FINANCIAL PERFORMANCE - samsungsecurities.com FINANCIAL PERFORMANCE 2. Samsung Securities is...
Transcript of FINANCIAL PERFORMANCE - samsungsecurities.com FINANCIAL PERFORMANCE 2. Samsung Securities is...
32.33
FINANCIAL PERFORMANCE
2.
Samsung Securities is confident that our strong
capabilities and comprehensive business
infrastructure create competitive advantage
that has proven resilient in the stagnant market
environment in 2013.
Building on the largest client base we
have accomplished collaboration across
our divisions, including brokerage, wealth
management, investment banking, and sales &
trading, facilitates balanced portfolio of solid
income streams.
Financial Performance 38.39
With our competitive advantage in strong capital position and top human resources, we will continue to serve clients with solutions tailored to their needs. Samsung Securities will further strive to thrive as the best financial institution with our dominance in retail wealth management division.
In FY 2013, our consolidated total assets and liabilities recorded KRW 20.5 trillion and KRW 17.1 trillion, respectively, up 5.4% and 6.9% over the year. The increase in both assets and liabilities was a result of growth in borrowings and financial assets at fair value through profit or loss, reflecting rise in securities sold under repur-chase agreements. Total equity remained relatively stable at KRW 3.4 trillion, including common stock capital of KRW 394.2 billion. As of December 2013, Samsung Securities owns 2,023,178 shares a treasury stocks, 2.6% of 76,435,165 shares issued.
Consolidated net revenue in FY 2013 recorded KRW 557.9 billion, down 42.2% compared to FY 2012, primarily reflecting changes in fiscal year and stagnant equity market Operating expenses (includ-ing personnel expenses, depreciation and amortization, and G&A expenses) was KRW 519.2 billion, down 28.7% with continuous ef-fort for cost reduction. Our net revenue-to-expenses ratio dropped to 107.5%from 132.6% in FY 2012.
As a result, our consolidated pretax income fell by 84.7% to KRW 35.7 billion. Net profit and net profit attributable to shareholders shrank by 86.7% and 93.3%, respectively, to KRW 24.0 billion and KRW 11.0 billion. Return on equity attributable to shareholders de-clined from 5.0% in FY 2012 to 0.4%.
FY 2012
780.1
601.4
-9.0
169.6
39.1
130.6
-
FY 2011
977.5
688.8
-81.2
207.5
72.8
134.7
-
FY 2013
430.9
423.7
1.6
8.8
0.4
8.4
-
(Y-Y)
-45%
-30%
-
-95%
-99%
-94%
-
Net Revenue
Operating Expenses
Non-operating Income
Pretax Income
Income Tax Expenses
Net Profit
(Controlling Interest)
FY 2012
965.6
728.0
-4.7
232.8
52.1
180.7
163.7
FY 2011
1,177.1
890.4
-0.7
286.0
93.5
192.5
171.5
FY 2013
557.9
519.2
-3.0
35.7
11.6
24.0
11.0
(Y-Y)
-42%
-29%
-
-85%
-78%
-87%
-93%
Consolidated Basis Separate Basis
Earnings Summary (In billions of KRW)
Overview
Business P
erformance
Risk and
Cap
ital Ad
equacy
Financial Information
Financial Perfo
rmance
Co
rpo
rate Resp
onsib
ility
Overview We are well positioned to achieve sustainable growth by generating solid earnings across business and deliver value to all our clients.
Operating environment The global economy continued its gradual recovery in FY 2013, though at a moderate pace, driven by improvement in economic activity of developed countries. US economy recovered with increase in consumer spending and housing investments. With growing expectations over “Abenomics”, Japan recorded solid growth. The improvement in economic activity varied among Eu-ropean countries. Several EU countries, notably Germany, France, and England, reported to have entered growth phase, while Italy and Spain were still under macro uncertainties. Chinese soft-landing scheme and subdued export by emerging markets under-performed market expectations.
Market conditions deteriorated to overshadow optimistic domestic economy that appeared to be recovering faster than anticipated in the first half of 2013. Towards the end the year, consumer spend-ing contracted with obscure global environment difficult to predict.
Market environment Equity market KOSPI index in 2013 showed a moderate recovery, increasing from 1,997 point to 2,011 point.
Rise in outflow of foreign capital and the possibility of QE tapering triggered drop in KOSPI index to 1,781 in the first half of 2013. However, with gradual recovery of global economy and growth in preference for undervalued equities, the index rose to 2,060 point, recording a record-high market capitalization of KRW 1,211 trillion. By the end of the year, KOSPI index dropped to previous year’s level with weakening of Japanese Yen and decelerated Chi-nese market growth.
Total equity market turnover in 2013 decreased for two-consec-utive years from KRW 4,763 trillion in 2011 to KRW 3,265 trillion, falling by 12% compared with 2012. Individual investors showed net sale of KRW 5.65 trillion, while domestic institution and foreign investors net purchased KRW 2.4 trillion and KRW 3.2 trillion, re-spectively.
Bond market Despite economic stimulus policies announced by the new gov-ernment at the beginning of the year, 3Y government bond inter-est rate tumbled to historical low 2.44% as investor preference for low risk assets increased considering global macro uncertainties.
Although delay in QE tapering and closure of federal government limited the rise of bond yield, proliferation of optimistic views on economic boom pushed the yield higher.
Total domestic bond market turnover increased slightly by +2.6%, recording KRW 7,360 trillion. Government bond, financial bond, and asset-backed securities turnover all rose by 6.5%, 4.6%, and
14.3%, respectively, to KRW 4,858 trillion, KRW 536 trillion, and KRW 37 trillion. However, corporate bond, special bond, mone-tary stabilization bond, and municipal bond turnover decreased to KRW 176 trillion, KRW 335 trillion, and KRW 20 trillion. Turnover ratio decreased by 31.6% points, recording 514.4%.
Fund market Domestic mutual fund market totaled KRW 184 trillion by the end of 2013, down 1.0% from the previous year. Equity and fixed income fund AUM fell by KRW 7.5 trillion and KRW 0.5 trillion, respectively, to KRW 72 trillion and KRW 12 trillion. Both hybrid and money market fund AUM increased by KRW 2 trillion, record-ing KRW 14 trillion and KRW 64 trillion each. Installment type fund dropped from KRW 54 trillion to KRW 48 trillion.
The exchange-traded fund (ETF) market expanded by 32% to KRW 19 trillion. The total number of ETFs listed at the end of 2013 was 146, including 16 newly listed ETFs. There are total of 16 asset manager participating in the ETF market which accounts for 1.6% of KOSPI market capitalization, and 12% of total equity market turnover.
OTC derivatives market With growing global economic uncertainties and continuing low interest rate environment trends, the demand for principal guaran-teed equity and derivative-linked securities surged, recording total issuance of KRW 63.0 trillion in the market.
