2011: Annual Report - CDCP · 2013-01-24 · (E4U, a.s.) on the basis of a contract with the issuer. The related calculation of income tax was also part of the service for the issuer

2011: Annual Report

1

Foreword by the Chief Executive Officer 2

Company Profile 3

Highlights of 2011 4

Key Data 5

Legislation 6

Maintenance of the Register 7

Settlement 9

Information and Trading System 14

Financial Results 16

Company Bodies 17

Participants 19

Report on Relationships 20

Report of the Supervisory Board 25

Auditor’s Report on the Annual Report 26

Financial Part 29

Auditor’s Report on the Financial Statements 30

Contact 58

Table of Contents

2

Dear Ladies and Gentlemen,

Allow me to share with you a few key events from 2011.

Inasmuch as the most important event in our company’s history

was undoubtedly its rebirth in mid-2010 as Central Securities

Depository Prague, 2011 was, in a manner of speaking, the first

conventional year in the new Central Depository’s existence.

We managed to resolve a number of problems inherited from

the Prague Securities Centre. Particularly worthy of note was the

initial step towards standardizing the Central Depository’s Price

List. Its complete transformation, however, will yet take several

years. The preparation and commissioning of the Ministry

of Finance’s register for state bonds issued for individuals,

the first issue of which the Ministry successfully sold this

autumn, was another successful project in which the Central

Depository participated.

Preparatory work on the project for a new type of exchange

trades clearing also was ongoing throughout the year. It was

decided that market participants will have two options: either

to use the local clearing and settlement system along with the

Exchange Guarantee Fund to secure settlement of trades or to

connect to a different internationally recognized clearing system

which will perform clearing in the form of reciprocal crediting

and debiting of participants’ amounts payable and receivable.

By the end of the year, it was decided that the Swiss company

SIX x-clear Ltd would provide this clearing for the Czech market.

The next year will thus see the introduction of fundamental

changes both in clearing and in the subsequent settlement of

exchange trades.

In closing, let me wish for all of us great success in 2012. May we

bring to fruition all the changes we have planned as a company.

Helena Čacká

Chief Executive Officer

Central Securities Depository Prague

Foreword by the Chief Executive Officer

3

Company Profile

n managing the lending and borrowing of domestic as well as

foreign securities;

n training for capital market entities directed to keeping records

of dematerialized securities and their settlement; and

n publishing of statistical information.

Central Securities Depository Prague (CSDP) is a fully owned

subsidiary of Prague Stock Exchange (PSE). It maintains the

central register for dematerialized securities issued in the Czech

Republic, assigns international securities identification numbers

(ISIN) to investment instruments, and operates a settlement

system for settling exchange and OTC securities trades.

In addition to the aforementioned activities, CSDP also provides

participants, securities issuers and other capital market entities

with the following services:

n settlement of primary securities issues;

n settlement of trades in foreign securities;

n settlement of securities trades concluded in euro;

n settlement of realized pledges of securities;

n clearing of trades concluded at POWER EXCHANGE

CENTRAL EUROPE (PXE);

n administration of margin deposits for PXE trading participants;

n keeping records of foreign investment instruments and such

instruments in documentary form;

n administration of foreign securities registered on the

CSDP’s accounts at Clearstream;

n administration and custody of securities in documentary form;

n administration of securities payments, securities returns, and

payments of investment earnings from securities;

n provision of data in compliance with the disclosure obligation

under Section 115 of Act No. 256/2004 Coll.;

n administration and management of members’ deposits into

the Exchange Guarantee Fund;

4

23 June 2011

CSDP signed an agreement on reciprocal membership

and cooperation with the Central Securities Depository of

the Slovak Republic (Centrálny depozitár cenných papierov

Slovenskej republiky, a.s.) in Bratislava. The linking of the

two institutions will simplify trading in the same securities in

Prague and Bratislava.

1 July 2011

CSDP’s Endowment Fund commenced operations and

began through its representatives to conclude donation

contracts for dematerialized securities maintained in the

Central Depository’s register.

1 July 2011

EQUILOR ZRt became a new member of CSDP and its

settlement system.

3 October 2011

For retail investors, the subscription period for state savings

bonds issued by the Czech Republic was initiated. CSDP

assisted in the birth of this new source of state debt financing

and closely cooperated with the Czech Ministry of Finance on

its enablement.

10 October 2011

IPOPEMA Securities S.A. became a new member of CSDP and

its settlement system.

31 December 2011

CSDP recorded contracts concluded on maintaining registers

for 1,656 issues, 186 contracts with notaries and 22 contracts

with insolvency administrators on acquiring information from its

register via the Information Service Broker (ISB).

Highlights of 2011

5

Key Data

Maintenance of the register

Settlement

Settled exchange trades in 2011

Settled OTC transfers in 2011

Economic indicators

SPAD AOS (Fixing + KOBOS) Block trades Total

YearNumber of

trades

Transfer value

(CZK mn)

Number of trades

Transfer value

(CZK mn)

Number of trades

Transfer value

(CZK mn)

Number of trades

Transfer value

(CZK mn)

2011 149,298 292,459 576,549 76,078 6,011 610,781 731,858 979,318

Year Number of transfers Transfer value (CZK mn)

2011 138,502 2,718,631

(in CZK thousand) 2011 2010 2009

Operating expenses 290,452 222,690 86,879

Net profit 58,975 9,359 20,950

OPF = open privatization fund, CPF = closed privatization fund.

SharesBonds (including

separate coupons)OPF CPF Derivatives Total

Issues – as at 31 December 2011 945 594 23 1 93 1,656

6

Legislation

Legislative changes during 2011 affected the Central

Depository’s role as settlement system operator. A crucial

amendment to Section 7 of the Act on Capital Market

Undertakings, as effected by Act No. 139/2011 Coll. and

constituting the implementation of Directive 2009/44/EC from 6

May 2009, amending Directive 98/26/EC on finality of clearing in

payment and securities settlement systems, divided the existing

settlement systems into those with finality of clearing and those

without. The Central Depository was obliged to change its

conditions in accordance with the new legislation, as evidenced by

amendment of the Settlement System Rules in both their parts (i.e.

settlement of trades concluded on Prague Stock Exchange and

those concluded on POWER EXCHANGE CENTRAL EUROPE).

The Operating Manual of the Central Depository was changed

once in 2011, effective as from 1 July. These changes were

occasioned in particular by an amendment to the Securities Act

introducing a new system for registering pledged securities, the

use of which the Central Depository enabled by amending its

Operating Manual.

The Central Depository’s Price List and Tariff of Material Costs was

amended in 2011, effective as from 1 July 2011, 1 October 2011

and 1 January 2012. The most significant changes in 2011

concerned the introduction of fees for services provided for the

independent register of state bonds, while the most significant

changes effective as from 2012 concerned the fee for maintenance

of securities on an account. Changes also were made to the

Tariff of Material Costs, wherein the Central Depository acted

in accordance with the Decree of the Ministry of Finance of the

Czech Republic No. 212/2010 Coll., implementing Section 115

of the Act on Capital Market Undertakings, and, based upon

the actual costs of this activity during last year, it established the

amount required to cover those costs in the subsequent period.

The Central Depository also took into account changes and

revisions in EU legal regulations. This involved especially

regulations on OTC derivatives, on central counterparties and

transaction data repositories (EMIR), and the prepared directive

on central securities depositories.

CSDP along with the Czech Banking Association and the

Czech Capital Market Association responded to proposals

of the Corporate Actions Joint Working Group to implement

Market Standards on General Meetings, identified impediments

to corporate actions under Czech conditions, and proposed

corresponding legislative adjustments.

7

Maintenance of the Register

The essential activities of the Central Depository involve

maintenance of the central register of dematerialized securities

and settlement of trades in investment instruments. Since the

takeover of the Prague Securities Centre (PSC), the central

register has been registering all dematerialized securities issued

in the Czech Republic.

The central register is a two-level register composed of the

register kept by CSDP and the follow-up records, the latter of

which are maintained by entities authorized to do so, namely

securities dealers. CSDP’s register differs from the register kept by

the Prague Securities Centre in its two-level registration method.

Securities are registered in asset accounts, of which there are two

types: the owner’s account, owned by the possessor of securities

registered in the account, or the customer account, owned by

an entity authorized to maintain follow-up records (generally

a securities dealer). The owner of a customer account does

not own securities registered to this account, but rather these

are securities that the account’s owner took over (to manage)

from their owners. While both owner’s accounts and customer

accounts may be opened at the central register kept by CSDP, only

owner’s accounts may be established in the follow-up records.

Based upon the Act on Capital Market Undertakings, CSDP is

authorized also to maintain an independent register of securities.

This independent register of the Central Depository includes

mainly foreign securities, securities in documentary form,

collective bonds, and derivative-type investment instruments.

As from November 2011, the Central Depository’s systems also

serve to maintain an independent register of state savings bonds

for the Czech Ministry of Finance.

Based on an agreement for the maintenance of an independent

register, the Central Depository had, until November 2011,

also maintained an independent register for such investment

companies as AXA investiční společnost, a.s., ČP INVEST

investiční společnost, a.s. and FINESKO. The independent

register continues to be maintained for AXA, although the register

was transferred from the original system created by Asseco Czech

Republic to CSDP’s own system. The investment companies ČP

INVEST and FINESKO, on the other hand, took over the register

of participation certificates under their own independent register

in November.

Custody of securities certificates continues to be maintained in

the depository of ČSOB, a.s. Bonds of Mero ČR, a.s. were paid

off in April, and thus only two joint-stock companies remained in

the register.

At the start of 2011, 1,359 issues were recorded in the central

register. During the year, 476 new issues were registered and 179

issues were cancelled. Thus, the final number of issues at year-

end was 1,656.

In maintaining the investment instruments register, in addition to

entries of new issues the Central Depository handled increases in

issues; changes in nominal values, types and forms of securities;

squeeze-outs; issue cancellations; and the like. CSDP participants

are informed of all new entries in the issues register at least once

per week by means of the Bulletin.

SharesBonds (including

separate coupons)OPF CPF Derivatives Total

Central register 932 287 13 1 5 1,238

Independent register 13 307 10 – 88 418

of which: issues registered in Clearstream Banking Luxembourg

11 296 – – 81 388

certificated issues 2 – – – – 2

Issues – as at 31 December 2011 945 594 23 1 93 1,656

OPF = open privatization fund, CPF = closed privatization fund.

8

While the Central Depository routinely provides for paying out

investment returns for foreign securities, in September, it for

the first time provided dividend payments for a Czech company

(E4U, a.s.) on the basis of a contract with the issuer. The related

calculation of income tax was also part of the service for the

issuer. The Central Depository is prepared to provide payments

of share dividends and bond coupons for any issuers interested

in the service, and particularly in relation to issues maintained on

accounts registered for participants of the Central Depository.

During the year, the Central Depository assigned ISINs to 176

securities issues.

Provision of information from the Central Depository register

The Central Depository is obliged by law to provide information

from the register it maintains to authorized persons and entities.

