TIDMIRF
RNS Number : 5537R
IRF European Fin Investments Ltd
30 April 2009
IRF European Finance Investments Ltd
30 April 2009
IRF European Finance Investments Ltd
("IRF" or the "Company")
Full Year 2008 Results
IRF European Finance Investments Ltd (SFM: IRF) announces its audited financial
results for the fiscal year ended 31 December 2008.
Financial Highlights
+----------------------------+-----------------------+----------------------+
| |
+----------------------------+
| Amounts in EUR 000 | Fiscal Year ended 31 |Fiscal Year ended 31 |
| | December 2008 | December 2007 |
+----------------------------+-----------------------+----------------------+
| Amounts in EUR 000 | Fiscal Year ended 31 |Fiscal Year ended 31 |
| | December 2008 | December 2007 |
+----------------------------+-----------------------+----------------------+
| Income Statement items | | |
+----------------------------+-----------------------+----------------------+
| Net (Loss)/ Income | (216,621) | 64,360 |
+----------------------------+-----------------------+----------------------+
| (Loss)/Profit before | (218,795) | 63,513 |
| income tax | | |
+----------------------------+-----------------------+----------------------+
| Income tax expense | - | - |
+----------------------------+-----------------------+----------------------+
| (Loss)/Profit after tax | (218,795) | 63,513 |
| from continuing operations | | |
+----------------------------+-----------------------+----------------------+
| Net (Loss)/Profit from | (87,139) | 14,513 |
| discontinued operations | | |
+----------------------------+-----------------------+----------------------+
| (Loss)/Profit after Tax | (305,934) | 78,026 |
+----------------------------+-----------------------+----------------------+
| Attributable to equity | (264,129) | 61,635 |
| holders of IRF | | |
+----------------------------+-----------------------+----------------------+
| Minority Interests | (41,806) | 16,391 |
+----------------------------+-----------------------+----------------------+
| Basic earnings (loss) per | (2,12) | 0,56 |
| share (in euro/share) | | |
+----------------------------+-----------------------+----------------------+
| Basic earnings (loss) per | (1,75) | 0,57 |
| share (in euro/share) from | | |
| continuing operations | | |
+----------------------------+-----------------------+----------------------+
| Balance Sheet Items | | |
+----------------------------+-----------------------+----------------------+
| Cash and cash equivalents | 148,610 | 369,083 |
+----------------------------+-----------------------+----------------------+
| Total assets | 403,689 | 2,750,355 |
+----------------------------+-----------------------+----------------------+
| Total liabilities | 200,148 | 1,973,008 |
+----------------------------+-----------------------+----------------------+
| Total Equity | 203,541 | 777,347 |
+----------------------------+-----------------------+----------------------+
| Equity attributable to | 203,541 | 487,099 |
| equity holders of the | | |
| Company | | |
+----------------------------+-----------------------+----------------------+
| Minority Interests | - | 290,248 |
+----------------------------+-----------------------+----------------------+
Results of the Proton Group for the fiscal year ended 31 December 2008 have been
consolidated in the financials as 'discontinued operations' due to the sale of
IRF's entire stake in Proton Bank. The Proton Group suffered significant losses
due to adverse economic conditions and the dislocation in the capital markets,
especially as it related to the credit markets. The losses from discontinued
operations include Proton losses attributed to IRF, the loss from the disposal
of Proton shares and related impairment losses on goodwill.
Dividend Payment and Reduction of Share Premium
The Company believes it is appropriate to make periodic a distributions to
its shareholders. Notwithstanding the Company having sufficient cash reserves
to distribute funds to its shareholders, Bermuda law restricts the Company from
declaring a dividend currently. The Company therefore intends to propose to
shareholders that the Company reduce the share premium account so it can make a
distribution to the shareholders.
Commenting on this proposal, Angeliki Frangou said: 'We have previously
indicated a desire to provide shareholders with a current return. We believe we
can meet this intention in respect of 2008 by agreeing to reduce share premium.
We intend to recommend to the shareholders that we reduce share premium to allow
a distribution of $.20 per share and will commence the process of obtaining
shareholder approval shortly."
Net Asset Value
IRF determined that its shares had a net asset value ("NAV") of $2.27 per share
as at 31 December 2008. The equity holdings portfolio of IRF is marked to
market on the balance sheet as at 31 December 2008. As of this date, the total
assets of the Company, including the cash balance of EUR148.6 million, was EUR403.7
million. The total liabilities were EUR200.1 million. Consequently, the equity
value was EUR203.5 million. The Euro/$ exchange rate of $1.3917 on 31 December
2008 was used to compute the NAV. As of 31 December 2008, IRF had 124.8
million common shares outstanding.
IRF intends to determine and publish NAV on a periodic basis. This estimated NAV
is provided for information purposes only and should not be relied upon for
investment decisions.
Information:
A copy of our annual financial report can be found on our website
(www.irf-finance.com) and copies will be sent to our shareholders shortly.
For further information, please contact:
IRF European Finance Investments Ltd
Angeliki Frangou, Chairperson Tel: +30 210 428 0560
Sheldon M. Goldman Tel: +1 212 404 5740
About IRF
IRF's principal investment strategy is to seek investment opportunities in
global financial institutions, with a complementary focus on investments in
distressed opportunities in other industries. The Company was initially listed
on AIM until 19 January 2009 when it transferred to the SFM (Specialist Fund
Market), both markets operated by the London Stock Exchange plc. The Company's
registered office is at Canon's Court 22 Victoria Street, Hamilton HM12,
Bermuda.
Forward-looking statements
All statements, other than statements of historical fact, included in this
release are forward looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements are based upon
current expectations and are subject to a number of risks, uncertainties and
assumptions that could cause actual results to differ materially from those
described in the forward-looking statements. IRF assumes no obligation and
expressly disclaims any duty to update the information contained herein except
as required by law.
IRF European Finance Investments Ltd
Financial Statements
for the year ended
31 December 2008
In accordance with the International
Financial Reporting Standards
The accompanying consolidated financial statements of "IRF European Finance
Investments Ltd" (the "Company" or "IRF" ) and its subsidiaries (together the
"Group"), for the year ended 31 December 2008 were approved by the Company's
Board of Directors on 24 April 2009.
Contents
BOARD OF DIRECTORS....4
MANAGEMENT REPORT FOR THE YEAR ENDED 31 DECEMBER 2008....4
STATEMENT OF DIRECTORS RESPONSIBILITIES IN RESPECT OF THE ANNUAL ACCOUNTS....6
INDEPENDENT AUDITOR'S REPORT....7
CONSOLIDATED INCOME STATEMENT....9
CONSOLIDATED BALANCE SHEET....10
CONSOLIDATED CASH FLOW STATEMENT....13
NOTES TO THE FINANCIAL STATEMENTS....14
1. GENERAL INFORMATION....14
2. BASIS OF FINANCIAL STATEMENT PREPARATION....14
3. SUMMARY OF IMPORTANT ACCOUNTING POLICIES....18
4. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS....29
5. STRUCTURE OF THE GROUP....30
6. RISK MANAGEMENT....32
7. SEGMENTAL ANALYSIS....36
8. NET INTEREST INCOME....38
9. NET FEE AND COMMISSION INCOME....38
10. DIVIDEND INCOME....38
11. NET TRADING INCOME....38
12. IMPAIRMENT LOSSES....39
13. STAFF COSTS....39
14. OTHER OPERATING EXPENSES....39
15. DISCONTINUED OPERATIONS....39
15.1 NET PROFIT FROM DISCONTINUED OPERATIONS....39
15.2 LOSS ON DISPOSAL OF PROTON BANK....40
16. CASH AND BALANCES WITH CENTRAL BANK....41
17. CASH AND OTHER EQUIVALENTS....41
18. LOANS AND ADVANCES TO FINANCIAL INSTITUTIONS....42
19.TRADING PORTFOLIO AND OTHER FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT &
LOSS....42
20. DERIVATIVE FINANCIAL INSTRUMENTS....42
21. LOANS AND ADVANCES TO CUSTOMERS....43
22. INVESTMENT PORTFOLIO....44
23. INVESTMENTS IN ASSOCIATES....45
24. PROPERTY, PLANT AND EQUIPMENT AND INVESTMENT PROPERTY....45
25. NON CURRENT ASSETS HELD FOR SALE....45
26. GOODWILL AND OTHER INTANGIBLE ASSETS....46
27. DEFERRED TAX....46
28. OTHER ASSETS....47
29. DUE TO FINANCIAL INSTITUTIONS....47
30. DUE TO CUSTOMERS....48
31. ISSUED DEBT SECURITIES....48
32. RETIREMENT BENEFIT OBLIGATION....49
33. CURRENT INCOME TAX LIABILITIES....50
34. OTHER LIABILITIES....50
35. SHARE CAPITAL & SHARE PREMIUM....50
36. OTHER RESERVES....52
37. CASH AND CASH EQUIVALENTS - CASH FLOW STATEMENT....53
38. EARNINGS PER SHARE....53
39. ASSETS HELD FOR SALE AND LIABILITIES ASSOCIATED WITH ASSETS CLASSIFIED AS
HELD FOR SALE.....53
40. RELATED PARTIES TRANSACTIONS....54
41. STOCK OPTION PLAN....55
42. COMMITMENTS, CONTINGENT ASSETS AND LIABILITIES....56
43. FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES....56
44. CLASSIFICATION OF FINANCIAL ASSETS AND LIABILITIES....56
45. POST-BALANCE SHEET EVENTS....57
46. APPROVAL OF FINANCIAL STATEMENTS....57
BOARD OF DIRECTORS
+-----------------------------+-------------------------------+
| Name | Position |
+-----------------------------+-------------------------------+
| Angeliki Frangou | Chairman, Non - Executive |
| | Director |
+-----------------------------+-------------------------------+
| Sheldon Goldman | Deputy Chairman, Non - |
| | Executive Director |
+-----------------------------+-------------------------------+
| Loukas Valetopoulos | Chief Executive Officer, |
| | Director |
+-----------------------------+-------------------------------+
| Alexander Meraclis | Secretary of the Company and |
| | Non - Executive Director |
+-----------------------------+-------------------------------+
Changes in the Board of Directors
On the 27 November 2008, John Karakadas, a Non Executive Director of IRF,
submitted his resignation effective from 28 November 2008 and has not been
replaced.
MANAGEMENT REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
Financial highlights
+------------------------------------------------+-------------+
| Amounts in EUR 000 | IRF Group |
+------------------------------------------------+-------------+
| Income Statement items | |
+------------------------------------------------+-------------+
| Continuing operations | |
+------------------------------------------------+-------------+
| Net Income/(Loss) | (216,621) |
+------------------------------------------------+-------------+
| Loss after tax | (218,795) |
+------------------------------------------------+-------------+
| | |
+------------------------------------------------+-------------+
| Attributable to equity holders of the Company | (218,795) |
+------------------------------------------------+-------------+
| Minority Interests | - |
+------------------------------------------------+-------------+
| Basic earnings (loss) per share (in | (1.75) |
| euro/share) | |
+------------------------------------------------+-------------+
| | |
+------------------------------------------------+-------------+
| Continuing and discontinued operations | |
+------------------------------------------------+-------------+
| Loss after tax | (305,934) |
+------------------------------------------------+-------------+
| | |
+------------------------------------------------+-------------+
| Attributable to equity holders of the Company | (264,129) |
+------------------------------------------------+-------------+
| Minority Interests | (41,806) |
+------------------------------------------------+-------------+
| Basic earnings (loss) per share (in | (2.12) |
| euro/share) | |
+------------------------------------------------+-------------+
| | |
+------------------------------------------------+-------------+
| Balance sheet items | |
+------------------------------------------------+-------------+
| Cash and cash equivalent | 148,610 |
+------------------------------------------------+-------------+
| Trading portfolio | 5,965 |
+------------------------------------------------+-------------+
| Investment portfolio | 248,508 |
+------------------------------------------------+-------------+
| Total Assets | 403,689 |
+------------------------------------------------+-------------+
| | |
+------------------------------------------------+-------------+
| Loans from banks | 198,393 |
+------------------------------------------------+-------------+
| Total liability | 200,148 |
+------------------------------------------------+-------------+
| | |
+------------------------------------------------+-------------+
| Total Equity | 203,541 |
+------------------------------------------------+-------------+
Major events during the year 2008
Commencing during the second half of year 2008, the global markets experienced a
seemingly coordinated series of meltdowns. Virtually all industries globally
suffered significantly given the pause in economic activity which resulted from
the absence of credit. We anticipate that markets will continue to be unsettled
for the near to medium term, and that public market valuations will trade
without regard to intrinsic value of the related enterprise.
Given the significant volatility affecting financial institutions, IRF decided
to dispose its investment in Proton Bank. IRF was able to take advantage of an
opportunity to sell these shares at a 10% premium to the then market price. On
25 September 2008 IRF sold 10 million shares in Proton Bank for gross sales
proceeds of EUR65.0 million, paid in cash. The disposal of these shares resulted
in a loss of EUR26.9 million, as presented under results from discontinued
operations. During the fourth quarter and as of 31 December 2008 IRF disposed of
its remaining investment in Proton Bank through the open market.
Results of the Proton Group until the date of disposal, 25 September 2008, have
been consolidated in IRF's annual financial statement. Proton Group suffered
significant losses due to the adverse economic conditions and the dislocation in
the capital markets, especially as it related to the credit markets. IRF's loss
in respect of Proton for the period was EUR52.5 million, while total losses from
discontinued operations, including the loss from the disposal of Proton shares
and the impairment losses on goodwill recognized before the disposal, was EUR87.1
million.
During the year, IRF acquired approximately 10.39% shares of Marfin Investment
Group ('MIG'), a public company traded on the Athens Stock Exchange and received
a cash distribution from MIG of approximately EUR21.5 million. This amount has not
been recognised in the income statement and has been deducted from the cost of
these securities.
As at 31 December 2008, IRF had cash and cash equivalents of EUR149 million. IRF
held investments in equity securities valued at about EUR255.0 million, including
77.6 million shares in MIG. All equity holdings are publicly listed on the
Athens Stock Exchange.
In September 2008, IRF modified the terms of its loan facility. Under the
revised terms, the maturity of the loan facility of EUR200 million has been
extended to September 2011. This has strengthened the liquidity position of the
company significantly. Securities and deposit accounts have been pledged as
collateral for this medium-term facility.
Other events
In March 2008, IRF's Board of Directors declared a US$0.28 dividend per share
for 2007. The total amount paid in respect of this dividend was EUR22.1 million
and was paid in the second quarter of 2008.
In January 2009, IRF transferred from AIM to the Specialist Fund Market (SFM) of
the London Stock Exchange. The Specialist Fund Market is an EU Regulated Market
and is compliant with the EU's Financial Services Action Plan (FSAP). On January
19, 2009, IRF has announced the successful admission of its entire issued common
shares and all issued warrants to trading on the SFM. As at admission, there
were 124,832,394 shares and 13,596,541 warrants in issue.
STATEMENT OF DIRECTORS RESPONSIBILITIES IN RESPECT OF THE ANNUAL ACCOUNTS
The directors are responsible for preparing the Annual Report and the financial
statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each
financial year. Under that law and in accordance with appropriate regulations of
the listing authority, the directors have elected to prepare financial
statements in accordance International Financial Reporting Standards as adopted
by the European Union.
The financial statements are required by law to give a true and fair view of the
state of affairs of the Group and of the profit or loss of the Group for that
period. In preparing these financial statements, the directors are required to:
* select suitable accounting policies and then apply them consistently;
* make judgments and estimates that are reasonable and prudent;
* state whether applicable International Financial Reporting Standards as adopted
by the European Union have been followed, subject to any material departures
disclosed and explained in the financial statements; and
* prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the company will continue in business.
The directors, to the best of their knowledge, state that:
* the financial statements, prepared in accordance with International Financial
Reporting Standards as adopted by the European Union, give a true and fair view
of the assets, liabilities, financial position and loss of the Group; and
* the management report includes a fair review of the development and performance
of the business and the position of the issuer and the undertakings included in
the consolidation taken as a whole, together with a description of the principal
risks and uncertainties that they face.
The directors are responsible for keeping proper accounting records that
disclose with reasonable accuracy at any time the financial position of the
company and enable them to ensure that the financial statements comply with the
Companies Act 1981 of Bermuda. They are also responsible for safeguarding the
assets of the company and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
In so far as the directors are aware:
* there is no relevant audit information of which the company's auditors are
unaware; and
* the directors have taken all steps that they ought to have taken to make
themselves aware of any relevant audit information and to establish that the
auditors are aware of that information.
Legislation in Bermuda governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
INDEPENDENT AUDITOR'S REPORT
To the Shareholders of IRF EUROPEAN FINANCE INVESTMENTS LTD
Report on the Financial Statements
We have audited the accompanying Financial Statements of IRF EUROPEAN FINANCE
INVESTMENTS LTD (the Company) and its subsidiaries (which, together with the
company form the Group), which comprise the consolidated balance sheet as at 31
December 2008, and the consolidated income statement, statement of changes in
equity and cash flow statement for the year then ended, and a summary of
significant accounting policies and other explanatory notes.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these
financial statements in accordance with International Financial Reporting
Standards that have been adopted by the European Union. This responsibility
includes designing, implementing and maintaining internal control relevant to
the preparation and fair presentation of financial statements that are free from
material misstatement, whether due to fraud or error; selecting and applying
appropriate accounting policies; and making accounting estimates that are
reasonable in the circumstances.
Auditor's Responsibility
Our responsibility is to express an opinion on these Financial Statements based
on our audit. We conducted our audit in accordance with the Greek Auditing
Standards, which are based on the International Standards on Auditing. Those
standards require that we comply with ethical requirements and plan and perform
the audit to obtain reasonable assurance whether the financial statements are
free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the
amounts and disclosures in the financial statements. The procedures selected
depend on the auditor's judgment, including the assessment of the risks of
material misstatement of the financial statements, whether due to fraud or
error. In making those risk assessments, the auditor considers internal control
relevant to the entity's preparation and fair presentation of the financial
statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entity's internal control. An audit also includes
evaluating the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by management, as well as evaluating
the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the abovementioned Financial Statements present fairly, in all
material respects, the financial position of the Group as of 31 December 2008,
and the financial performance and cash flows for the year then ended in
accordance with International Financial Reporting Standards that have been
adopted by the European Union.