Equity-linked securities (ELS) issuance totaled KRW 42.5 trillion, with sales of overseas equity, overseas index, and hybrid type all rising by 123%, 19%, and 8%, respectively, to KRW 0.3 trillion, KRW 22.2 trillion, and KRW 1.3 trillion. Domestic equity and index type ELS sales decreased by 35% and 26%, respectively, to KRW 3.9 trillion and KRW 14.8 trillion. Both principal-guaranteed and unguaranteed ELS products were issued fewer by 2% and 10%, recording KRW 13.9 trillion and KRW 28.6 trillion.
Derivative-linked securities (DLS) market contracted by 14% over the year to KRW 20.4 trillion as demand diminished. Issuance of interest rate and credit-linked securities fell by 37% and 38%, respectively, to KRW 7.9 trillion and KRW 4.3 trillion. Commodity-linked products surged by 65% to KRW 3.5 trillion. Both principal -guaranteed and unguaranteed DLS declined by 22% and 3%, respectively, to KRW 10.9 trillion and KRW 0.9 trillion.
BusinessPerformance
Balance Sheet Summary (In billions of KRW)
FY 2012
18,382
15,066
3,317
18,382
FY 2011
15,870
12,628
3,242
15,870
FY 2013
19,505
16,232
3,273
19,505
(Y-Y)
+6%
+8%
-1%
+6%
Total Assets
Total Liabilities
Total Equity
Total Liabilities and Equity
FY 2012
19,481
15,998
3,482
19,481
FY 2011
16,771
13,390
3,380
16,771
FY 2013
20,536
17,098
3,437
20,536
(Y-Y)
+5%
+7%
-1%
+5%
Consolidated Basis Separate Basis
Samsung Securities Report 2013 Financial Performance 40.41
We aspire to become a leading player with dominant market share by focusing on core businesses and offering differentiated financial products and services.
Client assets The value of our client assets in FY 2013 totaled KRW 184.6 tril-lion, up 0.6% from KRW 183.5 trillion the previous fiscal year. Client assets subject to wealth management increased from KRW 116.5 trillion to KRW 117.5 trillion, as a result of net inflow of KRW 6.1 trillion. Individual client assets increased from KRW 68.8 trillion to KRW 69.2 trillion.
The number of HNWI (clients with assets over KRW 100 million) recorded 80 thousand with KRW 59.4 trillion client assets, both the largest in the industry. The HNWI client assets account for 86% of total wealth management client assets.
Financial product assets among the wealth management client assets expanded by KRW 2.0 trillion to KRW 44.9 trillion with increase in fund and trust balance. Equity assets decreased by KRW 1.0 trillion to KRW 71.3 trillion
Revenue breakdownBrokerage commissionEquity market turnover in FY 2013 (including the KOSPI, KOS-DAQ, and ETFs) fell by 28.6% over the year from KRW 3,421 trillion to KRW 2,441 trillion. As a result, brokerage commission declined by 30.4%, recording KRW 188.8 billion.
Brokerage market share by turnover rose by 0.5% points to 6.2%. Market share in both retail and institutional markets remained rela-tively stable at 3.5% and 0.8%, respectively, while foreign investor market share increased by 0.2% points to 1.2%.
The average rate of equity brokerage commissions fell by 1.3 basis points over the year, mainly due to an increase in low-priced DMA transactions by overseas institutional investors.
Investment banking market Debt capital market in 2013 fell from KRW 101.7 trillion in 2012 to KRW 89.2 trillion as the rise of credit risk of some major com-panies despite the low interest rate environment. Especially, total corporate bond issuance dropped to KRW 40.5 trillion, record-ing the lowest after 2009. The IPO market continued its sluggish trends, although the market size increased to KRW 1.3 trillion from KRW 1.0 trillion in the previous year. Excluding the largest IPO deal (Hyundai-Rotem IPO worth KRW 622.3 billion) leaves the total 2013 IPO market volume 68% of the size in 2012. Right of-fering in 2013 increased by 19% to KRW 20.4 trillion as construc-tion and shipping companies preferred funding through equity is-suance for financial stability. M&A market size decreased by KRW 4.5 trillion, recording KRW 31.5 trillion. While financial investors exhibited bullish investing appetite, strategic investors also en-tered the market for M&A. M&A financing market was worth KRW 5.2 trillion, including KRW 3.4 trillion related to new M&A deals.
Earnings summarySamsung Securities’ consolidated net revenue in FY 2013 was KRW 557.9 billion, down 42.2% from FY 2012. This sharp re-duction is due to the change of fiscal year, drop in the sales of retail bonds, deterioration in fixed income sales & trading, and fall in brokerage income. Our consolidated operating expenses recorded KRW 519.2 billion, down 28.7% over the year. This was primarily attributable to efforts to improve cost efficiency and re-duce personnel costs. In a nutshell, consolidated net profit fell by 93.3% over the year to KRW 11.0 billion. Earnings per share and return on equity dropped to KRW 148 and 0.4% from KRW 2,200 and 5.0% the previous year.