The Information Service Broker (ISB) internet application serves

as the main tool for searching information from the histories of

both CSDP and the Prague Securities Centre. This application is

increasingly used by notaries and insolvency administrators, for

whom this method is much more efficient than sending written

requests to a data mailbox or via the services of the Czech

Post. The General Directorate of Customs and the National

Security Authority of the Czech Republic also use ISB to their

full satisfaction. In addition to direct entry of instructions via ISB,

authorized entities derive great benefit from completing orders

using the form on the CSDP website. At the end of 2011, the

Central Depository prepared the option to automatically load the

most used form, F9, for inspecting the status of an entity’s assets

as at a given date. Automatic reading of forms also will be

gradually applied for other client instructions. Not only will this

accelerate and simplify the work of CSDP employees, but it will

also reduce the risk of operator error during processing. In 2011,

CSDP filled 23,008 orders for paid information from authorized

entities, of which 9,363 were requested via ISB.

In accordance with a decree from the Ministry of Finance, CSDP

at the start of the second half of 2011 calculated the total material

costs expended in processing the provided information. New rates

became valid from October 2011 that incorporate information

about those costs and which are differentiated according to the

method of an enquiry’s submission and extent of the search

required. The Central Depository will endeavour to extend the

use of ISB in future to other groups of authorized persons and

entities, and in particular the public prosecutor’s office, courts as

well as distrainers.

Information from the CSDP register is also provided to issuers

and issue administrators. The method of providing issue listings

via ISB for this group is also developing successfully. In 2011, the

Central Depository provided a total of 1,449 issue listings, 1,006

of which were created by the issuers themselves through ISB.

9

Settlement

CSDP provides for the financial settlement of trades involving

investments in Czech crowns and clearing of electricity trades

in euro. It provided for settlement in Czech crowns by means of

payment orders sent to the Czech National Bank Clearing Centre

(CC CNB). In 2011, CSDP sent approximately 275,000 orders

to the CC CNB in total volume of CZK 3,798 billion, up by 1.5%

year on year. The volume of securities exchange trades and OTC

transactions settled by CSDP in 2011 reached CZK 3,580.3 billion,

which is 0.8% more than in 2010. Despite the increase in the

volume of settled trades as compared to 2010, it marked the third

poorest performance since 2005. The reason for this remains the

continuing uncertainty on financial markets. CSDP’s share in the

volume of all settled trades and transactions on the Czech capital

market grew slightly to 99.9%. Of the total volume of transactions

settled by the Central Depository, exchange trades and OTC

transactions accounted for 24.62% and 75.38%, respectively.

Year / Entity

2007 2008 2009 2010 2011

CZK bn % CZK bn % CZK bn % CZK bn % CZK bn %

Prague Securities Centre*

3.03 0.06 3.87 0.07 0.41 0.01 1.24 0.03

RM-S 7.57 0.15 6.87 0.13 7.87 0.27 6.25 0.18 5.48 0.15

CSDP 5,034.70 99.79 5,170.36 99.79 2,920.40 99.72 3,543.02 99.79 3,574.80 99.85

Total 5,045.30 100.00 5,181.10 100.00 2,928.68 100.00 3,550.51 100.00 3,580.29 100.00

Indicator 2007 2008 2009 2010 2011

Number of participants* 27 27 26 25 26

of which non-exchange members 3 3 3 4 5

No. of non-zero balances on owner’s accounts** 637 689 561 695 721

No. of non-zero balances on client accounts** 19,523 27,466 23,104 2,325,933 2,276,333

No. of non-zero balances on customer accounts** 25 34 131 34 29

Total value of transfers to CC CNB (CZK bn) 4,999 5,358 3,149 3,749 3,798

Number of orders sent to CC CNB (in thousands) 379 391 342 269 275

*activities terminated as at 30 June 2010

*including the Czech National Bank and the Ministry of Finance, which are not exchange members but are entitled to conclude exchange trades

**as at 31 December

Volumes of transfers involving investment instruments settled on the Czech capital market, 2007–2011

Basic indicators of CSDP activities, 2007–2011

10

Settled exchange trades, 2005–2011 Settled exchange trades, 2011

Settled OTC transfers, 2005–2011

Value (CZK bn) Value (CZK bn)

Value (CZK bn)

Number of trades (‘000) Number of trades (‘000)

Number of transfers (‘000)

11

Value (CZK bn) Number of trades (‘000)

Settled OTC transfers, 2011 Settled automatic trades, 2011

Settled SPAD trades, 2011 Settled block trades, 2011

Value (CZK bn) Number of transfers (‘000) Value (CZK bn) Number of trades (‘000)

Value (CZK bn) Number of trades (‘000)

6.68

27.6

24.8

30.4

24.7 23.7 24.1

20.0

37.7

22.920.7 19.7

16.2

52.5

35.8 37.9 40.746.5 48.2

63.959.8

96.7

56.8

40.0

32.0

6.24

6.99

6.01

7.00 6.93

4.26

9.30

6.84

5.625.11 5.03

12

Exchange Guarantee Fund

CSDP is responsible for administering the Exchange Guarantee

Fund (EGF), which serves to secure the obligations and cover

the risks ensuing from exchange trades and their settlement. The

Guarantee Fund consists of the Guarantee Fund for Automatic

Trades and SPAD (FAS) and the Derivative Trading Guarantee Fund

(FD). The average daily value of funds under EGF’s management

decreased from 2010 by 4.2% to CZK 69 million. Of this total,

FAS represented 94.2% with a value of CZK 65 million, while FD

represented just 5.8% (CZK 4 million).

Securities lending and borrowing

The number of issues entered into the pool of the securities lending

and borrowing system remained unchanged through October

2011 versus the preceding year. Participants had four issues

available: Erste Group Bank, Central European Media Enterprises

(CETV), Vienna Insurance Group (VIG) and Fortuna. The Fortuna

issue was withdrawn from lending as from November 2011.

The number of active borrowers increased to eight participants,

a gain of one compared to 2010. Forty-nine per cent of all

Revenues from administering EGF dropped by 38.7% against

2010. FAS revenue decreased by 38.0% year on year and FD

revenue by 47.9%. Besides there being a lower level of activity

among exchange members, the overall decline in revenues was

also due to changes in the number of EGF participants. During

2011, three members cancelled their memberships even as EGF

gained two new participants. EGF participants totalled 19 at year-

end. The number of participants with derivatives trading licences

declined by two, to seven members in total.

borrowings were executed by Patria Finance, a.s., 22% by

CYRRUS, a.s., and 11% by WOOD & Company Financial Services,

a.s. No other borrower accounted for more than 10%. The total

number of borrowings carried out decreased year on year by

31.3%, and 65.2% of these related to CETV. The greatest interest

was shown in borrowing of Erste Group Bank shares, accounting

for 70.9% of all borrowings in 2011. As measured by the number

of securities borrowed, Erste Group Bank accounted for 88.9%.

Indicator 2007 2008 2009 2010 2011

Average daily balance of FAO (CZK mn)* 80 86 – – –

Average daily balance of FAS (CZK mn)* 152 207 96 67 65

Average daily balance of FD (CZK mn) 6 5 5 5 4

FAO revenue (CZK thousand)* 1,923 3,192 – – –

FS or FAS revenue (CZK thousand) 3,639 7,637 2,808 1,218 755

FD revenue (CZK thousand) 135 174 148 96 50

Indicator 2007 2008 2009 2010 2011

Total number of issues for lending* 4 3 3 4 4

Total number of securities lent (in millions) 1.9 0.98 3.2 3.9 3.0

Total number of borrowings 275 83 198 265 182

Average loan duration (days) 13 8 11 9 8

Total number of active borrowers* 9 8 8 7 8

Total number of lenders* 4 3 3 4 4

*The FAO (Fund for Automatic Trades) and FS (Fund for Trades Concluded in SPAD) were merged into FAS as at 1 December 2008.

*within the course of the year

Financial resources in the Exchange Guarantee Fund

Securities lending and borrowing

13

Communication with foreign depositories

CSDP intermediated more than 4,500 transfers in 2011, including

deposits and withdrawals of securities executed between

CSDP’s account at Clearstream Banking Luxembourg and

other European depositories and the Depository Trust Company

in the United States. In addition to securities transfers, CSDP

provides other standard services in the foreign securities area:

organizing participation or voting during regular and extraordinary

general meetings for shareholders of foreign companies whose

investment instruments are recorded in the register; intermediating

the payment of dividends for these companies; and arranging tax

refunds on the basis of double taxation treaties for dividends paid.

In June 2011, CSDP for the first time provided a foreign issuer,

Fortuna Entertainment Group NV, with complete services in relation

to a dividend: payment of the dividend to the participants, tax

payment to the foreign tax office, and processing of any requests

for a tax allowance from individual shareholders, whether prior to

payment by taxation at source or by subsequent refunding.

The Central Depository participated in the reincorporation of New

World Resources Plc in 2011.

A contract on reciprocal membership and cooperation between

the Czech and Slovak central depositories was signed in the first

half of 2011. Preparations for maintaining a register of Slovak

securities were subsequently undertaken and culminated in

December with successful testing of the connection to the Central

Securities Depository of the Slovak Republic (Centrálny depozitár

cenných papierov SR, a.s.). Since January 2012, participants

thus have had a new service at their disposal – maintenance of

a register of Slovak securities at CSDP, whereby participants may

request registration of individual ISINs at no charge. A project

for maintaining a register of Czech securities in Bratislava is

under preparation.

Endowment Fund of CSDP

Since mid-2011, CSDP has enabled security holders to donate

to the CSDP Endowment Fund securities which they consider to

have no value, the value of which is unknown on the capital market,

or for which they wish not to pay fees. Since July 2011, some 138

contracts have been concluded with the Endowment Fund and

101 securities titles and a total of more than 197,000 individual

securities have been transferred into the Endowment Fund.

State savings bonds

In connection with issuing Czech Republic state savings

bonds, CSDP provides technical support for the maintenance

of an independent register of the Ministry of Finance of the

Czech Republic. The savings bonds register is separate from

CSDP’s central register. With the first subscription of state savings

bonds via distributors, over 37,000 subscription requests were

registered through the Central Depository to owners’ accounts in

the register of the Ministry of Finance. More than 50% of transfers

concerned five-year bonds with the possibility to reinvest interest

earnings, and over 8% of requests processed were for a five-

year coupon bond. The Central Depository also cooperates

in processing amendments in the register of the Ministry of

Finance concerning changes in data on asset accounts and

provides technical support to the Ministry for other activities,

such as preparing documents for early payment and payment of

interest earnings.

14

Information and Trading System

During 2011, the IT Division focused its efforts on further

developing the activities of the CSDP, transferring electricity trading

at POWER EXCHANGE CENTRAL EUROPE to the new Trayport

GlobalVision system, and extensively developing and modifying

the technological infrastructure of the PX group’s systems with

an emphasis on further enhancing the accessibility and security

of the information system and data. In mid-2011, preparations

were initiated in order to implement and launch the Xetra® trading

system in 2012.

The IT Division implemented a number of projects for CSDP

in 2011. The common integration of the internal information

system (IIS), filing office (ESS) and Information Service Broker

(ISB) was completed. Processes rationalization and automation

brought increased efficiency and reduced labour demands upon

Central Depository employees in addressing enquiries from

authorized users.

Employees of the IT Division programmed and by year-end

initiated the NAS (New Archive System), replacing the original

archiving and analytical system (AAS) supplied by Asseco. The

new system provides the same functionality as did the original

system, but it is designed with a view to further development and

wider use within the PX group. The IT Division will also implement

new functions, thereby increasing flexibility and reducing costs for

its further development.