Athens, 27 April 2009
+------------------------------------------+------------------------------------------+
| The Chartered Accountant | The Chartered Accountant |
+------------------------------------------+------------------------------------------+
| | |
+------------------------------------------+------------------------------------------+
| Vassilis Kazas | Panagiotis Christopoulos |
+------------------------------------------+------------------------------------------+
| SOEL Reg. No 13281 | SOEL Reg. No 28481 |
+------------------------------------------+------------------------------------------+
CONSOLIDATED INCOME STATEMENT
+------------------------------------------+------+---------------+---------------+
| Amounts presented in EUR '000 | Note | 1/1/- | 1/1 - |
| | | 31/12/2008 | 31/12/2007 |
| | | |(as restated) |
+------------------------------------------+------+---------------+---------------+
| | | | |
+------------------------------------------+------+---------------+---------------+
| Interest and similar income | | 8,158 | 10,498 |
+------------------------------------------+------+---------------+---------------+
| Interest and similar expenses | | (11,309) | (11,406) |
+------------------------------------------+------+---------------+---------------+
| Net interest income | 8 | (3,151) | (909) |
+------------------------------------------+------+---------------+---------------+
| Fee and commission income | | 86 | - |
+------------------------------------------+------+---------------+---------------+
| Fee and commission expense | | (881) | (7,745) |
+------------------------------------------+------+---------------+---------------+
| Net fee and commission income | 9 | (795) | (7,745) |
+------------------------------------------+------+---------------+---------------+
| Dividend income | 10 | 729 | 12,804 |
+------------------------------------------+------+---------------+---------------+
| Net trading income | 11 | (28,258) | 60,209 |
+------------------------------------------+------+---------------+---------------+
| Impairment losses | 12 | (185,146) | - |
+------------------------------------------+------+---------------+---------------+
| Total Net (loss)/income | | (216,621) | 64,360 |
+------------------------------------------+------+---------------+---------------+
| | | | |
+------------------------------------------+------+---------------+---------------+
| Staff costs | 13 | (100) | (100) |
+------------------------------------------+------+---------------+---------------+
| Other operating expenses | 14 | (2,074) | (748) |
+------------------------------------------+------+---------------+---------------+
| Total operating expenses | | (2,174) | (848) |
+------------------------------------------+------+---------------+---------------+
| | | | |
+------------------------------------------+------+---------------+---------------+
| (Loss)/Profit before tax | | (218,795) | 63,513 |
+------------------------------------------+------+---------------+---------------+
| Income tax expense | | - | - |
+------------------------------------------+------+---------------+---------------+
| (Loss) /Profit after tax from continuing | | (218,795) | 63,513 |
| operations | | | |
+------------------------------------------+------+---------------+---------------+
| | | | |
+------------------------------------------+------+---------------+---------------+
| Net (loss)/profit from discontinued | 15 | (87,139) | 14,513 |
| operations | | | |
+------------------------------------------+------+---------------+---------------+
| | | | |
+------------------------------------------+------+---------------+---------------+
| (Loss)/Profit after tax | | (305,934) | 78,026 |
+------------------------------------------+------+---------------+---------------+
| | | | |
+------------------------------------------+------+---------------+---------------+
| Attributable to: | | | |
+------------------------------------------+------+---------------+---------------+
| Shareholders of the Parent Company | | (264,129) | 61,635 |
+------------------------------------------+------+---------------+---------------+
| Minority Interest | | (41,806) | 16,391 |
+------------------------------------------+------+---------------+---------------+
| | | (305,934) | 78,026 |
+------------------------------------------+------+---------------+---------------+
| Earning per Share attributable to parent | | | |
| company's shareholders ( EUR/share ) | | | |
+------------------------------------------+------+---------------+---------------+
| From continuing and discontinued | | | |
| operations | | | |
+------------------------------------------+------+---------------+---------------+
| - Basic | 38 | (2.12) | 0.56 |
+------------------------------------------+------+---------------+---------------+
| | | | |
+------------------------------------------+------+---------------+---------------+
| From continuing operations | | | |
+------------------------------------------+------+---------------+---------------+
| - Basic | 38 | (1.75) | 0.57 |
+------------------------------------------+------+---------------+---------------+
The accompanying notes constitute an integral part of the financial statements.
CONSOLIDATED BALANCE SHEET
+------------------------------------------+-------+--------------+---------------+
| Amounts presented in EUR '000 | Note | 31/12/2008 | 31/12/2007 |
+------------------------------------------+-------+--------------+---------------+
| ASSETS | | | |
+------------------------------------------+-------+--------------+---------------+
| Cash and balances with Central Bank | 16 | - | 52,796 |
+------------------------------------------+-------+--------------+---------------+
| Cash and other equivalents | 17 | 148,610 | 322,355 |
+------------------------------------------+-------+--------------+---------------+
| Loans and advances to financial | 18 | - | 205,055 |
| institutions | | | |
+------------------------------------------+-------+--------------+---------------+
| Trading portfolio and other financial | 19 | 5,965 | 179,802 |
| assets at fair value through Profit & | | | |
| Loss | | | |
+------------------------------------------+-------+--------------+---------------+
| Derivative financial instruments | 20 | - | 11,529 |
+------------------------------------------+-------+--------------+---------------+
| Loans and advances to customers | 21 | - | 1,368,025 |
+------------------------------------------+-------+--------------+---------------+
| Investment portfolio | 22 | 248,508 | 259,944 |
+------------------------------------------+-------+--------------+---------------+
| Investments in associates | 23 | - | 3,886 |
+------------------------------------------+-------+--------------+---------------+
| Property, plant and equipment | 24 | - | 27,880 |
+------------------------------------------+-------+--------------+---------------+
| Goodwill and other intangible assets | 26 | - | 166,784 |
+------------------------------------------+-------+--------------+---------------+
| Deferred tax assets | 27 | - | 7,098 |
+------------------------------------------+-------+--------------+---------------+
| Other assets | 28 | 607 | 91,474 |
+------------------------------------------+-------+--------------+---------------+
| | | 403,689 | 2,696,628 |
+------------------------------------------+-------+--------------+---------------+
| Non current assets held for sale |25,39 | - | 53,727 |
+------------------------------------------+-------+--------------+---------------+
| TOTAL ASSETS | | 403,689 | 2,750,355 |
+------------------------------------------+-------+--------------+---------------+
| | | | |
+------------------------------------------+-------+--------------+---------------+
| EQUITY AND LIABILITIES | | | |
+------------------------------------------+-------+--------------+---------------+
| Due to financial institutions | 29 | 198,393 | 433,941 |
+------------------------------------------+-------+--------------+---------------+
| Due to customers | 30 | - | 1,422,139 |
+------------------------------------------+-------+--------------+---------------+
| Derivative financial instruments | 20 | - | 14,570 |
+------------------------------------------+-------+--------------+---------------+
| Issued debt securities | 31 | - | 25,283 |
+------------------------------------------+-------+--------------+---------------+
| Retirement benefit obligations | 32 | - | 1,140 |
+------------------------------------------+-------+--------------+---------------+
| Current income tax liabilities | 33 | - | 10,498 |
+------------------------------------------+-------+--------------+---------------+
| Deferred tax liability | 27 | - | 6,928 |
+------------------------------------------+-------+--------------+---------------+
| Other liabilities | 34 | 1,755 | 14,170 |
+------------------------------------------+-------+--------------+---------------+
| | | 200,148 | 1,928,669 |
+------------------------------------------+-------+--------------+---------------+
| Liabilities directly associated with | 39 | - | 44,339 |
| assets classified as held for sale | | | |
+------------------------------------------+-------+--------------+---------------+
| Total Liabilities | | 200,148 | 1,973,008 |
+------------------------------------------+-------+--------------+---------------+
| | | | |
+------------------------------------------+-------+--------------+---------------+
| Shareholders equity | | | |
+------------------------------------------+-------+--------------+---------------+
| Share capital | 35 | 147 | 147 |
+------------------------------------------+-------+--------------+---------------+
| Share premium | 35 | 400,443 | 400,443 |
+------------------------------------------+-------+--------------+---------------+
| Revaluation reserve | | - | (2,570) |
+------------------------------------------+-------+--------------+---------------+
| Other reserves | 36 | - | 16,587 |
+------------------------------------------+-------+--------------+---------------+
| Retained (losses)/earnings | | (197,049) | 72,491 |
+------------------------------------------+-------+--------------+---------------+
| Total equity attributable to | | 203,541 | 487,099 |
| shareholders' of parent company | | | |
+------------------------------------------+-------+--------------+---------------+
| Minority interest | | - | 290,248 |
+------------------------------------------+-------+--------------+---------------+
| Total equity | | 203,541 | 777,347 |
+------------------------------------------+-------+--------------+---------------+
| | | | |
+------------------------------------------+-------+--------------+---------------+
| TOTAL LIABILITIES AND EQUITY | | 403,689 | 2,750,355 |
+------------------------------------------+-------+--------------+---------------+
The accompanying notes constitute an integral part of the financial statement
+---------------------------------+------+---------+----------+-------------+----------+------------+-----------+------------+------------+
| | | Attributable to shareholders of the Parent Company | |
+---------------------------------+------+----------------------------------------------------------------------+-------------------------+
| |Note | Share | Share |Revaluation | Other | Retained | Total | Minority | Total |
| | |Capital | Premium | Reserve |Reserves | Earnings | | Interest | |
| | | | | | | / | | | |
| | | | | | | (losses) | | | |
+---------------------------------+------+---------+----------+-------------+----------+------------+-----------+------------+------------+
| Consolidated Statement of | | | | | | | | | |
| Changes in Equity | | | | | | | | | |
+---------------------------------+------+---------+----------+-------------+----------+------------+-----------+------------+------------+
| Amounts presented in EUR '000 | | | | | | | | | |
+---------------------------------+------+---------+----------+-------------+----------+------------+-----------+------------+------------+
| Opening balance as at 1 January | | 147 | 400,443 | (2,570) | 16,587 | 72,492 | 487,099 | 290,248 | 777,347 |
| 2008 | | | | | | | | | |
+---------------------------------+------+---------+----------+-------------+----------+------------+-----------+------------+------------+
| Available for sale: | | | | | | | | | |
+---------------------------------+------+---------+----------+-------------+----------+------------+-----------+------------+------------+
| -Gains/ losses directly | | - | - | (2,318) | - | - | (2,318) | (8,935) | (11,253) |
| recognized in equity | | | | | | | | | |
+---------------------------------+------+---------+----------+-------------+----------+------------+-----------+------------+------------+
| -Transferred to income | 15 | - | - | 4,888 | - | - | 4,888 | 18,964 | 23,852 |
| statement on disposal | | | | | | | | | |
+---------------------------------+------+---------+----------+-------------+----------+------------+-----------+------------+------------+
| Net result for the period | | - | - | - | - | (264,129) | (264,129) | (41,806) | (305,934) |
| 01/01-31/12/2008 | | | | | | | | | |
+---------------------------------+------+---------+----------+-------------+----------+------------+-----------+------------+------------+
| Total income/(loss) recognized | | - | - | 2,570 | - | (264,129) | (261,559) | (31,776) | (293,336) |
| for the period | | | | | | | | | |
+---------------------------------+------+---------+----------+-------------+----------+------------+-----------+------------+------------+
| Dividend relating to 2007 | | - | - | - | - | (22,105) | (22,105) | (9,829) | (31,935) |
+---------------------------------+------+---------+----------+-------------+----------+------------+-----------+------------+------------+
| Sale of subsidiary | 15 | - | - | - | (16,587) | 16,693 | 106 | (248,643) | (248,536) |
+---------------------------------+------+---------+----------+-------------+----------+------------+-----------+------------+------------+
| Balance as at 31 December 2008 | | 147 | 400,443 | - | - | (197,049) | 203,541 | - | 203,541 |
+---------------------------------+------+---------+----------+-------------+----------+------------+-----------+------------+------------+
The accompanying notes constitute an integral part of the financial statements
+----------------------+---------+------------+-------------+-----------+------------+------------+------------+------------+
| | Attributable to shareholders of the Parent Company | Minority | Total |
| | | Interest | |
+----------------------+--------------------------------------------------------------------------+------------+------------+
| Amounts presented in | Share | Share |Revaluation | Other | Retained | Total | | |
| EUR '000 |Capital | Premium | Reserve | Reserves | Earnings | | | |
| | | | | | / | | | |
| | | | | | (losses) | | | |
+----------------------+---------+------------+-------------+-----------+------------+------------+------------+------------+
| Opening balance as | 71 | 200,174 | (2) | 16,156 | 22,208 | 238,607 | 308,145 | 546,752 |
| at 1 January 2007, | | | | | | | | |
| as originally | | | | | | | | |
| published | | | | | | | | |
+----------------------+---------+------------+-------------+-----------+------------+------------+------------+------------+
| Restatement due to | - | - | - | - | (210) | (210) | (832) | (1,043) |
| amortization of | | | | | | | | |
| intangible assets | | | | | | | | |
| | | | | | | | | |
+----------------------+---------+------------+-------------+-----------+------------+------------+------------+------------+
| Restated Opening | 71 | 200,174 | (2) | 16,156 | 21,998 | 238,397 | 307,313 | 545,709 |
| Balance as at 1 | | | | | | | | |
| January 2007 | | | | | | | | |
+----------------------+---------+------------+-------------+-----------+------------+------------+------------+------------+
| Net result for the | - | - | - | - | 61,635 | 61,635 | 16,391 | 78,026 |
| period | | | | | | | | |
| 01/01-31/12/2007 | | | | | | | | |
+----------------------+---------+------------+-------------+-----------+------------+------------+------------+------------+
| Gains/ losses | - | - | - | - | - | - | - | - |
| directly recognized | | | | | | | | |
| in equity: | | | | | | | | |
+----------------------+---------+------------+-------------+-----------+------------+------------+------------+------------+
| - on the valuation | - | - | (2,564) | - | - | (2,564) | (10,018) | (12,582) |
| of available for | | | | | | | | |
| sale financial | | | | | | | | |
| assets | | | | | | | | |
+----------------------+---------+------------+-------------+-----------+------------+------------+------------+------------+
| - exchange | - | - | (3) | - | - | (3) | (11) | (14) |
| differences | | | | | | | | |
+----------------------+---------+------------+-------------+-----------+------------+------------+------------+------------+
| Total profit /(loss) | - | - | (2,567) | - | 61,635 | 59,067 | 6,362 | 65,430 |
| recognized for the | | | | | | | | |
| period | | | | | | | | |
+----------------------+---------+------------+-------------+-----------+------------+------------+------------+------------+
| Issue of new shares | 81 | 219,080 | - | - | - | 219,162 | - | 219,162 |
| after the exercise | | | | | | | | |
| of warrants | | | | | | | | |
+----------------------+---------+------------+-------------+-----------+------------+------------+------------+------------+
| Expenses related to | - | (4,287) | - | - | - | (4,287) | - | (4,287) |
| share capital | | | | | | | | |
| increase | | | | | | | | |
+----------------------+---------+------------+-------------+-----------+------------+------------+------------+------------+
| Dividend relating to | - | - | - | - | (10,911) | (10,911) | (14,045) | (24,956) |
| 2006 | | | | | | | | |
+----------------------+---------+------------+-------------+-----------+------------+------------+------------+------------+
| Participation in | - | - | - | - | - | - | 96 | 96 |
| share capital | | | | | | | | |
| increase (Proton | | | | | | | | |
| Insurance SA) | | | | | | | | |
+----------------------+---------+------------+-------------+-----------+------------+------------+------------+------------+
| Acquisition of | - | - | - | - | - | - | (1,603) | (1,603) |
| additional | | | | | | | | |
| percentage in | | | | | | | | |
| subsidiary (Proton | | | | | | | | |
| Bank) | | | | | | | | |
+----------------------+---------+------------+-------------+-----------+------------+------------+------------+------------+
| Acquisition of | - | - | - | - | - | - | (12) | (12) |
| minority interests | | | | | | | | |
| (Omega Mutual Funds | | | | | | | | |
| SA) | | | | | | | | |
+----------------------+---------+------------+-------------+-----------+------------+------------+------------+------------+
| Fair value of | - | - | - | 200 | - | 200 | 783 | 983 |
| employee services | | | | | | | | |
| received | | | | | | | | |
+----------------------+---------+------------+-------------+-----------+------------+------------+------------+------------+
| Purchases of | (5) | (14,525) | - | - | - | (14,530) | (8,646) | (23,176) |
| treasury shares | | | | | | | | |
+----------------------+---------+------------+-------------+-----------+------------+------------+------------+------------+
| Capitalization of | - | - | - | 231 | (231) | - | - | - |
| reserves | | | | | | | | |
+----------------------+---------+------------+-------------+-----------+------------+------------+------------+------------+
| | 77 | 200,268 | - | 431 | (11,142) | 189,634 | (23,427) | 166,207 |
+----------------------+---------+------------+-------------+-----------+------------+------------+------------+------------+
| Balance as at 31 | 147 | 400,443 | (2,570) | 16,586 | 72,492 | 487,099 | 290,248 | 777,346 |
| December 2007 | | | | | | | | |
+----------------------+---------+------------+-------------+-----------+------------+------------+------------+------------+
The accompanying notes constitute an integral part of the financial statements.