Earnings Summary (In billions of KRW)
FY 2012
965.6
302.8
333.5
29.6
297.8
21.1
-19.3
728.0
382.3
48.6
297.1
-4.7
232.8
52.1
180.7
163.7
FY 2012
780.1
271.4
206.8
29.5
264.5
37.5
-29.7
601.4
313.5
43.2
244.7
-9.0
169.6
39.1
130.6
-
FY 2011
1,177.1
466.9
358.2
42.4
315.8
9.3
-15.5
890.4
501.9
48.5
340.0
-0.7
286.0
93.5
192.5
171.5
FY 2011
977.5
418.0
238.4
39.7
290.8
23.9
-33.3
688.8
373.2
43.3
272.3
-81.2
207.5
72.8
134.7
-
FY 2013
557.9
211.0
279.8
24.0
37.9
18.5
-13.4
519.2
268.3
37.2
213.6
-3.0
35.7
11.6
24.0
11.0
FY 2013
430.9
188.8
179.7
24.0
25.6
33.9
-21.1
423.7
215.0
33.4
175.3
1.6
8.8
0.4
8.4
-
(Y-Y)
-42%
-30%
-16%
-19%
-87%
-12%
-31%
-29%
-30%
-23%
-28%
-
-85%
-78%
-87%
-93%
(Y-Y)
-45%
-30%
-13%
-19%
-90%
-10%
-29%
-30%
-31%
-23%
-28%
-
-95%
-99%
-94%
-
Net Revenue
Brokerage Commissions
Sales Commissions on Financial Products
Underwriting and Advisory Commission
Trading and Interest Income
Other Income
Commission Expenses
Operating Expenses
Personnel Expenses
Amortization and Depreciation Expenses
SG&A Expenses
Non-operating Income
Pretax Income
Income Tax Expenses
Net Profit
(Controlling Interest)
Consolidated Basis Separate Basis
Overview
Business P
erformance
Risk and
Cap
ital Ad
equacy
Financial Information
FY 2012
116.5
59.2
9.6
47.7
79,906
FY 2011
108.6
58.2
10.0
40.4
78,803
FY 2013
117.5
59.4
9.8
48.3
79,641
(Y-Y)
+0.9%
+0.3%
+2.1%
+1.3%
+0.03%
Wealth management
client assets
HNWI clients
Mass individual clients
Corporate clients
Number of HNW clients
Breakdown of Client Assets (In trillions of KRW)
* HNW clients refer to those with KRW 100 million or more client assets deposited in Samsung Securities
FY 2012
116.5
72.3
42.9
13.7
10.8
4.2
8.7
2.1
1.3
2.2
1.3
FY 2011
108.6
72.9
35.6
12.1
9.3
5.5
4.2
1.6
0.9
0.6
1.4
FY 2013
117.5
71.3
44.9
15.5
10.0
5.2
9.6
2.1
1.4
1.1
1.3
(Y-Y)
+0.9%
-1.4%
+4.7%
+13.6%
-8.1%
+24.0%
+10.7%
+1.8%
+9.7%
-47.9%
-0.6%
Wealth management
client assets
Equity assets
Financial product assets
Funds
Bonds
Repo
Trusts
OTC derivatives
Retirement pensions
Other
Cash deposits
Client Asset Breakdown (In trillions of KRW)
FY 2012
302.8
271.4
265.3
213.4
27.6
24.3
FY 2011
466.9
418.0
404.2
335.8
34.0
34.4
FY 2013
211.0
188.8
178.5
148.1
18.5
11.8
(Y-Y)
-30%
-30%
-33%
-31%
-33%
-51%
Brokerage commissions
(Consolidated)
Brokerage commissions
(Separate)
Equity brokerage commissions
Retail clients
Domestic institutional clients
Overseas institutional clients
Brokerage Revenues (In billions of KRW)
* Source : Financial Supervisory Service.
FY 2012
8.0%
5.7%
3.5%
0.8%
1.0%
0.4%
FY 2011
8.8%
5.9%
4.2%
0.9%
0.5%
0.1%
FY 2013
7.5%
6.2%
3.5%
0.8%
1.2%
0.7%
(Y-Y)
-0.6%p
+0.5%p
-
-
+0.2%p
+0.3%p
By Commission
By Turnover
Retail clients
Domestic institutional clients
Overseas institutional clients
Other
Market Share of Equity Brokerage Financial Perfo
rmance
Co
rpo
rate Resp
onsib
ility
Samsung Securities Report 2013 Financial Performance 42.43
Fund sales revenue totaled KRW 39.9 billion in FY 2013. Fund sales net asset value totaled KRW 15.9 trillion, up 14.0% for the year, as a result of increased sales in hybrid and bond-type funds. Sales of equity-type funds fell by 7.1% to KRW 3.0 trillion.
Wrap account revenue recorded KRW 15.8 billion in FY 2013. Despite total asset under management increased slightly over the year to KRW 4.9 trillion, equity-type balance fell by 27.3% to KRW 1.1 trillion as redemption of externally advised wrap account con-tinued.
OTC derivatives related revenue recorded KRW 105.9 billion, due to increase in DLS sales and the early redemption of ELS. ELS sales fell by KRW 0.3 trillion to KRW 2.1 trillion, while DLS sales rose by KRW 0.2 trillion to KRW 3.6 trillion.
Investment bankingUnderwriting and advisory commissions totaled KRW 24.0 billion, mainly due to increases in M&A and IPO volume. Volume in the domestic IPO market increased by KRW 0.2 trillion over the year to KRW 1.1 trillion, while bond issuance and M&A advisory market volume both reduced by respective 27.8% and 55.9% to KRW 68 trillion and KRW 12 trillion.
Trading and interest incomeTrading and interest income recorded KRW 25.6 billion in the midst of highly volatile interest rates and reduced sales of retail bonds. Retail bond sales decreased by 64.2% to KRW 2.2 trillion from KRW 6.0 trillion the previous year. Income from client cash deposits fell by 46% due to cut in benchmark rate by the Bank of Korea.
Operating expensesOperating expenses fell by 30% over the year to KRW 423.7 bil-lion, mainly backed by cost reduction program and decrease in compensation payment due to revenue fall. As the number of headcount dropped by 340 to 2,772 employees, personnel ex-penses decreased by 31% to KRW 215.0 billion. G&A expenses shrank by KRW 69.4 billion to KRW 175.3 billion, via further re-trenchment of costs such as advertising expenses.
(Y-Y)
-30%
-31%
-23%
-28%
-26%
-27%
-48%
-22%
-26%
+21%p
-3%p
-5%p
FY 2012
601.4
313.5
43.2
244.7
66.6
43.9
25.3
8.2
100.7
77%
52%
18%
FY 2011
688.8
373.2
43.3
272.3
61.3
41.6
44.1
9.2
116.1
70%
54%
26%
FY 2013
423.7
215.0
33.4
175.3
49.2
31.9
13.0
6.4
74.8
98%
51%
13%
Operating expenses
Personnel expenses
Depreciation expenses
G&A expenses
IT expenses
Rental expenses
Advertising
Sales promotions
Other
Operating expenses/
Net revenue
Personnel expenses/
Operating expenses
Compensation payments/
Personnel expenses
Operating Expenses (Separate) (In billions of KRW)
Overview
Business P
erformance
Risk and
Cap
ital Ad
equacy
Financial Information
FY 2012
333.5
206.8
45.2
26.5
89.4
45.6
FY 2011
358.2
238.4
59.8
60.6
93.2
24.7
FY 2013
279.8
179.7
39.9
15.8
105.9
18.2
(Y-Y)
-16%
-13%
-12%
-40%
+18%
-60%
Sales commissions on
financial products
(Consolidated)
Sales commissions on
financial instruments
(Separate)
Funds
Wrap accounts
Securitized derivatives
Other
Sales commissions on financial products (In billions of KRW)
Types of risk We seek to monitor and control our risks according to the risk type. For global-standard oversight of our risk management pro-cess, we established the Samsung Integrated Risk Intelligence System (SIRIS) in 2008. The first of its kind in the industry, the integrated system provides information on risks per type, such as market, credit, operational, and anti-money laundering. We also measure risk levels across the company and support monitoring and simulation functions by implementing an independently devel-oped OTC product calculation engine, incorporating vast market information and adopting sophisticated global best practices.
The potential for changes in the market value of our trading and investing positions is referred to as market risk. Such positions result from underwriting, brokerage, proprietary trading, and in-vestment activities. Market risk deals with potential losses due to fluctuations in market prices, interest rates, and exchange rates. We calculate VaR for all the assets we hold and for transactions that involve these risks. To complement VaR, Samsung Securities also uses various types of methods including Greeks, stress test-ing, and DV01 analysis.
