FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED 31 DECEMBER 2010 VNDIRECT SECURITIES JOINT STOCK COMPANY

Transcription

1 FOR THE FISCAL YEAR ENDED 31 DECEMBER 2010 VNDIRECT SECURITIES JOINT STOCK COMPANY

2 CONTENTS Page 1. Contents 1 2. Report of the General Directors Auditor s report Balance sheet as of 31 December Income statement for the year Cash flow statement for the year Notes to the financial statements for the year ************************** 1

3 REPORT OF THE GENERAL DIRECTORS The General Directors of VNDirect Securities Joint Stock Company (hereinafter called the Company ) present this report together with the audited financial statements for the fiscal year ended 31 December Business highlights VNDirect Securities Joint Stock Company operates in accordance with the Business Registration Certificate No dated 7 November 2006 granted by Hanoi Authority for Planning and Investment. The Company has carried out the securities business activities in accordance with the Business License No. 101/UBCK GP dated 31 December 2007 granted by the State Securities Commission. During the operation course, the Company has changed the Business Registration Certificates 8 times and has been additionally granted the Securities Business License No. 301/UBCK-GPDCCTCK by the State Securities Commission. Charter capital as in the 8 th amended Securities Business License is VND 999,990,000,000. Head office Address Tel. : Fax : Website : No. 1, Nguyen Thuong Hien Street, Nguyen Du Ward, Hai Ba Trung District, Hanoi : Tax code : Affiliates: Branch in Ho Chi Minh City Address Tel. : Fax : Branch in Da Nang Address : No. 51 Ben Chuong Duong, District 1, Ho Chi Minh City : No. 122 Quang Trung, Thach Thang Ward, Hai Chau District, Da Nang City Tel. : Fax : Branch in Nghe An Address Tel. : Fax : : No. 72 Ly Thuong Kiet, Vinh City, Nghe An Operations of the Company: Securities brokerage, finance advisory and securities investment, securities self trading, securities underwriting and securities custody. 2

4 REPORT OF GENERAL DIRECTORS (Cont.) Financial position and business results The financial position as of 31 December 2010, the business results and the cash flows for the fiscal year then ended of the Company have been expressed in the financial statements attached to this report (from page 7 to page 35). Subsequent events The General Directors of the Company hereby ensure that there have been no events from 31 December 2010 to the date of this report which need to make adjustments on the figures or the disclosures in the financial statements. Board of Management and Executive Officers The Board members and the Executive Officers of the Company during the year and until the date of this report include: The Board of Management Full names Position Appointing date Resigning date Ms. Pham Minh Huong Chairman 11 November 2006 Ms. Nguyen Ngoc Thanh Member 11 November 2006 Ms. Dau Thuy Ha Member 11 November 2006 Ms. Tran Thi Phuong Loan Member 25 December January 2010 Mr. Vu Hien Member 26 March 2009 Mr. Pham Duy Hieu Member 7 January 2010 The Control Board Full names Position Appointing date Resigning date Ms. Hoang Thuy Nga Manager 6 January 2010 Ms. Tran Thi Phuong Loan Manager 11 November January 2010 Mr. Nguyen Quang Huy Member 6 January December 2010 Ms. Nguyen Thi Hien Member 6 January 2010 The Executive officers Full names Position Appointing date Resigning date Ms. Pham Minh Huong General Director 20 March October 2010 Mr. Nguyen Hoang Giang Acting General Director 6 October 2010 Mr. Mai Huu Dat Deputy General Director 1 June 2010 Mr. Nguyen Duc Thinh Deputy General Director 1 December August 2010 Ms. Nguyen Ha Ninh Chief Accountant 2 January 2009 Auditor Auditing and Consulting Co., Ltd. (A&C) has performed the audit on the financial statements for the fiscal year ended 31 December 2010, and A&C has expressed their willingness to be appointed as the Company s external auditor in the coming years. 3

5 No. 136/2011/BCTC-KTTV-KT2 AUDITOR S REPORT ON THE FOR THE YEAR 2010 OF THE SHAREHOLDERS, THE BOARD OF MANAGEMENT AND THE GENERAL DIRECTORS We have audited the financial statements for the year 2010 of VNDirect Securities Joint Stock Company including the balance sheet as of 31 December 2010, the income statement, the cash flow statement and the notes to the financial statements for the fiscal year then ended, which were prepared on 28 March 2011, from page 7 to page 35. The preparation and the presentation of these financial statements are the responsibility of the Company s General Directors. Our responsibility is to express an opinion on these financial statements based on our audit. Audit background Our audit is conducted in accordance with the Vietnamese Auditing Standards. These standards require that we plan and perform the audit procedures to obtain a reasonable assurance that the financial statements are free from material mistakes. The audit is developed on the basis of our performing the sampling method as well as applying the necessary examinations and tests of evidences supporting the amounts and the disclosures in the financial statements. The audit also includes our assessing the Company s compliance with the prevailing accounting standards and system, the accounting principles and methods applied, the material estimates and judgments of the Company s General Directors as well as our evaluating the overall presentation of the financial statements. We believe that our audit has provided reasonable bases for our opinion. Auditor s opinion In our opinion, the financial statements referred give a true and fair view, in all material respects, of the financial position as of 31 December 2010, the business results and the cash flows for the fiscal year then ended of VNDirect Securities Joint Stock Company in conformity with the prevailing Accounting Standards and System of securities companies as well as other related regulations. Without qualifying our opinion above, we would like to draw the readers attention to Notes IV.6 and V.5 in the notes to the financial statements regarding the payment guarantee for purchasing securities of the Company as follows: As of 31 December 2010, the balance of payment guarantee for purchasing securities of the Company was VND 1,012,063,443,223 (being reflected in the item of Receivable on activity of securities exchanging ). Up to now, the Ministry of Finance has not issued any detailed regulations and guidance on this issue for securities companies. By sampling examination of some big clients with the value of VND 538,265,397,945, we realize that: 5