CONSOLIDATED CASH FLOW STATEMENT
+------------------------------------------+--------------+--------------+-------------+
| |
+------------------------------------------+
| Amounts presented in EUR '000 | Note | 31 December |31 December |
| | | 2008 | 2007 |
+------------------------------------------+--------------+--------------+-------------+
| Cash flows from operating activities | | | |
+------------------------------------------+ +--------------+-------------+
| (Loss)/Profit before tax of continuing | | (218,795) | 63,513 |
| operations | | | |
+------------------------------------------+--------------+--------------+--------------+
| Adjustments for: | | | |
+------------------------------------------+--------------+--------------+-------------+
| Add: Impairment losses on loans, | | 185,146 | - |
| financial and non financial assets | | | |
+------------------------------------------+--------------+--------------+-------------+
| Share of profit/(loss) from revaluation | | 904 | - |
| of financial assets at fair value | | | |
| through Profit & Loss | | | |
+------------------------------------------+--------------+--------------+-------------+
| Profit/(loss) from sale of a.f.s. | | 44,282 | - |
| portfolio at fair value | | | |
+------------------------------------------+--------------+--------------+-------------+
| Interest and other non cash expenses | | 3,151 | - |
+------------------------------------------+--------------+--------------+-------------+
| Dividends received | | (729) | (12,804) |
+------------------------------------------+--------------+--------------+-------------+
| Exchange differences | | (7,304) | 13,812 |
+------------------------------------------+ +--------------+-------------+
| Cash Flows from operating activities | | 6,665 | 64,521 |
| before changes in working capital | | | |
+------------------------------------------+--------------+--------------+--------------+
| Changes in working capital: | | | |
+------------------------------------------+--------------+--------------+-------------+
| Net (increase)/decrease in trading | | (6,869) | 3,865 |
| securities | | | |
+------------------------------------------+--------------+--------------+-------------+
| Net (increase)/decrease in other assets | | (1,916) | 98 |
+------------------------------------------+--------------+--------------+-------------+
| Net increase/(decrease) in other | | (171) | 3,002 |
| liabilities | | | |
+------------------------------------------+--------------+--------------+-------------+
| Cash flows from operating activities | | (2,301) | 71,486 |
| before payment of income tax | | | |
+------------------------------------------+--------------+--------------+-------------+
| Net cash flows from operating activities | | (69,445) | 319,080 |
| of discontinued operations | | | |
+------------------------------------------+--------------+--------------+-------------+
| Net cash flows from operating activities | | (71,746) | 390,565 |
| | | | |
+------------------------------------------+--------------+--------------+-------------+
| Cash flows from investing activities | | | |
+------------------------------------------+--------------+--------------+-------------+
| Acquisition/Sale of subsidiaries and | 15 | (1,877) | (2,827) |
| associates | | | |
+------------------------------------------+--------------+--------------+-------------+
| Proceeds from a.f.s. portfolio | | (448,727) | - |
+------------------------------------------+--------------+--------------+-------------+
| Interest received | | 8,158 | - |
+------------------------------------------+--------------+--------------+-------------+
| Dividend received from investment | | 729 | 12,804 |
| activities | | | |
+------------------------------------------+--------------+--------------+-------------+
| Net cash flows from investing activities | | (58,776) | (222,796) |
| of discontinued operations | | | |
+------------------------------------------+ +--------------+-------------+
| | | | |
+------------------------------------------+--------------+--------------+--------------+
| Net cash flow from investing activities | | (500,493) | (212,818) |
+------------------------------------------+--------------+--------------+-------------+
| Cash flows from financing activities | | | |
+------------------------------------------+--------------+--------------+-------------+
| Issuance of common shares | | - | 214,874 |
+------------------------------------------+--------------+--------------+-------------+
| Dividend paid | | (22,105) | (10,911) |
+------------------------------------------+--------------+--------------+-------------+
| Repayments of borrowings | 29 | (70,000) | (287,929) |
+------------------------------------------+--------------+--------------+-------------+
| Interest paid | | (11,309) | - |
+------------------------------------------+--------------+--------------+-------------+
| (Purchase)/sale of treasury shares | | - | (14,530) |
+------------------------------------------+--------------+--------------+-------------+
| Proceeds from borrowings | 29 | 268,393 | 287,929 |
+------------------------------------------+--------------+--------------+-------------+
| Net cash flows from financing activities | | (10,804) | 2,087 |
| of discontinued operations | | | |
+------------------------------------------+--------------+--------------+-------------+
| Net cash flow from financing activities | | 154,174 | 191,521 |
+------------------------------------------+--------------+--------------+-------------+
| | | | |
+------------------------------------------+--------------+--------------+-------------+
| Net increase/(decrease) in cash and cash | | (418,066) | 369,268 |
| equivalents | | | |
+------------------------------------------+--------------+--------------+-------------+
| Cash and cash equivalents at the | | 559,372 | 203,917 |
| beginning of the period | | | |
+------------------------------------------+--------------+--------------+-------------+
| Effect of exchange rate fluctuations on | | 7,304 | (13,812) |
| cash and cash equivalents | | | |
+------------------------------------------+--------------+--------------+-------------+
| Cash and cash equivalents at the end of | 37 | 148,610 | 559,372 |
| the financial year | | | |
+------------------------------------------+--------------+--------------+-------------+
| Amounts presented in EUR '000 | Note | 31 December |31 December |
| | | 2008 | 2007 |
+------------------------------------------+--------------+--------------+-------------+
| Cash flows from operating activities | | | |
+------------------------------------------+ +--------------+-------------+
| (Loss)/Profit before tax of continuing | | (218,795) | 63,513 |
| operations | | | |
+------------------------------------------+--------------+--------------+--------------+
| Adjustments for: | | | |
+------------------------------------------+--------------+--------------+-------------+
| Add: Impairment losses on loans, | | 185,146 | - |
| financial and non financial assets | | | |
+------------------------------------------+--------------+--------------+-------------+
| Share of profit/(loss) from revaluation | | 904 | - |
| of financial assets at fair value | | | |
| through Profit & Loss | | | |
+------------------------------------------+--------------+--------------+-------------+
| Profit/(loss) from sale of a.f.s. | | 44,282 | - |
| portfolio at fair value | | | |
+------------------------------------------+--------------+--------------+-------------+
| Interest and other non cash expenses | | 3,151 | - |
+------------------------------------------+--------------+--------------+-------------+
| Dividends received | | (729) | (12,804) |
+------------------------------------------+--------------+--------------+-------------+
| Exchange differences | | (7,304) | 13,812 |
+------------------------------------------+ +--------------+-------------+
| Cash Flows from operating activities | | 6,665 | 64,521 |
| before changes in working capital | | | |
+------------------------------------------+--------------+--------------+--------------+
| Changes in working capital: | | | |
+------------------------------------------+--------------+--------------+-------------+
| Net (increase)/decrease in trading | | (6,869) | 3,865 |
| securities | | | |
+------------------------------------------+--------------+--------------+-------------+
| Net (increase)/decrease in other assets | | (1,916) | 98 |
+------------------------------------------+--------------+--------------+-------------+
| Net increase/(decrease) in other | | (171) | 3,002 |
| liabilities | | | |
+------------------------------------------+--------------+--------------+-------------+
| Cash flows from operating activities | | (2,301) | 71,486 |
| before payment of income tax | | | |
+------------------------------------------+--------------+--------------+-------------+
| Net cash flows from operating activities | | (69,445) | 319,080 |
| of discontinued operations | | | |
+------------------------------------------+--------------+--------------+-------------+
| Net cash flows from operating activities | | (71,746) | 390,565 |
| | | | |
+------------------------------------------+--------------+--------------+-------------+
| Cash flows from investing activities | | | |
+------------------------------------------+--------------+--------------+-------------+
| Acquisition/Sale of subsidiaries and | 15 | (1,877) | (2,827) |
| associates | | | |
+------------------------------------------+--------------+--------------+-------------+
| Proceeds from a.f.s. portfolio | | (448,727) | - |
+------------------------------------------+--------------+--------------+-------------+
| Interest received | | 8,158 | - |
+------------------------------------------+--------------+--------------+-------------+
| Dividend received from investment | | 729 | 12,804 |
| activities | | | |
+------------------------------------------+--------------+--------------+-------------+
| Net cash flows from investing activities | | (58,776) | (222,796) |
| of discontinued operations | | | |
+------------------------------------------+ +--------------+-------------+
| | | | |
+------------------------------------------+--------------+--------------+--------------+
| Net cash flow from investing activities | | (500,493) | (212,818) |
+------------------------------------------+--------------+--------------+-------------+
| Cash flows from financing activities | | | |
+------------------------------------------+--------------+--------------+-------------+
| Issuance of common shares | | - | 214,874 |
+------------------------------------------+--------------+--------------+-------------+
| Dividend paid | | (22,105) | (10,911) |
+------------------------------------------+--------------+--------------+-------------+
| Repayments of borrowings | 29 | (70,000) | (287,929) |
+------------------------------------------+--------------+--------------+-------------+
| Interest paid | | (11,309) | - |
+------------------------------------------+--------------+--------------+-------------+
| (Purchase)/sale of treasury shares | | - | (14,530) |
+------------------------------------------+--------------+--------------+-------------+
| Proceeds from borrowings | 29 | 268,393 | 287,929 |
+------------------------------------------+--------------+--------------+-------------+
| Net cash flows from financing activities | | (10,804) | 2,087 |
| of discontinued operations | | | |
+------------------------------------------+--------------+--------------+-------------+
| Net cash flow from financing activities | | 154,174 | 191,521 |
+------------------------------------------+--------------+--------------+-------------+
| | | | |
+------------------------------------------+--------------+--------------+-------------+
| Net increase/(decrease) in cash and cash | | (418,066) | 369,268 |
| equivalents | | | |
+------------------------------------------+--------------+--------------+-------------+
| Cash and cash equivalents at the | | 559,372 | 203,917 |
| beginning of the period | | | |
+------------------------------------------+--------------+--------------+-------------+
| Effect of exchange rate fluctuations on | | 7,304 | (13,812) |
| cash and cash equivalents | | | |
+------------------------------------------+--------------+--------------+-------------+
| Cash and cash equivalents at the end of | 37 | 148,610 | 559,372 |
| the financial year | | | |
+------------------------------------------+--------------+--------------+-------------+
The accompanying notes constitute an integral part of the financial statements.
NOTES TO THE FINANCIAL STATEMENTS
1. GENERAL INFORMATION
Country of incorporation
IRF was incorporated on 8 September 2005 under the Bermuda Companies Act 1981 .
The Company was initially listed on AIM in 14 November 2005 and in 19 January
2009 transferred to the SFM (Specialist Fund Market), a regulated market
operated by the London Stock Exchange plc. The Company's registered office is at
Canon's Court 22 Victoria Street, Hamilton HM12, Bermuda.
Principal Activities
The Group was initially engaged in the provision of banking, financial and
insurance services. IRF was formed as an investing company to serve as a vehicle
for the acquisition of one or more businesses in the financial services industry
in Europe, with a primary focus on credit institutions and insurance companies
in Greece, Bulgaria, Romania and Turkey.
On 29 June 2006, the Company acquired a controlling interest in Proton
Investment Bank, a Greek bank, listed on the Athens Stock Exchange. Subsequent
to this acquisition, Proton Investment Bank merged with Omega Bank, resulting
IRF having an interest in the newly merged entity, Proton Bank. Proton Bank and
its subsidiaries operate in the sectors of retail, corporate and investment
banking, portfolio management, insurance and other financial services. Proton
Bank is licensed by the Bank of Greece to operate as a financial institution in
Greece. Proton Bank, which is established in Greece and is supervised by the
Bank of Greece, operates through a network of 28 branches.
On 24 September 2008, IRF sold a 15.95% interest in Proton Bank from its 20.6%
percent holding in Proton Bank. Following such disposal, the IRF directors
holding positions on the Board of Directors of Proton Bank resigned. As of 30
September 2008, IRF held approximately 2.9 million shares in Proton Bank,
representing an interest of approximately 4.65%. As of 31 December 2008, IRF had
disposed of its entire investment in Proton Bank. The results of Proton Bank's
Group are consolidated in the financial statements of IRF, as discontinued
operations, up to the date of the disposal (see notes 5 and 15).
IRF acquired and continues to hold approximately 10.39% shares of Marfin
Investment Group ('MIG') which, as of 31 December 2008, is the most significant
investment in the company's portfolio. MIG invests in private equity,
privatisations and infrastructure projects and principally operates in Greece,
Cyprus and South East Europe. All equity holdings are publicly listed on the
Athens Stock Exchange.
2. BASIS OF FINANCIAL STATEMENT PREPARATION
2.1 Statement of Compliance
The financial statements of the Group for the year ended 31 December 2008 have
been prepared according to the International Financial Reporting standards
(IFRS), which were published by the International Accounting Standards Board
(IASB) and in compliance with to their interpretations, which have been
published by the International Financial Reporting Interpretations Committee
(IFRIC) and have been adopted by the European Union.
The Group has adopted all International Accounting Standards, IFRS and their
interpretations which apply to the Group's activities.
2.2 Basis of Measurement
The financial statements have been prepared on the historical cost basis except
for the following items which are measured at fair value:
* Financial assets and liabilities at fair value through Profit & Loss (including
derivatives),
* Financial assets available for sale, and
* Investment Properties, and
* Land and Buildings.
2.3 Functional and Presentation Currency
The current financial statements are presented in Euro, which is the functional
currency of the Group. The functional currency is the currency of the primary
economic environment in which an entity operates and is normally the one in
which it primarily generates and expends cash. Management used its judgment to
determine the functional currency that most faithfully represents the economic
effects of the underlying transactions, events and conditions.
All amounts are presented in thousand Euros unless mentioned otherwise. Due to
rounding, percentages and numbers presented throughout the condensed separate
and consolidated financial statements may not match the counterparts in the
financial statements. All amount expressed in dollars, are US dollars.
2.4 Comparative Figures
Consolidated balance sheet, income statement, cash flow statement and statement
of changes in equity for the comparative period have been adjusted for the
reclassification of income statement to reflect results of discontinued
operations. Details are provided in note 15.
2.5 Use of Estimates
The preparation of the financial statements in accordance with the IFRS requires
management to make estimates, judgements and assumptions that affect the
application of accounting policies and the reporting amounts of assets,
liabilities, income and expenses.
Assumptions and estimates are reviewed on an ongoing basis and are revised based
on experience and other factors. Revisions of the accounting estimated are
recognised in the period in which estimates are revised and in any future
periods affected. Assumptions and estimates include expectations on future event
and outcomes that are considered as reasonable given the current conditions.
Actual results may differ from these estimates.
Significant areas of estimates uncertainty and items that are significantly
affected by judgements in applying accounting policies are presented in
paragraph 4.
2.6 Adoption of new standards, amendments and interpretations with effective
date as of 1 January 2008:
(a) IFRIC 12, "Service concession arrangements" (effective for annual periods
beginning on or after 1 January 2008):
This interpretation has no application to the Group's activities.
(b) IFRIC 14: "IAS 19 - The Limit on a Defined Benefit Asset, Minimum Funding
Requirements and their Interaction" (effective from 1 January 2008):
This interpretation has no application to Group activities.
(c) Amendment of International Accounting Standard 39 and International
Financial Reporting Standard 7
On 13 October 2008, the International Accounting Standard Board issued an
amendment to IAS 39 and IFRS 7 "Financial Instruments: Disclosures", which has
been adopted by European Union. The amendment permits, under circumstances, the
reclassification of certain financial assets to different categories from the
ones they have been classified on the initial recognition. The aforementioned
option can be applied from the 1st of July 2008.
New standards, amendments and interpretations issued but not yet effective
(a) IFRS 8, "Operating segments" (effective from 1 January 2009):
IFRS 8 replaces IAS 14 "Segment Reporting". The new IFRS requires a "management
approach" to the Group's presentation of financial information under segment
reporting. Information disclosed is basically information that the Management
uses for internal reporting so as to assess the productivity of segments, as
well as the manner in which resources are allocated. Such reporting might
differentiate from information used during the preparation of the balance sheet
and the income statement. Furthermore, the standard requires that explanatory
notes on the basis of preparation of segment reporting, as well as traces to
entries in financial statements should also be disclosed.
(b) IFRIC 13: "Customer Loyalty Programmes (effective for annual accounting
periods beginning on or after 1 July 2008):
IFRIC 13 is applied on customer loyalty programmes. This interpretation is
applicable to credit card customer loyalty programmes, nevertheless, its
adoption will not have a significant impact on the Group's financial position.
(c) IAS 23: (Revised 2007) "Borrowing Costs" (effective from 1 January 2009):
The revised IAS 23 removes the option of immediately expensing borrowing costs
directly attributable to the acquisition, construction, or production of a
qualifying asset as part of the cost of that asset. The adoption of the revised
IAS will have no significant impact on the Group's financial statements.
(d) IAS 1: "Presentation of Financial Statements" - revised 2007 (effective from
1 January 2009):
The fundamental change in IAS 1 is concerned with the segregation of the
presentation of owner changes in equity in those which are due to transactions
with owners and because of their capacity as owners ( e.g. dividends, capital
increase), from those which are due to other changes in equity (e.g. reserves).
The revision of the Standard produces changes in both the terminology and the
presentation of financial statements.
However, the new terms do not affect the rules of recognition, measurements and
disclosure of equity transactions and all other events which are required by
other standards. The adoption of the revised standard is expected to transform
the structure and description in the presentation of financial statements
without, however, causing any alternations to the financial position of an
entity.
(e) IFRS 2: "Share-based Payment" - Amendment 2008: Vesting Conditions and
Cancellations (effective from 1 January 2009):
This amendment clarifies that only service conditions and performance conditions
are vesting conditions, while all other features need to be included in the
grant date fair value. The Group is currently assessing the implications from
the adoption of the aforementioned amendment.
(f) IAS 32: Financial Instruments: Presentation and IAS 1: Presentation of
Financial Statements - Amendment 2008: Puttable Financial Instruments and
Obligations Arising on Liquidation (effective from 1 January 2009):
These amendments address the classifications of some puttable financial
instruments as well as instruments or their components that impose to the entity
an obligation to deliver to another party a pro rata share of the net assets of
the entity only on liquidation. The above mentioned amendments are not
applicable at present for Group activities.
(g) IFRIC 11: "Group and treasury share transactions":
IFRIC 11 provides guidance on IFRS 2 application in three cases: i) share-based
payment arrangements involving an entity's own equity instruments, ii)
share-based payment arrangements involving equity instruments of the parent and
iii) a subsidiary granting rights to equity instruments of its parent to its
employees. An entity shall apply this Interpretation for annual periods
beginning on or after 1 March 2008. The application of the Interpretation is not
expected to have significant impact on the Financial Statements of the Group.
Moreover, the following standards, amendments and interpretations have been
issued and are subject to endorsement by the European Union.
(a) IFRS 3: "Business Combinations" - Revised 2007 and subsequent amendments in
IAS 27, 28 and 31 (effective the first annual reporting period beginning on or
after 1 July 2009):
The revised standard introduces significant amendments for the application of
the acquisition method for business combinations. Among other changes the
standard introduces the possibility of minority interests being measured at fair
value. Furthermore, the revised standard requires that the acquirer of a
subsidiary recognizes the assets acquired and liabilities assumed as a
transaction with owners of the business and any difference should be recognized
in equity. The revised IFRS 3 applies for business combinations for which the
acquisition date is on or after the beginning of the first annual reporting
period beginning on or after 1 July 2009, while no consolidation adjustments are
required for the period before the revised standard will become effective. Thus,
the adoption of the revised standards will have no significant impact on the
Group's financial statements.
b) IFRIC 15: «Agreements for the Construction of Real Estate»
An entity shall apply IFRIC 15 "Agreements for the Construction of Real Estate"
for annual periods beginning on or after 1 January 2009.This Interpretation
applies to the accounting for revenue which refer to the real estates' disposal.
?his interpretation does not apply to the Group's activities.
c) IFRIC 16: Hedges of a Net Investment in a Foreign Operation
An entity shall apply IFRIC 16 for annual periods beginning on or after 1
October 2008.This Interpretation applies to an entity that hedges the foreign
currency risk arising from its net investments in foreign operations and wishes
to qualify for hedge accounting in accordance with IAS 39. The objective of IFRC
16 is to provide guidance concerning the nature of the hedged risk and the
amount of the hedged item for which a hedging relationship may be designated,
where in a group the hedging instrument can be held and what amounts should be
reclassified from equity to profit or loss as reclassification adjustments on
disposal of the foreign operation. This interpretation does not apply to Group
activities.
d) IFRIC 17: «Distribution of non-cash assets to owners »
Effective for annual periods beginning on or after 1 July 2009.
