Grant Thornton

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Independent reasonable assurance report(ISAE 3000) to Kalotl Jewellery International DMCC

For the period 1 October 2013 to 31 March 2014

18 August 2014

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Kaltoi Jewellery InternationalResponsible Sourcing Review

18 August 2014

Contents

1. Introduction....

Scope of work.

3. Independence.

4. Responsibilities

Sources of information.

6. Inherent limitations.

Opinic

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Kaltoi Jewellery InternationalResponsible Sourcing Review

18 August 2014

1. Introduction•s53 1.1. We were engaged by Kaloti Jewellery International DMCC / Kaloti Gold Factory

g( LLC (collectively "Kaloti") to perform an independent review, for the purposes of

compiling a compliance report, on Kaloti's due diligence in relation to the

^ responsible sourcing of gold in the period 1 October 2013 to 31 March 2014 ("die

gr period" or "period").

^ 2. Scope of work

sr2.1. Our work was performed for Kaloti in order to meet the requirements of DMCC

Practical Guidance for Market Participants in the Gold and Precious Metal Industry

•J ("The Guidance" or "Guidance") and DMCC's associated "Review Protocol" on

_^ Responsible Sourcing of Precious Metals ("The Review Protocol" or "Protocol").2?

•J 2.2. The engagement has been performed in accordance with International Standard on

Assurance 3000 ("ISAE 3000").

2l 3. Independence

3.1. We have complied with the Code of Ethics for Professional Accountants issued by

•"•* the International Ethics Standards Board for Accountants which includes

t»" requirements on independence, integrity, objectivity, professional competence and

behaviour, due care and confidentiality.5T

i* 3.2. We are an approved provider of responsible audit reviews by DMCC.

4. Responsibilities

^ Kaloti's management

5 •4.1. Kaloti have prepared a report on the steps they have taken to demonstrate ongoing

§j full compliance with DMCC's Practical Guidance for Market Participants in die

Gold and Precious Metals Industry ("the Guidance" or "Guidance") issued,

- 2012.

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Kaltoi Jeweller)' InternationalResponsible Sourcing Review

18 August 2014

4.2. This report which covers the period 1 October 2013 to 31 March 2014 addresses

the actions taken by Kaloti to comply with die five steps set out in the Guidancewhich are set out below:

The establishment of robust supply chain management systems

Identification and assessment of the risks in the supply chain

»J - Development and implementation of a risk mitigation and control plan

The commissioning of independent third party audits of its due diligence

practices

»J - Annual reporting on its responsible supply chain due diligence

SIResponsibilities of Grant Thornton UAE

4.3. Grant Thornton UAE's responsibility has been to undertake an independent5* reasonable assurance review of Kaloti's compliance with die Guidelines during the-^ period and to meet the review and reporting requirements set out in the Review

Protocol.

4.4. This work has also been conducted in accordance witii die standards of ISAE 3000,1̂ "Assurance Engagements other than Audits of Reviews of Historical Financial

Information". The engagement has been planned and conducted in a way thatallows us to obtain a reasonable level of assurance that Kaloti is compliant with the

gi Responsible Sourcing Guidance and that its compliance report provides a fair viewof that compliance.

£. 5. Sources of information

5.1. ISAE 3000 requires the auditor or reviewer to "obtain sufficient evidence on which£<j to base conclusions". We used our professional experience to make judgements

about the nature and extent of evidence we needed to obtain. We discussed the•»3 specific evidence and approach to die collection of this with the client at the outset

of the engagement. During the course of the engagement, when collecting and*•* evaluating evidence, we applied appropriate levels of professional scepticism. This£, was one of the key reasons why Grant Thornton UAE's Forensic team conducted

this engagement.

a5.2. Our evidence was obtained from the following sources:

^» - We asked Kaloti's management and certain operational personnel in diebusiness to describe die philosophy, policies and day to day implementation of_

5* their responsible sourcing due diligence compliance regime incluc

jjj introduction and use of their compliance management software FACTJ

Kaltoi Jeweller)' InternationalResponsible Sourcing Review

18 August 2014

»j - We questioned Kaloti management and operational personnel about specific

KYC and transactional examples that we had selected or observed

»] - Visits to the premises of a number of Kaloti suppliers to understand their

relationship with Kaloti and how they implement and maintain a responsible

sourcing compliance regime that supports Kaloti

aA visit to the Kaloti refinery to review the procedures for receiving, laboratory

testing and refining gold and to observe how these procedures support Kaloti's

•3 compliance regime

- A visit to Kaloti's offices at the Gold Souk in Deira to observe operations

g| including the receipt of gold from customers, its recording, testing and handling

__ prior to despatch to die refiner}- and the operation of responsible sourcing due

diligence compliance procedures at this location

-_ - Meetings with Compliance, Operations, Sales, Deals, Finance and Senior

Management personnel at Kaloti Head Office in die DMCC to assess their

*3 understanding and day to day implementation of the responsible sourcing due

~- diligence compliance regime.

^3 - Review of client account opening processes through sample testing of a number

g, of active, suspended and rejected client files

S - Sample testing of gold purchase transactions undertaken in the period from

£• clients delivering gold to die Gold Souk offices or through International

Shipment direct to the refinery

^ - Review of payment transactions made by Kaloti

5* - Review of Kaloti's compliance report for the period including the assertions

iPi made by Management in that report on the effectiveness and completeness of

their compliance processes.•51

gj 5.3. The work we have performed and the procedures undertaken relate solely to thereview of transactions in the period 1 October 2013 to 31 March 2014. These

»] procedures do not extend to any matters or assertions which may have been madeby Kaloti m their compliance report and which relate to matters after the

*•* period.

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Kaltoi Jeweller)' InternationalResponsible Sourcing Review

18 August 2014

y 5.4. It is our view that we have obtained appropriate and sufficient evidence during thecourse of this engagement to provide a sound basis for our opinion shown below.

»] 6. Inherent limitations

6.1. Non-financial information and opinions such as those which are contained in the»j Kaloti Compliance Report are subject to more inherent limitations than would be

die case for financial information. The nature of such information and opinions are^ primarily qualitative as are the methods used to obtain such information.

6.2. Our work to test the accuracy of the statements in Kaloti's compliance report>J concerning material issues was achieved through the use of interviews, the sampling

of documents and transactions and discussions with a limited number of clients.

_- 6.3. It is important to read Kaloti's responsible gold sourcing policy which is availableon Kaloti's website by following this link:

http:/V www.kaiorico.com/Susrainalulirv/Siisramability

7. Opinion

7.1. It is our opinion that for the review period, 1 October 2013 to 31 March 2014,Kaloti's Compliance Report fairly describes the compliance activities they haveundertaken to demonstrate compliance with DMCC's Guidance and that Kaloti isin full compliance with the DMCC Guidance.

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18Augusr2014

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GrantThornton

© 2014 Grant Thornton UAE All rights reserved

"Grant Thornton" means Grant Thornton UAEUAE member of Grant Thornton International Ltd, a leading internationalOrganisation of independently owned and managed accounting and consultingFirms. Grant Thornton International is not a worldwide partnership.

This report has been produced by Grant Thornton UAE and has been produced strictlyFor the purposes set out in our engagement letter and must not be disclosed to any otherparties without the express consent from Grant Thornton UAE.

-_ www.grantthornton.ae

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