6 AUDITOR S REPORT (cont.) - The value of secured assets for the guarantee which was listed shares was calculated by the number of mortgaged shares multiplying (x) the market prices as of 31 December 2010, there are 3 clients whose value of secured assets is deficient by the amount of VND 11,413,127,154. A provision for bad debts has been appropriated for this value. - The value of secured assets for the guarantee which was unlisted shares was calculated by the number of mortgaged shares multiplying (x) the prices revaluated by the Company as of 31 December Until 28 March 2011, total value of payment guarantee for purchasing securities of the Company is VND 661,605,941,890 (See Note VIII.1). This report is made in Vietnamese and English of equal validity. The Vietnamese version will be the original for reference when needed. Director Auditor Nguyen Hoang Duc Auditor s Certificate No. 0368/KTV Cao Thu Hien Auditor s Certificate No. 0803/KTV Hanoi, 28 March

7 Address: No.1, Nguyen Thuong Hien, Hai Ba Trung Dist., Hanoi Form B01-CTCK Issued in accordance with the Circular No. 95/2008/TT-BTC dated 24 October 2008 of the Ministry of Finance BALANCE SHEET As of 31 December 2010 Unit: VND ASSETS Code Note Ending balance Beginning balance A - CURRENT ASSETS (100= ) 100 2,912,772,308,985 1,760,441,361,177 I. Cash and cash equivalents 110 V.1 1,144,120,749, ,628,411, Cash 111 1,144,120,749, ,628,411, Cash equivalents II. Short-term financial investment ,655,746, ,983,399, Short-term investment 121 V.2 680,666,155, ,750,104, Provision for devaluation of short-term investment 129 V.3 (94,010,408,369) (75,766,705,562) III. Short-term accounts receivable 130 1,178,712,162, ,289,010, Receivable from customers Prepayments to suppliers 132 V.4 8,549,443,053 1,317,234, Short-term inter-company receivable Receivable on activity of securities exchanging 135 V.5 1,180,585,475, ,737,046, Other receivable 138 V.6 4,391,347,436 14,234,729, Provision for short-term bad debts 139 V.7 (14,814,102,783) - IV. Inventories 140 4,894,041 - V. Other current assets 150 3,278,756,328 1,540,539, Short-term prepaid expenses 151 V.8 2,105,309,624 1,054,837, VAT deductible Taxes and accounts receivable from the State budget Other current assets 158 V.9 1,173,446, ,701,752 tatement should be read in conjunction with the notes to the financial statements 7

8 Address: No.1, Nguyen Thuong Hien, Hai Ba Trung Dist., Hanoi Balance sheet (cont.) Form B01-CTCK Issued in accordance with the Circular No. 95/2008/TT-BTC dated 24 October 2008 of the Ministry of Finance ASSETS Code Note Ending balance Beginning balance B - LONG-TERM ASSETS (200= ) ,816,182,219 38,852,622,015 I. Long-term accounts receivable Long-term accounts receivable from customers Working capital in affiliates Long-term inter-company receivable Other long-term receivable Provision for bad debts II. Fixed assets ,323,051,394 35,563,816, Tangible assets 221 V.10 14,009,403,538 16,435,577,983 Historical costs ,306,988,341 29,935,841,976 Accumulated depreciation 223 (20,297,584,803) (13,500,263,993) 2. Financial leasehold assets Historical costs Accumulated depreciation Intangible assets 227 V.10 20,050,719,894 18,865,310,730 Historical costs ,747,949,334 22,229,363,434 Accumulated depreciation 229 (6,697,229,440) (3,364,052,704) 4. Construction in progress 230 V ,927, ,927,962 III. Investment property Historical costs Accumulated depreciation IV. Long-term investments Investments in subsidiaries Investments in associates and joint ventures Long-term investments in securities Securities ready to sell Securities kept till the due date Other long-term investments Provision for devaluation of long-term financial investments V. Other long-term assets 260 7,493,130,825 3,288,805, Long-term prepaid expenses 261 V.12 3,570,499,996 1,547,851, Deferred income tax assets Funds to Payment Assistance Fund 263 V.13 3,922,630,829 1,740,953, Other long-term assets TOTAL ASSETS (270= ) 270 2,954,588,491,204 1,799,293,983,192 tatement should be read in conjunction with the notes to the financial statements 8

