of human rights at a higher level compared with the legal requirements and put the issue of human rights in a more comprehensive and professional management system.

Complicance with the requirements of stakeholders

Meet the human rights requirements of State agencies, investors and customers.

Put people in the center position to consider decisions

In all decisions of the Group, the people is fundamental factor to make a solution compatible with the objective of ensuring the human rights, thereby maintaining the sustainability in production and business and attracting high quality human resources.

Expand to supply chain

Supply chain is an indispensable component of the production and business activities. It directly affects the performance of the company and its reputation and trade mark. Therefore, The PAN Group and its subsidiaries developed Common Codes of Conduct extended to the whole supply chain to ensure the human rights.

The PAN Group has promoted and appoint many personnel of the Group into senior management positions.

Non compulsory

labor

Non child labor

Indigenous rights

Non discrimination

Freedom of Association

and Collective Bargaining

HUMANRIGHTS

Orientation


RESULT

At The PAN Group:

In 2016, The PAN Group completed the establishment of the trade union and registered collective Labor agreement for its branch in Hanoi with better welfare benefits than required by Law to be provided to its employees. Although the number of employees in the branch is not big, the Group still established the trade union to demonstrate a serious desire to improve the material and spiritual life for the employees. In 2016, the Hanoi Branch’s Trade Union was honored to be recognized by Dong Da District’s Labor Union Federation as a strong trade union in 2016.

Ensure the human rights at its member companies:

Basic benefits are guaranteed at all the member companies of The PAN Group as the following requirements:

Sign labor contract and pay social and health insurance for official employees.

Pay the salary in accordance with the labor contract, and maintain the bonuses and allowance besides the salary to motivate the laborers.

Ensure the health care, periodical health checks and policies for female employees, other subsidies in case of accident or illness.

Ensure the welfare in case of sickness, maternity for the employees and their relatives.

The working time, overtime and rest time in compliance with the law.

Ensure labor safety: Provide labor protective equipment, safe working conditions.

Ensure the social welfare for the employees such as collective birthday organization, annual summer holiday, presents for the festival day, birthday, wedding or visits to funerals.

Although the benefits are not so outstanding or of great value but this is really a remarkable efforts of the companies to ensure the employees’ interests, thereby

encouraging more commitment and devotion. Besides, some member companies, based on their own conditions, introduced better policies, such as NSC’s health care policy for the employees and their family members, or ABT set up a website for policy propaganda and promoting the collective activities in the company, such as the activities of the Party Committee, trade union, veteran association, Youth Union… at http://dang-doanthe-abt.vn.

Grievance mechanism:

The PAN Group and its member companies continued to apply the grievance mechanism at all the companies, especially aimed at approaching the direct employees and the surrounding community. They are the people whose living conditions are not so high, having limited information and are vulnerable to the social life changes. For labor-intensive production which has considerable impact on the surrounding environment, this is an important requirement for the execution of the corporate social responsibility. The PAN Group’s dialogue mechanism was developed and applied under the requirements and supervision by some organizations:

International Financial Corporation (IFC).

Global GAP, ASC, MSC, SEDEX standards…

International Clients: Retailer Chains of Cotsco, Congalsa.

For all the member companies, the dialogue and the community’s grievance are mainly chaired by the third party who directly supervises, such as the authority at the district, commune or industrial zone management. In the PAN Production Principles, the development and application of grievance mechanisms at the member companies is a critical issue that must be implemented and monitored periodically. For the companies whose activities have direct impacts on the surrounding communities, such as ABT, LAF, NSC, SSC, PAN-SALADBOWL, the dialogue and consultancy with the community were conducted through the face-to-face discussion, ensuring the highest effectiveness of the dialogue mechanism. At the meetings, there was the participation of the representatives from the local authorities.

3

0

1

0

0

0

100%

Number of grievances about human rights and labor practices

Number of grievances about human rights and labor practices

Number of violations to child labor

Number of violations to compulsory labor

Discrimination (by sex, religion, ethnicity)

The percentage of companies apply and is monitored Grievance Mechanism to the community

Total fines due to violations of social and human rights issues


RESULT

3.3 CORPORATE SOCIAL RESPONSIBILITIES

The PAN Group’s and member companies’ social impacts on the community are considered to be significant based on the typical land-spreading, labor-intensive and environment-interactive activities. Our priority is to comply with the laws of Vietnam. In addition, the Group regards the social impact control as an obviously responsibility, and thereby adopting the appropriate control measures to ensure. The Group also encourages and supports its member companies to apply international social responsibility standards (BSCI, SEDEX, SA8000 ...) to manage social issues in a professional and comprehensive manner.

Orientation

Comprehensively compliance with Vietnamese law and regulations of labor and employment.

The requirements to perform social responsibility is set in association with production and business activities to build up coporation culture and gain community’s support.

Extend the scope of supervison of the compliance with the law and the social impact on all member companies and their supply chains.

Pro-community orientation by The PAN Group:

Develop a grievance handling mechanism for the community and require all the member companies to apply the same as stipulated in the PAN Production Principles.

In 2016, The PAN Group has focused on supporting the agricultural production whose scale is expanding rapidly. Agricultural production is oriented to bring about the benefits for farmers, be responsible for the community and provide reliable products to customers. Besides, the Group also conducted the business meetings, discussions on the requirements of social responsibility and proposed to gradually apply the social responsibility standards to the business and production activities (Global GAP, ASC, MSC, Fair Trade, SEDEX, SA8000…). It is expected that by the end of 2018, all the companies within the Group will apply one of these standards. This is also one of the goals in the Group’s sustainable development strategy.

Carry out the socio-environmental assessment at the member companies to evaluate the control of negative impacts and contribution to the community. The assessment program has set up the initial mechanism for supervising, promoting and enhancing the performance at all the member companies.

The social and community activities:

Delivered gifts at the National Institute of Hematology and Blood Transfusion on the occasion of mid-autumn festival on 15/09/2016. The program is coordinated by PAN Food Joint Stock company and Saigon Securities Incorporation.

