Bao Viet Annual Report
description
Transcript of Bao Viet Annual Report
2010MESSAGE
04 Chairman’s Message
12 Key Performance Indicators
06 Report of The Chief
Executive Officer
BAO VIET – NEW FOUNDATION
Board of Directors
of Bao Viet Holdings
16
One Bao Viet - One New
Foundation
18
Bao Viet 2011-2015 Strategy20
Organizational Structure22
Core Values of Bao Viet21
Bao Viet Development
Milestones
23
Shareholders24
Strategic Partners26
Bao Viet Holdings
Supervisory Board
28
Governance Report29
SUBSIDIARIES
Bao Viet General
Insurance Corporation
Bao Viet Life Corporation
Bao Viet Commercial
Joint Stock Bank
Bao Viet Securities
Joint Stock Company
Bao Viet Investment
Joint Stock Company
Bao Viet Fund Management
Company
34
38
42
44
46
48
COMMUNITYINVOLVEMENTAND SHAREHOLDERRELATIONS
54
56
Community Involvement
30A Program
57 Investor Relations
58 Human Resources
Development
and Efficient Working
Environment Estabishment
52 Ten Highlights in 2010
FINANCIALSTATEMENTS
59
161
Vietnam Accounting
Standard
International Financial
Reporting Standard
COINVAN
One Bao Viet – One New Foundation:
The strategy to develop Bao Viet into the leading
financial-insurance institution in Vietnam is on the
basis of a new solid foundation and unified brand.
This will help the company to meet the changing and
expanding financial demands of customers and
enable it to gradually integrate into the regional and
world economy. In 2010, Bao Viet started to implement
this strategy.
BBN
CHAIRMAN’S MESSAGE
ANNUAL REPORT 2010
04BAO VIET HOLDINGS
05
The mission of Bao Viet is “To ensure the peace of mind, prosperity,
and long term benefits for our customers, investors, employees
and community.”
20
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Ladies and Gentlemen,
In 2010, Vietnam’s economy and, in particular, the financial-
banking sector faced many difficulties following the global
financial crisis. The year was also challenging for Bao Viet due
to high inflation, a trade deficit, exchange rate fluctuations
and volatile investment environment. Many of our customers
also experienced business constraints in this operating environment.
Under the honourable leadership of the Party and the effective
management of the Government - together with the efforts of the
business community - inflation was restrained, economic growth
was comparatively high with countries in the region, the macro-
economy was stabilized, and social welfare was maintained.
Against the backdrop of a challenging economy, Bao Viet’s Board
of Directors (BOD) carefully monitored market movements,
implemented the policies of the Party and the Government,
and steered the business to meet its 2010 targets, completing
tasks entrusted by the General Shareholders. As a result, Bao
Viet strongly overcame the obstacles to fulfill its business plan,
meeting growth, revenue and profit targets. The company
began to implement its ‘One Bao Viet - One New Foundation’
strategy to take the business to new heights.
In 2010, the total revenue of Bao Viet Holdings was VND1,259
billion, recording a growth of 36.4% which was 8.8% higher
than the plan enstrusted by shareholders. Total profit before
tax was VND887 billion. The return on charter capital for the
year 2010 was 13.6% on charter capital of VND6.267 billion and
12.5% on the new charter capital after the right issue in early
2011. With this result, Bao Viet Holdings will pay its 2010
dividend at 12% on charter capital, higher than the initial plan
of 11% that was approved at the 2010 Annual General Meeting
of Shareholders.
With the support and strategic and technical expertise of
HSBC, Bao Viet’s sole foreign strategic partner, the company
has continued to invest in projects that will deliver long-term
growth and development, according to international
standards. These projects include the establishment of a
modern and transparent corporate governance system;
investments in companywide technology projects to enable
and drive business transformation and growth; the gradual
move to a centralized management business model offering a
‘one-stop shop’; enhanced investment in people management
and brand development; and the promotion of cross-
subsidiary cooperation. Bao Viet is aiming to harness the sum
of its strengths to provide customers with comprehensive
financial-insurance products and services.
The strong fluctuation in the financial, monetary and securities
markets in recent years has resulted in many risks, especially
credit risk, and market risk related to interest rates, inflation and
exchange rates. In this context, the BOD has established a Risk
Management Block, Investment Block, and Asset Liability
Management Committee (ALCO). The operation of these new
governance mechanisms helps Holdings to consistently administer
and manage our investments through the company, enhancing
risk management and improving investment efficiency.
Bao Viet has also improved its financial capacity, completing a
private placement to increase the ownership of its strategic
partner HSBC to 18% as part of the rights issue to existing
shareholders, increasing charter capital to VND6,804 billion,
owner’s equity reached over VND10,680 billion by early 2011.
This provides important financial capacity for the future
development of Bao Viet.
Bao Viet has also finalized a five year business development
strategy (2011-2015), with the mission: “To ensure the peace
of mind, prosperity, and long term benefits for our customers,
investors, employees, and community”, and the objective: “To
become Vietnam’s leading financial–insurance group, with
solid financial strength, strategically integrating into regional
and international markets, focused on three pillars: insurance,
banking and investment.”
To achieve this mission and objective, Bao Viet will complete
the foundation phase of its development in 2011. Against this
solid foundation and under a unified brand, Bao Viet will
continue to change and develop, providing diversified
financial-insurance services and products to customers. In the
process, we will ensure Bao Viet continues to improve
customer service quality and competitiveness, and deliver
strong revenue and profit growth, to meet the expectation of
shareholders, customers and employees.
2010 was an important milestone for Bao Viet as it celebrated
its 45 years of establishment, receiving the Second-Rank
Independence Medal from the State. Bao Viet is proud to be an
insurance company with the longest history in the industry, a
pioneer in business innovation and diversification.
Bao Viet’s success since 1965 has resulted from the hard work
and creativity of our employees across the generations. We are
grateful for this contribution and also appreciate the valuable
support from our investors, customers and partners.
Bao Viet is committed to developing our business with care
and effort, ensuring that the trust that shareholders and
customers place in us is well earned.
On behalf of the BOD of Bao Viet Holdings, I would like to wish
our shareholders, customers and partners a happy, peaceful
and properous year in 2011.
Thank you very much.
Chairman
Le Quang Binh
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REPORT OF THE CHIEF EXECUTIVE OFFICER
In addition to efforts to fullfil the business plan, the key task in 2010 was
to implement the strategy to build One Bao Viet – One New Foundation
and a new unified Bao Viet brand.
ANNUAL REPORT 2010
06
Dear Shareholders, Customers and Partners,
The economy in Vietnam grew by 6.7% in 2010 – which
compared well with the average growth of the world
economy – and the macro economy was stable. Even so,
the financial, banking and investment markets still
contained many risks and irregularities, particularly following
the global financial crisis.
In this challenging environment, Bao Viet’s Board of
Management and our employees worked tirelessly to fullfil
our business plan, under the close and effective direction of
the Board of Directors (BOD).
Business performance in 2010 was positive and Bao Viet
Holdings met its targets. The total consolidated revenue of
Holdings was VND12,863 billion (+21.8% compared to
2009); including revenues from insurance activities that
reached VND8,551 billion (+12%) and revenues from
financial activities that reached VND3,079 billion (+28%).
The consolidated profit before tax (PBT) of Bao Viet was
VND1,255 billion, from which profit after tax (PAT)
amounted to VND953 billion (+6.8%).
Revenue from the core insurance businesses amounted to
66% of the total consolidated revenue. This ratio decreased
from 72% in 2009 due to the improved contribution from
our banking and financial businesses.
The total revenue of the parent company, Bao Viet
Holdings, was VND1,259 billion, 108.8% of plan. Total PAT
was VND852 billion.
Holdings’ revenue from financial investments was VND521
billion (+34%), accounting for 41% of the total revenue of
Holdings. This strong growth was due to the additional
investment capital after the private placement to HSBC.
The detailed business results are explained as follows.
General Insurance
Revenue from non-life insurance reached VND4,574 billion
(+14.7% compared to 2009), accounting for 53% of Bao
Viet’s total revenue from insurance activities. Non-life
insurance profits attributable to the parent company, Bao
Viet Holdings, was VND198 billion (+32%), accounting for
15.7% of the revenue at Holdings.
In 2010, the non-life insurance market grew by approxi-
mately 23% and this increased competition significantly.
The new non-life insurance strategy of growth and
efficiency for general insurance resulted in an industry-
topping profit in Vietnam in 2010 (VND73 billion). Bao Viet
has maintained its position as the market leader with 24.6%
market share.
Life Insurance
Total revenues in the life insurance business reached
VND4,046 billion (+9.2% compared to 2009), accounting
for 47% of the total consolidated revenue of the group. Life
insurance profit transferred to the parent company was
VND402 billion (+23%), accounting for 32% of the revenue
at Holdings.
Significant changes were implemented in the organizational
model of Bao Viet Life in 2010 to improve its competitiveness.
This included a restructure of the life business to a centralized
management model, improvements in training and the
professionalism of the distribution network; improvements
in customer service quality, and the development of
information technology systems to support business
activities.
BAO VIET HOLDINGS
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Investment
The total consolidated financial assets under management
of Bao Viet at the end of 2010 were VND39,333 billion
(+34% compared to 2009). Total financial assets under
management by Bao Viet Fund Management Company was
VND19,966 billion (+13.6%). The financial portfolio of Bao
Viet was dominated by bonds, accounting for 50%. The
proportion of investments in term deposits accounted for
40%, the proportion of investment in equities was below
10% of the total investment portfolio.
In response to the volatile financial market in 2010, Bao Viet
focused on improving our investment governance. This
included the establishment of the Asset Liability
Management Committee, and enforcing improved
investment procedures at Holdings and the subsidiaries.
Banking
After two years in operation, the banking business of Bao
Viet has made huge progress in growing and servicing its
young network. The bank's network has been expanded to
26 transaction offices. The development of Bao Viet’s
banking business has helped to transform the company
into a comprehensive financial group. The company is now
able to provide customers a diversified package of financial
services in the fields of insurance, banking and investment.
Bao Viet’s banking business is growing. Revenue from
banking activities has contributed 7.4% to the total
consolidated revenues of the group in 2010 (+ 3.4%). Profit
from banking also contributed 7% to the PAT of the parent
company.
Securities and Brokerage
The securities business had a difficult year in 2010 due to
volatility and instability in the market. The company has
focused on strengthening its organizational structure and
improving the quality of customer service. It is also
enhancing its information technology infrastructure and
improving risk management to meet sustainable growth
targets in the future.
Real Estate and Property Development and Management
Bao Viet is managing its property porfolio and developing
new projects for customers. In 2010, the Bao Viet Commercial
Building in 233 Dong Khoi, Ho Chi Minh City opened,
contributing to the revenue of Bao Viet Holdings. Some
other key property projects of Bao Viet include the building
in 7 Ly Thuong Kiet Street and Bao Viet –SCIC Financial
Tower in Tran Duy Hung Road - Hanoi.
ONE BAO VIET – ONE NEW FOUNDATION
In addition to efforts to fullfil the business plan,
the key task in 2010 was to imlement the strategy
to build One Bao Viet – One New Foundation and
a new unified Bao Viet brand.
Improvements in Corporate Governance
Bao Viet Holdings continues to develop and improve the
governance structure of Holdings and the subsidiaries,
according to international standards. The Audit Committee
was strengthened to improve its effectiveness in supporting
Bao Viet’s BOD in risk control. As previously mentioned, the
Asset Liability Management Committee was established to
promote efficiency in balance sheet management,
investment and liquidity in the group.
Bao Viet prepared and published financial statements
according to both Vietnam Accounting Standards (VAS)
and IFRS in order to strengthen openess and transparency.
Innovation in Management and Information Technology
Bao Viet has invested around USD25 million in information
technology projects. In 2010, Bao Viet introduced professional
software in life insurance, securities, banking, and accounting,
delivering a consistent IT infrastructure within the group.
Currently, a number of key projects in the areas of non-life
insurance, fund management and technology infrastructure
are still being expeditiously implemented.
The IT development plan is important to create the necessary
technological infrastructure to transform the business
model towards centralized management and a ’one-stop
shop’. This will help to enhance the professionalism of tools
and faciliate improvements in customer service quality.
After finishing Phase II of the Technical Support and
Capability Transfer Agreement (TSCTA) between Bao Viet
and HSBC Insurance (Asia-Pacific) Holdings Limited, Phase
III is being carried out in a number of areas: actuary,
information technology, finance, marketing and communi-
cations, risk management, human resources, insurance,
and banking. This will help to improve and enhance
management quality in key areas.
Investment in Human Resources
In the implementation of Bao Viet’s human resources
development strategy, the company has organized many
training courses outlined in the company’s learning map.
Bao Viet Holdings is also implementing projects on salary
and remuneration policy reform and performance appraisals
in subsidiaries. Great attention is paid to the recruitment of
new employees, with a focus on skills, expertise and
professionalism.
In addition, the introduction of HSBC experts in embedded
leadership roles across Bao Viet has been an important
factor in improving standards, quality and excellence at Bao
Viet. A new governance model, the improving quality of our
workforce, and a performance-based remuneration and
assessment policy are all essential elements to the future
success of Bao Viet.
Brand Development
To begin the process of building a unified brand, that joins
up the collective value of the group, Bao Viet Holdings
launched a new brand identity in January 2010.
Bao Viet will continue to intensively and extensively carry
out the brand development strategy to better serve our
customers, and improve our competitiveness, transparency
and trust among shareholders, employees and community.
ANNUAL REPORT 2010
08
21.8%
VND Billion
12,863Total Consolidated Revenues
33%
VND Billion
44,768Total Consolidated Assets
12 billion
VND Billion
1,255Consollidated Profit before Tax
36%
VND Billion
1,259Total Revenues of Holdings
45 billion
VND Billion
852Profit after Tax of Holdings
18.7%
VND Billion
6,804Charter Capital of Holdings
BAO VIET HOLDINGS
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Modernization of the IT system: Bao Viet promotes the
consolidation of a centralized and modern IT system by
bringing into operation international software in life,
non-life, finance, investment, and by developing customer
database applications that bring into full play the strength
and coordination among subsidiaries under the ’financial
supermarket’ model.
Human Resources Development: The focus on creating a
professional and effective working environment will help
employees to increase their productivity and creativity. Bao
Viet will conduct a range of training courses to develop our
people, and apply market-oriented salary and remuneration
policy, developing a performance-based working culture.
Brand Development: The group will continue to build a
strong and unified brand, strengthen internal and external
communications capability, and conduct marketing
activities to enhance the image and prestige of Bao Viet.
also focusing on macro-economic stabilization and
inflation control policies; with a strong start to the
economic restructuring and growth model transformation
processes. This will create favorable conditions for
enterprises to develop business and grow the market.
There are also many market risks in 2011, especially high
inflation, fluctuation in exchange rates and interest rates.
Many businesses will have difficulties due to the pressure of
rising input costs, high interest rates and exchange rate
fluctuations. The stock market is forecast to be flat. The
insurance market is forecast to grow about 12-15% in the
field of life insurance and 22-25% in non-life insurance.
On the basis of the 2011 economic analysis and forecast, Bao
Viet will ensure we grow our business to meet business targets
while continuing to invest in building a solid foundation for
future development. We also must remain focused on
improving competitiveness in the core areas of insurance,
banking, securities, sustainably developing in these areas.
The business targets and key solutions in 2011 of Bao Viet
Holdings follow.
2011 Business Targets
Bao Viet will continue to build a firm foundation in 2011. Bao
Viet Holdings has targeted total consolidated revenue of
VND14,800 billion (+15% compared with 2010). Consolidated
PAT of Bao Viet is planned to be VND1,138 billion (+16.8%).
Total revenue plan of Bao Viet Holdings is targeted to be
VND1,300 billion (+3%). Total PAT is planned to be VND903
billion, about 106% of 2010.
To reach the above targets of Bao Viet’s BOD, the Board of
Management will carry out the solutions defined in the
strategy for One Bao Viet-One New Foundation. The solutions
for 2011 follow.
Finalization of the Governance Structure: Consolidate
the organizational structure of Holdings and the Subsidiaries
towards specialization and promoting autonomy; improve
the efficiency of Bao Viet’s BOD Supporting Committee;
improve the quality of Risk Management, Asset Liability
Management Committee, Investment, Strategy Committees
to establish a governance mechanism throughout the
company.
ANNUAL REPORT 2010
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Improved Financial Capacity
The successful private placement to strategic shareholder
HSBC and the wider share issue to existing shareholders
have contributed to an increase in the charter capital of
Bao Viet Holdings from VND5,730 billion to VND6,804
billion. Owner’s equity has grown from VND8,436 billion to
VND10,510 billion. Financial resource obtained after the
two issuances is equivalent to VND2,523 billion and is used
to increase charter capital for non-life insurance being from
VND1,000 billion to VND1,500 billion and will be used to
improve financial capacity in core business areas and
investments in IT development.
Improvements in Service Quality,
Strengthening Coordination among
Subsidiaries
With the advantage of a financial-insurance group, the
subsidiaries of Bao Viet are continuing to research new
products, develop distribution networks, and enhance
coordination and cooperation to provide comprehensive
financial capability and to improve customer service.
“Efforts in 2010 to improve corporate
governance, enhance IT innovation and
improve customer service have established
a firm foundation for development and
competitiveness. This will enable Bao Viet
to successfully roll out its 2011 business
plan and five-year development strategy.”
2011 BUSINESS PLAN
2011 is the first year that the Party and Government
implement the 2011-2015 socio-economic development
strategy. This is also the first year that Bao Viet implements
its 2011-2015 Strategic Plan.
The economic environment in 2011 is promising, particularly
related to the rapid development of science, technology
and the intensive and extensive integration of Vietnam into
the world economy. The Party and the Government are
Improve the Efficiency of Investment Management:
Continue to build the portfolio structure of Holdings.
Complete the internal legal framework on investment
management and improve the professionalism and
efficiency of investment activities. Bao Viet will also
strengthen risk management in investment activities.
Strengthen the Cooperation among Subsidiaries: The
subsidiaries of the group will develop and harness a unified
customer base, thus improving the efficiency in business
cooperation and investment among them.
Developing New Products and Multi-convenience
Financial Services: focus on researching and developing
multi-convenience, integrated financial products across
subsidiaries for the benefit of our customers.
Enhance Customer Service Quality: Bao Viet aims to
continuously improve, standardize and professionalize
customer service… down to each agency and branch. We
will pilot call centers in a number of member companies
with a view to improving customer service quality.
Bao Viet Holdings and its subsidiaries are committed to
working together to successfully implement the 2011-2015
strategic solutions. We will work tirelessly to maintain our
position as the leading financial-insurance group in
Vietnam.
On behalf of the Board of Management, once again I would
like to wish all shareholders, customers and employees good
health and happiness.
Chief Executive Officer
Nguyen Thi Phuc Lam
15%
VND Billion
14,800Estimated Total Consolidated Revenues 2011
15%
VND Billion
1,445Estimated Consollidated Profit before Tax 2011
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6%
VND Billion
903Estimated Total PAT 2011
KEY PERFORMANCE INDICATORS
ANNUAL REPORT 2010
12
CONSOLIDATED PERFORMANCE
Items
BAOVIET HOLDINGS
Total Revenues
Profit Before Tax
2009
922
882
2010
1,259
887
Growth
337
6
%
36%
1%
VND billion
Items
BAO VIET INSURANCE CORPORATION
Total Revenues
Profit Before Tax
2009
4,295
219
2010
4,995
311
Growth
700
92
%
16%
42%
VND billion
Items
BAO VIET LIFE CORPORATION
Total Revenues
Profit Before Tax
2009
5,324
456
2010
6,124
600
Growth
800
144
%
15%
32%
VND billion
Unit: VND billionTotal Consolidated Revenues Consolidated Profit before Tax
10,560
12,863
20092010
1,2431,255
20092010
Unit: VND billionTotal Consolidated AssetsTotal Consolidated Invested Assets under management
29,387
39,333
20092010
33,715
44,768
20092010
Total Consolidated Revenues by Subsidiaries Total Consolidated Revenues by Businesses
219311
20092010
20092010
4,295
4,995
Total Revenues Profit before Tax
456600
20092010
20092010
5,324
6,124
Total Revenues Profit before Tax
BAO VIET HOLDINGS
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BVH’s closing price as at December 31, 2009 was
VND30,600; VNIndex on December 31, 2009 was 494.8
BVH’s closing price as at December 31, 2010 was
VND64,500. BVH’s price increased 110% whereas the
market decreased from 494.8 to 484.6 at year end.
882887
20092010
Total Revenues Profit before Tax
9221,259
20092010
Bao Viet Holdings
Bao Viet Insurance
Bao Viet Life
Bao Viet Bank
Bao Viet Securities
Others
Insurance
Finance
Banking
Others
45%
36%
7%9%2%
1%
67%
7%
24%
2%
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One Bao Viet – One New Foundation
BOARD OF DIRECTORS OF BAO VIET HOLDINGS
1999 - 2006: Deputy Director of
Corporate Finance Department
2006 - present: Director of
Corporate Finance Department
Mr. Tran Huu Tien
Member of the BOD
2008 - 2010: General Manager -
Regional Head of Insurance
Asia Pacific
Present: Group General
Manager, Group Head of
Insurance of HSBC Holdings plc;
Chairman and Chief Executive
Officer of HSBC Insurance
(Asia-Pacific) Holdings Limited
Mr. David Fried
Member of the BOD
2006 - 2011: Member of the
BOD, Head of Supervisory
Board of State Capital Investment
Corporation (SCIC)
2011 - present: Deputy CEO of
State Capital Investment
Corporation (SCIC)
Mr. Nguyen Quoc Huy
Member of the BOD
7/2004 - 12/2004: Deputy CEO
of Vietnam Insurance Corporation
and CEO of Bao Viet Vietnam
Company
2005 - 2007: CEO of Bao Viet
Vietnam Company
2008 - present: CEO of Bao Viet
Insurance Corporation, Member
of Bao Viet Holdings BOD
Mr. Tran Trong Phuc
Member of the BOD
2003 - 2006: Deputy CEO of
Vietnam Insurance Corporation
and CEO of Bao Viet Life
Company, Member of Vietnam
Insurance Corporation BOD.
2006 - 2007: CEO, Member of
BOD of Vietnam Insurance
Corporation
2007 - present: CEO, Member of
BOD of Bao Viet Holdings
Mdm. Nguyen Thi Phuc Lam
Member of the BOD
2004 - 2006: Deputy CEO of Bao
Viet Life Vietnam Company
2006 - 2007: CEO of Bao Viet Life
Vietnam Company
2008 - present: CEO of Bao Viet
Life Corporation, Member of Bao
Viet Holdings BOD
Mr. Nguyen Duc Tuan
Member of the BOD
2003 - 2006: Director of
Insurance Department Ministry
of Finance
2006 - 2007: Chairman of
Vietnam Insurance Corporation
2007 - present: Chairman of
Bao Viet Holdings
Mr. Le Quang Binh
Chairman of the BOD
ANNUAL REPORT 2010
16BAO VIET HOLDINGS
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ONE BAO VIET–ONE NEW FOUNDATIONONE BADevelop software and IT infrastructure on a
national scale
Develop unified customer database
INFORMATION TECHNOLOGY
Develop the financial supermarket model
Provide customers with comprehensive package
of products
COOPERATION
Performance management and suitable salary-reward
system
Training according to the companywide learning map
Develop performance-based culture
HUMAN RESOURCES DEVELOPMENT
Unify the brand identity
Develop brand on the basis of
the core values
Support organisational change
BRANDING
Ensure the benefit of shareholders,
employees and community
Unified and effective governance system
Transparent infomation disclosure
GOVERNANCE MODEL
Mr. Alan Royal, Chief Information
Technology Officer: The successful
deployment of information technology
systems will help Bao Viet change to a
centralized management model, helping
improve professionalism and effectiveness.
Mr. Phan Tien Nguyen, Chief Human
Resources Officer: The introduction of a
performance evaluation system in 2010 has
contributed to the development of a working
culture in which the evaluation for
remuneration is on a performance basis.
Mr. Adrian Abbott, Chief Risk Officer: The
establishment of the Risk Management
Council and Asset Liability Management
Committee across the group has created a
consistent governance system that helps to
improve the financial management of Bao Viet
to international standards.
Mr. Duong Duc Chuyen, Chief Investment,
Strategy Officer: In 2010, Bao Viet finalized its
development strategy and defined the targets,
tasks and solutions for 2011-2015. Bao Viet also
completed the investment governance
mechanism in Holdings and the Subsidiaries.
Mr. Le Hai Phong, Chief Financial & Real
Estate Management Officer: 2010 is a
significant milestone because Bao Viet has
prepared a set of financial statements for the
full accounting year according to the
international accounting standard, IFRS, as
well as Vietnamese standard, VAS.
Mr. Nguyen Thanh Hai, Chief Account: The
successful implementation of the Sun Account
software system at the Holdings and continu-
ingly at the subsidiaries in 2010 will contribute to
improve quality and progress of preparing
financial reports as well as information
management according to both IFRS and VAS
ANNUAL REPORT 2010
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BLOCK HEADS AND EXECUTIVES OF BAO VIET HOLDINGS
BAO VIET HOLDINGS
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The key task in 2010 was to implement the strategy One
Bao Viet – One New Foundation through improvements in
corporate governance, investment in information technology
and human resources, brand development, improving
financial capacity and business cooperation.
CORE VALUES OF BAO VIET
112345
QUALITY
APPROACHABLE
TEAMWORK
DYNAMIC
RESPONSIBLE
High quality in all activities and services
Friendly and professional; caring to colleagues and
customers
Cooperation between colleagues within Bao Viet;
creating a strong relationship with customers and
partners based on mutual trust and understanding
Always looking forward; continuous development;
creating opportunities and an environment to
encourage new standards, ideas and initiatives
Transparent and honest; responsible to community
MISSION
“To ensure the peace of mind, prosperity, and long term benefits for our customers,
investors, employees, and community”
STRATEGIC DEVELOPMENT PHASES
BAO VIET 2011-2015 STRATEGY
NEW FOUNDATION
2011 - 2012Integrated information
technology platform, invest-
ment in human resource
development, modern
management processes,
unified brand, strengthened
financial capacity, new
products and services deliver-
ing convenience and added
values to customers.
ADVANCED BUSINESS
MODEL
2012 - 2013One-stop financial supermarket,
centralized management and
on-demand service.
COLLECTIVE STRENGTH
2013 - 2015Create strong growth in
revenue and business
efficiency, attain international
standards for competitiveness,
become the leading brand for
service quality.
VISION
“To become Vietnam’s leading financial–insurance group, with solid financial strength,
strategically integrating into regional and international markets, focused on three pillars:
insurance, banking and investment”
ANNUAL REPORT 2010
20BAO VIET HOLDINGS
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BAO VIET DEVELOPMENT MILESTONESORGANIZATIONAL STRUCTURE
ANNUAL REPORT 2010
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Establishment of Viet Nam Insurance Company on 15/1/1965 to undertake
non-life business
Transfer into Viet Nam Insurance Cooperation
The first and only company providing life insurance products in Viet Nam
Establishment of BVSC – the first securities company in Vietnam
Establishment of Bao Viet Fund Management Company (BVF)
Successful IPO and establishment of Bao Viet Finance–Insurance Group.
On 15 October 2007, Bao Viet Holdings (Parent Company) was granted its
business license
Establishment of Bao Viet Commercial Bank (BVB)
Listing of Bao Viet Holdings shares (BVH) on HOSE
Launch of new brand identity
On 15 October 2010, Bao Viet proudly celebrated its 45 years anniversary as the
longest running company in the insurance industry, and also a pioneer in financial
services business diversification.
Remuneration and Appointment
Committee
ALCO CommetteeỦy ban Thù lao và Bổ nhiệm
Risk Management
CommitteeAudit Committee
Supervisory Board
Bao Viet Insurance Corporation
Bao Viet Life Corporation
Bao Viet Fund Management Company
Bao Viet Securities Company
Bao Viet Commercial Joint-Stock Bank
Bao Viet Investment Joint Stock Company
Bao Viet - Au Lac Limited Company
Associated Company
Internal Audit
Division
Operations
Block
Human Resources
Block
Information Technology
Block
Real Estate
Management Block
Financial Management
Block
Strategy
Development Block
Risk Management
Block
Investment
Block
Straegy and Investment
Committee
ANNUAL GENERAL MEETING OF SHAREHOLDERS
BOARD OF DIRECTORS
CHIEF EXECUTIVE OFFICER
BAO VIET HOLDINGS SUBSIDIARIES AND ASSOCIATED COMPANIES
BAO VIET HOLDINGS
23
In 2010, Bao Viet Holdings established Investment and Risk Management Blocks in order to enhance the specializa-tion and professionalism of these activities.
ANNUAL REPORT 2010
24
SHAREHOLDERS
No.
Total
Shareholder Number of Shares
Before IssuePrivate
Placementto HSBC
After Private Placement to HSBC
% Ownership
1
2
3
4
MOF
HSBC
SCIC
Other
444,300,000
59,125,161
20,400,000
49,201,444
573,026,605
77.54%
10.32%
3.56%
8.58%
100.0%
53,682,474
Numberof Shares
444,300,000
112,807,635
20,400,000
49,201,444
626,709,079
Amount inVND billion
4,443
1,128
204
492
6,267
% Ownership
70.89%
18.00%
3.26%
7.85%
100.0%
Share Issues and Change of Shareholder Structure
In 2010, Bao Viet Holdings finalized the private placement to HSBC Insurance (Asia-Pacific) Holdings Limited of 53,682,474
shares. The total amount collected from the sale of shares was VND1,878.8 billion.
Following the private placement, there is no change in the shares owned by shareholders other than by HSBC. However
there is a resultant change in the overall ownership structure when compared with 2009:
No
Total
Shareholders Numberof Shares
% ownership
Before the right issue
Public Issuewith
8.6% Ratio
After the right Issue
Numberof Shares
1
2
3
4
MOF
HSBC
SCIC
Others
444,300,000
112,807,635
20,400,000
49,201,444
626,709,079
70.89%
18.00%
3.26%
7.85%
100%
38,209,800
9,701,456
1,754,400
4,096,699
53,762,355
70.91%
18.00%
3.26%
7.83%
100%
4,820
1,225
221
533
6,804
482,509,800
122,509,091
22,154,400
53,298,143
680,471,434
Amount inVND billion
% Ownership
Also during 2010, Bao Viet Holdings issued additional shares to existing shareholders to increase charter capital as
stipulated in Resolution 03/2010/NQ-DHCD dated 17 April 2010 of the Annual General Shareholders’ Meeting (AGM). As a
result, 53,762,355 shares were issued, accounting for 99.75% of the total shares eligible for issuance, raising a total of VND
645.1 billion.
(This structure is based on the closing list of shareholders attending the AGM on 21/3/2011)
After the additional issue the shareholder structure of Bao Viet Holdings follows
No. Shareholder Number of Share % Ownership
1
2
3
4
Major shareholders (Owning more than 5% of charter capital)
- Ministry of Finance
- HSBC
Other shareholders
Local shareholders
- Institution
- Individual
Foreign shareholder
- Institution
- Individual
605,018,891
482,509,800
122,509,091
75,452,543
510,186,840
506,684,274
3,502,566
170,284,594
169,375,700
908,894
88.91%
70.91%
18.00%
11.10%
74.97%
74.46%
0.51%
25.02%
24.89%
0.13%
BAO VIET HOLDINGS
25
The HSBC team is helping to drive real and lasting
improvements across the group. A key milestone in 2010
was HSBC’s involvement in enabling Bao Viet to report its
financial accounts and performance according to
International Financial Reporting Standards (IFRS) –
important broader disclosure that reflects a genuine
commitment by Bao Viet’s management team to improve
the transparency and quality of financial reporting.
HSBC executives are also working with Bao Viet to improve
corporate governance standards. This includes the
establishment of the Asset Liability Committee (ALCO) and
Risk Management Committee (RMC). These meetings are
held regularly and are supported by a growing audit
programme.
HSBC executives are also assisting Bao Viet to manage and
implement technology projects worth some USD25
million, to enable and drive business transformation and
growth. The adoption of advanced technology and
international standards will better enable Bao Viet to
support the future needs of customers, employees and agents.
We will continue to work with Bao Viet’s management
team to drive the changes and improvements that will
consolidate the group’s leadership position in Vietnam. We
look forward to another successful year in 2011.
Mr. David Fried
Group General Manager
and Group Head of Insurance
HSBC Insurance (Asia-Pacific) Holdings Limited has both
life and non-life manufacturing capabilities in nine markets
across the Asia Pacific region including the fastest growing
emerging markets of China, India, Korea, and Vietnam as
well as Hong Kong, Singapore, Malaysia, Macau and
Taiwan. HSBC Insurance is the largest administrator of
retirement schemes in Hong Kong, capturing almost one
third share of the market. In 2010, HSBC Insurance’s profit
before tax exceeded USD1 billion; its premium income
grew nearly 30% with total assets of USD31 billion and
more than 2,500 staff provided professional support to the
business and customers.
STRATEGIC PARTNERS
HSBC INSURANCE
(ASIA-PACIFIC) HOLDINGS LTD
HSBC is delighted to support Bao Viet’s strong and profit-
able performance in 2010.
The group’s 45th anniversary was a proud milestone that
marked an unmatched legacy in Vietnam’s financial
services industry. Bao Viet’s successful brand refresh, in
January 2010, was an important sign that the company is
continuing to evolve and prepare for the future. The
company’s long history of innovation and development,
diversified business and extensive network across Vietnam
means it will continue to be one of the leading financial-
insurance groups.
We are Bao Viet’s sole foreign strategic partner and
completed our investment of an additional VND1,879bn
(USD101mn) for a further 8% shareholding in January 2010.
HSBC maintained its 18% stake in the group by fully
subscribing to the Rights Issue in November 2010 - invest-
ing an additional VND116billion (USD6million).
We have partnered with Bao Viet for over three years,
working via the HSBC Technical Support and Capability
Transfer Agreement (TSCTA). The agreement includes
cooperation across the company in areas including
corporate governance and risk management, finance,
information technology, marketing and communications,
bancassurance, and human resources.
Our partnership was strengthened in 2010 with additional
HSBC executives embedded in Bao Viet. These HSBC
members of staff operate as Bao Viet executives in the roles
of Deputy Chief Financial Officer; Chief Actuary; Chief Risk
Officer; Group Head of Marketing, Communications and
Investor Relations; and Deputy Head of Human Resources.
Statement by Mr. David FriedMr. Lai Van Dao
CEO of SCIC
ANNUAL REPORT 2010
26BAO VIET HOLDINGS
27
STATE CAPITAL INVESTMENT
CORPORATION
To increase cooperation and to harness the strategic
strengths of each party, Bao Viet Holdings and State
Capital Investment Corporation (SCIC) signed, on 22
October 2009, a Comprehensive Strategic Cooperation
Agreement with the following objectives:
Use the resources and strengths of the two companies
to satisfy the insurance needs of all companies
receiving SCIC investment with competitive pricing
and highest service quality
Cooperate in investment projects; invest in financial
products.
Cooperate in introducing, promoting and sharing
experiences in corporate governance, financial
management, human resources management, and
other areas of expertise of Bao Viet and SCIC.
According to this Agreement, SCIC committed to carry
out the obligations of a strategic investor and develop
its long-term interest in Bao Viet. The implementation of
the agreement provides an excellent opportunity for
Bao Viet to access SCIC’s partners in order to maximize
cooperation and business development opportunities,
expand its target customer database, and evolve
common business strategies in areas of mutual interest.
BAO VIET HOLDINGS SUPERVISORY BOARD GOVERNANCE REPORT
Bao Viet Holdings invests in subsidiaries and joint-venture
companies, undertaking financial services and other
activities as stipulated by the law.
After the successful equitization in 2007, the listing of
Holdings’ shares (code BVH) on HOSE in 2009 and with the
technical services support of HSBC Insurance (Asia-Pacific)
Holdings Limited, Bao Viet Holdings continues to develop
international standard governance machinery throughout
Holdings and its subsidiaries.
The operation of Bao Viet’s BOD and the evolution of
governance are evidenced as follows:
GOVERNANCE MODEL
The Governance model of Holdings has a structure whereby
shareholders invest in Bao Viet Holdings – the parent
company. The BOD of Bao Viet Holdings was nominated by
the General Shareholders Meeting to be the representative
body of the shareholders. The organizational structure of
Holdings includes BOD, Board of Management and
functional Blocks established to manage the capital in
subsidiaries, conduct the business of Holdings, and
coordinate business activities in subsidiaries.
Bao Viet Holdings invests capital and conducts its ownership
rights in subsidiaries, joint ventures. Bao Viet Holdings sends
capital representatives to subsidiaries and joint ventures to
serve on the Members’ Council/Board of Directors (where
Bao Viet invests 100% capital) or to be representatives on the
Members‘ Council/Board of Directors. Bao Viet Holdings
develops internal governance regulations to ensure the
efficient capital management throughout Holdings and in
the subsidiaries and joint venture as stipulated in the
Enterprise Law, Operation Regulations and Charters of the
Holdings and subsidiaries.
OPERATION OF BAO VIET’S BOD
In 2010, the membership of Bao Viet Holdings BOD
comprised of seven members. In implementing the Charter
of Bao Viet Holdings and Operation Regulations of the BOD,
four regular meetings were held in 2010 to review and
approve the resolutions under the authority of the BOD.
The BOD collected official comments of BOD members to
resolve nearly 100 issues related to the Holdings’ business
operations including corporate governance, implementation
of investment projects, instruction on the implementation
of BOD resolutions, AGM and BOD’s decisions, leading to
some notable achievements:
Organizational structure: the BOD agreed to establish
Risk Management and Investment Blocks, to appoint Block
Heads to supplement the senior leadership team of Bao
Viet Holdings.
Governance mechanism: The BOD instructed the prepara-
tion and promulgation of Investment Regulations for Bao
Viet Holdings, Regulations for Asset Liability Management
Committee, Investment and Asset Management of Bao Viet
Holdings, Risk Management of Bao Viet Holdings and other
regulations on human resources management.
Investment projects: The BOD made decisions on
property projects, IT development projects and promoted
professionalism in capital management in these projects.
Strategy management: the BOD commissioned the
preparation and development of 2011-2015 strategies for
Holdings and Subsidiaries.
Increased capital to enhance financial capacity: The BOD
successfully carried out two capital increases during 2010
and instructed an increase in capital of the life insurance
business from VND1,000 billion to VND1,500 billion.
Provided instruction on credit rating implementation:
enhanced transparency by commissioning independent
and objective assessment on the management and financial
capability of Bao Viet Holdings by leading enterprise credit
rating companies. Strengthened the financial transparency
for investors at home and abroad.
Throughout 2010, the BOD has successfully performed
its role in directing the implementation the Group’s
strategic objectives and establishing a firm foundation on
which to build the 2011- 2015 development strategy.
ANNUAL REPORT 2010
28
The Supervisory Board attends the quarterly meetings of Bao
Viet’s BOD and the monthly meetings of the CEO with the
purpose of supervising the compliance of legal regulations,
the charter of Bao Viet Holdings and other internal regulations
on administration and management. It also supervises the
implementation of the Resolutions arising from the Bao Viet
Holdings 2010 AGM.
The Supervisory Board acts as the focal point in supervising
and monitoring the content, scope and progress of 2010
financial reports preparation for Bao Viet Holdings and its
subsidiaries with the co-auditors as stipulated by the Law. The
Board also prepares bidding invitation for auditing services
and distributes these to audit companies as approved by the
AGM and cooperates with subsidiaries in choosing independent
auditing companies making recommendations to the BOD for
approval.
The Board supervises the auditing content, scope and
progress of 2010 financial statements in accordance with the
Service Agreement signed with Ernst & Young Vietnam. (E&Y)
The Supervisory Board also reviews and examines the
Holdings’ semi-annual financial statements, quarterly financial
statements and 2010 annual financial statements as audited
by E&Y.
The Supervisory Board holds regular discussions with the
Holding’s functional blocks and with the Audit Committee to
gather information about BOD’s governance, CEO’s business
execution, and business processes compliance through
internal audit results.
In monitoring the administration and execution of the duties
of the BOD, CEO and senior managers of Bao Viet Holdings,
the Supervisory Board has not identified any unusual or
abnormal working practices or processes during 2010. The
Supervisory Board and Bao Viet’s BOD, CEO and senior managers
maintain close cooperation and working relationships for the
benefit of Holdings, shareholders and for compliance with the
laws, charter and internal regulations.
In 2010, according to the Resolution of the AGM, there was a
personnel change in the Supervisory Board membership with
Mr Christopher Edwards nominated by the shareholders to
replace Mrs Majory Miller as a new Supervisory Board
member.
04/1998-09/2007: Member of the BOD, Head of the
Supervisory Board of Vietnam Insurance Corporation
10/2007 - present: Head of the Supervisory Board of
Bao Viet Holdings
09/2004-05/2007: Regional Chief Finance Officer of HSBC
Insurance (Asia–Pacific) Holdings Limited
05/2007 - present: Regional Chief Finance Officer of
HSBC Insurance (Asia–Pacific) Holdings Limited,
Member of the Supervisory Board of Bao Viet Holdings.