9 Address: No.1, Nguyen Thuong Hien, Hai Ba Trung Dist., Hanoi Balance sheet (cont.) Form B01-CTCK Issued in accordance with the Circular No. 95/2008/TT-BTC dated 24 October 2008 of the Ministry of Finance CAPITAL SOURCES Code Note Ending balance Beginning balance A - LIABILITIES (300= ) 300 1,713,038,172,892 1,257,884,726,389 I. Current liabilities 310 1,713,038,172,892 1,257,884,726, Short-term loans and debts 311 V ,650,000, ,700,000, Payable to suppliers 312 V ,496,390,293 1,949,380, Advances from customers ,000,000 40,000, Taxes and other obligations to the State budget 314 V.16 33,992,253,704 48,726,646, Payable to employees Accrued expenses 316 V.17 10,701,062,587 8,652,457, Inter-company payable Payable on activity of securities exchanging 320 V ,422,043, ,941,145, Dividends, bond principal and interest 321 V ,225,201 1,284,670,778 payable on behalf of others 10. Payable to issuance agency of securities 322 V.20 3,518,608,000 2,942,265, Other accounts payable 328 V ,643,589, ,648,160, Provision for current liabilities II. Long-term liabilities Long-term payable to suppliers Long-term inter-company payable Other long-term payable Long-term loans and debts Deferred income tax Provision for unemployment allowance Provision for long-term liabilities Provision for investor's compensation B - OWNER'S EQUITY (400= ) 400 1,241,550,318, ,409,256,803 I. Owner's equity 410 V.22 1,241,550,318, ,409,256, Investment capital ,990,000, ,000,000, Share premiums ,000,000,000 50,000,000, Owner's other capital Treasury stocks 414 (3,310,000) - 5. Differences on asset revaluation Foreign exchange differences Business promotion fund Financial reserved fund ,656,202,831 22,140,925, Other funds Retained profit after tax ,907,425, ,268,331,123 II. Bonus and welfare funds TOTAL CAPITAL SOURCES (440= ) 440 2,954,588,491,204 1,799,293,983,192 tatement should be read in conjunction with the notes to the financial statements 9

10 Address: No.1, Nguyen Thuong Hien, Hai Ba Trung Dist., Hanoi Form B01-CTCK Issued in accordance with the Circular No. 95/2008/TT-BTC dated 24 October 2008 of the Ministry of Finance tatement should be read in conjunction with the notes to the financial statements 10

11 Address: No.1, Nguyen Thuong Hien, Hai Ba Trung Dist., Hanoi Balance sheet (cont.) Form B01-CTCK Issued in accordance with the Circular No. 95/2008/TT-BTC dated 24 October 2008 of the Ministry of Finance OFF - BALANCE SHEET ITEMS Items Code Ending balance Beginning balance 1. External lease fixed assets Valuable materials, certificates kept for others Assets deposited by others Bad debts already treated Foreign currencies Custody securities 006 2,817,740,260,000 1,163,185,050,000 In which: 6.1 Marketable securities 007 2,540,205,190,000 1,046,040,490, Marketable securities of custody members ,760,350, ,811,580, Marketable securities of local members 009 2,336,086,500, ,811,930, Marketable securities of foreign customers ,358,340,000 12,416,980, Marketable securities of other organisations Marketable pause securities ,448,070, ,315,340, Marketable pause securities of custody members Marketable pause securities of local customers ,003,310, ,439,240, ,309,820, Marketable pause securities of foreign customers 015 5,520,000 5,520, Marketable pause securities of other organisations Mortgage securities ,087,000, ,220, Mortgage securities of custody members Mortgage securities of local customers ,087,000, ,220, Mortgage securities of foreign customers Mortgage securities of other organisations Securities hold in custody Securities to be paid Blockaded securities to be withdrawn Securities to be dealed Deposit securities to guarantee loans Securities to fix dealing mistakes Custody securities of unlisted public companies Non custody securities of customers Non custody securities of securities companies 083 1,606,233,433 89,728,280, Securities trusted and auctioned for others ,845,000,000 62,530,400,000 Prepared on 28 March 2011 Chief Accountant 0 Acting Genral Director - Nguyen Ha Ninh 0 Nguyen Hoang Giang tatement should be read in conjunction with the notes to the financial statements 11

12 Address: No.1, Nguyen Thuong Hien, Hai Ba Trung Dist., Hanoi Form B02 - CTCK Issued in accordance with the Circular No. 95/2008/TT-BTC dated 24 October 2008 of the Ministry of Finance INCOME STATEMENT Year 2010 Unit: VND ITEMS Code Note Current year Previous year 1. Turnover ,747,761, ,927,903,112 In which: - Turnover from activity of securities brokerage ,228,733,199 63,652,284,952 Turnover from investments in securities, ,142,581, ,082,003,477 capital contribution Turnover from securities issuance underwriting Turnover from securities issuance agency Turnover from consulting activity ,254,613,418 2,651,083,465 Turnover from securities custody Turnover from trust and auction activity ,638,120 - Turnover from leasing assets Other turnovers ,833,195,367 49,542,531, Deductions 02-22,947, Net turnover ( ) ,747,761, ,904,955, Operating expenses 11 VI.1 244,404,593,922 85,194,335, Gross profit ( ) ,343,167, ,710,620, Administrative overheads 25 VI.2 84,887,179,093 47,575,852, Net profit ( ) ,455,988, ,134,768, Other income 31 VI.3 861,829,495 3,207,809, Other expenses 32 VI.4 1,313,153,313 2,449,754, Other profit (40=31-32) 40 (451,323,818) 758,054, Profit before tax (50=30+40) ,004,665, ,892,822, Current corporate income tax 51 V.16 35,851,893,494 16,194,023, Deferred corporate income tax Profit after corporate income tax (60= ) ,152,771, ,698,799, Basic earnings per share 70 VI.5 1,356 4,234 Chief Accountant Prepared on 28 March 2011 Acting General Director Nguyen Ha Ninh Nguyen Hoang Giang This statement should be read in conjunction with the notes to the financial statements 11