The program on Relief for people in the Central, Phu Nhieu village (Minh Hoa district) and Uyen Phong village (Tuyen Hoa District) – Quang Binh province after the natural disasters of floods and storms, conducted on 22, 23/10/2016. The program was coordinated by Saigon Securities Incorporation (SSI) and Biospring company. The goods used as emergency relief were the tools, food and medicine necessary for the people’s life.

The program on educating, raising the awareness of food safety and providing clean food to 5 primary schools in the suburbs of Hanoi: Duc Giang Primary school, Ai Mo B school, Viet Hung school (in Long Bien District) and Co Dong, Son Dong primary schools (in Son Tay District). The program was conducted in November, December/ 2016 and January/ 2017. Food safety was selected to be the key theme throughout The PAN Group’s plan, including the community programs.

Activities at member companies and the supply chainMember companies in the Group continued to maintain the community and charity activities annually. These were not just event-based relief programs, but have become an integral part of the companies’ annual plans aimed at sharing the material and spiritual values in a sincere manner, building the corporate culture and in line with the international ethical standards.

NSC: Implement the activities in order to realize the goals of Vinaseed Charity Fund which was established in 2015 with the value of 10 billion and continuously increased thanks to the contribution by the employees, in 2016, the following activities were carried out:

Organized Mid-Autumn Festival (Mid-Autumn Festival Night – love connection) for the poor children in Ngoc Lam, Thanh Chuong, Nghe An and the children with disabilities in Ha Noi.

Organized the program “Present Tet gifts, bring joyful spring” in Yen Bai, Thanh Hoa, Nghe An, Ha Tinh, Quang Nam with 700 gift sets to the families in difficult circumstances, the value of gift was VND 500.000 each.

The company’s Youth Union in collaboration with Youth Unions of Quang Linh, Quang Xuong, Thanh Hoa and Youth Union in Minh Quang, Ba Vi, Ha Noi organized a movement on environmental sanitation

and cleaning for street and fields. These were practical activities that were regularly carried out by Youth Union of the company to demonstrate the corporate responsibility in production and business, as well as maintain good relationship and attachment with the local community.

In September, 2016 scholarships were awarded to 10 poor but excellent students in Ha Nam (the program started in 2015), awarding 19 Vinaseed talent fostering scholarships to excellent students in Thanh Chuong, Nghe An, with the subsidy value of VND 6 million/ student/year until they graduate from the university and they will be offered to work for the company.

In October, 2016, Vinaseed Charity Fund spent VND 200 million to provide chairs in hospitals in Thanh Hoa, provided 20 tons of rice valued at VND 280 million to the people in flood-affected areas in Ha Tinh.

Dinh Dau Tet Holiday: the program named “Loving Tet Holiday”: 560 gift set with the value of VND 500,000 each.

- In Thanh Hoa: 250 sets for Thach Long and Cong Chinh communes.- In Dien Bien: 200 sets for Muong Phang and Pa Khoang communes.- In Ha Noi: 110 sets for the poor communes in Hanoi, such as Minh Quang, Van Hoa and Phuong Lien Ward.


RESULT

Besides the direct charity activities, NSC has kicked off 4 big projects in 2016, not only for profits but also for the sustainability of the agricultural sector in general:

The research project on selecting and developing high-yield and high quality rice varieties suitable for the northern provinces and southern central coastal region.

Project on Developing the model for increasing the farmers’ income through the linkage of production, processing and consumption of F1 rice seeds, high quality rice for local consumption and concentrated export, building new rural areas in 4 communes: Dinh Hoa (Yen Dinh, Thanh Hoa); Yen Khang (Y Yen, Nam Dinh); Nguyen Xa (Vu Thu, Thai Binh); Quang Hung (Tu Ky, Hai Duong).

The topic on “Assessing the current status, technological capacity and demand for new technology in rice seeds selection and rice production in Vietnam” was ranked one of the 10 outstanding scientific and technological events in Vietnam in 2016.

The Ha Nam Hi-Tech Agricultural Production Zone Construction Project covers the area of 21.9 ha. The goal is to become a model for high agricultural development in the northern area, contributing to the restructuring of Vietnam’s agriculture.

In 2016, NCS won the reward known as “Enterprise with good practice of social security and community development responsibilities”.

NSC’s high-tech agriculture projects promote the increasing in value and sustainable development of Vietnam agriculture segment.

Southern Seed Joint Stock Company presented gifts to poor children in Tra Vinh province.

ABT: 2016 was a tough year for ABT in many aspects, however, with the policy of responsible production and business, the company did not ignore the social and community issues. The company actively participated in the community and charity activities with the total sponsor value in this year at VND 405,548,300, up 15% compared with 2015. The company continued to take part in the “Charitable Bridge” program host by Ben Tre Television. This is a program which the company has been involved in for many years with the practical assistance to support the cases in difficult circumstances.

Mr. Nguyen Dinh Huan (in blue shirt, standing on the right side), director of ABT factory handed over 2 Trade Union houses and 2 clean water tanks to Mrs. Nguyen Thi Minh Giao and Ms. Pham Thi Sang who are two members of the trade union in the company. The house was built thanks to the contribution by the company, the provincial labor federation and the family.


RESULT

3.4. PRODUCT LIABILITY

With the mission of “Delivering high-quality, prestigious products in the complete value chain”, The PAN Group’s and its member companies’ products were produced in the modern and well-managed systems, therefore, these products can meet the market’s expectations.

Orientation

Lafooco company gradually cooperated with the suppliers, customers and farmers to set up a complete cashew supply chain: Target Agriculture, Olam... The company oriented to increase the production with the value-added and high-quality products to provide them to the markets and increase the product values and profits.

PAN-SALADBOWL’s chrysanthemum and carnation products were applied with high technology with the assistance from experienced Japanese specialists.

Huro- the nutritious candies from PAN Food Joint Stock Company is a product which was exclusively technologically transferred, using the HU58 beneficial bacterium, studied by Professor Simon Cutting, Royal Holloway University, London, UK. The product is suitable for many types of customers, bringing many benefits to consumers’ health and digestive system.