This interpretation, issued on 27 November 2008, provides guidance to an entity
in order to recognize and subsequently measure a liability arising from the
distribution of non-cash assets to owners. The Group is in the process of
evaluating the potential effects of this interpretation.
e) I.F.R.I.C. 18 «Transfer of assets from customers»
Effective for annual periods beginning on or after 1 July 2009.
This interpretation, issued on 29 January 2009, clarifies the accounting
treatment for agreements under which an entity receives from a customer an item
of property, plant and equipment that the entity must then use to serve
conventional obligations to him. The interpretation applies also, in cases where
the entity receives cash from customers to construct or to buy an item of
property, plant and equipment to be used as defined above. This interpretation
does not apply to Group activities.
f) IAS 39: Financial instruments: Recognition and Measurement
Eligible Hedged Items Amendment to IAS 39
Amendment to IAS 39 clarifies accounting hedges issues and, in particular,
inflation and one-sided risk of a hedged item. An entity shall apply those
amendments to IAS 39 for annual periods beginning on or after 1 July 2009.
g) Improvements to International Accounting Standards (Regulation 70/23.1.2009)
As part of the improvements project the International Accounting Standards Board
issued on 22 May 2008, certain non urgent but necessary amendments to various
standards. The majority of these are effective for annual periods beginning on
or after 1 January 2009. The adoption of these improvements is not expected to
have a significant impact on the Group's financial statements.
h) IFRS 7 (Amendment 2009): Improvements to the Financial Instruments
disclosures (effective from 1 January 2009)
This amendment aims to provide additional and improved disclosures concerning
the fair value of the financial instruments and the liquidity risk. Among the
changes of the standard, which are estimated to modify the way that the relative
information of the Group are presented, are: the introduction of three levels
for the definition of the fair value (market prices, valuation based on
remarkable market data and valuation based on non-remarkable market data),
requirement for disclosure of changes at the valuation methods used and
requirement for additional information concerning the third level including the
sensitivity analysis.
3. SUMMARY OF IMPORTANT ACCOUNTING POLICIES
3.1 Consolidation
Subsidiaries: Subsidiaries are entities controlled by the Company. Control
exists when the company has the power to govern the financial and operating
policies of an entity so as to obtain benefits from its activities. Control is
presumed to exist if the Company has ownership, directly of indirectly, over
more than half of the voting rights. The Group has also adopted a policy to
consider as a subsidiary an entity over which the Company is in the position to
have effective control, even though it has the ownership of less than half of
the voting rights. The Group has developed several criteria in order to
determine whether it has the "de facto" control over the entity, including the
actual representation of the Company in the Board of Directors and the
management of the subsidiary and the fact that there is no realistic possibility
that all the other shareholders of the subsidiary will be organised and take
control over the entity.
Subsidiaries are fully consolidated using the purchase method from the date on
which control commences until the date that control ceases. The acquisition cost
of a subsidiary is measured at the fair value of the assets given, the shares
issued and the liabilities undertaken on the date of the exchange, plus any
other cost directly attributable to the acquisition. Identifiable assets
acquired, liabilities and contingent liabilities assumed in a business
combination are measured at their fair values on the acquisition date. The
excess between the cost of acquisition and the fair value of the net assets
acquired is recorded as goodwill. If the cost of acquisition is less than the
fair value of the net assets of the subsidiary acquired, the difference is
recognized directly in the income statement.
Intra-group transactions, balances and unrealized gains on transactions between
Group companies are eliminated. Unrealised losses are also eliminated unless the
transaction provides evidence of impairment of the asset transferred. All Group
subsidiaries follow the same accounting policies as those adopted by the Group.
Associates: Associates are entities over which the Group has significant
influence but not control. Significant influence is presumed to exist if the
Group holds between 20% and 50% of the voting rights of another company.
Investments in associates are initially recognised at acquisition cost and
subsequently are accounted under the equity method. At the each balance sheet
date, investments carrying amount is increased by the Group's proportion in the
associate's changes in equity and decreases by the amount of dividends received
from the associate.
The Group's share in the associate's profits or losses, after the acquisition
date, is recognised in the Income Statement whereas, the Group's share in
changes in reserves, is recognised directly in equity accounts.
In case when the Group's participation in the associate's losses is equal or
exceeds its cost of participation, inclusive of any doubtful debts, the Group
does not account for any further losses, except if it has covered all
liabilities or has made payments on behalf of the associate as well as those
arising in the context of the shareholding.
3.2 Foreign Currency
(a) Foreign Operations
The assets and liabilities of foreign operations, including goodwill and fair
value adjustments due to business combinations, are translated into Euro at
exchange rates applicable on the balance sheet date. The income and expenses are
translated into Euro at exchange rate at the dates of transactions or, if it is
impracticable, based on the average exchange rates during the reporting period.
Any differences arising from the translation of the assets, liabilities, income
and expenses are recognized into "Translation reserves" within equity.
(b) Foreign Currency Transactions
Foreign currency transactions are translated into the respective functional
currency of the Group entities at the exchange rates at the dates of
transactions. Monetary asset and liability denominated in foreign currencies at
the reporting date are retranslated into the functional currency at the exchange
rate at that date. The non-monetary assets denominated in foreign currencies
that are measured at fair value are retranslated to the functional currency at
the exchange rate at the date that the fair value was determined. Foreign
currency differences arising on the execution of foreign currency transactions
and on the retranslation of monetary assets and liabilities are recognized in
profit or loss.
3.3 Interest income and expense
Interest income and expense are recognised on an accrual basis in the income
statement for all interest bearing assets and liabilities, based on the
effective interest method. Interest income and expense include the amortization
of any discount or premium, transaction costs or other differences between the
initial cost of an interest bearing financial asset and the amount to be
received or paid at maturity using the effective interest rate method.
The effective interest rate is the rate that exactly discounts any estimated
future payment or receipt through the expected life of a financial instrument
(or until the next date of interest reset), to the carrying amount of the
financial instrument, including any fees or transaction costs incurred.
3.4 Fee and commissions income
Fees and commissions are generally recognised on an accrual basis when the
relevant services have been provided. Commission and fees arising from
negotiating, or participating in the negotiation of, a transaction for a third
party are recognised on completion of the underlying transaction. Portfolio
management fees and other advisory and service fees are recognized in the income
statement according the applicable service contract, usually on a
time-apportionate basis.
3.5 Dividend Income
Dividend income is recognized in the income statement when the right to receive
payment is established.
3.6 Financial instruments
A financial instrument is any contract that gives rise to a financial asset of
one entity and a financial liability or equity instrument of another entity.
3.6.1 Initial Recognition
Financial assets and liabilities are recognized at the trade date which is the
date when the Group becomes a part to the contractual provision of the
instruments. The financial assets and liabilities are initially measured at fair
value plus, in the case of a financial asset or financial liability not at fair
value through profit or loss, transaction costs that are directly attributable
to the acquisition or issue of the financial asset or financial liability.
3.6.2 Classification and Measurement of Financial Assets
Management determines the classification of its investments at initial
recognition. Financial assets are classified into the following categories:
(a) Financial Assets and Liabilities at Fair Value through Profit & Loss
This category has two sub-categories: financial assets held for trading and
those designated at fair value through profit or loss at inception. A financial
asset is classified in the held for trading category if acquired principally for
the purpose of generating a profit from short-term fluctuations in price.
Derivative financial instruments are also categorised as held for trading unless
they are designated as accounting hedges in which case hedge accounting is
applied. Financial assets designated as at fair value through profit or loss at
inception are those that are managed and their performance is evaluated on a
fair value basis, in accordance with a documented investment strategy.
Information about these financial assets is provided internally on a fair value
basis to key management personnel. Financial assets and liabilities designated
as at fair value through profit or loss, are subsequently measured at fair value
and any change in the fair value is recorded in the income statement.
(b) Loans and Receivables
These include non-derivative financial assets with fixed or determinable
payments that are not quoted in an active market and which the Group does not
indent to sell in the short-term. They arise when the Group provides money,
goods or services directly to a debtor with no intention of trading the
receivable. Loans and receivables are measured at amortized cost using the
effective interest method.
(c) Held to maturity investments
Held-to-maturity financial assets are non-derivative financial assets with fixed
or determinable payments and fixed maturities that the management has the
positive intention and ability to hold to maturity. When the Group to sell other
than an insignificant amount of held-to-maturity assets, then the entire
category tainted and reclassified as available-for-sale. Held-to-maturity
financial assets are measured at amortised cost, using the effective interest
method
(d) Available for sale investment
Available-for-sale investments are those intended to be held for an indefinite
period of time, which may be sold in response to needs for liquidity or changes
in interest rates, exchange rates or equity prices.
Purchases and sales of financial assets at fair value through profit or loss,
held-to-maturity, and available-for-sale are recognized at trade date - the date
on which the Group commits to purchase or sell the asset. Loans are recognized
when cash is advanced to the borrowers.
Financial assets are initially recognized at fair value plus transaction costs
for all financial assets not carried at fair value through profit or loss.
Financial assets are derecognized when the rights to receive cash flows from the
financial assets have expired or where the Group has transferred substantially
all risks and rewards of ownership.
Available-for-sale financial assets are subsequently carried at fair value and
any change in fair value is recognized directly into equity.
3.6.3 Off setting
Financial assets and liabilities are offset and the net amount is presented in
the balance sheet when there is a legally enforceable right to offset the
recognised amounts and there is an intention to settle on an net basis, or
realize the asset and settle the liability simultaneously.
Income and expenses are offset only when permitted by the accounting standards,
or for gains and losses arising from a group of similar transactions.
3.6.4 Fair value measurement
For the measurement of assets and liabilities at fair value, the Group uses
current market prices for every financial instrument. For those assets and
liabilities whose current market price was not available, the values that were
derived by applying valuation methods do not differ much from their carrying
values.
In particular:
* The listed securities are valued at fair value, which is determined according to
the current market price on the day of the balance sheet date.
* Non listed securities are valued at cost of acquisition less any impairment.
* The fair value of derivative financial instruments that are not quoted in active
markets is determined by using valuation techniques. These models, even though
dependent on measurable data, may require estimates and judgments (i.e.
volatility and credit risk). Those estimates are assessed regulatory and when
market conditions change.
3.6.5 Impairment of financial assets
(a) Assets carried at amortized cost
The Group assesses at each balance sheet date whether there is objective
evidence that a financial asset or group of financial assets is impaired.
A financial asset or a group of financial assets is impaired and impairment
losses are incurred if, and only if, there is objective evidence of impairment
as a result of one or more events that occurred after the initial recognition of
the asset (a "loss event") and that loss event (or events) has an impact on the
estimated future cash flows of the financial asset or group of financial assets
that can be reliably estimated. Objective evidence that a financial asset or a
group of assets is impaired includes observable data that comes to the attention
of the Group about the following loss events:
* significant financial difficulty of the obligor;
* a breach of contract, such as a default or delinquency in interest or principal
payments;
* the Group granting to the borrower, for economic or legal reasons relating to
the borrower's financial difficulty, a concession that the lender would not
otherwise consider;
* it becoming probable that the borrower will enter bankruptcy or other financial
reorganisation; or
* observable data indicating that there is a measurable decrease in the estimated
future cash flows from a group of financial assets since the initial recognition
of those assets, although the decrease cannot yet be identified with the
individual financial assets in the group; including:
* adverse changes in the payment status of borrower in the group; or
* national or local economic conditions that correlate with defaults on the assets
in the group.
The Group first assesses whether objective evidence of impairment exists
individually for financial assets that are individually significant, and
individually or collectively for financial assets that are not individually
significant. If the Group determines that no objective evidence of impairment
exists for an individually assessed financial asset, whether significant or not,
it includes the asset in a group of financial assets with similar credit risk
characteristics and collectively assesses them for impairment. Assets that are
individually assessed for impairment and for which an impairment loss is or
continues to be recognized are not included in a collective assessment of
impairment.
If there is objective evidence that an impairment loss on financial assets has
been incurred, the amount of loss is measured as the difference between the
carrying amount of the financial asset and the present value of estimated future
cash flows (excluding future credit losses that have not been incurred)
discounted at the financial asset's original effective interest rate. The
carrying amount of the asset is reduced through the use of an allowance account
and the amount of the loss is recognized in the income statement. If a loan or a
held-to-maturity investment has a variable interest rate, the discount rate for
measuring any impairment loss is the current effective interest rate determined
under the contract.
The calculation of the present value of the estimated future cash flows of a
collateralized loan reflects the cash flows that may result from foreclosure
less costs for obtaining and selling the collateral, whether or not foreclosure
is probable.
For the purposes of a collective evaluation of impairment, financial assets are
grouped on the basis of similar credit risk characteristics (i.e. on the basis
of the Group 's grading process that considers asset type, industry,
geographical location, collateral type, past-due status and other relevant
factors). Those characteristics are relevant to the estimation of future cash
flows for groups of such assets by being indicative of the debtors' ability to
pay all amounts due according to the contractual terms of the assets being
evaluated.
Future cash flows in a group of financial assets that are collectively evaluated
for impairment are estimated on the basis of the contractual cash flows of the
assets in the group and historical loss experience for assets with credit risk
characteristics similar to those in the group. Historical loss experience is
adjusted on the basis of current observable data to reflect the effects of
current conditions that did not affect the period on which the historical loss
experience is based and to remove the effect of conditions in the historical
period that do not exist currently.
The methodology and assumptions used of estimating future cash flows are
reviewed regularly by the Group to reduce any differences between loss estimates
and actual loss experience.
When a loan is uncollectible, it is written-off against the related provision
for loan impairment. Such loans are written off after all the necessary
procedures have been completed and the amount of the loss has been determined.
Subsequent recoveries of amounts previously written off decrease the amount of
the provision for loan impairment in the income statement.
If, in a subsequent period, the amount of the impairment loss decreases and the
decrease can be related objectively to an event occurring after the impairment
was recognized, the previously recognized impairment loss is reversed by
adjusting the allowance account. The amount of the reversal is recognized in the
income statement.
(b) Assets carried at fair value
The Group assesses at each balance sheet date whether there is objective
evidence that a financial asset or group of financial assets is impaired. In the
case of equity investments classified as available-for-sale, a significant or
prolonged decline in the fair value of the security below its cost is considered
in determining whether the asset is impaired. If any such evidence exists for
available-for-sale financial assets, the cumulative loss measured as the
difference between the acquisition cost and the current fair value, less any
impairment loss on that financial asset previously recognized in profit or loss
is removed from equity and recognized in the income statement. Impairment losses
recognized in the income statement on equity instruments are not reversed
through the income statement. If, in a subsequent period, the fair value of a
debt instrument classified as available-for-sale increases and the increase can
be objectively related to an event occurring after the impairment loss was
recognized in profit or loss, the impairment loss is reversed through the income
statement.
3.6.6 Derivative financial instruments and hedge accounting
Derivative financial instruments include forward exchange contracts, currency
and interest rate swaps, stock, currency and index futures, equity and currency
options and other derivative financial instruments. These are initially
recognised in the balance sheet at fair value, and subsequently are remeasured
at their fair value. Fair values are obtained from quoted market prices,
discounted cash flow models and other appropriate pricing models. All
derivatives are shown as financial assets at fair value through profit or loss
when fair value is positive and as financial liabilities when fair value is
negative.
The best evidence of the fair value of a derivative at initial recognition is
the transaction price (i.e. the fair value of the consideration given or
received).
Certain derivatives embedded in other financial instruments are treated as
separate derivatives when their economic characteristics and risks are not
closely related to those of the host contract and the host contracts is not
carried at fair value through profit or loss. These embedded derivatives are
measured at fair value with changes in fair value recognized in the income
statement.
The Group has designated all derivatives as trading and has not applied hedging
accounting.
3.6.7 Sale and repurchase agreements
The Group enters into agreements for purchases (sales) of investments and to
resell (repurchase) substantially identical investments at a certain date in the
future at a fixed price. Investments purchased, on condition that they will be
resold in the future (reverse repos), are not recognized in the balance sheet.
The amounts paid for purchase thereof are recognized as receivables from other
banks or customers. The difference between the sale and repurchase consideration
is recognized as interest income or expense during the repurchase agreement
period on an accrual basis.
Investments sold under repurchase agreements continue to be recognized in the
balance sheet and are measured in accordance with the accounting policy for
either assets held for trading or available-for-sale as appropriate. The
proceeds from the sale of the investments are reported as liabilities to either
banks or customers.
3.7 Insurance contracts
Through its insurance subsidiaries, the Group issues insurance contracts to
customers. Under these contracts the Group accepts significant insurance risk,
by agreeing to compensate the contract holder on the occurrence of a specified,
uncertain future event.
Group's insurance company issues only insurance contracts covering property and
casualty risks up to one year of duration.
Property and casualty insurance contracts are separated in two categories:
a) Automobile third party liability. This category includes insurance contracts
covering the risk of automobile third party liability.
b) Non-automobile lines. This category includes insurance contracts covering the
risk of fire and allied lines, marine, general liability, legal protection, road
assistance, etc.
Gross insurance premiums are recognized in the income statement over the period
covered by the related insurance contract. The insurance premiums are recognized
before the deduction of the relevant commissions.
Contract costs
Costs incurred for the initiation or the renewal of insurance contract, such as
brokers commission, are deferred and recognized as an asset. The relevant
amounts are amortized to Profit or Loss on a systematic basis over the
contractual term of the relevant insurance contract.
Liabilities from insurance contracts
Provisions for outstanding claims are revised at each balance sheet date and any
change is recognized in Profit or Loss to the extend that it refers to claim
covered by the Group, while any amount covered by reinsurance is recognized as
an asset (receivable) according to the reinsurance contracts.
(a) Unearned Premiums
Gross insurance premiums for general insurance business are recognized in the
income statement over the period covered by the related insurance contract. The
proportion of premiums which relates to periods of risk extending beyond the end
of the year is reported as unearned premium and is calculated on a daily basis.
(b) Provisions for claims incurred
Provisions for outstanding claims are based on the estimated ultimate cost of
all claims incurred but not settled at the balance sheet date, whether reported
or not, together with related claims handling costs. The amount of
provisions is estimated based on available information (adjuster reports, court
decisions etc.) at the balance sheet date.
Provisions for outstanding claims include reserves for incurred claims, which
are not reported to the company at the balance sheet date (I.B.N.R.). Provisions
for outstanding claims are reported at the balance sheet date according to the
requirements of regulatory authority legislation in force (law 400/1970).
Specifically the automobile third party liability related claims reserves, are
checked according to the ?3-3975/11.10.1999 decision of The Ministry of
Development, forming the greater possible reserve. I.B.N.R. provisions are
estimated based on the ?3-3974/11.10.1999 decision of The Ministry of
Development.
Provisions for outstanding claims include reserves for incurred claims, which
are not reported to the company at the balance sheet date (I.B.N.R.). Provisions
for outstanding claims are reported at the balance sheet date according to the
requirements of regulatory authority legislation in force (law 400/1970).
