Frank questions – Sincere answers

A shareholder is questioning FPT’s Board of Directors

- In 2008, despite the difficulties, the corporation still made a profit, mainly from the communication business. However, the new business fields such as banking, finance, and securities all suffered losses. Could you explain this loss?

Le Quang Tien, FPT Deputy General Director: Besides the strong segments such as distribution, system integration, softwares, education and telecommunications services with high profits, since 2007 FPT has invested into other fields such as fund management, banking and securities with the total capital of 290 billion VND, two of which – fund management and banking – gained a profit in 2008.

Although TienPhongBank was operational in a difficult time during the last 6 months of 2008, it made a profit of 20 billion VNDs and paid the shareholders a 6% dividend. FPT Capital was just founded in 2008 but gained 8 billion VNDs and paid a 12% dividends to the shareholders.

Having the same difficulties with other companies, FPT Securities suffered a loss of 60 billion VNDs.

However, in each of the above fields, FPT’s shares only account for 15-33% of the total sum of shares. In the future, FPT deeply believes that those fields will make a profit for FPT.

- In 2009, what business fields will FPT focus on? Could you explain more clearly the main features in the business development plan of FPT in 2009?

Nguyen Thanh Nam, Chairman of Management Board of FPT Software Company says: In the telecommunication field, FPT will exploit the new service on the basis of Triple Play. This is a service which integrates Internet Protocol Television (IPTV), Internet access (Data) and Internet telephone (VoIP – Voice over Internet Protocol) on only one transmission line.

In the system integration field, in 2008 FPT IS made a sudden progress in terms of quality when won the bid for a big project and became a main contractor for the first time. With this new role, FPT’s profits will increase and the staff will become more experienced. These are the strong points of FPT Information System and will be developed and exploited more in the future.

In the distribution field, FPT has had the experience of building the distribution network and international relations. With that experience, FPT will enlarge the product lines and will not only focus on technologies but also exploit other consumer products.

Although FPT University has not had any graduated students, but in 2009 it has had the first batch of students training at FPT Software. These students have proved that their capacities are equivalent to the capacities of programmers working here, among whom one student has been assigned to work in the U.S.A. In 2009, FPT University ‘s objective is enrolling 3000 students.

They are the main features in the thriving business fields of FPT in 2009.

- This year, the communication mission of FPT Corporation has been performed in a better way than last year, but it has not been done very well. For example, the fact that FPT will change the General Director may affect the stock prices. How has FPT carried out this communication task? How can you explain this?

Trương Gia Bình, Chairman of Management Board , General Director of FPT says: Before deploying the plan of changing the General Director, FPT decided to spend 3 months implementing the communication task, from the time of announcing the decision at the end of December until the time the new General Director will officially takes up office on April 13.

After making an internal decision, we have continuously announced this in our internal journals’ editions as well as in other popular newspapers.

On this occasion, I would like to explain more about the leadership of FPT.

Previously, the roles of the Chairman of Management Board and the General Director in FPT were not allocated clearly.

Currently, when FPT has got a certain position in Vietnam and in the world, the standardization of the management activities is very necessary. The action of making Mr. Nguyen Thanh Nam a member of the leaders’ team of FPT in the post of General Director first serves the purpose of clarifying the management and operation, then is to hand over the work to the younger officers. This tendency will help the management become better, more explicit and more effective.

In terms of communication, we will examine and discuss more to make it better.

- FPT needs to clarify the pay for the Chairman of Management Board , the General Director Board and the Supervisory Board in 2008 and 2009. Why can’t we see the the pay for the Chairman of Management Board in 2008 in the reports?

Bui Quang Ngoc, FPT Deputy General Director: The members of the Management Board also hold operational positions and are paid for these positions. Therefore, in 2008, there was no pay for the Chairman of Management Board .

In 2009, the pay for the Chairman of Management Board is increased because the Chairman no longer holds the position of General Director and does not receive the salary from that operational position. Besides, there needs to be pays for the foreign members of the Management Board .

In 2008, the pay for the Board of General Directors (also a member of the Management Board) included salary and bonus. In 2009, this amount of money is increased due to FPT’s salary level adjustment. Previously, this salary level was relatively low in comparison with the general standard, e.g. the salary for Chairman of the Management Board and the General Director was 70 million VND.

We have adjusted the salary level to encourage and keep our staff.