Bibica Company continuously upgraded and renovated its production line to deliver high-quality products, ensuring the food safety. The renovation and improvement plans are proposed and approved by the CEO every year to ensure the progress of quality improvement.

Provide nutritious products to improve the consumers’ health

Absolutely guarantee the food safety requirements

Apply high technology in production to produce high quality products

Provide full and transparent information of products for the customers to evaluate and choose

In 2016, The PAN Group and its member companies carried out assessments and upgrading of the plants, equipment and technological systems to produce higher-quality products. All of PAN’s new projects have been implemented with the application of high technology such as the food factory project of PAN Food, PAN-SALADBOWL company, Lafooco cashew plant renovation project. For the existing production activities, the companies always have plans to upgrade them to maintain stable product quality, competing on the market in terms of product quality and sustainable production systems. The products of companies such as BBC, ABT, NSC, SSC have always been prestigious to all local and international customers, which were clearly demonstrated through the stable sales revenue, there have been no considerable incident related to the products introduced to market.

Member companies step by step introduced the requirements and controlled of social issues of the suppliers based on the specific terms and conditions in the contract, the evaluations in the search and selection of suppliers, or gave the Code of conduct requirements to the suppliers. The above activities were carried out consistently with the requirements in The PAN Production Principles.

The National Seed Joint Stock Company issued codes of conduct for all suppliers.


RESULT

The PAN has also supported member companies to complete the supply chain as well as cooperated with them to provide safe, high quality and traceable raw material sources.

NSC’s “Technological Map for Rice Industry in Vietnam” was one of the top 10 scientific and technological events nationwide in 2016. The technological map was developed to improve the quality, the safety and reliability, thus helping the Vietnamese rice industry to develop sustainably.

ABT’s pangasius products are produced based on the source of pangasius farmed by the company and strictly controlled during the development process. The active supply of the breeds and materials enabled ABT to satisfy the highest requirements of all the markets in terms of food safety, traceability, environment and society. ABT continued to maintain the international certifications such as ASC, MSC, Global GAP in aquaculture.

Indicators of product liability (for The PAN Group and its member companies in 2016):

Indicators Information Indicator

Product quality; Customers’ health and safety

Percentage of food factories certified international food safety standards (HACCP, ISO22000, BRC…).

100%

Total number of violations of food safety. 0

Total number of products recalled cases due to quality defects.

2

Product and service labelling

Total number of violations of information, information inscription and product labels.

0

The percentage of products rated for customer satisfaction/ total product launches.

75%

Marketing communications

Selling prohibited or disputed products. 0

Total number of incidents of marketing communications, including advertising, promotion, and sponsorship.

0

Customer privacyTotal number of substantiated complaints regarding breaches of customer privacy and losses of customer data.

0

ComplianceTotal fines due to violation in provision of products to the market.

15,355,000 VND

In response to the inadequacies of the sectors considered as Vietnam’s strengths, the Government has been making efforts in terms of policy, resources, and market, in addition to the support of the community. Many local and international organizations, companies and individuals have step by step engaged in these sectors with long-term vision, concentrating on the application of modern technology, creating value-added and better products. With the community’s participation, Vietnam’s available strengths and the foundation gradually developed in the past years, The PAN Group is having opportunities to take full advantages to become the regional leading corporation in agriculture and food. Yet, the difficulties which the Group overcame in 2016 also gave the messages on the considerable challenges in the next phase. After each phase, The PAN Group has reviewed the socio-economic context and has evaluated the advantages and disadvantages so as to make appropriate policy decisions, and the Sustainability report is one of the sources of critical and comprehensive information for reference. Besides the economic and market issues, the society and environment factors are also the inevitable contents due to the increasingly obvious impacts on the production and business activities, affecting the final results.

“Wholeheartedly improve and nurture the family meals”


OPPORTUNITIES AND CHALLENGES

1.2 CHALLENGES AND SOLUTIONS Pursuing the sustainable development strategy was expected to bring the stability and create the opportunities for future development, but linked with many challenges and difficulties in implementation. The PAN Group is ready for the difficulties in the next phase with the packages of solution to each issue.

The activities of identifying and evaluating opportunities and challenges in the sustainable development strategy were periodically reviewed or after major economic, political and social events by The PAN Group in order to have timely solutions. Sustainable development is a process whose results are impacted by a number of factors, there-fore the above analysis is critical for us to update the situation and work out the action plans in a proactive manner.

1. OPPORTUNITIES AND CHALLENGES1.1 OPPORTUNITIES

OPPORTUNITIES FROM SUSTAINABLE DEVELOPMENT … AND ACHIEVEMENTS IN 2016

The sustainable development will bring PAN many opportunities linked to the agriculture’s development orientation such as: to develop the agriculture towards sustainable and modern development, large-scale commodity production based on the advantages and production re-organization. Apply the science and technology to increase the productivity, quality, effectiveness and competitive advantages, satisfying various domestic and export demands, increasing farmers’ income, protecting and using the natural resources and environment effectively and sustainably as well as maintaining stable and long-term growth for the Group.

In 2016 The PAN Group has made outstanding growth compared to the same period of 2015, especially the profit after tax of the parent company increased by 20% in the context that the agricultural sector in 2016 faced many difficulties due to the climate changes.

The sustainable development strategy helps attract investment capital into the Group, approach the world’s prestigious partners and customers. In particular, the investments in high-tech agriculture, agriculture supporting industries are investment areas that Vietnamese enterprises have temporarily not been capable due to the lack of resources. In addition, the attraction of foreign capital investment in agriculture will promote the transfer of technology to improve the quality of human resources, especially high-ranked human resources in agricultural and rural areas.

In 2016, many prestigious investors have contacted PAN to look for investment opportunities and to finalize the cooperation (IFC, Orix, Daiwa ...). The investors highly appreciated and were ready to cooperate with The PAN Group after being convinced by the sustainable development strategy. 2016 marked the close and comprehensive cooperation of the Japan SALADBOWL Group in the high-tech flower and vegetable production project in Lam Dong.