On the basis of requests from CSDP participants, their options

for settlement management were expanded. Settlement of any

transaction can now be conditioned upon settlement of another

transaction. This objective was achieved by extending the services

currently in use.

The aim of the SOMF Relocation project is to discontinue

operations using the SOMF system supplied by Asseco. The

possibility to transfer mutual funds to CSDP’s central system,

where their registration would be kept under a separate register,

was offered as an alternative to SOMF. The project consisted in

adjusting the Central Depository’s systems such that requirements

would be fulfilled for maintaining an independent register in parallel

to the central register and for ensuring secure data transfer from

SOMF to CSDP’s central system.

The project to provide CSDP support for subscription and

maintenance of the register of state savings bonds for individuals

continued in 2011. For this purpose, a special independent register

was built in the Central Depository’s system, accessible not only

to the Ministry of Finance (as the owner) and CSDP but also to

other CSDP participants who have concluded a contract with the

Ministry of Finance (so-called contractual distributors). A number

of new services related to this project had to be incorporated into

the current systems precisely in accordance with the Ministry of

Finance’s requirements. The project was successfully completed.

Based on an agreement between the Ministry of Finance and

CSDP for the newly introduced MTS bond trading system, the

Central Depository’s task was to build a connection to the MTS

market with the objective of providing the delivery versus payment

service for settlement of trades concluded on this market. The

connection is implemented based on the SWIFT protocol.

The project was designed for minimal impact on settlement

participants and was successfully completed.

Analytical work on a project to transfer historical data of the

Securities Centre’s register from its systems to CSDP’s systems

was initiated during the year. Instead of the demanding and

prolonged migration of these data to CSDP formats that was

originally planned, and during which some information might be

lost, a solution consisting in the creation of an independent low-

cost archive system was selected. In this case, the original data

will be transferred and saved in the same logical structure with

no loss of information. The system will be implemented by the

company Styrax and be completed in mid-2012. All data of the

Securities Centre will thus be transferred to the CSDP systems,

and the original systems at Asseco may be shut down.

The aim of a project for preparing statistical reports was to

provide the Ministry of Finance and Czech National Bank with all

data received from the Securities Centre up to mid-2010 under

the conditions established by the new Act on Capital Market

Undertakings. This Act considerably complicates the creation

of these statistics, as part of the register is transferred to the

so-called follow-up records. For the purposes of generating

statistics, it is first necessary to obtain the appropriate data from

the follow-up records, to confirm their consistency with the data

contained in the Central Depository, and only then to assemble

the final statistics for the Ministry of Finance and Czech National

Bank. The project was successfully completed.

Due to the large number and complexity of projects, 2011 marked

a year of technological changes for the IT Division. One of the

most important is implementation of the desktop virtualization

15

project as a solution strengthening the security of information

and data in the PX group systems. That system was successfully

implemented in the first half of the year at one department of CSDP

working with sensitive data. In the second half, a solution was

prepared for another department of the Central Depository. This

solution, to be implemented during 2012, is based on VMWare

and Microsoft software. It will allow a user to work simultaneously

on a single computer in two independent interfaces (standard

and virtual secure), between which information cannot be

shared except through defined secure channels. The complexity

of implementation is due not only to the solution’s technical

sophistication, but also to the fact that the established security

requirements necessitate certain changes in work methods.

The aim of the server virtualization project was to prepare a new,

robust infrastructure that will enable the use of new application

servers and migration of old servers into this infrastructure. The

main advantages of this platform are its flexibility in executing

new requirements and changes, high accessibility of systems,

simplification of system administration, and reduction in costs of

implementing new servers.

Along with virtualization and high accessibility, it was necessary

also to address broadband connection of the primary and back-

up locations. The new data connection of the primary and back-

up workstations based on broadband connections over Fibre

Channel Protocol and Ethernet will ensure the necessary data

throughput and synchronization of systems at the primary and

back-up workstations.

The IT Division also devoted great efforts to security. In close

cooperation with the Security Division, it participated in further

improving the information security management system (ISMS)

in accordance with international standards. This collaboration

involved analysing and adopting a number of internal security

policies, processing and introducing documentation for operating

processes, and implementing certain new security measures,

including internal controls. In the context of security projects

implementation, also worthy of note is the network segmentation

consisting in separation of servers from PCs, launch of the intrusion

prevention system, centralized storing of certificates, and more.

For purposes of software audit and record maintenance, software

was purchased and installed that enables more efficient scanning

of software installed on devices and regular evaluation of the status

of licensed software based on a record of purchased licences.

The system was put into test operation at the end of the year.

Due to the growing number of messages arriving via data boxes,

a secure data messages storage system was proposed in the

second quarter and then implemented across the PX group. The

robust system is based on two independent storage locations,

each controlling the other, and ensures that no data messages

will get lost.

For purposes of management and training, an independent WiFi

network was put into service, thus enabling broadband internet

connection especially of mobile devices.

Work in implementing a system for automated collection and

evaluation of operating and security events from various systems

and devices (a so-called log concentrator) continued, with more

devices being connected and the creation of reports being tested.

The system was put into live operation at the start of 2012, and

regular reports began to be generated for connected systems. The

number of connected devices and reports will continue to grow.

In November, the ISB and AAS technologies were transferred

from the company Asseco to CSDP. The preparation, actual

transfer and connection took place seamlessly, and now the

systems are under the Central Depository’s full control. This step

was preceded by the necessary technical modernization of the

power and air-conditioning systems, consisting in installation

of new uninterruptible power supply systems and installation of

additional air conditioning units in computer rooms.

In November and December, a cumulative package of repair

software for the primary iSeries computing platform was installed.

The transfer process was well prepared and was performed with

no undesirable impacts on group systems operation.

At the very end of the year, an external company performed

penetration tests which found no serious deficiencies in internet

connection security.

16

Income Statement

Statement of Changes in Equity and Financial Position

Financial Results


Revenues from business activities 371,337 237,129 104,465

Operating expenses 290,452 222,690 86,879

Operating profit 80,885 14,439 17,586

Net financial income / expense (-) (7,159) (1,980) 3,712

Profit before income tax 73,726 12,459 21,298

Income tax expense 14,751 3,100 348

Net profit 58,975 9,359 20,950


Share capital 100,000 100,000 100,000

Shareholder's equity 168,536 119,061 129,702

Statutory reserve fund 9,501 9,033 7,985

Retained earnings 59,035 10,028 21,717

Earnings per share (CZK) 0.590 0.094 0.210

17

Company Bodies

Board of Directors

The Board of Directors is the company’s statutory body, controlling

its activities and acting on its behalf. The Board of Directors

consists of three members elected for a period of three years.

Members of the Board of Directors as at 31 December 2011:

ChairpersonPetr Koblic

Education: University of Economics, Prague

Other positions held: Chairperson of the Exchange Chamber and

Chief Executive Officer of Prague Stock Exchange, Chairperson

of the Exchange Chamber of POWER EXCHANGE CENTRAL

EUROPE

Vice-ChairpersonHelena Čacká

Education: Institute of Chemical Technology, Prague

Other positions held: Chief Executive Officer of Central Securities

Depository Prague, Member of the Exchange Chamber of Prague

Stock Exchange, Vice-Chairperson of the Exchange Chamber of

POWER EXCHANGE CENTRAL EUROPE

MemberJiří Opletal

Education: Brno University of Technology

Current position: Director of the Division of Trading and Securities,

Prague Stock Exchange.

Supervisory Board

The Supervisory Board consists of three members elected for

a period of three years. The Supervisory Board oversees the

activities of the Board of Directors and company operations.

Members of the Supervisory Board as at 31 December 2011:

Chairperson Petr Horáček, Prague Stock Exchange

Members Radan Marek, Prague Stock Exchange

Miroslav Prokeš, Prague Stock Exchange

Company management

Members of management as at 31 December 2011:

Chief Executive Officer Helena Čacká

First Deputy Chief Executive Officerand Director of the Issuers and Information Services Department Jaroslava Vlková

Second Deputy Chief Executive Officer Tomáš Lněnička

Director of the Operations Department Ivana Čiperová

Director of the Finance and Administration Department Petr Horáček

Legal Services Václav Ježek

18

Trades Settlement and Register Maintenance Committee

Members as at 31 December 2011:

Chairperson Helena Čacká, Central Securities Depository Prague

Secretary Tomáš Lněnička, Central Securities Depository Prague

The Trades Settlement and Register Maintenance Committee

held four meetings in 2011. The main topics related to informing

participants as to the creation of CSDP’S Endowment Fund

and the possibility to donate securities, discussing the method

of settling trades concluded on the MTS Europe-wide electronic

trading platform for state bonds, and technical implementation

of the Czech Ministry of Finance’s project for administration and

issue of state savings bonds.

At the end of 2011, members of the Committee were also informed

about the planned change of the Central Depository’s Price List

valid from 1 January 2012, as well as the continuing preparations

for implementing the Exchange’s new Xetra® trading system and

the new clearing model based in particular on the existence of

CCP as the central counterparty for all trades.

Security Committee, Internal Audit Committee

In 2011, the Security Committee analysed and re-evaluated the

information security requirements and established principles

and objectives for the PX group to be achieved in this area.

The conclusions were then incorporated into the underlying

documents – the information security management system

(ISMS) specifications and policies, security directives, and

operational security directives. By means of these documents,

the group’s management stated its strategy for continually

safeguarding information security as part of its management

processes.

The group’s information security management stems from

the fundamental principles of the ISO 27000 series standards,

decisions and recommendations of the supervisory authority

(Czech National Bank), and legal regulations.

The Committee also directed its attention to the implementation

and operation of individual security measures the principles of

which are based on the approved ISMS policy, and especially

in the areas of information access management, confidentiality

protection and information integrity, management of security

incidents, and monitoring of adherence to ISMS principles.

Activity of the internal audit and the Internal Audit Committee

focused especially on monitoring the compliance of the PX

group’s ISMS policy with the requirements of ISO/IEC 27000

standards as well as on the aforementioned individual priority

areas of information security. This resulted in the adoption and

implementation of a number of corrective measures.

The established information security system significantly reduced

the potential for information leakages and breaches of integrity.

Access to confidential information as well as the possibility of

handling information were restricted, and rigorous information

protection rules were reinforced.

19

Participants

Participants of Central Securities Depository Prague as at 31 December 2011:

BH Securities a.s.

Burza cenných papírů Praha, a.s.

Centrálny depozitár cenných papierov SR, a.s.

Citibank Europe plc, organizační složka

COMMERZBANK Aktiengesellschaft, pobočka Praha

Crédit Agricole Corporate and Investment Bank S.A. Prague, organizační složka

CYRRUS, a.s.

Czech National Bank

Česká spořitelna, a.s.

Českomoravská záruční a rozvojová banka, a.s.

Československá obchodní banka, a. s.

Deutsche Bank Aktiengesellschaft Filiale Prag, organizační složka

EQUILOR ZRt

Fio banka, a.s.

ING Bank N.V.

IPOPEMA Securities S.A.

J & T BANKA, a.s.

Komerční banka, a.s.

LBBW Bank CZ a.s.

Ministry of Finance of the Czech Republic

Patria Finance, a.s.

PPF banka a.s.

Raiffeisenbank a.s.

RM-SYSTÉM, česká burza cenných papírů a.s.

The Royal Bank of Scotland N.V.