Mr. Christopher Alan EdwardsMember of the Supervisory Board
07/2007-01/2008: Deputy CEO of South East Asia
Commercial Bank
01/2008 - present: CEO of South East Asia Commercial Bank
Mr. Le Van ChiMember of the Supervisory Board
03/1997-09/2007: Member of the Supervisory Board,
Vietnam Insurance Corporation
10/2007 - present: Officer of Internal Supervisory
Division of Baoviet Life Corporation, Member of the
Supervisory Board of Bao Viet Holdings.
Mr. Nguyen Ngoc ThuyMember of the Supervisory Board
6/2005 – 10/2007: Member of the Supervisory Board,
Vietnam Insurance Corporation
11/2007 - present: Accountant of Baoviet Insuarance,
Member of the Supervisory Board of Bao Viet
Holdings.
Mr. Tran Minh ThaiMember of the Supervisory Board
Mr. Nguyen Trung Thuc
Head of the Supervisory Board
BAO VIET HOLDINGS
29
ANNUAL REPORT 2010
30
REMUNERATION OF THE BOARD OF
DIRECTORS – SUPERVISORY BOARD
In 2010, total actual paid remuneration for Board of Director’s
members was VND816.67 million (equivalent to 63.90% of the
budget approved by Annual General Shareholders’ Meeting,
and 0.096% of profit after corporate income tax of Bao Viet
Holdings). There are currently six part-time Bao Viet Holdings
Board of Directors members.
Total actual paid remuneration for Supervisory Board
members was VND275 million (equivalent to 80.86% of the
budget approved by Annual General Shareholders’ Meeting,
and 0.032% of profit after corporate income tax of Bao Viet
Holdings). At the present Bao Viet Holdings, Supervisory Board
comprises four part-time members.
STAKEHOLDER TRANSACTIONS
There were no significant changes (of over 10,000 shares) in
the stakes of members from Board of Directors/Members’
Council, Board of Management, Supervisory Board and their
relatives during 2010. No contracts have been signed, and no
transactions have been made with the companies of the
above stakeholders. Every stakeholder change or relevant
transaction, under the State Securities Commission regulations,
has been made public.
REPORTS OF COMMITTEES
To improve the governance efficiency of the company in
accordance with international standards, the BOD estab-
lished functional committees to supervise strategy, auditing,
financial management, risk management, senior human
resources management, and investment. The operation of
these committees is as follows:
Audit Committee
The Chairman of the Audit Committee is Mr Nguyen Quoc
Huy, Deputy CEO of the State Capital Investment Corporation
(SCIC), and former Deputy CEO of Deloitte-VACO Vietnam.
The Audit Committee coordinates and reviews the reason-
ableness and objectiveness of financial statements based
on the audit reports of internationally renowned auditing
companies.
The main function of the Audit Committee is to give consul-
tation to and support the BOD in maintaining and strength-
ening the internal control and ensuring compliance in the
Holdings and Subsidiaries.
In 2010, the mechanism and operation of audit activities
was finalized with the establishment of two main divisions
- Life Operations Auditing and Non-Life Operations Audit-
ing – staffed by more than 22 auditors. During the year, the
Internal Audit Division conducted many audits in accor-
dance with the standards established in the HSBC Technical
Support and Capability Transfer Agreement.
In the coming year, audit responsibilities will include
investment activities. The objective of the Committee is to
gradually extend internal audit oversight across all activi-
ties to ensure effective risk management within Bao Viet.
Remuneration-Appointment Committee
The Chairman of this Committee is Mr Nguyen Huu Tien,
member of the BOD of Bao Viet Holdings, Head of Corporate
Finance Department – Ministry of Finance. The main task of
this Committee is to prepare the senior human resources
development strategy for Bao Viet Holdings and to build up
the governance model and human resources strategies.
BAO VIET HOLDINGS
31
Mr. Nguyen Quoc Huy
Chairman of the Audit Committee
In 2010, the Audit Committee was strengthened by the
recruitment and training of high quality human
resources and increasing specialization in audit
activities. The auditing is performed under the processes
transferred by HSBC to help the BOD in risk management.
Over the past two years, Internal Audit has carried out
nearly 20 audits, provided information required to
complete the management responsibilities of Bao Viet
Holdings and delivered many recommendations for
implementation of control measures for insurance
business activities and financial management.
Mr. Danny Lui
Deputy Chief Financial Officer
In 2010, Bao Viet Holdings reported its full year financial
accounts according to International Financial
Reporting Standards (IFRS). This is an important
initiative to support analysis and research, providing
investors and partners with Bao Viet’s business results
according to internationally recognized standards. The
IFRS financial statement is reviewed and appraised
periodically dusing Asset Liability Management
Committee meetings.
In 2010, the Committee researched, prepared and imple-
mented management processes and, policies for senior
managers in Bao Viet Holdings; reviewed and evaluated the
proposals of Holdings and subsidiaries and provided
consultation on the appointment, remuneration of senior
managers/leaders in Holdings and three subsidiaries.
Investment-Strategy Committee
The Investment-Strategy Committee of Bao Viet Holdings is
chaired by Madam Nguyen Thi Phuc Lam - CEO of Bao Viet
Holdings, and was established by the BOD on 10 June 2008 to
provide consultation and advice to the BOD of Bao Viet
Holdings in preparing business strategy, investment strategy
and investment research and evaluation.
Since its establishment, the Investment-Strategy Committee
has participated in the preparation of 2011-2015 strategy;
contributed ideas to the regulations on investment imple-
mentation and management; reviewed the projects and
enterprises that Bao Viet invests in; taken part in Asset Liability
Management Committee, Risk Management Committee.
The Investment-Strategy Committee has contributed to the
improvement of business efficiency and enhanced risk
management in Bao Viet; supported the sustainable growth
goal of Bao Viet, ensuring the rights of shareholders, investors,
customers, partners, and employees as well as contributing to
the state budget.
Asset Liability Management Committee
The Asset Liability Management Committee (ALCO) is chaired
by Madam Nguyen Thi Phuc Lam, CEO of Bao Viet Holdings.
ALCO of the Holdings has responsibility to manage the risks
threatening the balance of assets and liabilities on the asset
sheet of the whole group. ALCO of subsidiaries were estab-
lished in 2010 to create a financial risk management network
across the entire Bao Viet group.
ALCO has organized quarterly meeetings in 2010. In these
meetings, the committee evaluated the key performance
indicators (KPI) of the subsidiaries, the risks related to the
changes in asset and liability mix, changes in liquidity, cash flow,
and the investment results of the Holdings and subsidiaries.
Through financial analysis and evaluation on the basis of both
Vietnamese accounting standards (VAS) and international
standards (IFRS), ALCO has given effective recommendations
on corporate finance governance to the Board of Management
and Board of Directors.
Risk Management Committee
The Chairman of the Risk Management Committee (RMC) is Mr
Adrian Abbott, Chief Risk Officer of Bao Viet Holdings and senior
risk management expert of HSBC. The Risk Management
Committee of Bao Viet Holdings was established to continue
reform the governance model and organizational structure to
international standards and practice. The Risk Management
Block of the Holdings was established and recruited additional
staff to improve professionalism and operations.
In 2010, RMCs of the subsidiaries were set up with a view to
building up a consistent risk management system across
the group.
The RMC organized two meetings on the direction and operating
plan for Risk during the year. Risk and Investment Analysis
Reports, a Market Risk Framework, Credit Risk Limits and Risk
Management Table were developed and approved by the RMC.
Using the Risk evaluation and analysis, Holdings and subsidiary
leaders allocated specific risk management activities for the
specialized divisions of each company.
RMC successfully fulfilled the basic 2010 targets including the
improvement of risk management capacity and technique across
the group and the preparation and implementation of risk
management policies and processes that will drive attainment of
an international standard corporate governance model.
Residual value risk Residual value risk is the risk that has bad financial impact due to the change in value of fixed assets at the end of the term.
Strategic risk Strategic risk is the risk that a company will not be able to recognize and appropriately respond to opportunities
and/or challenges arising from market conditions change, some changes may occur in a few years as changes in
economic political conditions, and requirements of customers, geographic trends, the development of legislation
environment or the acts of competitors. Risks can be minimized by carefully considering the potential opportunities
and challenges during the strategy planning.
Sustainability risk of the
companySustainability risk of the company relates to sensitive environmental and/or social issues or being against the
sustainable development requirements of the company. In fact, the adverse effects on the environment and society
are higher than the economic benefits that it brings. Those risks may arise from the Holdings' services such as asset
management, corporate finance, but in general, mostly arise from the lending operation which establishes direct
links to the bad affect.
Operational risk Operational risk is the risk of loss from errors, illegal acts, and careless mistakes, errors in processes or external
objective causes. Risks hide within each business and involves many aspects. The risks related to credit, market,
liquidity, insurance, pension funds, value recovery, strategies, reputation of the business are not operational risk. The
purpose of operational risk management is to minimize the loss at acceptable levels, ensure consistency between
risk and profit, cost and efficiency.
Reputation risk The reputation of Holdings and the subsidiaries is the key factor determining success. Any financial service organiza-
tion can survive or fail because of its reputation and the trust that such organization brings to clients. Maintaining the
trust of customers is the prerequisite goal of the managers and can be achieved through strong financial manage-
ment and the successful risk control of the managers. However, reputation can be seriously damaged by the failure
to comply with relevant laws or by inappropriate behavior or comments in the mass media. It is necessary to set up
a strong internal control system within the Holdings and subsidiaries to fully assess the potential impact on
reputation, to minimize the risks that may undermine the reputation ranging from inability in operational and
financial management to wrong decision in business operation, business strategy.
Distribution
channel risk
Distribution channel is critical in the business of the group; the externally reflected factors are recruitment,
maintenance, execution, productivity specialization; remuneration change must be controlled under competitive
condition and be consistent with business objectives
Classification Risk Management Basis
Credit risk Risks that customers or partners of Bao Viet cannot or do not want to conduct the commitment signed with Bao Viet
Holdings or subsidiaries. Credit risk is under various forms including lending – non refundable capital, loan
certificates; bonds – unpaid amount that is put as debt; government bonds – the refunding as committed not to be
carried out or ceased; acquisition of enterprises – the invalid debt payment. Insurance risk during reinsurance process
– reinsurance company does not/cannot fulfil the commitment; Cross-border transaction – money transfer can be
freely implemented and can be banned or temporarily ceased; The holding of the pledged assets - property values
drops after the decrease of credit rating.
Liquidity risk Liquidity risk relates to the fact that Holdings and subsidiaries cannot carry out the committed debt obligations when
the debt is due or can only carry out this obligation at very high cost. This is resulted from many factors, ranging from
too many people withdrawing money from the bank to being unable to sell the financial tools at the right time in the
market. In general, liquidity risk is managed by using necessary liquidity parameters.
Market risk Risks related to assets or liabilities can be altered by changes in interest rates or prices. Market risk factors are interest
rate risk, credit spread, exchange rate risk and owner’s equity risk. These risks will be controlled by market risk
calculation tools such as: sensitivity limits, value risk limits, stress testing (testing method to check the stability of the
system).
Insurance risk Insurance risk relates to uncertainties such as incidents, number and duration of the incidents under the insurance
liability approved by insurance company.
ANNUAL REPORT 2010
32
Business operation risks that are managed by the RMC of Holdings and the subsidiaries include:
SU
BS
IDIA
RIE
S
SUBSIDIARIES
BAO VIET GENERAL INSURANCE CORPORATION
ANNUAL REPORT 2010
34BAO VIET HOLDINGS
35
Bao Viet Insurance Corporation (Bao Viet Insurance) is a
subsidiary where 100% charter capital is held by Bao Viet
Holdings. With more than 45 years of experience in non-life
insurance business, Bao Viet Insurance maintains the
number one position in the Vietnamese insurance market
in terms of reputation, service quality, and market share.
Bao Viet Insurance has a nationwide operations network,
with 66 branches, over 300 customer centers, in excess of
3,000 employees and 10,000 agents. Business lines of Bao
Viet Insurance include non-life insurance, assumed and
ceded reinsurance, damage certification, financial invest-
ments and other legally registered businesses.
2010 Business Results
In 2010, despite the difficult economic and insurance
market, Bao Viet Insurance has successfully achieved
revenue and profit targets. Total revenue reached
VND4,995 billion, an increase of 16.3% over 2009. Insurance
revenues increased nearly 15% over the previous year to
VND4,574 billion. Profit before tax is up by over 41%
compared with 2009 to VND311 billion.
Additionally, Bao Viet Insurance has successfully imple-
mented risk appraisal processes and managed claims to
derive profits from insurance business with a combined
ratio of 94.2%. Bao Viet Insurance is the number one player
in the non-life insurance market with 24.7% market share of
primary insurance premium.
2011 Business Plan
Bao Viet Insurance is positioned for success in 2011 by driving three important priorities: INNOVATION – the application of
advanced IT systems and management models, QUALITY – market leader in the delivery of quality products, services and
customer satisfaction, EFFICIENCY – high productivity, accuracy and profitability. Specific business targets include:
• Total revenue of over VND5,792 billion
• Growth rate of 16%
• Primary premium revenue growth of over 16%
• Profit after tax growth of over 25.4%
Bao Viet Insurance also aims to maintain its position as the leading non-life insurer in the Vietnam market for the period of
2011-2015, and strives for an average annual growth rate of 16% in terms of primary premium revenue during this period.
In 2010, Bao Viet Insurance has
exceeded business plans, achieved
profitability and growth targets,
and invested in the development
of its IT system, new products
and services.
Bao Viet Insurance has also focused efforts during 2010 on establishing a new business and operation foundation by:
Investing in the development and modernization of IT software including new systems for policy administration (InsureJ),
accounting (Sun Accounts) and e-mail (Lotus Notes). These initiatives will actively support business administration and manage-
ment; as well as transforming the business model to provide a specialized, centrally managed and one-stop service capability.
Focusing on the development of human resources, organizational structure and human resource administration in cooperation
with the common direction of Bao Viet Holdings.
Developing the bancassurance distribution channel, exploring new distribution channels including e-commerce in cooperation
with HSBC, and establishing a call center to enhance customer service quality and convenience.
Promote the strengths in motor vehicle insurance, health and personal accident insurance, business disruption insurance, hull
insurance, protection and indemnity insurance, hospital expense insurance, etc.
219311
20092010
20092010
4,295
4,995
Key financial indicators
BAO VIET INSURANCE 2009 2010
700
587
119
92
527
1,085
-
-
-
(%)Growth
16%
15%
40%
42%
52%
23%
-
-
-
Total revenue
Revenue from insurance businesses
Revenue from financial activities
Profit before tax
Owner equity
Total asset
Return on equity (ROE)
Loss ratio
Combined ratio
4,295
3,987
296
219
1,013
4,636
16.41%
53.90%
97.59%
4,995
4,574
415
311
1,540
5,721
15.55%
49.30%
94.17%
311
42%
Profit Before Tax
VND Billion
Unit: VND Billion
Total Revenues Profit before Tax
VND Billion
4,574
15%
Insurance Revenue
VND Billion
Mr. TRAN TRONG PHUC
Chief Executive Officer
MEMBERS OF BAO VIET INSURANCE’S BOARD OF MANAGEMENT
From left to right
Mr. Nguyen Kim Phu - Deputy Chief Executive Officer
Mr. Nguyen Xuan Thuy - Deputy Chief Executive Officer
Mr. Tran Trong Phuc - Chief Executive Officer
Mr. Ta Van Can - Deputy Chief Executive Officer
Mr. Nguyen Quang Phi - Deputy Chief Executive Officer
BAO VIET HOLDINGS
37ANNUAL REPORT 2010
36
BALANCE SHEET AS AT 31 DECEMBER 2010
INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2010
ASSETAs at 31 December 2010
VND
As at 31 December 2009
VND
CURRENT ASSETS 3,202,446,387,782 2,252,540,829,378
Cash 86,398,758,384 104,458,309,835
Short-term investments 1,585,700,800,000 703,864,000,000
Account receivables 1,479,084,928,228 1,409,444,890,826
Inventories 9,602,608,708 9,160,988,407
Other short-term assets 41,659,292,462 25,612,640,310
NON-CURRENT ASSETS 2,518,212,344,699 2,383,761,925,272
Fixed assets 626,633,290,454 569,493,784,283
Long-term investments 1,870,147,088,339 1,795,585,009,882
Other long-term assets 21,431,965,906 18,683,131,107
TOTAL ASSETS 5,720,658,732,481 4,636,302,754,650
RESOURCES
LIABILITIES 4,180,621,301,772 3,623,201,852,257
Short-term liabilities 1,050,913,328,325 958,272,870,093
Reserves 3,117,944,873,780 2,656,941,256,258
Other long-term payables 11,763,099,667 7,987,725,906
OWNER’SEQUITY 1,540,037,430,709 1,013,100,902,393
Owner’s equity 1,540,037,430,709 1,013,100,902,393
Contributed capital 1,500,000,000,000 1,000,000,000,000
Retained earnings and other funds 40,037,430,709 13,100,902,393
TOTAL LIABILITIES AND OWNER’S EQUITY 5,720,658,732,481 4,636,302,754,650
-
FINANCIAL INFORMATION CITED FROM THE FINANCIAL STATEMENTS AUDITED BY E&Y OF BAO VIET GENERAL INSURANCE CORPORATION
ITEMSCurrent year
VND
Previous year
VND
Total revenue 4,994,672,287,391 4,294,530,291,067
Insurance Operating Revenue 4,574,030,982,006 3,987,319,219,075
Financial Revenue 414,940,531,260 296,151,307,473
Other Incomes 5,700,774,125 11,059,764,519
Reinsurance expenses & revenue deduction (1,143,631,627,698) (1,030,842,352,310)
Net Revenue 3,851,040,659,693 3,263,687,938,757
Total Expense (3,540,065,256,909) (3,044,443,182,595)
Insurance Operating expense (2,430,546,218,527) (2,240,573,650,601)
Financial expense (182,895,430,534) (50,239,328,328)
Administrative expense (926,244,164,763) (748,323,085,281)
Other expense (379,443,085) (5,307,118,385)
310,975,402,784 219,244,756,162
Corporate income tax (71,479,938,884) (53,018,678,357)
239,495,463,900 166,226,077,805
BAO VIET LIFE 2009 2010
Total revenue
New underwriting revenue
Revenue from insurance businesses
Revenue from financial activities
Profit before tax
Owner equity
Total asset
Return on equity
Regulatory solvency ratio
Number of agents
5,324
730
3,704
1,615
456
1,527
17,150
23.76%
139.50%
18,000
6,124
760
4,046
2,069
600
1,581
20,594
30.04%
149.30%
19,999
Bao Viet Life Corporation (Bao Viet Life) is a subsidiary in
which 100% charter capital is invested by Bao Viet
Holdings. It was the first life insurer in the market and has
now been operating for 15 years.
Bao Viet Life is a leading life insurer securing a 29.2% of
market share in premium revenue. Business lines of Bao
Viet Life include life insurance, assumed and ceded reinsur-
ance for life insurance, health insurance and personal
accident insurance, fund management, and investment.
Bao Viet Life manages 60 branches and over 500 customer
centers throughout 63 cities and provinces in Vietnam. It
has nearly 2,000 employees and 20,000 agents, serving
more than 1.5 million customers.
2010 Business Results
Bao Viet Life’s 2010 annual results have been positive with
total revenues of VND6,124 billion, an increase of 15%
compared with 2009, exceeding target by 10%. Premium
revenue has risen 9.2% in comparison with 2009 to
VND4,046 billion, exceeding target by 2.5%. Profit before
tax grew 32% over prior year to VND600 billion.
Business growth can be attributed to customer care
programs, new products development, and the improved
quality of the nationwide distribution system.
BAO VIET LIFE CORPORATION
The year 2011 marks the 15 year anniversary of Bao Viet
Life, also a milestone for the Vietnam life insurance
business. Bao Viet Life has set out 2011 targets including
30% market share, nearly VND4,400 billion total revenue,
and 8.5% growth of which new underwriting revenue is
targeted to grow by 25%. Bao Viet Life will focus on
increasing the professionalism and productivity within
the corporation through product development, comple-
tion of the specialized business model transformation
process, human resources development and investment,
and enhancing agent quality and capability.
BAO VIET HOLDINGS
39ANNUAL REPORT 2010
38
2011 Business Plan
2010 has been a year for Bao Viet Life to
invest in high and sustainable growth,
with successes made in terms of rev-
enue and profit growth, customer
service quality enhancement; trans-
forming the business model, and devel-
oping distribution capabilities.
2010 has also witnessed a high degree of change and transformation across the entire Bao Viet Life operation with five key founda-
tional initiatives being executed during the year.
Enhanced centralization: centralized management for aspects related to the Central Operations Center and finance – accounting
has been running smoothly in the centre allowing branches focus to business development.
IT system deployment: an international standard policy administration system supporting the centralized management model
became operational in February 2011.
Improved service quality: establishment of telemarketing and customer care departments and provision of frequent training to
promote the service quality culture
Continue organizational restructuring: consolidate the business development resources, establish and deliver staff planning and
training policies, develop appropriate salary and reward policies
Focus on business development by specializing the functions of agent development and training, expanding market opportuni-
ties and enhancing agent skills and knowledge training
Progress in creating a new foundation have contributed to improved competitive capacity through specialization and
enhanced productivity. This strengthened competitive capacity will drive significant change in revenue and earnings
growth for subsequent development stages.
456600
20092010
20092010
5,324
6,124
800
30
342
455
144
54
3444
-
-
1,999
15%
4%
9%
28%
32%
4%
20%
-
-
11%
Key financial indicators
(%)Growth
Unit: VND Billion
Total Revenues Profit before Tax
VND Billion
20,594
20%
Total Assets
600
32%
Profit before Tax
VND Billion VND Billion
Mr. NGUYEN DUC TUAN
Chief Executive Officer
MEMBERS OF BAO VIET LIFE’S BOARD OF MANAGEMENT
From left to right
Ms. Nguyen Thi Lam Hong - Deputy Chief Executive Officer
Mr. Nguyen Duc Tuan - Chief Executive Officer
Dr. Nguyen Thanh Quang - Deputy Chief Executive Officer
Mr. Nguyen Quang Tam - Deputy Chief Executive Officer
BAO VIET HOLDINGS
41ANNUAL REPORT 2010
40
FINANCIAL INFORMATION CITED FROM THE FINANCIAL STATEMENTS AUDITED BY E&Y OF BAO VIET LIFE CORPORATION
INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2010
BALANCE SHEET AS AT 31 DECEMBER 2010
ASSETAs at 31 December 2010
VND
As at 31 December 2009
VND
CURRENT ASSETS 1,262,599,237,885 1,200,994,662,126
Cash and cash equivalent 242,980,700,033 403,750,624,359
Current receivables 1,006,087,352,129 786,648,681,245
Inventory 12,917,679,613 10,286,029,983
Other current assets 613,506,110 309,326,539
NON-CURRENT ASSETS 19,331,315,240,817 15,949,086,093,132
Fixed assets 601,102,745,129 551,587,362,491
Long-term investments 18,671,595,612,623 15,377,320,111,741
Other long-term assets 58,616,883,065 20,178,618,900
TOTAL ASSETS 207,874,419,395,02 17,150,080,755,258
RESOURCES
LIABILITIES 19,013,237,040,387 15,622,647,589,106
Current liabilities 3,223,082,409,255 769,764,756,044
Non-current liabilities 55,137,225,716 43,951,579,032
Reserves 15,735,017,405,416 14,808,931,254,030
OWNERS’ EQUITY 1,581,012,644,669 1,527,433,166,152
Capital 1,580,677,438,315 1,527,433,166,152
Contributed capital 1,500,000,000,000 1,500,000,000,000
Retained earnings and other funds 81,012,644,669 27,433,166,152
TOTAL LIABILITIES AND OWNERS’ EQUITY 20,593,914,478,702 17,150,080,755,258
-
ITEMSCurrent year
VND
Previous year
VND
Total revenue 6,115,269,908,663 5,323,825,645,427
Insurance Operating Revenue 4,037,442,495,252 3,704,401,156,127
Financial Revenue 2,070,769,668,653 1,614,669,789,883
Other Incomes 7,057,744,758 4,754,699,417
Total Expense (3,540,065,256,909) (3,044,443,182,595)
Insurance Operating expense (4,062,051,307,848) (4,001,087,536,607)
Financial expense (905,537,696,869) (325,093,882,630)
Administrative expense (548,046,962,593) (541,836,833,785)
Other expense (90,760,988) (165,289,438)
599,543,180,365 455,642,102,967
Corporate income tax (118,549,558,777) (88,236,088,293)
474,998,189,784 362,849,593,644
2010 Business Results
2010 proved to be a challenging year for investment and
the stock markets in general. Over the course of the year,
the assets managed by BVF have been relatively flat at
approximately VND20,261 billion. Of which almost 90% is
managed on behalf of Bao Viet Life Company and 8% is
managed on behalf of Bao Viet Insurance (general
insurance business). The total revenue reached VND56
billion, equivalent to 83% of that in 2009. BVF return on
charter capital reached 42% during the period.
Performance (measured as rate of return for each specific
client) has exceeded all customer requirements and the
portfolio compositions have been in-line with expectations.
In order to achieve the goals set by our customers in early
2010, continued development of BVF in each and every
business line was paramount to our success. In particular,
for investment requirements:
The average interest of 2010 deposit portfolio was
higher than that of the market
The Portfolios were constantly balanced to best meet
clients’ liquidity requirements
Credit limits agreed with customers were strictly
followed
The composition of equities and bonds were actively
managed to enhance the investment returns
Repo activities were carried out to take advantage of
market anomalies and further enhance the return of
client portfolios (where applicable).
Over the course of 2010, BVF worked closely with assigned
HSBC executives to strengthen the organisational and
operating structure of the business. In particular focus was
given to the organizational structure within BVF and specifi-
cally the creation and alignment of a new operating model
to enhance BVFs day-to-day efficiency.
2011 Business Plan
Over the course of 2011, BVF plans to further capitalise on
the progress made in 2010 and set about more granular
development in the area of risk, customer service, product
development and IT systems with the objective of interna-
tional best practise. In addition, BVF will focus on developing
a much closer working relationship and support the
‘joining-up’ of all of Bao Viet Holdings’ subsidiary businesses
to create a better service standard to its customers.
Ông TRẦN TRỌNG PHÚC
Tổng Giám đốc
BAO VIET HOLDINGS
43ANNUAL REPORT 2010
42
BAO VIET FUND MANAGEMENT COMPANY
FINANCIAL INFORMATION CITED FROM THE FINANCIAL STATEMENTS AUDITED BY E&Y OF BAO VIET FUND MANAGEMENT COMPANY
Bao Viet Fund Management Company (‘BVF’) is a wholly
owned subsidiary of Bao Viet Holdings. Although estab-
lished as a separate subsidiary in its own right in late 2005,
Bao Viet has over 15 years of experience in investment and
capital markets.
The current financial assets under management of BVF has
increased steadily giving the company the enviable
position of being one of the top two fund management
companies in Vietnam by asset size. BVF’s assets under
management cover a wide spectrum of services for clients
including the management of ‘funds’ and specific
mandated accounts.
Bao Viet Fund Management Com-
pany is striving towards its goal of
international best practice in terms
of fund management and general
investment capabilities.
INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2010
BALANCE SHEET AS AT 31 DECEMBER 2010
ASSETS
CURRENT ASSETS 86,925,900,559 99,189,276,182
Cash and cash equivalents 12,029,966,055 5,948,360,103
Short-term investments 46,770,461,000 66,158,383,980
Short-term receivables 24,834,282,553 26,639,994,156
Other current assets 3,291,190,951 442,537,943
FIXED ASSETS AND LONG-TERM INVESTMENTS 780,740,123 1,690,771,416
Fixed assets 780,740,123 1,690,771,416
TOTAL ASSETS 87,706,640,682 100,880,047,598
RESOURCES
LIABILITIES 17,331,184,962 16,830,739,231
Current liabilities 17,120,153,829 14,950,234,182
Non-current liabilities 211,031,133 1,880,505,049
OWNER’S EQUITY 70,375,455,720 84,049,308,367
Capital 70,375,455,720 84,049,308,367
Chartered capital 50,000,000,000 50,000,000,000
Undistributed retained earnings 20,375,455,720 34,049,308,367
TOTAL LIABILITIES AND OWNERS’ EQUITY 87,706,640,682 100,880,047,598
ITEMSCurrent year
VND
Previous year
VND
Revenues from operating activities 45,771,288,984 56,533,849,791
Expenses from operating activities (84,325,650) (62,393,042)
45,686,963,334 56,471,456,749
Financial income 9,888,136,221 10,479,555,255
Financial expenses - 2,798,824,000
General and administration expenses (32,776,957,880) (31,162,150,466)
Other income 301,964,328 198,940,445
Other expenses (26,927,681) (35,217,075)
23,073,178,322 38,751,408,908
20,759,969,610 36,214,710,562
As at 31 December 2010
VND
As at 31 December 2009
VND
Mr. BUI TUAN TRUNG
Chief Executive Officer
Bao Viet Bank continued to make progress in consolidating the organisational structure, investing in IT systems, developing its network, strengthening its product develop-ment and growing its operational scale, targeting business efficiency and security.
2010 Business Results
In 2010, Bao Viet Bank has made impressive gains in terms of
business scale growth and profit. In summary this translates
to total asset of VND13,718 billion, an increase of 88.69%
against 2009; profit before tax of VND176.6 billion, up 131%
against 2009; network expansion with 26 transaction offices,
up 135% against 2009.
Despite the financial market turbulence and tough competi-
tion, in the second year of operation, BVB has continued to
consolidate the organizational structure, invest in IT systems,
develop its network, strengthen product development and
grow the operation scale, security. The key aim remains both
business efficiency and security. The bank has succeeded in
fulfilling its business and organizational structure develop-
ment. It is encouraging that with a debt balance of VND5,615
billion, Bao Viet Bank currently has no bad debts.
Solutions to enhance and develop the foundations built in 2010:
Complete the organizational structure: during 2010, BVB has
completed the modern banking management model where
functions like ”revenue generation”, ”risk management” and
”operations” are specialised; BVB has also applied centralized
management; carried out direct business management by section
(Corporate banking and Retail banking)
Develop new products: during 2010 BVB has developed 16 new
products, focused on retail products and bancassurance. BVB has
become one of the banks with the biggest number of bancassur-
ance products on the market.
Develope the modern network and distribution: provide 15
outlets more in major markets, develop internet banking .
2011 Business Plan
In 2011, BVB aims to maintain the strong growth demon-
strated in 2010 in terms of business efficiency and scale with
the total asset growth of 81% and 13% growth of profit before
and after tax. This will include expanding and developing the
network. So In order to achieve these targets, the bank shall
begin implementing key solutions to overcome outstanding
issues and enhance inherent strengths, including boosting
capital mobilization, developing credit and monetary trading,
creating a breakthrough in card trading and ebanking, estab-
lishing a proper strategy and regime to promote bancassur-
ance revenue growth, strengthening marketing and commu-
nications to raise customers’ awareness of BVB in the market.
Bao Viet Commercial Joint Stock Bank (BVB) is currently 52% owned
by Bao Viet Holdings. Established in December 2008 with official
operations commencing in January 2009, BVB applies the advanced
centralized corporate governance model based on the modern IT
system and core banking, which directly and constantly connects all
branches/transaction offices. This ensures a high quality and timely
provision of banking products and services to our customers.
BAO VIET COMMERCIAL JOINT STOCK BANK
BALANCE SHEET AS AT 31 DECEMBER 2010
FINANCIAL INFORMATION CITED FROM THE FINANCIAL STATEMENTS AUDITED BY E&Y OF BAO VIET COMMERCIAL JOINT STOCK BANK
13,718VND Billion
growth 88%
Total Assets
INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2010
31 December 2010
VND
S31 December
VND
ASSETS
Cash on hand, gold and gemstones 122,623,520,804 32,183,579,905
Balances with State Bank of Vietnam (“the SBV”) 238,513,449,731 195,829,359,746
Due from the banks 4,355,565,558,413 3,643,677,486,369
Trading securities 674,416,600,000 -
Loans and advances to customers 5,581,744,627,368 2,250,149,842,704
Investment securities 2,288,627,529,102 949,066,441,037
Fixed assets 80,699,211,213 47,587,936,017
Other assets 375,680,623,865 151,260,583,764
TOTAL ASSETS 13,717,871,120,496 7,269,755,229,542
LIABILITIES
Borrowings from the Ministry of Finance and the SBV 1,593,235,333,373 420,798,732,663
Deposits and borrowings from other banks 3,019,960,785,943 1,709,021,432,606
Customer deposits and other amounts due to customers 7,291,211,679,405 3,514,340,257,846
Other liabilities 165,592,643,276 62,486,793,925
TOTAL LIABILITIES 12,070,000,441,997 5,706,647,217,040
OWNER’S EQUITY 1,647,870,678,499 1,563,108,012,502
Capital and reserves 1,528,365,919,714 1,509,150,661,813
Capital 1,500,000,000,000 1,500,000,000,000
Reserves 28,365,919,714 9,150,661,813
TOTAL LIABILITIES AND OWNER’S EQUITY 13,717,871,120,496 7,269,755,229,542
Interest and similar income 920,720,951,902 351,806,966,712
Interest and similar expenses (632,649,507,831) (188,107,295,381)
Net interest and similar income 288,071,444,071 163,699,671,331
Fees and commission income 15,833,714,048 2,789,620,472
Fees and commission expenses (5,546,370,401) (1,292,449,919)
Net gain/(loss) from fees and commission income 10,287,343,647 1,497,170,553
Net gain/(loss) from foreign currencies trading 13,111,279,638 114,949,978
Net gain/(loss) from securities trading 43,993,322,604 (29,487,706)
Net gain/(loss) from securities investment 702,397,011 -
Net other operating income 522,998,343 39,289,848
TOTAL OPERATING INCOME 356,688,785,314 165,321,594,004
OPERATING EXPENSE (149,837,064,141) (80,029,804,294)
206,851,721,173 85,291,789,710
Provision for credit losses (30,159,694,493) (8,797,229,101)
PROFIT BEFORE TAX 176,692,026,680 76,494,560,609
132,519,020,010 63,108,012,502
Basic earnings per share 884 421
ITEMSCurrent year
VNDPrevious year
VND
BAO VIET HOLDINGS
45ANNUAL REPORT 2010
44
Mr. PHAN DAO VU
Chief Executive Officer
Established in 1999, Bao Viet Securities Joint Stock Company
(BVSC) is the first securities joint stock company incorporated
in Vietnam with the initial charter capital of VND49 billion.
Today, the company charter capital has reached over VND722
billion, 59.92% of which is contributed by Bao Viet Holdings.
BVSC business lines include securities brokerage services,
securities investment advisory and investment banking,
underwriting, enterprise ownership, form conversion
advisory, issue advisory, listing advisory, corporate finance
advisory, merger and acquisition advisory, corporate
governance advisory, and other financial advisory services.
2010 Business Results
2010 has recorded a key milestone for BVSC. Being the first
securities company incorporated in Vietnam, with over 10
years of development and experience, BVSC has attempted
to actively contribute to the market development and play a
pioneering role.
In 2010, despite facing difficulties caused by unstable
markets, the company Board of Management and employ-
ees have made encouraging successes. The revenue from
underwriting and issue agent has exceeded the plan by 32%.
Revenue generated from deposit and others also have
exceeded the 2010 plan by 2% and 99%, respectively.
Key policies that have been implemented:
Focus on strengthening areas that generate sustainable
revenue growth such as brokerage, investment advisory
and investment banking services;
Consolidate and stablize the organizational structure and
enhance investment in human resources development;
Provide new products and services including the
BVS@Trade online trading and BVS@45 analysis to serve
investors
Invest in IT development
2011 Business Plan
In 2011, BVSC aims to maintain the strong growth demon-
strated in 2010 in terms of business efficiency and scale with
the total asset growth of 81% and 13% growth of profit before
and after tax. This will include expanding and developing the
network. So In order to achieve these targets, the bank shall
begin implementing key solutions to overcome outstanding
issues and enhance inherent strengths, including boosting
capital mobilization, developing credit and monetary trading,
creating a breakthrough in card trading and ebanking, estab-
lishing a proper strategy and regime to promote bancassur-
ance revenue growth, strengthening marketing and commu-
nications to raise customers’ awareness of BVB in the market.
2010 was the year for Bao Viet
Securities to focus on strengthen-
ing the organizational structure,
applying IT to meet customers’
demands for online trading and
investment analysis; boost busi-
ness development in the fields
that generate stable revenue
growth and enhance investment
risk management.
BAO VIET SECURITIES JOINT STOCK COMPANY
BALANCE SHEET AS AT 31 DECEMBER 2010
FINANCIAL INFORMATION CITED FROM THE FINANCIAL STATEMENTS AUDITED BY E&Y OF BAO VIET SECURITIES JOINT STOCK COMPANY
INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2010
ASSETS31 December 2010
VND
31 December 2009
VND
CURRENT ASSETS 1,103,765,229,069 1,268,338,449,109
Cash and cash equivalents 290,875,831,010 475,807,301,959
Short-term investments 634,281,294,280 732,992,652,378
Current accounts receivable 175,208,255,555 56,500,501,323
Other current assets 3,399,848,224 3,037,993,449
NON-CURRENT ASSETS 514,255,891,337 507,656,860,022
Fixed assets 14,772,009,454 13,926,692,554
Long-term investments 486,997,610,397 479,936,000,000
Other long-term assets 12,486,271,486 13,794,167,468
TOTAL ASSETS 1,618,021,120,406 1,775,995,309,131
LIABILITIES 471,985,576,730 537,151,954,844
Current liabilities 471,924,668,999 537,083,701,843
Non-current liabilities 60,907,731 68,253,001
OWNERS’ EQUITY 1,146,035,543,677 1,238,843,354,287
Contributed charter capital 722,339,370,000 722,339,370,000
Share premium 610,253,166,720 610,253,166,720
Undistributed earnings and other funds (186,556,993,043) (93,749,182,433)
TOTAL LIABILITIES AND OWERS’ EQUITY 1,618,021,120,406 1,775,995,309,131
ITEMSCurrent year
VND
Previous year
VNDITEMS
Current year
VND
Previous year
VND
Revenues 238,908,803,628 292,205,149,076
Operating expense (258,366,846,148) (53,144,117,820)
General and administrative expense (72,490,788,705) (65,157,617,047)
Other income 16,015,015 656,880,561
Other expense (798,494,400) (90,893,452)
(92,731,310,610) 174,469,401,318
(92,731,310,610) 174,469,401,318
Basic earnings per share (1,284) 3,677
ANNUAL REPORT 2010
46BAO VIET HOLDINGS
47
Mr. NHU DINH HOA
Chief Executive Officer
ANNUAL REPORT 2010
48
After two years of operation, BVIN-
VEST has improved the efficiency
of Holdings’ property manage-
ment and usage, progressively
proving its prestige as a profes-
sional real estate developer and
service provider.
Under Baoviet Holdings’ strategy to develop multiple invest-
ment and financial services, Baoviet Invest Joint Stock
Company (BVINVEST) was established in January 2009 and
has been operating in property investment, trading, and
supporting services with VND100 billion charter capital.
The performance of BVINVEST in 2010 has been encourag-
ing. Total revenue has reached VND98 billion, four times
larger than that of 2009. Profit before tax has been VND3.3
billion, growing by 71% against 2009.
In addition to investing in property projects and property
trading, the company has carried out construction equip-
ment and machines trading, import and export, and
completed 2010 revenue objectives despite market move-
ments.
In terms of building management, BVINVEST has absorbed
and applied the advanced management techniques and
methods to upgrade the building management quality for
Baovie buildings including No. 8 Le Thai To, No. 71 Ngo Si
Lien - Hanoi and No. 233 Dong Khoi – Ho Chi Minh City to
international standards.
Looking ahead to 2011, with an aim to become one of the
leading property investors in Vietnam, BVINVEST has set out
the following development objectives: 200% revenue
growth rates, equivalent to VND203 billion and VND27
billion profit before tax, eight times larger than that of 2010.
In order to achieve the above objectives, the company will
implement key solutions including consolidating the
organizational structure, enhancing the professionalism
within the company, improving building management
capacity, and focusing on the execution of real estate invest-
ment and construction projects.