Specifically the automobile third party liability related claims reserves, are
checked according to the ?3-3975/11.10.1999 decision of The Ministry of
Development, forming the greater possible reserve. I.B.N.R. provisions are
estimated based on the ?3-3974/11.10.1999 decision of The Ministry of
Development.
The difference in non-life insurance contract liabilities (increase / decrease)
related to their previous assessment is transferred to the profit and loss
accounts as far as the company's own retention, while the rest is transferred to
the reinsurance accounts, according to the reinsurance agreements.
Reinsurance contracts
Reinsurance contracts are contracts entered into by the Group's insurance
subsidiaries, under which the Group is compensated for losses incurred under
insurance contracts issued by the Group's insurance subsidiaries. The
reinsurance contracts entered into by the Group's insurance subsidiaries, in
which the issuer of the insurance contract is another insurer (inwards
reinsurance) are included in reinsurance contracts.
Any amounts recovered from reinsurers, that derive from the reinsurance
contracts of the Group, are recognized in assets. The amounts recovered from or
to reinsurers are calculated based on the amounts related with the reinsurance
contracts and are based on the terms of each reinsurance contract. The
reinsurance liabilities are mainly premiums payable for reinsurance contracts
and are recognized as expenses on an accrual basis.
The Group evaluates its reinsurance assets for impairment. If there is objective
evidence that the reinsurance assets have incurred an impairment, the Group
reduces the carrying amount of the reinsurance asset to its recoverable amount
and recognizes the reduction in its value in the income statement.
Liability adequacy test
At each balance sheet date, liability adequacy tests are performed by the
Group's insurance companies to ensure the adequacy of liabilities that arise
from their operations. In performing these tests, current best estimates of
operational and investment income and operational and administration expenses
are based on past experience and financial results.
In case when the adequacy test reveals insufficient reserves, provisions are
adjusted accordingly. The liability is derecognized when the contract expires,
is discharged or is cancelled.
3.8 Cash and cash equivalents
For the purposes of the cash flow statement, cash and cash equivalents comprise
balances with less than three months maturity and include cash and non
restricted balances with Central Bank, government bonds and treasury bills and
amounts due from other banks and short-term government securities.
3.9 Intangible assets
The Group has included in this category goodwill from acquisitions and software
which is carried at amortised cost less accumulated amortization.
(a) Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value
of the net identifiable assets of the acquired undertaking at the date of
acquisition. Goodwill on acquisitions of subsidiaries is included in the balance
sheet in "Goodwill and other intangible assets".
Negative goodwill is recognised immediately as gain in the income statement.
Goodwill is tested for impairment annually and whenever there are indications of
impairment and is carried at cost less accumulated impairment losses. Goodwill
is allocated to cash-generating units for the purpose of impairment testing,
using the country of operation and economic segment as the allocation bases.
(b) Other intangible assets arisen from business combinations
An intangible acquired in a business combination is recognized if it is
identifiable; it is probable that the expected future economic benefits
associated with the asset will flow to the Group and its cost can be measured
reliably. Identifiable is an asset when it is separable, i.e. is capable of
being separated or divided from the entity and transferred individually or
together with a related contract, or arises from contractual or other legal
rights, regardless of whether those rights are transferable or separable from
the entity or from other rights and obligations.
The Group, has recognized the following intangible assets in their fair value
that was acquired at the take-over of Omega Bank as part of a business
combination on 30 September 2006:
* Intangible asset from conventions of customer loans
* Intangible asset from conventions of customer deposits
* Intangible asset from conventions of financial brokerage
Amortisation of other intangible assets arising from business combination is
calculated using the straight-line method to allocate their cost to their
residual values over their estimated useful lives, which extends from 4 to 5
years. Other intangible assets coming from business combination that are subject
to amortizations are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable.
Amortisation charge is included within "Depreciation" in the income statement.
(c) Computer software
Costs that are directly associated with identifiable and unique computer
software products controlled by the Group and that will probably generate
economic benefits exceeding costs beyond one year are recognised as intangible
assets. Subsequently computer software is carried at cost less any accumulated
amortisation and any accumulated impairment losses. Expenditure, which enhances
or extends the performance of computer software programmes beyond their original
specifications is recognised as a capital improvement.
Costs associated with maintenance of computer software programmes are recognised
as an expense when incurred. Computer software costs are amortised using the
straight-line method over their useful lives, not exceeding a period of five
years. Amortisation commences when the computer software is available for use
and is included within "Depreciation" in the income statement.
3.10 Property, plant and equipment
All plant and equipment are stated at historical cost less depreciation, except
land and buildings which are shown at fair value based on valuations by external
independent valuers, less subsequent depreciation for buildings.
Historical cost includes expenditure that is directly attributable to the
acquisition of the items. Expenditure for repairs and maintenance of property
and equipment is charged to the income statement of the year in which they were
incurred. Depreciation on buildings and other tangible assets are calculated
using the straight line method to allocate their cost or fair value to their
residual values over their estimated useful lives.
The carrying amount of impaired assets is written down to their recoverable
amounts. Gains and losses from disposals are recognised in the income statement.
Land is not depreciated but is reviewed for impairment. Depreciation on other
property and equipment is calculated using the straight-line method to allocate
the cost or revalued amount of each asset less their residual values, over their
estimated useful lives. The estimated useful lives are as follows:
* Buildings: 50 years
* Lease hold improvements: depreciated on a straight-line basis over the term of
the lease
* Computers: 3 years
* Vehicles: 5-7 years
* Furniture and equipment: 10 years
* The commercial value of leased assets is depreciated over the lease period
The assets' residual values and useful lives are reviewed, and adjusted if
appropriate, at each balance sheet date. When the carrying amount of an asset is
greater than its estimated recoverable amount, it is written down immediately to
its recoverable amount. The recoverable amount is the higher of the asset's fair
value less costs to sell and value in use.
Gains and losses on disposal of property and equipment are determined by
comparing proceeds to carrying amount and are included in the income statement.
3.11 Investment property
Investment property are properties held by the Group either to earn rental
income or for capital appreciation. The Group records investment property at
fair value as determined by an independent valuation company having an
appropriate recognised professional qualification. Initially investment property
is recorded at cost including acquisition expenses. Any gain or loss arising
from a change in fair value is recognised in profit or loss.
3.12 Assets held for sale
The Group classifies an asset as held for sale if it is committed to recover its
carrying amount principally through a sale transaction rather than through
continuing use. For this to be the case, these assets should be available for
immediate sale in their present condition subject only to terms that are usual
and customary for sales of such assets and their sale is highly probable. The
category of assets held for sale comprises of two type of assets:
* Property acquired from auctions with the intention to recover loans and
receivables past due.
* Group of assets forming a disposal group that the Group intends to dispose
together at a single transaction. Liabilities associated with this disposal
group are also classified separately. As of 31 December 2008, the Group has
classified into this category the assets of its subsidiary Proton Insurance SA.
Assets held for sale, according to IFRS 5 "Non current assets held for sale are
measured at the lower of their carrying amount and fair value less costs to
sell. Assets held for sale are not depreciated but are subject to impairment.
Gains/ losses from sale of these assets are recognized in the income statement.
3.13 Leases
3.13.1 A Group company is a lessee
(i) Finance lease
The Group has not entered into a finance lease agreement in the capacity of a
lessee.
(ii) Operating leases
Leases where the risks and rewards of ownership remain with the lessor are
classified as operating leases. Payments made under operating leases (net of any
incentives received by the lessor) are charged to the income statement on a
straight line basis over the period of the lease.
3.13.2 A Group company is a lessor
(i) Finance lease
When assets are leased out under finance lease / hire purchase, the present
value of the lease payments is recognized as a receivable. Lease income and hire
purchase fees are recognized in the income statement in a systematic manner,
based on instalments receivable during the year so as to provide a constant
periodic rate using the net investment method.
(ii) Operating leases
Assets leased out under operating leases are carried on the Group's financial
statements and are depreciated over their useful economic lives. Payments
received under operating leases are recorded in the income statement on a
straight line basis.
3.14 Financial liabilities
Financial liabilities are treated as held for trading if:
(a) acquired principally for the purpose of selling or repurchasing them in the
near term
(b) a derivative financial instrument (except for a designated and effective
hedging instrument)
Financial liabilities are initially recognised at fair value. Subsequently any
changes in their fair value are recognised in the income statement.
The Group has classified in this category derivative financial instruments not
held and qualifying for hedging purposes.
Derivative financial liabilities that are part of a hedging relationship are
measured at fair value. Liabilities not included in the above categories are
carried at amortised cost using the effective interest rate method.
3.15 Share capital
(a) Share issue costs
Incremental costs directly attributable to the issue of new shares are deducted
from equity.
(b) Dividends on ordinary shares
The dividend distribution to ordinary shareholders is recognized in the period
in which the dividend is approved by the Company's shareholders.
(c) Treasury Shares
Where the Company or other members of the Group purchase the Company's equity
share capital, the consideration paid is deducted from total shareholders'
equity as treasury shares. Where such shares are subsequently sold or reissued,
any consideration received is included in shareholders' equity.
3.16 Fiduciary activities
Assets and income arising thereon together with related undertakings to return
such assets to customers are excluded from these financial statements where the
Group acts in a fiduciary capacity such as nominee, trustee or agent.
3.17 Provisions
Provisions are recognised when the Group has a present legal or constructive
obligation as a result of past events, when it is more likely than not that an
outflow of resources will be required to settle the obligation, and a reliable
estimate of the amount of the obligation can be made. If the effect is material,
provisions are determined by discounting the expected future cash flows at a
pre-tax rate that reflects current market assessments of the time value of
money.
Where the Group expects a provision to be reimbursed, the reimbursement is
recognised as a separate asset but only when the reimbursement is virtually
certain.
The Group recognises a provision for onerous contracts when the expected
benefits to be derived from a contract are less than the unavoidable costs of
meeting the obligations under the contract.
3.18 Employee benefits
(a) Defined contribution plans
A defined contribution plan is a plan under which the Company and the employees
pay fixed contributions into a separate fund. The benefits provided to the
employees participating in defined contribution plans are based on the return of
the fund. Each fund is governed by specified regulations as agreed between the
two parties and in compliance with relevant statutory obligations. The
contributions of the Group to the defined contribution plans are charged to the
income statement in the year in which they arise.
The Group's personnel are insured for its main pension to publicly administered
pension insurance funds (i.e. Social Security Foundation and other) depending on
their specialty. The contributions paid by the Group are included in "Staff
costs". The Group's personnel are also insured for medical care in multiemployer
funds. In these funds, there are no separate accounts for each company, hence
accounting for defined contribution is followed. Once the contribution has been
paid, the Group has no further payment obligations.
(b) Defined benefit plans
The Group's defined benefit plan regards the legal commitment to pay lump-sum
severance grant, pursuant to L.2112/1920. Typically defined benefit plans define
an amount of pension benefit that an employee will receive on retirement,
usually dependent on one or more factors such as years of service and
compensation. The liability recognised in the balance sheet for defined benefit
pension plans is the present value of the defined benefit obligation at the
balance sheet date less unrecognised actuarial gains or losses and past service
costs. The defined benefit obligation is calculated on an annual basis by an
independent actuary with the use of the projected unit credit method.
The present value of the liability of the defined benefit plan is calculated by
discounting the future cash outflows of the plan with the long-term Greek bonds'
rate.
Actuarial gains and losses are not recognised as an expense unless the total
unrecognised gain or loss exceeds 10% of the greater of the obligation and
related plan assets. The amount exceeding this 10% corridor is charged or
credited to profit or loss over the employees' expected average remaining
working lives. Actuarial gains and losses within the 10% corridor are disclosed
separately. Past-service costs are recognized immediately in the income
statement, unless the changes to the pension plan are conditional on the
employees remaining in service for a specified period of time (the vesting
period). In this case, the past service
Costs are amortised on a straight-line basis over the vesting period.
(c) Share based employee remuneration
Group's subsidiary (Proton) operates equity-settled share-based remuneration
plans for remuneration of its employees.
All employee services received in exchange for the grant of any share-based
remuneration are measured at their fair values at the date at which they are
granted. These are indirectly determined by reference to the fair value of the
share options awarded. Their value is appraised at the grant date and excludes
the impact of any non-market vesting conditions (for example, profitability and
sales growth targets).
All share-based remuneration is ultimately recognised as an expense in the
income statement with a corresponding credit to "stock option reserve", net of
deferred tax where applicable. If vesting periods or other vesting conditions
apply, the expense is allocated over the vesting period, based on the best
available estimate of the number of share options expected to vest. Non-market
vesting conditions are included in assumptions about the number of options that
are expected to become exercisable. Estimates are subsequently revised, if there
is any indication that the number of share options expected to vest differs from
previous estimates.
No adjustment is made to expense recognised in prior periods if fewer share
options ultimately are exercised than originally estimated.
Upon exercise of share options, the proceeds received net of any directly
attributable transaction costs up to the nominal value of the shares issued are
allocated to share capital with any excess being recorded in share premium
account.
3.19 Income Tax
Current tax liabilities and assets for the current and prior periods are
measured at the amount expected to be paid to or recovered from the taxation
authorities using the tax rates and laws that have been enacted or substantially
enacted by the balance sheet date.
Deferred income taxes are calculated using the liability method on temporary
differences. This involves the comparison of the carrying amounts of assets and
liabilities in the consolidated financial statements with their respective tax
bases. Deferred tax assets are recognised to the extent that it is probable that
they will be able to be offset against future taxable income. Deferred tax
liabilities are recognised for all taxable temporary differences.
However, in accordance with the rules set out in IAS 12, no deferred taxes are
recognised in conjunction with goodwill.
No deferred taxes are recognised to temporary differences associated with shares
in subsidiaries if reversal of these temporary differences can be controlled by
the Group and it is probable that reversal will not occur in the foreseeable
future. In addition, tax losses available to be carried forward as well as other
income tax credits to the Group are assessed for recognition as deferred tax
assets.
No deferred taxes are recognised from the initial recognition of an asset or
liability in a transaction that is not a business combination and, at the time
of the transaction, affects neither the accounting profit nor taxable profit or
loss
Deferred tax assets and liabilities are calculated, without discounting, at tax
rates that are expected to apply to their respective period of realisation,
provided they are enacted or substantively enacted at the balance sheet date.
Most changes in deferred tax assets or liabilities are recognised as a component
of tax expense in the income statement. Only changes in deferred tax assets or
liabilities that relate to a change in value of assets or liabilities that is
charged directly to equity are charged or credited directly to equity.
In Greece submitted tax returns are not considered as final until tax
authorities audit the company's books and records, or until the statute of
limitation expires. In Greece the results reported to the tax authorities by an
entity are provisional and are subject to revision until the tax authorities
examine the books and records of the entity and the related tax returns are
accepted as final. Therefore, entities remain contingently liable for additional
taxes and penalties which may be assessed on such tax examination. It is common
practice in Greece for the tax authorities to audit an entity's books and
records and to disallow expenses arbitrarily and to assess additional taxes.
3.20 Segment reporting
A segment is a distinguishable component of the Group that is engaged either in
providing products or services (business segment) or in providing products or
services within a particular environment (geographical segment), which is
subject to risks and rewards that are different from those of other segments.
Segment is analyzed in Note 7.
4. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS
Accounting estimates and judgements are continually evaluated and are based on
historical experience and other factors, including expectations of future events
that are believed to be reasonable under the circumstances.
The Group makes estimates and assumptions concerning the future. The resulting
accounting estimates will, by definition, seldom equal the related actual
results. The estimates, judgements and assumptions that have a significant risk
of causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year are discussed below:
* Impairment of available for sale financial assets
The Group follows the guidance in IAS 39 to determine if an investment has been
impaired. This decision requires critical judgement. Available for sale equity
investments are impaired when there has been a significant or prolonged decline
in fair value below its cost. When the declines in fair value are considered
significant or prolonged, the fair value reserve is transferred to the income
statement. Furthermore, estimates are used to determine the fair value of equity
investments which are not quoted in active markets. For those investments, the
fair value is determined by using valuation techniques taking under
consideration assumptions about industry and sector performances as well as the
financial health of the investee.
* Financial Instruments Classification
The Group's accounting policies require financial assets and liabilities to be
classified into different categories at their inception:
* Investments held to maturity. Management judgement is required when applying
this classification, which takes into account the Group's intention & ability to
hold investment to maturity.
* Financial instruments for trading purposes include Investments and derivatives
held to achieve short-term profit.