Credit risk refers to potential losses that we would incur if a coun-terparty or an issuer of securities or other financial instruments that we hold fails to perform their obligations or upon a deteriora-tion in their credit quality. As part of our strict credit risk manage-ment policy, we assign credit ratings to counterparties based on our internal inspection and manage credit lines of each counter-part. Using SIRIS, we conduct daily monitoring of total credit ex-posure including counterparty exposure for over-the-counter de-rivatives. We effectively manage limits by identifying the individual counterparty limit prior to transactions involving credit exposure. Separate management of limits on large-sum margin lending is intended to prevent credit risk concentration. We are also building an effective system to prepare for future expansion of businesses involving credit risk by maintaining limits per business group and country. In the case of over-the-counter derivative trades, we re-quire the derivatives to be backed by collateral of above a certain amount or certain rating. This is to effectively manage various risks inherent in Over-the-counter derivatives. Samsung Securities enters into a contract with a counterparty for over-the-counter derivatives trading through the Master Agreements offered by the International Swap and Derivatives Association, Inc. (ISDA). We restrict derivatives transactions to counterparties who have signed a Credit Support Annex (CSA) with Samsung Securities. Through credit default swap (CDS) premium and news monitoring, we are proactively responding to the possible occurrence of credit events.
Liquidity risk refers to risk arising from a maturity mismatch in funding and investing. It stems from situations in which trading an asset at a previous price is impossible due to lack of transaction
or disruption in the market or when the company becomes default of payment due to a temporary increase in cash demand or credit crunch. Samsung Securities has established a number of strate-gies to deal with every possible type of liquidity crisis. All of them serve as the foundation for our overall emergency funding strate-gies. Since 2008, Samsung Securities has systematically man-aged operational risk by maintaining a unified system of internal controls and risk management organization. The SIRIS is used to manage and analyze company-wide data to keep operating risks at a level seen in leading global financial institutions.
As a way to make necessary improvements before accidents oc-cur, we rely on the Risk and Control Self Assessment (RCSA) to identify and manage risk factors and vulnerabilities. We have also developed and monitor Key Risk Indicators (KRI) related to opera-tional risks such as financial accidents, incomplete sales activities, transaction errors, and system failures. We also calculate opera-tional risk exposure by using a statistical tool that applies changes in the business environment and internal controls as well as loss-related data and scenarios.
Our rigorous operational risk management has reduced potential losses by recognizing and improving specific target risk factors. Furthermore, we are able to make efficient use of limited resourc-es and maintain business continuity through appropriate deploy-ment of management capabilities according to risk levels. We also secure the company's financial soundness by ensuring the avail-ability of sufficient cash flows based on an accurate projection of potential losses.
To manage regulatory risk that stems from various legal and regulatory changes, we assess related laws and regulations that are being established or revised, or that have been completed, and make relevant changes. To manage reputational risks arising from negative publicity and document risk from uncertain contract terms, each of our business divisions work organically with risk management, compliance, legal affairs and corporate commu-nication teams to analyze business activities that may affect the company as a whole or each operation to maintain risk within ac-ceptable levels.
Risk and Capital Adequacy
We are confident that our sound control framework will discipline risk capacity and enable us to remain a trusted financial partner to all of our clients.
Financial Perfo
rmance
Co
rpo
rate Resp
onsib
ility
Samsung Securities Report 2013 Financial Performance 44.45
Limit managementLimit management is a proactive management tool rather than passive management that limits sales activities of a company that entail risks. It minimizes interference in each department’s decision-making, while maintaining overall estimated losses within an acceptable range to maximize company-wide profit. Samsung Securities holds a wide range of trading securities, such as equi-ties, fixed income, and derivatives that are subject to trading limit management. Every year, Samsung Securities sets company-wide trading limits per risk type, which are approved by the Risk Management Committee.
The Risk Management Unit is responsible for overseeing trad-ing limits by category and type. It is also tasked with establishing countermeasures in the event of any violations of these regula-tions or limits. As key indicators for managing trading limits, we have adopted VaR limit, maximum loss limit, funds and loss limits. Greeks limit and DV01 limit are also used as additional indicators. VaR limit and loss limit are allocated in accordance with the com-pany's overall risk capital strategy. We have also established rules outlining how much limit management is to be applied to each major strategy. Support teams within each business division carry out our primary risk management functions, while the Risk Man-agement Unit oversees the entire operation.
VaR-based limits are used to measure and quantify an acceptable level of financial risk within a company or an investment portfolio over a specific time frame and in normal market conditions. Maxi-mum loss limit means the maximum amount of loss that a com-pany could suffer from its sales and management activities under a worst-case scenario.
Fund limit is calculated according to predetermined priorities to ensure the efficient use of a limited range of funds, while loss limit refers to the sum of both realized and unrealized losses. Yearly and monthly loss limits for each strategy are assigned. The term “Greeks limits” (i.e., Delta, Gamma, Vega, and Rho) refers to the limit of price sensitivity to such risk factors as share prices, volatility, and interest rates. It is used to manage risks of over-the-counter derivatives. The term DV01 bond evaluation refers to the change in the value of a sensitivity limit when the interest rate changes by 1 basis point. This limit is used to manage the rate of risk of fixed income instruments.
Samsung Securities manages its company-level VaR by applying diversification effects between its trading and non-trading assets within SIRIS. As of the end of February 2013, the VaR from our assets was worth KRW 47.0 billion, up KRW 3.3 billion over the year. The VaR of our equity-related assets decreased, while that from our interest rate-related assets grew. This happened be-cause our volume of equity-related asset fell during the year, while that of our interest rate -related assets increased.
Capital adequacyWe maintain an adequate level of capital to protect our investors and ensure our corporate stability in a rapidly changing market environment. Samsung Securities uses a net capital ratio to calcu-late its level of capital adequacy. The ratio is derived by comparing the level of market, credit, operational, and other risks that are present in our current asset position with our net operating capital. This helps us to gauge our ability to cope with the total amount of risk that we face.
The term “net operating capital” refers to the value of corporate assets that can be immediately converted into cash on the day the calculation is performed, meaning that it represents the true value of the assets being evaluated. It is calculated by subtract-ing the value of fixed and other illiquid assets from net assets and adding subordinated debt to the result.
FY 2013
Low
118
136
0
0
95
160
High
454
359
5
7
221
605
End of the year
153
352
0
0
35
470
Daily Average
185
312
1
1
59
441
FY 2012
End of the year
211
279
4
6
63
437
Equity
Interest Rates
FX
Other
Diversification (Overall)
Total VaR
VaR
Total risk amount refers to the maximum estimated loss that a company might face in the course of its operations, including market, counterparty, and operational risks. Market risk means the possible loss that would be faced if the values of a company’s trading assets were to be adversely affected in the future. Credit risk refers to the possible loss that a company would face if a counterparty or third party were to default on a financial obliga-tion. Operational risk means the possible loss faced in terms of expenditures or any deterioration in operating conditions if an ac-cident, error, illegal, or improper activity were to take place.