BAO VIET HOLDINGS
FINANCIAL INFORMATION CITED FROM THE FINANCIAL STATEMENTS AUDITED BY E&Y OF BAOVIET INVEST
BALANCE SHEET AS AT 31 DECEMBER 2010
BAOVIET INVESTMENT JOINT STOCK COMPANY
INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2010
ASSETS31 December 2010
VND
31 December 2009
VND
CURRENT ASSETS 156,654,801,656 133,898,744,922
Cash and cash equivalents 8,520,657,930 32,021,578,798
Current account receivables 55,355,283,664 14,615,981,944
Inventories 92,758,996,462 86,881,533,090
Other current assets 19,863,600 379,651,090
NON-CURRENT ASSETS 42,230,918,915 41,680,262,866
Fixed assets 1,349,793,789 1,420,887,804
Other long-term assets 912,792,126 291,042,062
39,968,333,000 39,968,333,000
TOTAL ASSETS 198,885,720,571 175,579,007,788
RESOURCES
LIABILITIES 95,226,805,182 74,150,904,412
Current liabilities 95,226,805,182 74,150,904,412
OWNERS’ EQUITY 103,658,915,389 101,428,103,376
Contributed chartered capital 100,000,000,000 100,000,000,000
Undistributed earnings and other funds 3,658,915,389 1,428,103,376
TOTAL LIABILITIES AND OWNERS’ EQUITY 198,885,720,571 175,579,007,788
ITEMS
Revenues from sale of goods and rendering of services 95,961,009,629 19,701,041,029
Costs of goods sold and services rendered (87,940,083,864) (17,174,828,650)
1,934,716,208 5,213,919,053
(18,600,372) (34,710,690)
Selling expenses (653,324,459) -
General and administrative expenses (6,024,117,298) (5,962,386,347)
Other income - 18,000,000
Other expenses - 30,000,000
- (12,000,000)
3,259,599,844 1,731,034,395
2,444,699,882 1,428,103,376
Earning per share 244 143
Current year
VND
Previous year
VND
49
Mr. BUI THANH NGUYEN
Chief Executive Officer
CO
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ME
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AN
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HO
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COMMUNITY INVOLVEMENT
AND SHAREHOLDER RELATIONS
11/6/2010
19/1/2010
19/6/2010
17/9/2010
15/10/2010
Bao Viet launches a new brand identity
Bao Viet Insurance increases its charter capital to VND1,500 billion
Bao Viet brand wins ’Top 20 famous Vietnamese brand’ award
Bao Viet Life Chief Executive Officer receives 2010 Thanh Giong Cup
Bao Viet granted the Second rank I n d e p e n d e n c e Medal
1
2
3
4
5
20/10/2010
1965 – 2010
26/11/2010
2010
2010
Bao Viet 45th anniversary
Bao Viet Bank connects with Banknet to serve customers
Bao Viet Securities launches BVS@Trade online trading
Bao Viet invests VND15.5 billion in community activities in 2010
6
7
8
9
10Bao Viet Training Center conducts training for over 3,270 participants under the learning map
TEN HIGHLIGHTS IN 2010
ANNUAL REPORT 2010
52BAO VIET HOLDINGS
53
COMMUNITY INVOLVEMENT
ANNUAL REPORT 2010
54BAO VIET HOLDINGS
55
Bao Viet Senior
Management
attend the
opening
ceremony of a
kindergarten in
Nam Duong
commune
2010 highlights:
Besides pursuing its business goals, Bao Viet also dem-
onstrates great care for the community through its
corporate social responsibility activities.
We also unite with the nation to resolve social issues,
contributing to the common economic growth and
maintaining social stability. Bao Viet community activi-
ties focus on four major areas: youth projects, care for
the aged, disaster recovery, and poverty alleviation.
Bao Viet joins the ’2009
Hands in Hands’ and
donates VND25 billion to
the poor
Bao Viet presents Kim
Dong prizes for the
school year of
2009 - 2010
Bao Viet Holdings
activities on the occasion
of Invalids – Martyrs’ Day
27 July 2010
Bao Viet sponsors
’Mobile Library’ project
to improve literacy
among students in Da
Nang
Bao Viet joins hands to
recover flood impacts in
the Central area
TẬP ĐOÀN BẢO VIỆT
ANNUAL REPORT 2010
56BAO VIET HOLDINGS
57
INVESTOR RELATIONS
The publishing of the audited VAS
and IFRS quarterly financial
statements, together with the
frequent meetings and open
discussions with investors are
among Bao Viet’s efforts to make
our information open and
transparent in accordance with the
advanced global corporate gover-
nance standards.
The website for Bao Viet Holdings -
www.baoviet.com.vn - has been
upgraded to make it more user-
friendly and introduce a quicker,
more convenient and easier way
to access information. Investors
can find useful information
related to business performance,
events, financial information, and
share price.
In 2010, Bao Viet has strengthened its
investor relations and communications
capability. Together with the input of HSBC
experts, we are enhancing our ability to
meet requests for information from share-
holders.
In addition to daily services related to
shareholder certificate management, we
also improved shareholder service quality
in the following ways in 2010:
Publishing information promptly and
comprehensively, including audited
quarterly financial statements to the
media, announcing IFRS financial
statements.
Promptly advising updates and
changes to Bao Viet’s business opera-
tions to ensure openness, transpar-
ency and professionalism.
Upgrading and investing in the corpo-
rate website to better meet sharehold-
ers’ information requirements.
New look of Bao Viet websiteContact details: Public Relations Division Bao Viet Holding No. 8 Le Thai To, Hanoi
30A PROGRAM IS THE KEY SOCIAL SECURITY
PROGRAM OF BAO VIET HOLDINGS
Mr. NGUYEN VAN DU
Vice Chairman of Bac Kan Province People’s Committee
w w w. b a ov i e t . co m . v n
Bao Viet employees actively participated in
community development programs in Pac Nam,
Bac Kan province to support and encourage poor
school children in their studying
Despite making certain socioeconomic improvements, Bac Kan is
still among the most disadvantaged provinces in the nation. Out
of the 122 communes in province, 64 have the proportion of poor
households of over 25%. Two rural districts, Ba Be and Pac Nam,
with the proportion of poor households of over 50% have taken
part in the Rapid and Sustainable Poverty Alleviation Program
under the Resolution No. 30a/2008/NQ-CP dated 28 December
2008 by the Government.
In accordance with the Resolution No. 30a by the Government,
Bao Viet Holdings since 2009 has extended a sincere care,
efficient and realistic support to the ethnic people in Pac Nam
rural district. In 2009, Bao Viet Holdings contributed VND2,050
million to rebuild 410 temporary houses (VND5 million per
house), visited and donated VND183 million to landslide and
flood victims in Nhan Mon and Cong Bang communes. In 2010,
VND5,448 million was donated to construct a medical center,
boarding schools, and purchase tables, chairs, beds for students.
For 2011, Bao Viet Holdings has committed to donate VND10
billion to this rural district for national standard medical centers
construction.
Thanks to the priceless donation from Bao Viet Holdings, and the
local government’s efficient use for the right purpose, Pac Nam
rural district people’s physical and mental lives have been gradu-
ally and considerably improved. The proportion of poor house-
holds of 56.15% in 2008 has reduced to 43.32% in 2010.
Bac Kan Province People’s Committee would like to express our
thanks to the kind attention and support from Bao Viet Holdings
shareholders, Board of Directors, Senior Management, and
employees as well as HSBC executives for the past time, and hope
to receive your further assistance in the future.
Under the 30a Program of the Government, in 2010, on the
basis of the project "Boarding school construction, school
equipment installation within the areas of the communal
secondary schools and medical centers” by the People’s
Committee of Pac Nam rural district, Bac Kan province, Bao
Viet has committed to donate VND5,448 billion for construc-
tion and purchasing items related to facilities including board-
ing house, medical center, kitchen, table, chair, etc.
In Que Phong rural district, Nghe An province, Bao Viet has
committed to donate VND4 billion to construct Muong Noc
commune Medical center, boarding houses for secondary
schools in communes including Tien Phong, Nam Giai, Nam
Nhoong, Cam Muon, Quang Phong, Tri Le and Hanh Dich.
To maintain the poverty alleviation commitment under the
30a Program in 2011, Bao Viet shall actively join the social
security program, committing to support the poor communes
all over the country. Investments in the development projects
in 2011 shall be focused on health care and education with
the estimated budget of VND15 billion. Our strong commu-
nity and social commitments will definitely enhance the
proud tradition of Bao Viet, and establish sustainable value as
a leverage for future development.
Dr. HOANG VIET HABAO VIET HOLDINGS SPOKESPERSON
Mr. NHAN CHIEMDEPUTY CHIEF OPERATING OFFICER
FIN
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S
FINANCIAL STATEMENTS
ANNUAL REPORT 2010
58
HUMAN RESOURCES DEVELOPMENT AND
EFFICIENT WORKING ENVIRONMENT ESTABLISHMENT
Being a financial services provider, Bao Viet understands that
human resources is our most crucial resource and asset.
By 2010, the total number of Bao Viet Holdings employees
was 5,520. During the technology transfer process with
HSBC, many HSBC executives have participated in and been
directly in charge of embedded Bao Viet Holdings leadership
roles, and experienced the ongoing innovation and devel-
opment together with Bao Viet people.
Bao Viet is implementing the human resources develop-
ment strategy based on clearly defining functions and
duties, managing staff performance, training and develop-
ing people, and offering good benefits. At the same time, we
are developing a dynamic and performance oriented enter-
prise culture. These initiatives are being carried out step by
step in Bao Viet Holdings and the subsidiaries. Training and personal development are among the
priorities reflected in Bao Viet’s strategy for human
resources development.
In 2010, Bao Viet Training Center conducted
training for over 3,272 participants under the
learning map. Our 2011 plan includes conducting
80 training courses, completing the learning map,
and preparing necessary conditions for online
training.
Dr. PHI TRONG THAODirector of Bao Viet Training Center
Performance management system to monitor and
appraise the objectives implementation and apply the
performance based salary. This is regarded as an efficient
tool to create the performance oriented working culture.
Revised reward system aimed at the performance based
salary, a competitive salary system in comparison with
the market, internal equality, and salary differences for
people with different performance.
Build up and apply the regulations and standards to
establish and execute the Job Descriptions, develop
the job grade system to evaluate and rate employees’
capacity
Develop learning map system to systematically and
methodically improve employees in order to meet
business requirements, create a continuous learning and
sharing culture within the enterprise to strengthen the
resources competitive capacity.
These positive changes have been contributing to the
implementation of Bao Viet business strategy and group
operations, creating the best working environment, enhanc-
ing the personal performance and development of all Bao
Viet employees.
Dr. PHHI TROONG TTHAOO
Bao Viet Holdings
Report of the Board of Directors and Audited Separate Financial Statements
CONTENTS
Pages
REPORT OF THE BOARD OF DIRECTORS 62 - 65
AUDITED SEPARATE FINANCIAL STATEMENTS
Independent auditors’ report 66
Separate balance sheet 67 - 68
Separate income statement 69
Separate cash flow statement 70
Notes to the separate financial statements 71 - 96
AN
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RT
ANNUAL REPORT 2010
62BAO VIET HOLDINGS 2010
63
REPORT OF THE BOARD OF DIRECTORSThe Board of Directors of Bao Viet Holdings is pleased to present its report and Bao Viet Holdings’ separate financial statements as at and for the year ended 31 December 2010.
CORPORATE INFORMATION
Bao Viet Holdings (herein referred to as the “Holdings”) was previously a state-owned company that was equitized and became a joint stock company pursuant to Business License approved by Hanoi Authority for Planning and Investment on 15 October 2007. The Business License was subsequently modified the first time on 29 October 2009, the second time on 18 January 2010 and the third time on 10 May 2010. Below is a summary of information extracted from the third modified Business License dated 10 May 2010:
Business License Number: 0100111761
Registered company name: Bao Viet Holdings
Head Office’s address: 8 Le Thai To Street, Hoan Kiem District, Hanoi
Operating activities: Equity investments in subsidiaries and associates; financial services and other related services under Vietnamese Laws; real estate businesses;
Charter capital: VND 6,267,090,790,000
Number of registered shares: 626,709,079
Legal representative: Ms. Nguyen Thi Phuc Lam - Chief Executive Officer
The Holdings has listed its entire outstanding stocks of 626,709,079 shares, including the issuance of 53,682,474 shares through a private placement on 18 January 2010 to its strategic partner, HSBC Insurance (Asia Pacific) Holdings Limited, on the Ho Chi Minh Stock Exchange (HOSE). The listing of the additional 53,682,474 shares was approved by the HOSE on 21 April 2010.
Subsidiaries and dependently accounted units of the Holdings are as follow:
Subsidiaries Address Principal activities% directly owned
Bao Viet Insurance Corporation (“Bao Viet Insurance”)
35 Hai Ba Trung Street, Hoan Kiem District, Hanoi
General insurance products, reinsurance, loss adjustment
100%
Bao Viet Life Corporation (“Bao Viet Life”)
1 Dao Duy Anh Street, Dong Da District, Hanoi
Life insurance products, reinsurance 100%
Bao Viet Fund Management Company (“BVF”)
8 Le Thai To, Hang Trong Ward, Hoan Kiem District, Hanoi
Management of investment funds and in-vestment portfolios
100%
Bao Viet Securities Joint Stock Company (“BVSC”)
8 Le Thai To, Hang Trong Ward, Hoan Kiem District, Hanoi
Securities trading, brokerage, portfolio management, underwriting, consulting and securities placement
59.92%
Bao Viet Commercial Joint Stock Bank (“Baoviet Bank”)
8 Le Thai To, Hang Trong Ward, Hoan Kiem District, Hanoi
Banking services 52%
Bao Viet Investment Joint Stock Company (“BVInvest”)
71 Ngo Sy Lien, Dong Da District, Hanoi
Real estate investment and consulting, pro-vision of machinery and equipment
55%
Bao Viet Au Lac Limited Compa-ny (“BV - Au Lac”)
Ha Lieu, Phuong Lieu, Que Vo District, Bac Ninh Province
Vocational driving training 60%
Dependently accounted units Address
Bao Viet Training Centre 8 Le Thai To, Hang Trong Ward, Hoan Kiem District, Hanoi
Infrastructure Construction Project Management Unit 71 Ngo Sy Lien, Dong Da District, Hanoi
RESULTS AND DIVIDENDS
The net profits of the Holdings for the year ended 31 December 2010 were VND 852,068,230,108 (for the year ended 31 December 2009: VND 807,785,178,469).
In April 2010, Bao Viet Holdings declared and approved to pay out dividends to its shareholders at the rate of 11% for the year 2009. The total dividend amount of VND 630,329,265,500 has been completely paid out during 2010.
SIGNIFICANT EVENTS
Below are the significant events during the year ended 31 December 2010:
On 18 January 2010, the Holdings issued 53,682,474 additional shares for an amount of VND 1,878,886,590,000 to HSBC Insur-ance (Asia Pacific) Holdings Limited (“HSBC Insurance”) through a private placement, which increased the shareholding of HSBC in Bao Viet Holdings from 10.31% to 18%. This share issuance to HSBC Insurance was made pursuant to the agreement between Bao Viet Holdings and HSBC Insurance and in accordance with Resolution 1527/2009/NQ-DHDCD dated 23 Decem-ber 2009 of Bao Viet General Shareholders’ Meeting. These additionally issued shares were listed on 21 April 2010 pursuant to the approval granted by the Ho Chi Minh Stock Exchange.
At the 2010 Annual General Meeting on 17 April 2010, the shareholders approved the plan to increase the Holdings’ charter capital to VND 6,800 billion to enable Bao Viet Holdings to pursue its strategy of increasing investment in core business sectors and continually enhancing its information system and processes in accordance with the strategy agreed at the equitization. The increase in charter capital was effected in January 2011.
On 11 June 2010, Bao Viet Holdings increased its investment in Bao Viet Insurance Corporation from VND 1,000 billion to VND 1,500 billion.
THE BOARD OF DIRECTORS AND SUPERVISORY BOARD
The members of the Board of Directors for the period from 1 January 2010 to the date of this report are:
Name Position Date of appointment
Mr. Le Quang Binh Chairman 04 October 2007
Ms. Nguyen Thi Phuc Lam Member 04 October 2007
Mr. Tran Huu Tien Member 04 October 2007
Mr. Tran Trong Phuc Member 04 October 2007
Mr. Nguyen Duc Tuan Member 04 October 2007
Mr. David Lawrence Fried Member 04 October 2007
Mr. Nguyen Quoc Huy Member 23 September 2009
REPORT OF THE BOARD OF DIRECTORS
ANNUAL REPORT 2010
64BAO VIET HOLDINGS 2010
65
The members of the Supervisory Board for the period from 1 January 2010 to the date of this report are:
Name Position Date of appointment Date of resignation
Mr. Nguyen Trung Thuc Chairman 04 October 2007
Mr. Tran Minh Thai Member 04 October 2007
Mr. Nguyen Ngoc Thuy Member 04 October 2007
Mr. Le Van Chi Member 04 October 2007
Mr. Christopher Edwards Member 17 April 2010
Ms. Marjory Miller Member 04 October 2007 17 April 2010
THE BOARD OF MANAGEMENT
The members of the Board of Management for the period from 1 January 2010 to the date of this report are:
Name Position Date of appointment Date of resignation
Ms. Nguyen Thi Phuc Lam Chief Executive Officer 15 October 2007
Mr. Le Hai Phong Chief Financial Officer 30 June 2008
Chief Property & Estate Officer 1 February 2011
Mr. Luu Thanh Tam Chief Property & Estate Officer 30 June 2008 1 February 2011
Mr. Phan Tien Nguyen Chief Human Resources Officer 30 June 2008
Mr. Duong Duc Chuyen Chief Strategy Officer 30 June 2008
Chief Investment Officer 22 April 2010
Mr. Alan Royal Chief Information Officer 08 September 2008
Mr. Adrian Abbott Chief Risk Officer 22 April 2010
Mr. Pham Khac Dung Chief Operating Officer 30 June 2008 15 November 2010
EVENTS SINCE THE REPORTING DATE
In accordance with the Annual General Meeting’s Resolution No. 03/2010/NQ-DHDCD dated 17 April 2010, the Holdings issued ad-ditional shares to existing shareholders to increase its charter capital in January 2011. The number of shares issued was 53,762,355, which increased the Holdings’ charter capital to VND 6,804,714,340,000 on 14 January 2011. These additionally issued shares were approved by the Ho Chi Minh Stock Exchange to be listed on 18 February 2011.
There have been no other significant events occurring after 31 December 2010 which would require adjustments or disclosures to be made in the separate financial statements.
STATEMENT OF THE BOARD OF MANAGEMENT’S RESPONSIBILITY IN RESPECT OF THE SEPARATE FINANCIAL STATEMENTS
The Board of Management of Bao Viet Holdings is responsible for the separate financial statements of the financial period which give a true and fair view of the state of affairs of the Holdings as at 31 December 2010 and of its results and cash flows for the year then ended. In preparing these separate financial statements, management is required to:
select suitable accounting policies and then apply them consistently;
make judgments and estimates that are reasonable and prudent;
state whether applicable accounting standards have been followed, subject to any material departures disclosed and ex-plained in the separate financial statements; and
prepare the separate financial statements on the assumption that it will continue its operations on a going concern basis un-less it is inappropriate to presume that the Holdings will continue in business.
The Board of Management is responsible for ensuring that proper accounting records are kept which disclose, with reasonable accuracy at any time, the financial position of the Holdings and ensuring that the accounting records comply with the registered accounting system. It is also responsible for safeguarding the assets of the Holdings and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Board of Management has confirmed to the Board of Directors that the Holdings has complied with the above requirements in preparing the separate financial statements.
APPROVAL OF THE SEPARATE FINANCIAL STATEMENTS
We hereby approve the accompanying separate financial statements which give a true and fair view of the separate financial posi-tion of the Holdings as at 31 December 2010 and the results of its operations and separate cash flows for the year then ended in accordance with the Vietnamese Accounting Standards and System and comply with the relevant statutory requirements.
On behalf of the Board of Directors:
Mr. Le Quang BinhChairman
Hanoi, Vietnam25 March 2011
REPORT OF THE BOARD OF DIRECTORS REPORT OF THE BOARD OF DIRECTORS
ANNUAL REPORT 2010
66BAO VIET HOLDINGS 2010
67
Code ITEMS Notes 31 December 2010VND
31 December 2009 VND
100 A. CURRENT ASSETS 5,808,051,586,311 4,158,808,819,789
110 I. Cash and cash equivalents 5 851,018,126,099 16,530,312,670
111 1. Cash 667,518,126,099 16,530,312,670
112 2. Cash equivalents 183,500,000,000 -
120 II. Short-term investments 6 3,740,108,825,556 3,176,729,847,461
130 III. Accounts receivable 1,206,045,137,574 963,931,728,224
131 1. Trade receivables 7 240,884,671,205 108,927,751,454
133 2. Receivables from related parties 8 963,674,281,695 854,333,957,588
135 3. Other receivables 9 1,486,184,674 670,019,182
140 IV. Inventory 124,195,000 535,706,172
150 V. Other current assets 10,755,302,082 1,081,225,262
151 1. Prepaid expense 10 9,731,061,326 -
158 2. Advances to employees 1,024,240,756 1,081,225,262
200 B. NON-CURRENT ASSETS 6,961,614,519,573 6,210,971,104,885
220 I. Fixed assets 541,575,089,338 447,987,553,936
221 1. Tangible fixed assets 11 456,128,626,035 186,396,038,084
222 Cost 534,271,735,023 240,959,607,879
223 Accumulated depreciation (78,143,108,988) (54,563,569,795)
227 2. Intangible fixed assets 12 37,256,991,136 13,947,900,474
228 Cost 60,846,699,942 32,220,757,228
229 Accumulated amortization (23,589,708,806) (18,272,856,754)
230 3. Construction in progress 13 48,189,472,167 247,643,615,378
250 II. Long-term investments 14 6,420,039,430,235 5,762,983,550,949
251 1. Investments in subsidiaries and BFV1 4,710,481,388,414 4,210,481,388,414
2522. Investments in associates and joint ventures
252,769,440,000 232,862,440,000
258 3. Other long-term investments 1,797,126,521,875 1,461,270,934,725
2594. Provision for impairment of long-term investments
(340,337,920,054) (141,631,212,190)
270 TOTAL ASSETS 12,769,666,105,884 10,369,779,924,674
SEPARATE BALANCE SHEETas at 31 December 2010
ANNUAL REPORT 2010
68BAO VIET HOLDINGS 2010
69
Code ITEMS Notes31 December 2010
VND31 December 2009
VND
300 A. LIABILITIES 2,259,606,670,990 1,933,355,471,426
310 I. Current liabilities 2,238,341,837,984 1,912,228,266,008
312 1. Trade payables 15 23,074,890,475 1,109,305,001
314 2. Statutory obligations 16 (398,325,815) 75,503,537,980
315 3. Payables to employees 17 20,258,970,199 6,197,547,272
317 4. Payables to related parties 18 1,463,223,728,574 1,324,966,605,661
318 5. Other payables 19 710,164,109,097 485,404,104,622
323 6. Bonus and welfare funds 20 22,018,465,454 19,047,165,472
330 II. Non-current liabilities 21,264,833,006 21,127,205,418
336 1. Provisions for severance allowance 21 21,264,833,006 21,127,205,418
400 B. OWNERS’ EQUITY 10,510,059,434,894 8,436,424,453,248
410 I. Owners’ equity 22 10,510,059,434,894 8,436,424,453,248
411 1. Contributed capital 6,267,090,790,000 5,730,266,050,000
412 2. Shares premium 3,076,807,671,197 1,734,745,821,197
416 3. Foreign exchange difference - 1,668,684,274
420 4. Undistributed profit 1,166,160,973,697 969,743,897,777
440TOTAL LIABILITIES AND OWNERS’ EQUITY
12,769,666,105,884 10,369,779,924,674
OFF-BALANCE SHEET ITEMS
ITEMS 31 December 2010 31 December 2009
1. Foreign currency U.S. Dollar (USD)
1,743,596.40 1,711,941.14
Mr. Nguyen Thanh Hai Mr. Le Hai Phong Ms. Nguyen Thi Phuc LamChief Accountant Chief Financial Officer Chief Executive Officer
25 March 2011
SEPARATE BALANCE SHEET (continued)as at 31 December 2010
Code ITEMS Notes Current yearVND
Previous yearVND
21 1. Income from operating activities 23 1,210,238,783,745 898,758,428,365
22 2. Expenses from operating activities 24 (198,841,308,054) 57,829,782,161
24 3. Gross operating profit 1,011,397,475,691 956,588,210,526
25 4. General and administration expenses 25 (158,116,554,023) (94,580,108,214)
30 5. Net operating profit 853,280,921,668 862,008,102,312
31 6. Other income 26 48,323,388,110 23,694,525,355
32 7. Other expenses 26 (14,476,993,530) (4,081,077,172)
40 8. Net other income 33,846,394,580 19,613,448,183
50 9. Profit before tax 887,127,316,248 881,621,550,495
51 10. Current enterprise income tax expense 27 (35,059,086,140) (81,014,026,134)
52 11. EIT reduction for 2008 27 - 7,177,654,108
60 12. Net profit after tax 852,068,230,108 807,785,178,469
61 13. Earning per share 29 1,366 1,410
Mr. Nguyen Thanh Hai Mr. Le Hai Phong Ms. Nguyen Thi Phuc LamChief Accountant Chief Financial Officer Chief Executive Officer
25 March 2011
SEPARATE INCOME STATEMENTfor the year ended 31 December 2010
ANNUAL REPORT 2010
70BAO VIET HOLDINGS 2010
71
Code ITEMS NotesCurrent year
VNDPrevious year
VND
I. CASH FLOWS FROM OPERATING ACTIVITIES
01 1. Cash receipts from rendering of services and other revenue 696,984,803,846 147,931,049,444
03 2. Payments to employees (40,474,620,973) (42,709,794,750)
05 3. Payments for enterprise income tax (111,288,125,756) (95,987,938,444)
06 4. Other cash receipts 91,685,400,268 6,784,876,322
07 5. Other cash disbursements (7,781,663,960) (14,821,735,789)
20 Net cash flows from operating activities 629,125,793,425 1,196,456,783
II. CASH FLOWS FROM INVESTING ACTIVITIES
21 1. Payments for purchases and construction of fixed assets (123,303,077,063) (65,930,491,722)
22 2. Proceeds from disposal and liquidation of fixed assets - 23,017,345
25 3. Investments in bonds, shares and others (6,632,078,176,263) (3,868,730,362,126)
26 4. Proceeds from sale of investments 5,523,798,386,525 4,022,197,689,300
30 Net cash flows from investing activities (1,231,582,866,801) 87,559,852,797
III. CASH FLOWS FROM FINANCING ACTIVITIES
31 1. Additional capital contribution through share issues 1,878,886,590,000 -
36 2. Dividends paid to shareholders (630,329,265,500) (128,726,605,000)
373. Cash receipts from existing shareholders for the in-crease in charter capital
188,350,073,855 -
40 Net cash flows from financing activities 1,435,947,398,355 (128,726,605,000)
50VI. NET CASH INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS
834,450,324,979 (39,970,295,420)
60 Cash and cash equivalents at the beginning of the period 16,530,312,670 56,469,344,502
61 Net foreign exchange difference 37,488,450 31,263,588
70 Cash and cash equivalents at the end of the period 5 851,018,126,099 16,530,312,670
Mr. Nguyen Thanh Hai Mr. Le Hai Phong Ms. Nguyen Thi Phuc LamChief Accountant Chief Financial Officer Chief Executive Officer
25 March 2011
SEPARATE CASH FLOW STATEMENT for the year ended 31 December 2010
1. CORPORATE INFORMATION
Bao Viet Holdings (herein referred to as the “Holdings”) was previously a state-owned company that was equitized and became a joint stock company pursuant to Business License approved by Hanoi Authority for Planning and Investment on 15 October 2007. The Business License was subsequently modified the first time on 29 October 2009, the second time on 18 January 2010 and the third time on 10 May 2010. Current Business License number of the Holdings is 0100111761 pursuant to the third modi-fied Business License on 10 May 2010. Below is a summary of information extracted from the third modified Business License dated 10 May 2010:
Business License Number: 0100111761
Registered company name: Bao Viet Holdings
Head Office’s address: 8 Le Thai To Street, Hoan Kiem District, Ha Noi
Operating activities:Equity investments in subsidiaries and associates; financial services and other related services under Vietnamese Laws; real estate businesses.
Charter capital: VND 6,267,090,790,000
Number of registered shares: 626,709,079
Legal representative: Ms. Nguyen Thi Phuc Lam - Chief Executive Officer
The Holdings has listed its entire outstanding stocks of 626,709,079 shares, including the issuance of 53,682,474 shares through a private placement on 18 January 2010 to its strategic partner, HSBC Insurance (Asia Pacific) Holdings Limited, on the Ho Chi Minh Stock Exchange (HOSE). The listing of the additional 53,682,474 shares was approved by the HOSE on 21 April 2010.
The structure of the Holdings’ shareholdings as at 31 December 2010 is as follows:
Shareholders No. of shares %
Founding shareholders 577,507,635 92.15%
The Ministry of Finance 444,300,000 70.89%
HSBC Insurance (Asia Pacific) Holdings Limited 112,807,635 18.00%
State Capital Investment Corporation 20,400,000 3.26%
Other shareholders 49,201,444 7.85%
Total 626,709,079 100%
In accordance with the Annual General Meeting’s Resolution No. 03/2010/NQ-DHDCD dated 17 April 2010, the Holdings issued ad-ditional shares to existing shareholders to increase its charter capital in January 2011. The number of shares issued was 53,762,355, which increased the Holdings’ charter capital to VND 6,804,714,340,000 on 14 January 2011. These additionally issued shares were approved by the Ho Chi Minh Stock Exchange to be listed on 18 February 2011.
NOTES TO THE SEPARATE FINANCIAL STATEMENTSas at and for the year ended 31 December 2010
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The Holdings has the following subsidiaries and dependently accounted units:
Subsidiaries Address Principal activities% directly owned
Bao Viet Insurance Corporation (“Bao Viet Insurance”)
35 Hai Ba Trung Street, Hoan Kiem District, Hanoi
General insurance products, reinsurance, loss adjustment
100%
Bao Viet Life Corporation (“Bao Viet Life”)
1 Dao Duy Anh Street, Dong Da District, Hanoi
Life insurance products, reinsurance 100%
Bao Viet Fund Management Company (“BVF”)
8 Le Thai To, Hang Trong Ward, Hoan Kiem District, Hanoi
Management of investment funds and invest-ment portfolios
100%
Bao Viet Securities Joint Stock Company (“BVSC”)
8 Le Thai To, Hang Trong Ward, Hoan Kiem District, Hanoi
Securities trading, brokerage, portfolio man-agement, underwriting, consulting and securi-ties placement
59.92%
Bao Viet Commercial Joint Stock Bank (“Baoviet Bank”)
8 Le Thai To, Hang Trong Ward, Hoan Kiem District, Hanoi
Banking services 52%
Bao Viet Investment Joint Stock Company (“BVInvest”)
71 Ngo Sy Lien Street, Dong Da District, Hanoi
Real estate investment and consulting, provi-sion of machinery and equipment
55%
Bao Viet Au Lac Limited Com-pany (“BV - Au Lac”)
Ha Lieu, Phuong Lieu, Que Vo Dis-trict, Bac Ninh Province
Vocational driving training 60%
Dependently accounted units Address
Bao Viet Training Centre 8, Le Thai To, Hang Trong Ward, Hoan Kiem District, Hanoi
Infrastructure Construction Project Management Unit 71 Ngo Sy Lien, Dong Da District, Hanoi
2. BASIC OF PREPARATION OF THE SEPARATE FINANCIAL STATEMENTS
2.1 Accounting standards and systems
The separate financial statements of the Holdings, which are expressed in Vietnam dong (“VND”), are prepared in accordance with the Vietnamese Accounting System and Vietnamese Accounting Standards issued by the Ministry of Finance as per the:
Decision No. 149/2001/QD-BTC dated 31 December 2001 on the Issuance and Promulgation of Four Vietnamese Standards on Accounting (Series 1);
Decision No. 165/2002/QD-BTC dated 31 December 2002 on the Issuance and Promulgation of Six Vietnamese Standards on Accounting (Series 2);
Decision No. 234/2003/QD-BTC dated 30 December 2003 on the Issuance and Promulgation of Six Vietnamese Standards on Accounting (Series 3);
NOTES TO THE SEPARATE FINANCIAL STATEMENTS (continued)as at and for the year ended 31 December 2010
Decision No. 12/2005/QD-BTC dated 15 February 2005 on the Issuance and Promulgation of Six Vietnamese Standards on Ac-counting (Series 4); and
Decision No. 100/2005/QĐ-BTC dated 28 December 2005 on the Issuance and Promulgation of Four Vietnamese Standards on Accounting (Series 5).
Accounting Standard and guidance issued but not yet effective
Circular 210/2009/TT-BTC providing guidance for the adoption in Vietnam of the International Financial Reporting Standards on presentation and disclosures of financial instruments:
On 6 November 2009, the Ministry of Finance issued Circular 210/2009/TT-BTC providing guidance for the adoption in Vietnam of the International Financial Reporting Standards on presentation and disclosures of financial instruments. The adoption of the circular will require further disclosures and have impact on the presentation of certain financial instruments in the financial state-ments. The circular will become effective for financial years beginning on or after 1 January 2011.
2.2 Registered accounting documentation system
The registered accounting documentation system is the general journal voucher system.
2.3 Accounting currency
The Holdings maintains its accounting records in Vietnam dong (“VND”).
2.4 Fiscal year
The Holdings’ financial year starts on 1 January and ends on 31 December.
3. STATEMENT ON THE COMPLIANCE WITH VIETNAMESE ACCOUNTING STANDARDS AND SYSTEMS
The Board of Management confirms that the Holdings has complied with the Vietnamese Accounting Standards and Systems in preparing the separate financial statements. The Holdings has also followed the accounting policy for the recognition of the reval-ued land use rights as set out in Note 4.6.
The accompanying separate balance sheet, related separate income statement and separate cash flow statement and their uti-lisation are not designed for those who are not informed about Vietnam’s accounting principles, procedures and practices and furthermore are not intended to present the financial position and results of operations in accordance with accounting principles and practices generally accepted in countries other than Vietnam.
The separate financial statements reflect only the operations of the Holdings and its dependently accounted units for the year ended 31 December 2010. The consolidated financial statements which include the Holdings and its subsidiaries are prepared separately and independently from the separate financial statements. Users of these separate financial statements should read them together with the consolidated financial statements of the Holdings as at 31 December 2010 and for the year then ended in order to obtain full information on the consolidated financial position, results of operations and cash flows of the Holdings and its subsidiaries as a whole.
NOTES TO THE SEPARATE FINANCIAL STATEMENTS (continued)as at and for the year ended 31 December 2010
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4.1 Changes in accounting policies and disclosures
The accounting policies adopted by the Holdings in preparation of the separate financial statements are consistent with those
followed in the preparation of the Holdings’ annual financial statements for the year ended 31 December 2009 except for the fol-
lowing changes in the accounting policies in relation to the following:
Application of Circular No. 244/2009/TT-BTC
During 2010, the Holdings implemented Circular No. 244/2009/TT-BTC dated 31 Dec 2009 issued by the Ministry of Finance on
amending and supplementing the enterprise accounting regime, which causes the following changes:
Stock dividend and bonus shares received are not recognized as income of the Holdings and the respective increase in number
of shares are only updated off balance sheet;
Bonus and welfare funds are reclassified from owner’s equity to liabilities.
Other than the reclassification of bonus and welfare funds presented in Note 32 to the separate financial statements, comparative
figures as at 31 December 2009 and for the year then ended are not restated as Circular 244/2009/TT-BTC does not require retro-
spective application.
Effects of changes in foreign exchange rates
For the year ended 31 December 2010, the Holdings has adopted Vietnamese Accounting Standard No. 10 - Effects of Chang-
es in Foreign Exchange Rates (the “VAS 10”). The VAS 10 differs from the accounting policy adopted in prior year under Circu-
lar 201/2009/TT-BTC issued on 15 October 2009 by the Ministry of Finance (the “Circular 201”) providing guidance for the
treatment of foreign exchange differences relating to the recognition of unrealised foreign exchange differences as follows:
NOTES TO THE SEPARATE FINANCIAL STATEMENTS (continued)as at and for the year ended 31 December 2010
4. SIGNIFICANT ACCOUNTING POLICIESTransaction Accounting treatment under VAS 10 Accounting treatment under Circular 201
Translation of short-term mone-tary assets and liabilities denomi-nated in foreign currencies.
All unrealised foreign exchange dif-ferences are taken to the separate income statement.
All unrealised foreign exchange differences are taken to the “Foreign exchange differences reserve” account in the equity section of the balance sheet and will be reversed in the following year.
Translation of long-term mon-etary liabilities denominated in foreign currencies at year end.
All unrealised foreign exchange dif-ferences are taken to the separate income statement.
- All unrealized foreign exchange gains are taken to the income statement.- All foreign exchange losses will be charged to the income statement. However, if the charging of all for-eign exchange losses results in net loss before tax for the company, part of the exchange losses can be de-ferred and allocated to the income statement within the subsequent years. In any case, the total foreign exchange loss to be charged to current year’s income statement must be at least equivalent to the foreign exchange losses arising from the translation of the current portion of the long-term liabilities, while the remaining portion of the foreign exchange losses can be deferred in the balance sheet and allocated to the income statement within the subsequent five years.
As the impacts of this change in accounting policy on the opening balance of 2010 are immaterial, they have been recorded in this year separate income statement.
4.2 Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, cash at banks, demand deposits and short-term, highly liquid investments with an original maturity of three months or less which are readily convertible into known amounts of cash and that are subject to an insignificant risk of change in value.
4.3 Financial investments
Investment in subsidiaries
Investments in subsidiaries over which the Holdings has control are carried at cost in the separate financial statements. Appropri-ated profits from accumulated profits of the subsidiaries arising subsequent to the date of acquisition are recognised in the sepa-rate income statement. Distributions from sources other than from such profits are considered a recovery of investment and are deducted from the cost of the investment.
A listing of the Holdings’ subsidiaries is shown in Note 14.1.
NOTES TO THE SEPARATE FINANCIAL STATEMENTS (continued)as at and for the year ended 31 December 2010
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Investment in BVF1
The capital contribution to BVF1 is accounted for at cost. Profit or loss arising from this investment is recognized in the income statement based on the profit appropriation notice from the Board of Representatives at the reporting date. The provision for impairment losses of investment to BVF1 is recognized when the carrying value of the investment is higher than net asset value (NAV) of BVF 1 at the balance sheet date.
Further information of BVF1 and capital contribution of each trustees are shown in Note 14.2.
Investment in joint ventures, associates
Investments in joint ventures, associates are accounted for under the cost method of accounting in the separate financial state-ments. Distributions from the accumulated net profits of the joint ventures, associates arising subsequent to the date of acquisition by the Holdings are recognized as income in the separate income statement. Distributions from sources other than such profits are considered a recovery of investment and are deducted from the cost of the investment.
A listing of the Holdings’ joint ventures and associates is shown in Note 14.3.
Investments in securities and other investments
All financial investments are initially recognised at cost and subsequently are recognized at cost less provision for impairments.
Short-term investments comprise holdings of listed shares, government bonds, corporate bonds and other liquid securities which are readily realisable and are intended to be held for not more than one year.
Long-term investments include listed and unlisted shares, government bonds, corporate bonds, trusted loans and term-depos-its at financial institutions, which are intended to be held for more than one year.
Investments held under trusted investment management contracts
Assets and liabilities under the trusted investments contracts have been aggregated to the separate balance sheet as the manage-ment believes that it better reflects the operations of the Holdings.
Provision for devaluation of investments in securities and other investments
The primary source of reference for impairment provisioning is Circular 228/2009/TT-BTC dated 07 December 2009 issued by the Ministry of Finance (the “Circular 228”). Details of the basis of determination of impairment of investment are as follows:
Listed securities
For listed securities that are carried at cost in accordance with Vietnamese Accounting Standards, if there is objective evi-dence that their market value is lower than book value, the provision amount is measured as the difference between the se-curities’ carrying amount and the closing market value as of the balance sheet date in accordance with the following formula given in Circular 228:
NOTES TO THE SEPARATE FINANCIAL STATEMENTS (continued)as at and for the year ended 31 December 2010
Provision amount =Number of impaired securities as at report-ing date
xCarrying value of secu-rities
- Market value of securities
Unlisted securities
For unlisted shares, the following methods are used in calculating the fair value in order to compare with book value to determine the provision amount:
for securities registered to be traded on the trading market of unlisted public companies’ securities (UPCom), fair value is deter-mined as the average trading prices quoted on UPCom;
for securities yet registered to be traded on UPCom, fair value is determined as the average price of public quotations from at least three securities companies as at reporting date;
for securities that fair value is not determinable, the Holdings does not make provision for devaluation.
Equity investments in other entities
For equity investments in other entities and other long-term investments, a provision for devaluation is set up if the investees are suffering from loss (except where such loss is already included in their business plans prior to the investment).