UniCredit Bank Czech Republic, a.s.

WOOD & Company Financial Services, a.s.

20

Central Securities Depository - Report on Relationships between Affiliated Undertakings in Fiscal Year 2011

- 1 -

Report on Relationships between Controlling and Controlled Undertaking and Relationships between Controlled Undertaking

and other Undertakings Controlled by the Same Controlling Undertaking in Fiscal Year 2011

In accordance with the provisions of Art. 66a (9) of Act 513/1991 Coll., the Commercial Code, as amended (hereinafter the “ComCo”), the Board of Directors of Centrální depozitář cenných papírů, a.s. hereby issues this Report on Relationships between:

the Controlling Undertaking, i.e. Burza cenných papírů Praha, a.s., with its registered office at Rybná 14/682, Prague 1, ID No.: 47115629, entered in the Commercial Register kept on file at the Municipal Court in Prague, Section B, Insert 1773 (hereinafter the “Controlling Undertaking” or “Prague Stock Exchange”)and the Controlled Undertaking, Centrální depozitář cenných papírů, a.s., with its registered office at Rybná 14, Prague 1, ID No.: 25081489, entered in the Commercial Register kept on file at the Municipal Court in Prague, Section B, Insert 4308 (hereinafter the “Controlled Undertaking” or “Central Securities Depository”)

for fiscal year 2011.

The report also provides information on the relationships between the Controlled Undertaking and other affiliated undertakings, specifically:

- CENTRAL COUNTERPARTY, a.s., with its registered office at Rybná 14/682, Prague 1, ID No.: 27122689, entered in the Commercial Register kept on file at the Municipal Court in Prague, Section B, Insert 9145 (hereinafter “CCP”); - POWER EXCHANGE CENTRAL EUROPE, a.s., with its registered office at Rybná 14, Prague 1, ID No.: 27865444, entered in the Commercial Register kept on file at the Municipal Court in Prague, Section B, Insert 15362 (hereinafter “PXE”); - Central Clearing Counterparty, a.s., with its registered office at Rybná 14/682, Prague 1, ID No.: 28381696, entered in the Commercial Register kept on file at the Municipal Court in Prague, Section B, Insert 14224 (hereinafter “CCC”);- Energy Clearing Counterparty, a.s., with its registered office at Rybná 682/14, Prague 1, ID No.: 28441681, entered in the Commercial Register kept on file at the Municipal Court inPrague, Section B, Insert 14531 (hereinafter “EnCC”).

The Controlling Undertaking holds a 100% stake in Central Securities Depository, CCP, CCC and EnCC. The Controlling Undertaking holds a 33.3% stake in PXE; indirectly, the Controlling Undertaking controls the remaining 66.7% (33% through the Central Securities Depository and 33% through CCP). The Central Securities Depository is also the sole founder of the CSD Endowment Fund.

The report provides a list of agreements entered into between these undertakings during the 2011 fiscal year, other legal steps between the affiliated undertakings in their interest, and a list of all measures adopted or executed by the Controlled Undertaking in the interest of or upon the request from these undertakings. The report is issued in writing and is included in the Annual Report in accordance with the applicable regulations.

21


- 2 -

AgreementsThe business relationships between the Controlling and Controlled Undertakings were regulated by the following agreements during fiscal year 2011. On the basis of previous agreements, the Controlling Undertaking was provided with the following performance, unless otherwise specified:

Agreement entered into on

Agreement title Description Performance provided (incl.

VAT)

7 December 2001 Agreement on the Online Data Connection with the Information System of the Czech National Bank Clearing Centre

The Prague Stock Exchange enables the Central Securities Depository to connect online to the information system of the Czech National Bank Clearing Centre.

CZK 42,000

31 December 2008

Agreement on the Sublease of Non-Residential Premises, pursuant to Amendment 4 dated 1 July 2011.

Sublease of non-residential premises which the Prague Stock Exchange leases from Burzovní Palác Investment s.r.o.

CZK 12,593,000

30 December 2009

Agreement for the Settlement of Exchange Trades and Transactions, and for the Provision of Related Services

35% of the total PSE income from the fees for the settlement of trades concluded or settled via ATS.

CZK 8,932,000

(payment in favour of CSD)

30 December 2009

IT Service Agreement 65% of the total income from the fees for the settlement in ATS and for communication connection.

CZK 51,389,000

12 April 2010 and 31 December

2010

Loan Agreement, pursuant toAmendment 1 dated 31 December 2011.

Provision of a loan in the amount of CZK 170 million.

Annual PRIBOR + 0.85% p.a.

from 1 January 2012 annual PRIBOR + 0.75% p.a.

19 November 2010

IT Service Agreement for the Management of Central Register of Securities, pursuant to Amendment 1.

Provision of IT services associated with the management of a central register of securities.

8% of the total amount of revenues generated by CSD in connection with the keeping of the register (economic centre of CSD).

CZK 19,752,000

28 January 2011 Loan Agreement Provision of a loan in the amount of CZK 50 million, payable by 31 December 2011.


20 June 2011 Central Depository Participation Agreement

Agreement providing authorisation to participate in the Central Securities Depository. The fees are set forth in the Central Depository Fee Schedule.

CZK 51,000

22


- 3 -

20 December 2011

Agreement on the payment of redevelopment costs for the non-residential premises on the 6th floor of the Stock Exchange Palace.

Payment for the redevelopment of the leased premises.

CZK 29,000

22 December 2011

Loan Agreement Provision of a loan in the amount of CZK 25 million, payable by 31 December 2012.


As of 31 December 2011, CSD claims debts amounting to CZK 34,937,000 payable by the Prague Stock Exchange, representing a tax deduction related to the payment of VAT for December 2011.

Furthermore, expenses were re-invoiced between these two entities for telephone fees, insurance of statutory bodies and liability arising from activities, capital life insurance of employees, use of a time stamp and company preventive health care provided by the Prague Stock Exchange, cost of the seminars and software and its maintenance, organised and provided by the Central Securities Depository. The expenses re-invoiced to CSD amounted to CZK 442,000, incl. VAT. The expenses re-invoiced to PSE amounted to CZK 686,000, incl. VAT. The business relationships between PXE and the Controlled Undertaking were regulated by the following agreements during the 2011 fiscal year. On the basis of previous agreements, the Controlled Undertaking was provided with the following:



VAT)

4 July 2007 Agreement on the Provision of Services associated with the Clearing of Trades Concluded at the Prague Energy Exchange

Organization of clearing for PXE.

50% of the total amount of fees from the clearing of transactions within the PXE trading system.

CZK 4,631,000

10 January 2011 Loan Agreement Provision of a short-term loan in the amount of CZK 50 million, i.e. a new loan in the amount of CZK 30 million and an additional loan in the amount of 20 million.

Annual PRIBOR + 0.85% p.a. of the

new loan

Applicable PRIBOR + 0.85% p.a. of the

additional loan

30 December 2011

Amendment 1 to the Loan Agreement

Amendment of the terms and conditions of the Loan Agreement, particularly the extension of maturity until 31 January 2012 and the change of the interest rate for January 2012.


23


- 4 -

The business relationships between CSD and CCP were regulated by the following agreements during the 2011 fiscal year. On the basis of previous agreements the Controlled Undertaking was provided with the following:



VAT)

10 February 2009 Loan Agreement Provision of a short-term revolving loan for the purpose of the payment of VAT to the suppliers of electrical power to PXE, up to the amount of CZK 300 million, with the solidarity of the creditors of CSD, PXE, and PSE. Share of the Central Securities Depository – credit line of CZK 30 million.

The credit was not used.

The Central Securities Depository has a debt payable to CCP in the total amount of CZK 4,518,000. The Central Securities Depository arranges for the financial settlement of physical supplies of electrical power, and the amount payable corresponds to the balance between the payments received from electricity consumers and the payments to suppliers (CZK 0), plus the amount corresponding to the interest accrued in the bank account holding the money (CZK 4,518,000).

The business relationships between CSD and EnCC were regulated by the following agreements during the 2011 fiscal year. On the basis of previous agreements, the Controlled Undertaking was provided with the following:



VAT)

30 March 2009 Loan Agreement Provision of a short-term revolving loan for the purpose of the payment of VAT to the suppliers of electric power to PXE, up to the amount of CZK 150 million, with the solidarity of the creditors of CSD, PXE, and PSE. Share of Central Securities Depository – credit line of CZK 15 million.


The Central Securities Depository has a debt payable to EnCC in the total amount of CZK 449,000. The Central Securities Depository arranges for the financial settlement of the physical supplies of electrical power, and the amount payable corresponds to the balance between the payments received from electricity consumers and the payments to suppliers (CZK 368,000), plus the amount corresponding to the interest accrued in the bank account holding the money (CZK 81,000).

The business relationships between CSD and CCC were regulated by the following agreements during the 2011 fiscal year. On the basis of previous agreements, the Controlled Undertaking was provided with the following:

Agreement Agreement title Description Performance provided (incl.

24


- 5 -

entered into on VAT)

24 June 2009 Loan Agreement Provision of a short-term revolving loan for the purpose of the payment of VAT to the suppliers of electrical power to PXE, up to the amount of CZK 100 million, with the solidarity of the creditors of CSD, PXE, and PSE. Share of Central Securities Depository – credit line of CZK 10 million.


The Central Securities Depository has a debt payable to CCC in the total amount of CZK 11,666,000. The Central Securities Depository arranges for the financial settlement of the physical supplies of electrical power, and the amount payable corresponds to the balance between the payments received from electricity consumers and the payments to suppliers (CZK 11,581,000), plus the amount corresponding to the interest accrued in the bank account holding the money (CZK 85,000).

Legal Acts and other MeasuresOn 26 April 2011, the Controlling Undertaking approved, pursuant to a decision adopted by the sole shareholder, acting in the capacity of the General Meeting of Shareholders held pursuant to Section 190 (1) of ComCo, the 2010 Financial Statements of the Central Securities Depository, in accordance with Art. 17 (1) (d) of the Articles of Association of the Central Securities Depository. In accordance with the provisions of Art. 17 (1) (d) of the Articles of Association and the respective provisions of ComCo, the sole shareholder decided on the payment of a dividend in the amount of CZK 95 per share. In addition, the sole shareholder decided to appoint an auditor and change the members of the Audit Committee.On 11 March 2011, the Controlling Undertaking approved the provision of a loan and the agreement between the Controlling Undertaking and POWER EXCHANGE CENTRAL EUROPE, a.s., dated 10 January 2011, specified above.

On 25 July 2011, the Controlling Undertaking reelected Ing. Petr Horáček as a member of theSupervisory Board of the Controlled Undertaking; on 12 August 2011 the Controlling Undertaking reelected Ing. Helena Čacká as a member of the Board of Directors of the Controlled Undertaking.

No other measures or legal actions were adopted or executed between the undertakings concerned. The Board of Directors of the Central Securities Depository declares that the Controlled Undertaking did not suffer any detriment from the agreements specified above, other measures and steps, or from any other performance accepted or provided.