Pursuing the sustainable development strategy in-creases opportunities for PAN to participate in the world’s food and agricultural product value chain, while enhancing its reputation and image. Vietnam has promising opportunities in both domestic and international markets, but in order to be successful, farmer households and enterprises must be able to produce the products (including food and other products) which are reliable, high quality, safe and meet stringent technical requirements for entry into high end markets.

The products such as confectionery, cashew nuts, and pangasius of The PAN Group have been exported to many countries in the world (Asia, EU, USA, Japan. The product quality was improved and highly appreciated by customers, ensuring no food safety incidents. Existing customers continued to cooperate and new big clients established (such as Cotsco Corporation of America, and Corona company of Japan).

The sustainable development trend promotes the reform of the institutions and domestic business environment, and prevents the risks of legal violations, legal conflicts, and stakeholder’s interests. The community will acknowledge the efforts and results of the companies operating with the community responsibility.

There is no violation or incident related to the socio-environmental issues at The PAN Group and its member companies that resulting in the penalty or impacts on the brand name.

CHALLENGES TO SUSTAINABLE DEVELOPMENT JOURNEY

SOLUTIONS

People The implementation has not been effective due to the local laborers’ limited capacity, dissatisfied the high-technology requirements, with no experiences or inappropriate approach. The employees only thought about the short-term benefits and weren’t aware of long-term benefits, so they did not highly appreciate and weren’t willing to contribute and share the costs of the enterprise’s sustainable development activities. The disapproval and lack of implementation efforts by the stakeholders when applying the new requirements and principles of sustainable development which haven’t been popular in Vietnam.

Develop suitable labor policy to attract capable emloyees, especially the one with special skills, high qualifications and capacity. Besides, develop the training programs on enhancing the knowledge and skills to catch up with the new and modern techniques. Promote the communication and increase the internal training on awareness so that the parties can see the benefits of sustainable development strategies. Establish the system of specific regulations and guidelines for the activities and monitor the application process. Develop the mechanism of monitoring, and checking the compliance. Seek for the partners to provide the consultancy and deployment support. Learn and update the information and knowledge in order to make appropriate and effective implementation plan.

Climatic environment and natural resources Pollution and risks of causing environmental degradation in many places together with some environmentally unfriendly images in agriculture are hindering the increase of labor productivity and competitive position of Vietnamese enterprises on the international market, including PAN. Vietnam is one of the 5 nations in the world affected the worst by the climatic changes. In the recent years, the climatic changes have become increasingly obvious, especially the increase in natural disasters such as droughts, saline intrusion and flood that caused the human and material losses in many areas, including the PAN’s farming areas. In the past years, due to various causes, the natural resources, especially the resources of water and biodiversity have been seriously degraded. In some localities, land and mineral resources were exhausted or wasted. This is a challenge to PAN in developing its production and business.

Develop the measures of monitoring the cultivation process, sustainable standards, natural resources management, waste management for environmental protection and energy saving. Promote the application of high technologies and advanced science and technology to production such as cross-breading of new plants and animals, which can be grown and developed in areas with severe climate, water circulation in aquaculture. Conduct the training and communication to raise the awareness of the group’s employees about the importance of protecting the environment, natural resources and the risks of climate changes in production.



2. OBJECTIVES, PLANS AND MEASURES FOR 2017 2.1 ECONOMY

Overall plan:

In 2016, the PAN Group established PAN Farm Joint Stock Company to attract and concentrate maximum resources in the field of agriculture to exploit opportunities among business units, and thereby deploying potential projects with domestic and foreign partners in agriculture, helping the company continue to maintain the long-term growth rate. The establishment of 02 key member companies to manage the agricultural and food sectors in the 2 years 2015 - 2016 with the total investment of VND 2,000 billion together with the divestment in industrial sanitation and cleaning services, The PAN Group has made great steps in building and completing its core business platforms.

To maintain the growth rates and towards the vision of becoming a leading regional group in Agriculture and Food sectors, providing clean, safe, nutritious and traceable products from Vietnam and to the world through the value chain of Farm, Food, Family, The PAN Group made the overall development plans and key economic goals:

Develop newly-established platforms at PAN Farm and Pan Food, aimed at becoming a leading company specializing in the sector of consumer food based on utilizing the available foundations of The PAN Group and its member companies, strategic investment partners to boost the research and development of highly profitable products; Actively expand the market by improving the effectiveness of modern marketing activities.

Continue to complete the value chain in Agriculture and Food sectors through M&A of potential companies in the sectors, having good governance system, sound financial position and aligned with the Group’s overall strategy. Regarding the existing member companies, The PAN Group expected to continue to increase its ownership ratio in favorable market conditions.

Regarding the new business areas and new products, the investment can be made through The PAN Group or its subsidiaries. The total estimated investment value in 2017 can reach about VND 600 billion if the market conditions are favorable and the projects are implemented as planned. In particular, the investment focuses of the Group’s key projects in 2017 are as follows:

Project on investing in Greenhouse to grow and export high-quality flowers to Japanese market at PAN-SALADBOWL.

Project on investing in agricultural products: vegetable, fruits… based on the joint venture with the potential foreign partners at PAN Farm.

Project on investing in High-Tech Agricultural Company at NSC.

Project on PAN Food Processing Factory at PAN Food with international stature and standards in order to produce nutritious, natural, safe, high-quality packaged food products.

Develop its own branded products in the Agriculture and Food sectors, especially PAN Food’s own branded products based on a complete distribution system. In 2016, PAN Food introduced its own branded products to the market such as Huro candy, Bon Ami cookies Funnutz product, PAN Food’s Mid-Autumn Cake, Ban Mai rice which received positive feedbacks from the market.

Cooperate with investors and partners with the same objective of bringing The PAN Group out of the territory of Vietnam, targeting the world and regional markets, shifting Vietnamese agricultural products from raw exports, under various brand names to be under a separate domestic brand names.

Ensure rapid growth in the consolidated revenue and profits, creating the values for the shareholders, investors and partners, enhancing The PAN Group’s position on the market.