5. STRUCTURE OF THE GROUP
Entities consolidated under full consolidation method at 31 December 2008:
+----------------------------+-------------+-------------+---------------+------------------+
| Name | Country | Direct and |Relation that | Note |
| | | indirect | dictated the | |
| | | holding |consolidation | |
+----------------------------+-------------+-------------+---------------+------------------+
| IRF EUROPEAN FINANCE | BERMUDA | Parent | | |
| INVESTMENTS LIMITED | | | | |
+----------------------------+-------------+-------------+---------------+------------------+
| MIMOSA TRADING SA | MARSHALL | 100% | Percentage | Direct Stake |
| | ISLANDS | | Ownership | |
+----------------------------+-------------+-------------+---------------+------------------+
| MYRTLE TRADING COMPANY | MARSHALL | 100% | Percentage | Direct Stake |
| | ISLANDS | | Ownership | |
+----------------------------+-------------+-------------+---------------+------------------+
The following table indicates the Group structure as at 31 December 2007:
+--------------+-------------+--------------+--------------+----------+---------------+----------+
| |
+--------------+
| Name | Country | Direct | Indirect | Direct | Relation | Note |
| | |Shareholding |Shareholding | and | that | |
| | | % | % |Indirect | dictated | |
| | | | | Holding | the | |
| | | | | |consolidation | |
+--------------+-------------+--------------+--------------+----------+---------------+----------+
| Name | Country | Direct | Indirect | Direct | Relation | Note |
| | |Shareholding |Shareholding | and | that | |
| | | % | % |Indirect | dictated | |
| | | | | Holding | the | |
| | | | | |consolidation | |
+--------------+-------------+--------------+--------------+----------+---------------+----------+
| IRF | BERMUDAS | | | Parent | | |
| EUROPEAN | | | | | | |
| FINANCE | | | | | | |
| INVESTMENTS | | | | | | |
| LIMITED | | | | | | |
+--------------+-------------+--------------+--------------+----------+---------------+----------+
| MIMOSA | MARSHALL | 100.00% | 0.00% | 100% | Percentage | Direct |
| TRADING | ISLANDS | | | | Ownership | Stake |
| SA | | | | | | |
+--------------+-------------+--------------+--------------+----------+---------------+----------+
| MYRTLE | MARSHALL | 100.00% | 0.00% | 100% | Percentage | Direct |
| TRADING | ISLANDS | | | | Ownership | Stake |
| COMPANY | | | | | | |
+--------------+-------------+--------------+--------------+----------+---------------+----------+
| PROTON | | | | | | |
| BANK | | | | | | |
| GROUP | | | | | | |
+--------------+-------------+--------------+--------------+----------+---------------+----------+
| PROTON | GREECE | 20.60% | 0.00% | 20.60% | Control | Direct |
| BANK | | | | | | Stake |
| SA | | | | | | |
+--------------+-------------+--------------+--------------+----------+---------------+----------+
| FIRST | SERBIA | 0.00% | 16.63% | 16.63% | Control | Indirect |
| GLOBAL | | | | | | stake |
| BROKERS | | | | | | through |
| SA | | | | | | "PROTON |
| | | | | | | BANK" |
+--------------+-------------+--------------+--------------+----------+---------------+----------+
| PROTON | GREECE | 0.00% | 20.58% | 20.58% | Control | Indirect |
| MUTUAL | | | | | | stake |
| FUNDS | | | | | | through |
| SA | | | | | | "PROTON |
| | | | | | | BANK" |
+--------------+-------------+--------------+--------------+----------+---------------+----------+
| OMEGA | GREECE | 0.00% | 13.60% | 13.60% | Control | Indirect |
| INSURANCE | | | | | | stake |
| BROKERS | | | | | | through |
| SA | | | | | | "PROTON |
| | | | | | | BANK" |
+--------------+-------------+--------------+--------------+----------+---------------+----------+
| PROTON | GREECE | 0.00% | 18.80% | 18.80% | Control | Indirect |
| INSURANCE | | | | | | stake |
| SA | | | | | | through |
| | | | | | | "PROTON |
| | | | | | | BANK" |
+--------------+-------------+--------------+--------------+----------+---------------+----------+
|INTELLECTRON | GREECE | 0.00% | 11.46% | 11.46% | Control | Indirect |
| SYSTEMS SA | | | | | | stake |
| | | | | | | through |
| | | | | | | "PROTON |
| | | | | | | BANK" |
+--------------+-------------+--------------+--------------+----------+---------------+----------+
| OMEGA |SWITZERLAND | 0.00% | 16.48% | 16.48% | Control | Indirect |
| KAHN | | | | | | stake |
| FINANCIAL | | | | | | through |
| SERVICES | | | | | | "PROTON |
| SA | | | | | | BANK" |
+--------------+-------------+--------------+--------------+----------+---------------+----------+
| ASSOCIATES | | | | | | |
+--------------+-------------+--------------+--------------+----------+---------------+----------+
| Omega | Greece | 0.00% | 6.01% | 6.01% | | |
| Portfolio | | | | | | |
| Investment | | | | | | |
| SA | | | | | | |
+--------------+-------------+--------------+--------------+----------+---------------+----------+
Changes in group structure during the year 2008
DISPOSAL OF SHAREHOLDING IN PROTON: On 24 September 2008, IRF sold 10 million
shares in Proton Bank for a gross sales price of EUR65 million. The consideration
for this disposal was in the form of cash. Following IRF's disposal of these
shares in Proton Bank, the IRF directors holding position on the Board of
Directors of Proton Bank resigned. As of 30 September 2008, IRF held
approximately 2.9 million shares in Proton Bank, representing an interest of
approximately 4.65%. As of 31 December 2008, IRF had disposed the entire
investment in Proton Bank. The results of Proton Bank's Group are consolidated
in the financial statements of IRF, as discontinued operations, up to the date
of the disposal (note 15.2).
Information on consolidation
PROTON BANK is fully consolidated in the 2007 and the 9 month period of 2008
accounts because of the "de facto" power of the Company to control its financial
and operating activities. In particular, IRF owned 20.60% of the voting rights
of Proton Bank while the percentage of voting rights controlled by the Company
was increased to 27.14% after taking into consideration the holding of two other
shareholders of Proton Bank, who were committed to vote in accordance with IRF's
instructions based on an agreement. IRF had exercised its effective power and
appointed six members in the eleven-member Board of Directors of Proton Bank,
including Proton Bank's chairman.
Company's directors used their judgment in order to ascertain whether IRF had
the effective control of Proton Bank according to the accounting policy adopted.
Based on all relevant information available, Company concluded that it had the
ability to control Proton Bank and therefore fully consolidated its financial
statements. The following reasons advocate that IRF had control over Proton
Bank:
* IRF had exercised its effective power and appointed six members in the
eleven-member Board of Directors of Proton Bank, including Proton Bank's
chairman,
* Based on the Purchase Agreement, the vendors, who were directors and
shareholders of Proton Bank, agreed to vote in such a way that would protect
IRF's power to appoint the majority of the Proton Bank's Board of Directors,
* There were no realistic possibility that all the other shareholders, who
represented the 72.86% of the voting rights, would be organized in such a way as
to in practice block the exercise of IRF's power. In particular, the 72.86% of
the shares of Proton Bank was held by more than 10,000 investors, the majority
of whom did not usually attend the Shareholders' Meeting. Moreover, only 3 of
them controlled more than 5% of the entity and
* The relevant judgment was in compliance with the relevant Greek regulations.
All other subsidiaries comprising Proton Bank Group were consolidated because of
the indirect, through Proton Bank, ownership of the majority of their voting
rights. The method of consolidation is the Purchase Method. Also associates of
Proton Bank (entities where Proton directly owns more than 20%) are consider as
associates of IRF as well. Investment in associates is accounted under the
equity method.
On 29 June 2006 IRF acquired a 28% stake in the share capital of "Proton
Investment Bank", which was listed on the Athens Stock Exchange. The range of
activities of the Proton Bank Group of Companies covers almost the whole
spectrum of the financial industry. More precisely, Proton Bank Group is
specialized in investment banking.
The Group consolidated Proton Investment Bank for the first time at 30 June
2007, the date at which control was deemed to be acquired. "Control" is the
right to lead the financial and business policies of an entity in order to
receive benefits from its operation.
On 7 September 2006, the Extraordinary General Meeting of shareholders of Proton
Investment Bank approved the merger of the Bank with Omega Bank and Proton
Securities. According to the Merger Contract, which was approved by the General
Assembly, the exchange ratio was 1 share of Omega Bank for 0.90 shares of Proton
Investment Bank. As Proton Bank holds 100% of Proton Securities shares, there
was no exchange ratio. Additionally, the General Assembly decided the amendment
of article 5 of its Articles of Association in order for the bank's share
capital to rise after the merger, to a total amount of EUR 281,450,360.78 divided
into 62,683,822 common voting shares of nominal value EUR 4.49 each. The merger
was completed on 29 September 2007. Following Proton Investment Bank's merger
with Omega and taking into account the shares issued therewith, the Company
owned a 20.16% interest in the newly merged entity, Proton Bank. For the above
merger the provisions of IFRS 3 "Business Combinations" were followed which
applies to business combinations after 31 March 2004. On 24 September 2008, IRF
sold its major participation in Proton Bank and as of 31 December 2008 , IRF had
disposed of its entire investment in Proton Bank.
MIMOSA TRADING SA: This company is duly incorporated and has filed articles of
incorporation under the provisions of the Marshall islands Business Corporation
Act on 6 July 2007. IRF is the owner of five hundred (500) fully paid and
non-assessable shares of the capital stock of the corporation. The aggregate
number of shares of stock that this company is authorized to issued to issue is
five hundred (500) registered and/or bearer shares without par value.
MYRTLE TRADING COMPANY: This company is duly incorporated and has filed articles
of incorporation under the provisions of the Marshall islands Business
Corporation Act on 6 July 2007. IRF is the owner of five hundred (500) fully
paid and non-assessable shares of the capital stock of the corporation. The
aggregate number of shares of stock that this company is authorized to issued to
issue is five hundred (500) registered and/or bearer shares without par value.
6. RISK MANAGEMENT
IRF Group is exposed to various risks in relation to financial instruments.
After the disposal of Proton Bank, the extent of these risks has been reduced.
IRF indents to minimise its exposure to credit, liquidity and interest rate
risk, while it is exposed to market risks due to its investments in equity
shares. All comparative figures for the year 2007 include the consolidated
accounts of Proton Bank Group.
6.1 Credit Risk
The Group is exposed to credit risk, which is the risk that the counterparty of
a financial instrument will cause losses to the Group by failing to discharge
its obligations.
6.1.2 Maximum credit risk exposure before collateral held or other credit
enhancements:
The below table presents the maximum credit risk exposure as at 31 December 2008
and 31 December 2007 respectively, without taking into account any collaterals
or other credit enhancements pledged. For on-balance-sheet assets, the exposures
set out above are based on net carrying amounts as reported in the balance
sheet.
+--------------------------------------------------+------------+---+------------+
| Amounts presented in EUR '000 | | | |
+--------------------------------------------------+------------+---+------------+
| Total exposure to credit risk | | | |
+--------------------------------------------------+------------+---+------------+
| Exposure to credit risk of the Balance Sheet |31.12.2008 | |31.12.2007 |
| items: | | | |
+--------------------------------------------------+------------+---+------------+
| Cash and other ecquivalents | 148,609 | | 322,354 |
+--------------------------------------------------+------------+---+------------+
| Due from other Banks | - | | 205,055 |
+--------------------------------------------------+------------+---+------------+
| Loans and advances to Banks | - | | 45,906 |
+--------------------------------------------------+------------+---+------------+
| Loans to retail customers | | | |
+--------------------------------------------------+------------+---+------------+
| -Credit Cards | - | | 37,232 |
+--------------------------------------------------+------------+---+------------+
| -Consumer / Personal loans | - | | 159,010 |
+--------------------------------------------------+------------+---+------------+
| -Housing | - | | 48,341 |
+--------------------------------------------------+------------+---+------------+
| Corporate loans | - | | 1,113,216 |
+--------------------------------------------------+------------+---+------------+
| Derivative financial instruments | - | | 11,529 |
+--------------------------------------------------+------------+---+------------+
| Trading portfolio and other financial assets at | 3,688 | | 126,792 |
| fair value through Profit & Loss | | | |
+--------------------------------------------------+------------+---+------------+
| Securities at fair value as at initial | - | | 5,421 |
| recognition | | | |
+--------------------------------------------------+------------+---+------------+
| Investing portfolio securities | | | |
+--------------------------------------------------+------------+---+------------+
| -Held to maturity | - | | 9,717 |
+--------------------------------------------------+------------+---+------------+
| -Available for sale | - | | 242,144 |
+--------------------------------------------------+------------+---+------------+
| Other assets | 607 | | 91,475 |
+--------------------------------------------------+------------+---+------------+
| Exposure to credit risk pertaining to off | | | |
| Balance Sheet items: | | | |
+--------------------------------------------------+------------+---+------------+
| Letters of Guarantee & Letters of Credit | - | | 113,358 |
+--------------------------------------------------+------------+---+------------+
| Undrawn loans (approved) & other commitments | - | | 3,830 |
+--------------------------------------------------+------------+---+------------+
| Total | 152,904 | | 2,535,381 |
+--------------------------------------------------+------------+---+------------+
6.1.3 Concentration of risks of financial assets with credit risk exposure:
analysis per industry
The here below table breaks down the Group's main credit exposure at their
carrying amounts, as categorized by the industry sectors of our counterparties.
[*** UNPARSEABLE TABLE ***]
6.1.4 Concentration of risks of financial assets with credit risk exposure:
analysis per geographical region
The Group has a significant credit risk concentration in Greece:
As of 31 December 2008
+------------------------------------------+-----------+--------------+-----------+
| Amounts presented in EUR '000 | Greece | Other | Total |
| | | countries | |
+------------------------------------------+-----------+--------------+-----------+
| Cash and other ecquivalents | 148,582 | 27 | 148,609 |
+------------------------------------------+-----------+--------------+-----------+
| Trading portfolio and other financial | 3,688 | - | 3,688 |
| assets at fair value through Profit & | | | |
| Loss | | | |
+------------------------------------------+-----------+--------------+-----------+
| Other assets | 565 | 41 | 607 |
+------------------------------------------+-----------+--------------+-----------+
| Total | 152,835 | 68 | 152,904 |
+------------------------------------------+-----------+--------------+-----------+
As of 31 December 2007
+------------------------------------------+-----------+--------------+-----------+
| Amounts presented in EUR '000 | Greece | Other | Total |
| | | countries | |
+------------------------------------------+-----------+--------------+-----------+
| Due from banks | 434,679 | 92,731 | 527,410 |
+------------------------------------------+-----------+--------------+-----------+
| Loans and advances to customers | 1,107,038 | 296,667 | 1,403,705 |
+------------------------------------------+-----------+--------------+-----------+
| Derivative financial instruments | 0 | 11,529 | 11,529 |
+------------------------------------------+-----------+--------------+-----------+
| Financial assets at fair value through | 21,039 | 105,753 | 126,792 |
| profit and loss | | | |
+------------------------------------------+-----------+--------------+-----------+
| Financial assets designated at fair | 5,421 | - | 5,421 |
| value | | | |
+------------------------------------------+-----------+--------------+-----------+
| Investment securities: | | | |
+------------------------------------------+-----------+--------------+-----------+
| -Held-to-maturity investments | 9,717 | - | 9,717 |
+------------------------------------------+-----------+--------------+-----------+
| -Available-for-sale financial assets | 204 | 241,940 | 242,144 |
+------------------------------------------+-----------+--------------+-----------+
| Other assets | 81,907 | 9,568 | 91,475 |
+------------------------------------------+-----------+--------------+-----------+
| Total | 1,660,005 | 758,188 | 2,418,193 |
+------------------------------------------+-----------+--------------+-----------+
6.2 Market Risk
The Group takes on exposure to market risks. Market risk is the risk of
occurring possible losses caused by the fluctuation and volatility of market
prices, such as share prices, interest rate and foreign exchange rate
fluctuations.
Market risks arise from short-term deposits and equity holdings, all of which
are exposed to general and specific market movements and changes.
The table below, presents the results in the carrying value of the assets of the
Group as of December 31, 2008 by implementing a stress test scenario on the
factors concerning the aforementioned market risks.
+-----------------------------+------------+-------------+
| Amounts presented in EUR '000 | | |
| | | |
+-----------------------------+------------+-------------+
| Market Prices | Price | Impact on |
| |Volatility | Equity and |
| | | Profit and |
| | | Loss |
+-----------------------------+------------+-------------+
| Foreign-exchange rate | -10% | (12,842) |
+-----------------------------+------------+-------------+
| Prices of listed securities | -50% | (127,210) |
+-----------------------------+------------+-------------+
| Interest Rates | +2,5% | (4,390) |
+-----------------------------+------------+-------------+
6.3 Currency Risk
The Group undertakes currency risk arising from the exposure to the effects of
fluctuations in the prevailing foreign currency exchange rates on its financial
position and cash flows. The following tables summarize the Groups' exposure to
currency risk. The Group's assets and liabilities at carrying amounts,
categorized by currency are included in the table.
As of 31 December 2008
Amounts presented in EUR '000
+--------------------------------------+---------+---------+-------+---------+
| ASSETS | EUR | USD | GBP | TOTAL |
+--------------------------------------+---------+---------+-------+---------+
| Cash and other equivalents | 20,242 | 128,367 | - | 148,610 |
+--------------------------------------+---------+---------+-------+---------+
| Trading portfolio and other | 5,965 | - | - | 5,965 |
| financial assets at fair value | | | | |
| through Profit & Loss | | | | |
+--------------------------------------+---------+---------+-------+---------+
| Investment portfolio securities | | | | |
+--------------------------------------+---------+---------+-------+---------+
| -Available for sale | 248,508 | - | - | 248,508 |
+--------------------------------------+---------+---------+-------+---------+
| Other assets | 565 | 7 | 34 | 607 |
+--------------------------------------+---------+---------+-------+---------+
| Total assets | 275,280 | 128,374 | 34 | 403,689 |
+--------------------------------------+---------+---------+-------+---------+
| LIABILITIES | | | | |
+--------------------------------------+---------+---------+-------+---------+
| Due to banks | 198,393 | - | - | 198,393 |
+--------------------------------------+---------+---------+-------+---------+
| Other liabilities | 253 | 916 | 586 | 1,755 |
+--------------------------------------+---------+---------+-------+---------+
| Total liabilities | 198,646 | 916 | 586 | 200,148 |
+--------------------------------------+---------+---------+-------+---------+
| Net Balance Sheet position | 76,634 | 127,458 | (551) | 203,541 |
+--------------------------------------+---------+---------+-------+---------+
As of 31 December 2007
+--------------------------------------+-----------+---------+--------+-------------+--------+-----------+
| Amounts presented in EUR '000 | EUR | USD | GBP | JPY | OTHER | TOTAL |
+--------------------------------------+-----------+---------+--------+-------------+--------+-----------+
| Total assets | 2,451,882 | 261,836 | 4,600 | 3,397 | 28,639 | 2,750,354 |
+--------------------------------------+-----------+---------+--------+-------------+--------+-----------+
| Total liabilities | 1,622,938 | 160,859 | 4,630 | 183,153 | 1,429 | 1,973,009 |
+--------------------------------------+-----------+---------+--------+-------------+--------+-----------+
| Net Balance Sheet position | 828,944 | 100,977 | (30) | (179,756) | 27,21 | 777,346 |
+--------------------------------------+-----------+---------+--------+-------------+--------+-----------+
6.4 Interest Rate Risk
Interest rate risk is the risk of a negative impact on the Group's financial
condition due to its exposure to interest rates.
The following tables summarise the Group's exposure to interest rate risks.
Included in the tables are the Group's assets and liabilities at carrying
amounts categorized by contractual reprising date for floating rate items and
maturity day for fixed rate items.
