Re-structure FPT Corporation’s financial system

- Mr. Phan Duc Trung joined FPT in 2007 as the General Director of FPT Capital .

- On March 31, 2009, he officially became the CFO of FPT Corporation.

After taking office, he had a talk with an FPT internal reporter about what he was going to do as the CFO of FPT.

- In the post of new FPT’s CFO, what are you going to do immediately after taking office?

The amount of work that Mr. Le Quang Tien has done for FPT during the past 20 years is a lot. In the early period, I need to master the information about the system to prepare for the things to do in the future. In finance, the more you know, the more reliable your later actions will be.

- Could you say a bit about the “legacy” left behind by Mr. Le Quang Tien?

Mr. Le Quang Tien has established a very good financial management system foundation, especially the complete and deep management over the lower systems. FPT has honest and consistent staff in the system.

 Moreover, the financial system of FPT has been operational for many years and has shown that is has been operating independently as well as coping with business development.

FPT has constructed the “1^st floor”, now it will continue to build the “2^nd floor” much more favourably.

My challenge is how to take full advantage of that basis to develop the higher floors.

- Could you tell me more specifically how you are going to develop?

I have submitted a plan of restructuring FPT’s financial structure to the General Director Truong Gia Binh and the Management Board. The plan includes restructuring the parent company (FPT) and rearranging the management system in subsidiary companies. This plan consists of many periods. If it can be realized, I think FPT will have a sustainable growth.

I want FPT to have a good financial system operated in compliance with the internal documents and rules.

However, this plan is being considered.

- Could you reveal more about this plan?

In terms of nature, finance cannot make direct money, but it can make money from the not-yet-optimized things. Therefore, the task of finance is to rearrange the flow of money in a reasonable way, and good finance management can make a lot of money.

The first thing to do is to foster the Financial Plan Board. I will reorganize the resources to make them more intensified and briefer. Many matters will be transferred to subsidiary companies to solve. The internal auditing work will be strengthened.

Next is the financial structures which are suitable with the strategies of FPT as well as of subsidiary companies such as capital, debt as a lever, points of view about money flow management.

Presently, the first priority is to set up the legal and internal monitoring department, basing on which we can make internal rule systems and check the obedience.

I have also proposed to employ lawyers who have experience in working for foreign companies. Temporarily we will use the legal group of FPT Capital. They have effectively supported legal disputes of FPT Software Company during the past time.

After period 1, FPT’s apparatus will be restructured effectively. The decisions of FPT Corporation will be of a remote support nature, but will be more detailed and effective for other units. This support will also become more focused.

- What about the investment sector?

This is also a part of the plan to restructure FPT. FPT will introduce a flow of money which will be strong enough to buy back the backbone subsidiary companies which make a big and long-term profit for FPT, or the Corporation will invest more into these companies, not reducing the percentage f ownership. Basing on the strengthened rate of control, we can promote the development of those companies.

In reality, during the past years, FPT has not increased the capital in such companies. Thus, FPT is now on the edge of having the decision-making rights affected. In the next time, FPT needs to increase more capital in such companies.

In other sectors, FPT needs to send clear messages to investors. The top matter of interest is how FPT will prevent risks for such sectors before mentioning profits.

- What subsidiary companies will receive strategic investments?

The investment will be aimed at strategic companies with high possibilities of making big profits in the future. They are FPT Telecom , FPT Software and FPT University .

Invest with objectives of increasing the profit of the parent company – FPT, speed up the development of that company in the direction which is suitable with FPT’s strategies.

- Is FPT going to invest into other outside companies?

Currently, the parent company FPT has not invested into other outside companies. I think that if there are some companies which can serve our long-term interest, then why not? We are a holding company, so we should know how to buy and sell.

- Could you show me the relationship between financial management and shareholder value?

The operating nature of a Finance Director is to maximize shareholder value, i.e. maximizing our market capitalized value and stabilizing it, as well as reducing the out-of-control fluctuation. Or we may have strategies for market capitalized value. This is the highest level of finance management that FPT needs to achieve.

Shareholder value is the respecting behaviour that originates from the relationships and actions of each person without needing anyone to protect.

Previously, there existed a point of view that the Shareholder Relation Board would protect the rights and interests of shareholders. But in fact it is not so. The Shareholder Relation Board only acts as a communication gateway for shareholders.

Because shareholders are an internal value and are one factor of an enterprise’s management standards. Perhaps due to the development progress of FPT, the ownership structure between staff and shareholders has not been clear yet.

Mr. Truong Gia Binh’s Gene structure has also included this factor, which is called management on the basis of interests consisting conflicts among employees, clients and shareholders. Presently, FPT’s Gene structure is being amended and adjusted to be suitable with the current general trend.

- At 2009 shareholders’ meeting of FPT, you said that in 2009 FPT would highly appreciate shareholder value. How can that be shown?

According to the proposal about the CFO’s work that I presented with the Management Board, the management would be divided into 4 sectors according to levels: money flow management, liquidation management, debt-property balance sheet management, and shareholder value management, among which shareholder value management is of the highest value, and I highly hope for changes that FPT needs to carry out in the forthcoming period.

In 2009, FPT will start to seriously pay attention to shareholder value. FPT needs to create solid messages and announcements about that. “What will you think if the share prices double?”. A question like that will also be a very good message.

We will also care about value for short-term, middle-term and long-term shareholder groups, and will restrict as much as possible the interest conflict among shareholder groups.

Shareholders usually care about interests over risks. To make it more specific, dividends come from the internal values, capitalized value, and the sustainability of such values. We need to relocate such things when we talk to shareholders, from which we can take actions which are suitable with all those three values..

In terms of capitalized value, the most important thing is sustainable growth. Hot growth will not bring about long-term interest. The value of FPT shares needs to grow sustainably. This is a part of my work to serve the shareholders’ interest.