As of the end of December 2013, our net capital ratio recorded 636%, down 67% points from the previous year. This happened because the amount of our total risks and illiquid assets increased by KRW 15.4 billion and KRW 113.6 billion to KRW 393.2 billion and KRW 776.9 billion, respectively.
Market risk amount was KRW 294.5 billion in FY 2013, up KRW 31.4 billion from the previous year. Our amount of credit risk fell by KRW 12.8 billion to KRW 38.3 billion, after the calculation formula has been revised to reflect the total amount of loan collateral. Op-erating risk was KRW 60.4 billion, a drop of KRW 2.1 billion over the year.
Overview
Business P
erformance
Risk and
Cap
ital Ad
equacy
Financial Information
Net Capital Ratio
FY 2012
26,578
3,778
703%
FY 2011
24,970
2,800
892%
FY 2013
24,999
3,932
636%
(Y-Y)
-1,579
154
-67%p
Net capital (A)
Total risk amount
Net capital ratio (A/B)
Net operating capital
Total assets
Total liabilities
Illiquid assets
Subordinated debt
= - - +
Total risk Market risk Counterparty risk Operational risk = + +
Net capital ratio
Net capital
Total amount of risk
=
Financial Perfo
rmance
Co
rpo
rate Resp
onsib
ility
Samsung Securities Report 2013 Financial Performance 46.47
FINANCIAL INFORMATION
INDEPENDENT AUDITORS’ REPORT
To the Shareholders and Board of Directors ofSamsung Securities Co., Ltd.:
We have audited the accompanying consolidated financial statements of Samsung Securities Co., Ltd. and its subsidiaries (the “Group”). The consolidated financial statements consist of the consolidated statements of financial position as of December 31, 2013 and March 31, 2013, and the related consoli-dated statements of comprehensive income, consolidated statements of changes in shareholders’ equity and consolidated statements of cash flows for the nine months period ended December 31, 2013 and for the year ended March 31, 2013, all expressed in Korean won. The Group’s management is responsible for the preparation and fair presentation of the consolidated financial statements, and our responsibility is to express an opinion on these consolidated financial statements based on our audits. We did not audit the financial statements of Samsung Futures Inc., Samsung Securities (Europe) Ltd., Samsung Securi-ties (America) Inc., and Samsung Securities (Asia) Ltd., whose statements reflect total assets represent-ing 4.0% of the Group’s consolidated total assets as of December 31, 2013 and 5.8% as of March 31, 2013, and total net operating revenues representing 7.1% of the Group’s consolidated total net operating revenues for the nine months period ended December 31, 2013 and 6.6% for the year ended March 31, 2013. Those statements were audited by other auditors whose reports have been furnished to us, and our opinion expressed herein, insofar as it relates to the amounts included for those consolidated subsid-iaries, is based solely on the reports of the other auditors.
We conducted our audits in accordance with auditing standards generally accepted in the Republic of Ko-rea. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes ex-amining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material re-spects, the financial position of the Group as of December 31, 2013 and March 31, 2013, and the results of its operations and its cash flows for the nine months period ended December 31, 2013 and for the year March 31, 2013, in conformity with Korean International Financial Reporting Standards.
Accounting principles and auditing standards and their application in practice vary among countries. The accompanying consolidated financial statements are not intended to present the financial position, results of operations and cash flows in accordance with accounting principles and practices generally ac-cepted in countries other than the Republic of Korea. In addition, the procedures and practices utilized in the Republic of Korea to audit such consolidated financial statements may differ from those generally accepted and applied in other countries. Accordingly, this report and the accompanying consolidated fi-nancial statements are for use by those knowledgeable about Korean accounting principles and auditing standards and their application in practice.
March 6, 2014
This report is effective as of March 6, 2014, the auditors’ report date. Certain subsequent events or circum-stances may have occurred between the auditors’ report date and the time the auditors’ report is read. Such events or circumstances could significantly affect the accompanying consolidated financial statements and may result in modifications to the auditors’ report.
150-876, 9F, One IFC International Finance Centre Seoul,10, Gukjegeumyung-ro, Yeongdeungpo-gu, Seoul, Korea
Tel: +82 (2) 6676 1000Fax: +82 (2) 6674 2114www.deloitteanjin.co.kr
Overview
Business P
erform
anceR
isk and C
apital A
deq
uacy F
inancial Inform
ation
Financial Performance
Corporate R
esponsibility
Samsung Securities Report 2013 Financial Performance 48.49
CONSOLIDATED STATEMENTS OF FINANCIAL POSITIONAS OF DECEMBER 31, 2013 AND MARCH 31, 2013
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMEFOR THE NINE MONTHS PERIOD ENDED DECEMBER 31, 2013 AND FOR THE YEAR ENDED MARCH 31, 2013
SAMSUNG SECURITIES CO., LTD. AND ITS SUBSIDIARIES In thousands of KRW
Assets: Cash and cash equivalents Financialassetsatfairvaluethroughprofitorloss Available-for-salefinancialassets Loans and receivables Investment in associate Property and equipment Intangible assets Deferred income tax assets Current income tax assets Others Total assetsLiabilities: Financialliabilitiesatfairvaluethroughprofitorloss Depository liabilities Borrowings Debentures Definedbenefitliabilities Provisions Deferred income tax liabilities Current income tax liabilities Others Total liabilitiesShareholders’ equity: Capital stock Capital surplus Capital adjustments Accumulated other comprehensive income Retained earnings Equity attributable to the owners of the parent companyNon-controlling interests Totalshareholders’equity Totalliabilitiesandshareholders’equity
221,091,993
13,949,690,680
1,896,426,494
4,210,723,117
6,728,719
66,750,381
130,278,083
4,233,870
35,432,548
14,226,487
5,838,879,301
2,885,036,499
7,049,194,001
299,771,674
16,380,759
9,690,567
99,830,126
7,626,000
892,020,796
394,153,905
1,507,956,489
(105,670,638)
162,327,815
1,337,038,884
3,295,806,455
20,535,582,372
17,098,429,723
141,346,194
3,437,152,64920,535,582,372
461,226,645
(48,506,217)
367,438,996