By the end of 2016, The PAN Group grew rapidly in the scale, with the total consolidated asset value of nearly VND 4,000 billion, the market capitalization reached over VND 4,500 billion, making The PAN Group one of the TOP 50 listed companies. In 2017, The PAN Group’s goal is to continue to increase in its scale in term of total assets and capital, to maintain the speed of growth in revenue and profits in key areas as in the past few years, as well as maintain the position not only in the TOP 50 biggest companies on the stock exchange of Vietnam but also one of the most efficient and sustainable companies.

Linkage in the value chainThe agricultural value chain, creating the close linkage between the groups of farmers and processing factories, or the export enterprises has not been well organized.

Develop the policies to closely link the group’s member companies with the farmers in the closed agricultural value chain.

Other issues The local and regional enterprises are focusing more and more investment on developing the agriculture, resulting in increasingly higher competition in the industry. Risks in agricultural production such as diseases and pricing fluctuation. High investment costs for upgrading the infrastructure, training on the awareness and actions. The competition in human resource, increased labor costs affect the competitiveness which initially based on the advantages of low production costs of raw agricultural products.

Make reasonable development strategy to have competitive advantages against the local and international competitors. Set up the measures to prevent, avoid and handle the unexpected risks such as natural resources, diseases or pricing fluctuations. Make detailed plans on the focused targets. Arrange, optimize the infrastructure and operation to effectively reduce the investment and efficiently use the resources.



No. Indicator (Consolidated figures) Actual 2016 Plan in 2017% Plan vs.

Actual 2016

1 Consolidated revenue 2,753 3,080 112%

2 Consolidated profit before tax 385 320 83%

3 Consolidated profit after tax 336 280 83%

4 PAN’s shareholder’s profit 257 190 74%

The PAN Group’s goal is in 2017 it will develop 6 - 10 groups of product under other different brand names to form the basis for the rapid growth from 2017 onwards, through the investment in the production capacity, partnership with the prestigious partners and strong distribution system development.

(*) In March/2016, The PAN Group completed the investment from the industrial sanitation and cleaning sector (PAN Services) to focus its resources on the sectors of Agriculture and Food in line with the set strategy. This deal brought about the huge cash flow and profits to The PAN Group, supplementing the investment activities in 2016.

Executive Governance Plan in 2017:

Focus on developing strong human resources as well as a strong corporate governance apparatus to maintain the leading position and achieve the sustainable growth.

Complete and enhance the quality of internal management of the Company, such as: deploy the human

2.2 ENVIRONMENT AND SOCIETY

The theme in 2017 is “Good Agriculture Practices and Food Safety”. The PAN Group will focus on professionalizing rapidly expanding agricultural production activities to establish sustainable development statutes from the beginning. In response to food safety issue which is being concerned by the entire society, The PAN Group continues to promote the activities aimed at raising the awareness and improving the conditions that reduce the risks of unsafe food.

The PAN Group reviewed and evaluated the actual situation in order to play the role of connecting, organizing, orienting and supporting the business and production activities of its member companies. The PAN Group also redefined the tasks, restructured the action plan, and set the objectives in line with the roles in group of companies within the Group. Accordingly, the targets for 2017 and following phases are as follows:

Detail target

Business plan

Please refer to the detail explanation of the database in The PAN Group’s 2016 Annual Report.

Profit distribution plan 2017

No. Indicator Ratios/amount of money

1 Dividends 10% of par value of share

2 Operation cost, remuneration of BOD and Supervisory Board VND 2,000,000,000 (two billion VND)

3 Bonus and welfare funds 5% profit after tax of the Parent company

Area Implementation Orientation Targets for 2017 and following phase

Current outcomes

Food safety As one of the top priorities in the sustainable development strategies, The PAN Group will focus on upgrading both its infrastructure and executive management to meet stringent requirements in the food quality and safety. In the context of the society’s increasing concern about food safety, such activities are extremely critical and necessary to prevent, build consumers’ trust as well as to maintain good cooperation with international clients. The Group’s food processing factories ensure not only be certified to international food safety standard like HACCP, ISO22000, BRC, IFS, SQF… but also setting the targets of receiving positive feedbacks from customers or the third party on the food safety issue and quality management system.

Maintain 100% food production facilities certified to international food safety standards.

100% current factories satisfy. Yet, as the Group continually opens new factories and production facilities, this objective must be maintained.

Traceability In the production, the traceability is a strong guarantee for product quality. For food product in particular, traceability is a customer’s mandatory requirement. The PAN Group also supports and places high demand on traceability, considering this as a commitment and demonstration of the effort to build a modern, professional production system, aimed at enhancing the position of agriculture and food processing industry in Vietnam.

100% products of the group are linked to efficient monitoring and traceability system, they include all the food products and other agricultural products, such as seeds, flowers.

84%

resource assessment, standardize the job positions; improve the issuance of internal documents, complete the regulations to create legal and administrative corridors for the activities of PAN and its member companies, well perform the role of risk management at all levels and units.

Continue to perfect the risk management system to minimize any negative impacts on the PAN’s business performance and sustainable development. Also, increase the investment in the information technology infrastructure, ensure and continue to deliver advanced training aligned with the requirements of business activities.

Best comply with the current regulations in Law on Enterprise, other Laws as well as the internal rules and regulations of The Pan Group, ensuring the objectivity, transparency based on the prevention of interest conflicts between the Company with the members of BOD, BOM, Board of Supervisors and related people, respecting the legitimate rights and interests of the shareholders.




Current outcomes

Internal employees and community

Always having a dialogue with the community is a measure for The PAN Group and member companies to effectively and quickly handle the issues arising in the production and business activities. Therefore, the grievance mechanism involving all the related parties was required and established by The PAN Group from 2015 to ensure communication channel and solutions to the feedbacks. This mechanism must be sustained and continually improved in order to promote the efficiency and ensure there would be no crisis or protests from the parties.

100% complaints or feedbacks from the internal employees or the community would be properly resolved by the end of 2018).