Amounts presented in EUR '000
+------------------------+-----------+---------+-----------+---------+----------+---------------+-----------+
| As at 31 December | Less | From 1 | From 3 | From 1 | More |Uncategorized | Total |
| 2008 | than 1 | to 3 | to 12 | to 5 | than 5 | | |
| | month | months | months | years | years | | |
+------------------------+ + + + + + + +
| ASSETS | | | | | | | |
+------------------------+-----------+---------+-----------+---------+----------+---------------+-----------+
| Cash and balances with | | | | | | | |
| Central Bank | | | | | | | |
+------------------------+-----------+---------+-----------+---------+----------+---------------+-----------+
| Cash and other | 76,155 | 72,455 | - | - | - | - | 148,610 |
| equivalents | | | | | | | |
+------------------------+-----------+---------+-----------+---------+----------+---------------+-----------+
| Trading portfolio and | - | - | 3,688 | - | - | 2,277 | 5,965 |
| other financial assets | | | | | | | |
| at fair value through | | | | | | | |
| Profit & Loss | | | | | | | |
+------------------------+-----------+---------+-----------+---------+----------+---------------+-----------+
| -Available for sale | - | - | - | - | - | 248,508 | 248,508 |
+------------------------+-----------+---------+-----------+---------+----------+---------------+-----------+
| Other assets | - | - | - | - | - | 607 | 607 |
+------------------------+-----------+---------+-----------+---------+----------+---------------+-----------+
| Total assets | 76,155 | 72,455 | 3,688 | - | - | 251,392 | 403,689 |
+------------------------+-----------+---------+-----------+---------+----------+---------------+-----------+
| As at 31 December | | | | | | | |
| 2008 | | | | | | | |
+------------------------+-----------+---------+-----------+---------+----------+---------------+-----------+
| LIABILITIES | | | | | | | |
+------------------------+-----------+---------+-----------+---------+----------+---------------+-----------+
| Due to banks | - | - | 198,393 | - | - | - | 198,393 |
+------------------------+-----------+---------+-----------+---------+----------+---------------+-----------+
| Other Liabilities | - | - | - | - | - | 1,755 | 1,755 |
+------------------------+-----------+---------+-----------+---------+----------+---------------+-----------+
| Total Liabilities | - | - | 198,393 | - | - | 1,755 | 200,148 |
+------------------------+-----------+---------+-----------+---------+----------+---------------+-----------+
| Net interest gap | 76,155 | 72,455 | (194,705) | - | - | 249,637 | 203,541 |
+------------------------+-----------+---------+-----------+---------+----------+---------------+-----------+
| As at December 31, | Less | From 1 | From 3 | From 1 | More |Uncategorized | Total |
| 2007 | than 1 | to 3 | to 12 | to 5 | than 5 | | |
| | month | months | months | years | years | | |
+------------------------+-----------+---------+-----------+---------+----------+---------------+-----------+
| Total assets | 1,419,393 | 435,860 | 222,226 | 254,039 | 15,854 | 402.975 | 2,750,347 |
+------------------------+-----------+---------+-----------+---------+----------+---------------+-----------+
| Total liabilities | 1,326,590 | 418,754 | 109,784 | 12,405 | 28,400 | 77,076 | 1,973,009 |
+------------------------+-----------+---------+-----------+---------+----------+---------------+-----------+
| Net interest gap | 92,803 | 17,106 | 112,442 | 241,634 | (12,546) | 325,899 | 777,347 |
+------------------------+-----------+---------+-----------+---------+----------+---------------+-----------+
6.5 Liquidity Risk
Liquidity risk arises from the Group's financing process and management of the
open positions in the market. Liquidity risk is the risk that the Group is
unable to meet its payment obligations associated with financing liabilities
when they fall due and to replace funds when are withdrawn. The consequence may
be the failure, to meet obligations to repay depositors, to fulfil commitments
to lend, and to liquidate its financial assets at fair value.
6.5.1 Non derivative contractual cash flows
The table below presents the cash flows payable by the Group under
non-derivative financial liabilities remaining contractual maturities at the
balance sheet date. The amounts disclosed in the table are the contractual
undiscounted cash flows.
Amounts presented in EUR '000
+-------------------+------------+----------+------------+---------+------------+-----------+
| As at 31 | | | | | | |
| December 2008 | | | | | | |
+-------------------+------------+----------+------------+---------+------------+-----------+
| LIABILITIES | Less than | 1-3 | 3-12 | 1-5 | over 5 | Total |
| | 1 month | months | months | years | years | |
+-------------------+------------+----------+------------+---------+------------+-----------+
| Due to other | - | 2,976 | 11,808 | 220,639 | - | 235,423 |
| banks | | | | | | |
+-------------------+------------+----------+------------+---------+------------+-----------+
| Other liabilities | - | 1,755 | - | - | - | 1,755 |
| | | | | | | |
+-------------------+------------+----------+------------+---------+------------+-----------+
| Total liabilities | - | 4,731 | 11,808 | 220,639 | - | 237,178 |
+-------------------+------------+----------+------------+---------+------------+-----------+
| | | | | | | |
+-------------------+------------+----------+------------+---------+------------+-----------+
| As at 31 | | | | | | |
| December 2007 | | | | | | |
+-------------------+------------+----------+------------+---------+------------+-----------+
| LIABILITIES | Less than | 1-3 | 3-12 | 1-5 | over 5 | Total |
| | 1 month | months | months | years | years | |
+-------------------+------------+----------+------------+---------+------------+-----------+
| Due to other | 288,506 | 145,435 | - | - | - | 433,941 |
| Banks | | | | | | |
+-------------------+------------+----------+------------+---------+------------+-----------+
| Due to customers | 1,041,364 | 278,979 | 112,359 | 13,852 | 3,733 | 1,450,287 |
+-------------------+------------+----------+------------+---------+------------+-----------+
| Bonds issued | - | 580 | 984 | 3,998 | 30,556 | 36,118 |
+-------------------+------------+----------+------------+---------+------------+-----------+
| Other liabilities | 260 | 10,615 | - | - | 5 | 10,880 |
| | | | | | | |
+-------------------+------------+----------+------------+---------+------------+-----------+
| Total liabilities | 1,330,130 | 435,609 | 113,343 | 17,850 | 34,294 | 1,931,226 |
+-------------------+------------+----------+------------+---------+------------+-----------+
As of 31 December 2008 the Group, has not entered into any derivative contract
or product. Therfore there are no derivative cash flows.
7. SEGMENTAL ANALYSIS
7.1 By Business segment (primary segment)
The Group has defined the following business segments: Investment Banking, Other
banking activities and insurance and other activities.
+--------------------------------------------+------------+------------+------------+-----------+
| |
+--------------------------------------------+
| Amounts presented in EUR '000 |Investment | Other | Insurance | Total |
| | Banking | Banking | and other | |
| | |Activities |activities | |
+--------------------------------------------+------------+------------+------------+-----------+
| Amounts presented in EUR '000 |Investment | Other | Insurance | Total |
| | Banking | Banking | and other | |
| | |Activities |activities | |
+--------------------------------------------+------------+------------+------------+-----------+
| Financial year 1 January - 31 December | | | | |
| 2008 | | | | |
+--------------------------------------------+------------+------------+------------+-----------+
| Continuing operations | | | | |
+--------------------------------------------+------------+------------+------------+-----------+
| Net Income | | | | |
+--------------------------------------------+------------+------------+------------+-----------+
| - from interest | (3,151) | - | - | (3,151) |
+--------------------------------------------+------------+------------+------------+-----------+
| - from fees and commissions | (795) | - | - | (795) |
+--------------------------------------------+------------+------------+------------+-----------+
| - from dividends | 729 | - | - | 729 |
+--------------------------------------------+------------+------------+------------+-----------+
| - net trading income and other income | (213,404) | - | - | (213,404) |
+--------------------------------------------+------------+------------+------------+-----------+
| Total net income | (216,621) | - | - | (216,621) |
+--------------------------------------------+------------+------------+------------+-----------+
| Net segmental profit before tax | (218,795) | - | - | (218,795) |
+--------------------------------------------+------------+------------+------------+-----------+
| Impairment of Goodwill | | | | - |
+--------------------------------------------+------------+------------+------------+-----------+
| Operating expenses not allocated | | | | - |
+--------------------------------------------+------------+------------+------------+-----------+
| Net profit before tax | | | | (218,795) |
+--------------------------------------------+------------+------------+------------+-----------+
| Tax | | | | - |
+--------------------------------------------+------------+------------+------------+-----------+
| Profit after tax | | | | (218,795) |
+--------------------------------------------+------------+------------+------------+-----------+
| | | | | |
+--------------------------------------------+------------+------------+------------+-----------+
| Discontinued operations | | | | |
+--------------------------------------------+------------+------------+------------+-----------+
| Net Income | | | | |
+--------------------------------------------+------------+------------+------------+-----------+
| - from interest | 14,135 | 19,297 | 80 | 33,512 |
+--------------------------------------------+------------+------------+------------+-----------+
| - from fees and commissions | 9,377 | 4,741 | - | 14,118 |
+--------------------------------------------+------------+------------+------------+-----------+
| - from dividends | 1,874 | - | 1 | 1,875 |
+--------------------------------------------+------------+------------+------------+-----------+
| - net trading income and other income | (15,985) | - | 696 | (15,289) |
+--------------------------------------------+------------+------------+------------+-----------+
| - from insurance activities | - | - | 16,926 | 16,926 |
+--------------------------------------------+------------+------------+------------+-----------+
| - other income | 609 | 257 | - | 867 |
+--------------------------------------------+------------+------------+------------+-----------+
| Total net Income | 10,010 | 24,295 | 17,703 | 52,009 |
+--------------------------------------------+------------+------------+------------+-----------+
| | | | | |
+--------------------------------------------+------------+------------+------------+-----------+
| Net segment profit before tax | (4,067) | (7,117) | (665) | (11,848) |
+--------------------------------------------+------------+------------+------------+-----------+
| Transfers to profit and loss from disposal | | | | (58,523) |
| of Proton | | | | |
+--------------------------------------------+------------+------------+------------+-----------+
| Impairment of subsidiary of Proton Bank | | | | (10,698) |
+--------------------------------------------+------------+------------+------------+-----------+
| Operating expenses not allocated | | | | (4,449) |
+--------------------------------------------+------------+------------+------------+-----------+
| Net profit before tax | | | | (85,519) |
+--------------------------------------------+------------+------------+------------+-----------+
| Tax | | | | (1,621) |
+--------------------------------------------+------------+------------+------------+-----------+
| Profit after tax | | | | (87,140) |
+--------------------------------------------+------------+------------+------------+-----------+
| | | | | |
+--------------------------------------------+------------+------------+------------+-----------+
| Total segment income | (206,611) | 24,295 | 17,703 | (164,613) |
+--------------------------------------------+------------+------------+------------+-----------+
| Total segment net profit before tax | (222,862) | (7,117) | (665) | (230,644) |
+--------------------------------------------+------------+------------+------------+-----------+
| Depreciation - amortisation | 791 | 2,857 | 2,109 | 5,757 |
+--------------------------------------------+------------+------------+------------+-----------+
| Impairment Losses and Provisions | 194,648 | 5,236 | - | 199,884 |
+--------------------------------------------+------------+------------+------------+-----------+
| Share on profit from associates | (1,274) | - | - | (1,274) |
+--------------------------------------------+------------+------------+------------+-----------+
| 31 December 2008 | | | | |
+--------------------------------------------+------------+------------+------------+-----------+
| Segment assets | 403,689 | - | - | 403,689 |
+--------------------------------------------+------------+------------+------------+-----------+
| Unallocated assets | - | - | - | - |
+--------------------------------------------+------------+------------+------------+-----------+
| Total assets | 403,689 | - | - | 403,689 |
+--------------------------------------------+------------+------------+------------+-----------+
| | | | | |
+--------------------------------------------+------------+------------+------------+-----------+
| Segment liabilities | 200,148 | - | - | 200,148 |
+--------------------------------------------+------------+------------+------------+-----------+
| Unallocated liabilities | - | - | - | - |
+--------------------------------------------+------------+------------+------------+-----------+
| Total liabilities | 200,148 | - | - | 200,148 |
+--------------------------------------------+------------+------------+------------+-----------+
| | | | | |
+--------------------------------------------+------------+------------+------------+-----------+
| Financial year 1 January - 31 December | | | | |
| 2007 | | | | |
+--------------------------------------------+------------+------------+------------+-----------+
| Continuing operations | | | | |
+--------------------------------------------+------------+------------+------------+-----------+
| Net Income | | | | |
+--------------------------------------------+------------+------------+------------+-----------+
| - from interest | (909) | - | - | (909) |
+--------------------------------------------+------------+------------+------------+-----------+
| - from fees and commissions | (7,745) | - | - | (7,745) |
+--------------------------------------------+------------+------------+------------+-----------+
| - from dividends | 12,804 | - | - | 12,804 |
+--------------------------------------------+------------+------------+------------+-----------+
| - net trading income and other income | 60,209 | - | - | 60,209 |
+--------------------------------------------+------------+------------+------------+-----------+
| Total net Income | 64,360 | - | - | 64,360 |
+--------------------------------------------+------------+------------+------------+-----------+
| Net segmental profit before tax | 63,513 | - | - | 63,513 |
+--------------------------------------------+------------+------------+------------+-----------+
| Impairment of Goodwill | | | | - |
+--------------------------------------------+------------+------------+------------+-----------+
| Operating expenses not allocated | | | | - |
+--------------------------------------------+------------+------------+------------+-----------+
| Net profit before tax | | | | 63,513 |
+--------------------------------------------+------------+------------+------------+-----------+
| Tax | | | | 0 |
+--------------------------------------------+------------+------------+------------+-----------+
| Profit after tax | | | | 63,513 |
+--------------------------------------------+------------+------------+------------+-----------+
| | | | | |
+--------------------------------------------+------------+------------+------------+-----------+
| Discontinued operations | | | | |
+--------------------------------------------+------------+------------+------------+-----------+
| Net Income | | | | |
+--------------------------------------------+------------+------------+------------+-----------+
| - from interest | 3,939 | 40,517 | - | 44,456 |
+--------------------------------------------+------------+------------+------------+-----------+
| - From fees and commissions | 30,568 | 5,037 | - | 35,605 |
+--------------------------------------------+------------+------------+------------+-----------+
| - from dividends | 3,467 | - | - | 3,467 |
+--------------------------------------------+------------+------------+------------+-----------+
| - net trading income and other income | 10,133 | 1,052 | 755 | 11,940 |
+--------------------------------------------+------------+------------+------------+-----------+
| - from insurance activities | - | - | 27,707 | 27,707 |
+--------------------------------------------+------------+------------+------------+-----------+
| - other income | - | - | 2 | 2 |
+--------------------------------------------+------------+------------+------------+-----------+
| Total net Income | 48,107 | 46,606 | 28,464 | 123,177 |
+--------------------------------------------+------------+------------+------------+-----------+
| | | | | |
+--------------------------------------------+------------+------------+------------+-----------+
| Net segment profit before tax | 32,668 | 4,602 | 237 | 37,507 |
+--------------------------------------------+------------+------------+------------+-----------+
| Impairment of Goodwill | | | | (7,465) |
+--------------------------------------------+------------+------------+------------+-----------+
| Operating expenses not allocated | | | | (5,781) |
+--------------------------------------------+------------+------------+------------+-----------+
| Net profit before tax | | | | 24,261 |
+--------------------------------------------+------------+------------+------------+-----------+
| Tax | | | | (9,748) |
+--------------------------------------------+------------+------------+------------+-----------+
| Profit after tax | | | | 14,513 |
+--------------------------------------------+------------+------------+------------+-----------+
| | | | | |
+--------------------------------------------+------------+------------+------------+-----------+
| Total segment income | 112,467 | 46,606 | 28,464 | 187,537 |
+--------------------------------------------+------------+------------+------------+-----------+
| Total segment net profit before tax | 96,181 | 4,602 | 237 | 101,020 |
+--------------------------------------------+------------+------------+------------+-----------+
| Depreciation - amortisation | 1,006 | 3,646 | 140 | 4,792 |
+--------------------------------------------+------------+------------+------------+-----------+
| Impairment losses and provisions | 89 | 6,892 | 22,335 | 29,316 |
+--------------------------------------------+------------+------------+------------+-----------+
| Share on profit from associates | 255 | - | 47 | 302 |
+--------------------------------------------+------------+------------+------------+-----------+
| | | | | |
+--------------------------------------------+------------+------------+------------+-----------+
| 31 December 2007 | | | | |
+--------------------------------------------+------------+------------+------------+-----------+
| Segment assets | 1,161,197 | 1,361,679 | 56,306 | 2,579,182 |
+--------------------------------------------+------------+------------+------------+-----------+
| Unallocated assets | - | - | - | 171,173 |
+--------------------------------------------+------------+------------+------------+-----------+
| Total assets | | | | 2,750,355 |
+--------------------------------------------+------------+------------+------------+-----------+
| | | | | |
+--------------------------------------------+------------+------------+------------+-----------+
| Segment liabilities | 441,381 | 1,467,435 | 46,766 | 1,955,582 |
+--------------------------------------------+------------+------------+------------+-----------+
| Unallocated liabilities | - | - | - | 17,426 |
+--------------------------------------------+------------+------------+------------+-----------+
| Total liabilities | | | | 1,973,008 |
+--------------------------------------------+------------+------------+------------+-----------+
| | | | | |
+--------------------------------------------+------------+------------+------------+-----------+
| Investment in associates | 3,886 | - | 625 | 4,511 |
+--------------------------------------------+------------+------------+------------+-----------+
A geographical segment is defined as a particular economic environment in which
the Group is engaged in investment activities and that is subject to different
risks and return from those in other economic environments. The substantial part
of assets and liabilities are currently held in Greece.
8. NET INTEREST INCOME
+---------------------------------------+--------------+------------+
| |
+---------------------------------------+
| Amounts presented in EUR '000 | 31/12/2008 |31/12/2007 |
+---------------------------------------+--------------+------------+
| Amounts presented in EUR '000 | 31/12/2008 |31/12/2007 |
+---------------------------------------+--------------+------------+
| Interest and similar income | | |
+---------------------------------------+--------------+------------+
| From deposits in financial | 7,374 | 10,498 |
| institutions | | |
+---------------------------------------+--------------+------------+
| From securities | 52 | - |
+---------------------------------------+--------------+------------+
| From loans and receivables | 732 | - |
+---------------------------------------+--------------+------------+
| Total | 8,158 | 10,498 |
+---------------------------------------+--------------+------------+
| | | |
+---------------------------------------+--------------+------------+
| Interest and Similar Expenses | | |
+---------------------------------------+--------------+------------+
| Due to financial institutions | (10,946) | (10,832) |
+---------------------------------------+--------------+------------+
| Other interest related expenses | (363) | (574) |
+---------------------------------------+--------------+------------+
| Total | (11,309) | (11,406) |
+---------------------------------------+--------------+------------+
| | | |
+---------------------------------------+--------------+------------+
| Net Interest Income | (3,151) | (909) |
+---------------------------------------+--------------+------------+
9. NET FEE AND COMMISSION INCOME
+---------------------------------------+-------------+--------------+
| |
+---------------------------------------+
| Amounts presented in EUR '000 | 31/12/2008 | 31/12/2007 |
+---------------------------------------+-------------+--------------+
| Amounts presented in EUR '000 | 31/12/2008 | 31/12/2007 |
+---------------------------------------+-------------+--------------+
| Fee and commission income from: | | |
+---------------------------------------+-------------+--------------+
| Loans and advances to third parties | 86 | - |
+---------------------------------------+-------------+--------------+
| Total | 86 | - |
+---------------------------------------+-------------+--------------+
| Fee and commission expense from: | | |
+---------------------------------------+-------------+--------------+
| Securities brokerage & safekeeping | (556) | (6,545) |
+---------------------------------------+-------------+--------------+
| Loans fees and commissions | (325) | (1,199) |
+---------------------------------------+-------------+--------------+
| Total | (881) | (7,745) |
+---------------------------------------+-------------+--------------+
| Net fee and commission income | (795) | (7,745) |
+---------------------------------------+-------------+--------------+
10. DIVIDEND INCOME
+---------------------------------------+-------------+-------------+
| Amounts presented in EUR '000 | 31/12/2008 | 31/12/2007 |
+---------------------------------------+-------------+-------------+
| Dividends from AFS securities | 729 | - |
+---------------------------------------+-------------+-------------+
| Dividends from trading securities | - | 12,804 |
+---------------------------------------+-------------+-------------+
| Total | 729 | 12,804 |
+---------------------------------------+-------------+-------------+
11. NET TRADING INCOME
+---------------------------------------+--------------+-------------+
| |
+---------------------------------------+
| Amounts presented in EUR '000 | 31/12/2008 | 31/12/2007 |
+---------------------------------------+--------------+-------------+
| Amounts presented in EUR '000 | 31/12/2008 | 31/12/2007 |
+---------------------------------------+--------------+-------------+
| Purchase and sale of securities | (44,282) | 77,186 |
+---------------------------------------+--------------+-------------+
| Valuation of securities | (904) | (213) |
+---------------------------------------+--------------+-------------+
| Foreign exchange differences | 7,303 | (16,764) |
+---------------------------------------+--------------+-------------+
| Derivative instruments | 9,570 | - |
+---------------------------------------+--------------+-------------+
| Other income | 54 | - |
+---------------------------------------+--------------+-------------+
| Total | (28,258) | 60,209 |
+---------------------------------------+--------------+-------------+
12. IMPAIRMENT LOSSES
As of 31 December 2008, the total amount of approximately EUR 185,146,000 is
generated from the difference between the acquisition cost of the investments
classified as available-for-sale and fair value of the aforementioned portfolio.
