Differences Between Capital Securities' Hong Kong Stock Prospectus and A-share Annual Report Data: Attributed to IFRS and Chinese Accounting Standards Discrepancies

On October 24, it was reported that there are discrepancies between the Hong Kong stock prospectus of Capital Securities Corporation Limited 601136 and its A-share annual report data. The Hong Kong prospectus disclosed a total revenue of 9.116 billion yuan for the years 2022 to 2024, while the A-share annual report recorded total revenue of 5.933 billion yuan for the same period, indicating a difference of 3.1 billion yuan, which constitutes a discrepancy ratio between one-third to one-half.

In response, Capital Securities stated that the financial reporting in its Hong Kong prospectus is prepared under International Financial Reporting Standards (IFRS), with revenue including fees and commission income, interest income, investment gains and losses (mainly including investment gains plus fair value changes), and other income and gains.

Conversely, the financial report disclosed in the A-share is prepared based on Chinese Accounting Standards and published in accordance with the financial statement format for financial enterprises issued by the Ministry of Finance. Revenue here includes net fees and commission income (fees and commission income minus fees and commission expenses), net interest income (interest income minus interest expenses), investment gains, fair value gains and losses, as well as other types of income.

The primary reason for the discrepancies lies in whether fees and commission expenses and interest expenses are deducted from revenue or included in the total expenses. The differences in revenue and expenses in segment reporting are also attributed to these divergent accounting standards.