The amount of provision for each investment shall not exceed the invested capital and is calculated according to the following formula given in Circular 228:
NOTES TO THE SEPARATE FINANCIAL STATEMENTS (continued)as at and for the year ended 31 December 2010
Provision amount =Actual capital contribu-tions of investors in the investee
– Actual owners’ equity
x
Investment capital of the Holding
Actual capital contributions of investors in the investee
The basis for setting up the provision is the positive difference between the investors’ actual capital contributions and the actual amount of owners’ equity in the investee’s financial statements at the balance sheet date.
The provision amount presented in the balance sheet of the Holdings excludes the provision for devaluation of investments under the trusted investments contracts.
4.4 Receivables
Receivables comprise of trade receivables and other receivables that are initially recognized at cost and subsequently are recog-nized at cost less provision for impairment.
Provision for impairment of receivables will be made base on their overdue ages. For receivables that are undue and owed by debtors who have become bankrupt or are undergoing dissolution pro¬cedures, are missing, have absconded, are prosecuted, detained or tried by law enforcement bodies, are serving sentences or have deceased, provision should be estimated based on the amount of expected loss. The increase or decrease to the provision balance is recorded as an administrative expense in the separate income statement.
The Holdings uses the provision policy regulated by the Ministry of Finance in Circular 228/2009/TT-BTC dated 07 December 2009 (“Circular 228”). Details are as follows:
Overdue receivable aging Allowance rate
Overdue from six months to less than one year 30%
Overdue from one to less than two years 50%
Overdue from two to less than three years 70%
Overdue over three years 100%
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NOTES TO THE SEPARATE FINANCIAL STATEMENTS (continued)as at and for the year ended 31 December 2010
4.5 Tangible fixed assets
Tangible fixed assets are stated at cost less accumulated de-preciation.
The cost of a tangible fixed asset comprises of its purchase price and any directly attributable costs of bringing the tangi-ble fixed asset to working condition for its intended use.
Expenditures for additions, improvements and renewals are added to the carrying amount of the assets and expenditures for maintenance and repairs are charged to the separate in-come statement as incurred.
When tangible fixed assets are sold or retired, their costs and accumulated depreciation are removed from the balance sheet and any gain or loss resulting from their disposal is included in the separate income statement.
4.6 Intangible fixed assets
Intangible fixed assets are stated at cost less accumulated am-ortisation.
The cost of an intangible fixed asset comprises of its purchase price and any directly attributable costs of preparing the intan-gible fixed asset for its intended use.
Expenditures for additions, improvements are added to the carrying amount of the assets and other expenditures are charged to the separate income statement as incurred.
When intangible fixed assets are sold or retired, their costs and accumulated amortisation are removed from the balance sheet and any gain or loss resulting from their disposal is in-cluded in the separate income statement.
Land use rights are recognised based on the revalued amount as determined by an independent valuer for the land areas that the Holdings had land use right certificates, or was in the process of obtaining the land use right certificates, as at 31 De-cember 2005 for the equitization purpose of the Holdings.
4.7 Depreciation and amortisation Depreciation and amortisation of tangible fixed tangible and intangible fixed assets is calculated on a straight-line basis over the estimated useful lives of these assets, which are as follows:
Buildings 6 - 25 yearsMachinery and equipment 3 - 7 yearsMeans of transportation and communication 6 - 8 yearsOffice equipment 3 - 6 yearsOther fixed assets 4 yearsSoftware 3 - 5 years
Land use rights with indefinite terms are not amortised in ac-cordance with Circular 203/2009/TT-BTC issued by the Ministry of Finance on 20 October 2009.
4.8 Payables and accruals
Payables and accruals are recognised for the amount to be paid in the future for goods and services received, whether or not billed to the Holdings.
4.9 Employee benefits
Post employment benefits
Post employment benefits are paid to retired employees of the Holdings by the Vietnam Social Insurance Agency. The Holdings is required to contribute to these post employment benefits by paying social insurance premiums to the Vietnam Social Insur-ance Agency at the rate of 16% of employee basic salaries on a monthly basis since 1 January 2010 (15% for the periods before 1 January 2010). The Holdings has no further obligation concern-ing post employment benefits for its employees other than this.
Voluntary resignation and retrenchment benefits
Voluntary resignation benefits: the Holdings has the obligation, under Section 42 of the Labor Code amended on 2 April 2002, to pay an allowance to voluntarily resigning employees, equal to half of one-month’s basic salary for each year of employ-ment plus wage allowances (if any) until 31 December 2008. Commencing 1 January 2009, the average monthly salary used in this calculation will be revised at the end of each reporting period based on the average monthly salary of the most recent 6 months up to the reporting date;
Retrenchment benefits: the Holdings has the obligation, under Section 17 of the Labor Code, to pay an allowance to employ-ees who are retrenched as a result of organizational restructur-ing or technological changes. In such cases, the Holdings shall pay to employees an allowance for loss of work equivalent to the aggregate amount of one month salary for each year of employment, but no less than two month salary.
Although the obligations under Sections 17 and 42 are compul-sory, the implementation of these Sections is subject to detailed guidance by the Ministry of Finance. In accordance with Circular 64/1999/TT-BTC dated 7 June 1999 and subsequently Circular 82/2003/TT-BTC dated 14 August 2003 by the MOF which super-seded Circular 64, companies are required to calculate retrench-ment allowance at the rate of 1-3% per annum, of the basic sal-ary fund; and the outstanding balance of employee termination
reserve which was previously created at 10% from the profit after tax and after appropriation for supplementary capital reserve in accordance with the guidance of Circular 64 should be transferred to the retrenchment allowance as allowed under Circular 82.
Unemployment Insurance Fund
According to the Social Insurance Law No. 71/2006/QH11 is-sued on 29 June 2006, and Decree 127/2008/ND-CP issued on 12 December 2008, employee and employer are required to contribute 1% each of employee basic salary to the unem-ployment insurance fund, with effect from 01 January 2009. Further, the Government will also contribute 1% of the basic salary of each employee to this fund. Vietnam Social Insurance Agency is responsible for the collection, distribution and man-agement of the Fund.
4.10 Revenue recognition
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Holdings and the revenue can be reliably measured. The following specific revenue recog-nition criteria must also be met before revenue is recognised:
Interest
Revenue is recognised as interest accrues (taking into account the effective yield on the asset) unless the collectability is in doubt.
Revenue from bond is recognized on an accrual basis. Inter-est revenue also includes the amount of amortization of any discount, premium or other difference between the initial carrying amount of a bond and its amount at matu-rity and allocated using straight-line method. When unpaid bond coupon interest has accrued before the acquisition of a bond, the subsequent receipt of coupon interest is allo-cated between pre-acquisition and post-acquisition period. Only post-acquisition bond coupon interest is recognized as revenue. Pre-acquisition bond coupon interest is deducted from the cost of the bond.
Dividends and appropriated profits
Income is recognised when the Holdings’ right to receive the cash dividend or the appropriated profit is established. Stock dividend and bonus shares received are not recognized as in-come of the Holdings and the respective increase in number of shares are only updated off balance sheet.
Other income
Revenues from irregular - activities other than turnover-gen-erating activities are recorded to other incomes as stipulated by “VAS 14 - Revenue and other income”, including: Revenues from asset liquidation and sale; fines paid by customers for their contract breaches; collected insurance compensation; collected debt which had been written off and included in the preceding period expenses; payable debts now recorded as revenue increase as their owners no longer exist; collected tax amounts which now are reduced and reimbursed; and other revenues.
4.11 Taxation
Current income tax
Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be re-covered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantially enacted as at the balance sheet date.
Current income tax is charged or credited to the separate in-come statement, except when it relates to items recognised directly to equity, in which case the deferred current income tax is also dealt with in equity.
Current income tax assets and liabilities are offset when there is a legally enforceable right for the Holdings to set off current tax assets against current tax liabilities and when the Holdings in-tends to settle its current tax assets and liabilities on a net basis.
As disclosed in Note 4.1, the Holdings adopted the “VAS 10” in relation to foreign currency transactions from the year 2010. However, the Holdings applies Circular 130/2008/TT-BTC dat-ed 26 December 2008 and Circular 177/2009/TT-BTC dated 10 September 2009 issued by the Ministry of Finance in calculat-ing the taxable income relating to these transactions.
Deferred tax
Deferred tax is provided using the liability method on tem-porary differences at the balance sheet date between the tax base of assets and liabilities and their carrying amount for fi-nancial reporting purposes.
Deferred tax liabilities are recognised for all taxable temporary differences, except:
NOTES TO THE SEPARATE FINANCIAL STATEMENTS (continued)as at and for the year ended 31 December 2010
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where the deferred tax liability arises from the initial recog-nition of an asset or liability in a transaction which at the time of the related transaction affects neither the account-ing profit nor taxable profit or loss; and
in respect of taxable temporary differences associated with investments in subsidiaries and associates, and interests in joint ventures where timing of the reversal of the temporary difference can be controlled and it is probable that the tem-porary difference will not reverse in the foreseeable future.
Deferred tax assets are recognised for all deductible temporary differences, carried forward unused tax credit and unused tax losses, to the extent that it is probable that taxable profit will be available against which deductible temporary differences, carried forward unused tax credit and unused tax losses can be utilised, except:
where the deferred tax asset in respect of deductible tem-porary difference which arises from the initial recognition of an asset or liability which at the time of the related transac-tion, affects neither the accounting profit nor taxable profit or loss; and
in respect of deductible temporary differences associated with investments in subsidiaries, associates, and interests in joint ventures, deferred tax assets are recognized only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilized.
The carrying amount of deferred income tax assets is re-viewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised. Previously unrecognised deferred income tax assets are reassessed at each balance sheet date and are recognised to the extent that it has be-come probable that future taxable profit will allow the de-ferred tax assets to be recovered.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply in the period when the as-set realised or the liability is settled based on tax rates and tax laws that have been enacted at the balance sheet date.
Deferred tax is charged or credited to the separate income statement, except when it relates to items recognised directly to equity, in which case the deferred tax is also dealt with in the equity account.
Deferred tax assets and liabilities are offset when there is a le-gally enforceable right for the Holdings to set off current tax assets against current tax liabilities and when they relate to in-come taxes levied on the same taxable entity by the same taxa-tion authority.
4.12 Offsetting
Financial assets and liabilities are offset and presented on net basis on the separate balance sheet when and only when the Holdings has the intention and legal right to make payment on net basis, or the settlement of financial assets and liabilities happen at the same time.
4.13 Appropriation of net profits
Profit after tax of the Holdings is appropriated in accordance with resolutions of the General Shareholders’ Meeting and Viet-namese regulatory requirements.
4.14 Foreign currency transactions
The Holdings adopted the “VAS 10” in relation to foreign cur-rency transactions from the year 2010.
Transactions in currencies other than the Holdings’ reporting currency of VND are recorded at the exchange rates ruling at the date of the transaction. At the end of the year, monetary as-sets and liabilities denominated in foreign currencies are trans-lated at inter-bank exchange rates ruling at the balance sheet date. All realised and unrealised foreign exchange differences are taken to the separate income statement.
The above guidance related to unrealized foreign exchange dif-ferences provided by VAS 10 is different from those stipulated in the Circular 201/2009/TT-BTC issued on 15 October 2009 by the Ministry of Finance providing guidance for the treatment of foreign exchange differences (the “Circular 201”) as applied by the Holdings in 2009 as described in Note 4.1.
The impact to the separate financial statements had the Hold-ings adopted the Circular 201 in 2010 is presented in Note 30.
NOTES TO THE SEPARATE FINANCIAL STATEMENTS (continued)as at and for the year ended 31 December 2010
NOTES TO THE SEPARATE FINANCIAL STATEMENTS (continued)as at and for the year ended 31 December 2010
5. CASH AND CASH EQUIVALENTS
31 Dec 2010VND
31 Dec 2009 VND
Cash on hand in VND 830,825,704 693,051,531
In Holdings’ Head office 721,861,569 679,640,280
In Bao Viet Training Center 108,964,135 13,411,251
Cash at bank 666,687,300,395 15,837,261,139
Cash at bank in VND 666,051,253,350 15,443,615,146
Bao Viet Holdings’ own funds 665,779,662,919 13,747,166,957
Bao Viet Life’s trusted investments 146,417,440 416,836,059
Bao Viet Insurance’s trusted investments 99,432,498 941,913,244
MOF’s trusted investments 25,740,493 337,698,886
Cash at bank in USD 636,047,045 393,645,993
Bao Viet Holdings’ own funds 636,047,045 393,645,993
Cash equivalents (*) 183,500,000,000 -
Bao Viet Holdings’ own funds 124,000,000,000 -
Bao Viet Insurance’s trusted investment contracts 27,000,000,000 -
MOF’s trusted investments 32,500,000,000 -
851,018,126,099 16,530,312,670
(*) Cash equivalents comprises of term deposits at financial institutions having original maturity of not more than 3 months with interest at rates ranging from 12% to 16% per annum.
6. SHORT-TERM INVESTMENTS
31 Dec 2010VND
31 Dec 2009 VND
Short-term deposits in VND at financial institutions (**)
From Bao Viet Holdings’ own funds 3,088,006,000,000 2,116,760,503,079
From trusted investments of Bao Viet Life 483,529,105,556 416,700,000,000
From trusted investments of Bao Viet Insurance 136,200,000,000 106,439,496,921
From trusted investments of MOF - 447,080,000,000
3,707,735,105,556 3,086,980,000,000
Short-term deposits in USD at financial institutions ( VND equivalent) (**)
From Bao Viet Holdings’ own funds 32,373,720,000 30,320,290,000
32.373.720.000 30.320.290.000
Short-term portion of bonds
Bao Viet Holdings’ own funds - 59,429,557,461
- 59,429,557,461
Total short term investments 3,740,108,825,556 3,176,729,847,461
(**) The above short-term deposits at financial institutions have maturity not more than one year and interest at rates ranging from 8.2%% p.a. to 17.5% p.a. for VND and being 1% p.a. for USD.
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7. TRADE RECEIVABLES
Trade receivables represent the interest receivables from investment activities carried out by the Holdings:
31 Dec 2010VND
31 Dec 2009 VND
Interest receivables from:
Investments of the Holdings’ own funds 163,777,164,785 71,961,976,304
Investments trusted by Bao Viet Life 60,177,019,242 27,723,341,367
Investments trusted by Bao Viet Insurance 16,529,653,845 6,764,865,452
Investments trusted by MOF 400,833,333 2,477,568,331
240,884,671,205 108,927,751,454
8. RECEIVABLES FROM RELATED PARTIES
31 Dec 2010VND
31 Dec 2009 VND
Receivables from Bao Viet Life 612,634,690,349 601,016,051,505
Receivables from Bao Viet Insurance 318,148,907,505 213,453,540,178
Receivables from BVF 23,583,899,190 37,469,189,623
Receivables from BVSC 4,915,901,362 1,954,264,162
Receivables from BV - Au Lac 1,260,000 1,260,000
Receivables from Bao Viet Bank 4,389,623,289 439,652,120
963,674,281,695 854,333,957,588
9. OTHER RECEIVABLES
31 Dec 2010VND
31 Dec 2009 VND
North East Mai Linh Joint Stock Company 5,000,000 5,000,000
Green Star Joint Stock Company 26,239,697 26,239,697
Dat Viet Energy Investment Joint Stock Company 579,564,331 -
S.S.G Group Joint Stock Company 270,335,800 -
Advances to Financial Regime Drafting Divisions - 399,822,222
Petroleum Vietnam – SSG Real estate JSC 162,593,174 -
LG Electronic Vietnam 176,982,251 -
Others 265,469,421 238,957,263
1,486,184,674 670,019,182
10. PREPAID EXPENSE
This represents the expenditures related to the Technical Support and Capability Transfer Agreement with HSBC Insurance (Asia Pacific) Holdings Limited which is allocated to expense for 2 years. During the year 2010, VND 9,731,061,326 was allocated into expense and the remaining of VND 9,731,061,326 will be allocated to expense in 2011.
NOTES TO THE SEPARATE FINANCIAL STATEMENTS (continued)as at and for the year ended 31 December 2010
NOTES TO THE SEPARATE FINANCIAL STATEMENTS (continued)as at and for the year ended 31 December 2010
11. TANGIBLE FIXED ASSETS
Items
BuildingVND
Machinery & equipment
VND
Means of trans-portation and
communicationVND
Office equipment
VND
Other fixed assets
VND
TotalVND
Cost:
Balance at 31 December 2009 164,587,933,800 919,234,639 33,974,348,890 41,420,110,550 57,980,000 240,959,607,879
Additions: 219,793,540,625 - 64,806,430,739 8,712,155,780 - 293,312,127,144
New purchases - - - 2,813,155,780 - 8,712,155,780
Newly constructed or transferred from CIP
219,793,540,625 - 64,806,430,739 5,899,000,000 - 284,599,971,364
Balance at 31 December 2010 384,381,474,425 919,234,639 98,780,779,629 50,132,266,330 57,980,000 534,271,735,023
Accumulated depreciation:
Balance at 31 December 2009 24,310,667,110 861,692,097 4,433,525,169 24,915,071,159 42,614,260 54,563,569,795
Depreciation for the year 9,054,661,512 36,342,658 8,594,151,734 5,883,607,509 10,775,780 23,579,539,193
Balance at 31 December 2010 33,365,328,622 898,034,755 13,027,676,903 30,798,678,668 53,390,040 78,143,108,988
Net book value:
Balance at 31 December 2009 140,277,266,690 57,542,542 29,540,823,721 16,505,039,391 15,365,740 186,396,038,084
Balance at 31 December 2010 351,016,145,803 21,199,884 85,753,102,726 19,333,587,662 4,589,960 456,128,626,035
12. INTANGIBLE FIXED ASSETS
ItemsLand use rights
VNDSoftwareVND
TotalVND
Cost:
Balance at 31 December 2009 11,667,900,000 20,552,857,228 32,220,757,228
Addition
New purchases - 5,322,093,000 5,322,093,000
Transferred from CIP - 23,303,849,714 23,303,849,714
Balance at 31 December 2010 11,667,900,000 49,178,799,942 60,846,699,942
Accumulated amortisation:
Balance at 31 December 2009 - 18,272,856,754 18,272,856,754
Amortisation during the year - 5,316,852,052 5,316,852,052
Balance at 31 December 2010 - 23,589,708,806 23,589,708,806
Net book value:
Balance at 31 December 2009 11,667,900,000 2,280,000,474 13,947,900,474
Balance at 31 December 2010 11,667,900,000 25,589,091,136 37,256,991,136
ANNUAL REPORT 2010
84BAO VIET HOLDINGS 2010
85
13. CONSTRUCTION IN PROGRESS
Items
31 Dec 2009 VND
IncreasesVND
DecreasesVND
31 Dec 2010VND
Headquarter at No 8 Le Thai To, Hanoi 105,024 2,677,497,159 2,677,602,183 -
Office at No 233 Dong Khoi, HCM 183,622,163,685 32,855,601,387 216,000,000,000 477,765,072
Bao Viet Ha Tinh Office 397,105,337 - - 397,105,337
Bao Viet Thai Nguyen Office (*) 19.917.161.261 - 15.910.650.980 4.006.510.281
Bao Viet Ha Tay Office 25,000,000,000 235,620,226 - 25,235,620,226
Bao Viet An Giang Office 610,191,011 - - 610,191,011
BVAccount Software 2,360,570,920 - - 2,360,570,920
Human resource management Software - 139,952,554 139,952,554 -
International accounting software 4,176,981,077 7,681,099,600 11,858,080,677 -
Financial statement consolidation software - 1,047,989,200 - 1,047,989,200
Anti Virus software 170,005,900 1,530,053,100 1,700,059,000 -
Lotus Note software - 15,504,757,483 15,504,757,483 -
The Holdings’ Information Center 10,396,985,085 68,455,915,774 64,806,430,739 14,046,470,120
Others 992,346,078 801,556,000 1,786,652,078 7,250,000
247,643,615,378 130,930,042,483 330,384,185,694 48,189,472,167
(*) Part of Bao Viet Thai Nguyen Office Building, owned by Bao Viet Insurance, was constructed under the management of the Hold-ings, and was recorded as construction in progress in the Holdings’ book. During 2010, the Holdings has transferred a completed part with a finalised value of VND 15,910,650,980 to be recognised as fixed assets at Bao Viet Insurance.
14. LONG-TERM INVESTMENTS
Items Notes 31 Dec 2010VND
31 Dec 2009 VND
Investment in subsidiaries and BVF1 4,710,481,388,414 4,210,481,388,414
Investment in subsidiaries 14.1 4,616,291,148,720 4,116,291,148,720
Investment in BVF1 14.2 94,190,239,694 94,190,239,694
Investment in associates and joint-ventures 14.3 252,769,440,000 232,862,440,000
Other long-term investments 14.4 1,797,126,521,875 1,461,270,934,725
Bonds 14.4.a 632,871,555,108 531,511,227,958
Term deposits 14.4.b 202,000,000,000 -
Other long-term investments 14.4.c 962,254,966,767 929,759,706,767
6,760,377,350,289 5,904,614,763,139
Provision for impairment of long-term investments (340,337,920,054) (141,631,212,190)
6,420,039,430,235 5,762,983,550,949
Details of long-term investments by sources of capital as at 31 December 2010 are as follows:
NOTES TO THE SEPARATE FINANCIAL STATEMENTS (continued)as at and for the year ended 31 December 2010
ItemsTrusted investment
from Bao Viet Life VND
Trusted investment from Bao Viet Insurance
VND
Long-term invest-ment of the Holdings
VND
Total
VND
Investment in subsidiaries - - 4,616,291,148,720 4,616,291,148,720
Investment in BVF1 - - 94,190,239,694 94,190,239,694
Investment in associates and joint- ventures 77,719,440,000 - 175,050,000,000 252,769,440,000
Other long-term investments 71,205,200,000 59,872,226,767 1,666,049,095,108 1,797,126,521,875
Bonds - - 632,871,555,108 632,871,555,108
Term deposits - 2,000,000,000 200,000,000,000 202,000,000,000
Other long-term investments 71,205,200,000 57,872,226,767 833,177,540,000 962,254,966,767
148,924,640,000 59,872,226,767 6,551,580,483,522 6,760,377,350,289
Provision for impairment of long-term investments
This represents provision for impairment of listed shares, deposit contracts, investment in BVF1 and unlisted shares as at 31 De-cember 2010.
Details of the provision for impairment of long-term financial investments are as follows:
31 Dec 2010VND
31 Dec 2009 VND
Provision for impairment of listed shares (176,919,725,000) (57,280,000,000)
Provision for impairment of unlisted shares (58,312,000,000) (79,839,500,000)
Provision for impairment of deposit contracts (95,397,026,975) -
Provision for impairment of net assets of BVF1 (9,709,168,079) (4,511,712,190)
(340,337,920,054) (141,631,212,190)
14.1 Investment in subsidiaries
31 Dec 2010VND
31 Dec 2009 VND
Bao Viet Life 1,500,000,000,000 1,500,000,000,000
Bao Viet Insurance 1,500,000,000,000 1,000,000,000,000
BVF 50,000,000,000 50,000,000,000
BVSC 694,895,148,720 694,895,148,720
Baoviet Bank 780,000,000,000 780,000,000,000
BVInvest 55,000,000,000 55,000,000,000
BV - Au Lac 36,396,000,000 36,396,000,000
4,616,291,148,720 4,116,291,148,720
Details of investments in subsidiaries as at 31 December 2010 are as follows:
NOTES TO THE SEPARATE FINANCIAL STATEMENTS (continued)as at and for the year ended 31 December 2010
ANNUAL REPORT 2010
86BAO VIET HOLDINGS 2010
87
Investee Charter capitalVND
Committed contribution capital
VND
Contributed capitalVND
Bao Viet Life 1,500,000,000,000 1,500,000,000,000 1,500,000,000,000
Bao Viet Insurance 1,500,000,000,000 1,500,000,000,000 1,500,000,000,000
BVF 50,000,000,000 50,000,000,000 50,000,000,000
BVSC 722,339,370,000 432,811,930,000 694,895,148,720
Baoviet Bank 780,000,000,000 780,000,000,000 780,000,000,000
BVInvest 100,000,000,000 55,000,000,000 55,000,000,000
BV - Au Lac 60,660,000,000 36,396,000,000 36,396,000,000
4,616,291,148,720
Investments in Bao Viet Securities Investment Fund (“BVF1”)
BVF1 was established as a closed-end member investment fund in Vietnam in accordance with License No. 05/UBCK-TLQTV issued by the State Securities Commission on 19 July 2006. The Fund was licensed to operate for a period of five years. BVF1 originally had a charter capital of VND 500,000,000,000, equivalent to 50,000,000 units with a par value of VND 10,000 per unit. BVF1 increased its charter capital to VND 1,000,000,000,000 on 4 March 2008, as approved in Official Letter No. 98/TB-UBCK issued by the State Securities Commission, which is equivalent to 100,000,000 units with a par value of VND 10,000 per unit.
The Fund is managed by BVF, a subsidiary of the Holdings. The custodian bank of the Fund is HSBC Bank (Vietnam) Ltd.
At 31 December 2010, direct and indirect holding of the Holdings in BVF1 is as follows:
Contributed capitalVND
% of charter capitalVND
Direct investment of the Holdings 94,190,239,694 9.42%
Indirect investment via subsidiaries 821,659,537,741 82.16%
Bao Viet Life 601,214,295,907 60.12%
Bao Viet Insurance 220,445,241,834 22.04%
915,849,777,435 91.58%
14.3 Investments in associates and joint ventures
31 Dec 2010VND
31 Dec 2009 VND
Investments from Bao Viet Holdings’ own funds 175,050,000,000 171,150,000,000
Baoviet Tourism Hotel JSC 7,050,000,000 3,150,000,000
Bao Viet Tokio Marine Insurance Joint Venture Com-pany
153,000,000,000 153,000,000,000
International Investment and Construction JSC (“VIGEBA”)
15,000,000,000 15,000,000,000
NOTES TO THE SEPARATE FINANCIAL STATEMENTS (continued)as at and for the year ended 31 December 2010
Investment from trusted capital of Bao Viet Life 77,719,440,000 61,712,440,000
Baoviet Tourism Hotel JSC 9,450,000,000 4,250,000,000
International Investment & Construction Joint Stock Company (“VIGEBA”)
39,000,000,000 39,000,000,000
Quang Minh Project - 14,000,000,000
Long Viet Investment and Construction JSC 29,269,440,000 4,462,440,000
252,769,440,000 232,862,440,000
Details of the investments in associates and joint ventures as at 31 December 2010 are as follows:
Invested company Charter capitalVND
Committed con-tribution capital
VND
% Contributed capitalVND
Capital to be contributed
VND
Associates
Baoviet Tourism Hotel JSC 60.000.000.000 21.000.000.000 35% 16.500.000.000 4.500.000.000
VIGEBA 180.000.000.000 54.000.000.000 30% 54.000.000.000 -
Long Viet Investment and Construction JSC 65.043.200.000 29.269.440.000 45% 29.269.440.000 -
Joint ventures
Bao Viet Tokio Marine Insurance Joint Venture
Company (Control right: 50%)
300.000.000.000 153.000.000.000 51% 153.000.000.000 -
252.769.440.000
14.4 Other long-term investments
14.4.a Bonds
31 Dec 2010
VND
31 Dec 2009
VND
Corporate Bonds 534,421,421,004 487,604,752,707
Government Bonds 98,450,134,104 43,906,475,251
632,871,555,108 531,511,227,958
The Holdings’ bonds include government bonds with interest at rates ranging from 7.86% p.a. to 12.1% p.a. and corporate bonds with interest at rates ranging from 9.4% p.a. to 14.05% p.a.
14.4.b Long term deposits
31 Dec 2010
VND
31 Dec 2009
VND
Long term deposits in VND at financial institutions
From Bao Viet Insurance’s trusted funds 200,000,000,000 -
From Bao Viet Holdings’ own funds 2,000,000,000 -
202,000,000,000 -
The Holdings’ long term deposits in VND at financial institutions include term deposits at Bank for Investment and Development of Vietnam (BIDV) and Thanh Hoa Development Bank with interest at rates ranging from 10.5% p.a. to 11.5% p.a. and one term deposit contract at Da Nang Development Fund with interest rate at 11.3% p.a.
NOTES TO THE SEPARATE FINANCIAL STATEMENTS (continued)as at and for the year ended 31 December 2010
14.3 Investments in associates and joint ventures (continued)
ANNUAL REPORT 2010
88BAO VIET HOLDINGS 2010
89
NOTES TO THE SEPARATE FINANCIAL STATEMENTS (continued)as at and for the year ended 31 December 2010
14.4.c Other long-term investments
31 Dec 2010 31 Dec 2009
Quantity of shares CostVND
Quantity of shares CostVND
Investments from Holdings’ own funds 833,177,540,000 800,408,280,000
Maritime Commercial Joint Stock Bank 3,937,542 39,375,420,000 3,937,542 39,375,420,000
Saigon Ha Long Joint Stock Company 1,000,000 10,000,000,000 1,000,000 10,000,000,000
Vietnam Ocean Shipping Company 3,000,000 59,587,500,000 3,000,000 59,587,500,000
SSG Construction and Real Estate Joint Stock Company 2,750,000 225,000,000,000 2,250,000 225,000,000,000
Viet Long Growth Investment Fund 3,000,000 30,450,000,000 3,000,000 30,450,000,000
Bao Long Insurance Joint Stock Company 6,368,272 63,682,720,000 3,184,136 31,841,360,000
HiPT Group Joint Stock Company 1,766,250 63,250,000,000 1,125,000 63,250,000,000
Vietnam National Reinsurance Corporation 5,762,400 57,624,000,000 5,762,400 57,624,000,000
Sai Gon Beer Alcohol Beverage Joint Stock Company 500,000 35,000,000,000 500,000 35,000,000,000
CMC Corporation 3,200,000 144,000,000,000 3,200,000 144,000,000,000
Vietnam Commercial Joint Stock Bank of Foreign Trade 1,092,790 105,207,900,000 1,000,000 104,280,000,000
Investments from Bao Viet Life’ s trusted capital 71,205,200,000 71,479,200,000
Hai Phong Thermal Power Joint Stock Company 3,777,165 37,771,650,000 3,777,165 37,771,650,000
Tay Ninh Cable Car Tour Joint Stock Company 511,490 5,114,900,000 538,890 5,388,900,000
Tay Ninh Transportation Joint Stock Company 55,070 550,700,000 55,070 550,700,000
Hai Au Shipping Joint Stock Company 441,000 4,410,000,000 441,000 4,410,000,000
Hanoi Entertainment Service Joint Stock Company 1,800,000 18,330,750,000 1,800,000 18,330,750,000
Saigon Phu Quoc Joint Stock Company 502,720 5,027,200,000 502,720 5,027,200,000
Investments from Bao Viet Insurance’s trusted
capital57,872,226,767 57,872,226,767
Da Nang Bus and Trading Services Company 20,000 200,000,000 20,000 200,000,000
Quang Nam Transportation JSC 58,138 581,376,767 58,138 581,376,767
Vietnam Ocean Shipping Company 1,000,000 19,862,500,000 1,000,000 19,862,500,000
Hai Phong Thermal Power Joint Stock Company 3,722,835 37,228,350,000 3,722,835 37,228,350,000
962,254,966,767 929,759,706,767
15. TRADE PAYABLES
31 Dec 2010VND
31 Dec 2009 VND
Prepaid interest from term deposits 13,709,361,125 -
Prepaid interest from bonds 3,032,054,795 -
Dividend advance 4,881,550,723 -
Medicine Technology Development Joint Stock Company 110,805,001 110,805,001
Contractors of Building No. 8 Le Thai To 518,618,831 -
Others 822,500,000 998,500,000
23,074,890,475 1,109,305,001
16. STATUTORY OBLIGATIONS
31 Dec 2009 VND
IncreaseVND
Paid during the year
VND
31 Dec 2010VND
Taxes
Value added tax 676,205,276 3,632,021,985 2,793,468,382 1,514,758,879
Enterprise Income Tax 73,550,488,349 35,059,086,140 111,288,125,756 (2,678,551,267)
Land leasing fee - 314,369,742 314,369,742 -
Other taxes 1,276,844,355 6,018,631,927 6,530,009,709 765,466,573
License duty - 3,000,000 3,000,000 -
Foreign contractor withholding tax 600,640,537 2,687,856,846 3,286,663,364 1,834,019
Personal income tax 596,265,579 2,793,646,349 2,927,166,465 462,745,463
Irregular income tax 79,938,239 534,128,732 313,179,880 300,887,091
75,503,537,980 45,024,109,794 120,925,973,589 (398,325,815)
Enterprise Income Tax expenses for the year is presented in Note 27.
17. PAYABLES TO EMPLOYEES
31 Dec 2010VND
31 Dec 2009 VND
Salary fund payable 20,258,970,199 6,197,547,272
20,258,970,199 6,197,547,272
NOTES TO THE SEPARATE FINANCIAL STATEMENTS (continued)as at and for the year ended 31 December 2010
ANNUAL REPORT 2010
90BAO VIET HOLDINGS 2010
91
18. PAYABLES TO RELATED PARTIES
31 Dec 2010VND
31 Dec 2009VND
Payables to Bao Viet Life 1,089,644,890,232 975,576,515,708
Payables to Bao Viet Insurance 365,293,699,484 347,702,226,512
Payables to BVInvest 8,285,138,858 1,687,863,441
1,463,223,728,574 1,324,966,605,661
19. OTHER PAYABLES
31 Dec 2010VND
31 Dec 2009VND
Trade Union’s fees 1,078,649,472 751,370,685
Social and health insurance 190,148,379 119,865,509
Unemployment Insurance 17,901,180 -
Payable related to BAVINA liquidation - 12,193,416,456
Payable for HSBC Insurance Asia Pacific 10,423,137,760 16,736,723,282
Advance from shareholders (*) 646,867,673,855 -
Dividend payable to the Ministry of Finance (**) 32,926,573,826 449,895,267,217
Payables for Thanh Vinh Furniture Ltd. 190,000,000 -
Payables related to 30a Program 14,386,072,248 5,135,707,709
Deposits from tenants at 233 Dong Khoi 3,180,775,820 -
Other payables 903,176,557 571,753,764
710,164,109,097 485,404,104,622
(*) This represents the subscription money received from existing shareholders for their exercise of right issues in January 2011.
(**) This relates to the 2008 dividend payable to MOF that the Holdings was authorized to use to increase MOF’s contribution in the Holdings’ charter capital. During the year 2010, an amount of VND 458,517,600,000 was transferred to a bank account for the preparation of the MOF’s contribution in the Holdings’ charter capital that took place in January 2011.
20. BONUS AND WELFARE FUNDS
31 Dec 2009VND
Increased during the year
VND
Used during the year
VND
31 Dec 2010VND
Bonus Fund 11,678,792,153 6,646,711,071 3,725,342,039 14,600,161,185
Welfare Fund 7,368,373,319 17,586,844,283 17,536,913,333 7,418,304,269
19,047,165,472 24,233,555,354 21,262,255,372 22,018,465,454
NOTES TO THE SEPARATE FINANCIAL STATEMENTS (continued)as at and for the year ended 31 December 2010
21. PROVISIONS FOR SEVERANCE ALLOWANCE
31 Dec 2010VND
31 Dec 2009 VND
Opening balance 21,127,205,418 21,227,073,732
Increase 147,059,588 103,982,986
Utilized (9,432,000) (203,851,300)
Closing balance 21,264,833,006 21,127,205,418
22. OWNERS’ EQUITY
Contributed Capital
VND
Shares Premium
VND
Foreign Exchange Difference
VND
Undistributed Profit VND
Total
VND
As at 31 December 2009 5,730,266,050,000 1,734,745,821,197 1,668,684,274 969,743,897,777 8,436,424,453,248
Additional capital contribution 536,824,740,000 1,342,061,850,000 - - 1,878,886,590,000
Profit of current year - - - 852,068,230,108 852,068,230,108
Dividends for the year 2009 paid to Shareholders
- - - (630,329,265,500) (630,329,265,500)
Appropriation to bonus and welfare fund for the year 2009
- - - (24,233,555,354) (24,233,555,354)
Remuneration to BOD and Supervisory Committee for the year
- - - (1,088,333,334) (1,088,333,334)
Recognition of foreign exchange differ-ence to income of the year
- - (1,668,684,274) - (1,668,684,274)
As at 31 December 2010 6,267,090,790,000 3,076,807,671,197 - 1,166,160,973,697 10,510,059,434,894
23. INCOME FROM OPERATING ACTIVITIES
Current yearVND
Previous yearVND
Interest from demand deposits 948,688,305 28,864,672,094
Interest from term deposits 408,931,325,919 246,459,545,855
Gain from trading securities 64,230,038,578 62,236,356,695
Income from dividends or distributed profits 731,415,531,077 558,730,600,086
Bao Viet Insurance 197,583,757,718 149,205,247,802
Bao Viet Life 402,095,241,388 326,162,856,501
BVF 19,337,457,239 33,893,752,812
Bao Viet Bank 70,200,000,000 -
BVSC - 6,390,761,070
Bao Viet Tokio Marine Insurance Joint Venture Company 9,911,913,955 13,935,661,901
Shared dividends from other equity investments 32,287,160,777 29,142,320,000
Gain from foreign exchange rate differences 3,409,602,724 -
Income from other financial activities 1,303,597,142 2,467,253,635
1,210,238,783,745 898,758,428,365
NOTES TO THE SEPARATE FINANCIAL STATEMENTS (continued)as at and for the year ended 31 December 2010
ANNUAL REPORT 2010
92BAO VIET HOLDINGS 2010
93
24. EXPENSES FROM OPERATING ACTIVITIES
Current yearVND
Previous yearVND
Reversal of provision for impairment of investments - (58,133,911,004)
Provision for impairment of investments 198,706,707,864 -
Other financial expenses 134,600,190 304,128,843
198,841,308,054 (57,829,782,161)
25. GENERAL AND ADMINISTRATION EXPENSESa
Current yearVND
Previous yearVND
Staff costs 58,787,509,243 41,528,000,000
Materials expenses 1,684,032,812 1,102,811,597
Office stationery expenses 1,358,963,762 772,960,728
Fixed asset depreciation and amortisation 28,896,391,245 19,209,863,945
Taxes and fees 382,717,389 8,102,418
Consultancy fees 17,845,250,184 3,205,752,951
Provision for severance allowance 147,059,588 146,080,000
Social security expenses 2,080,000,000 2,350,000,000
External service fees 27,385,031,693 19,143,918,647
Others 19,549,598,107 7,112,617,928
158,116,554,023 94,580,108,214
26. OTHER INCOME AND EXPENSES
Current yearVND
Previous yearVND
Other income
Rental income 35,913,028,904 23,629,992,632
Gain on disposal of BAVINA company 12,193,416,456 -
Others 216,942,750 41,515,378
48,323,388,110 23,694,525,355
Other expenses
Building management expenses 14,456,793,530 4,056,077,172
Others 20,200,000 25,000,000
14,476,993,530 4,081,077,172
Net other income 33.846.394.580 19.613.448.183
NOTES TO THE SEPARATE FINANCIAL STATEMENTS (continued)as at and for the year ended 31 December 2010
27. ENTERPRISE INCOME TAX
The Holdings has the obligation to pay Enterprise Income Tax (“EIT”) at the rate of 25 % of taxable profits of the period.
The Holdings’ tax returns are subject to examination by the tax authorities. Because the application of tax laws and regulations to many types of transactions is susceptible to varying interpretations, the amounts reported in the audited separate financial state-ments could be changed at a later date upon final determination by the tax authorities.
The current tax payable is based on taxable profit for the period. The taxable profit of the Holdings for the period differs from the profit as reported in the separate income statement because it excludes items of income or expense that are taxable or deductible in other periods and it further excludes items that are not taxable or deductible. The Holdings liability for current tax is calculated using tax rates that have been enacted by the balance sheet date.
Current Enterprise Income Tax
Current yearVND
Previous yearVND
Total accounting profit before tax 887,127,316,248 881,621,550,495
Non taxable dividend income, unrealized foreign exchange gain and other adjustments
(746,890,971,690) (558,708,980,669)
Total taxable income 140,236,344,558 322,912,569,826
Enterprise income tax rate 25% 25%
Estimated enterprise income tax 35,059,086,140 80,728,142,457
Additional EIT payable according to tax authorities’ inspection minutes - 285,883,677
Enterprise income tax 35,059,086,140 81,014,026,134
EIT reduction according to Circular No. 03/2009/TT-BTC - (7,177,654,108)
Enterprise income tax expenses for the year 35,059,086,140 73,836,372,026
28. TRANSACTIONS WITH RELATED PARTIESDuring the normal course of operations, the Holdings engages in transactions with entities to which it is related through equity participation. As set out below, the Holdings and the related entities with which it trades, are linked either through the investor/investee relationship, or share a common investor and thus are a part of the same corporate group.