13 Address: No.1, Nguyen Thuong Hien, Hai Ba Trung Dist., Hanoi Form B03 - CTCK Issued in accordance with the Circular No. 95/2008/TT-BTC dated 24 October 2008 of the Ministry of Finance CASH FLOW STATEMENT (Under the indirect method) Year 2010 Unit: VND I. Cash flows from operating activities ITEMS Code Note Current year Previous year 1. Profit before tax ,004,665, ,892,822, Adjustments - Depreciation of fixed assets 02 10,057,530,032 8,639,951,431 - Provisions 03 33,057,805,590 (30,106,252,035) - Gain/ loss from unrealized foreign exchange differences Gain/ loss from investing activities 05 (6,760,310) - - Loan interest expenses ,020,986,838 36,390,047, Operating profit before changes of working capital ,134,227, ,816,569,458 - Increase/ decrease of accounts receivable 09 (774,733,022,926) (594,563,433,944) - Increase/ decrease of inventories 10 (4,894,041) - - Increase/ decrease of accounts payable ,494,179, ,554,809,894 - Increase/ decrease of prepaid expenses 12 3,073,120, ,535,818 - Loan interests already paid 13 (99,966,471,069) (36,397,242,532) - Corporate income tax already paid 14 (54,190,381,579) (3,500,000,000) - Other gains Other disbursements 16 - (68,671,575) Net cash flows from operating activities 20 (98,193,243,047) 393,022,567,119 II. Cash flows from investing activities 1. Purchases and construction of fixed assets and other long-term assets 21 (8,889,732,265) (12,438,733,849) 2. Gains from disposal and liquidation of fixed assets and other long-term assets 22 27,760,310 60,951, Loans given and purchases of debt instruments of other entities 23 (57,528,681,332) - 4. Recovery of loan given and disposals of debt instruments of other entities 24 7,672,000, Investments in other entities Withdrawals of investments in other entities Receipts of loans given, dividends and profit shared 27 13,465,943,809 - Net cash flows from investing activities 30 (45,252,709,478) (12,377,782,418) tement should be read in conjunction with the notes to the financial statements 12

14 Address: No.1, Nguyen Thuong Hien, Hai Ba Trung Dist., Hanoi Cash flow statement (cont.) Form B03 - CTCK Issued in accordance with the Circular No. 95/2008/TT-BTC dated 24 October 2008 of the Ministry of Finance ITEMS Code Note Current year Previous year III. Cash flows from financial activities 1. Gains from stock issuance and capital contributions from shareholders ,988,290, Repayments of capital contributions to owners and re-purchase of stocks already issued Short-term and long-term loans received ,598,800, ,588,333, Loan principal amounts repaid 34 (426,648,800,000) (457,140,920,000) 5. Payments for financial leasehold assets Dividends and profit shared to the owners 36 - (30,000,000,000) Net cash flows from financial activitites ,938,290, ,447,413,333 Net cash flows during the year ,492,337, ,092,198,034 Beginning cash and cash equivalents 60 V.1 762,628,411, ,536,213,555 Effects of fluctuations in foreign exchange rates Ending cash and cash equivalents 70 V.1 1,144,120,749, ,628,411,589 Chief Accountant Prepared on 28 March 2011 Acting General Director Nguyen Ha Ninh Nguyen Hoang Giang tement should be read in conjunction with the notes to the financial statements 13

15 I. OPERATION FEATURES NOTES TO THE Year Investment form : Joint Stock Company 2. Operating field : Trading securities 3. Main operations : Securities brokerage, securities self trading, trusted investment portfolio management, securities investment consultation 4. Personnel As of 31 December 2010, the Company had 283 employees (at the end of the previous year, the Company had 220 employees). II. FISCAL YEAR AND STANDARD CURRENCY UNIT USED IN ACCOUNTING 1. Fiscal year The fiscal year of the Company is from 1 January to 31 December annually. 2. Standard currency unit The standard currency unit used in accounting is Vietnam Dong (VND). III. ACCOUNTING STANDARDS AND SYSTEM APPLIED 1. Accounting system applied The Company has been applying the accounting system of securities companies issued together the Circular No. 95/2008/TT BTC dated 24 October 2008 of the Finance Minister and the Circulars giving guidance on the implementation of accounting standards and system of the Ministry of Finance. 2. Statement on the compliance with the Accounting Standards and System The General Directors ensure to follow all the requirements of the prevailing Vietnamese Accounting Standards and System of securities companies issued together the Circular No. 95/2008/TT BTC dated 24 October 2008 of the Minister of Finance and the Circulars giving guidance on the implementation of accounting standards and system of the Ministry of Finance in the preparation of these financial statements. 3. Accounting form The Company has been using the accounting form of general journal recording in the computer. IV. ACCOUNTING POLICIES 1. Accounting convention All the financial statements are prepared on the basis of accrued accounting (except for information related to cash flows). These notes form an integral part of and should be read in conjunction with the financial statements 14

16 2. Cash and cash equivalents Cash and cash equivalents include cash on hand, cash in bank, cash in transit and short-term investments of which the due dates can not exceed 3 months from the dates of the investments and the convertibility into cash is easy, and which do not have a lot of risks in the conversion into cash. 3. Principles of evaluation of fixed assets Fixed assets are determined by their historical costs less accumulated depreciation. Historical costs of fixed assets include all the expenses of the company to have these fixed assets as of the dates they are ready to be put into use. Other expenses incurred subsequent to the initial recognition are included in historical costs of fixed assets only if they certainly bring more economic benefits in the future thanks to the use of these assets. Those which do not meet the above conditions will be recorded into expenses during the period. When a fixed asset is sold or disposed, its historical cost and accumulated depreciation are written off, then any gain/loss arisen are posted into the income or the expenses during the period. Fixed assets are depreciated in accordance with the straight-line method over their estimated useful lives. The depreciation years are as follows: Fixed assets Years Machinery and equipment 3 5 Office equipment 3 10 Management software Financial investment The Circular No. 95/2008/TT-BTC allows securities companies to record investments in securities in accordance with either the original cost method or the reasonable value method. Accordingly, the Company has selected the original cost method to record investments in securities. Trading securities Trading securities are recorded at their original costs. Dividends and bond interest during the year are recognized to decrease the costs of securities for the acrrued interest before the purchasing date and to incease the turnover from investments for the interest commencing from the purchasing date. Costs of securities sold are determined in accordance with the instant weighted average method. Provision for devaluation of trading securities Provision for devaluation of trading securities is made for each particular type of securities in the market and of which the market value decreases in comparison with the book value. The market prices of listed securities are determined on the basis of reference to the matching price (the average price for Hanoi Stock Exchange, the closing price for Ho Chi Minh Stock Exchange) as of the balance sheet date. The market prices of unlisted securities are determined on the basis of the average exchange price in the market of the unlisted public companies (UPCom) for the companies which have registered These notes form an integral part of and should be read in conjunction with the financial statements 15