Prague, 15 March 2012

………………………………………….Ing. Petr KoblicChairperson of the Board of Directors

………………………………………….Ing. Helena Čacká

Vice-Chairperson of the Board of Directors

25

Minutes No. 50 of the Meeting of Supervisory Board Centrální depozitář cenných papírů, a.s., dated 5 April 2012

Agenda: 1. 2011 Report of the Supervisory Board2. Discussion of the Report of the Board of Directors on Relationships between

Affiliated Undertakings3. Discussion of the Report on the Financial Results, including the Auditor’s

Report and the Proposal for the Settlement of Losses

The meeting of the Supervisory Board of Centrální depozitář cenných papírů, a.s. was opened and directed by its chairperson, Ing. Petr Horáček, in the presence of all the other Supervisory Board members. The meeting was also attended by Mgr. Radan Marek, LLM and Ing. Miroslav Prokeš, CSc.

1. The Supervisory Board compiled this Report on the Activities of the Supervisory Board for 2011 and will submit it to Burza cenných papírů Praha, a.s. (the Prague Stock Exchange). The Supervisory Board met once in 2011: see Minutes No. 49 of the Supervisory Board Meeting of 14 April 2011.

2. The Supervisory Board reviewed the Report of the Board of Directors on Relationships between Affiliated Undertakings in Fiscal Year 2011, in which Burza cenných papírů Praha, a.s. is stated as the controlling undertaking and Centrální depozitář cenných papírů, a.s. as the controlled undertaking. The affiliated undertakings include POWER EXCHANGE CENTRAL EUROPE, a.s., CENTRAL COUNTERPARTY, a.s., Energy Clearing Counterparty, a.s. and Central Clearing Counterparty, a.s. The Supervisory Board did not identify any circumstances that would suggest that during fiscal year 2011 Centrální depozitář cenných papírů, a.s. acted in relation to the controlling undertaking or other affiliated undertakings in conflict with the generally binding legal regulations, the Articles of Association or the decisions of the sole shareholder, and the Supervisory Board therefore recommends that Burza cenných papírů Praha, a.s., acting as the sole shareholder of Centrální depozitář cenných papírů, a.s., approve the report.

3. The Supervisory Board discussed the Report on the Financial Results for 2011. The Supervisory Board also studied the auditor’s methods and the Auditor’s Report for the Shareholders of Centrální depozitář cenných papírů, a.s. compiled by KPMG Česká republika Audit, s.r.o. The Supervisory Board recommends that the report be approved by Burza cenných papírů Praha, a.s. as the sole shareholder. The Board also recommends the approval of the regular Financial Statements and the Board of Directors’ proposal for the distribution of profit for 2011.

The date of the next meeting of the Supervisory Board will be determined by the Supervisory Board’s chairperson as required.

Prague, 5 April 2012

…………………………………

Petr Horáček

Chairperson of the Supervisory Board

26

27

28

29

Financial Part

30

31

32

31 December 2011 31 December 2010

ASSETS Gross Adjustment Net Net

B. Fixed assets 447,812 (105,943) 341,869 294,368

I. Intangible fixed assets 369,824 (75,407) 294,417 244,106

1. Incorporation costs 49 (49) – –

3. Software 142,172 (48,600) 93,572 25,321

6. Other intangible assets 226,655 (26,758) 199,897 218,785

7. Intangible fixed assets not in use 948 – 948 –

II. Tangible fixed assets 57,988 (30,536) 27,452 30,262

3. Equipment 57,988 (30,536) 27,452 30,262

III. Long-term investments 20,000 – 20,000 20,000

2. Investments in associates 20,000 – 20,000 20,000

C. Current assets 2,050,261 (457) 2,049,804 2,318,453

II. Long-term receivables 15 – 15 15

5. Advances paid 15 – 15 15

III. Short-term receivables 80,893 (457) 80,436 48,226

1. Trade receivables 26,592 (457) 26,135 32,426

4. Receivables from shareholders/owners and alliance partners 34,937 – 34,937 –

6. Tax receivables 126 – 126 3,680

7. Advances paid 80 – 80 31

8. Estimated receivables 148 – 148 80

9. Other receivables 19,010 – 19,010 12,009

IV. Financial assets 1,969,353 – 1,969,353 2,270,212

1. Cash in hand 298 – 298 157

2. Bank accounts 1,955,083 – 1,955,083 2,237,561

3. Short-term investments 13,972 – 13,972 32,494

D. I. Accruals and deferrals 45,209 – 45,209 3,801

1. Prepaid expenses 45,209 – 45,209 3,800

3. Accrued income – – – 1

TOTAL ASSETS 2,543,282 (106,400) 2,436,882 2,616,622

Balance Sheet as at 31 December 2011(in CZK thousand)

33

EQUITY AND LIABILITIES 31 December 2011 31 December 2010

A. Equity 168,536 119,061

I. Share capital 100,000 100,000

III. Statutory reserve funds, non-distributable reserves 9,501 9,033

IV. Retained earnings 60 669

1. Retained profits 60 669

V. Net profit for the current period 58,975 9,359

B. Liabilities 2,265,025 2,483,544

I. Provisions 13,629 2,000

3. Income tax provisions 8,062 –

4. Other provisions 5,567 2,000

II. Long-term liabilities 6,954 2,621

10. Deferred tax liability 6,954 2,621

III. Short-term liabilities 2,229,175 2,478,923

1. Trade payables 17,883 15,480

2. Payables to group undertakings 199,583 173,316

3. Payables to associated companies 32,404 30,238

4. Payables to shareholders/owners and alliance partners – 1,941

5. Payables to employees 4,428 3,099

6. Payables to social security and health insurance 2,924 1,730

7. Tax liabilities and subsidies 1,367 814

8. Advances received – 5,489

10. Estimated payables 604 584

11. Other payables 1,969,982 2,246,232

B. IV. Bank loans and borrowings 15,267 –

2. Short-term bank loans 15,267 –

C. Accruals and deferrals 3,321 14,017

1. Accrued expenses 262 59

2. Deferred revenues 3,059 13,958

TOTAL EQUITY AND LIABILITIES 2,436,882 2,616,622

34

Year ended31 December 2011

Year ended31 December 2010

II. Revenue from production 358,896 226,579

1. Revenue from own products and services 358,896 226,579

B. Cost of sales 157,278 117,951

1. Materials and consumables 1,285 1,051

2. Services 155,993 116,900

+ Added value 201,618 108,628

C. Personnel expenses 45,999 34,654

1. Wages and salaries 32,591 23,997

2. Remuneration of board members 479 479

3. Social and health insurance expenses 10,293 7,828

4. Other social expenses 2,636 2,350

D. Taxes and charges 116 29

E. Depreciation of fixed assets 71,331 51,282

G. Change in operating provisions and complex prepaid expenses 3,924 1,996

IV. Other operating revenues 12,441 10,550

H. Other operating expenses 11,804 16,778

* Operating profit (loss) 80,885 14,439

VI. Proceeds from sales of securities and ownership interests – 23,732

J. Securities and ownership interests sold – 23,683

VIII. Revenue from short-term financial investments 222 1,139

K. Financial assets expenses 734 426

X. Interest revenue 169 989

N. Interest expense 6,672 3,701

XI. Other financial revenues 61,729 119,888

O. Other financial expense 61,873 119,918

* Profit or loss from financial operations (7,159) (1,980)

Q. Income tax on ordinary profit 14,751 3,100

1. – current 10,418 537

2. – deferred 4,333 2,563

** Profit on ordinary activities after taxation 58,975 9,359

*** Net profit for the accounting period 58,975 9,359

**** Profit before taxation 73,726 12,459

Income Statement for the year ended 31 December 2011(in CZK thousand)

35

Statement of Changes in Equity for the year ended 31 December 2011

Share capitalStatutory

reserve fundRetained earnings

Profit for the current period

Total equity

Balance as at 31 December 2009 100,000 7,985 767 20,950 129,702

Distribution of profit – 1,048 – (1,048) –

Dividends paid – – (98) (19,902) (20,000)

Profit for the current period – – – 9,359 9,359


Distribution of profit – 468 – (468) –

Dividends paid – – (609) (8,891) (9,500)

Profit for the current period – – – 58,975 58,975


(in CZK thousand)

36

Year ended 31 December

2011

Year ended 31 December

2011

P. Opening balance of cash and cash equivalents 2,237,718 2,613,084

Cash flows from operating activities

Z. Profit or loss from operating activities before tax 73,726 12,459

A.1. Adjustments for non-cash transactions 81,771 55,994

A.1.1. Depreciation of fixed assets 71,331 51,282

A.1.2. Change in provisions and reserves 3,924 1,996

A.1.5. Interest income and interest expense 6,503 2,712

A.1.6. Other non-cash movements 13 4

A.* Net operating cash flow before changes in working capital 155,497 68,453

A.2. Changes in working capital (348,025) (299,081)

A.2.1. Change in operating receivables and other assets (77,668) 3,357

A.2.2. Change in operating payables and other liabilities (288,879) (373,937)

A.2.4. Change in short-term financial assets 18,522 71,499

A.** Net cash flow from operations before tax (192,528) (230,628)

A.3. Interest paid (5,237) (147)

A.4. Interest received 169 1,592

A.5. Income tax paid from ordinary operations 1,324 (3 524)

A.*** Net operating cash flows 196,272 (232,707)

Cash flows from investing activities

B.1. Acquisition of fixed assets (118,832) (322,659)

B.*** Net investment cash flows (118,832) (322,659)

Cash flows from financial activities

C.1. Change in payables from financing 42,267 200,000

C.2. Impact of changes in equity (9,500) (20,000)

C.2.6. Dividends paid (9,500) (20,000)

C.*** Net financial cash flows 32,767 180,000

F. Net increase/(decrease) in cash and cash equivalents (282,337) (375,366)

R. Closing balance of cash and cash equivalents 1,955,381 2,237,718

Cash Flow Statement for the year ended 31 December 2011(in CZK thousand)

37

1. GENERAL INFORMATION

1.1. Incorporation and description of the business Centrální depozitář cenných papírů, a.s. (hereinafter “the Company” or “CDCP”) was incorporated by means of a Notary Record under

the business name UNIVYC, a.s. on 21 June 1996 as a joint stock company and entered in the Commercial Register maintained by the

Municipal Court in Prague on 8 October 1996, File B, Insert 4308.

The Company is the legal successor of Burzovní registr cenných papírů, s.r.o., Registration No. C 19209 wound up without liquidation on 8

October 1996 (hereinafter “BRCP”). BRCP was established on 5 April 1993 as a subsidiary of Burza cenných papírů Praha, a.s. (hereinafter

“BCPP”) and its main business activity was settlement of stock exchange trades.

The Czech National Bank (CNB) decided in administrative proceedings according to Act No. 500/2004 Coll. to grant a licence to UNIVYC,

a.s. to organize a central depository of securities on 14 August 2009. Consequently the decision of the sole shareholder of UNIVYC, a.s. at

26 August 2009 has changed the business name to Centrální depozitář cenných papírů, a.s.

The activity of central depository under the CNB licence was started on 7 July 2010. At this date the transfer of records of dematerialized

and immobilized securities from Středisko Cenných Papírů (“SCP”) was successfully completed.

The basic business activities of the Company are operation of the system for stock exchange and OTC trade settlement, lending of

securities, administration of collateral funds, custody and administration of investment securities, settlement of trades in electric power,

managing of central records of dematerialized securities issued in the Czech Republic and assignment of identification codes (ISIN) to

investment instruments. The central depository operates on a participation principle and it provides its services related to administration of

securities evidence as well as trade settlement through the participants. The central depository also provides services for securities issuers.