(149,048,141)
253,515,981
798,961,073
293,329,928
(386,414,346)
(690,098,103)
(356,090,271)
54,654,170
(39,539,267)
11,034,525
12,989,505
2,552,666
(7,811,659)
(5,455,906)
1,178,223
12,130,908
412,720,428
218,390,855
(86,795,738)
15,114,903
559,430,448268,301,908252,439,938
38,688,6022,277,0165,301,066
35,664,55211,640,52224,024,030
(10,714,899)
13,309,131
148
148
260,377,190
13,081,765,115
1,336,460,882
4,561,824,190
8,028,487
81,715,538
127,743,120
3,595,643
741,838
18,665,790
6,118,653,416
2,977,019,973
5,326,268,928
299,460,035
22,051,163
10,468,815
102,269,610
9,316,271
1,132,931,410
394,153,905
1,506,982,289
(105,016,066)
172,184,117
1,374,368,262
3,342,672,507
19,480,917,793
15,998,439,621
139,805,665
3,482,478,17219,480,917,793
652,269,339
(74,091,244)
453,261,099
(197,097,524)
452,369,536
761,884,551
351,134,330
(332,073,448)
(731,481,736)
(409,708,223)
79,319,470
(37,975,833)
163,704,845
17,020,084
(6,403,911)
(3,332,787)
(2,525,278)
152,058,814
16,404,139
578,178,095
256,163,575
92,125,010
41,343,637
967,810,317382,323,724347,948,424237,538,169
5,164,1439,896,180
232,806,13252,081,203
180,724,929
(12,261,976)
168,462,953
2,200
2,200
December 31, 2013 December 31, 2013March 31, 2013 March 31, 2013
SAMSUNG SECURITIES CO., LTD. AND ITS SUBSIDIARIES In thousands of KRW
Commissions income and expenses, net: Commissions income Commissions expensesInterest income and expenses, net: Interest income Interest expensesGains or losses on financial instrument at fair value through profit or loss, net: Gainsrelatedtofinancialinstrumentsheldfortrading Gains related to derivatives held for trading Gainsrelatedtofinancialinstrumentsdesignatedatfairvaluethroughprofitorloss Lossesrelatedtofinancialinstrumentsheldfortrading Losses related to derivatives held for trading LossesrelatedtofinancialinstrumentsdesignatedatfairvaluethroughprofitorlossOther operating income and expenses: Other operating income Other operating expensesOperating revenues, netEmployee compensation and benefitsSelling and administrative expensesOperating profitNon-operating incomeNon-operating expensesProfit before income taxIncome tax expenseNet income Profitattributableto: Owners of the parent company Non-controlling interestsOther comprehensive income, net of tax: Itemnotsubsequentlyreclassifiedtonetincome: Remeasurementofthenetdefinedbenefitliabilities Itemssubsequentlyreclassifiedtonetincome: Valuationlossonavailable-for-salefinancialassets Cumulative translation adjustments for overseas subsidiaries and branchesTotal comprehensive income Comprehensiveincomeattributableto: Owners of the parent company Non-controlling interests Earnings per share (In Korean won): Basic earnings per share Diluted earnings per share
Overview
Business P
erform
anceR
isk and C
apital A
deq
uacy F
inancial Inform
ation
Financial Performance
Corporate R
esponsibility
Samsung Securities Report 2013 Financial Performance 50.51
394,153,905
-
394,153,905
-
-
-
-
-
-
-
394,153,905
394,153,905-
-
-
-
-
-
-
-
394,153,905
1,505,276,083
-
1,505,276,083
-
-
-
-
-
1,286,695
419,511
1,506,982,289
1,506,982,289-
-
-
-
-
53,862
926,987
(6,649)
1,507,956,489
(99,529,719)
-
(99,529,719)
-
-
-
-
-
1,791,483
(7,277,830)
(105,016,066)
(105,016,066)-
-
-
-
-
158,640
(813,212)
-
(105,670,638)
200,616,859
(16,786,711)
183,830,148
-
-
(5,907,296)
(3,271,873)
(2,466,862)
-
-
172,184,117
172,184,117-
-
2,455,306
(6,983,064)
(5,328,544)
-
-
-
162,327,815
1,245,937,332
16,786,711
1,262,724,043
(52,060,626)
163,704,845
-
-
-
-
-
1,374,368,262
1,374,368,262(48,363,903)
11,034,525
-
-
-
-
-
-
1,337,038,884
3,246,454,460
-
3,246,454,460
(52,060,626)
163,704,845
(5,907,296)
(3,271,873)
(2,466,862)
3,078,178
(6,858,319)
3,342,672,507
3,342,672,507(48,363,903)
11,034,525
2,455,306
(6,983,064)
(5,328,544)
212,502
113,775
(6,649)
3,295,806,455
133,967,089
-
133,967,089
(10,565,564)
17,020,085
(496,615)
(60,914)
(58,416)
-
-
139,805,665
139,805,665(10,565,564)
12,989,505
97,360
(828,595)
(127,362)
-
-
(24,815)
141,346,194
3,380,421,549
-
3,380,421,549
(62,626,190)
180,724,930
(6,403,911)
(3,332,787)
(2,525,278)
3,078,178
(6,858,319)
3,482,478,172
3,482,478,172(58,929,467)
24,024,030
2,552,666
(7,811,659)
(5,455,906)
212,502
113,775
(31,464)
3,437,152,649
Overview
Business P
erform
anceR
isk and C
apital A
deq
uacy F
inancial Inform
ation
Financial Performance
Corporate R
esponsibility
Samsung Securities Report 2013 Financial Performance 52.53
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITYFOR THE NINE MONTHS PERIOD ENDED DECEMBER 31, 2013AND FOR THE YEAR ENDED MARCH 31, 2013
CONSOLIDATED STATEMENTS OF CASH FLOWSFOR THE NINE MONTHS PERIOD ENDED DECEMBER 31, 2013AND FOR THE YEAR ENDED MARCH 31, 2013
SAMSUNG SECURITIES CO., LTD. AND ITS SUBSIDIARIES In thousands of KRW
Balance as of April 1, 2012Cumulative effect on change of accounting policyBalance after adjustmentDividendsNet incomeOther comprehensive income, net of tax: Remeasurement of the net defined benefit liabilities Valuation loss on available-for- sale financial assets Cumulative translation adjustments for overseas subsidiaries and branchesDisposal of treasury stockOthersBalance as of March 31, 2013
Balance as of April 1, 2013DividendsNet incomeOther comprehensive income, net of tax: Remeasurement of the net defined benefit liabilities Valuation loss on available-for- sale financial assets Cumulative translation adjustments for overseas subsidiaries and branchesDisposal of treasury stockOthersAcquisition of treasury stockBalance as of December 31, 2013
Capital stock
Capital surplus
Capital adjustments
Accumulated other
Comprehensive income
Retainedearnings
Total
Non-controllinginterests
Total equity
24,024,030
(271,327,288)
(921,919,284)
331,098,245
(134,532,777)
9,563,171
(45,110,095)
411,239,977
-
109,920,071
1,227,446
3,538,263
124,470
971,554
(975,770,216)
(107,443,344)
(7,891,835)
(23,233,392)
1,617,264,516
165,125
(58,929,467)
(31,464)
(1,008,203,998)
(587,317,006)
1,558,468,710(2,232,903)
(39,285,197)260,377,190221,091,993
180,724,929
(326,184,676)
(1,008,160,049)
456,467,636
(186,805,196)
19,343,374
(30,710,597)
1,892,447,134
10,000,000
165,847,165
2,028,289
-
332,121
3,881,940
(1,587,477,222)
(180,127,145)
(12,944,287)
(31,442,715)
579,158,571
-
(62,626,190)
-
(895,324,579)
262,545,280
516,532,381(1,397,925)
(117,644,843)378,022,033260,377,190
December 31, 2013 March 31, 2013
SAMSUNG SECURITIES CO., LTD. AND ITS SUBSIDIARIES In thousands of KRW