17 to trade in this market, or the average price on the basis of exchange price provided by at least 3 securities companies as of the balance sheet date for the companies which have not registered to trade in the UPCom market. For types of securities which have not had reference prices from the above sources, no provision is appropriated. Other financial investments Other financial investments are recorded at their original costs. When an investment is liquidated, the differences between net liquidation values and book values are recorded into income or expenses during the period. Provisions for loss of investments in other economic organizations are made when these organizations suffer from loss (except for the loss according to the plan already determined in the Company s business budgets before making the investments) at the rate equivalent to the rate of capital contribution of the Company in these organizations. 5. Re-purchasing and re-selling contracts The assets which are sold out with the commitment of re-purchasing at a specific time in the future (re-purchasing contracts) are not recorded to decrease in the financial statements. The amount received in accordance with these re-purchasing contracts is recognized as a due debts in the balance sheet and the difference between the selling price and the committed re-purchasing price in the future is recognized as assets, or income to be transferred and allocated into the business results during the duration of re-purchasing contract. The assets which are purchased with the commitment of re-selling out at a specific time in the future (re-selling contracts) are not recorded to increase in the financial statements. The amount paid in accordance with these re-selling contracts is recognized as assets in the balance sheet and the difference between the purchasing price and the committed re-selling price is recognized as income, or payable accounts to be transferred and allocated into the business results during the duration of re-selling contract. 6. Transaction of purchasing deposit securities This is the transaction in which the Company allows customers to overdrawn purchase securities when accounts of customers do not have enough money. Purchased securities are mortgaged for the overdraft. At present, there is no statutory document of the State giving guidance on the implementation of transaction of purchasing deposit securities. The Ministry of Finance has issued the 2 nd draft of Circular giving guidance for transaction of purchasing deposit securities. The Company is reviewing the contents of this draft to make suitable adjustments when the Ministry of Finance officially issues the Circular. 7. Prepaid expenses Prepaid expenses include expenses for tools, instruments already put into use, expenses for large repair of fixed assets are allocated into expenses during the period in accordance with the straight line method with the duration not over 2 years. These notes form an integral part of and should be read in conjunction with the financial statements 16

18 8. Accrued expenses Accrued expenses are recorded based on reasonable estimates on the amounts payable for goods and services already used during the period. 9. Sources of capital and funds The Company s sources of capital include: Investment capital: being recorded according to the amount accutally invested by shareholders. Share premiums: the difference between issuance price and face value. Financial reserved funds are appropriated and used in line with the Company s Charter. 10. Corporate income tax Corporate income tax includes current income tax and deferred income tax. Current income tax Current income tax is the tax amount computed based on the taxable income. Taxable income is different from accounting profit due to the adjustments of temporary differences between tax and accounting figures as well as those of non-taxable or non-deductible income and expenses, losses transferred. Deferred income tax Deferred income tax is the amount of corporate income tax payable or refundable due to temporary differences between book values of assets and liabilities serving the preparation of the financial statements and the values for tax purposes. Deferred income tax liabilities are recognized for all the temporary taxable differences. Deferred income tax assets are recorded only when there is an assurance on the availability of taxable income in the future against which the temporarily deductible differences can be used. Book values of deferred corporate income tax assets are considered at the balance sheet date and will be reduced to the rates that ensure enough taxable income against which the benefits from a part of or all of the deferred income tax can be used. Deferred income tax assets which have not been recognized are considered at the balance sheet dates and recognized when it is certain to have enough taxable income to use these assets. Deferred income tax assets and deferred income tax liabilities are determined at the estimated rates to be applied in the year when the assets are recovered or the liabilities are settled based on the effective tax rates as of the balance sheet date. Deferred income tax is recognized in the income statement. In the case that deferred income tax is related to the items of the owner s equity, corporate income tax will be included in the owner s equity of the Company. These notes form an integral part of and should be read in conjunction with the financial statements 17