Related parties with the Holdings include:
Related parties Relationship
Ministry of Finance Shareholder
HSBC Insurance (Asia Pacific) Holdings Limited Shareholder
State Capital Investment Corporation (SCIC) Shareholder
Bao Viet Insurance Subsidiary
Bao Viet Life Subsidiary
Bao Viet Fund Management Ltd, Co (BVF) Subsidiary
Bao Viet Securities Joint Stock Company (BVSC) Subsidiary
Bao Viet Au Lac Ltd, Co (BV - Au Lac) Subsidiary
NOTES TO THE SEPARATE FINANCIAL STATEMENTS (continued)as at and for the year ended 31 December 2010
ANNUAL REPORT 2010
94BAO VIET HOLDINGS 2010
95
NOTES TO THE SEPARATE FINANCIAL STATEMENTS (continued)as at and for the year ended 31 December 2010
Bao Viet Investment Joint Stock Company (BVInvest) Subsidiary
Bao Viet Commercial Joint Stock Bank (Baoviet Bank) Subsidiary
Bao Viet Tokio Marine Insurance Joint Venture Company Joint venture
Baoviet Tourism Hotel Joint Stock Company (“Bao Viet Resort JSC”) Associate
International Investment and Construction Joint Stock Company – (“VIGEBA”) Associate
Long Viet Investment and Construction JSC (“Long Viet JSC”) Associate
Significant related party transactions during the year are given below:
Related parties Transactions For the year ended 31 December 2010
VND
Ministry of Finance Dividends for the year 2009 paid to MOF 488,730,000,000
HSBC Insurance (Asia Pacific) Holdings Limited
Additional capital contribution to the Holdings 1,878,886,590,000
Dividends for the year 2009 paid to HSBC Insurance (Asia Pacific) Holdings Limited 59,050,721,400
Additional capital contribution to the Holdings 116,417,472,000
SCICDividends for the year 2009 paid to SCIC 22,440,000,000
Additional capital contribution to the Holdings 21,052,800,000
BVInvestOffice management fee paid to BVInvest 14,9 90,971,337
Office rental expense payable to the Holdings 462,138,548
Bao Viet Insurance Profit transfer to the Holdings 197,583,757,718
Bao Viet Life
Profit transfer to the Holdings 402,095,241,388
Investment portfolio management fee 1,165,979,581
Office rental expense payable to the Holdings 3,737,732,805
BVFProfit transfer to the Holdings 19,337,457,239
Office rental expense payable to the Holdings 3,580,954,672
Baoviet BankOffice rental expense payable to the Holdings 70,200,000,000
Office rental expense payable to the Holdings 14,077,364,968
BVSCOffice rental expense payable to the Holdings 9,514,588,251
Advisory fee of organizing Shareholders’ General Meeting 587,361,574
VIGEBA Dividend advance to the Holdings 27,000,000,000
BaoViet Resort JSC Additional capital contribution by the Holdings 9,100,000,000
Long Viet JSC Additional capital contribution to Long Viet JSC 24,807,000,000
Amounts due to and due from related parties at the balance sheet date are presented in Note 8 and Note 18 to the separate finan-cial statements.
Remuneration of members of the Board of Directors and the CEO:
Current yearVND
Previous yearVND
Remuneration of members of the Board of Directors and the CEO
1,449,600,000 1,464,320,998
1,449,600,000 1,464,320,998
NOTES TO THE SEPARATE FINANCIAL STATEMENTS (continued)as at and for the year ended 31 December 2010
29. EARNINGS PER SHAREBasic earnings per share (“EPS”) amount is calculated by dividing net profit after tax for the year attributable to ordinary sharehold-ers of the Holdings by the weighted average number of ordinary shares outstanding during the year.
The following information has been used for the calculation of EPS:
Current yearVND
Previous yearVND
Net profit after tax attributable to holders of ordinary share 852,068,230,108 807,785,178,469
Weighted average number of ordinary shares during the year 623,914,649 573,026,605
EPS 1,366 1,410
30. THE EFFECTS OF VAS 10 TO THE SEPARATE FINANCIAL STATEMENTS
As disclosed in Note 4.1, for the year ended 31 December 2010, the Holdings has changed its accounting policy for foreign cur-rency transactions from those guided by Circular 201 as applied in 2009 to those required by VAS 10. Had the Holdings continued to follow Circular 201 in 2010, the separate financial position and separate financial operating results of the Holdings would have been as follows:
VAS 10VND
Circular 201VND
DifferenceVND
Separate balance sheet
Foreign exchange difference reserves - 1,740,918,450 (1,740,918,450)
Retained earnings 1,740,918,450 - 1,740,918,450
Separate income statement
Net foreign exchange gain taken to the separate income statement 1,740,918,450 - 1,740,918,450
Earnings per share
Basic 1,366 1,363 3
31. EVENTS AFTER BALANCE SHEET DATE
Other than disclosed elsewhere in the separate financial statements, there have been no significant events occurring after 31 De-cember 2010 which would require adjustments or disclosures to be made in the separate financial statements. 32. COMPARATIVE INFORMATION
As referred to in Note 4.1, bonus and welfare fund balance as at 31 December 2009 was reclassified from owners’ equity to liabilities as follows:
31 Dec 2009 ReportedVND
AdjustmentVND
31 Dec 2009 ReclassifiedVND
Reclassification of bonus and welfare fund
Current liabilities 1,893,181,100,536 19,047,165,472 1,912,228,266,008
Owners’ equity 8,455,471,618,720 (19,047,165,472) 8,436,424,453,248Impact to total liabilities and owner’s equity
-
ANNUAL REPORT 2010
96
NOTES TO THE SEPARATE FINANCIAL STATEMENTS (continued)as at and for the year ended 31 December 2010
In addition, some comparative information in the separate financial statements for the year ended 31 December 2009 has been represented to be in conformity with the financial statement presentation of this year.
33. RATIOS ON OVERALL FINANCIAL POSITION AND BUSINESS RESULTS OF THE HOLDINGS
Items Unit of measurement Current year Previous year
1. Structures of assets and capital sources
1.1 Structure of assets
- Current assets/ Total assets % 45.48 40.11
- Long-term assets/Total assets % 54.52 59.89
1.2 Structure of capital sources
- Liabilities/Total capital sources % 17.70 18.64
- Owners’ equity/Total capital sources % 82.30 81.36
2. Liquidity
2.1 Current ratio Times 2.59 2.17
2.2 Quick ratio Times 2.59 2.17
3. Profitability ratios
3.1 Profit margin on sales
Profit before tax/ Net sales % 73.30 98.89
Profit after tax/ Net sales % 70.40 89.88
3.2 Profit/ Total assets
Profit before tax/ Total assets % 6.95 8.57
Profit after tax/ Total assets % 6.67 7.79
3.3 Profit after tax/ Owners’ equity % 8.11 9.57
25 March 2011
Mr. Nguyen Thanh HaiChief Accountant
Mr. Le Hai PhongChief Financial Officer
Ms. Nguyen Thi Phuc LamChief Executive Officer
BAO VIET HOLDINGS
Report of the Board of Directors and Audited Consolidated Financial Statements
CONTENTS
REPORT OF THE BOARD OF DIRECTORS 98 - 101
AUDITED CONSOLIDATED FINANCIAL STATEMENTS
Independent auditors’ report 102
Consolidated balance sheet 103 - 105
Consolidated income statement 106 - 107
Consolidated cash flow statement 108
Notes to the consolidated financial statements 109 - 160
CON
SOLI
DAT
ED F
INA
NC
IAL
REPO
RTS
ANNUAL REPORT 2010
98BAO VIET HOLDINGS 2010
99
REPORT OF THE BOARD OF DIRECTORThe Board of Directors of Bao Viet Holdings is pleased to present its report and the consolidated financial statements of Bao Viet Holdings and its subsidiaries (the “Group”) as at and for the year ended 31 December 2010.
CORPORATE INFORMATION
Bao Viet Holdings (herein referred to as the “Holdings”) was previously a state-owned company that was equitized and became a joint stock company pursuant to Business License approved by Hanoi Authority for Planning and Investment on 15 October 2007. The Business License was subsequently modified the first time on 29 October 2009, the second time on 18 January 2010 and the third time on 10 May 2010.Below is a summary of information extracted from the third modified Business License dated 10 May 2010:
Business License Number: 0100111761
Registered company name: Bao Viet Holdings
Head Office’s address: 8 Le Thai To Street, Hoan Kiem District, Hanoi
Operating activities: Equity investments in subsidiaries and, financial services and other related services under Vietnamese Laws
Charter capital: VND 6,267,090,790,000
Number of registered shares: 626,709,079
Legal representative: Ms. Nguyen Thi Phuc Lam - Chief Executive Officer
The Holdings has listed its entire outstanding stocks of 626,709,079 shares, including the issuance of 53,682,474 shares through a private placement on 18 January 2010 to its strategic partner, HSBC Insurance (Asia Pacific) Holdings Limited, on the Ho Chi Minh Stock Exchange (HOSE). The listing of the additional 53,682,474 shares was approved by the HOSE on 21 April 2010.
Subsidiaries and dependently accounted units of the Holdings are as follows:
Subsidiaries Address Principal activities% directly
owned
Bao Viet Insurance Corpora-tion (“Bao Viet Insurance”)
35 Hai Ba Trung Street, Hoan Kiem District, Hanoi
General insurance products, reinsurance, loss adjustment
100%
Bao Viet Life Corporation (“Bao Viet Life”)
1 Dao Duy Anh Street, Dong Da District, Hanoi
Life insurance products, reinsurance 100%
Bao Viet Fund Management Company (“BVF”)
8 Le Thai To, Hang Trong Ward, Hoan Kiem District, Hanoi
Management of investment funds and in-vestment portfolios
100%
Bao Viet Securities Joint Stock Company (“BVSC”)
8 Le Thai To, Hang Trong Ward, Hoan Kiem District, Hanoi
Securities trading, brokerage, portfolio management, underwriting, consulting and securities placement
59.92%
Bao Viet Commercial Joint Stock Bank (“Baoviet Bank”)
8 Le Thai To, Hang Trong Ward, Hoan Kiem District, Hanoi
Banking services 52%
Bao Viet Investment Joint Stock Company (“BVInvest”)
71 Ngo Sy Lien, Dong Da Dis-trict, Hanoi
Real estate investment and consulting, pro-vision of machinery and equipment
55%
Bao Viet Au Lac Limited Com-pany (“BV - Au Lac”)
Ha Lieu, Phuong Lieu, Que Vo District, Bac Ninh Province
Vocational driving training 60%
Dependently accounted units Address
Bao Viet Training Centre 8 Le Thai To, Hang Trong Ward, Hoan Kiem District, Ha Noi
Infrastructure Construction Project Management Unit 71 Ngo Sy Lien, Dong Da District, Hanoi
RESULTS AND DIVIDENDS
The net profit attributable to the equity holders of the Holdings for the year ended 31 December 2010 was VND 952,597,195,373 (for the year ended 31 December 2009: VND 891,754,255,672).
On 17 April 2010, Annual General Meeting of Shareholders declared and approved to pay out dividends to its shareholders at the rate of 11% for the year 2009. The total dividend amount of VND 630,329,265,500 has been completely paid out during 2010.
SIGNIFICANT EVENTS
Below are the significant events during the year ended 31 December 2010:
On 18 January 2010, the Holdings issued 53,682,474 additional shares for an amount of VND 1,878,886,590,000 to HSBC Insur-ance (Asia Pacific) Holdings Limited (“HSBC Insurance”) through a private placement, which increased the shareholding of HSBC in Bao Viet Holdings from 10.31% to 18%. This share issuance to HSBC Insurance was made pursuant to the agreement between Bao Viet Holdings and HSBC Insurance and in accordance with Resolution 1527/2009/NQ-DHDCD dated 23 Decem-ber 2009 of Bao Viet General Shareholders’ Meeting. These additionally issued shares were listed on 21 April 2010 pursuant to the approval granted by the Ho Chi Minh Stock Exchange.
At the 2010 Annual General Meeting on 17 April 2010, the shareholders approved the plan to increase the Holdings’ charter capital to VND 6,800 billion to enable Bao Viet Holdings to pursue its strategy of increasing investment in core business sectors and continually enhancing its information system and processes in accordance with the strategy agreed at the equitization. The increase in charter capital was effected in January 2011.
On 11 June 2010, Bao Viet Holdings increased its investment in Bao Viet Insurance Corporation from VND 1,000 billion to VND 1,500 billion.
THE BOARD OF DIRECTORS AND SUPERVISORY BOARD The members of the Board of Directors for the period from 1 January 2010 to the date of this report are:
Name Position Date of appointment
Mr. Le Quang Binh Chairman 04 October 2007
Ms. Nguyen Thi Phuc Lam Member 04 October 2007
Mr. Tran Huu Tien Member 04 October 2007
Mr. Tran Trong Phuc Member 04 October 2007
Mr. Nguyen Duc Tuan Member 04 October 2007
Mr. David Lawrence Fried Member 04 October 2007
Mr. Nguyen Quoc Huy Member 23 September 2009
REPORT OF THE BOARD OF DIRECTORS (continued)
ANNUAL REPORT 2010
100BAO VIET HOLDINGS 2010
101
The members of the Supervisory Board for the period from 1 January 2010 to the date of this report are:
Name Position Date of appointment Date of resignation
Mr. Le Quang Binh Chairman 04 October 2007
Ms. Nguyen Thi Phuc Lam Member 04 October 2007
Mr. Tran Huu Tien Member 04 October 2007
Mr. Tran Trong Phuc Member 04 October 2007
Mr. Nguyen Duc Tuan Member 04 October 2007
Mr. David Lawrence Fried Member 04 October 2007
Mr. Nguyen Quoc Huy Member 23 September 2009
The members of the Supervisory Board for the period from 1 January 2010 to the date of this report are:
Name Position Date of appointment Date of resignation
Mr. Nguyen Trung Thuc Chairman 04 October 2007
Mr. Tran Minh Thai Member 04 October 2007
Mr. Nguyen Ngoc Thuy Member 04 October 2007
Mr. Le Van Chi Member 04 October 2007
Mr. Christopher Edwards Member 17 April 2010
Ms. Marjory Miller Member 04 October 2007 17 April 2010
THE BOARD OF MANAGEMENT
The members of the Board of Management for the period from 1 January 2010 to the date of this report are:
Name Position Date of appointment Date of resignation
Ms. Nguyen Thi Phuc Lam Chief Executive Officer 15 October 2007
Mr. Le Hai Phong Chief Financial Officer 30 June 2008
Chief Property & Estate Officer 1 February 2011
Mr. Luu Thanh Tam Chief Property & Estate Officer 30 June 2008 1 February 2011
Mr. Phan Tien Nguyen Chief Human Resources Officer 30 June 2008
Mr. Duong Duc Chuyen Chief Strategy Officer 30 June 2008
Chief Investment Officer 22 April 2010
Mr. Alan Royal Chief Information Officer 08 September 2008
Mr. Adrian Abbott Chief Risk Officer 22 April 2010
Mr. Pham Khac Dung Chief Operating Officer 30 June 2008 15 November 2010
EVENTS SINCE THE REPORTING DATE
In accordance with the Annual General Meeting’s Resolution No. 03/2010/NQ-DHDCD dated 17 April 2010, the Holdings issued ad-ditional shares to existing shareholders to increase its charter capital in January 2011. The number of shares issued was 53,762,355, which increased the Holdings’ charter capital to VND 6,804,714,340,000 on 14 January 2011. These additionally issued shares were approved by the Ho Chi Minh Stock Exchange to be listed on 18 February 2011.
There have been no other significant events occurring after 31 December 2010 which would require adjustments or disclosures to be made in the consolidated financial statements.
REPORT OF THE BOARD OF DIRECTORS (continued)
STATEMENT OF THE BOARD OF MANAGEMENT’S RESPOSIBILITY IN RESPECT OF THE CON-SOLIDATED FINANCIAL STATEMENTS
The Board of Management of Bao Viet Holdings is responsible for the consolidated financial statements of each financial year which give a true and fair view of the consolidated state of affairs of the Group and of the Group’s consolidated results and consolidated cash flows for the year. In preparing those consolidated financial statements, management is required to:
select suitable accounting policies and then apply them consistently;
make judgments and estimates that are reasonable and prudent;
state whether applicable accounting standards have been followed, subject to any material departures disclosed and ex-plained in the consolidated financial statements; and
prepare the consolidated financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue its business.
The Board of Management is responsible for ensuring that proper accounting records are kept which disclose, with reasonable accuracy at any time, the consolidated financial position of the Group and to ensure that the accounting records comply with the registered accounting system. It is also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Board of Management has confirmed to the Board of Directors that the Holdings has complied with the above requirements in preparing the consolidated financial statements.
APPROVAL OF THE CONSOLIDATED FINANCIAL STATEMENTS
We hereby approve the accompanying consolidated financial statements which give a true and fair view of the consolidated finan-cial position of the Group as at 31 December 2010, the consolidated results of its operations and the consolidated cash flows for the year then ended in accordance with the Vietnamese Accounting Standards and System and comply with the relevant statutory requirements.
On behalf of the Board of Directors:
Mr. Le Quang BinhChairman Hanoi, Vietnam 25 March 2011
REPORT OF THE BOARD OF DIRECTORS (continued)
ANNUAL REPORT 2010
102BAO VIET HOLDINGS 2010
103
Code ASSET Notes31 December 2010
VND31 December 2009
VND
100 A. CURRENT ASSETS 18,279,349,724,769 13,673,103,807,542110 I. Cash and cash equivalents 5,844,707,147,758 2,532,644,263,412111 1. Cash 5 723,039,874,862 540,937,036,319 112 2. Cash equivalents 5,121,667,272,896 1,991,707,227,093120 II. Short-term investments 13.1 9,032,191,623,735 8,576,063,696,075121 1. Short-term investments 9,885,894,075,590 8,939,362,811,569
129 2. Provision for impairment of short-term
investments(853,702,451,855) (363,299,115,494)
130 III. Accounts receivables 6 3,206,514,890,912 2,427,630,124,465 131 1. Receivables from insurance activities 1,453,370,439,126 1,273,174,332,975 132 2. Trade advances 51,438,200,967 9,351,089,507 133 3. Other advances 15,004,672,895 14,169,850,360 137 4. Receivables from investment activities 1,485,851,186,757 1,068,732,816,372 138 5. Other receivables 272,320,059,245 100,924,531,492 139 6. Provision for doubtful debts (71,469,668,078) (38,722,496,241)140 IV. Inventories 7 117,263,182,664 107,121,526,352150 V. Other current assets 78,672,879,700 29,644,197,238151 1. Short-term prepaid expenses 64,122,955,098 18,119,677,599
155 2.Shortage of current assets waiting for
resolution 149,740,507 137,942,020
152 3. VAT deductible 1,431,426,197 1,073,545,982154 4. Tax and other receivables from the State 8,967,622,683 5,322,979,220156 5. Margin deposits 2,994,243,432 3,599,500,616158 6. Others 1,006,891,783 1,390,551,801160 B. LOANS AND ADVANCES TO CUSTOMERS 8 5,889,067,477,368 2,624,756,884,104161 1. Loans and advances to customers 5,924,279,393,498 2,633,023,390,293169 2. Provision for credit losses (35,211,916,130) (8,266,506,189)200 C. NON-CURRENT ASSETS 20,599,519,961,390 17,416,755,972,025
220 I. Fixed assets 1,937,675,150,696 1,702,679,360,400
221 1. Tangible fixed assets 9 888,368,098,875 569,869,121,953
222 Cost 1,502,061,361,597 1,100,690,387,362
223 Accumulated depreciation (613,693,262,722) (530,821,265,409)
227 2. Intangible fixed assets 10 709,672,873,718 650,130,000,618
228 Cost 792,990,562,889 707,105,030,491
229 Accumulated amortization (83,317,689,171) (56,975,029,873)
230 3. Construction in progress 11 339,634,178,103 482,680,237,829
240 II. Investment Properties 12 23,448,947,000 23,448,947,000
250 III. Long-term investments 13.2 18,543,754,501,476 15,630,164,051,412
252 1. Investments in associates and joint-ventures 338,561,803,678 313,559,572,889
258 2. Other long-term investments 18,402,589,538,431 15,512,602,012,844
259 3. Provision for impairment of long-term invest-
ments(197,396,840,633) (195,997,534,321)
260 IV. Other long-term assets 94,641,362,218 60,463,613,213
261 1. Long-term prepaid expenses 14 52,531,464,772 18,120,011,138
262 2. Deferred tax assets 17.2 12,668,907,308 10,654,317,835
267 3. Long-term margin deposits 25,654,827,632 20,641,706,845
268 4. Other long-term assets 3,786,162,506 11,047,577,395
270 TOTAL ASSETS 44,767,937,163,527 33,714,616,663,671
CONSOLIDATED BALANCE SHEET as at 31 December 2010
ANNUAL REPORT 2010
104BAO VIET HOLDINGS 2010
105
Code RESOURCES Notes31 December 2010
VND
31 December 2009
VND
300 A. LIABILITIES 32,752,630,760,483 23,826,885,284,184
310 I. Current liabilities 6,221,002,414,770 2,500,811,457,427
311 1. Short-term loans and borrowings 15 1,593,235,333,373 420,948,732,663
312 2. Trade payables 16.1 3,100,216,309,659 960,615,920,164
313 3. Advances from customers 16.2 35,305,467,978 43,226,021,957
314 4. Statutory obligations 17 87,863,714,694 128,841,596,905
315 5. Payables to employees 205,641,088,427 135,423,296,316
316 6. Accrued expenses 23,372,079,839 17,242,129,166
318 7. Other payables 18 1,106,255,039,321 744,657,262,135
319 8. Bonus and welfare funds 19 69,113,381,479 49,856,498,121
320 II. Amount due to customers 20 7,597,839,409,023 3,786,961,866,864
321 1. Deposits from commercial banks 20.1 3,019,960,785,943 1,709,021,432,606
322 2. Deposits from customers 20.2 4,577,878,623,080 2,077,940,434,258
330 III. Non-current liabilities 80,826,657,494 73,239,449,605
333 1. Long-term deposits, mortgage 27,376,215,506 24,444,886,406
335 2. Deferred tax liabilities 17.2 8,613,670,942 4,476,408,636
336 3. Provision for severance allowance 44,836,771,046 44,318,154,563
340 IV. Reserves 21 18,852,962,279,196 17,465,872,510,288
341 1. Unearned premium reserve 2,447,163,648,748 2,219,898,075,597
342 2. Mathematical reserve 13,947,735,874,260 13,149,693,155,870
343 3. Claims reserve 1,221,357,297,901 1,096,611,181,704
344 4. Catastrophe reserve 307,012,203,931 193,572,226,768
345 5. Dividend reserve 906,960,197,603 789,360,245,400
346 6. Equalization reserve 22,733,056,753 16,737,624,949
CONSOLIDATED BALANCE SHEET (continued)as at 31 December 2010
CONSOLIDATED BALANCE SHEET (continued)as at 31 December 2010
Code RESOURCES Notes31 December 2010
VND31 December 2009
VND
400 B. EQUITY 10,667,776,713,657 8,538,905,644,218
410 I. Owners’ equity 22 10,667,776,713,657 8,538,905,644,218
411 1. Contributed capital 6,267,090,790,000 5,730,266,050,000
412 2. Share premium 3,076,807,671,197 1,734,745,821,197
415 3. Foreign exchange differences reserve 16,075,608,000 18,387,227,948
416 4. Statutory reserves for insurance operations 79,245,733,155 43,521,050,471
417 5. Investment and development fund 13,810,688,873 10,222,384,015
418 6. Financial reserve fund 18,316,956,265 11,699,111,508
419 7. Other reserve 103,568,802,818 103,568,802,818
420 8. Undistributed earnings 1,092,860,463,349 886,495,196,261
500 C. MINORITY INTERESTS 23 1,347,529,689,387 1,348,825,735,269
440TOTAL LIABILITIES AND EQUITY AND
MINORITY INTERESTS44,767,937,163,527 33,714,616,663,671
OFF BALANCE SHEET ITEMS
ITEMS31 December 2010
VND31 December 2009
VND
1. Insurance policies signed but not yet effective (VND)
223,855,361,342 115,681,301,363
2. Bad debt written off (VND) 4,792,072,858 4,401,672,856
3. Foreign currency (USD) 2,448,850 3,027,404
4. Securities under custody (VND) 14,143,012,400,000 15,731,400,660,000
5. Letters of credit (VND) 234,468,403,536 158,727,549,353
6. Other guarantees (VND) 81,382,221,188 15,948,831,827
ANNUAL REPORT 2010
106BAO VIET HOLDINGS 2010
107
CONSOLIDATED INCOME STATEMENTfor the year ended 31 December 2010
Code ITEMS Notes Current yearVND
Previous yearVND
01 Gross written premium 24.1 8,243,995,446,509 7,393,367,704,806
02 Reinsurance premium assumed 24.2 186,623,651,556 151,666,182,986
03 Deductions 24.3 (1,152,034,398,163) (1,036,847,985,406)
04 Reinsurance premium ceded (1,083,576,007,876) (979,534,348,986)
05 Premium deduction (2,065,444,546) (1,915,407,401)
06 Premium returns (66,392,945,741) (55,398,229,019)
08 Increase in unearned premium reserve and technical reserve (1,025,308,291,541) (1,467,453,204,038)
09 Commissions on reinsurance ceded 183,298,558,113 146,828,204,959
10 Other income 5,958,591,545 5,863,915,547
11 Income on reinsurance assumed 2,095,474,697 1,127,872,732
12 Income on reinsurance ceded 333,858,761 308,514,166
13 Income from other activities 3,529,258,087 4,427,528,649
14 Total net revenue from insurance business (14 = 01+02+03+08+09+10) 6,442,533,558,019 5,193,424,818,854
15 Claim and maturity payment expenses 25.1 (4,634,714,084,183) (4,050,560,862,254)
16 Claim expenses for reinsurance assumed 25.2 (51,747,327,052) (46,246,678,770)
17 Deductions 391,909,000,095 386,713,469,741
18 Recoveries from reinsurance ceded 25.3 372,222,596,599 366,196,782,586
19 Subrogation recoveries 6,834,114,530 13,815,213,821
20 Salvages 12,852,288,966 6,701,473,334
21 Claim expenses on retained risks(21 = 15+16+17) (4,294,552,411,140) (3,710,094,071,283)
22 Claim expenses using catastrophe reserve - -
23 Increase in claims reserve (70,365,084,289) (105,617,698,741)
24 Provision for catastrophe reserve (113,439,977,163) (98,132,466,119)25 Other insurance operating expenses (988,931,762,242) (860,363,747,027)
26 Other underwriting expenses (924,160,351,685) (812,295,263,119)
27 Commission (830,054,332,159) (714,761,159,822)
28 Risk minimization expenses (35,566,098,265) (54,457,729,341)
29 Loss adjusting fee, risk assessment and others (58,539,921,261) (43,076,373,956)
30 Other reinsurance assumed expenses (40,479,795,339) (35,541,606,643)
31 Other reinsurance ceded expenses (24,291,615,218) (12,526,877,265)
33Total direct insurance operating expenses (33
= 21+22+23+24+25)(5,467,289,234,834) (4,774,207,983,170)
34Gross insurance operating profit
(34 = 14+33)975,244,323,185 419,216,835,684
35.1 Income from banking activities 957,223,058,373 355,479,712,399
Code ITEMS Notes Current yearVND
Previous yearVND
35.2 Expenses from banking activities (538,591,304,881) (126,218,988,181)
35 Net operating income from banking activities 26 418,631,753,492 229,260,724,218
36.1 Revenue from other activities 198,297,078,626 144,166,331,292
36.2 Expenses from other activities (156,377,596,191) (59,566,766,423)
36 Net operating income from other activities 27 41,919,482,435 84,599,564,869
37 Selling expenses (142,837,253,724) (122,023,207,897)
38 General and administrative expenses 28 (1,724,057,419,395) (1,449,516,010,995)
38.1General and administrative expenses of
insurance operation(1,328,369,465,286) (1,187,481,587,361)
38.2General and administrative expenses of
banking operation(136,995,092,835) (67,507,827,941)
38.3General and administrative expenses of
other operations of the Group(258,692,861,274) (194,526,595,693)
39.1Net operating loss from insurance opera-
tion (39.1 = 34+37+38.1)(495,962,395,825) (890,287,959,574)
39.2Net profit from bank operation
(39.2=35+38.2)281,636,660,657 161,752,896,277
39.3Net loss from other operation
(39.3=36+38.3)(216,773,378,839) (109,927,030,824)
40 Financial income 29.1 3,078,930,495,583 2,393,475,592,072
41 Financial expenses 29.2 (1,468,414,780,544) (331,877,326,646)
42Profit from financial activities
(42 = 40+41)1,610,515,715,039 2,061,598,265,426
43 Other income 23,550,981,715 13,275,225,337
44 Other expenses (1,775,611,065) (6,569,981,488)
45 Net other profit (45 = 43+44) 30 21,775,370,650 6,705,243,849
46Share of the profit in associates and joint
ventures53,709,140,782 13,057,543,886
47Profit before tax
(47 = 39.1+39.2+39.3+42+45+46)1,254,901,112,464 1,242,898,959,040
48 Equalisation reserve (5,995,431,804) (4,556,421,030)
49 Enterprise income tax for the year 17.1 (274,604,981,244) (226,842,397,703)
50 Profit after tax (50 = 47+48+49) 974,300,699,416 1,011,500,140,307
51 Minority interest 21,703,504,043 119,745,884,635
52Net profit attributable to shareholders of
the Holdings (52 = 50-51)952,597,195,373 891,754,255,672
53 Earnings per share 32 1,527 1,556
CONSOLIDATED INCOME STATEMENT (continued) for the year ended 31 December 2010
ANNUAL REPORT 2010
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CONSOLIDATED INCOME STATEMENT (continued) for the year ended 31 December 2010
Code ITEMS NotesCurrent year
VNDPrevious year
VND
I. CASH FLOWS FROM OPERATING ACTIVITIES
01 1. Premium received and interest income received 12,454,944,888,704 8,784,866,696,654
02 2. Payment to suppliers (9,981,578,704,434) (7,128,510,955,183)
03 3. Payment to employees (570,328,597,249) (598,670,981,585)
05 4. Enterprise income tax paid (318,521,037,200) (192,697,194,230)
06 5. Other cash inflows from operating activities 3,956,910,541,401 1,022,896,275,546
07 6. Other cash outflows from operating activities (4,922,592,129,067) (1,444,775,176,900)
10 Net cash inflows from operating activities 618,834,962,155 443,108,664,302
II. CASH FLOWS FROM INVESTING ACTIVITIES
21 1. Purchase and construction of fixed assets (244,601,678,911) (315,726,997,458)
22 2. Proceeds from disposals of fixed assets 654,142,947 7,459,136,006
23 3. Loans to other entities and payments for purchase of debt instru-
ments of other entities (10,594,663,873,796) (7,296,464,781,636)
24 4. Repayments from borrowers and proceeds from sales of debt
instruments of other entities 4,928,885,195,844 1,287,210,525,579
25 5. Payments for investments in other entities (6,007,088,767,440) (2,967,338,985,684)
26 6. Proceeds from sales of investments in other entities 6,739,077,003,398 4,157,816,410,833
27 7. Interest received, coupon and distributed profits 194,782,794,193 497,054,068,939
20 Net cash outflows from investing activities (4,982,955,183,765) (4,629,990,623,421)
III. CASH FLOWS FROM FINANCING ACTIVITIES
31 1. Cash receipts from issuing shares of the Holdings 1,878,886,590,000 720,000,000,000
33 2. Cash receipts short and long term loans 6,260,247,375,606 5,646,136,030,318
36 3. Dividends paid out (651,929,265,500) (128,728,400,000)
37 4. Cash receipts from existing shareholders for the increase in charter
capital188,350,073,855 -
38 5. Other cash outflows from financing activities (150,000,000) -
30 Net cash inflows from financing activities 7,675,404,773,961 6,237,407,630,318
40 Net cash inflows during the year 3,311,284,552,351 2,050,525,671,199
50 Cash and cash equivalents at the beginning of the year 5 2,532,644,263,412 480,836,990,174
51 Impact of exchange rate fluctuation 778,331,995 1,281,602,039
60 Cash and cash equivalents at the end of the year 5 5,844,707,147,758 2,532,644,263,412
Mr. Nguyen Thanh Hai Mr. Le Hai Phong Ms. Nguyen Thi Phuc LamChief Accountant Chief Financial Officer Chief Executive Officer
25 March 2011
1. CORPORATE INFORMATION
Bao Viet Holdings (herein referred to as the “Holdings”) was previously a state-owned company that was equitized and became a joint stock company pursuant to Business License approved by Hanoi Authority for Planning and Investment on 15 October 2007. The Business License was subsequently modified the first time on 29 October 2009, the second time on 18 January 2010 and the third time on 10 May 2010. Current Business License number of the Holdings is 0100111761 pursuant to the third modified Busi-ness License on 10 May 2010.
Below is a summary of information extracted from the third modified Business License dated 10 May 2010:
Business License Number: 0100111761
Registered company name: Bao Viet Holdings
Head Office’s address: 8 Le Thai To Street, Hoan Kiem District, Hanoi
Operating activities: Equity investments, financial services and other related services under Vietnamese Laws
Charter capital: VND 6,267,090,790,000
Number of registered shares: 626,709,079
Legal representative: Ms. Nguyen Thi Phuc Lam - Chief Executive Officer
The Holdings has listed its entire outstanding stocks of 626,709,079 shares, including the issuance of 53,682,474 shares through a private placement on 18 January 2010 to its strategic partner, HSBC Insurance (Asia Pacific) Holdings Limited, on the Ho Chi Minh Stock Exchange (HOSE). The listing of the additional 53,682,474 shares was approved by the HOSE on 21 April 2010.
The structure of the Holdings’ shareholdings as at 31 December 2010 is as follows:
Shareholders No. of shares %
Founding shareholders 577,507,635 92.15%
The Ministry of Finance 444,300,000 70.89%
HSBC Insurance (Asia Pacific) Holdings Limited 112,807,635 18.00%
State Capital Investment Corporation 20,400,000 3.26%
Other shareholders 49,201,444 7.85%
Total 626,709,079 100%
In accordance with the Annual General Meeting’s Resolution No. 03/2010/NQ-DHDCD dated 17 April 2010, the Holdings issued ad-ditional shares to existing shareholders to increase its charter capital in January 2011. The number of shares issued was 53,762,355, which increased the Holdings’ charter capital to VND 6,804,714,340,000 on 14 January 2011. These additionally issued shares were approved by the Ho Chi Minh Stock Exchange to be listed on 18 February 2011.
Details of the Holdings’ subsidiaries, dependently accounted units and its investment in Bao Viet Securities Investment Fund (“BVF1”) are as follows:
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSas at and for the year ended 31 December 2010
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Subsidiaries
Subsidiaries Address Principal activities% directly owned
Bao Viet Insurance Corpora-tion (“Bao Viet Insurance”)
35 Hai Ba Trung Street, Hoan Kiem District, Hanoi
General insurance products, reinsurance, loss adjustment
100%
Bao Viet Life Corporation (“Bao Viet Life”)
1 Dao Duy Anh Street, Dong Da District, Hanoi
Life insurance products, reinsurance 100%
Bao Viet Fund Management Company (“BVF”)
8 Le Thai To, Hang Trong Ward, Hoan Kiem District, Hanoi
Management of investment funds and in-vestment portfolios
100%
Bao Viet Securities Joint Stock Company (“BVSC”)
8 Le Thai To, Hang Trong Ward, Hoan Kiem District, Hanoi
Securities trading, brokerage, portfolio management, underwriting, consulting and securities placement
59.92%
Bao Viet Commercial Joint Stock Bank (“Baoviet Bank”)
8 Le Thai To, Hang Trong Ward, Hoan Kiem District, Hanoi
Banking services 52%
Bao Viet Investment Joint Stock Company (“BVInvest”)
71 Ngo Sy Lien Street, Dong Da District, Hanoi
Real estate investment and consulting, pro-vision of machinery and equipment
55%
Bao Viet Au Lac Limited Com-pany (“BV- Au Lac”)
Ha Lieu, Phuong Lieu, Que Vo District, Bac Ninh Province
Vocational driving training 60%
Bao Viet Insurance was established in accordance with Decision No. 1296/QD/BTC issued by the Ministry of Finance on 21 June 2004 and Business License No. 01/GPDC3/KDBH issued by the Ministry of Finance on the same date. On 23 November 2007, the Ministry of Finance has approved the re-establishment of Bao Viet Insurance in pursuant to the Establishment and Operating Li-cense No. 45GP/KDBH. On 11 June 2010, the Ministry of Finance has approved the increase of Bao Viet Insurance’s charter capital to VND 1,500,000,000,000 in pursuant to the Modified License No. 45/GPDC3/KDBH.
Bao Viet Life was established in accordance with Decision No. 3668/QD/BTC issued by the Ministry of Finance on 4 December 2003. On 23 November 2007, the Ministry of Finance approved the re-establishment of Bao Viet Life in pursuant to the Establish-ment and Operating License No. 46/GP/KDBH. The charter capital of Bao Viet Life is VND 1,500,000,000,000.
BVF was established in accordance with Decision No. 911/2005/QD/HDQT-BV on 22 August 2005 by the Group’s Board of Man-agement and operating in accordance with Business License No. 0104000256 issued on 22 August 2005 by Hanoi Authority for Planning and Investment and modified business registration No. 10/UBCK-GPDCQLQ issued on 14 December 2007 by the State Securities Commission. The charter capital of BVF is VND 50,000,000,000.
BVSC is a joint stock company established in Vietnam in accordance with Incorporation License No. 4640/GP-UB dated 1 October 1999 issued by the Hanoi People’s Committee and Business License No. 056655 issued by the Hanoi Authority for Planning and Investment on 11 October 1999 and Operating License No. 01/GPHDKD dated 26 November 1999 issued by the State Securities Commission. According to the 6th Amended Business License No. 056655 granted on 17 December 2009 by Hanoi Authority for Planning and Investment, the total value of registered securities of BVSC is VND 722,339,370,000.
BV - Au Lac was established on 18 February 2009 under the License No. 2300373648 granted by Bac Ninh Authority for Planning and Investment. The charter capital of BV Au Lac is VND 60,660,000,000.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)as at and for the year ended 31 December 2010
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)as at and for the year ended 31 December 2010
Baoviet Bank was incorporated in Vietnam on 11 December 2008 under the Establishment and Operating License No. 328/GP-NHNN provided by the Governor of the State Bank of Vietnam and the Business License No. 0103034012 granted by Hanoi Author-ity for Planning and Investment on 24 December 2008. Baoviet Bank’s charter capital is VND 1,500,000,000,000.
BVInvest was established on 9 January 2009 in accordance with Business License No. 0103034168 granted on 9 January 2009 by Hanoi Authority for Planning and Investment. The charter capital of BVInvest is VND 100,000,000,000. At 31 December 2010, indi-rect and direct investments of Bao Viet Holdings in BVInvest are as follows:
Contributed capitalVND
% of charter capitalVND
Direct investment of the Holdings 55,000,000,000 55%
Indirect investment via subsidiaries 45,000,000,000 45%
Bao Viet Life Insurance 20,000,000,000 20%
Bao Viet Insurance 20,000,000,000 20%
BVSC, in which: 5,000,000,000 5%
The Holdings’ indirect interest 2,995,500,000 3%
Minority interest 2,004,500,000 2%
100,000,000,000 100%
Bao Viet Securities Investment Fund (“BVF1”)
BVF1 was established as a closed-end member investment fund in Vietnam in accordance with License No. 05/UBCK-TLQTV issued by the State Securities Commission on 19 July 2006. The Fund was licensed to operate for a period of five years. BVF1 originally had a charter capital of VND 500,000,000,000, equivalent to 50,000,000 units with a par value of VND 10,000 per unit. BVF1 increased its charter capital to VND 1,000,000,000,000 on 4 March 2008, as approved in Official Letter No. 98/TB-UBCK issued by the State Securities Commission, which is equivalent to 100,000,000 units with a par value of VND 10,000 per unit.
The Fund is managed by BVF, a subsidiary of the Holdings. The custodian bank of the Fund is HSBC Bank (Vietnam) Ltd.
At 31 December 2010, direct and indirect holding by the Holdings in BVF1 is as follows:
Contributed capitalVND
% of charter capitalVND
Direct investment of the Holdings 94,190,239,694 9.42%
Indirect investment via subsidiaries 821,659,537,741 82.16%
Bao Viet Life Insurance 601,214,295,907 60.12%
Bao Viet Insurance 220,445,241,834 22.04%
915,849,777,435 91.58%
Dependently accounted units:
Dependently accounted units Address
Bao Viet Training Centre 8, Le Thai To, Hang Trong Ward, Hoan Kiem District, Hanoi
Infrastructure Construction Project Management Unit 71 Ngo Sy Lien, Dong Da District, Hanoi
ANNUAL REPORT 2010
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2. BASIS FOR THE PRESENTATION OF THE CONSOLIDATED FINANCIAL STATEMENTS
2.1 Accounting standards and system
The consolidated financial statements of the Holdings and its subsidiaries, which are expressed in Vietnamese dong (“VND”), are prepared in accordance with the Vietnamese Accounting System and other Vietnamese Accounting Standards issued by the Min-istry of Finance as per:
Decision No. 149/2001/QD-BTC dated 31 December 2001 on the Issuance and Promulgation of Four Vietnamese Standards on Accounting (Series 1);
Decision No. 165/2002/QD-BTC dated 31 December 2002 on the Issuance and Promulgation of Six Vietnamese Standards on Accounting (Series 2);
Decision No. 234/2003/QD-BTC dated 30 December 2003 on the Issuance and Promulgation of Six Vietnamese Standards on Accounting (Series 3);
Decision No. 12/2005/QD-BTC dated 15 February 2005 on the Issuance and Promulgation of Six Vietnamese Standards on Ac-counting (Series 4); and
Decision No. 100/2005/QD-BTC dated 28 December 2005 on the Issuance and Promulgation of Four Vietnamese Standards on Accounting (Series 5).