Cash flows from operating activities: Net income Adjustments Changes in operating assets and liabilities Interest received Interest paid Dividend received Income tax paid Net cash used in operating activitiesCash flows from investing activities: Proceeds from disposal of available-for-sale financial assets Decrease in held-to-maturity investments Decrease in loans and receivables Disposal of the investment in associates Net cash provided by acquisition of subsidiary Proceeds from disposal of property and equipment Proceeds from disposal of intangible assets Acquisition of available-for-sale financial assets Increase in loans and receivables Acquisition of property and equipment Acquisition of intangible assets Net cash provided by (used in) investing activitiesCash flows from financing activities: Net increase in borrowings Proceeds from disposal of treasury stock Payment of dividends Proceeds from acquisition of treasury stock Net cash provided by financing activitiesChanges in cash and cash equivalents by foreign currency translationNet decrease in cash and cash equivalentsCash and cash equivalents, beginning of the yearCash and cash equivalents, end of the year
Overview
Business P
erform
anceR
isk and C
apital A
deq
uacy F
inancial Inform
ation
Financial Performance
Corporate R
esponsibility
Samsung Securities Report 2013 Financial Performance 54.55
SEPARATE STATEMENTS OF FINANCIAL POSITIONAS OF DECEMBER 31, 2013 AND MARCH 31, 2013
SEPARATE STATEMENTS OF COMPREHENSIVE INCOMEFOR THE NINE MONTHS PERIOD ENDED DECEMBER 31, 2013 AND FOR THE YEAR ENDED MARCH 31, 2013
SAMSUNG SECURITIES CO., LTD. In thousands of KRW
Assets: Cash and cash equivalents Financial assets at fair value through profit or loss Available-for-sale financial assets Loans and receivables Investments in associates and subsidiaries Property and equipment Intangible assets Current income tax assets Others Total assetsLiabilities: Financial liabilities at fair value through profit or loss Depository liabilities Borrowings Debentures Defined benefit liabilities, net Provisions Deferred income tax liabilities Others Total liabilitiesShareholders’ equity: Capital stock Capital surplus Capital adjustments Accumulated other comprehensive income Retained earnings (Reserves for credit losses: December 31, 2013: ₩7,943,303 thousand March 31, 2013: ₩5,794,162 thousand Expected reserves for credit losses: December 31, 2013: ₩1,184,771 thousand March 31, 2013: ₩2,149,141 thousand) Total shareholders’ equity Total liabilities and shareholders’ equity
170,251,903
13,878,917,370
1,835,754,216
3,119,230,657
283,154,393
60,805,520
110,536,361
35,119,049
11,227,538
5,838,879,301
2,086,441,276
7,032,050,609
299,771,674
14,876,330
9,061,678
93,905,525
857,358,271
394,153,905
1,507,963,137
(105,670,638)
170,901,384
1,305,304,555
19,504,997,007
16,232,344,664
3,272,652,34319,504,997,007
325,609,855
(42,900,888)
348,267,926
(142,898,391)
252,476,732
798,471,015
293,301,197
(385,396,599)
(689,645,858)
(356,090,271)
68,618,633
(37,353,608)
2,364,476
(6,217,778)
(239,500)
(135,994)
(153,543)
282,708,967
205,369,535
(86,883,784)
31,265,025
432,459,743215,033,053210,199,341
7,227,3495,397,1603,799,0448,825,465
439,780
8,385,685(4,382,339)
4,003,346
113113
234,088,901
13,081,765,115
1,273,498,891
3,309,012,477
285,420,424
74,055,530
110,182,673
365,760
14,092,159
6,118,653,416
2,038,703,953
5,381,317,877
299,460,035
21,063,583
9,859,803
96,033,869
1,100,702,770
394,153,905
1,506,982,289
(105,016,065)
175,283,723
1,345,282,772
18,382,481,930
15,065,795,306
3,316,686,62418,382,481,930
476,344,291
(66,699,460)
418,614,184
(185,195,761)
452,369,536
761,868,545
351,134,330
(332,073,448)
(731,358,878)
(409,708,223)
84,373,830
(37,349,525)
(5,142,268)
7,570,458
(5,172,123)
230,601
(171,131)
409,644,831
233,418,423
92,231,862
47,024,305
782,319,421313,473,222290,207,030178,639,169
10,989,74220,002,515
169,626,39639,051,008
130,575,388(2,684,463)
127,890,925
1,7551,755
December 31, 2013 December 31, 2013March 31, 2013 March 31, 2013
SAMSUNG SECURITIES CO., LTD. In thousands of KRW
Commissions income and expenses, Net: Commissions income Commissions expensesInterest income and expenses, net: Interest income Interest expensesGains or losses on financial instrument at fair value through profit or loss, net: Gains related to financial instruments held for trading Gains related to derivatives held for trading Gains related to financial instruments designated at fair value through profit or loss Losses related to financial instruments held for trading Losses related to derivatives held for trading Losses related to financial instruments designated at fair value through profit or lossOther operating income and expenses: Other operating income Other operating expensesOperating revenues, netEmployee compensation and benefitsSelling and administrative expensesOperating profitNon-operating incomeNon-operating expensesProfit before income taxIncome tax expenseNet income (Net income after reserves for credit losses: December 31, 2013: ₩7,200,915 thousand March 31, 2013: ₩128,426,248 thousand)Other comprehensive income, net of tax: Item not subsequently reclassified to net income: Remeasurement of the net defined benefit liabilities Items subsequently reclassified to net income: Valuation gain (loss) on available-for-sale financial assets Change in value of investments in subsidiaries Change in value of investments in associates Cumulative translation adjustments for overseas subsidiaries and branchesTotal comprehensive incomeEarnings per share (In Korean won): Basic earnings per share Diluted earnings per share
Overview
Business P
erform
anceR
isk and C
apital A
deq
uacy F
inancial Inform
ation
Financial Performance
Corporate R
esponsibility
Samsung Securities Report 2013 Financial Performance 56.57
3,244,636,4653,244,636,465
-
(52,060,625)
130,575,388
(5,142,268)
7,570,458
(5,172,123)
230,601
(171,131)
3,078,178
(6,858,319)
3,316,686,624
3,316,686,624(48,363,902)
8,385,685
2,364,476
(6,217,778)
(239,500)
(135,994)
(153,543)
212,500
113,775
3,272,652,343
SEPARATE STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITYFOR THE NINE MONTHS PERIOD ENDED DECEMBER 31, 2013AND FOR THE YEAR ENDED MARCH 31, 2013
SEPARATE STATEMENTS OF CASH FLOWSFOR THE NINE MONTHS PERIOD ENDED DECEMBER 31, 2013AND FOR THE YEAR ENDED MARCH 31, 2013
SAMSUNG SECURITIES CO., LTD. In thousands of KRW