19 11. Recognition of turnover Turnover is recognized when the Company will probably enjoy economic benefits certainly determined. Turnover is determined in accordance with reasonable values of accounts received or to be received less trade discounts, sales allowances and sales returns. The following detailed conditions have to be satisfied to recognize turnover: Turnover from service provision Turnover from service provision are recognized when there are no uncertain factors related to payments or additional costs. In case that the services are to be provided in many accounting periods, the determination of sales in each period is done on the basis of the service completion rate as of the balance sheet date. Turnover from trading securities Turnover from trading securities is determined basing on the difference between selling prices (when receiving the notice of offsetting results of securities exchange from Securities Custody Center) and average costs of securities. Interests Interests are recorded based on the term and the interest rates applied for each period. Dividends and profit shared Dividends and profit shared are recognized when the Company has the right to receive dividends or profit from the capital contribution. Particularly, dividends received by shares are not recognized into income but only followed with the increasing number. 12. Segment reporting A business segment is a distinguishable component that is engaged in producing or providing products, services and that is subject to risks and returns different from those of other business segments. A geographical segment is a distinguishable component that is engaged in producing or providing products, services within a particular economic environment and that is subject to risks and returns different from those of components operating in other economic environments. 13. Related parties A party is considered a related party of the company in case that party is able to control the company or to cause material effects on the financial decisions as well as the operations of the company. A party is also considered a related party in case of together being controlled or affected significantly. In the consideration of relations among related parties, the nature of relations is paid more attention than the legal form. The transactions during the year with the related parties are presented in Note VIII.2. These notes form an integral part of and should be read in conjunction with the financial statements 18

20 V. ADDITIONAL INFORMATION ON THE ITEMS OF THE BALANCE SHEET 1. Cash and cash equivalents Ending balance Beginning balance Cash on hand Cash in bank 515,960,582,434 84,663,952,131 Deposit of investors for securities trading 625,700,817, ,625,608,619 Deposit for offsetting securities trading 2,459,349,021 1,338,850,839 Total 1,144,120,749, ,628,411, Short-term investment Situation of holding short-term securities and short-term investment is as follows: Ending balance Beginning balance Short-term investment in shares 630,809,473, ,157,537,451 Listed shares 446,776,972, ,304,083,006 Unlisted shares 184,032,501, ,853,454,445 Short-term investment in bonds 23,592,567,146 The Company s bonds - 23,592,567,146 Other short-term investment 49,856,681,332 Loan to Minh Ngan Real Estate JSC. 42,784,681,332 Investment cooperation 7,072,000,000 Total 680,666,155, ,750,104,597 Situation of increase, decrease and presence of short-term investment in securities Beginning balance 577,750,104,597 Increase during the year 1,294,267,496,434 Decrease during the year (1,241,208,127,339) Ending balance 630,809,473, Provision for devaluation of short-term investment Shares Listed Unlisted Total Accounting book value 446,776,972, ,032,501, ,809,473,692 Market value 384,209,017, ,590,048, ,799,065,323 Provision to be appropriated as of 31 December ,567,955,472 31,442,452,897 94,010,408,369 Provision already appropriated as of 31 December ,831,130,404 58,935,575,158 75,766,705,562 Appropriation (reversal) of the current year 45,736,825,068 (27,493,122,260) 18,243,702,808 These notes form an integral part of and should be read in conjunction with the financial statements 19

21 4. Prepayments to suppliers Ending balance Beginning balance AFE Solutions Co., Ltd. 2,654,685,000 - C&A Management Consulting Co., Ltd. 568,000,000 18,000,000 HCL Singapore Pte Ltd. 4,114,000,000 - FPT Information System Co., Ltd. 192,432, ,432,000 Octech JSC. 114,480,000 - ICA Oriental Technology Co., Ltd. 10,000,000 10,000,000 Others 895,846,053 1,096,802,581 Total 8,549,443,053 1,317,234, Receivable on activity of securities exchanging Ending balance Beginning balance Advances of selling securities for investors 99,696,563, ,773,693,792 Receivable on payment guarantee to purchase securities of investors (*) 1,012,063,443, ,507,917,637 Receivable from securities self-trading 68,062,368,188 55,459,435,531 Receivable on consulting activity 52,000,000 - Receivable from Repo contracts of securities 711,100,000 3,996,000,000 Total 1,180,585,475, ,737,046,960 (*) The Company has regulations on decision authority for payment guarantee, list of securities which can be used for guarantee and equivalent margin rate. In fact, the Company offers favour of margin rate to big customers. The process and procedures for payment guarantee and the supervision are carried out in the software. Values of secured assets which are values of shares mortgaged in the Company as of 31 December 2010 are determined as follows: - The value of secured assets for the guarantee which was listed shares was calculated by the number of mortgaged shares multiplying (x) the market prices as of 31 December 2010, there are 3 clients whose value of secured assets is deficient by the amount of VND 11,413,127,154. A provision for bad debts has been appropriated for this value. - The value of secured assets for the guarantee which was unlisted shares was calculated by the number of mortgaged shares multiplying (x) the prices revaluated at the safest level by the Company (lower than the book value) as of 31 December Details are as follows: + 5,588,000 shares of Tay Giang Cao Bang Mineral JSC. at the price of VND 10,000/share, equivalent to the value of VND 55,880,000,000; + 2,800,000 shares of IPA Investments Group JSC. at the price of VND 7,000/share, equivalent to the value of VND 19,600,000,000. These notes form an integral part of and should be read in conjunction with the financial statements 20

22 6. Other receivable Ending balance Beginning balance Receivable on loans to staff 1,887,800,000 1,887,800,000 Interest from loans to staff 75,975,333 75,975,333 Payment on behalf of IPAAM Company - 1,161,718,914 Receivable from Ms. Trinh Phuong Nhi due to transferring money to wrong account 1,419,230,000 1,419,230,000 Estimated receipt from contracts of bank interest rate assistance - 5,162,130,196 Receivable on securities purchasing right - 1,623,040,000 Receivable from IPA project 557,204,146 1,230,314,511 Others 451,137,957 1,674,520,500 Total 4,391,347,436 14,234,729, Provision for bad debts This is provision for doubtful debts. Situation of fluctuations in provision for bad debts is as follows: Current year Previous year Beginning balance - - Additional appropriation 14,814,102,783 - Refund of provision - - Ending balance 14,814,102, Short-term prepaid expenses Ending balance Beginning balance Expenses for tools, instruments, office stationery 891,037, ,119,607 Expenses for office repair 1,214,271, ,718,199 Total 2,105,309,624 1,054,837, Other current assets Ending balance Beginning balance Advances 308,455, ,030,177 Short-term deposits and mortgages 864,991, ,671,575 Total 1,173,446, ,701,752 These notes form an integral part of and should be read in conjunction with the financial statements 21