Bao Viet Holdings is a company operating in equity investments and financial services and prepares its financial statements accord-ing to Decision 15/2006/QD-BTC on the formulation of corporate accounting system dated 20 March 2006 issued by the Ministry of Finance. However, as the Holdings and its subsidiaries (the “Group”) have major operations in insurance services, the consolidated financial statements of the Group are prepared in accordance with Decision 15/2006/QD-BTC and modified to follow the Vietnam-ese Accounting System for insurance companies issued by the Ministry of Finance in Decision 1296 TC/QD/CDKT dated 31 Decem-ber 1996 and Decision 150/2001/QD-BTC dated 31 December 2001 on amended accounting policies for insurance companies.
Accounting Standard and guidance issued but not yet effective
Circular 210/2009/TT-BTC providing guidance for the adoption in Vietnam of the International Financial Reporting Standards on presen-tation and disclosures of financial instruments
On 6 November 2009, the Ministry of Finance issued Circular 210/2009/TT-BTC providing guidance for the adoption in Vietnam of the International Financial Reporting Standards on presentation and disclosures of financial instruments. The adoption of the circular will require further disclosures and have impact on the presentation of certain financial instruments in the financial state-ments. The circular will become effective for financial years beginning on or after 1 January 2011.
2.2 Basis of consolidation
The consolidated financial statements comprise the financial statements of the Holdings (the parent company), its subsidiaries and BVF1 as at 31 December 2010 (collectively referred to as the “Group”).
Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains control, and continues to be consolidated until the date that such control ceases. Control exists when the Group has the power, directly or indirectly, to govern the financial and operating policies of a company so as to obtain benefits from its activities.
The financial statements of the subsidiaries are prepared for the same reporting year as the parent entity, using consistent account-ing policies.
All intra-group balances, income and expenses and unrealized gains or losses arising from intra-group transactions, are eliminated in full
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)as at and for the year ended 31 December 2010
Minority interests represent the portion of profit or loss and net assets of the subsidiaries not held by the Holdings and are pre-sented separately in the consolidated income statement and in the consolidated balance sheet.
2.3 Registered accounting documentation system
The registered accounting documentation system of the Group is the general journal voucher system.The Group maintains its accounting records in Vietnamese dong (“VND”).
2.4 Fiscal year
The Group’s financial year starts on 1 January and ends on 31 December.The Group also prepares its consolidated financial statements quarterly.
3. STATEMENT ON THE COMPLIANCE WITH VIETNAMESE ACCOUNTING STANDARDS AND SYSTEMS
The Board of Management confirms that the Holdings has complied with the Vietnamese Accounting Standards and Systems in preparing the consolidated financial statements. The Holdings has also followed the accounting policy for the recognition of the revalued land use rights as set out in Note 4.8.
The accompanying consolidated balance sheet, consolidated income statement, consolidated cash flow statement and related notes, including their utilisation are not designed for those who are not informed about Vietnam’s accounting principles, proce-dures and practices and furthermore are not intended to present the financial position and results of operations and cash flows in accordance with accounting principles and practices generally accepted in countries other than Vietnam.
4. SIGNIFICANT ACCOUNTING POLICIES
4.1. Changes in accounting policies and disclosures
The accounting policies adopted by the Group in preparation of the consolidated financial statements are consistent with those followed in the preparation of the Group’s annual financial statements for the year ended 31 December 2009 except for the follow-ing changes in the accounting policies in relation to the following:
Application of Circular No. 244/2009/TT-BTC
During 2010, the Group implemented Circular No. 244/2009/TT-BTC dated 31 Dec 2009 issued by the Ministry of Finance on amending and supplementing the enterprise accounting regime, which causes the following changes:
Stock dividend and bonus shares received are not recognized as income of the Group and the respective increase in number of shares are only updated off balance sheet;
Bonus and welfare funds are reclassified from owner’s equity to liabilities.
Other than the reclassification of bonus and welfare funds as presented in Note 38 to the financial statements, comparative figures as at 31 December 2009 and for the year then ended are not restated as Circular 244/2009/TT-BTC does not require retrospective application.
Effects of changes in foreign exchange rates
For the year ended 31 December 2010, the Group has adopted Vietnamese Accounting Standard No. 10 - Effects of Changes in Foreign Exchange Rates (the “VAS 10”). VAS 10 differs from the accounting policy adopted in prior year under Circular 201/2009/TT-BTC issued on 15 October 2009 by the Ministry of Finance (the “Circular 201”) providing guidance for the treatment of foreign exchange differences relating to the recognition of unrealised foreign exchange differences as follows:
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)as at and for the year ended 31 December 2010
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TransactionAccounting treatment under VAS 10
Accounting treatment under Circular 201
Translation of short-term monetary assets and liabilities denom-inated in foreign cur-rencies.
All unrealised foreign exchange differences are taken to the con-solidated income state-ment.
All unrealised foreign exchange differences are taken to the “Foreign ex-change differences reserve” account in the equity section of the balance sheet and will be reversed in the following year.
Translation of long-term monetary liabili-ties denominated in foreign currencies at year end.
All unrealised foreign exchange differences are taken to the con-solidated income state-ment.
All unrealized foreign exchange gains are taken to the income statement.
All foreign exchange losses will be charged to the income statement. However, if the charging of all foreign exchange losses results in net loss before tax for the company, part of the exchange losses can be deferred and allocated to the income statement within the subsequent years. In any case, the total foreign exchange loss to be charged to current year’s income statement must be at least equivalent to the foreign exchange losses arising from the translation of the current portion of the long-term liabilities, while the remaining portion of the foreign exchange losses can be deferred in the balance sheet and allocated to the income statement within the subsequent five years.
As the impacts of this change in accounting policy on the opening balance of 2010 are immaterial, they have been charged to this year’s consolidated income statements.
4.2 Cash and cash equivalents
Cash and cash equivalents comprise of cash on hand, cash at banks, demand deposits and short-term, highly liquid investments with an original maturity of three months or less which are readily convertible into known amounts of cash and that are subject to an insignificant risk of change in value.
4.3 Accounts receivables
Accounts receivable comprise of trade receivables and other receivables that are initially recognized at cost and subsequently are recognized at cost less provision for impairment.
Provision for impairment of receivables will be made based on their overdue ages. For receivables that are undue and owed by debtors who have become bankrupt or are undergoing dissolution procedures, are missing, have absconded, are prosecuted, detained or tried by law enforcement bodies, are serving sentences or have deceased, provision should be estimated based on the amount of expected loss. The increase or decrease to the provision balance is recorded as an administrative expense in the consolidated income statement.
The Group uses the allowance ratio as stipulated in Circular 228/2009/TT-BTC issued on 7 December 2009 by the Ministry of Fi-nance, as follows:
Overdue receivables aging Allowance ratio
Overdue from six months to less than one year 30%
Overdue from one to less than two years 50%
Overdue from two to less than three years 70%
Overdue over three years 100%
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)as at and for the year ended 31 December 2010
4.4 Loans and advances to customers
Loans and advances to customers are presented at the principal amounts outstanding at the end of financial year.
4.5 Provision for credit losses
Loans and advances to customers are classified and provided for credit losses in accordance with the Law on Credit Institutions effective from 1 October 1998; Law on Amendment and Supplementation to a number of articles of the Law on Credit Institu-tions effective from 1 October 2004; Decision 1627/2001/QD-NHNN dated 31 December 2001 by the Governor of the State Bank of Vietnam on lending statutory; Decision 127/2005/QD-NHNN dated 3 February 2005 amending and supplementing Decision 1627/2001/QĐ-NHNN; Decision 493/2005/QD-NHNN dated 22 April 2005 and Decision 18/2007/QD-NHNN dated 25 April 2007 by the State Bank of Vietnam on loan classification and provision. Accordingly, loans are classified into Current, Special Mention, Substandard, Doubtful and Loss on the basis of payment arrears status and other qualitative factors.
Net loans and advances exposure for each borrower is calculated by subtracting from the loan balance the discounted value of collateral. Decision 493/2005/QD-NHNN and Decision 18/2007/QD-NHNN stipulated specific discount rates for certain accepted collaterals.
Specific provision is created on the net loans and advances exposure of each borrower using a fixed provision rates as follows:
Group Name Specific provision rate
1 Current 0%
2 Special Mention 5%
3 Substandard 20%
4 Doubtful 50%
5 Loss 100%
Loans in Substandard, Doubtful or Loss group are considered as non-performing loans.
In accordance with Decision 493/2005/QD-NHNN of the State Bank of Vietnam, loan classification is made at the end of each quar-ter for the first three quarters and on 30 November for the last quarter each year.
In accordance with Decision 493/2005/QD-NHNN, a general provision is made for credit losses which are yet to be identified during the loan classification and provision process and for the Bank’s potential financial difficulties due to deterioration in loan quality. As such, the Group is required to fully create and maintain a general provision at 0.75% of total loans and advances to customers; guarantees and irrevocable lending commitments and acceptance for payments which are classified from groups 1 to 4 within 5 years commencing from May 2005.
The provisions are recorded in the consolidated income statement as an expense and will be used to write off any credit losses incurred. According to Decision 493/2005/QĐ-NHNN, at the discretion of the Group’s Bad Debt Resolution Committee, the Group can write off the loans that are classified in group 5 and of which the borrower are bankrupted or liquidated (for corporate) or are deceased or missing (for individuals).
Details on the loan classification and related provision as at 31 December 2010 are presented in Note 8.1 and Note 8.2.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)as at and for the year ended 31 December 2010
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4.6 Provision for off-balance-sheet commitmentsAccording to Article 6 and 7 of Decision 493/2005/QĐ-NHNN and Decision 18/2007/QĐ-NHNN by the SBV, credit institutions must classify and make provision for guarantees, payment acceptances, and non-cancellable loan commitments with specific effective date (generally called off-balance-sheet commitments) into groups, namely Current, Special Mention, Substandard, Doubtful and Loss based on the overdue status and other qualitative factors.
Specific and general provision for off-balance-sheet commitments is calculated similarly to the provision for loans and advances to customers. Provision expense is recorded in the consolidated income statement and provision balance is recorded in other li-abilities in the consolidated balance sheet.
4.7 Tangible fixed assetsTangible fixed assets are stated at cost less accumulated depreciation.
The cost of a tangible fixed asset comprises of its purchase price and any directly attributable costs of bringing the tangible fixed asset to working condition for its intended use.
Expenditures for additions, improvements and renewals are added to the carrying amount of the assets and expenditures for maintenance and repairs are charged to the consolidated income statement as incurred.
When tangible fixed assets are sold or retired, their costs and accumulated depreciation are removed from the balance sheet and any gain or loss resulting from their disposal is included in the consolidated income statement.
4.8 Intangible fixed assetsIntangible fixed assets are stated at cost less accumulated amortisation.
The cost of an intangible fixed asset comprises of its purchase price and any directly attributable costs of preparing the intangible fixed asset for its intended use.
Expenditures for additions, improvements are added to the carrying amount of the assets and other expenditures are charged to the consolidated income statement as incurred.
When intangible fixed assets are sold or retired, their costs and accumulated amortisation are removed from the balance sheet and any gain or loss resulting from their disposal is included in the consolidated income statement.
Land use rights are recognised based on the revalued amount as determined by an independent valuer for the land areas that the Holdings had land use rights certificates, or was in the process of obtaining the land use right certificates, as at 31 December 2005 for the equitization purpose of the Holdings.
4.9 Depreciation and amortisation Depreciation and amortisation of fixed tangible and intangible assets is calculated on a straight-line basis over the estimated use-ful lives of these assets, which are as follows:
Buildings 6 - 25 years
Machinery 3 - 7 years
Means of transportation and communication 6 - 8 years
Office equipment 3 - 6 years
Other tangible fixed assets 4 years
Software 3 - 5 years
Other intangible assets 3 years
Land use rights with definite term according to the term specified on the land use right certificate
Land use rights with indefinite terms are not amortised in accordance with Circular 203/2009/TT-BTC issued by the Minister of Finance on 20 October 2009.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)as at and for the year ended 31 December 2010
4.10 Investment properties
Investment properties are stated at cost including transaction costs less accumulated depreciation.
Subsequent expenditure relating to an investment property that has already been recognized is added to the net book value of the investment property when it is probable that future economic benefits, in excess of the originally assessed standard of perfor-mance of the existing investment property, will flow to the Group.
Depreciation and amortisation of investment properties are calculated on a straight-line basis over the estimated useful life of each asset as follows:
Land use rights with definite term according to the term specified on the land use right certificate
Buildings 6 - 25 years
Others 5 - 10 years
Investment properties are derecognised when either they have been disposed of or when the investment properties are perma-nently withdrawn from use and no future economic benefit is expected from its disposal. The difference between the net disposal proceeds and the carrying amount of the assets is recognised in the consolidated income statement in the year or retirement or disposal.
Transfers are made to investment properties when, and only when, there is a change in use, evidenced by ending of owner-occupation, commencement of an operating lease to another party or ending of construction or development. Transfers are made from investment properties when, and only when, there is change in use, evidenced by commencement of owner-occupation or commencement of development with a view to sale.
4.11 Investments in associates
Investments in associates over which the Group has significant influence and which is neither a subsidiary nor a joint venture (typically those that the Group owns from 20% to 50% of voting rights) are accounted for under the equity method of accounting.
Under the equity method, the investment is initially recorded at cost and the carrying value is increased or decreased to recog-nize the Group’s share of the profits or losses in the associate after the date of acquisition. Distributions actually received from an associate reduce the carrying amount of the investment. Adjustments to the carrying value are recognized for changes in the Group’s proportionate interest in the associate arising from changes in the associate’s equity that have not been included in the consolidated income statement.
The reporting dates of the associates and the Group are identical and the associates’ accounting policies conform to those used by the Group for transactions and events in similar circumstances.
A listing of the Group’s associates is shown in Note 13.2.1.
4.12 Interests in jointly controlled entities
Under the equity method, the Group’s interest in jointly controlled entities is carried in the consolidated balance sheet at cost plus post joint venture changes in the Group’s share of net assets of the jointly controlled entities. The consolidated income statement reflects the share of the post-acquisition results of operation of the jointly controlled entities.
The share of profit/ (loss) of the jointly controlled entities is presented on the face of the consolidated income statement and its share of post-acquisition movements in reserves is recognised in reserves. The cumulative post-acquisition movements are ad-justed against the carrying amount of the investment. Dividends receivable from jointly controlled entities reduce the carrying amount of the investment.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)as at and for the year ended 31 December 2010
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)as at and for the year ended 31 December 2010
The financial statements of the jointly controlled entities are prepared for the same reporting period as the Group. Where neces-sary, adjustments are made to bring the accounting policies in line with those of the Group.
A listing of the Group’s significant joint ventures is presented in Note 13.2.1.
4.13 Investments in securities and other investments
All financial investments are initially recognised at cost and subsequently are recognized at cost less provision for impairment.
Short-term investments comprise holdings of listed shares, government bonds, corporate bonds and other liquid securities which are readily realisable and are intended to be held for not more than one year.
Long-term investments include listed and unlisted shares, government bonds, corporate bonds, trusted loans and term-depos-its at financial institutions, which are intended to be held for more than one year.
Provision for devaluation of investments in securities and other investments
The primary source of reference for impairment provisioning is Circular 228/2009/TT-BTC dated 07 December 2009 issued by the Ministry of Finance (the “Circular 228”). Details of the basis of determination of impairment of investment are as follows:
Listed securities
For listed securities that are carried at cost in accordance with Vietnamese Accounting Standards, if there is objective evidence that their market value is lower than book value, the provision amount is measured as the difference between the securities’ carrying amount and the closing market value as of the balance sheet date in accordance with the following formula given in Circular 228:
Provision amount =Number of impaired securities as at reporting date
xCarrying value of securities
-Market value of securi-ties
Unlisted securities
For unlisted shares, the following methods are used in calculating the fair value in order to compare with book value to determine the provision amount:
for securities registered to be traded on the trading market of unlisted public companies’ securities (UPCom), fair value is de-termined as the average trading prices quoted on UPCom;
for securities yet registered to be traded on UPCom, fair value is determined as the average price of public quotations from at least three securities companies as at reporting date;
for securities that fair value is not determinable, the Group does not make provision for devaluation.
Equity investments in other entities
For equity investments in other entities and other long-term investments, a provision for devaluation is set up if the investees are suffering from loss (except where such loss is already included in their business plans prior to the investment).
The amount of provision for each investment shall not exceed the invested capital and is calculated according to the following formula given in Circular 228:
Provision amount =Actual capital contributions of investors in the investee
–Actualowners’ equity
x
Investment capital of the Group
Actual capital contributions of inves-tors in the investee
The basis for setting up the provision is the positive difference between the investors’ actual capital contributions and the actual amount of owners’ equity in the investee’s financial statements at the balance sheet date.
4.14 Advances on surrender value
Policyholders who have fulfilled their premium payment obligations for at least twenty-four (“24”) months are entitled to an ad-vance on the surrender value, with the advance amount at a maximum of 80% of the surrender value and accumulated un-with-drawn dividend for the relevant policy. Advances on surrender value are carried at cost.
4.15 Securities purchased/sold under agreement to resell/repurchase (“repo”)
Securities sold under agreements to repurchase at a specified future date (“repo”) are not derecognized from the consolidated financial statements. The corresponding cash received is recognized as a liability in the consolidated balance sheet. The difference between the selling price and repurchasing price is allocated to expense in the consolidated income statement over the life of the agreement using straight-line method.
Securities purchased under agreements to resell at a specified future date (“reverse repo”) are not recognized in the consolidated financial statement. The corresponding cash paid is recognized as an asset in the consolidated balance sheet. The difference be-tween the purchasing price and reselling price is allocated to income in the consolidated income statement over the life of the agreement using straight-line method.
4.16 Payables and accruals
Payables and accruals are recognised for amount to be paid in the future for goods and services received, whether or not billed to the Group.
4.17 Provision for severance allowance
Post employment benefits
Post employment benefits are paid to retired employees of the Group by the Vietnam Social Insurance Agency. The Group is required to contribute to these post employment benefits by paying social insurance premiums to the Vietnam Social Insurance Agency at the rate of 16% of employee basic salaries on a monthly basis since 1 January 2010 (15% for the periods before 1 January 2010). The Group has no further obligation concerning post employment benefits for its employees other than this.
Voluntary resignation and retrenchment benefits
Voluntary resignation benefits: the Holdings has the obligation, under Section 42 of the Labor Code amended 2 April 2002, to pay an allowance to voluntarily resigning employees, equal to half of one-month’s basic salary for each year of employment plus wage allowances (if any) until 31 December 2008. Commencing 1 January 2009, the average monthly salary used in this calculation will be revised at the end of each reporting period based on the average monthly salary of the most recent 6 months up to the reporting date;
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)as at and for the year ended 31 December 2010
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Retrenchment benefits: the Holdings has the obligation, under Section 17 of the Labor Code, to pay an allowance to employees who are retrenched as a result of organizational restructuring or technological changes. In such cases, the Holdings shall pay to employees an allowance for loss of work equivalent to the aggregate amount of one month salary for each year of employ-ment, but no less than two month salary.
Although the obligations under Sections 17 and 42 are compulsory, the implementation of these Sections is subject to detailed guidance by the Ministry of Finance. In accordance with Circular 64/1999/TT-BTC dated 7 June 1999 and subsequently Circular 82/2003/TT-BTC dated 14 August 2003 by the MOF which superseded Circular 64, companies are required to calculate retrench-ment allowance at the rate of 1-3% per annum, of the basic salary fund; and the outstanding balance of employee termination reserve which was previously created at 10% from the profit after tax and after appropriation for supplementary capital reserve in accordance with the guidance of Circular 64 should be transferred to the retrenchment allowance as allowed under Circular 82.
Unemployment Insurance Fund
According to the Social Insurance Law No. 71/2006/QH11 issued on 29 June 2006, and Decree 127/2008/ND-CP issued on 12 De-cember 2008, employee and employer are required to contribute 1% each of employee basic salary to the unemployment insur-ance fund, with effect from 01 January 2009. Further, the Government will also contribute 1% of the basic salary of each employee to this fund. Vietnam Social Insurance Agency is responsible for the collection, distribution and management of the Fund.
4.18 Reserves
Technical reserves are established in accordance with provisions and instructions of Circular 156/2007/TT-BTC dated 20 December 2007 issued by the Ministry of Finance providing guidelines for implementation of Decree 46/2007/ND-CP of the Government dated 27 March 2007 on financial regime applicable to insurers and insurance brokers. The Group’s technical reserves include:
Life insurance services General insurance services
Unearned premium reserve Unearned premium reserve
Claims reserve Claims reserve
Mathematical reserve Catastrophe reserve
Dividend reserve
Equalisation reserve
Details on the reserve calculation method are as follows:
4.18.1 Life insurance reserves
Mathematical Reserve: is the difference between present value of total insurance payables in the future and the actuarially adjusted present value of insurance premiums receivable in the future. Mathematical reserve is calculated for all products with specific ac-tuarial formulas and factors for each type of products as registered and approved by the Ministry of Finance;
The Group estimates the mathematical reserve for universal life products in accordance with the provisions and instructions of MOF’s Decision 96/2007/QD-BTC dated 23 November 2007 as amended by Circular 86/2009/TT-BTC dated 28 April 2009 and with actuarial principles and methods which are widely recognised in international practice. Furthermore, the methodology and actu-arial principles used to estimate these universal life reserves have been registered and approved by the MOF.
Unearned premium reserve: is the provision for unearned revenue out of already-paid premium as at the balance sheet date, and is calculated for all outstanding policies as at the reporting date;
Claims Reserve: is the provision for claims submitted but still in the course of settlement as at the balance sheet date;
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)as at and for the year ended 31 December 2010
Dividend Reserve: is the provision for accumulated unpaid dividends for participating policies, which is established on the variances of actual rate of return announced for participating policies and the respective nominal interest rate; and
Equalisation Reserve: Annual contributions shall be made up until the time when this reserve is equal to five per cent (5%) of the premiums collected in the fiscal year of an insurer. The rate of annual contributions shall be one per cent (1%) of the before-tax profit of the issuer.
4.18.2 General insurance reserves
Unearned premium reserve
Unearned premium reserve is established as a percentage of total retained premium or in accordance with a coefficient of the insurance contracts’ terms as such:
For cargo insurance, unearned premium reserve is made at 25% of the retained premium;
For other insurance lines, unearned premium reserve is calculated based on the 1/8 method. This method assumes that premi-ums for all insurance contracts issued in a quarter are allocated equally between each month within the quarter. In other word, all insurance contracts of a particular quarter are assumed to be effective at that mid quarter. Unearned premium reserve is calculated based on the following formula:
Unearned premium reserve = Retained premiums X Unearned premium rate
For the insurance policies with period cover is more than one year, unearned premium reserve is calculated based on the daily method, following the formula:
Unearned premium reserve =Retained premiums x Remaining day of insurance policy
-------------------------------------------------------------------------------------------------Number of coverage days
Claims reserve
Claims reserve includes the reserve for outstanding claims and for claims incurred but not reported.
Outstanding claims reserve is established based on the estimated claim payments for each claim for which the insurer is liable, which is either notified to the insurer or requested for payment but is still unresolved at the end of the fiscal year, in accordance to the Circular 156/2007/TT-BTC; and
Reserve for incurred but not reported claims for which the insurer is liable (IBNR).
Circular 156 stipulates the application of a formula for calculation of IBNR which requires statistical information inputs of the past three years. However, the Group’s information system in use for the mentioned period did not maintain the required statistical data.
On application by the Group, the Ministry of Finance granted permission to modify the application of the formula stipulated in the Circular 156 to enable the Group to reasonably comply with the requirements of the said Circular. In this regard, the Ministry of Finance has approved the Group to use the statistic data of the reporting year only for the purpose of calculation of IBNR as per the Official Letter No.1393/BTC-QLBH dated 06 February 2009 and the Official Letter No.2250/BTC-QLBH dated 24 February 2011. On this basis, the reserve for incurred but not reported claims is established based on the following formula:
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)as at and for the year ended 31 December 2010
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Reserve for payment of losses which have incurred but not yet reported for the current fiscal year
=
Total indemnity for claims incurred but not reported at the end of the last year
x
Indemnity for losses arising in the current fiscal year
x
Net operating revenue of current fiscal year
Total indemnity for losses arising in the last year Net operating revenue
of the previous fiscal year
Catastrophe reserve
Catastrophe reserve is accrued annually until such reserve reaches 100% of the retained premiums of the current fiscal year and is made based on retained premiums and based on Bao Viet Insurance’s management’s experience of historical data.
On 28 December 2005, the Ministry of Finance issued Decision 100/2005/QD-BTC governing the publication of four new account-ing standards, one of which is Vietnamese Accounting Standard (“VAS”) 19 - Insurance Contract. Following the issuance of this Standard, starting from January 2006, the provision of catastrophe reserve is no longer required since it represents “possible claims under contracts that are not in existence at the reporting date”. However, since the Ministry of Finance has not issued detailed guidance for the implementation of VAS 19 and in accordance with the provision set out in Decree 46/2007/ND-CP issued by the Government of Vietnam on 27 March 2007 regarding financial regulations for insurance enterprises, the Group is still providing for the catastrophe reserve at 3.5% of total retained premium for the year ended 31 December 2010 according to official letter No.1393/BTC-QLBH dated 06 February 2009 and Official letter No.727/BTC-QLBH dated 18 January 2010.
4.19 Statutory reserves
The below statutory reserve funds are made in accordance with the regulations applicable to specific industries that the Group’s subsidiaries are operating in.
Insurance operation
The compulsory reserve fund is established in order to supplement the contributed capital of Bao Viet Life and Bao Viet Insurance and ensure solvency. Appropriation to the compulsory reserve fund is made annually at 5% of after-tax profits until it reaches 10% of contributed capital in compliance with Decision 46/2007/ND-CP dated 27 March 2007.
Securities operation
Exclusively applied for the securities companies, investment and development reserve fund is appropriated at the rate of 5% of the companies’ annual net profit and is limited to 100% of contributed capital in accordance with Decision No. 27/2007/TT- BTC dated 24 April 2007 issued by Ministry of Finance. This fund is set aside for use in the companies’ expansion of its operation or increase in contributed capital.
Financial reserve fund is appropriated at the rate of 5% of the companies’ annual net profit and is limited to 10% of contributed charter capital in accordance with Decision No. 27/2007/TT- BTC. This reserve is set aside to secure the companies’ normal opera-tions from business risks or losses, or to prepare for unforeseen losses or damages due to objective reasons.
Banking operation
On 23 November 2005, the Government issued Decree No. 146/2005/ND-CP regarding the financial management regime of credit institutions which was effective from 16 December 2005. Accordingly, commercial banks are required to make the following alloca-tions of profit after tax to create statutory reserves:
Percentage of profit after tax Maximum balance
Supplementary capital reserve Not applicable Not applicable
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)as at and for the year ended 31 December 2010
Moreover, the Financial Risk Reserve is calculated based on profit after tax, and after deducting the allocation to the supplemen-tary capital reserve (remaining profit after tax):
Financial risk reserve 10% of remaining profit after tax 25% charter capital
In 2010, Baoviet Bank has temporarily made 5% of its profit after tax for supplementary capital reserve and 10% of the profit after tax for financial risk reserve. The appropriation to statutory reserve of Baoviet Bank is determined by Shareholders’ meeting. The utilization of these statutory reserves is in accordance with guidelines as stipulated in Decree. 146.
4.20 Revenue recognitionRevenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised:
Gross written premium
Life insurance
Premiums are established in accordance with provisions and instructions of Circular 156/2007/TT-BTC dated 20 December 2007 as amended by Circular 86/2009/TT-BTC dated 28 April 2009 issued by the Ministry of Finance providing guidelines on financial regime applicable to insurers and insurance brokers. Premiums from life insurance contracts are recognised as revenue when payables by the policyholder. For single premium business, revenue is recognised on the date from which the policy is effective. Premiums due after the reporting period but received before the balance sheet date are shown as “premiums in advance” and included in the “Other payables” in the consolidated balance sheet.
Total premium received from Universal Life policy holders are recorded as revenue, Policy holders account value is calculated actu-arially and recognized through technical reserves in the consolidated balance sheet.
General insurance
Gross written premiums are recognized in accordance with Circular 156/2008/TT-BTC issued by the Ministry of Finance on 20 De-cember 2008 (“Circular 156”) and Circular 86/2009/TT-BTC modifying some clauses of Circular 156 on financial regime applicable to insurers and insurance brokers. Specifically, gross written premium is recognized as revenue at the point of time when the fol-lowing conditions are met: (1) the insurance contract has been entered into by the insurer and the insured; and (2) the premium has been paid by the insured or there is agreement between the Corporation and the insured for delayed payment of insurance premium. Prepaid premium before due date is recorded as “Premium received in advance” in the consolidated balance sheet as at the balance sheet date.
Interests
Revenue is recognised as interests accrue (taking into account the effective yield on the asset) unless recoverability is in doubt.
Revenue from bond is recognized on an accrual basis. Interest revenue also includes the amount of amortization of any discount, premium or other difference between the initial carrying amount of a bond and its amount at maturity and allocated using straight-line method. When unpaid bond coupon interest has accrued before the acquisition of a bond, the subsequent receipt of coupon interest is allocated between pre-acquisition and post-acquisition period. Only post-acquisition bond coupon interest is recognized as revenue. Pre-acquisition bond coupon interest is deducted from the cost of the bond.
Interest income from banking activities is recognized in the consolidated income statement on an accrual basis using nominal interest rate. The recognition of accrued interest income is suspended when loans become impaired, which occurs when a loan is classified from either group 2 to group 5 according to criteria set in Decision 493/2005/QD-NHNN dated 22 April 2005 and Decision 18/2007/QD-NHNN dated 25 April 2007 by the State Bank of Vietnam. Suspended interest income is recorded off-balance sheet and recognized in the consolidated income statement upon actual receipt.
Fees from rendering of services
Fees from rendering of services include fund management fees, placement fees, incentive fees, brokerage, underwriting activi-ties…, which are recognized when services are performed and the revenue can be reliably measured.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)as at and for the year ended 31 December 2010
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Gains from securities trading
Gains from securities trading are the excess of selling prices over the weighted average cost of securities sold.
Dividends and appropriated profits
Income is recognised when the Group’s right to receive the cash dividend or the appropriated profit is established. Stock dividend and bonus shares received are not recognized as income of the Group and the respective increase in number of shares are only updated off balance sheet.
Other income
Revenues from irregular - activities other than turnover-generating activities are recorded to other incomes as stipulated by “VAS 14 - Revenue and other income”, including: Revenues from asset liquidation and sale; fines paid by customers for their contract breaches; collected insurance compensation; collected debt which had been written off and included in the preceding period expenses; payable debts now recorded as revenue increase as their owners no longer exist; collected tax amounts which now are reduced and reimbursed; and other revenues.
4.21 Expense recognition
Claim and maturity payments
Claim and maturity payment expenses for life insurance are recognised when the liability to the policyholder under the policy has been determined.
For general insurance, claim expense is recognized at the point of time when the claim documents are completed and approved by authorized persons. In case that the final claim amount has not been finalized but the Group is certain that the loss is within its insured liabilities and has paid an advance to the customer as per their request, such advance would also be recognized as claim expenses. Any claim that is not yet approved by authorized persons is considered an outstanding claim and included in claims reserve.
Commission
For life insurance, commission expenses are calculated as the percentages of premium revenue and are recognized in the con-solidated income statement. Commission is calculated for all products with specific percentages for each type of products, and in accordance with Circular 155/2007/TT-BTC dated 20 December 2007 issued by the Ministry of Finance providing guidelines for implementation of Decree 45/2007/ND-CP dated 27 March 2007 on Law on Insurance and Circular 86/2009/TT-BTC issued on 28 April 2009 by the Ministry of Finance to provide guidance and amendment to Circular 155/2007/TT-BTC.
For general insurance, commission expense is recognized when incurred.
Interest expense from banking activities
Interest expense is recognized in the consolidated income statement on an accrual basis.
Leased assets
Rentals paid under operating leases are charged to the consolidated income statement on a straight-line basis over the term of the lease.
4.22 Recognition of reinsurance activities of general insurance
(i) Reinsurance ceded
Reinsurance premiums ceded under treaty reinsurance agreements are recognized when gross written premiums within the scope of the treaty agreements are recognized.
Reinsurance recoveries are recognized when there is evidence of liability on the part of the reinsurer.
Reinsurance recoveries are recognized when there is evidence of liability on the part of the reinsurer.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)as at and for the year ended 31 December 2010
Reinsurance commission is recognized when there is a corresponding reinsurance premium ceded.
(ii) Reinsurance assumed
Reinsurance assumed under treaty arrangement
Income and expenses relating to reinsurance assumed under treaty arrangements are recognized when the statement of account is received from the cedants. As at the reporting date, income and expenses relating to reinsurance assumed under treaty arrange-ments for which the cedants have not sent their statement of accounts have been estimated based on statistical data and based on the cedants’ own estimate.
Reinsurance assumed under facultative arrangement
Reinsurance premium assumed is recognized when the facultative reinsurance agreement has been entered into by the Group and a statement of account (for each facultative reinsurance agreement) has been received from the cedants;
Claim expenses for reinsurance assumed are recognized when there is evidence of liability of the Group and when a statement of account has been sent to the Group;
Reinsurance commission is recognized when the reinsurance premium is recorded and when a statement of account has been sent to the Group.
4.23 Taxation
Current income tax
Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or sub-stantively enacted as at the balance sheet date.
Current income tax is charged or credited to the consolidated income statement, except when it relates to items recognised di-rectly to equity, in which case the deferred current income tax is also dealt with in equity.
Current income tax assets and liabilities are offset when there is a legally enforceable right for the Group to set off current tax assets against current tax liabilities and when the Group intends to settle its current tax assets and liabilities on a net basis.
As disclosed in Note 4.1, the Group adopted the “VAS 10” in relation to foreign currency transactions from the year 2010. However, the Group applies Circular 130/2008/TT-BTC dated 26 December 2008 and Circular 177/2009/TT-BTC dated 10 September 2009 issued by the Ministry of Finance in calculating the taxable income relating to these transactions.
Deferred tax
Deferred tax is provided using the liability method on temporary differences at the balance sheet date between the tax base of assets and liabilities and their carrying amount for financial reporting purposes.
Deferred tax liabilities are recognised for all taxable temporary differences, except:
where the deferred tax liability arises from the initial recognition of an asset or liability in a transaction which at the time of the related transaction affects neither the accounting profit nor taxable profit or loss; and
in respect of taxable temporarily differences associated with investments in subsidiaries and associates, and interests in joint ventures where timing of the reversal of the temporary difference can be controlled and it is probable that the temporary dif-ference will not reverse in the foreseeable future.
Deferred tax assets are recognized for all deductible temporary differences, carried forward unused tax credit and unused tax losses, to the extent that it is probable that future taxable profits will be available against which these deductible temporary differences, carried forward unused tax credit and unused tax losses can be utilized, except:
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)as at and for the year ended 31 December 2010
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Where the deferred tax arises from the initial recognition of an asset or liability in a transaction which at the time of the transac-tion affects neither the accounting profit nor taxable profit or loss.
in respect of deductible temporarily differences associated with investments in subsidiaries, associates, and interests in joint ventures, deferred tax assets are recognized only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilized.
The carrying amount of deferred income tax assets is audited at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised. Previously unrecognised deferred income tax assets are re assessed at each balance sheet date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax assets to be recovered.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply in the period when the asset realised or the liability is settled based on tax rates and tax laws that have been enacted at the balance sheet date.
Deferred tax is charged or credited to the consolidated income statement, except when it relates to items recognised directly to equity, in which case the deferred tax is also dealt with in the equity account.
Deferred tax assets and liabilities are offset when there is a legally enforceable right for the Group to set off current tax assets against current tax liabilities and when they relate to income taxes levied on the same taxable entity by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.
4.24 Appropriation of net profits
Profit after tax of the Group is appropriated in accordance with resolutions of the General Shareholders’ Meeting and Vietnamese regulatory requirements.
4.25 Transactions in foreign currencies
The Group adopted the “VAS 10” in relation to foreign currency transactions from the year 2010.
Transactions in currencies other than the Group’ reporting currency of VND are recorded at the exchange rates ruling at the date of the transaction. At the end of the year, monetary assets and liabilities denominated in foreign currencies are translated at inter-bank exchange rates ruling at the balance sheet date. All realised and unrealised foreign exchange differences are taken to the consolidated income statement.
The above guidance relating to unrealized foreign exchange differences provided by VAS 10 is different from those stipulated in the Circular 201/2009/TT-BTC issued on 15 October 2009 by the Ministry of Finance providing guidance for the treatment of for-eign exchange differences (the “Circular 201”) as applied by the Group in 2009. The differences are described in Note 4.1.
The impact to the consolidated financial statements had the Holdings adopted the Circular 201 in 2010 is presented in Note 34.
4.26 Offsetting
Financial assets and liabilities are offset and presented on net basis on the consolidated balance sheet when and only when the Group has the intention and legal right to make payment on net basis, or the settlement of financial assets and liabilities happen at the same time.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)as at and for the year ended 31 December 2010
4.27 Use of estimates
The preparation of the consolidated financial statements requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent liabilities. These estimates and assumptions also affect the income and expenses and the resultant provisions. Such estimates are necessarily based on assumptions about several factors involving varying degrees of judgment and uncertainty and actual results may differ resulting in future changes in such provisions.
4.28 Off-balance sheet items
In accordance with the Vietnamese Accounting System for insurance company, insurance policies that have been signed but for which no obligations have arisen on the part of the insurers are not recorded in the consolidated balance sheet until the premium is collected or the policies become effective.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)as at and for the year ended 31 December 2010
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)as at and for the year ended 31 December 2010
5. CASH AND CASH EQUIVALENTS31 December 2010
VND31 December 2009
VND
Cash on hand 155,587,174,546 68,973,179,827
Cash at banks 507,654,505,084 471,869,527,792
Cash in transit 59,798,195,232 94,328,700
Cash equivalents (*) 5,121,667,272,896 1,991,707,227,093
Total cash and cash equivalents 5,844,707,147,758 2,532,644,263,412
(*) Cash equivalents comprise of term deposits at financial institutions having original maturities of no more than 3 months and interest at rates denominated in
Vietnam dong ranging from 8.5% to 16.5% per annum and in US dollar with interest rate ranging from 0.2% to 1.4% per annum.
6. ACCOUNTS RECEIVABLES
31 December 2010VND
31 December 2009VND
Receivables from insurance activities
Gross written premium receivables 501,744,386,049 318,134,288,531
Reinsurance assumed receivables 69,830,833,871 74,315,180,815
Reinsurance ceded receivables 857,276,129,659 873,267,024,099
Other receivables from insurance activities 1,264,166,676 1,122,133,839
Receivables from co-insurers 23,254,922,871 6,335,705,691
1,453,370,439,126 1,273,174,332,975
Trade advancesAdvances to suppliers 51,438,200,967 9,351,089,507
51,438,200,967 9,351,089,507
Other advances 15,004,672,895 14,169,850,360Receivables from investment activities
Dividend receivables 10,923,835,861 8,928,848,933
Bank deposit interest 432,084,476,342 293,214,114,444
Bond coupon receivables 750,381,556,782 511,835,722,629
Receivables from repo contracts - 22,988,904,912
Receivables from securities trading 993,842,121 11,067,001,000
Interest receivables from automatic loans 4,822,755,596 2,874,246,605
Loans interest receivables from customers 4,196,209,448 5,021,488,048
Interest receivables from advances on surrender value 238,920,490,000 208,516,086,800
Other receivables from investment activities 43,528,020,607 4,286,403,001
1,485,851,186,757 1,068,732,816,372
Other receivables (*) 272,320,059,245 100,924,531,492 Total receivables 3,277,984,558,990 2,466,352,620,706
Provision for doubtful debts (71,469,668,078) (38,722,496,241)
Net receivables 3,206,514,890,912 2,427,630,124,465
(*) Other receivables as at 31 December 2010 include an amount of VND 106,761,864,000 being the money transferred to issuers to buy shares for BVSC’s customers under brokerage contracts signed between BVSC and clients.