Business activities:

• to administer redemption of securities, refund of securities and distribution of income from securities,

• to provide for issuers and CDCP participants custody and administration of investment instruments,

• to lend to its participants securities held in the central and separate register of securities if they are properly secured, or mediating these

transactions,

• to administer the funds and investment instruments placed as collateral for the fulfilment of the obligations arising from the settlement of

transactions with investment instruments,

• to set up accounts for CDCP participants or clients at foreign entities with a similar activity as the central depository,

• to carry out clearing of transactions taking place on commodity exchanges under special legislation, which regulates commodity

exchanges,

• to provide to its participants other activities connected with the activities of the central depository under legislation on the capital market.

The Company is a founder of Nadační fond CDCP entered in the Commercial Register maintained by the Municipal Court in Prague on

23 December 2010, File N, Insert 822.

1.2. Year-to-year changes and amendments to the Commercial RegisterMr. Petr Koblic was re-elected Chairman of the Board of Directors. Ms. Helena Čacká was re-elected Vice Chairman of the Board of

Directors. Mr. Petr Horáček ceased to be Chairman of the Supervisory Board; he was elected as a member of the Supervisory Board on

the same date. All changes were entered into the Commercial Register on 13 December 2011.

Notes to the Financial Statements for the year ended 31 December 2011

38

1.3. Group identificationThe Company is a member of the group of Burza cenných papírů Praha, a.s. (hereinafter “BCPP”).

CEESEG AG is majority shareholder of BCPP group.

Burza cenných papírů Praha, a.s.(Prague Stock Exchange)

The Organiser of the Securities Market

Centrální depozitář cenných papírů, a.s.(Central Securities Depository Prague)

Clearing and settlement of trades in securities

and electricity

100%

100%

100%

100%

331/3%

331/3%331/3%

POWER EXCHANGE CENTRAL EUROPE, a.s.

The Organiser of the Electricity Market

CENTRAL COUNTERPARTY, a.s.

Counterparty to every trading participant in concluding

trades in electricity

Central Clearing Counterparty, a.s.



Energy Clearing Counterparty, a.s.



39

1.4. Board of Directors and SupervisoryThe members of the Board of Directors as at 31 December 2011 were as follows:

Petr Koblic – Chairman of the Board of Directors

Helena Čacká – Vice Chairman of the Board of Directors, Managing Director

Jiří Opletal – member of the Board of Directors

The members of the Supervisory Board as at 31 December 2011 were as follows:

Petr Horáček – member of the Supervisory Board

Radan Marek – member of the Supervisory Board

Miroslav Prokeš, CSc. – member of the Supervisory Board

1.5. Organizational structure of the Company

Chief Executive Officer

Office of the CEO

Department of Risk Management and Development

Operations Department

Issuers and Information Services Department

Finance and Administration Department

2. ACCOUNTING POLICIES

2.1. Basis of preparationThese financial statements have been prepared in accordance with generally accepted accounting principles in the Czech Republic and

have been prepared under the historical cost convention. All balances in the financial statements are presented in thousands of Czech

crowns, unless indicated otherwise.

2.2. Tangible and intangible fixed assetsAll tangible fixed assets with a useful life longer than one year and a unit cost of more than TCZK 10 are treated as tangible fixed assets.

All intangible assets with a useful life longer than one year and a unit cost of more than TCZK 10 are treated as intangible fixed assets.

Tangible and intangible assets with a useful life longer than one year and a unit cost below TCZK 10 are not recognized in the balance sheet,

but are recognized in the profit and loss account upon acquisition and recorded in the operating evidence.

Acquired tangible fixed assets are recorded at cost, which include all costs incurred in bringing the assets to their present location

and condition.

40

Tangible and intangible fixed assets are depreciated applying the straight-line basis over their estimated useful lives as follows:

A provision for impairment is established when the carrying value of an asset is greater than its estimated recoverable amount.

2.3. Investments in associatesInvestments in associates represent enterprises over which the Company has significant influence, i.e. the power to participate in the

financial and operating policy decisions, but not control (“the associate”).

Investments in associates are recorded at cost less a provision for impairment.

2.4. Other securitiesThe Company classifies securities and investments, other than investments in subsidiaries and associates, as trading and held-to-maturity.

Securities that are acquired principally for the purpose of generating profits from short-term (maximum one year period) fluctuations in price

are classified as trading investments and included in current assets.

Investments with a fixed maturity that management has the intent and ability to hold to maturity are classified as held-to-maturity and are

included in non-current assets, unless the date of maturity falls within 12 months of the balance sheet date.

All securities and investments are initially recorded at cost, including transaction costs. Held-to-maturity investments are subsequently

accounted for at amortized cost. Other investments are subsequently accounted for at fair value. The fair value is determined as the market

value of the securities as at the balance sheet date. Measurement of non-traded securities is based on management estimates based on

recognized models or valuation techniques. Gains and losses arising from changes in the fair value of trading instruments are included in

the income statement in the period in which they arise.

2.5. Receivables Receivables are stated at their nominal value less a provision for doubtful receivables. A provision for bad debts is created on the basis of

an ageing analysis and individual evaluation of the recoverability of the receivables. Receivables from related parties are not provided for.

2.6. Cash and cash equivalentsCash and cash equivalents include cash in hand, stamps and vouchers and cash at banks. Cash equivalents are short-term highly liquid

investments that can be exchanged for a predictable amount of cash and no significant changes of value over time are expected. Cash

equivalents are, for example, deposits with a maturity of less than three months from the date of acquisition and liquid commercial paper

traded in public markets.

Fixed assets categories Accounting depreciation

Establishment costs 5 years

Software 3 years

Other intangible assets 12 years

Office equipment, computers 3–5 years

Transport vehicles 5 years

Furniture and fixtures 3–10 years

41

2.7. Foreign currency translationTransactions denominated in a foreign currency are translated and recorded at the exchange rate as at the transaction date.

Cash, receivables and liabilities balances denominated in foreign currencies have been translated at the exchange rate published by the

Czech National Bank as at the balance sheet date. All exchange gains and losses on cash, receivables and liabilities balances are recorded

in the income statement.

2.8. Employment benefitsRegular contributions are made to the state to fund the national pension plan. The Company also provides contributions to defined

contribution plans operated by third parties.

2.9. Revenue recognitionRevenues are recorded as at date of rendering the services and are recognized net of discounts and without VAT.

2.10. LeasesThe costs of assets held under operating leases are not capitalized as fixed assets. Lease payments are expensed evenly over the life of

the lease. Future lease payments not yet due are disclosed in the notes but not recognized in the balance sheet.

2.11. ProvisionsProvisions are recognized when the Company has a present obligation, it is probable that an outflow of resources will be required to settle

the obligation, and a reliable estimate of the amount can be made.

2.12. Deferred taxationDeferred tax is recognized on all temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax

base effective for upcoming periods. Deferred tax assets are recognized if it is probable that sufficient future taxable profits will be available

against which the assets can be utilized.

2.13. Related partiesThe Company’s related parties are considered to be the following:

– shareholder, of which the Company is a subsidiary or an associate, directly or indirectly, and subsidiaries and associates of this shareholder;

and/or

– members of the Company’s statutory and supervisory bodies and management and parties related to such members, including entities

in which they have a controlling or significant influence.

Material transactions and outstanding balances with related parties are disclosed in Note 3.2.4., 3.6.6 and 4.

2.14. Group VAT registrationEffective from 1 January 2009, Burza cenných papírů Praha, a.s., POWER EXCHANGE CENTRAL EUROPE, a.s. (hereinafter “PXE”) and

Centrální depozitář cenných papírů, a.s. (henceforth “the Group”), created a Value Added Tax (henceforth “VAT”) group according to Act

no. 235/2004. Effective from 1 January 2011 Central Clearing Counterparty, a.s. (hereinafter “CCC”), Energy Clearing Counterparty, a.s.

(hereinafter “EnCC”) a CENTRAL COUNTERPARTY, a.s. (hereinafter “CCP”) became members of this Group. Consequently the Group is

registered under a joint VAT identification number.

42

As at 1 January 2011 the Group used an advance coefficient of 0.30. The Group applied this coefficient for calculating a proportional

VAT deduction on acquired supplies in 2010. In the VAT return for December 2011 a settlement coefficient of 1 was calculated and

represents the advance coefficient for 2012. The difference between the applied deduction based on the advance rate during the entire

calendar year and the deduction of VAT calculated on the basis of the settlement coefficient was settled in December 2011.

Based on the group registration the Group claimed VAT coefficient of 1 as a deductible item in the VAT return.

2.15. Use of estimatesThe presentation of financial statements requires management to make estimates and assumptions that affect the reported amounts

of assets and liabilities at the balance sheet date and the reported amounts of revenues and expenses during the accounting period.

Management of the Company believes that the estimates and assumptions used will not significantly differ from the actual results and

outcomes in the following accounting periods.

2.16. Classification of liabilitiesThe Company classifies as short-term any part of long-term liabilities, bank loans and overdrafts that is due within one year of the balance

sheet date.

2.17. Funds administered by the Company 2.17.1. Stock Exchange Guarantee Fund (SEGF)

The Company administers the funds included in the Stock Exchange Guarantee Fund (“SEGF”), an association with non-legal entity status.

The funds of the association are deposited in standalone bank accounts and asset accounts maintained on behalf of CDCP. Pursuant to

the Agreement of the SEGF Association and instruction from the SEGF Executive Council, the Company invests the associated funds in the

money market in the form of term deposits or by purchasing Government treasury bills, thereby generating interest income.

The Executive Council of SEGF has used repo operations since 2008.

Income from financial assets in SEGF does not form a part of revenues of the Company. Revenues and costs of SEGF were distributed

among individual association’s members pursuant to agreed rules. In compliance with the Standpoint of the Ministry of Finance of the

Czech Republic of 17 July 2000 regarding taxation of interest yields from SEGF funds, the Company allocated these interest revenues to

the association’s members in their full amount.

The Company was remunerated for the administration of SEGF funds with a fee set by SEGF’s rules; this fee is included in the total sales

of the Company.

SEGF includes the Fund of Market Makers and the Margin Fund. The Fund of Market Makers became part of SEGF in 1999 and its purpose

is to secure liabilities and cover risks arising from trades in SPAD. In 2006, in relation to the newly introduced stock exchange trading in

derivatives, the Guarantee Fund for trading in derivatives (the Margin Fund) became a part of SEGF.

The Company administers SEGF funds according to SEGF’s rules.

Margin deposits of financial derivatives traders are presented separately from liabilities to SEGF, and SEGF associated funds are accounted

for in the off-balance sheet as values received into administration.

2.17.2 Collateral Fund

The Company further acts as an administrator of funds that the Company obtains in order to ensure smooth trading and settlement, e.g.

the Collateral Fund, which covers risks connected with securities borrowings.

The Company recognizes these funds as financial assets in correspondence with other payables.

43

2.17.3 Margin Deposits and the Clearing Fund

In 2007, Energetická burza Praha (effective from 15 July 2009 named POWER EXCHANGE CENTRAL EUROPE, a.s.) was established. This

company provides services related to settlement of trades in electricity. In 2007 the margin deposit and the clearing fund were established in

connection with trading on the power exchange. The margin deposit serves as a collateral for fulfilment of obligations from power exchange

contracts (hereinafter “Margin Deposits”) and the purpose of the Clearing Fund is to secure obligations and cover risks arising from the

settlement of power trading on PXE.