The grievance mechanism in member companies is currently not accurately tracked by data, so the Group set the target of receiving and solving the complaints thoroughly.

Management system

Sustainable development is the guiding orientation of The PAN Group to maintain the steady growth, protect the environment and fulfill the corporate social responsibility. In order to provide consistent guidance in line with the real context, The PAN Group issued the “PAN Production principles” dealing with the issues of assuring the food safety and quality, the environment and the society. This code is required to be comprehensively applied in all member companies, accompanied by periodical compliance monitoring mechanism by The PAN Group. The assessment results will be the basis for developing the plan for correction and improvement.

100% member companies apply “PAN production principles” and are assessed periodically (by the end of 2019).

The PAN Production principles were promulgated by the end of 2016, therefore, it’s not enough time to train and apply in member companies.


Current outcomes

Products The final output of all the product process is the introduction of products to customers. Products must satisfy customer’s ever-increasing expectation, and should be accepted by customer. This is not only the responsibility of the producer but also the deciding factor to the existence of an enterprise. Thus, customers’ feedback and opinions provide a source of valuable information for the producer to recognize their products’ advantages and disadvantages, and then have proper plans for product renovation, and product capacity enhancement. The PAN Group will gradually make the plans for collecting customer’s feedbacks on all the products.

100% product of the member companies are assessed and surveyed (by the end of 2020).

65% (Average ratio)

Environment The compliance with Vietnam’s laws is the Group’s strong commitment, in which the environmental issue is one of the critical contents, receiving the community’s attention and the implementation outcome has great impacts on the company’s activities. The PAN Group with the support and monitoring mechanism ensures all the member companies comply with the legal requirements, especially the ones related to the issues: making environment impact assessment report; Carrying out the environment monitoring; treatment of waste water, garbage, and exhaust gas meeting the national standards before being discharged into the environment; Use chemicals in the permitted categories.

No violations of legal regulations on the environmental issues (excluding the cases of force majeure).

0

Safety Like all the other enterprises, The PAN Group consider health, labor safety as a top priority and requires all the companies to take the measures to ensure its operation. The Group controls even the records, the regulations, procedures and the activities in reality through the annual review mechanism to make recommendations for improvements aimed at the target of zero labor accident. This is also one of the contents which big clients are always concerned about and require the evidence to demonstrate the comprehensive compliance with legal requirements and to be really effective in ensuring the laborers’ health, safety.

Zero labor accident within the Group (accident is counted when the laborer has to be off more than a day as a consequence of the incident).

1

135SUSTAINABILITY REPORT | 134 | THE PAN GROUP 135

Category Index Content Page on report

Strategy and analysis G4-1 Statement from the most senior decision-maker of the organization, about the relevance of sustainability to the organization 4,5

G4-2 Description of key impacts, risks and opportunities 67,68

Organization profile

G4-3 Name of the Company 11G4-4 Primary brands, products, and/or services 22 – 29G4-5 Headquarter 11G4-6 Number and names of countries where the Company operates 30G4-7 The nature of ownership and legal form 31G4-8 The markets served 30G4-9 Quy mô tổ chức 14 -19G4-10 Report on workforces 106G4-11 Report the percentage of total employees covered by collective bargaining agreements XG4-12 The Company’s supply chain 36,37G4-13 Report any significant changes during the reporting period regarding the Company’s size, structure, ownership, or its supply chain XG4-14 Precautionary approach or principle and the applications 78 – 80G4-15 List externally developed economic, environmental and social charters, principles, or other initiatives to which the Company subscribes 39G4-16 List memberships of associations and national or international advocacy organizations in which the Company holds a position and participates in 39

Identified materials Aspect and Boundaries

G4-17 List all entities included in the Company’s consolidated financial statements. Report whether any entity included in the Company’s consolidated financial statements is not covered by the report 31

G4-18 Explain the process for defining the report content and the Aspect Boundaries and how the Company has implemented the Reporting Principles for Defining Report Content 45 – 48

G4-19 List all the material aspects 49G4-20 For each material Aspect, report the Aspect Boundary within the Company 46 – 49G4-21 For each material Aspect, report the Aspect Boundary within the Company 46 – 49G4-22 The effect of any restatements of information provided in previous reports, and the reasons for such restatements XG4-23 Report significant changes from previous reporting periods in the Scope and Aspect Boundaries 44, 45

Stakeholders engagement

G4-24 List of stakeholder groups engaged by the Company 47G4-25 The basis for identification and selection of stakeholders with whom to engage 47G4-26 The Company’s approach to stakeholder engagement 47G4-27 Key topics and concerns that have been raised through stakeholder engagement, and how the Company has responded to those key topics and concerns 49

Report profile

G4-28 Reporting period 56G4-29 Date of most recent previous report (if any) 56G4-30 Reporting cycle 56G4-31 Contact point for questions regarding the report or its contents 56G4-32 The “in accordance” option chosen by the Company and the GRI Content Index for the chosen option 134 – 137G4-33 External assurance for the report 57

Governance

G4-34 Report the governance structure of the company 69

G4-35 Report the process for delegating authority for economic, environmental and social topics from the highest governance body to senior executives and other employees 69 – 72

G4-36 Report whether the Company has appointed an executive-level position or positions with responsibility for economic, environmental and social topics, and whether post holders report directly to the highest governance body 71

G4-37 Report processes for consultation between stakeholders and the highest governance body on economic, environmental and social topics 75, 76G4-38 The composition of the highest governance body and its committees 69 – 71G4-39 Report whether the Chair of the highest governance body is also an executive officer 70

G4-40 Report the nomination and selection processes for the highest governance body and its committees, and the criteria used for nominating and selecting highest governance body members X

G4-41 Report processes for the highest governance body to ensure conflicts of interest are avoided and managed. Report whether conflicts of interest are disclosed to stakeholders? 69

G4-42 Report the highest governance body’s and senior executives’ roles in the development, approval, and updating of the Company’s purpose, value or mission statements, strategies, policies, and goals related to economic, environmental and social impacts X