7. INVENTORIES
31 December 2010VND
31 December 2009VND
Pre-printed certificates 13,750,685,339 10,177,565,405
Materials and stationery 8,636,859,860 9,488,302,527
Tools/ Equipment 2,116,641,003 574,125,330
Work in progress (*) 92,758,996,462 86,881,533,090
Total inventories 117,263,182,664 107,121,526,352Provision for obsolete inventories - -
Net realisable value of inventories 117,263,182,664 107,121,526,352
(*) Work in progress represents investment properties under construction of BVInvest. These items are recorded in inventory account and will be recognized in cost of
goods sold when they’re sold.
8. LOANS AND ADVANCES TO CUSTOMERS
31 December 2010VND
31 December 2009VND
Commercial loans 5,394,881,793,498 2,070,446,430,293In which:
Short-term loans 2,945,413,518,436 1,224,593,789,651
Medium-term loans 1,115,916,458,477 471,228,961,441
Long-term loans 1,333,551,816,585 374,623,679,201
Loans and advances to credit institutions 529,397,600,000 562,576,960,000
5,924,279,393,498 2,633,023,390,293
Provision for credit losses (35,211,916,130) (8,266,506,189)
Net loans and advances to credit institutions 5,889,067,477,368 2,624,756,884,104
For the year ended 31 December 2010 interest rate (% per annum)
Commercial loans in VND 12% - 22%
Commercial loans in foreign currency 4% - 9%
8.1. Analysis of commercial loans by quality
31 December 2010VND
31 December 2009VND
Current 5,341,330,710,017 2,069,588,097,293
Special mention 53,084,683,481 858,333,000
Substandard 466,400,000 -
Doubtful - -
Loss - -
5,394,881,793,498 2,070,446,430,293
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)as at and for the year ended 31 December 2010
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8.2 Provision for credit losses
Changes in the provision for credit losses for the year ended 31 December 2010 are summarized below:
Specific provision
VND
General provision
VND
Total
VND
Balance as at 31 Dec 2009 13,750,000 8,252,756,189 8,266,506,189
Provision expense in the year for credit losses 370,683,381 26,574,726,560 26,945,409,941
Balance as at 31 Dec 2010 384,433,381 34,827,482,749 35,211,916,130
9. TANGIBLE FIXED ASSETS
Building
VNDMachinery
VND
Means of trans-portation and
communicationVND
Office equipmentVND
Others tangible fixed assets
VND
TotalVND
Cost:
31 Dec 2009 574,108,338,213 35,388,309,102 177,122,050,807 313,023,765,644 1,047,923,596 1,100,690,387,362
Additions 281,846,912,137 8,594,245,653 84,407,057,820 41,997,209,133 37,232,955 416,882,657,698
In which:
New purchases 60,708,691,265 8,485,455,153 19,600,627,081 35,548,957,133 37,232,955 124,380,963,587
Newly con-structed
221,138,220,872 - 64,806,430,739 6,448,252,000 - 292,392,903,611
Others - 108,790,500 - - - 108,790,500
Disposals (1,744,867,469) (1,083,369,873) (2,649,079,218) (10,008,573,903) (25,793,000) (15,511,683,463)
31 Dec 2010 854,210,382,881 42,899,184,882 258,880,029,409 345,012,400,874 1,059,363,551 1,502,061,361,597
Accumulated depre-
ciation:
31 Dec 2009 184,440,340,420 16,170,370,407 94,238,307,189 234,988,112,711 984,134,682 530,821,265,409
Depreciation for the
year33,225,493,358 6,981,298,669 24,490,972,656 33,421,297,978 48,124,625 98,167,187,287
Decrease due to
disposal(1,744,867,469) (1,077,837,669) (2,649,079,218) (9,797,612,618) (25,793,000) (15,295,189,974)
31 Dec 2010 215,920,966,309 22,073,831,407 116,080,200,627 258,611,798,071 1,006,466,307 613,693,262,722
Net book value:
31 Dec 2009 389,667,997,793 19,217,938,695 82,883,743,618 78,035,652,933 63,788,914 569,869,121,953
31 Dec 2010 638,289,416,572 20,825,353,475 142,799,828,782 86,400,602,803 52,897,244 888,368,098,875
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)as at and for the year ended 31 December 2010
10. INTANGIBLE FIXED ASSETS
Land use rights
VND
Software
VND
Other intangible fixed assets
VND
Total
VND
Cost:31 Dec 2009 619,162,684,653 86,050,244,082 1,892,101,756 707,105,030,491
New purchases 2,551,361,733 83,627,611,783 - 86,178,973,516
Disposals (293,441,118) - - (293,441,118)
31 Dec 2010 621,420,605,268 169,677,855,865 1,892,101,756 792,990,562,889
Accumulated amortisation:
31 Dec 2009 7,105,055,229 48,856,611,950 1,013,362,694 56,975,029,873
Amortisation during the year 5,336,369,799 20,749,827,766 503,345,356 26,589,542,921
Decrease due to disposals (246,883,623) - - (246,883,623)
31 Dec 2010 12,194,541,405 69,606,439,716 1,516,708,050 83,317,689,171
Net book value:
31 Dec 2009 612,057,629,424 37,193,632,132 878,739,062 650,130,000,618
31 Dec 2010 609,226,063,863 100,071,416,149 375,393,706 709,672,873,718
11. CONSTRUCTION IN PROGRESS
31 December 2010
VND
31 December 2009
VND
Purchasing fixed assets 97,139,041,830 52,547,596,674
Capital constructions in progress 242,422,455,753 429,277,918,123
Major assets overhaul 72,680,520 854,723,032
339,634,178,103 482,680,237,829
Details of the capital constructions in progress at 31 December 2010 are as follows:
31 December 2010
VND
31 December 2009
VND
Buildings under construction at Bao Viet Insurance 12,879,128,752 21,899,868,122
Buildings under construction at Baoviet Bank 6,352,444,033 2,482,812,425
Buildings under construction at Bao Viet Life 174,930,810,801 157,251,622,198
Buildings under construction at the Holdings 30,734,441,927 240,936,057,481
Software under development at the Holdings 17,455,030,240 6,707,557,897
Construction in progress of BVSC 70,600,000 -
242,422,455,753 429,277,918,123
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)as at and for the year ended 31 December 2010
ANNUAL REPORT 2010
132BAO VIET HOLDINGS 2010
133
12. INVESTMENT PROPERTIES
This is the investment in Quang Minh Housing Project at Dong Dia, Cua Cuong, Ma Vang areas in Gia Tan, Quang Minh, Me Linh Dis-trict, Vinh Phuc. These projects are held for capital appreciation at the date of preparation of these consolidated financial statements.
13. INVESTMENTS
13.1 Short-term investments
Notes31 December 2010
VND
31 December 2009
VND
Term deposits at financial institutions 13.1.1 6,889,370,528,889 6,652,102,000,000
Bonds 13.1.2 860,005,838,111 478,650,208,005
Listed shares 13.1.3 1,885,055,919,490 1,808,610,603,564
Other short-term investments 251,461,789,100 -
9,885,894,075,590 8,939,362,811,569
Provision for impairment of short-term investments (853,702,451,855) (363,299,115,494)
Net value of short – term investments 9,032,191,623,735 8,576,063,696,075
13.1.1 Term deposits at financial institutions
31 December 2010
VND
31 December 2009
VND
Term deposits in VND 6,889,370,528,889 6,598,279,000,000
Term deposits in USD - 53,823,000,000
6,889,370,528,889 6,652,102,000,000
The above short-term deposits have maturities not over one year and interest at rates ranging from 8.2% to 17.8% per annum for VND and being1% per annum for USD.
13.1.2 Bonds
Type of bonds Currency Term (years) Rate (%) 31 December 2010
VND
Corporate bonds VND 1-5 years 8% - 15% 650,022,000,000
Government bonds VND 5-7 years 7.15% - 16% 209,983,838,111
860,005,838,111
The Group’s short-term bonds are bonds which have remaining maturity of not over one year.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)as at and for the year ended 31 December 2010
13.1.3 Listed shares
Besides investments in term deposits and bonds, the Group has invested in shares listed in Hanoi Stock Exchange and Ho Chi Minh Stock Exchange. The Group currently does not have any investment in overseas stock markets.
13.2 Long-term investments
Notes 31 December 2010
VND
31 December 2009
VND
Investments in associates and joint ventures 13.2.1 338,561,803,678 313,559,572,889
Other long-term investments
Term deposits at financial institutions 13.2.2 1,683,500,000,000 789,000,000,000
Bonds 13.2.3 14,450,546,217,240 12,218,952,105,078
Loans and trusted loans 13.2.4 41,385,137,366 42,662,403,128
Advances from surrender value 13.2.5 862,658,975,058 903,945,810,246
Other long-term investments 13.2.6 1,364,499,208,767 1,558,041,694,392
18,402,589,538,431 15,512,602,012,844
Total long-term investments 18,741,151,342,109 15,826,161,585,733
Provision for impairment (197,396,840,633) (195,997,534,321)
Net value of long-term investments 18,543,754,501,476 15,630,164,051,412
13.2.1 Investments in associates and joint ventures
As at 31 December 2010, the Group’s investments in associates and joint ventures include:
Notes 31 December 2010
VND
31 December 2009
VND
Bao Viet Tourism Hotel JSC 13.2.1.a 16,500,000,000 7,400,000,000
International Investment & Construction Joint Stock Com-pany (“VIGEBA”)
13.2.1.b 54,000,000,000 54,000,000,000
Long Viet Investment and Construction Co. Ltd and Quang Minh Project
13.2.1.c 34,812,144,191 19,797,937,689
Bao Viet Tokio Marine Insurance Joint Venture Company 13.2.1.d 212,554,391,751 186,892,261,619
Bao Viet-SCIC Investment Limited Company (“BV-SCIC”) 13.2.1.e 20,695,267,736 45,469,373,581
338,561,803,678 313,559,572,889
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)as at and for the year ended 31 December 2010
ANNUAL REPORT 2010
134BAO VIET HOLDINGS 2010
135
Details of the investments in associates and joint ventures as at 31 December 2010 are presented as below:
Invested companyCharter capital
VND
Committed con-
tribution capital
VND
%Contributed capital
VND
Capital to be
contributed
VND
Associates
Bao Viet Tourism Hotel JSC 60,000,000,000 21,000,000,000 35% 16,500,000,000 4,500,000,000
VIGEBA 180,000,000,000 54,000,000,000 30% 54,000,000,000 -
Long Viet Investment and Construc-tion Co. Ltd
65,043,200,000 29,269,440,000 45% 29,269,440,000 -
Joint ventures
Bao Viet Tokio Marine Insurance Joint Venture (Control right: 50%)
300,000,000,000 153,000,000,000 51% 153,000,000,000 -
Bao Viet-SCIC Investment Limited Company
40,000,000,000 20,000,000,000 50% 20,000,000,000 -
272,769,440,000
13.2.1.a Bao Viet Tourism Hotel JSC
31 December 2010VND
31 December 2009VND
Opening balance 7,400,000,000 7,400,000,000
Increase in capital 9,100,000,000 -
Closing balance 16,500,000,000 7,400,000,000
13.2.1.b International Investment & Construction Joint Stock Company (“VIGEBA”)
31 December 2010VND
31 December 2009VND
Opening balance 54,000,000,000 39,000,000,000
Increase in capital - 15,000,000,000
Dividend paid (9,426,417,396) -
Share of net profit during the year 9,426,417,396 -
Closing balance 54,000,000,000 54,000,000,000
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)as at and for the year ended 31 December 2010
13.2.1.c Investment in Long Viet Investment and Construction Company Ltd (“Long Viet”) and interest in Quang Minh Project
31 December 2010VND
31 December 2009VND
Opening balance 19,797,937,689 21,405,085,041
Capital recovery upon the liquidation of Quang Minh Project
(14,000,000,000) -
Increase investment in Long Viet 24,807,000,000 -
Dividend received - (3,637,321,762)
Share of retained profit for the year 4,207,206,502 2,030,174,410
Closing balance 34,812,144,191 19,797,937,689
13.2.1.d Bao Viet Tokio Marine Insurance Joint Venture Company
31 December 2010VND
31 December 2009VND
Opening balance 186,892,261,619 186,640,010,026
Dividend received (9,911,913,955) (13,935,661,901)
Foreign exchange difference due to application of Circular 201 in 2009
- 3,629,917,600
Adjustment for the foreign exchange difference as the Group applied VAS 10 in 2010
(3,629,917,600) -
Share of retained profit for the year 39,203,961,687 10,557,995,894
Closing balance 212,554,391,751 186,892,261,619
13.2.1.e Bao Viet-SCIC Investment Limited Company
31 December 2010VND
31 December 2009VND
Opening balance 45,469,373,581 -
(Decrease)/Increase in capital (25,000,000,000) 45,000,000,000
Dividend paid (645,661,041) -
Share of retained profit for the year 871,555,196 469,373,581
Closing balance 20,695,267,736 45,469,373,581
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)as at and for the year ended 31 December 2010
ANNUAL REPORT 2010
136BAO VIET HOLDINGS 2010
137
13.2.2 Term deposits at credit institutions
31 December 2010VND
31 December 2009VND
Term deposits in VND 1,683,500,000,000 789,000,000,000
1,683,500,000,000 789,000,000,000
These deposits have terms ranging from 1 to 15 years and interest at rates ranging from 8.8% to 16% per annum.
13.2.3 Bonds
Type of bonds Currency Term (years) Interest rate
(%)
Value as at 31 December 2010
VND
Corporate bonds VND 2-20 years 7.2%-16% 4,159,352,934,482
Government bonds VND 2-15 years 7.7%-12.1% 10,291,193,282,758
14,450,546,217,240
13.2.4 Loans and trusted loans
As at 31 December 2010, details of the loans under investment category of the Group are as follows:
Loans
Name of borrower Term (years) Interest rate (%) 31 December 2010
VND
Greenline Limited Company Ltd 2 years 9.6% 2,106,027,200
2,106,027,200
Trusted loans
Name of borrower Currency Trusted bank Term Rate (%) 31 December 2010 VND
Orion Hanel Company Ltd USDBIDV - Bac
Thang Long6 years 7.4% 39,279,110,166
39,279,110,166
Total loans and trusted loan 41,385,137,366
The above loans and trusted loans are overdue and borrowers have no capacity for paying back the loans. Hence, the Group has made 100% provision for credit losses for these loans.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)as at and for the year ended 31 December 2010
13.2.5 Advances from surrender values
Advances from surrender values are carried at cost.
Policyholders who have fulfilled their premium payment obligations for at least 24 months are entitled to an advance on the sur-render value, with the advance amount at a maximum of 80% of the surrender value and accumulated un-withdrawn dividend for the relevant policy.
13.2.6 Other long-term investments
These are equity investments in other entities which the Group has neither control right nor significant influence on. Hence, these are not investment in joint-ventures or associates. Breakdown of the investments by source is as follows:
Breakdown of the investments by source is as follows:
31 December 2010
VND
31 December 2009
VND
The Holdings 962,254,966,767 638,504,280,000
Bao Viet Insurance 60,500,000,000 103,460,559,767
Bao Viet Life 88,747,960,000 226,072,777,000
Bao Viet Security Joint Stock Company 92,911,383,000 400,058,558,625
Bao Viet Security Investment Fund 105,346,105,000 125,466,565,000
Bao Viet Fund Management Company 14,770,461,000 24,510,621,000
BVInvest 39,968,333,000 39,968,333,000
1,364,499,208,767 1,558,041,694,392
14. LONG-TERM PREPAID EXPENSES
31 December 2010
VND
31 December 2009
VND
Beginning balance 18,120,011,138 18,692,585,177
Increase 91,609,710,537 18,546,776,391
Charged as expenses (57,198,256,903) (19,119,350,430)
Ending balance 52,531,464,772 18,120,011,138
15. SHORT-TERM LOANS AND BORROWINGS
These are loans of Baoviet Bank from the State Bank of Vietnam, including loans in VND for capital replenishment under the form of valuable paper discounting to ensure the Bank’s liquidity. These loans have a term of 7 days and bear interest at rate of 10% p.a.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)as at and for the year ended 31 December 2010
ANNUAL REPORT 2010
138BAO VIET HOLDINGS 2010
139
16. ACCOUNTS PAYABLES
16.1 Trade payables
31 December 2010
VND
31 December 2009
VND
Insurance activities
Life insurance 101,637,171,829 78,294,863,262
Claims payables 41,928,770,562 30,909,622,212
Commissions payables 56,791,508,044 45,118,047,019
Premium returns payables 105,682,201 1,205,393,917
Dividends payables - life insurance 2,811,211,022 1,061,800,114
General insurance 561,633,862,961 527,528,538,481
Commissions payables 40,544,856,355 36,265,822,959
Payables relating to direct insurance activities 45,942,008,701 51,424,540,911
Reinsurance assumed payables 42,537,943,062 44,132,188,818
Reinsurance ceded payables 432,609,054,843 395,705,985,793
663,271,034,790 605,823,401,743
Financial activities
Prepaid bond interest 45,470,109,657 48,737,767,142
Prepaid deposit interest 39,504,785,202 13,622,315,414
Interest payable to customer deposits 71,080,071,486 22,107,099,657
Other payables from financial activities 51,209,531,821 34,430,572,452
207,264,498,166 118,897,754,665
Payables to suppliers and service providers
Payables to suppliers 58,620,367,443 29,436,471,962
Payables to securities issuing organisations 4,193,069,302 7,364,535,134
Payables to lender in repo contracts 2,165,153,642,558 174,367,077,046
Others 1,713,697,400 24,726,679,614
2,229,680,776,703 235,894,763,756
3,100,216,309,659 960,615,920,164
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)as at and for the year ended 31 December 2010
16.2 Advances from customers
31 December 2010
VND
31 December 2009
VND
Advances from customers for securities trading 4,648,902,058 3,973,208,500
Premium in advance 30,656,565,920 39,252,813,457
35,305,467,978 43,226,021,957
17. STATUTORY OBLIGATIONS
31 Dec 2009VND
Increase
VND
Paid
VND
31 Dec 2010VND
Taxes
Value added tax 18,042,750,720 295,947,115,802 287,403,399,457 26,586,467,065
Enterprise Income Tax 93,170,087,183 272,482,308,411 318,521,037,200 47,131,358,394
Personal Income Tax 3,939,485,398 71,590,043,372 67,056,801,811 8,472,726,959
Land lease tax 9,817,641 2,263,656,733 2,207,299,048 66,175,326
Other taxes 13,679,455,963 29,487,645,126 37,560,114,139 5,606,986,950
128,841,596,905 671,770,769,444 712,748,651,655 87,863,714,694
17.1 Current Enterprise Income Tax
In 2010, except for the case of Bao Viet Fund Management Company and BV Au Lac, the Group has the obligation to pay Enterprise Income Tax (“EIT”) at the rate of 25% of taxable profits.
For the training service of BV - Au Lac, the Enterprise Income Tax rate imposed is 10%. In the first 10 years from the establishment of the company, BVF is subject to enterprise income tax at the rate of 20%. The company is exempted from EIT for two years from the first profit making year and enjoy a reduction of 50% in the next 3 years. Therefore from 2008 to 2010, BVF has the obligation to pay the tax at the rate of 10%.
The Group’s tax returns are subject to examination by the tax authorities. Because the application of tax laws and regulations on many types of transactions is susceptible to varying interpretations, amounts reported in the consolidated financial statements could be changed at a later date upon final determination by the tax authorities.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)as at and for the year ended 31 December 2010
ANNUAL REPORT 2010
140BAO VIET HOLDINGS 2010
141
Current year
VND
Previous year
VND
Current Enterprise Income Tax 272,482,308,411 227,108,847,520
Deferred Enterprise Income Tax 2,122,672,833 (266,449,817)
Enterprise Income Tax Expense 274,604,981,244 226,842,397,703
The current tax payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the consolidated income statement because it excludes items of income or expenses that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted by the balance sheet date.
Current yearVND
Previous yearVND
Profit before tax 1,254,901,112,464 1,242,898,959,040
Increase adjustment on profit before tax 31,906,643,605 16,764,412,148
Expenses disallowed for tax purpose 31,906,643,605 16,764,412,148
Reduction adjustment on profit before tax (249,761,504,870) (142,942,648,620)
Dividends (tax exempted) (133,558,710,320) (115,183,397,972)
Bond interest which is subject to tax exemption (43,637,255,776) (9,853,616,104)
Gain from foreign exchange difference (34,922,724,364) (17,905,634,544)
Other reductions (37,642,814,410) -
Non-taxable (loss)/profit arising from consolidation adjust-ments
(112,629,466,034) 253,626,218,571
Non-taxable loss 154,463,863,895 -
Loss transferred from last year - (378,221,351,467)
Total adjustment on profit before tax (176,020,463,404) (250,773,369,368)
Equalization reserve (5,995,431,804) (4,556,421,030)
Estimated current taxable income 1,072,885,217,256 987,569,168,642
in which:
Profit taxed at 25% 1,051,842,920,820 869,652,559,502
Profit taxed at preferential rate of 17.5% - 79,364,908,893
Profit taxed at 10% 21,042,296,436 -
Profit taxed at preferential rate of 7% - 38,551,700,247
Adjustment according to State Investigators 7,579,376,993 -
Total estimated tax expense 272,482,308,411 234,000,617,951
EIT reduction according to Circular No. 03/2009/TT-BTC - (7,177,654,108)
Other adjustments (162,028,433) 285,883,677
Tax expense charged to current year 272,482,308,411 227,108,847,520
Opening balance of EIT payables 93,170,087,183 58,758,433,893
Current EIT paid during the year (318,521,037,200) (192,697,194,230)
Estimated enterprise Income Tax payables 47,131,358,394 93,170,087,183
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)as at and for the year ended 31 December 2010
17.2 Deferred Tax
The following are the major deferred tax assets and liabilities recognized by the Group, and the movements thereon, during the current and prior reporting periods.
Consolidated balance sheet Consolidated income statement
31 December 2010VND
31 December 2009VND
Current yearVND
Previous yearVND
Deferred tax assets on deductible temporary differences
12,668,907,308 10,654,317,835 2,014,589,473 3,797,053,009
Deferred tax liabilities on taxable temporary differences
(8,613,670,942) (4,476,408,636) (4,137,262,306) (3,530,603,192)
Net deferred income tax credit (charge) to consolidated Income statement
(2,122,672,833) 266,449,817
18. OTHER PAYABLES
31 December 2010
VND
31 December 2009
VND
Surplus assets awaiting resolution 38,459,281 22,729,580
Social Insurance, Health Insurance, Trade Union Fees 5,268,842,172 5,733,287,034
Share allotment monies received (*) 646,867,673,855 -
Dividend payables to shareholders 10,613,306,875 -
Deferred revenue 18,974,714,214 8,085,122,877
Payables relating to security operation 12,501,781,144 -
Payables to Ministry of Finance (**) 32,926,520,739 449,895,267,217
Payable to HSBC Insurance (Asia Pacific) Holdings Limited for Technical Support and Capability Transfer Agreement (TSCTA)
74,408,814,579 106,072,353,436
Others (***) 304,654,926,462 174,848,501,991
1,106,255,039,321 744,657,262,135
(*) This represents the subscription money received from existing shareholders for their exercise of right issues in January 2011.
(**) This relates to the dividend payable in respect of 2008 to the Ministry of Finance (the “MOF”) that the Holdings has been authorized to use as the MOF’s contribution in the Holdings’ charter capital. During the year 2010, an amount of VND 458,517,600,000 was transferred to a bank account for the preparation of the MOF’s contribution in the Holdings’ charter capital that took place in January 2011.
(***) These include amounts received from customers under brokerage contracts to buy shares totaling VND 106,761,864,000.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)as at and for the year ended 31 December 2010
ANNUAL REPORT 2010
142BAO VIET HOLDINGS 2010
143
19. BONUS AND WELFARE FUNDS
31 December 2010
VND
31 December 2009
VND
Opening balance 49,856,498,121 36,500,034,959
Increased during the year 68,159,512,505 35,048,205,891
Utilized during the year (48,902,629,147) (21,691,742,729)
Closing balance 69,113,381,479 49,856,498,121
20. AMOUNT DUE TO CUSTOMERS
31 December 2010
VND
31 December 2009
VND
Deposits from commercial banks 3,019,960,785,943 1,709,021,432,606
Deposits from customers 4,577,878,623,080 2,077,940,434,258
7,597,839,409,023 3,786,961,866,864
20.1 Deposits from commercial banks
31 December 2010
VND
31 December 2009
VND
Term deposits
In VND 2,754,912,785,943 1,655,198,432,606
In gold and foreign currencies 265,048,000,000 53,823,000,000
3,019,960,785,943 1,709,021,432,606
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)as at and for the year ended 31 December 2010
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)as at and for the year ended 31 December 2010
20.2 Deposits from customers
31 December 2010
VND
31 December 2009
VND
Demand deposits 452,914,877,809 365,294,918,913
Demand deposits in VND 444,262,169,207 362,572,397,652
Demand savings deposits in VND 3,422,568 232,324
Demand deposits in foreign currencies 8,591,260,022 2,482,959,406
Demand savings deposits in foreign currencies 58,026,012 239,329,531
Term deposits 4,104,108,685,744 1,675,619,756,327
Term deposits in VND 2,623,855,520,334 1,265,467,327,953
Term savings deposits in VND 826,429,877,181 235,524,744,555
Term deposits in foreign currencies 17,376,853,389 48,874,345,273
Term savings deposits in foreign currencies 636,446,434,840 125,753,338,546
Margin deposits 20,855,059,527 37,025,759,018
Margin deposits in VND 13,649,052,864 9,604,677,526
Margin deposits in foreign currencies 7,206,006,663 27,421,081,492
4,577,878,623,080 2,077,940,434,258
Current year
interest rate
per annum
Previous year
interest rate
per annum
Demand deposits in VND 2.4% 3.6%
Demand savings deposits in VND 2.4% 3.6%
Demand deposits in foreign currencies 0.5% - 0.6% 0.6%
Demand savings deposits in foreign currencies 0.5% - 0.6% 0.6%
Term deposits in VND 10% - 14% 7.5% - 10.49%
Term savings deposits in VND 10.49% - 14% 7.2% - 10.49%
Term deposits in foreign currencies 0.8% - 6.02% 2.8% - 3.3%
Term savings deposits in foreign currencies 2.57% - 6.05% 4.3%
Certificates of deposit in VND 10.49% - 14% 7.2% - 10.15%
ANNUAL REPORT 2010
144BAO VIET HOLDINGS 2010
145
21. RESERVES
UPR ReserveVND
Mathematical ReserveVND
Claims ReserveVND
Catastrophe ReserveVND
Dividend ReserveVND
Equalisation ReserveVND
TotalVND
Life Insurance
Balance at 31 Dec 2009 845,499,257,711 13,149,693,155,870 7,640,970,100 - 789,360,245,400 16,737,624,949 14,808,931,254,030
Net movement of provision 6,282,742,289 798,042,718,390 (1,834,693,300) - 117,599,952,203 5,995,431,804 926,086,151,386
Balance at 31 Dec 2010 851,782,000,000 13,947,735,874,260 5,806,276,800 - 906,960,197,603 22,733,056,753 15,735,017,405,416
General Insurance
Balance at 31 Dec 2009 1,374,398,817,886 - 1,088,970,211,604 193,572,226,768 - - 2,656,941,256,258
Net movement of provision 220,982,830,862 - 126,580,809,497 113,439,977,163 - - 461,003,617,522
Balance at 31 Dec 2010 1,595,381,648,748 - 1,215,551,021,101 307,012,203,931 - - 3,117,944,873,780
Total balance at 31 Dec 2009 2,219,898,075,597 13,149,693,155,870 1,096,611,181,704 193,572,226,768 789,360,245,400 16,737,624,949 17,465,872,510,288
Balance at 31 Dec 2010 2,447,163,648,748 13,947,735,874,260 1,221,357,297,901 307,012,203,931 906,960,197,603 22,733,056,753 18,852,962,279,196
22. OWNERS’ EQUITY
Contributed capital
VND
Share premium
VND
Foreign exchange
differences reserve (*)
VND
Statutory reserves for
insurance operation
VND
Investment and
development fund
VND
Financial
reserve fund
VND
Other reserve (**)
VND
Undistributed earnings
VND
Total
VND
31 Dec 2009 5,730,266,050,000 1,734,745,821,197 18,387,227,948 43,521,050,471 10,222,384,015 11,699,111,508 103,568,802,818 886,495,196,261 8,538,905,644,218
Additional capital con-
tribution536,824,740,000 1,342,061,850,000 - - - - - - 1,878,886,590,000
Profit of current year - - - - - - - 952,597,195,373 952,597,195,373
Appropriation to other
reserves- - - 35,724,682,684 3,588,304,858 6,617,844,757 - (45,930,832,299) -
Dividends for the
year 2009 paid to
Shareholders
- - - - - - - (630,329,265,500) (630,329,265,500)
Appropriation to bonus
and welfare fund for the
year 2009
- - - - - - - (67,199,512,505) (67,199,512,505)
Remuneration to the
Board of Directors and
Supervisory Board of the
Holdings and subsidiar-
ies for the year
- - - - - - - (2,772,317,981) (2,772,317,981)
Recognition ò foreign
exchange difference to
income of the year
- - (2,311,619,948) - - - - - (2,311,619,948)
31 Dec 2010 6,267,090,790,000 3,076,807,671,197 16,075,608,000 79,245,733,155 13,810,688,873 18,316,956,265 103,568,802,818 1,092,860,463,349 10,667,776,713,657
(*) The balance of foreign exchange translation reserve of VND 16,075,608,000 as at 31 December 2010 represents the foreign exchange difference resulted from the conversion of accounting currency of Bao Viet Tokio Marine Insurance Joint Venture from USD to VND since 1 January 2008. This balance does not include the foreign exchange difference related to the application of Circular 201 in 2009, as that difference has been charged to this year’s consolidated income statement arising from the Group’s change in accounting policy to adopt VAS 10 during the year. (**) Other reserve represents the Group’s retained interest in share premium of Bao Viet Securities Joint Stock Company (BVSC) arising after consolidating
the financial statements of BVSC into the Group’s consolidated income statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)as at and for the year ended 31 December 2010
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)as at and for the year ended 31 December 2010
23. MINORITY INTERESTS
Minorities interest
VND
31 Dec 2009 1,348,825,735,269
Profit for the year 21,703,504,043
Dividends for the year 2009 (21,600,000,000)
Profit appropriation to bonus and welfare funds for the year 2009 (960,000,000)
Payment to the Board of Directors and Supervisory Board (363,049,925)
Buy treasury shares (76,500,000)
31 Dec 2010 1,347,529,689,387
24. REVENUE24.1 Gross written premium
Current year
VND
Previous year
VND
Life Insurance
Endowment insurance 3,387,950,268,309 3,427,486,254,644
Universal life 507,352,226,058 142,598,222,121
Term insurance 2,364,709,869 2,350,738,591
Whole Life insurance 9,240,606,719 10,436,638,371
Life annuity 35,607,154,756 44,628,470,307
Rider 100,921,532,389 81,977,216,471
Bancassurance 2,408,767,617 929,248,718
Total life insurance premium 4,045,845,265,717 3,710,406,789,223
General Insurance
Cargo Insurance 310,121,673,435 268,817,818,616
Hull- P&I Insurance 526,994,515,342 493,828,426,844
Oil & Gas Insurance 43,003,905 1,280,716,534
Aviation Insurance 197,709,637,806 209,152,701,150
Engineering Insurance 391,534,726,447 292,439,471,825
Fire & Special Risk Insurance 333,230,309,272 289,678,053,640
General Indemnity Insurance 81,200,645,832 77,382,803,115
Agriculture Insurance 1,838,316,517 1,691,144,952
Automobile Insurance 1,272,336,429,565 1,141,252,840,591
Health & Personal Accident Insurance 1,083,140,922,671 907,436,938,316
Total general insurance premium 4,198,150,180,792 3,682,960,915,583
Total gross premium 8,243,995,446,509 7,393,367,704,806
ANNUAL REPORT 2010
146BAO VIET HOLDINGS 2010
147
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)as at and for the year ended 31 December 2010
24.2 Reinsurance premium assumed
Current year
VND
Previous year
VND
Cargo Insurance 12,283,819,020 11,516,394,816
Hull- P&I Insurance 41,207,200,435 38,733,182,917
Oil & Gas Insurance 8,467,641,186 8,714,791,012
Aviation Insurance 8,848,088,784 3,500,005,364
Engineering Insurance 44,833,749,971 42,955,324,747
Fire & Other Insurance 70,983,152,160 46,246,484,130
186,623,651,556 151,666,182,986
24.3 Deductions
Current year
VND
Previous year
VND
Reinsurance premium ceded 1,083,576,007,876 979,534,348,986
Cargo Insurance 45,600,557,199 76,721,126,322
Hull- P&I Insurance 286,400,031,710 233,587,174,870
Oil & Gas Insurance 1,077,373,187 (1,409,820,503)
Aviation Insurance 181,396,605,802 190,016,987,506
Engineering Insurance 226,464,250,181 176,784,037,350
Fire & Other Insurance 296,816,794,625 278,087,207,798
Human Insurance 45,820,395,172 25,747,635,643
Premium deduction 2,065,444,546 1,915,407,401
General insurance activities 2,065,444,546 1,915,407,401
Premium returns 66,392,945,741 55,398,229,019
Life insurance activities 8,402,770,465 6,005,633,096
General insurance activities 57,990,175,276 49,392,595,923
Total deductions 1,152,034,398,163 1,036,847,985,406
25. DIRECT EXPENSES OF INSURANCE ACTIVITIES
25.1 Claim and maturity payment expenses
Current yearVND
Previous yearVND
Life Insurance
Maturity payments 2,020,411,495,836 1,895,897,507,201
Surrender value payments 826,993,601,131 474,487,748,506
Claim expenses 31,882,227,401 54,473,671,703
2,879,287,324,368 2,424,858,927,410
General Insurance
Cargo Insurance 107,378,918,707 133,927,217,887
Hull- P&I Insurance 206,806,356,882 242,342,170,242
Oil & Gas Insurance 8,931,661,968 242,795,847
Aviation Insurance 59,823,323,111 113,083,558
Engineering Insurance 95,969,490,634 54,783,755,715
Fire & Special Risk Insurance 118,940,856,929 159,315,273,022
General Indemnity Insurance 2,041,459,452 1,956,066,928
Agriculture Insurance - 285,074,800
Automobile Insurance 675,134,056,935 603,796,494,981
Health & Personal Accident Insurance 480,400,635,197 428,940,001,864
1,755,426,759,815 1,625,701,934,844
4,634,714,084,183 4,050,560,862,254
25.2 Claim expenses for reinsurance assumed
Current yearVND
Previous yearVND
Cargo Insurance 2,070,264,209 6,298,835,423
Hull- P&I Insurance 12,023,826,740 15,328,421,879
Oil & Gas Insurance 1,557,868,354 7,428,276,775
Aviation Insurance 707,650,153 1,648,424,215
Engineering Insurance 6,958,028,162 5,536,872,520
Fire & Other Insurance 28,429,689,434 10,005,847,958
51,747,327,052 46,246,678,770
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)as at and for the year ended 31 December 2010
ANNUAL REPORT 2010
148BAO VIET HOLDINGS 2010
149
25.3 Recoveries from reinsurance ceded
Current yearVND
Previous yearVND
Cargo Insurance 19,274,421,947 37,429,513,061
Hull- P&I Insurance 79,633,378,294 114,047,743,691
Oil & Gas Insurance 11,347,465,053 6,120,499,548
Aviation Insurance 55,593,521,765 764,236,373
Engineering Insurance 83,917,052,395 40,836,724,293
Fire & Other Insurance 100,131,198,536 166,998,065,620
Health care Insurance 22,325,558,609 -
372,222,596,599 366,196,782,586
26. NET OPERATING INCOME FROM BANKING ACTIVITIES
Current yearVND
Previous yearVND
Interest and similar income
Interest income from deposits 237,105,833,881 206,083,468,641
Interest income from lending 459,976,442,570 94,225,028,212
Interest from debt securities investment 194,560,997,283 48,332,027,190
Other income from credit activities 7,156,614,750 13,364,930
898,799,888,484 348,653,888,973
Other banking operating income
Fee income from banking activities 15,833,714,048 2,789,620,472
Gain from FX trading 27,703,529,777 4,036,202,954
Income from securities trading 14,885,926,064 -
58,423,169,889 6,825,823,426
Total revenue from banking activities 957,223,058,373 355,479,712,399
Interest and similar expenses
Interest expenses on deposits 386,713,119,676 108,394,933,939
Interest expenses on borrowings 94,347,313,673 3,676,414,055
Other expenses on credit activities 6,216,577,167 107,220,485
487,277,010,516 112,178,568,479
Other banking operating expenses
Expenses on banking operations 5,564,749,733 1,321,937,625
Loss from FX trading 15,589,850,139 3,921,252,976
Loan loss provision expenses 30,159,694,493 8,797,229,101
51,314,294,365 14,040,419,702
Total expenses from banking activities 538,591,304,881 126,218,988,181
Net banking operation income 418,631,753,492 229,260,724,218
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)as at and for the year ended 31 December 2010
27. NET OPERATING INCOME FROM OTHER ACTIVITIES
Current yearVND
Previous yearVND
Operating income from other activities
Brokerage service 60,270,507,596 91,806,996,273
Securities underwriting 6,490,795,709 2,305,985,042
Investment advisory service 6,300,671,770 6,677,103,761
Custody service 2,064,448,252 2,533,336,169
Portfolio investment management 162,222,222 3,709,429,446
Training services 17,486,448,587 17,788,076,627
Construction machinery trading activities 66,856,747,569 15,907,582,199
Others 38,665,236,921 3,437,821,775
198,297,078,626 144,166,331,292
Operating expenses from other activities
Brokerage service expense 25,831,402,828 26,733,548,719
Securities underwriting 1,998,121,544 99,434,682
Investment advisory service 5,024,520,498 5,643,012,432
Custody service 8,125,310,878 4,866,974,216
Real estate management service 9,190,954,318 2,047,858,373
Construction machinery trading activities 78,136,774,389 15,126,970,277
Others 28,070,511,736 5,048,967,724
156,377,596,191 59,566,766,423
Net operating income from other activities 41,919,482,435 84,599,564,869
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)as at and for the year ended 31 December 2010
ANNUAL REPORT 2010
150BAO VIET HOLDINGS 2010
151
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)as at and for the year ended 31 December 2010
28. GENERAL AND ADMINISTRATIVE EXPENSES
Current yearVND
Previous yearVND
Insurance operation
Salaries and other staff costs 568,299,751,178 452,971,660,097
Materials and office supplies 87,459,804,250 68,231,108,682
Depreciation expenses 68,437,181,254 67,261,604,448
Taxes and fees expenses 12,124,236,677 1,528,189,590
Expenses for external service 219,250,791,704 299,281,711,491
Provision expenses 21,625,743,138 19,344,876,192
Other expenses 351,171,957,085 278,862,436,861
1,328,369,465,286 1,187,481,587,361
Banking operation
Salaries and other staff costs 62,209,575,963 32,968,069,187
Materials and office supplies 5,656,293,280 924,431,393
Depreciation expenses 14,431,718,993 8,536,910,164
Taxes and fees expenses 2,057,071,774 13,865,930,257
Expenses for external service 41,870,252,454 7,162,925,528
Other expenses 10,770,180,371 4,049,561,412
136,995,092,835 67,507,827,941
Other operations of the group
Salaries and other staff costs 98,682,356,086 90,151,037,799
Materials and office supplies 9,070,666,532 8,294,082,609
Depreciation expenses 36,166,622,296 30,727,698,249
Taxes and fees expenses 1,914,388,743 200,492,030
Expenses for external service 72,338,229,727 40,797,439,737
Provision expenses 11,121,428,699 -
Other expenses 29,399,169,191 24,355,845,269
258,692,861,274 194,526,595,693
1,724,057,419,395 1,449,516,010,995
29. FINANCIAL ACTIVITIES
29.1 Financial income
Current yearVND
Previous yearVND
Interest from term deposits 1,185,626,488,564 798,608,237,220
Interest from investments in bonds and treasury bills 1,292,247,734,837 1,009,383,409,804
Loan interest 138,779,643,025 134,587,760,205
Dividend income 172,649,771,720 115,183,397,972
Gains from foreign exchange rate difference 85,159,812,378 37,962,027,832
Gain from securities trading 202,266,719,820 296,360,210,695
Other financial income 2,200,325,239 1,390,548,344
3,078,930,495,583 2,393,475,592,072
29.2 Financial expenses
Current yearVND
Previous yearVND
Dividend reserves 117,599,952,203 258,514,225,821
Exchange rate difference 81,604,113,636 47,113,399,541
Loan interest expenses 188,219,664,922 -
Dividend paid to policyholders 165,930,761,116 81,675,392,628
Loss from trading securities 356,479,792,648 90,993,378,238
Financial provision expenses/(reversal) 491,802,642,676 (636,133,369,371)
Other financial expenses 66,777,853,343 489,714,299,789
1,468,414,780,544 331,877,326,646
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)as at and for the year ended 31 December 2010
ANNUAL REPORT 2010
152BAO VIET HOLDINGS 2010
153
30. NET OTHER PROFIT
Current yearVND
Previous yearVND
Other income
Proceeds on disposal of assets 1,255,104,284 8,191,844,310
Collection of bad debts 77,364,151 -
Gain on disposal of BAVINA company 12,193,416,456 -
Other income 10,025,096,824 5,083,381,027
23,550,981,715 13,275,225,337
Other expenses
Expenses on disposal of assets 60,116,749 102,046,181
Others 1,715,494,316 6,467,935,307
1,775,611,065 6,569,981,488
Net other profit 21,775,370,650 6,705,243,849
31. RELATED PARTIES TRANSACTIONS
During the normal course of operations, the Group engages in transactions with entities to which it is related through equity par-ticipation. As set out below, the Group and the related entities with which it trades, are linked either through the investor/investee relationship, or share a common investor and thus are a part of the same corporate group.