The Company only accepts cash and cash equivalents as Margin Deposits. The Company will use the Margin Deposits of a trading

participant if the trading participant is delayed in fulfilment of its obligations from power futures settlement. The trading participant is obliged

to replenish its margin deposit on the day following after the day when the margin deposit funds were used.

The Company recognizes these funds as financial assets in correspondence with other payables.

2.18. Cash flow statement The cash flow statement is prepared using the indirect method. Cash equivalents include current liquid assets easily convertible into cash

in an amount known in advance.

2.19. Subsequent eventsThe effects of events, which occurred between the balance sheet date and the date of preparation of the financial statements, are recognized

in the financial statements if these events provide further evidence of conditions that existed as at the balance sheet date.

Where significant events occur subsequent to the balance sheet date but prior to the preparation of the financial statements, which are

indicative of conditions that arose subsequent to the balance sheet date, the effects of these events are disclosed, but are not in themselves

recognized in the financial statements.

2.20. Change in accounting principlesThere was no change in accounting methodology, valuation or depreciation during 2011 or 2010.

3. ADDITIONAL INFORMATION ON THE BALANCE SHEET AND INCOME STATEMENT

3.1. Fixed assets3.1.1. Tangible f ixed assets

Cost Office equipment, computers

Transportvehicles

Furnitureand fixtures

Total

Balance as at 1 January 2010 16,206 14 2,210 18,430

Additions 33,441 – 226 33,667

Disposals (129) – – (129)

Balance as at 31 December 2010 49,518 14 2,436 51,968

Additions 5,015 – 1,129 6,144

Disposals (124) – – (124)


(in CZK thousand)

44

Accumulated depreciation Office equipment, computers

Transportvehicles


Total

Balance as at 1 January 2010 13,461 14 2,023 15,498

Additions 6,196 – 141 6,337

Disposals (129) – – (129)


Additions 8,759 – 195 8,954

Disposals (124) – – (124)


CostIncorporation

costsSoftware

Other intangible assets

Total

Balance as at 1 January 2010 49 1,130 – 1,179

Additions – 62,371 226,655 289,026

Disposals – – – –

Balance as at 31 December 2010 49 63,501 226,655 290,205

Additions – 111,740 – 111,740

Disposals – (33,069) – (33,069)


Net book value Office equipment, computers

Transportvehicles


Total

Balance as at 31 December 2010 29,990 – 272 30,262

Balance as at 31 December 2011 26,246 – 1,206 27,452

As at 31 December 2011 and 31 December 2010 the Company had no tangible fixed assets under construction.

Additions to tangible fixed assets in the amount of TCZK 6,144 are represented by purchases of IT equipment (servers, computers, storage

devices, switches, disk arrays, tape libraries), and air conditioning units.

Disposals of tangible fixed assets in the amount of TCZK 124 are represented by a disposal of IT equipment.

Depreciation of tangible fixed assets amounted to TCZK 8,954 as at 31 December 2011 (2010: TCZK 6,337).

The total amount of low value tangible fixed assets not recognized in the balance sheet but included in the operating records amounted to

TCZK 2,475 as at 31 December 2011 (2010: TCZK 2,412).

No tangible fixed asset was pledged in either 2011 or 2010.

3.1.2. Intangible f ixed assets

(in CZK thousand)

(in CZK thousand)

45

Accumulated amortizationIncorporation

costsSoftware


Total

Balance as at 1 January 2010 49 1,105 – 1,154

Additions – 37,075 7,870 44,945

Disposals – – – –


Additions – 43,489 18,888 62,377

Disposals – (33,069) – (33,069)


Net book valueIncorporation

costsSoftware


Total

Balance as at 31 December 2010 – 25,321 218,785 244,106

Balance as at 31 December 2011 – 93,572 199,897 293,469

Balance as at 31 December 2011 Balance as at 31 December 2010

Due within 1 year 875 673

Due in 1 to 5 years 1,282 1,227

Total 2,157 1,900

As at 31 December 2011 the Company had tangible fixed assets under construction in the amount of TCZK 948 (2010: TCZK 0).

Additions of intangible fixed assets in the amount of TCZK 111,740 are represented mainly by purchase of software licences in connection

with the takeover of central depository activities.

Disposal of intangible fixed assets in the amount of TCZK 33,069 are represented mainly by disposed software licence provided for

fixed period.

Amortization of intangible fixed assets amounted to TCZK 62,377 as at 31 December 2011 (2010: TCZK 44,945).

The total amount of low value intangible fixed assets not recognized in the balance sheet but included in the operating evidence amounted

to TCZK 34 as at 31 December 2011 (2010: TCZK 0).

3.1.3. Leased assets

The Company has an operating lease for three cars as at 31 December 2011. The annual cost of this lease for 2011 was TCZK 804

(2010:TCZK 718).

The Company is committed to payments under operating leases for motor vehicles as follows:

(in CZK thousand)

(in CZK thousand)

46

3.2. Receivables 3.2.1. Short-term trade receivables and other advance payments

3.2.2. Ageing of trade receivables

The Company reports short-term receivables more than five years past due in the amount of TCZK 101 as at 31 December 2011

(2010: TCZK 101). These claims are registered in insolvency proceedings. These receivables are fully provided for.

3.2.3. Provisions to receivables

3.2.4. Receivables from related parties


Short-term trade receivables

– Customers 26,514 32,359

– Other trade receivables 78 168

Total trade receivables 26,592 32,527

– Operating advances 80 31

– Adjustments (457) (101)

Total 26,215 32,457


Burza cenných papírů Praha, a.s.

– services related to rent of offices – 79

– VAT receivables (VAT Group) 34,937 –

– CDCP services 9 –

POWER EXCHANGE CENTRAL EUROPE, a.s.

– settlement of trades 631 553

Total short-term receivables from related parties 35,577 632

Provisions to receivables 2011 2010

Balance as at 1 January 101 105

Creation of provision 356 –

Release of provision – (4)

Balance as at 31 December 457 101

Year Class Before Overdue (days) Total

due date 0–90 91–120 121–180 181–365 > 365

2011 Short-term 25,552 360 60 89 191 340 26,592

Provisions – – – (19) (98) (340) (457)

Total 25,552 360 60 70 93 – 26,135

2010 Short-term 31,363 981 82 – – 101 32,527

Provisions – – – – – (101) (101)

Total 31,363 981 82 – – – 32,426

(in CZK thousand)

(in CZK thousand)

(in CZK thousand)

(in CZK thousand)

47

3.2.5. State – tax receivables

The Company has no tax overpayments as at 31 December 2011 (2010: TCZK 3,680).

3.3. Financial assets 3.3.1. Long-term financial assets

The Company owns a 33.3% share in POWER EXCHANGE CENTRAL EUROPE, a.s. (hereinafter “PXE”), with its registered office at Rybná

14, Praha 1. Registered capital of PXE amounts to TCZK 60,000, PXE recorded profit amounting to TCZK 11,566 in 2011 (2010: TCZK 845).

3.3.2. Short-term financial assets

The Company provides settlement of trades concluded on the PXE, in compliance with relevant regulation, and administers funds in bank

accounts maintained by the Company for these purposes. The amount of the Clearing Fund was TCZK 63,233 as at 31 December 2011

(2010: TCZK 61,415). The balance of the Margin Deposit amounted to TCZK 1,842,989 as at 31 December 2011 (2010: TCZK 1,817,879).

The Company recognized short-term securities amounting to TCZK 13,972 (2010: TCZK 32,494) in its balance sheet as at 31 December 2011.

3.4. Deferrals – assetsPrepaid expenses in the amount of TCZK 45,209 (2010: TCZK 3,800) include expenses for IT services, operations support system,

property insurance, liability insurance, preventive care and administration of a documentary register by SCP.

3.5. Equity3.5.1. Share capital

The registered capital of the Company as at 31 December 2010 in the amount of TCZK 100,000 is in accordance with the Articles of

Association divided into 100,000 physical shares with a nominal value of TCZK 1 each. The Company issued twenty collective shares

registered on behalf of Burza cenných papírů Praha, a.s., one share in the nominal value of TCZK 7,000, another share in the nominal value

of TCZK 3,000 and eighteen shares in the nominal value of TCZK 5,000 each.

3.5.2. Profit distribution and statutory reserve fund

The net profit of TCZK 9,359 for 2010 was approved and distributed by the decision of the sole shareholder on 26 April 2011.

The statutory reserve fund is created from the profit of the Company according to law and may not be distributed to shareholders, but may

be used to offset losses.

Short-term financial assets Balance as at 31 December 2011 Balance as at 31 December 2010

Petty cash 43 46

Cash equivalents 255 111

Bank accounts, of which: 1,955,083 2,237,561

– cash in transit – 1,253

– own current accounts 4,223 2,175

– bank accounts of SEGF (margin) 27,522 32,024

– bank accounts of Collateral Fund 484 268,187

– Clearing Fund, Margin Deposits and other bank accounts related to PXE

1,922,854 1,933,922

Debt securities held to maturity – depository notes – 18,000

Debt securities held for trading 13,972 14,494

Total current financial assets 1,969,353 2,270,212

(in CZK thousand)

48

3.6. Liabilities3.6.1. Advances received

A time discrepancy regularly arises between due dates of SCP invoices and encashment of payments by traders. This is covered by

collected advances from traders (see Note 3.6.2.). In connection with the takeover of the SCP business, these receivables were returned

to the respective traders.

3.6.2. Trade payables

3.6.6. Payables to related parties

None of trade payables are past due or secured.

3.6.3. Social security and health insurance l iabil it ies

Social security and health insurance liabilities total TCZK 2,924 (2010: TCZK 1,730), of which TCZK 2,041 (2010: TCZK 1,206) relates to

overdue social security liabilities and TCZK 883 (2010: TCZK 524) to overdue health insurance liabilities. None of these liabilities are overdue.

3.6.4. Tax l iabil it ies and subsidies

Tax liabilities amount to TCZK 1,367 (2010: TCZK 814), of which TCZK 1,304 (2010: TCZK 786) is related to personal income tax and

TCZK 63 (2010: TCZK 28) is related to other taxes. None of these liabilities are overdue.

3.6.5. Other payables

Short-term trade payables and received prepayments Balance as at 31 December 2011 Balance as at 31 December 2010

– Suppliers 17,816 15,322

– Advance payments received – 5,489

– Other trade payables 67 158

Total 17,883 20,969


Remuneration of members of statutory bodies 57 57

Supplementary pension scheme 65 42

Securities lending – collateral 19,484 280,187

Margin to securities 27,522 32,024

Settlement of trades concluded on PXE 1,922,854 1,933,922

Total 1,969,982 2,246,232


Burza cenných papírů Praha, a.s. 205,013 179,690

Liabilities – VAT Group – 1,941

Other payables – VAT account (CCP, CCC, EnCC) 11,949 50,154

CENTRAL COUNTERPARTY, a.s. 4,518 4,403

Central Clearing Counterparty, a.s. 85 38

Energy Clearing Counterparty, a.s. 81 33

POWER EXCHANGE CENTRAL EUROPE, a.s. 32,404 30,238

Total short-term liabilities 254,050 266,497

(in CZK thousand)

(in CZK thousand)

(in CZK thousand)

49

Short-term payables due to Burza cenných papírů Praha, a.s. in the amount of TCZK 5,430 (2010: TCZK 6,374) were not overdue and

comprised ten invoices for services such as telephone charges, IT services, reinvoicing TSA, other services and a loan provided by BCPP

in the amount of TCZK 199,583 (2010: TCZK 173,316).