23 10. Fixed assets Machinery and equipment Office equipment Total tangible fixed assets Intangible fixed assets Historical costs Beginning balance 6,909,968,143 23,025,873,833 29,935,841,976 22,229,363,434 New purchase 3,615,047, ,098,911 4,392,146,365 4,518,585,900 Disposal and liquidation (21,000,000) (21,000,000) Ending balance 10,525,015,597 23,781,972,744 34,306,988,341 26,747,949,334 Depreciation Beginning balance 2,663,691,284 10,836,572,709 13,500,263,993 3,364,052,704 Depreciation during the year 2,101,093,701 4,708,749,324 6,809,843,025 3,333,176,736 Disposal and liquidation (12,522,215) (12,522,215) Ending balance 4,764,784,985 15,532,799,818 20,297,584,803 6,697,229,440 Net book value Beginning balance 4,246,276,859 12,189,301,124 16,435,577,983 18,865,310,730 Ending balance 5,760,230,612 8,249,172,926 14,009,403,538 20,050,719, Construction in progress Software for social network "VNDirect community" Software for VNDirect Virtual Stock Exchange Beginning balance Increases during the year Inclusion in fixed assets Ending balance 200,255, ,255,150 62,672, ,672,812 Total 262,927, ,927, Long-term prepaid expenses Beginning balance Increases during the year Allocation Ending balance Expenses for tools, instruments, office stationery 1,154,899,092 3,122,665,663 1,865,453,326 2,412,111,429 Expenses for asset repair 392,952,435 1,097,782, ,346,799 1,158,388,567 Total 1,547,851,527 4,220,448,594 2,197,800,125 3,570,499,996 These notes form an integral part of and should be read in conjunction with the financial statements 22

24 13. Funds to Payment Assistance Fund Current year Previous year Initial funds 120,000, ,000,000 Additional funds annually 3,802,630,829 1,620,953,813 Ending balance 3,922,630,829 1,740,953, Short-term loans and debts Ending balance Beginning balance Loans from banks 93,000,000, ,000,000,000 Lien Viet Bank 100,000,000,000 Maritime Bank 50,000,000,000 Viet A Bank 93,000,000,000 Loans from other organizations and individuals 57,650,000,000 70,700,000,000 PetroVietnam Finance Corporation 21,000,000,000 Loans from Mr. Vu Hien (*) 57,650,000,000 49,700,000,000 Total 150,650,000, ,700,000,000 (*) Loans from Mr. Vu Hien the Board Member (the husband of the Board Chairman) in accordance with the following contracts: - Contract dated 2 December 2010 with the amount of VND 51 billion, the term of 3 months, the interest rate of 17%/year; - Contract dated 25 October 2010 with the amount of VND 6.65 billion, the term of 6 months, the interest rate of 15.5%/year. These notes form an integral part of and should be read in conjunction with the financial statements 23

25 Details of increases/decreases of loans are as follows: Loans from banks Loans from individuals Total Beginning balance 171,000,000,000 49,700,000, ,700,000,000 Increases during the year 204,795,000, ,803,800, ,598,800,000 Amount already paid during the year (282,795,000,000) (143,853,800,000) (426,648,800,000) Ending balance 93,000,000,000 57,650,000, ,650,000, Payable to suppliers Ending balance Beginning balance IPA Investments Group JSC. 178,331,625,226 1,429,576,125 Thien Hung Construction Private Enterprise 130,488,450 DC Company - 41,752,075 Tan Quang Minh Company - 36,225,000 ADG National System Integration Corporation - 254,545,200 VTS Logistics Service JSC ,952,459 Others 34,276,617 86,330,039 Total 178,496,390,293 1,949,380, Taxes and other obligations to the State budget Beginning balance Amount payable Amount already paid Ending balance VAT on local sales 54,430,932 17,095,932,078 16,245,580, ,782,092 Corporate income tax 48,618,157,087 35,851,893,494 54,190,381,579 30,279,669,002 Personal income tax of employees 54,058,673 2,088,864,976 2,058,927,517 83,996,132 Personal income tax of investors 24,584,051,136 21,860,244,658 2,723,806,478 Other taxes 3,000,000 3,000,000 - Total 48,726,646,692 79,623,741,684 94,358,134,672 33,992,253,704 Value added tax (VAT) The Company has to pay VAT in accordance with the deduction method. Activities of securities brokerage, securities self-trading, investment portfolio management, securities investment consultation are not subject to value added tax. Other activities are subject to VAT at the rate of 10%. Other taxes The Company has declared and paid these taxes in line with the prevailing regulations. These notes form an integral part of and should be read in conjunction with the financial statements 24