Related parties of the Group as at and for the year ended 31 December 2010 include:
Related parties Relationship
Ministry of Finance Shareholder
HSBC Insurance (Asia Pacific) Holdings Limited Shareholder
State Capital Investment Corporation (SCIC) Shareholder
Bao Viet-SCIC Investment Limited Company (“BV-SCIC”) Joint Venture
Bao Viet Tokio Marine Insurance Joint Venture Joint Venture
Long Viet Investment and Construction JSC (“Long Viet JSC”) Associate
Baoviet Tourism Hotel JSC (“Bao Viet Resort JSC”) Associate
International Investment and Construction JSC (“VIGEBA”) Associate
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)as at and for the year ended 31 December 2010
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)as at and for the year ended 31 December 2010
Significant related party transactions during the year are given below:
Related parties TransactionsFor the year ended 31
December 2010VND
Ministry of Finance Dividends for the year 2009 paid to MOF 488,730,000,000
HSBC Insurance (Asia Pacific) Holdings Limited Additional capital contribution to the Holdings 1,878,886,590,000
Dividends for the year 2009 paid to HSBC Insurance (Asia Pacific) Holdings Limited
59,050,721,400
Additional capital contribution to the Holdings 116,417,472,000
SCIC Dividends for the year 2009 paid to SCIC 22,440,000,000
Additional capital contribution to the Holdings 21,052,800,000
VIGEBA Dividend advance to the Holdings 27,000,000,000
Bao Viet Resort JSC Additional capital contribution by the Holdings 9,100,000,000
Long Viet JSC Additional capital contribution to Long Viet JSC 24,807,000,000
Remuneration of members of the Board of Directors and the CEO of the Holdings:
Current year
VND
Previous year
VND
Remuneration of members of the Board of Directors and the CEO of the Holdings
1,449,600,000 1,464,320,998
1,449,600,000 1,464,320,998
32. EARNINGS PER SHARE
Basic earnings per share (“EPS”) amounts is calculated by dividing net profit after tax for the period attributable to ordinary share-holders of the Group by the weighted average number of ordinary share outstanding during the period.
The following reflects the income and share data used in the basic earnings per share computation.
Current yearVND
Previous yearVND
Net profit after tax attributable to ordinary equity holders for basic earnings
952,597,195,373 891,754,255,672
Weighted average number of ordinary shares (ex-cluding treasury shares) for basic earnings per share
623,914,649 573,026,605
EPS 1,527 1,556
There have been no other transactions involving ordinary shares or potential ordinary shares between the reporting date and the date of completion of these consolidated financial statements.
ANNUAL REPORT 2010
154BAO VIET HOLDINGS 2010
155
33. SEGMENT INFORMATION
The primary segment reporting format is determined to be business segments as the Group’s risks and rates of return are affected predominantly by differences in the products and services rendered. The operating businesses are organized and managed sepa-rately according to the nature of the products and services provided, with each segment representing a strategic business unit offering different products and serves different markets. Accordingly, the Group’s management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment.
For management purposes, the Group is organised into business units based on their products and services, and has five report-able Business segments as follows:
The life insurance segment offers a wide range of Whole Life, Pure Endowment, Term Life, Endowment, Annuity, Universal life, Bancassurance, Healthcare and personal accident riders, other types of life insurance, reinsurance assumed and ceded in life, healthcare insurance and personal accident.
Non-life insurance services include health and personal accident insurance, property insurance, cargo insurance, hull - P&I insurance, general indemnity insurance, aviation insurance, automobile insurance, fire & special risk insurance, agriculture in-surance and others; assuming and ceding reinsurance for all types of non-life insurance.
Financial services such as fund management, investment portfolio management, security brokerage and trading, invest-ment consulting, etc. The investment management segment also provides investment management services to policyholders through the investment management services in Bao Viet Fund Management Company (BVF). The security brokerage, securi-ties underwriting and issuance agency, securities trading, custody, investment and financial consulting services are provided by Bao Viet Security Joint Stock Company (BVSC).
Banking services: Including the provision of various banking services such as handling individual customer deposit, deposit and current account for corporate and institutional customers and providing consumer loan, overdraft, credit card facilities and fund transfer facilities though Bao Viet Commercial Joint Stock Bank.
Real Estate operation and other activities: includes the provision of rental and related services at the Bao Viet Building 8 Le Thai To, Hoan Kiem, Ha Noi and 71 Ngo Sy Lien, Dong Da, Hanoi and other places... In addition, the Group is in the progress of developing other real estate projects such as Bao Viet Life Building in Hanoi, project in Ho Chi Minh City and other real estate projects around the countries.
Transfer prices between business segments are set on an arm’s length basis in a manner similar to transactions with third parties. Segment revenue, segment expenses and segment result include transfers between business segments. Those transfers are eliminated in preparation of consolidated financial statements.
Geographical segments
These consolidated financial statements do not include information on geographical segments of Bao Viet Group that is engaged in providing products or services within the same economic environment and that is subject to similar risks and returns.
Business segments
The following tables present revenue and profit information regarding the Group’s business segments for the year ended 31 December 2010 and for the year ended 31 December 2009, respectively:
1 Currently, the Group has not yet provided life reinsurance services.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)as at and for the year ended 31 December 2010
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)as at and for the year ended 31 December 2010
The following table presents operating result of the Group’s operating segments for the year ended 31 December 2010:
Unit: Million VND
For the year ended 31 December 2010 Life insurance services
General insurance services
Financial services
Banking services
Real -estate operations and other activities
Adjustments and eliminations
Total
Gross written premium 4,045,845 4,198,150 - - - - 8,243,995
Reinsurance premium assumed - 186,624 - - - - 186,624
Deductions (8,403) (1,143,632) - - - - (1,152,035)
(Increase)/decrease in unearned premium reserve and math-
ematical reserve
(804,325) (220,983) - - - - (1,025,308)
Commissions on reinsurance ceded - 183,299 - - - - 183,299
Other income from insurance activities - 5,959 - - - - 5,959
Total operating revenues 3,233,117 3,209,417 - - - - 6,442,534
Claim and maturity payment expenses (2,879,287) (1,755,427) - - - - (4,634,714)
Claim expenses for reinsurance assumed - (51,747) - - - - (51,747)
Deductions - 391,909 - - - - 391,909
Claim expenses using catastrophe reserve - - - - - - -
(Increase)/ decrease in claims reserve 1,835 (72,200) - - - - (70,365)
Provision for catastrophe reserve - (113,440) - - - - (113,440)
Other operating expenses (380,273) (608,659) - - - - (988,932)
Total direct expenses for insurance activity (3,257,725) (2,209,564) - - - - (5,467,289)
Gross operating profit (24,608) 999,853 - - - - 975,245
Net profit from banking activities - - - 326,006 - 92,626 418,632
Net profit from other activities - - 95,854 - 9,304 (63,239) 41,919
Selling expenses (142,184) - - - (653) - (142,837)
General administration expenses (405,863) (926,244) (264,965) (149,837) (9,580) 32,432 (1,724,057)
Finance profit 1,163,821 232,045 933,466 - 1,910 (720,726) 1,610,516
Other income 6,967 5,321 11,581 523 36 (2,654) 21,774
Profit in associates and joint venture 1,411 - - - - 52,298 53,709
Profit before tax 599,544 310,975 775,936 176,692 1,017 (609,263) 1,254,901
2 Majority of this adjustment relate to dividend and profit transferred from subsidiaries, associates and joint-ventures to the Parent Company
ANNUAL REPORT 2010
156BAO VIET HOLDINGS 2010
157
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)as at and for the year ended 31 December 2010
The following table presents operating results of the Group’s operating segments for the year ended 31 December 2009:
Unit: Million VND
For the year ended 31 December 2009 Life insurance services
General insurance services
Financial services Banking services
Real -estate operations and other activities
Adjustments and eliminations
Total
Gross written premium 3,710,407 3,682,961 - - - - 7,393,368
Reinsurance premium assumed - 151,666 - - - - 151,666
Deductions (6,006) (1,030,842) - - - - (1,036,848)
(Increase)/decrease in unearned premium reserve and
mathematical reserve
(1,241,075) (226,378) - - - - (1,467,453)
Commissions on reinsurance ceded - 146,828 - - - - 146,828
Other income from insurance activities - 5,864 - - - - 5,864
Total operating revenues 2,463,326 2,730,099 - - - - 5,193,425
Claim and maturity payment expenses (2,424,859) (1,625,702) - - - - (4,050,561)
Claim expenses for reinsurance assumed - (46,247) - - - - (46,247)
Deductions - 386,713 - - - - 386,713
Claim expenses using catastrophe reserve - - - - - - -
(Increase)/ decrease in claims reserve (2,624) (102,994) - - - - (105,618)
Provision for catastrophe reserve - (98,132) - - - - (98,132)
Other operating expenses (332,530) (527,834) - - - - (860,364)
Total direct expenses for insurance activity (2,760,013) (2,014,196) - - - - (4,774,209)
Gross operating profit (296,687) 715,903 - - - - 419,216
Net profit from banking activities - - - 156,484 - 72,776 229,260
Net profit from other activities 3,540 - 145,660 - 20,410 (85,011) 84,599
Selling expenses (122,023) - - - - - (122,023)
General administration expenses (419,814) (748,323) (190,899) (80,030) (20,417) 9,968 (1,449,515)
Finance profit 1,289,576 245,912 1,357,548 - 5,174 (836,612) 2,061,598
Other income 1,050 5,753 (152) 39 16 - 6,706
Profit in associates and joint venture - - - - - 13,058 13,058
Profit before tax 455,642 219,245 1,312,157 76,493 5,183 (825,821) 1,242,899
3 Majority of this adjustment relate to dividend and profit transferred from subsidiaries, associates and joint-ventures to the Parent Company
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)as at and for the year ended 31 December 2010
The following table presents financial position of the Group’s operating segments as at 31 December 2010: Unit: Million VND
As at 31 December 2010 Life insurance
services
General insurance services
Financial services
Banking services
Real -estate operations and other activities
Adjustments and
eliminations
Total
ASSETS
Cash and cash equivalents 172,981 86,399 1,271,228 3,499,094 8,673 806,332 5,844,707
Receivables from reinsurance - 927,107 - - - - 927,107
Receivables from insurance 32,361 - - - - - 32,361
Other receivables 973,726 565,950 1,418,379 543,553 60,365 (1,314,927) 2,247,046
Financial investments 18,741,596 3,455,848 12,097,469 3,653,044 39,968 (10,411,978) 27,575,947
Tangible fixed assets 155,146 185,934 464,780 39,078 43,430 - 888,368
Intangible fixed assets 210,517 398,806 44,088 41,621 14,640 - 709,672
Loans to customers - - - 5,889,067 - - 5,889,067
Other assets 307,587 100,615 74,627 52,414 94,263 24,156 653,662
TOTAL ASSETS 20,593,914 5,720,659 15,370,571 13,717,871 261,339 (10,896,417) 44,767,937
LIABILITIES
Short-term liabilities 3,250,231 1,050,914 2,754,358 1,758,828 96,010 (2,689,338) 6,221,003
Customer deposits - - - 10,311,172 - (2,713,333) 7,597,839
Long-term liabilities 27,653 11,763 21,331 - - 20,080 80,827
Insurance technical reserves 15,735,017 3,117,945 - - - - 18,852,962
TOTAL LIABILITIES 19,012,901 4,180,622 2,775,689 12,070,000 96,010 (5,382,591) 32,752,631
OWNERS’ EQUITY 1,581,013 1,540,037 12,594,882 1,647,871 165,329 (6,861,356) 10,667,776
MINORITY INTERESTS - - - - - 1,347,530 1,347,530
TOTAL LIABILITIES AND OWNERS’ EQUITY 20,593,914 5,720,659 15,370,571 13,717,871 261,339 (10,896,417) 44,767,937
ANNUAL REPORT 2010
158BAO VIET HOLDINGS 2010
159
The following table presents financial position of the Group’s operating segments as at 31 December 2009:Unit: Million VND
As at 31 December 2009 Life
insurance services
General insurance services
Financial services
Banking services
Real -estate operations and other activities
Adjustments and
eliminations
Total
ASSETS
Cash and cash equivalents 204,451 104,458 379,849 1,891,961 33,737 (81,812) 2,532,644
Receivables from reinsurance - 947,582 - - - - 947,582
Receivables from insurance 21,099 303,371 - - - - 324,470
Other receivables 765,550 171,600 1,064,688 128,946 16,523 (991,729) 1,155,578
Financial Investments 15,576,620 2,499,449 10,856,161 2,369,066 39,968 (7,111,588) 24,229,676
Tangible fixed assets 348,860 175,511 448,211 31,467 48,500 - 1,052,549
Intangible fixed assets 202,727 393,983 15,394 23,386 14,640 - 650,130
Loans to customers - - - 2,809,879 - (185,122) 2,624,757
Other assets 30,774 40,349 18,776 15,050 88,474 3,808 197,231
TOTAL ASSETS 17,150,081 4,636,303 12,783,079 7,269,755 241,842 (8,366,443) 33,714,617
LIABILITIES
Short-term liabilities 789,010 958,273 2,126,666 483,285 76,663 (1,933,085) 2,500,812
Customer deposits - - - 5,223,362 - (1,436,400) 3,786,962
Long-term liabilities 24,707 7,988 21,200 - - 19,345 73,240
Insurance technical reserves 14,808,931 2,656,941 - - - - 17,465,872
TOTAL LIABILITIES 15,622,648 3,623,202 2,147,866 5,706,647 76,663 (3,350,140) 23,826,886
OWNERS’ EQUITY 1,527,433 1,013,101 10,635,213 1,563,108 165,179 (6,365,219) 8,538,815
MINORITY INTERESTS - - - - - 1,348,916 1,348,916
TOTAL LIABILITIES AND OWNERS’ EQUITY 17,150,081 4,636,303 12,783,079 7,269,755 241,842 (8,366,443) 33,714,617
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)as at and for the year ended 31 December 2010
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)as at and for the year ended 31 December 2010
34. THE EFFECTS OF VAS 10 TO THE CONSOLIDATED FINANCIAL STATEMENTS
As disclosed in Note 4.1, the Group has changed its accounting policy for treatment of foreign currency exchange differences from guidance provided under Circular 201, as applied in 2009, to adoption of VAS 10. Had the Group continued to adopt the guidance under the Circular 201 in 2010, the consolidated financial position and consolidated financial operating results of the Group would have been as follows:
VAS 10
VND
Circular 201
VND
Difference
VND
Consolidated balance sheet
Foreign exchange difference reserves - 5,566,044,904 (5,566,044,904)
Retained earnings 5,566,044,904 - 5,566,044,904
Consolidated income statement
Net foreign exchange gain taken to the con-solidated income statement
5,566,044,904 - 5,566,044,904
Basic earnings per share 1.527 1.518 9
35. COMMITMENT UNDER OPERATING LEASES
The minimum lease payments under non-cancellable leases of offices are as follows:
31 December 2010
VND
31 December 2009
VND
Total lease payments under non-cancellable operating lease contracts which fall due:
Within one year 39,150,040,652 69,831,611,273
From one to five years 153,566,642,631 147,660,558,069
Above five years 56,782,451,578 11,035,983,931
249,499,134,861 228,528,153,273
36. CONTINGENT LIABILITIES
Outstanding dispute, litigations
As at 31 December 2010, general insurance business of the Group has on-going disputes or litigations with its customers on claims lodged by the customers, which the Group does not accept or accepting only partially. The total outstanding claims lodged by the customers which are being disputed or under on-going litigations as at the 31 December 2010 amounted to VND 13,452,215,000. The final outcome of these disputes or litigations can only be finalized upon the verdict of an arbitrator, or by the court. Accord-ingly, the Group has not made any provision in respect of these claims in the financial statements as the Group considers that the likelihood of financial loss is remote based on the information available as at 31 December 2010.
Foreign contractor withholding tax
The general insurance business of the Group has not provided for the potential foreign contractor withholding taxes from the offshore payments of reinsurance premiums ceded to overseas reinsurers for the period from 01 Jan 2005 to 31 December 2008 as this was based on the practice of the insurance industry as well as the tax finalisation results in previous years. According to Official Letter No. 8667/BTC-TCT dated 06 July 2010 by the Ministry of Finance, reinsurance premium ceded to overseas reinsurers who are
ANNUAL REPORT 2010
160
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)as at and for the year ended 31 December 2010
from countries which have Double Taxation Agreement with Vietnam would be exempted from Foreign Contractor Withholdings Taxes (FCWT). For the period from 2005 to 2008, the estimated FCWT on the reinsurance premium ceded to overseas reinsurers who are not from countries which have Double Taxation Agreement with Viet Nam is VND 1,472 million. For reinsurance premium ceded to overseas reinsurers who are from countries which have Double Taxation Agreement with Viet Nam, the estimated FCWT amount is VND 33,620 millions. The Group is carrying the procedure to finalise those tax liabilities.
For the year 2009 and 2010, the Group only accounted for the FCWT on reinsurance premiums ceded to overseas reinsurers from countries without Double Tax Treaty with Vietnam or from countries with Double Tax Treaty with Vietnam but the reinsurers have not submitted adequate supporting documents. The FCWT amount that the Group has not withheld is estimated at VND 11,449,777,111.
37. EVENTS AFTER BALANCE SHEET DATE
Other than disclosed elsewhere in the consolidated financial statements, there have been no significant events occurring after 31 December 2010 which would require adjustments or disclosures to be made in consolidated financial statements.
38. COMPARATIVE INFORMATION
As referred to in Note 4.1, bonus and welfare fund balance as at 31 December 2009 was reclassified from owners’ equity to liabilities as follows:
31 Dec 2009
ReportedVND
Adjustment
VND
31 Dec 2009
Reclassified
VND
Reclassification of bonus and welfare fund
Current liabilities 2,450,954,959,306 49,856,498,121 2,500,811,457,427
Owners’ equity 8,588,762,142,339 (49,856,498,121) 8,538,905,644,218
Impact to total liabilities and owner’s equity -
In addition, some comparative information in the consolidated financial statements for the year ended 31 December 2009 has been represented to be in conformity with the financial statement presentation of this year.
25 March 2011
Mr. Nguyen Thanh HaiChief Accountant
Mr. Le Hai PhongChief Financial Officer
Ms. Nguyen Thi Phuc LamChief Executive Officer
Bao Viet Holdings SUPP
LEM
ENTA
RY F
INA
NC
IAL
INFO
RMAT
ION
Supplementary financial informationin accordance with the International Financial Reporting Standards (“IFRS”)
ANNUAL REPORT 2010
162BAO VIET HOLDINGS 2010
163
SUPPLEMENTARY FINANCIAL INFORMATIONfor the year ended 31 December 2010
This supplementary financial information is extracted from the audited consolidated financial statements of Bao Viet Holdings and its subsidiaries (“the Group”), which were prepared in accordance with the International Financial Reporting Standards (“IFRS”) is-sued by the International Accounting Standards Board. The preparation of these IFRS financial statements is not required under Vietnamese rules or regulations but as part of the Group’s restructuring and enhancing corporate governance programs in order to improve the prestige and strengthen the competitiveness in Vietnam and international markets.
The disclosure of this supplementary financial information is solely on a voluntary basis. The Group’s management believes the disclosure of this supplementary financial information may help the users of this annual report to better understand the Group from an internationally accepted accounting principles.
A full detailed audited consolidated financial statements prepared under IFRS for the year ended 31 December 2010 is available for download in our website (www.baoviet.com.vn). Users of this annual report should refer to the full set audited consolidated financial statements to ensure the completeness and accuracy of financial information.
2010VND
2009VND
Gross premiums 8,362,160,707,778 7,487,720,251,372
Less: Reinsurance premiums ceded (1,083,576,007,876) (979,534,348,986)
Net written premiums 7,278,584,699,902 6,508,185,902,386
Changes in unearned premium reserves (220,982,830,862) (215,504,405,765)
Net earned premiums 7,057,601,869,040 6,292,681,496,621
Commission income on reinsurance ceded 183,298,558,113 146,828,204,959
Other insurance income 5,958,591,545 5,863,915,547
Total revenue from insurance business 7,246,859,018,698 6,445,373,617,127
Net income from banking operations 403,745,827,428 229,260,724,218
Investment income 2,136,964,480,980 2,524,029,143,776
Other operating income 221,848,060,341 164,619,210,737
Total other revenues 2,762,558,368,749 2,917,909,078,731
TOTAL OPERATING INCOME 10,009,417,387,447 9,363,282,695,858
Gross benefit and claim expenses (4,898,558,394,006) (4,370,233,793,548)
Claims expenses for reinsurance assumed (51,747,327,052) (46,246,678,770)
Claims ceded to reinsurers 372,222,596,603 366,196,782,586
Gross change in insurance contract liabilities (1,165,179,176,829) (1,412,603,234,671)
Change in insurance contract liabilities ceded to reinsurers 221,988,660,835 21,340,944,724
Net claims and benefits incurred (5,521,273,640,449) (5,441,545,979,679)
Commission and underwriting expenses of insurance operations (924,160,351,685) (812,295,263,119)
Other reinsurance assumed expenses (40,479,795,339) (35,541,606,643)
Expenses on reinsurance ceded (24,291,615,218) (12,526,877,265)
Selling expenses (142,837,253,724) (122,023,207,897)
General and administrative expenses (1,815,221,814,718) (1,508,025,648,804)
Financial expenses (266,230,168,791) (89,309,579,912)
Other operating expenses (159,466,623,297) (62,080,670,739)
Total commission and expenses (3,372,687,622,772) (2,641,802,854,379)
TOTAL BENEFITS, CLAIMS AND OTHER EXPENSES (8,893,961,263,221) (8,083,348,834,058)
Profit before share of profit of associates and joint ventures 1,115,456,124,226 1,279,933,861,800
Share of profits of associates and joint ventures 53,709,140,782 13,057,543,886
PROFIT BEFORE TAX 1,169,165,265,008 1,292,991,405,686
Income tax expense (227,581,071,801) (235,025,704,943)
PROFIT AFTER TAX 941,584,193,207 1,057,965,700,743
SUPPLEMENTARY FINANCIAL INFORMATION (continued)
CONSOLIDATED INCOME STATEMENTfor the year ended 31 December 2010
ANNUAL REPORT 2010
164BAO VIET HOLDINGS 2010
165
2010VND
2009VND
Net profit attributable to:
Equity holders of the parent 919,459,250,402 953,906,618,399
Non-controlling interests 22,124,942,805 104,059,082,344
941,584,193,207 1,057,965,700,743
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMEfor the year ended 31 December 2010
2010VND
2009VND
PROFIT AFTER TAX941,584,193,207 1,057,965,700,743
Other comprehensive income for the year
Available-for-sale investments:
net movement in the fair value reserve(861,692,667,688) 293,635,150,900
Income tax relating to components of other comprehensive income 208,955,335,843 (60,064,657,819)
Other comprehensive income for the year, net of tax(652,737,331,845) 233,570,493,081
Total comprehensive income for the year, net of tax288,846,861,362 1,291,536,193,824
Total comprehensive income attributable to:
Equity holders of the parent280,338,142,997 1,165,450,111,352
Non-controlling interests8,508,718,365 126,086,082,472
SUPPLEMENTARY FINANCIAL INFORMATION (continued)CONSOLIDATED INCOME STATEMENT (continued)for the year ended 31 December 2010
31 December 2010
VND
31 December 2009
VND
Assets
Tangible fixed assets 979,030,747,437 873,384,210,750
Investment properties 23,448,947,000 23,448,947,000
Intangible assets 576,759,679,199 477,971,962,067
Investments in associates and joint ventures 338,561,803,678 313,559,572,889
Fixed maturity investments
Available-for-sale 10,519,261,133,615 8,836,925,601,627
Loans and receivables 13,405,885,995,299 11,873,808,593,954
Equity investments
Available-for-sale 2,091,984,300,963 2,735,560,526,347
Fair value through profit or loss 815,858,725,100 765,373,585,900
Loans and advances to customers 5,930,242,259,658 2,651,619,373,077
Loans and trusted loans - 1,030,002,323
Policy loans 1,106,402,220,654 1,115,336,143,651
Deferred tax assets 278,252,333,116 174,133,911,091
Insurance receivables 394,053,603,348 259,370,910,528
Reinsurance assets 1,737,555,070,923 1,530,374,005,223
Other assets and prepayments 1,049,074,183,733 593,395,822,082
Cash and cash equivalents 5,877,952,763,741 2,544,295,519,291
TOTAL ASSETS 45,124,323,767,464 34,769,588,687,800
Shareholders’ Equity
Contributed capital 6,267,090,790,000 5,730,266,050,000
Share premium reserve 3,076,807,671,197 1,734,745,821,197
Retained earnings 688,471,240,981 515,243,918,864
Revaluation reserve for available-for-sale assets (22,868,249,209) 616,252,858,196
Foreign exchange translation reserve 16,075,608,000 18,387,227,948
Investment and development fund 13,810,688,873 10,222,384,015
Finance reserve fund 18,316,956,265 11,699,111,508
Statutory reserve 79,245,733,155 43,521,050,471
Other reserves 103,568,802,818 103,568,802,818
Shareholders’ Equity 10,240,519,242,080 8,783,907,225,017
Non-controlling interests 1,355,361,118,553 1,369,851,950,129
TOTAL EQUITY 11,595,880,360,633 10,153,759,175,146
Liabilities
Insurance contract liabilities 19,722,345,843,077 18,157,177,388,009
Severance allowance 28,797,689,798 44,318,154,563
Amount due to customers 4,619,623,951,636 2,097,098,977,495
Due to banks and other financial institutions 4,642,530,862,246 2,132,918,721,689
Advances from customers 35,305,467,978 43,226,021,957
Tax and statutory obligations 87,863,714,694 128,841,596,905
Deferred tax liabilities 14,774,169,054 164,512,319,485
Insurance payables 663,271,034,790 605,823,401,743
Trade and other liabilities 3,713,930,673,558 1,241,912,930,808TOTAL LIABILITIES 33,528,443,406,831 24,615,829,512,654
TOTAL EQUITY AND LIABILITIES 45,124,323,767,464 34,769,588,687,800
SUPPLEMENTARY FINANCIAL INFORMATION (continued) CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at 31 December 2010
ANNUAL REPORT 2010
166BAO VIET HOLDINGS 2010
167
Share capital
VND
Share premium reserve
VND
Retained earnings
VND
Revaluation reserve for
available-for-sale assets
VND
Foreign exchange difference
VND
Investment and development
fund
VND
Financial reserve
VND
Statutory reserves
VND
Other reserve
VND
Total
VND
Balance at 1 January 2009 5,730,266,050,000 1,736,438,449,955 175,924,227,439 404,709,365,243 16,075,608,000 8,609,458,421 8,609,458,421 17,067,266,899 103,568,802,818 8,201,268,687,196
Profit for the year - - 953,906,618,399 - - - - - - 953,906,618,399
Profit appropriation to other
reserves - - (31,156,362,253) - - 1,612,925,594 3,089,653,087 26,453,783,572 - -
Dividends paid to shareholders - - (581,239,974,257) - - - - - - (581,239,974,257)
Payment to Board of Directors
and Supervisory Board - - (1,655,222,225) - - - - - - (1,655,222,225)
Buy treasury shares - - (90,775,901) - - - - - - (90,775,901)
Movement in value of Available-
for-sale investments - - - 211,543,492,953 - - - - - 211,543,492,953
Other increase/(decrease) - (1,692,628,758) (444,592,338) - 2,311,619,948 - - - - 174,398,852
Balance as at 31 December 2009
and 1 January 20105,730,266,050,000 1,734,745,821,197 515,243,918,864 616,252,858,196 18,387,227,948 10,222,384,015 11,699,111,508 43,521,050,471 103,568,802,818 8,783,907,225,017
Additional capital contribution 536,824,740,000 1,342,061,850,000 - - - - - - - 1,878,886,590,000
Profit for the period - - 919,459,250,402 - - - - - - 919,459,250,402
Profit appropriation to other
reserves - - (45,930,832,299) - - 3,588,304,858 6,617,844,757 35,724,682,684 - -
Dividend paid to shareholders - - (630,329,265,500) - - - - - - (630,329,265,500)
Profit appropriation to bonus
and welfare fund- - (67,199,512,505) - - - - - - (67,199,512,505)
Payment to BOD and Supervi-
sory Board - - (2,772,317,981) - - - - - - (2,772,317,981)
Movement in value of
Available-for-sale investments - - - (639,121,107,405) - - - - - (639,121,107,405)
Foreign exchange difference - - - - (2,311,619,948) - - - (2,311,619,948)
Balance as at
31 December 20106,267,090,790,000 3,076,807,671,197 688,471,240,981 (22,868,249,209) 16,075,608,000 13,810,688,873 18,316,956,265 79,245,733,155 103,568,802,818 10,240,519,242,080
SUPPLEMENTARY FINANCIAL INFORMATION (continued)CONSOLIDATED STATEMENT OF CHANGES IN EQUITYfor the year ended 31 December 2010
2010VND
2009VND
CASH FLOWS FROM OPERATING ACTIVITIES
Premium received and interest income received 12,454,944,888,704 8,784,866,696,654
Payment to suppliers (9,981,578,704,434) (7,128,510,955,183)
Payment to employees (570,328,597,249) (598,670,981,585)
Enterprise income tax paid (318,521,037,200) (192,697,194,230)
Other cash inflows from operating activities 3,956,910,541,401 1,022,896,275,546
Other cash outflows from operating activities (4,922,592,129,067) (1,444,775,176,900)
Net cash flows from operating activities 618,834,962,155 443,108,664,302
CASH FLOWS FROM INVESTMENT ACTIVITIES
Purchase of tangible fixed assets (244,601,678,911) (315,726,997,458)
Proceeds from disposals of tangible fixed asset 654,142,947 7,459,136,006
Loans to other entities and payments for purchases of debt instruments
(10,573,069,513,692) (7,284,813,525,757)
Repayments from borrowers and proceeds from sales of debt instruments
4,928,885,195,844 1,287,210,525,579
Payments for investments (6,007,088,767,440) (2,967,338,985,684)
Proceeds from sales of investments 6,739,077,003,398 4,157,816,410,833
Interest received, coupon and distributed profits 194,782,794,193 497,054,068,939
Net cash outflows from investing activities (4,961,360,823,661) (4,618,339,367,542)
CASH FLOWS FROM FINANCING ACTIVITIES
Cash receipts from issuing additional shares 1,878,886,590,000 720,000,000,000
Cash receipts short and long term loans 6,260,247,375,606 5,646,136,030,318
Dividends paid to shareholders (651,929,265,500) (128,728,400,000)
Cash receipts from the rights issue 188,350,073,855 -
Other cash outflows from financing activities (150,000,000) -
Net cash inflows from financing activities 7,675,404,773,961 6,237,407,630,318
Net cash inflows during the year 3,332,878,912,455 2,062,176,927,078
Cash and cash equivalent at the beginning of the year 2,544,295,519,291 480,836,990,174
Impact of exchange rate fluctuation 778,331,995 1,281,602,039
Cash and cash equivalent at the end of the year 5,877,952,763,741 2,544,295,519,291
SUPPLEMENTARY FINANCIAL INFORMATION (continued)CONSOLIDATED STATEMENT OF CASH FLOWSfor the year ended 31 December 2010
ANNUAL REPORT 2010
168BAO VIET HOLDINGS 2010
169
2010VND
2009VND
Prepared in accordance with VAS 952,597,195,373 891,754,255,672
Financial assets – Valuation differences and impairment adjustments
Bond investments (216,338,590,915) (33,818,926,325)
Equity investments 86,798,827,182 44,344,913,420
Term deposits 91,341,721,493 (20,895,244,429)
Insurance related balances
Insurance contracts liabilities (68,499,971,022) (33,695,792,934)
Reversal of catastrophe and equalisation reserve 119,435,408,967 102,688,887,149
Impairment on direct premium and reinsurance premium receivables
(45,720,728,597) (1,838,118,035)
Other accounting balances
Inventories written (off)/back to/from income statement (4,264,192,940) 4,380,159,817
Bonus and welfare fund written off - (35,048,205,891)
Reversal on loan and receivables provision - 22,405,692,895
Fixed assets impairment and written off (12,576,381,390) (1,052,152,099)
REPO contracts fee amortisation adjustment (1,313,416,041) -
Adjustment on severance allowance provision 16,039,081,248 -
Adjustment on professional expenses due to different recognition basis
(44,642,173,637) -
Deferred tax provision on above adjusting items 47,023,909,443 (1,005,653,132)
Non-controlling interests (421,438,762) 15,686,802,291
Prepared in accordance with IFRS and reported in this supplementary financial information
919,459,250,402 953,906,618,399
SUPPLEMENTARY FINANCIAL INFORMATION (continued) MATERIAL GAAP DIFFERENCESfor the year ended 31 December 2010
1. RECONCILIATION OF GAAP DIFFERENCES BETWEEN VIETNAMESE ACCOUNTING STANDARDS (“VAS”) AND INTERNATIONAL FINANCIAL REPORTING STANDARDS (“IFRS”) FOR NET PROFIT AND EQUITY
(i) Net profit attributable to equity holders of the parent
(ii) Shareholders’ Equity
31 December 2010VND
31 December 2009VND
Prepared in accordance with VAS 12,015,306,403,044 9,887,731,379,487
Financial assets – Valuation differences and impairment adjustments
Bond investments (728,649,915,711) (136,667,006,402)
Equity investments 251,250,175,881 650,499,697,995
Term deposits 70,446,477,049 (20,895,244,429)
Insurance related balances
Insurance contracts liabilities (382,097,730,829) (313,597,759,806)
Reversal of catastrophe and equalisation reserve 329,745,260,684 210,309,851,717
Impairment on direct premium and reinsurance premium receivables
(78,444,619,212) (32,723,890,616)
Other accounting balances
Inventories written off (24,504,186,202) (20,239,993,262)
Fixed assets impairment and written off (86,677,923,337) (74,101,541,947)
REPO contracts fee amortisation adjustment (1,313,416,041) -
Adjustment on severance allowance provision 16,039,081,248 -
Adjustment on professional expenses due to different rec-ognition basis
(44,642,173,637) -
Deferred tax provision on above adjusting items 259,422,927,696 3,443,682,408
Non-controlling interests (1,355,361,118,553) (1,369,851,950,128)
Prepared in accordance with IFRS and reported in this supplementary financial information
10,240,519,242,080 8,783,907,225,017
SUPPLEMENTARY FINANCIAL INFORMATION (continued)MATERIAL GAAP DIFFERENCES (continued)for the year ended 31 December 2010
ANNUAL REPORT 2010
170BAO VIET HOLDINGS 2010
171
2 NARRATIVE DESCRIPTION OF MATERIAL MEASUREMENT AND INCOME RECOGNITION DIFFER-ENCES BETWEEN VAS AND IFRS
ITEM VAS IFRS
Financial assets Investments in securities and other investments are stated at their acquisition cost. Short term investments comprise the holdings of listed shares and other liquid securities, which are readily realisable and are intended to be held for not more than one year. Long term investments in-clude listed and over-the-counter shares, government bonds, loans and trusted loans, and term deposits at banks, which are intended to be held for more than one year.Allowance for devaluation in value of all shares is created representing the excess of the acquisition cost over the market value at the reporting date.
i) Financial assets designated at fair value through profit or loss is financial assets which on initial recognition are designated by the Group for measurement at fair value through profit or loss.
ii) Investments intended to be held on a continuing basis are classified as available-for-sale (“AFS”) securities, and are initially measured at fair value plus direct and incremental transaction costs. At each balance sheet date the fair value is re-measured, with any resultant gain or loss being rec-ognised in other comprehensive income and accumulated separately in equity in the fair value reserve until the in-vestments are either sold or become impaired. When AFS investments are sold, cumulative gains or losses previously recognised in equity are recognised in the consolidated in-come statement.
iii) Loans and receivables are non-derivative financial assets with fixed determinable payments that are not quoted in an active market. These investments are initially recog-nised at cost, being the fair value of the consideration paid for the acquisition of the investment. All transaction costs directly attributable to the acquisition are also included in the cost of the investment. After initial measurement, loans and receivables are measured at amortised cost, us-ing the effective interest rate method. Gains and losses are recognised in the consolidated income statement when the investments are derecognised or impaired, as well as through the amortisation process.
SUPPLEMENTARY FINANCIAL INFORMATION (continued)MATERIAL GAAP DIFFERENCES (continued)for the year ended 31 December 2010
ITEM VAS IFRS
Impairment Allowance for the diminution in value of all shares is created representing the excess of the acquisition cost over the market value at the reporting date.
Impairment is recognised on financial assets that are carried at amortised cost and on AFS financial assets whose fair value changes are recognised in other comprehensive income.Past impairment losses on AFS debt instruments (monetary as-sets) are reversed through income when fair value increases.For AFS equity instruments (non-monetary assets), past im-pairment losses are reversed through equity.
AssociateInvestment in an associate is not subject to impairment testing under VAS 7.
An investment in an associate is stated initially at cost and is thereafter adjusted for the post-acquisition change in the Group’s share of the assets of the investee. This carrying value is reduced where there is objective evidence of impairment.
Receivables
Receivables are presented at the carrying amount due from customers and other debtors, along with the allowance for doubtful debts. The allowance for doubtful debts represents the estimated loss due to non-payment arising on receiva-bles that were outstanding at the balance sheet date, is calculated based on different ratio relating to the aging of the receivables.
Receivables are carried at cost less any accumulated impair-ment losses.
Tangible fixed assets
Fixed asset is carried at its cost less accumulated depre-ciation. Revaluation or write down for impairment is not allowed, unless a specific ap-proval is received from the Ministry of Finance.
Fixed asset is carried at its cost less accumulated depreciation and any accumulated impairment losses.
SUPPLEMENTARY FINANCIAL INFORMATION (continued) MATERIAL GAAP DIFFERENCES (continued)for the year ended 31 December 2010
ANNUAL REPORT 2010
172
ITEM VAS IFRS
Intangible assets
Intangible assets are stated at cost less accumulated amor-tisation. Revaluation or write down for impairment is not allowed.
Intangible assets are carried at cost less any accumulated am-ortisation and any accumulated impairment losses. Where the useful life of an intangible asset is assessed as indefinite, IAS 38 requires that the asset should not be amortised.
Life insurance reserves
Equalisation reserve is ac-crued based on net after tax profit of Bao Viet Life Corporation.
IFRS 4 does not permit provisions for claims on contracts that are not in existence at the end of the reporting period (such as equalisation and catastrophe provisions).
General insurance re-serves
The reserve for incurred but not reported claims in Bao Viet Insurance is calculated based on a specific formula agreed by the Ministry of Finance. Catastrophe reserve is accrued based on retained premiums and management judgement.
Full provision is made for the estimated cost of claims notified but not settled at the balance sheet date and for the estimated cost of claims incurred but not reported by that date.
Presentation UPR liability is presented net of related reinsurance asset.
IFRS 4 does not allow offset of reinsurance assets against relat-ed insurance liabilities, or of income or expense from reinsur-ance contracts against the expense or income from the related insurance contracts. Therefore, the UPR assets and liability are presented gross on the statement of financial position and the consolidated income statement impact is similarly presented gross.
Income tax
VAS 17 does not address tem-porary differences and the deferred tax recognition in respect of business combina-tions, goodwill, assets carried at fair value and government grants.
Deferred tax assets and liabilities arise from deductible and tax-able temporary differences respectively, being the differences between the carrying amounts of assets and liabilities for fi-nancial reporting purposes and their tax bases. Deferred tax assets also arise from unused tax losses and unused tax cred-its, if any. The amount of deferred tax recognised is measured based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates en-acted or substantively enacted at the balance sheet date.
SUPPLEMENTARY FINANCIAL INFORMATION (continued) MATERIAL GAAP DIFFERENCES (continued)for the year ended 31 December 2010