As the Company provides settlement of physical supplies of electricity, the payables due to CCP, CCC and EnCC arise from the difference

between the payments made by electricity consumers and payments made to suppliers in the amount of TCZK 11,949 (2010: TCZK 50,154)

and the amount of TCZK 4,684 (TCZK 4,474) corresponding to interest income from the bank account where the financial sources

are administered.

The payable to PXE is represented by a loan in the amount of TCZK 32,404 (2010: TCZK 30,238).

3.6.7. Short-term bank loans

A bank loan is drawn at Komerční banka a.s.; the loan has monthly instalments and matures on 30 April 2012. The interest rate is floating

and amounts to the sum of 1M PRIBOR and a margin of 0.50% p.a. The interest rate on the overdraft amounts to the sum of O/N PRIBOR

and a margin of 1.55% p.a. The overdraft can be drawn up to amount of TCZK 55,000.

3.7. Deferred taxDeferred tax as at 31 December 2011 is calculated using an applicable tax rate of 19% (tax rate for 2011 and following years), depending

on the period in which temporary differences are expected to be reversed.

The deferred tax liability can be analysed as follows


Fixed assets 7,969 3,001

Provisions (985) (380)

Provisions to receivables (30) –

Deferred tax liability / (assets) 6,954 2,621

Deferred tax expense / (income) 4,333 2,563


Bank loan 13,333 –

Overdraft 1,934 –

Total short-term bank loans 15,267 –

(in CZK thousand)

(in CZK thousand)

50

3.8. Estimated payablesEstimated payables in the amount of TCZK 604 as at 31 December 2011 (2010: TCZK 584) consisted of estimated rent expenses..

3.9. Revenue analysisAll revenues in 2010 and 2011 were generated in the Czech Republic and can be analysed by types of activities as follows:

2011 2010

Settlement fee 78,228 74,846

Settlement fee received from BCPP 8,932 9,225

Fee for administration of accounts 1,727 733

SCP services – 11,335

SCP postage – 1,361

Revenue from settlement of PXE trades 4,631 4,343

Multi-cycle trading charge 813 900

Trade registration charges 976 560

Revenue from mediation of the securities income distribution 135 51

Revenue from securities deposit 165 560

Revenue from primary issues – 282

Fee for the administration of foreign securities 9,673 11,265

Collective bond registration and administration 207 287

Revenue from other services 332 277

Participation fees 8,873 3,555

Annual fee of clearing participant 853 906

Communication fee 991 865

Service fee for RM-SYSTÉM 4,967 1,920

Fees for the management of securities in the owner accounts in the central depository 78,781 29,613

Fees for the registration of a new issue in the central depository 84,284 34,871

Fees for the registration of a new issue in the independent CSD records 105 52

Fees for the maintenance of issue records 42,374 19,210

Fees for other services to issuers (extracts, etc.) 8,052 2,674

Fees for special operation for issues maintained on the basis of a contract 9,259 6,625

Fees for services to issuers (squeeze outs) 4,526 5,577

Fees for maintenance of records of participation certificates 999 472

Fees for other types of transfers 1,890 667

Fees for maintenance of documentary SCP evidence 2,447 1,235

Fee for providing information to the public 1,069 341

Fee for proving extract of accounts 3,607 1,971

Revenues from sale of own services 358,896 226,579

(in CZK thousand)

51

In connection with the takeover of the central depository services, in 2011 there was an increase in revenues from sale of own services

compared to 2010.

According to the Agreement on settlement of exchange trades and transaction and on the provision of related services, dated 30 December

2009 and effective from 1 January 2010, CDCP’s share of the fee for the settlement of trades and transactions amounted to 35% of

BCPP’s revenues from the settlement of trades executed through the AOS system.

3.10. Services

According to the Agreement on providing IT services dated 30 December 2009 and effective from 1 January 2010, BCPP’s share of the

fees for settlement of trades and transactions amounted to 65% of CDCP’s revenues from settlement of trades executed through AOS

system and from the communication fee.

According to a transfer pricing analysis undertaken by Deloitte Advisory s.r.o., 8% of CDCP revenues from central depository activities

services belong to BCPP for the provision of IT.

2011 2010

Fees for suspended and unsettled trades 7,017 6,724

Revenue from SEGF administration 293 414

Revenue – margins of PXE 138 58

Commission from securities lending 332 592

Revenue from penalty related to lending of securities – 100

Inter-bank payment fees 2,695 2,651

Other revenues 144 –

Effect of VAT coefficient 1,819 –

Contractual penalty interest 3 11

Other operating revenues 12,441 10,550

Total revenues from ordinary activities 371,337 237,129

2011 2010

SCP services – 11,332

SCP postage – 1,361

Premises lease 10,481 4,583

Advisory and legal services 5,236 4,572

Maintenance services 57,030 29,103

Payments for the deposit of securities 141 432

Training, seminars, conferences 804 357

Telecommunication 1,287 1,274

Travel expenses 726 328

Audit fee 540 540

Operating lease of cars 778 598

Fees for maintenance of documentary SCP evidence 4,893 2,470

IT services related to settlement of transactions 51,389 49,190

IT services related to central depository services 19,752 8,579

Other services 2,936 2,181

Total services 155,993 116,900

(in CZK thousand)

(in CZK thousand)

52

3.11. Other operating expenses

3.12. Financial revenues and expenses

3.13. Income tax calculation

2011 2010

Gifts 273 18

Receivables written off 13 4

Fees for the administration of foreign securities 6,797 7,639

Czech National Bank fees 1,381 1,405

Insurance premium 393 367

Effect of VAT coefficient 2,135 6,243

Membership fees (ECSDA, AKAT) 310 358

Other operating costs 502 744

Total other operating expenses 11,804 16,778

2011 2010

Foreign exchange gains 61,729 119,888

Revenue from the sale of portfolio securities – 23,732

Gain from portfolio revaluation 212 999

Revenue from e-Trading Komerční banka, a.s. (depository notes) 10 140

Interest income 169 989

Total financial revenues 62,120 145,748

2011 2010

Profit before tax 73,726 12,459

Tax non-deductible costs (16,828) (9,844)

Non-taxable income (2,003) (503)

Adjusted tax base 54,895 2,112

Current tax on income from ordinary activities 10,430 401

Current tax – settlement of previous periods (12) 136

Current income tax expense at a tax rate of 19% (2010: 19%) 10,418 537

2011 2010

Foreign exchange losses 61,691 119,769

Securities sold – portfolio – 23,683

Losses from financial assets – portfolio revaluation 734 426

Bank charges 182 149

Interest expense 6,672 3,701

Total financial expenses 69,279 147,728

(in CZK thousand)

(in CZK thousand)

(in CZK thousand)

53

3.14. Provisions

4. RELATED PARTY TRANSACTIONS

Revenues:

Expenses:

For transactions with BCPP, see Notes 3.9 and 3.10

Corporate income tax provision Other provisions

Balance as at 1 January 2011 – 2,000

Creation of provision 10,430 5,567

Usage of provision (2,368) (2,000)

Balance as at 31 December 2011 8,062 5,567

2011 2010

Income tax provision 8,062 –

Other provisions 5,567 2,000

Total provisions 13,629 2,000

2011 2010


Settlement fee related to the Agreement on the settlement of exchange trades 8,932 9,225

Fee for transfer of securities in the central depository 46 –

Services provided to PXE – settlement of trades 4,647 4,329

Total revenues 13,625 13,554

2011 2010


On-line data communication 42 42

Rent 10,431 4,309

IT support related to the settlement of trades 51,389 49,190

IT support related to the administration of securities register 19,752 8,579

Interest expense 5,222 3,316

PXE – interest expenses 985 335

Total expense 87,821 65,771

(in CZK thousand)

(in CZK thousand)

(in CZK thousand)

54

5. EMPLOYEES, COMPANY MANAGEMENT AND STATUTORY BODIES

5.1. Staff cost and number of staffAverage staff count and staff costs for 2011 and 2010 are stated below:

5.2. Loans, credits and other benefits provided The following benefits were granted to the members of the Board of Directors, Supervisory Board and the Company management

in 2010 and 2011:

Staff count is calculated as an average number of staff during the period. Management includes the Managing Director and her deputies.

The members of the Board of Directors and Supervisory Board were granted benefits on the basis of the decision of the sole shareholder

from August 1998. Contracts were concluded between the Company and its Managing Director and her deputies for the use of company

cars for private purposes.

2011 Count Total personnel expenses

Employees 37 37,209

Management 3 8,311

Total 40 45,520

2010 Count Total personnel expenses

Employees 30 26,583

Management 3 7,592

Total 33 34,175

2011 Board of Directors SupervisoryBoard Company management Total

Other bonuses 444 35 – 479

Life and pension insurance contributions – – 154 154

Cars/other movable and immovable assets to be used for private purposes

– – 245 245

2010 Board of Directors SupervisoryBoard Company management Total

Other bonuses 444 35 – 479

Life and pension insurance contributions – – 111 111

Cars/other movable and immovable assets to be used for private purposes

– – 237 237

(in CZK thousand)

(in CZK thousand)

55

6. ASSOCIATED FUNDS OF SEGF AS AT 31 DECEMBER 2010 NOT RECOGNIZED IN THE BALANCE SHEET

7. AUDITOR FEEThe information on the remuneration of the audit firm KPMG Czech Republic Audit, s.r.o. is disclosed in the notes to the consolidated

financial statements of the parent company, Burza cennných papírů Praha, a.s.

8. CONTINGENT LIABILITIES The management of the Company is not aware of any significant unrecorded contingent liabilities as at 31 December 2011 and as

at 31 December 2010.

9. CASH AND CASH EQUIVALENTS Cash and cash equivalents disclosed in the cash flow statement can be analysed as follows:

Bank accounts 5,114

Fixed income securities held to maturity

– long-term 21,898 Liabilities to members of association 141,814

– short-term 114,802

Total assets 141,814 Total liabilities 141,814

Balance as at 31 December 2011

Balance as at 31 December 2010

Cash in hand and cash in transit 43 46

Cash at bank 1,955,083 2,237,561

Total cash and cash equivalents included in current financial assets 255 111

Total cash and cash equivalents 1,955,381 2,237,718

(in CZK thousand)

(in CZK thousand)

56

Petr Koblic Chairman of the Board of Directors

Helena Čacká Vice Chairman of the Board of Directors

10. SUBSEQUENT EVENTS

No events have occurred subsequent to the balance sheet date that would have a material impact on the financial statements as

at 31 December 2011.

Prague, 13 March 2012

57

58

Contact

CENTRAL SECURITIES DEPOSITORY PRAGUERybná 14

110 05 Prague 1

[email protected]

www.cdcp.cz

59

Translation, editing and DTP provided by English Editorial Services, s.r.o.

Central Securities Depository Prague, Rybná 14, 110 05 Prague 1, Czech Republic [email protected], www.cdcp.cz

Documents

2011: Annual Report - CDCP · 2013-01-24 · (E4U, a.s.) on the basis of a contract with the issuer. The related calculation of income tax was also part of the service for the issuer