Balance as of April 1, 2012Balance after adjustmentCumulative effect on change of accounting policyDividendsNet incomeOther comprehensive income, net of tax: Remeasurement of the net defined benefit liabilities Valuation gain (loss) on available-for-sale financial assets Changes in value of investments in subsidiaries Changes in value of investments in associates Cumulative translation adjustments for overseas subsidiaries and branchesDisposal of treasury stockOthersBalance as of March 31, 2013
Balance as of April 1, 2013DividendsNet incomeOther comprehensive income, net of tax: Remeasurement of the net defined benefit liabilities Valuation gain (loss) on available-for-sale financial assets Changes in value of investments in subsidiaries Changes in value of investments in associates Cumulative translation adjustments for overseas subsidiaries and branchesDisposal of treasury stockOthersBalance as of December 31, 2013
394,153,905394,153,905
-
-
-
-
-
-
-
-
-
-
394,153,905
394,153,905-
-
-
-
-
-
-
-
-
394,153,905
1,505,276,0831,505,276,083
-
-
-
-
-
-
-
-
1,286,695
419,511
1,506,982,289
1,506,982,289-
-
-
-
-
-
-
53,861
926,987
1,507,963,137
(99,529,718)(99,529,718)
-
-
-
-
-
-
-
-
1,791,483
(7,277,830)
(105,016,065)
(105,016,065)-
-
-
-
-
-
-
158,639
(813,212)
(105,670,638)
193,634,965177,968,186
(15,666,779)
-
-
(5,142,268)
7,570,458
(5,172,123)
230,601
(171,131)
-
-
175,283,723
175,283,723-
-
2,364,476
(6,217,778)
(239,500)
(135,994)
(153,543)
-
-
170,901,384
1,251,101,2301,266,768,009
15,666,779
(52,060,625)
130,575,388
-
-
-
-
-
-
-
1,345,282,772
1,345,282,772(48,363,902)
8,385,685
-
-
-
-
-
-
-
1,305,304,555
Capital stock
Capital surplus
Capital adjustments
Accumulated other
Comprehensive income
Retainedearnings
Total equity
8,385,685
(296,142,107)
(871,859,323)
311,265,234
(128,445,940)
31,721,424
(35,972,892)
399,207,213
9,786,360
2,423,823
15,767
21,070
(962,209,585)
(2,993,992)
(6,863,635)
(17,689,601)
1,543,886,323
165,125
(48,363,903)
(981,047,919)
(578,302,580)
1,495,687,545(174,044)
(63,836,998)234,088,901170,251,903
130,575,388
(322,509,942)
(1,027,576,163)
419,697,091
(174,047,332)
37,000,718
(10,738,000)
1,863,857,216
23,036
14,001,289
58,751
3,309,228
(1,569,729,198)
-
(11,561,843)
(29,079,211)
634,209,577
-
(52,060,625)
(947,598,240)
270,879,268
582,148,952822,527
(93,747,493)327,836,394234,088,901
December 31, 2013 March 31, 2013
SAMSUNG SECURITIES CO., LTD. In thousands of KRW
Cash flows from operating activities: Net income Adjustments Changes in operating assets and liabilities Interest received Interest paid Dividend received Income tax paid Net cash used in operating activitiesCash flows from investing activities: Proceeds from disposal of available-for-sale financial assets Proceeds from disposal of loans and receivables Proceeds from disposal of investments in associates and subsidiaries Proceeds from disposal of property and equipment Proceeds from disposal of intangible assets Acquisition of available-for-sale financial assets Acquisition of loans and receivables Acquisition of property and equipment Acquisition of intangible assets Net cash provided by (used in) investing activitiesCash flows from financing activities: Net increase in borrowings Proceeds from disposal of treasury stock Payment of dividends Net cash provided by financing activitiesChanges in cash and cash equivalents by foreign currency translationNet decrease in cash and cash equivalentsCash and cash equivalents, beginning of the yearCash and cash equivalents, end of the year
MAJOR ACCOUNTING PRINCIPLES
Accounting PolicyOur financial statements follow the Korean International Financial Reporting Standards (K-IFRS) beginning the reporting period commending April 1, 2011. K-IFRS is the Korean version of standards, revisions and interpretations issued by the International Accounting Standards Board (ISAB). For comparison purposes, we made corrections to prior-period financial statements as well as those as at the date of the conversion.
Major changes entailed by the adoption of K-IFRS are as follows:
Switch to consolidated financial statements Wider scope of financial product disclosures (fair value disclosures, risk disclosures, etc.) Recognition of day 1 profit and loss according to fair value of marketable securities and derivatives Reflection of credit spread when calculating fair value of financial products Recognition of defined benefit obligation
Accounting TreatmentRecognition and Measurement of Financial Instruments
Standard transactions of financial assets are recognized on the date of transaction. All financial assets excluding financial assets at fair value
through profit or loss are initially recognized at fair value plus transaction costs. Financial assets at fair value through profit or loss are initially recognized at fair value and transaction costs are recorded in the income statement. Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently measured at fair value. Loans, receivables and financial assets held to maturity are measured at amortized cost using the effective interest method.
DerivativesDerivatives are initially recognized at fair value at the date a derivative contract is entered into and are subsequently reassessed to their fair value. Gains or losses on valuation of derivatives for trading purposes are recognized as net trading income or loss in the statement of comprehensive income.
Day 1 profit and lossWhere the company assesses fair value of OTC derivatives using inputs that are not from observable market data, the difference between the fair value on initial recognition and the transaction price (Day 1 profit and loss) is not recognized as profit or loss for the current term but deferred. The difference is amortized over the life of the transaction of the instrument using the straight-line method. When the valuation methods become observable in the market, the deferred balance is immediately recognized in the statement of comprehensive income as profit or loss for the current term.
Defined benefit obligationsDefined benefit plans refer to all pension plans excluding defined contribution plans which define the amount of pension benefits employees receive when they retire based on the age, service period and wage levels. Defined benefit obligation recorded in the statement of financial position is the present value of defined benefit obligation as of the end of the reporting period less the fair value of plan assets and less past service cost not yet recognized. Defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method.
Samsung Securities Report 2013