G4-43 Report the measures taken to develop and enhance the highest governance body’s collective knowledge of economic, environmental and social topics X

G4-44The processes for evaluation of the highest governance body’s performance with respect to governance of economic, environmental and social topics. Report whether such evaluation is independent or not, and its frequency. Report actions taken in response to evaluation of the highest governance body’s performance

72 – 74

G4-45 Report the highest governance body’s role in reviewing the effectiveness of the Company’s risk management processes for economic, environmental and social topics 51 - 55

G4-46 The highest governance body’s role in the identification and management of economic, environmental and social impacts, risks, and opportunities X

G4-47 Report the highest committee or position that formally reviews and approves the organization’s sustainability report 67 – 6878 – 80

G4-48 Report the process for communicating critical concerns to the highest governance body 56G4-49 Report the process for communicating critical concerns to the highest governance body 71

G4-50 Report the nature and total number of critical concerns that were communicated to the highest governance body and the mechanism(s) used to address and resolve them X

G4-51 Report the remuneration policies for the highest governance body and senior executives. Performance criteria in the remuneration policy 130

G4-52 Report the process for determining remuneration. Report whether remuneration consultants are involved in determining remuneration and whether they are independent of management X

G4-53 Report how stakeholders’ views are sought and taken into account regarding remuneration XG4-54 The ratio of the annual total compensation for the Company’s highest-paid individual in each country of significant operations X

G4-55 Report the ratio of percentage increase in annual total compensation for the Company’s highest-paid individual in each country of significant operations X


Ethics and integrity

G4-56 Describe the Company’s values, principles, standards and norms of behavior 48

G4-57 Report the internal and external mechanisms for seeking advice on ethical and lawful behavior, and matters related to organizational integrity 48

G4-58 Report the internal and external mechanisms for reporting concerns about unethical or unlawful behavior, and matters related to organizational integrity 48

Economic

Economic performance

G4-DMA General Management Approach 86

G4-EC1 Direct economic value generated and distributed 87-90

G4-EC2 Financial implications and other risks and opportunities for the organization’s activities due to climate change 78-80

G4-EC3 Coverage of the organization’s defined benefit plan obligations X

G4-EC4 Financial assistance received from government X

Market presence

G4-DMA General Management Approach X

G4-EC5 Ratios of standard entry level wage by gender compared to local minimum wage at significant locations of operation 112

G4-EC6 Proportion of senior management hired from the local community at significant locations of operation X

Indirect economic impacts


G4-EC7 Development and impact of infrastructure investments and services supported 64, 65

G4-EC8 Significant indirect economic impacts, including the extent of impacts 87 – 90

Procurement practices


G4-EC9 Proportion of spending on local suppliers at significant locations of operation X

Enviroment

Materials


G4-EN1 Materials used by weight or volume X

G4-EN2 Percentage of materials used that are recycled input materials X

Energy


G4-EN3 Energy consumption within the organization 94

G4-EN4 Energy consumption outside of the organization 94

G4-EN5 Energy intensity X

G4-EN6 Reduction of energy consumption 92

G4-EN7 Reductions in energy requirements of products and services 92, 93

Water


G4-EN8 Total water withdrawal by source 97

G4-EN9 Water sources significantly affected by withdrawal of water 97

G4-EN10 Percentage and total volume of water recycled and reused X

Biodiversity


G4-EN11 Operational sites owned, leased, managed in, or adjacent to, protected areas and areas of high biodiversity value outside protected areas X

G4-EN12 Description of significant impacts of activities, products, and services on biodiversity in protected areas and areas of high biodiversity value outside protected areas X

G4-EN13 Habitats protected or restored X

G4-EN14 Total number of IUCN Red List species and national conservation list species with habitats in areas affected by operations, by level of extinction risk X

Emissions


G4-EN15 Direct greenhouse gas (GHG) emissions (Scope 1) 99

G4-EN16 Energy indirect greenhouse gas (GHG) emissions (Scope 2) X

G4-EN17 Other indirect greenhouse gas (GHG) emissions (Scope 3) X

G4-EN18 Greenhouse gas (GHG) emissions intensity X

G4-EN19 Reduction of greenhouse gas (GHG) emissions 99

G4-EN20 Emissions of ozone-depleting substances (ODS) 103, 104

G4-EN21 NOx, SOx, and other significant air emissions 103, 104

Effluents and waste


G4-EN22 Total water discharge by quality and destination 98

G4-EN23 Total weight of waste by type and disposal method 98

G4-EN24 Total number and volume of significant spills None

G4-EN25 Weight of transported, imported, exported, or treated waste deemed hazardous under the terms of the Basel Convention Annex I, II, III, and VIII, and percentage of transported waste shipped internationally None

G4-EN26 Identity, size, protected status, and biodiversity value of water bodies and related habitats significantly affected by the organization’s discharges of water and run off None

Products and services


G4-EN27 Extent of impact mitigation of environmental impacts of products and services X

G4-EN28 Percentage of products sold and their packaging materials that are reclaimed by category x

ComplianceG4-DMA General Management Approach X

G4-EN29 Monetary value of significant fines and total number of non-monetary sanctions for non-compliance with environmental laws and regulations None

GRI INDICATORS

137SUSTAINABILITY REPORT | 136 | THE PAN GROUP 137


TransportG4-DMA General Management Approach X

G4-EN30 Significant environmental impacts of transporting products and other goods and materials for the organization’s operations, and transporting members of the workforce x

OverallG4-DMA General Management Approach 91

G4-EN31 Total environmental protection expenditures and investments by type X

Supplier environmantalassessment


G4-EN32 Percentage of new suppliers that were screened using environmental criteria X

G4-EN33 Significant actual and potential negative environmental impacts in the supply chain and actions taken 82, 83

Environmental grievance mechanisms


G4- EN34 Number of grievances about environmental impacts filed, addressed, and resolved through formal grievance mechanisms X

Social

Employment


G4-LA1 Total number and rates of new employee hires and employee turnover by age group, gender and region 106, 107