In 2009, we propose that the pay for the Supervisory Board will increase up to 483 500 000 VND because we want to find a full-time officer. That high pay is necessary to find a person who is capable of doing this job well for the whole Corporation.

However, we have not found a suitable person yet. We will present a detailed report about this expense in the meeting next year.

- Why did FPT choose 2 foreigners to become members of the Management Board?

Truong Gia Binh, FPT General Director: FPT has started to regard itself as a worldwide corporation and needs to appear and operate in many parts of the world. Therefore, FPT needs the appearance of foreigners.

In terms of using foreign human resources, FPT has carried out an experiment in FPT Software by making 2 foreigners become members of the Management Board.

One is an ex-leader of Hitachi Group (Japan), a friend and a close client of FPT, who helped FPT a lot in the past.

The other one is the General Director of Vinagame with a very good business and a highly creative capacity.

The person who has just been elected to the FPT Management Board is Mr. Jonathon Ralph Alexander Waugh. He used to study at Eton College and South Bank University in the U.K.

Eton College is especially prestigious because the graduated students can assure successful business and a wide relationship with the leaders in the U.K.

Mr. Jonathon loves Vietnam and he can speak Vietnamese. He used to be the Deputy General Director of ABC Securities Company and the co-founder of Vietnam PXP Investment Fund.

- We do not object to the fact that FPT retained 518 billion VNDs of the profit in 2008 to invest into business and production. But the Corporation needs to let us know the plan to use this amount of money in the forthcoming period.

Truong Dinh Anh, General Director of FPT Telecome Company: The Management Board has considered the project of dividing dividends to assure the interests among long-term and short-term investors’ groups. In 2009, FPT will focus on investing into traditional business fields in order to make a profit for the shareholders in the future.

In the telecommunication field, FPT Telecom Company organized a shareholders’ meeting on March 27 and decided to retain 160 billion VNDs for the company to invest and enlarge business activities.

In 2009, FPT Telecom Company will expand to 10 more provinces and cities. As forecasted, the profit of the company in the telecommunication field will be over 50%.

Next, FPT will invest into software fields and further export in this sector. In 2008, FPT had opened branches in France, Australia, the U.S.A…

Education is also a good growth field, with a 100% profit. In 2009, FPT University will receive investments to enlarge with the new campus in Hoa Lac, and will develop the university branch well in HCMC. The education scale has also been expanded from 1800 up to 3000 students.

The fields which bring about very high profit rates such as distribution business and system integration will also be invested more.

Finally, in 2009, the forecasts about the business activities are all bad. For such an economic-technological corporation as FPT, we need capital to ensure to be able to overcome the crisis. We hope that the decisions of the Chairman of the Management Board will be approved by the shareholders.

- FPT seems to have the tendency to gradually reduce the parent company’s percentage of ownership of the subsidiary companies, leading to the fact that FPT may steadily become a “holdings”. So how can values be increased for shareholders?

Phan Duc Trung, Director of FPT Capital: Models of holdings all over the world are inclined to financial investment. With the current structure of FPT, the model of holdings is not clear, and in most fields, FPT’s capital accounts for 100% of the total capital and FPT has deep control over detailed operational activities.

To go into detail, the fields we highly value are three main turnover sectors focusing on information technologies and telecommunications. These are the fields with high PE indexes. FPT’s policy is to intensify expanding and deeply invest to affirm the right of the parent company over subsidiary companies. However, FPT is not investing much into the other fields.

With such strategies, I hope that FPT can establish the suitable PE indexes on the market, not just the average PE indexes of the traditional fields that FPT has invested into.

- FPT will carry out the privatization of subsidiary companies such as FPT Informationl System Company(FPT IS) and FPT Trading Company - FTC. FPT needs to give the priority of buying shares to the current shareholders. Will they have the privilege to buy 10% of the shares issued to the public?

Phan Duc Trung, Director of FPT Capital: FPT owns 100% of the capital of FPT Information System (FPT IS) and FPT Trading Company .

For the privatization of these two companies, the short-term objectives that we have determined is to temporarily create the model of holding companies, with a clear relationship between the parent company and the subsidiary companies.

In terms of the privatization process, the prices of shares, whether we will sell shares to shareholders or give shareholders the priority to buy shares or not, … , we are still considering them.

Thus, through the shareholders’ meeting, we would like all to approve the policies. When we have official information, FPT will send specific documents to the shareholders.