26 Corporate income tax The Company has to pay corporate income tax on taxable incomes at the rate of 25%. Estimated corporate income tax payable during the year is as follows: Current year Previous year Total accounting profit before tax 141,004,665, ,892,822,991 Increase/decrease adjustments of accounting profit to determine profit subject to corporate income tax: 2,402,908,974 (41,998,558,303) - Increase adjustments 15,868,852,783 Expenses not deductible to calculate tax 1,054,750,000 Provision for bad debts (temporary taxable difference) 14,814,102,783 - Decrease adjustments (dividends and profit shared) (13,465,943,809) (41,998,558,303) Taxable income 143,407,573, ,894,264,688 Income exempted from tax Losses of the previous years transferred (93,356,985,177) Taxable income 143,407,573,977 92,537,279,511 Corporate income tax rate 25% 25% Corporate income tax payable at the common tax rate 35,851,893,494 23,134,319,878 Corporate income tax deducted (6,940,295,963) Corporate income tax payable 35,851,893,494 16,194,023,915 Adjustment of corporate income tax payable of the previous years Total corporate income tax payable 35,851,893,494 16,194,023, Accrued expenses Ending balance Beginning balance Loan interest expenses, share repo 7,956,131,328 5,901,615,559 Brokerage commission 529,070,838 1,595,197,277 Transaction fee payable to Ho Chi Minh Stock Exchange 640,316, ,790,431 Transaction fee payable to Hanoi Stock Exchange 846,185, ,099,833 Estimated interest payable on contracts of interest rate assistance 67,748,175 Expenses payable to Vietnam Securities Depository 31,655,812 Transaction fee payable to transaction agencies 26,383,933 Office expenses payable 729,358, ,966,555 Total 10,701,062,587 8,652,457,575 These notes form an integral part of and should be read in conjunction with the financial statements 25

27 18. Payable on activity of securities exchanging Including deposits of investors to pay securities exchange. 19. Dividends, bond principal and interest payable on behalf of others Ending balance Beginning balance Military Bank - 796,500,000 VOSCO - 235,920,000 IPA Investment Group JSC. 150,986, ,261,500 PetroVietnam Insurance Joint Stock Corporation 12,390,200 Vietcombank 20,500,001 - Dividends of other companies 9,348,500 82,989,278 Total 193,225,201 1,284,670, Payable to issuance agency of securities Including payment of investors to realize the right of purchasing securities additionally issued payable to issuance agency of securities. 21. Other accounts payable Ending balance Beginning balance Trade Union s expenditure 165,250,535 41,240,717 Social insurance, health insurance payable 1,215,566 12,302,384 Deposits for brokerage contracts to purchase bonds 706,611,554, ,362,247,995 Capital contribution of shareholders 104,357,500,000 Securities to arrive 9,739,377,833 Payable to investment trusters on selling securities 754,925, ,507,139 Payable on deposits of investors for auction 65,444,995 Others 45,197, ,984,106 Total 707,643,589, ,648,160,174 These notes form an integral part of and should be read in conjunction with the financial statements 26

28 22. Owner's equity Statement of fluctuations in owner s equity: Owner s investment capital Share premium Treasury stocks Financial reserved fund Retained profit after tax Total Beginning balance of the previous year 300,000,000,000 50,000,000,000 9,710,457, ,710,457,727 Profit of the previous year 211,698,799, ,698,799,076 Appropriation of funds in the previous year 22,140,925,680 (22,140,925,680) Sharing dividends of the previous year (30,000,000,000) Ending balance of the previous year 300,000,000,000 50,000,000,000 22,140,925, ,268,331, ,409,256,803 Beginning balance of the current year 300,000,000,000 50,000,000,000 22,140,925, ,268,331, ,409,256,803 Increase of capital from share premium 50,000,000,000 (50,000,000,000) Share of dividends by shares to increase capital 149,998,400,000 (149,998,400,000) - Increase of capital in cash during the year 499,991,600,000 95,000,000,000 (3,310,000) 594,988,290,000 Profit of the current year 105,152,771, ,152,771,508 Appropriation of funds in the current year 10,515,277,151 (10,515,277,151) - Ending balance of the current year 999,990,000,000 95,000,000,000 (3,310,000) 32,656,202, ,907,425,481 1,241,550,318,311 These notes form an integral part of and should be read in conjunction with the financial statements 27

29 Shares Ending balance Beginning balance Number of shares registered to be issued 100,000,000 30,000,000 Number of common shares already issued 99,990,000 30,000,000 Number of shares repurchased (331) Number of outstanding common shares 99,989,669 30,000,000 Face value per outstanding share: VND 10,000/share. VI. ADDITIONAL INFORMATION ON THE ITEMS OF THE INCOME STATEMENT 1. Operating expenses Current year Previous year Expenses for securities brokerage 24,559,071,392 14,981,786,186 Expenses for securities self-trading 97,707,680,885 63,878,044,588 Expenses for securities custody 50,709,390 Appropriation of provision for devaluation of investment in securities 18,243,702,807 (30,106,252,035) Expenses for using capital 102,020,986,838 36,390,047,071 Expenses for investment consultation 1,873,152,000 Total 244,404,593,922 85,194,335, Administrative overheads Current year Previous year Expenses for staff 32,182,228,461 19,576,642,907 Expenses for materials 1,154,604 Expenses for tools and instruments 256,105,791 2,584,829,115 Fixed asset depreciation 10,057,530,032 8,639,951,431 Taxes, fees and duties 780,146, ,337,696 Provision for bad debts 14,814,102,783 External services hired 26,797,065,291 15,277,213,769 Other expenses in cash 855,722,639 Total 84,887,179,093 47,575,852, Other income Current year Previous year Gain from disposal and liquidation of fixed assets, tools and instruments 27,760,310 60,951,431 Gain from penalties as customers break contracts 784,196,810 3,023,000,000 Others 49,872, ,857,724 Total 861,829,495 3,207,809,155 These notes form an integral part of and should be read in conjunction with the financial statements 28