G4-LA2 Benefits provided to full-time employees that are not provided to temporary or part-time employees, by significant locations of operation 107

G4-LA3 Return to work and retention rates after parental leave, by gender X

Labor/Management relations


G4-LA4 Minimum notice periods regarding operational changes, including whether these are specified in collective agreements x

Occupational health and safety


G4-LA5 Percentage of total workforce represented in formal joint management-worker health and safety committees that help monitor and advise on occupational health and safety programs 107, 108

G4-LA6 Type of injury and rates of injury, occupational diseases, lost days, and absenteeism, and total number of work-related fatalities, by region and by gender 109

G4-LA7 Workers with high incidence or high risk of diseases related to their occupation X

G4- LA8 Health and safety topics covered in formal agreements with trade unions 107

G4-DMA General Management Approach 109 – 111

G4-LA9 Average hours of training per year per employee by gender, and by employee category 111

G4-LA10 Programs for skills management and lifelong learning that support the continued employability of employees and assist them in managing career endings x

G4-LA11 Percentage of employees receiving regular performance and career development reviews, by gender and by employee category 111

Diversity and equal opportunity


G4-LA12 Composition of governance bodies and breakdown of employees per employee category according to gender, age group, minority group membership, and other indicators of diversity x

Equal remuneration for women and men


G4-LA13 Ratio of basic salary and remuneration of women to men by employee category, by significant locations of operation X

Supplier assessment for labor practices


G4-LA14 Percentage of new suppliers that were screened using labor practices criteria X

G4-LA15 Significant actual and potential negative impacts for labor practices in the supply chain and actions taken X

Labor practices grievance mechanisms


G4-LA16 Number of grievances about labor practices filed, addressed, and resolved through formal grievance mechanisms 114

Human rights

Investment


G4-HR1 Total number and percentage of significant investment agreements and contracts that include human rights clauses or that underwent human rights screening X

G4-HR2 Total hours of employee training on human rights policies or procedures concerning aspects of human rights that are relevant to operations, including the percentage of employees trained 111

Non-DiscriminationG4-DMA General Management Approach X

G4-HR3 Total number of incidents of discrimination and corrective actions taken None

Freedom of association and collective bargaining


G4-HR4 Operations and suppliers identified in which the right to exercise freedom of association and collective bargaining may be violated or at significant risk, and measures taken to support these rights X

Child laborG4-DMA General Management Approach X

G4-HR5 Operations and suppliers identified as having significant risk for incidents of child labor, and measures taken to contribute to the effective abolition of child labor X

Forced or compulsory labor


G4-HR6 Operations and suppliers identified as having significant risk for incidents of forced or compulsory labor, and measures to contribute to the elimination of all forms of forced or compulsory labor X

CATEGORY INDEX CONTENT PAGE ON REPORT

Security practicesG4-DMA General Management Approach X

G4-HR7 Percentage of security personnel trained in the organization’s human rights policies or procedures that are relevant to operations X

Indigenous rightsG4-DMA General Management Approach X

G4-HR8 Total number of incidents of violations involving rights of indigenous peoples and actions taken 115

AssessmentG4-DMA General Management Approach X

G4-HR9 Total number and percentage of operations that have been subject to human rights reviews or impact assessments X

Supplier human rights assessment

G4-DMA General Management Approach

G4-HR10 Percentage of new suppliers that were screened using human rights criteria X

G4-HR11 Significant actual and potential negative human rights impacts in the supply chain and actions taken X

Human rights grievance mechanisms


G4-HR12 Number of grievances about human rights impacts filed, addressed, and resolved through formal grievance mechanisms 114

Social

Local communities


G4-SO1 Percentage of operations with implemented local community engagement, impact assessments, and development programs 117 – 119

G4-SO2 Operations with significant actual and potential negative impacts on local communities 117 – 119

Anti - corruption


G4-SO3 Total number and percentage of operations assessed for risks related to corruption and the significant risks identified X

G4-SO4 Communication and training on anti-corruption policies and procedures X

G4-SO5 Confirmed incidents of corruption and actions taken X

Public policyG4-DMA General Management Approach X

G4-SO6 Total value of political contributions by country and recipient/beneficiary X

Anti-competitive behavior

G4-DMA General Management Approach

G4-SO7 Total number of legal actions for anti-competitive behavior, anti-trust, and monopoly practices and their outcomes None


G4-SO8 Monetary value of significant fines and total number of non-monetary sanctions for non-compliance with laws and regulations 115

Supplier assessment for impacts on society


G4-SO9 Percentage of new suppliers that were screened using criteria for impacts on society X

G4-SO10 Significant actual and potential negative impacts on society in the supply chain and actions taken 120

Grievance mechanisms for impacts on society

G4-DMA General Management Approach 114, 115

G4-SO11 Number of grievances about impacts on society filed, addressed, and resolved through formal grievance mechanisms 115

Product responsibility

Customer health and safety


G4-PR1 Percentage of significant product and service categories for which health and safety impacts are assessed for improvement 123

G4-PR2 Total number of incidents of non-compliance with regulations and voluntary codes concerning the health and safety impacts of products and services during their life cycle, by type of outcomes 123

Product and service labeling


G4-PR3 Type of product and service information required by the organization’s procedures for product and service information and labeling, and percentage of significant product and service categories subject to such information requirements x

G4-PR4 Total number of incidents of non-compliance with regulations and voluntary codes concerning product and service information and labeling, by type of outcomes 123

G4-PR5 Results of surveys measuring customer satisfaction 123

Marketing communications


G4-PR6 Sale of banned or disputed products None

G4-PR7 Total number of incidents of non-compliance with regulations and voluntary codes concerning marketing communications, including advertising, promotion, and sponsorship, by type of outcomes 123

Customer privacyG4-DMA General Management Approach X

G4-PR8 Total number of substantiated complaints regarding breaches of customer privacy and losses of customer data 123

Compliance


G4-PR9 Monetary value of significant fines for non-compliance with laws and regulations concerning the provision and use of products and services 123

SUSTAINABILITY REPORT 2016 - The PAN Group

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