The management of IRF, taking in consideration the following factors:
* the large decline in the fair value of the investments
* the prolonged vast negative trends in the Greek market
* the combined effect of the aforementioned events with the international economic
and market conditions
has come to the conclusion that there is an objective evidence of impairment of
the available-for-sale investments. Following the stipulations of IAS 39
paragraphs 59 and 67, when a decline in the fair value of an available-for-sale
financial asset has been recognised directly in equity and there is objective
evidence that the asset is impaired, the cumulative loss that had been
recognised directly in equity shall be removed from equity and recognised in
profit or loss even though the financial asset has not been derecognised.
13. STAFF COSTS
+---------------------------------------+--------------+--------------+
| Amounts presented in EUR '000 | 31/12/2008 | 31/12/2007 |
+---------------------------------------+--------------+--------------+
| Wages and salaries | (100) | (100) |
+---------------------------------------+--------------+--------------+
| Total | (100) | (100) |
+---------------------------------------+--------------+--------------+
| | | |
+---------------------------------------+--------------+--------------+
| | 31/12/2008 | 31/12/2007 |
+---------------------------------------+--------------+--------------+
| Number of employees | 1 | 1 |
+---------------------------------------+--------------+--------------+
The CEO, is the sole employe of the Company.
14. OTHER OPERATING EXPENSES
+---------------------------------------+--------------+--------------+
| Amounts presented in EUR '000 | 31/12/2008 | 31/12/2007 |
+---------------------------------------+--------------+--------------+
| Consulting and other third partie | (1,740) | (473) |
| fees | | |
+---------------------------------------+--------------+--------------+
| Legal fees | (189) | (97) |
+---------------------------------------+--------------+--------------+
| Other operating expenses | (144) | (178) |
+---------------------------------------+--------------+--------------+
| Total | (2,074) | (748) |
+---------------------------------------+--------------+--------------+
15. DISCONTINUED OPERATIONS
15.1 NET PROFIT FROM DISCONTINUED OPERATIONS
On 24 September 2008, IRF sold 15.95% investment in Proton Bank from its 20.6%
percent interest. The results of Proton Bank's Group are consolidated in the
financial statements of IRF, as discontinued operations, up to the date of the
disposal and for the comparative periods.
Net profit from discontinued operation is analyzed as follows:
+----------------------------------------+--------------+-------------+
| |
+----------------------------------------+
| Amounts presented in EUR '000 | 31/12/2008 | 31/12/2007 |
+----------------------------------------+--------------+-------------+
| Amounts presented in EUR '000 | 31/12/2008 | 31/12/2007 |
+----------------------------------------+--------------+-------------+
| Interest and similar income | 98,772 | 112,301 |
+----------------------------------------+--------------+-------------+
| Interest and similar charges | (65,261) | (67,845) |
+----------------------------------------+--------------+-------------+
| Net interest income | 33,511 | 44,456 |
+----------------------------------------+--------------+-------------+
| | | |
+----------------------------------------+--------------+-------------+
| Fee and commission income | 21,569 | 43,966 |
+----------------------------------------+--------------+-------------+
| Fee and commission expense | (7,451) | (8,360) |
+----------------------------------------+--------------+-------------+
| Net fee and commission income | 14,118 | 35,606 |
+----------------------------------------+--------------+-------------+
| Income from insurance services | 24,045 | 39,643 |
+----------------------------------------+--------------+-------------+
| Expenses from insurance services | (7,119) | (11,936) |
+----------------------------------------+--------------+-------------+
| Net Income from insurance services | 16,926 | 27,707 |
+----------------------------------------+--------------+-------------+
| | | |
+----------------------------------------+--------------+-------------+
| Dividend income | 1,872 | 3,468 |
+----------------------------------------+--------------+-------------+
| Net trading income | (20,455) | 8,196 |
+----------------------------------------+--------------+-------------+
| Loss on investment portfolio | (23,852) | - |
| recognised in profit and loss due to | | |
| disposal of subsidiary. | | |
+----------------------------------------+--------------+-------------+
| Net income from financial instruments | 4,425 | 2,263 |
| designated at fair value | | |
+----------------------------------------+--------------+-------------+
| Gains less losses from investment | (40) | - |
| securities | | |
+----------------------------------------+--------------+-------------+
| Other operating income | 1,648 | 1,482 |
+----------------------------------------+--------------+-------------+
| | (36,402) | 15,409 |
+----------------------------------------+--------------+-------------+
| Total net income | 28,152 | 123,178 |
+----------------------------------------+--------------+-------------+
| | | |
+----------------------------------------+--------------+-------------+
| Staff costs | (20,851) | (27,004) |
+----------------------------------------+--------------+-------------+
| Other operating expenses | (19,078) | (28,071) |
+----------------------------------------+--------------+-------------+
| Write-off of goodwill | (5,757) | (7,465) |
+----------------------------------------+--------------+-------------+
| Depreciation | (14,323) | (7,361) |
+----------------------------------------+--------------+-------------+
| Insurance claims | (17,716) | (22,335) |
+----------------------------------------+--------------+-------------+
| Impairment losses on financial assets | - | (6,981) |
| and non financial assets | | |
+----------------------------------------+--------------+-------------+
| Total operating expenses | (77,726) | (99,219) |
+----------------------------------------+--------------+-------------+
| Share of (losses)/profits of | (1,273) | 302 |
| associates | | |
+----------------------------------------+--------------+-------------+
| (Loss)/Profit before tax | (50,847) | 24,261 |
+----------------------------------------+--------------+-------------+
| Less: Income tax | (1,621) | (9,747) |
+----------------------------------------+--------------+-------------+
| (Loss)/Profit after tax from | (52,468) | 14,513 |
| discontinued operations | | |
+----------------------------------------+--------------+-------------+
| Loss from disposal of discontinued | (26,952) | - |
| operations | | |
+----------------------------------------+--------------+-------------+
| Impairment of goodwill previously | (7,720) | - |
| recognised | | |
+----------------------------------------+--------------+-------------+
| Net profit from discontinued | (87,139) | 14,513 |
| operations | | |
+----------------------------------------+--------------+-------------+
The amount of approximately EUR 23,852,000 in the nine month period of 2008,
refers to losses from the valuation of Proton's available-for-sale portfolio,
recognised directly to equity. Because of the disposal of the subsidiary the
relevant amount is recognised as a loss in the income statement.
The amount of approximately EUR 7,720,000 in the nine month period of 2008, refers
to an impairment loss recognised during the second quarter of the year, before
the sale of the subsidiary.
15.2 LOSS ON DISPOSAL OF PROTON BANK
The assets and the liabilities of PROTON as of the disposal date are as follows:
+----------------------------------------------------+------------+
| Amounts presented in EUR '000 | |
+----------------------------------------------------+------------+
| Cash and balances with the Central Bank | 60,270 |
+----------------------------------------------------+------------+
| Loans and advances to banks | 55,646 |
+----------------------------------------------------+------------+
| Loans and receivables | 1,316,680 |
+----------------------------------------------------+------------+
| Derivative financial instruments | 28,208 |
+----------------------------------------------------+------------+
| Financial assets at fair value through profit or | 147,123 |
| loss | |
+----------------------------------------------------+------------+
| Financial assets designated at fair value | 44,524 |
+----------------------------------------------------+------------+
| Investment portfolio | 319,943 |
+----------------------------------------------------+------------+
| Investments in associates | 2,617 |
+----------------------------------------------------+------------+
| Intangible assets | 155,656 |
+----------------------------------------------------+------------+
| Property, plant and equipment | 27,325 |
+----------------------------------------------------+------------+
| Deferred tax assets | 12,728 |
+----------------------------------------------------+------------+
| Other assets | 47,048 |
+----------------------------------------------------+------------+
| Non-current assets held for sale | 41,568 |
+----------------------------------------------------+------------+
| Total assets | 2,259,336 |
+----------------------------------------------------+------------+
| Amounts presented in EUR '000 | |
+----------------------------------------------------+------------+
| less | |
+----------------------------------------------------+------------+
| Due to banks | 354,658 |
+----------------------------------------------------+------------+
| Due to customers | 1,419,834 |
+----------------------------------------------------+------------+
| Derivative financial instruments | 19,952 |
+----------------------------------------------------+------------+
| Debt securities in issue | 25,219 |
+----------------------------------------------------+------------+
| Retirement benefit obligations | 1,528 |
+----------------------------------------------------+------------+
| Current income tax liabilities | 9,144 |
+----------------------------------------------------+------------+
| Deferred tax liabilities | 4,262 |
+----------------------------------------------------+------------+
| Other liabilities | 9,634 |
+----------------------------------------------------+------------+
| Liabilities related to non-current assets held for | 45,163 |
| sale | |
+----------------------------------------------------+------------+
| Total liabilities | 1,889,394 |
+----------------------------------------------------+------------+
| Total net assets | 369,942 |
+----------------------------------------------------+------------+
| less: Minority rights | (249,055) |
+----------------------------------------------------+------------+
| Total net assets disposed | 120,887 |
+----------------------------------------------------+------------+
The loss from the disposal of Proton Group is analysed as follows:
+----------------------------------------------------+-----------+
| Amounts presented in EUR '000 | |
+----------------------------------------------------+-----------+
| Cash consideration | 64,727 |
+----------------------------------------------------+-----------+
| Cost of remaining investment transferred to | 29,208 |
| available for sale portfolio | |
+----------------------------------------------------+-----------+
| Total consideration | 93,935 |
+----------------------------------------------------+-----------+
| Less: Total net assets disposed | (120,887) |
+----------------------------------------------------+-----------+
| Loss on disposal | (26,952) |
+----------------------------------------------------+-----------+
The net cash flow from the sale of Proton Group is analysed as follows:
+----------------------------------------------------+-----------+
| Amounts presented in EUR '000 | |
+----------------------------------------------------+-----------+
| Consideration paid in cash | 64,727 |
+----------------------------------------------------+-----------+
| less: cash & cash equivalent of Proton at the date | (66,604) |
| of disposal | |
+----------------------------------------------------+-----------+
| Cash received from the sale of Proton, net of cash | (1,877) |
| disposed | |
+----------------------------------------------------+-----------+
16. CASH AND BALANCES WITH CENTRAL BANK
+--------------------------------------+-------------+------------+
| Amounts presented in EUR '000 | 31/12/2008 |31/12/2007 |
+--------------------------------------+-------------+------------+
| Cash on hand and cash in course of | - | 34,384 |
| collection | | |
+--------------------------------------+-------------+------------+
| Cheques receivable | - | 12,344 |
+--------------------------------------+-------------+------------+
| Included in cash and cash | - | 46,728 |
| equivalents | | |
+--------------------------------------+-------------+------------+
| Mandatory reserve deposits with | - | 6,068 |
| Central Bank | | |
+--------------------------------------+-------------+------------+
| Total | - | 52,796 |
+--------------------------------------+-------------+------------+
17. CASH AND OTHER EQUIVALENTS
+--------------------------------------+-------------+------------+
| Amounts presented in EUR '000 | 31/12/2008 |31/12/2007 |
+--------------------------------------+-------------+------------+
| Petty cash | 1 | 1 |
+--------------------------------------+-------------+------------+
| Deposits placed in other financial | 3,569 | 322,354 |
| institutions | | |
+--------------------------------------+-------------+------------+
| Time deposits | 145,039 | - |
+--------------------------------------+-------------+------------+
| Total | 148,610 | 322,355 |
+--------------------------------------+-------------+------------+
18. LOANS AND ADVANCES TO FINANCIAL INSTITUTIONS
+--------------------------------------+-------------+------------+
| Amounts presented in EUR '000 | 31/12/2008 |31/12/2007 |
+--------------------------------------+-------------+------------+
| Deposits placed in other financial | - | 33,787 |
| institutions | | |
+--------------------------------------+-------------+------------+
| Time deposits | - | 155,133 |
+--------------------------------------+-------------+------------+
| Cheques receivables | - | 1,053 |
+--------------------------------------+-------------+------------+
| Total | - | 189,972 |
+--------------------------------------+-------------+------------+
| Placements with other banks (over 90 | - | 15,082 |
| days) | | |
+--------------------------------------+-------------+------------+
| Total | - | 205,055 |
+--------------------------------------+-------------+------------+
19.TRADING PORTFOLIO AND OTHER FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT &
LOSS
+---------------------------------------+--------------+-------------+
| |
+---------------------------------------+
| Amounts presented in EUR '000 | |
+---------------------------------------+----------------------------+
| Amounts presented in EUR '000 | |
+---------------------------------------+----------------------------+
| Trading Portfolio | 31/12/2008 | 31/12/2007 |
+---------------------------------------+--------------+-------------+
| Government bonds | - | 23,850 |
+---------------------------------------+--------------+-------------+
| Corporate entities bonds | 3,688 | 102,942 |
+---------------------------------------+--------------+-------------+
| Mutual funds | - | 8,903 |
+---------------------------------------+--------------+-------------+
| Equity securities | 2,276 | 38,686 |
+---------------------------------------+--------------+-------------+
| | 5,965 | 174,381 |
+---------------------------------------+--------------+-------------+
| | | |
+---------------------------------------+--------------+-------------+
| Other financial instruments at fair | 31/12/2008 | 31/12/2007 |
| value through Profit & Loss | | |
+---------------------------------------+--------------+-------------+
| Corporate entities bonds | - | 5,421 |
+---------------------------------------+--------------+-------------+
| Total | - | 179,802 |
+---------------------------------------+--------------+-------------+
20. DERIVATIVE FINANCIAL INSTRUMENTS
There were no derivarive financial instruments at 31 December 2008. The notional
and fair values of derivatives held at 31 December 2007 were:
+--------------------+----------------+---------------+---------------+
| |
+--------------------+
| | 31st December 2007 |
+--------------------+------------------------------------------------+
| | FAIR VALUE |
+--------------------+------------------------------------------------+
| | 31st December 2007 |
+--------------------+------------------------------------------------+
| | FAIR VALUE |
+--------------------+------------------------------------------------+
| Amounts presented | Notional | Assets | Liabilities |
| in EUR '000 | amount | | |
+--------------------+----------------+---------------+---------------+
| Derivatives held | | | |
| for trading | | | |
+--------------------+----------------+---------------+---------------+
| a) Trading in | | | |
| exchanges | | | |
+--------------------+----------------+---------------+---------------+
| Options | 3,583 | - | 136 |
+--------------------+----------------+---------------+---------------+
| Forwards / Futures | 9,418 | - | - |
| | | | |
+--------------------+----------------+---------------+---------------+
| | 13,001 | - | 136 |
+--------------------+----------------+---------------+---------------+
| | | | |
+--------------------+----------------+---------------+---------------+
| b) OTC | | | |
+--------------------+----------------+---------------+---------------+
| Interest rate | 489,672 | 4,302 | 4,240 |
| swaps | | | |
+--------------------+----------------+---------------+---------------+
| Options | 1,770,193 | 6,861 | 6,836 |
+--------------------+----------------+---------------+---------------+
| FX forwards | 324,064 | - | 3,358 |
+--------------------+----------------+---------------+---------------+
| Credit default | 30,000 | 72 | - |
| swaps | | | |
+--------------------+----------------+---------------+---------------+
| Total return swap | 10,000 | 294 | - |
+--------------------+----------------+---------------+---------------+
| | 2,623,929 | 11,529 | 14,434 |
+--------------------+----------------+---------------+---------------+
| | | | |
+--------------------+----------------+---------------+---------------+
| Total recognised | 2,636,930 | 11,529 | 14,570 |
| derivative assets | | | |
| /liabilities | | | |
+--------------------+----------------+---------------+---------------+
The notional amount of certain types of derivative financial instruments provide
a basis for comparison with instruments recognised on the balance sheet but do
not necessarily indicate the amounts of future cash flows involved or the
current fair value of the instruments and, therefore, do not indicate the
Group's exposure to credit or price risks. The derivative instruments become
favourable (assets) or unfavourable (liabilities) as a result of fluctuations in
market interest rates or foreign exchange rates relative to their terms. The
aggregate contractual or notional amount of derivative financial instruments on
hand, to the extent to which instruments are favourable or unfavourable, and
thus the aggregate fair values of derivative financial assets and liabilities,
can fluctuate significantly from time to time.
The Group does not apply hedge accounting as described in IAS 39, therefore the
gains and losses arising on derivative financial instruments are recognised in
the income statement.
21. LOANS AND ADVANCES TO CUSTOMERS
The loan portfolio at a Group level is analyzed as follows:
Loans are measured at amortized cost. Loans fair value is not materially
different from their carrying amount.
The movements in the provisions account are as follows:
+-----------------------------+---+--------+--------------+--------------+
| |
+-----------------------------+
| Amounts presented in EUR '000 | | | 31/12/2008 | 31/12/2007 |
| | | | | |
+-----------------------------+---+--------+--------------+--------------+
| Amounts presented in EUR '000 | | | 31/12/2008 | 31/12/2007 |
| | | | | |
+-----------------------------+---+--------+--------------+--------------+
| Retail customers | | | | |
+-----------------------------+---+--------+--------------+--------------+
| Mortgages | | | - | 48,341 |
+-----------------------------+---+--------+--------------+--------------+
| Consumer loans /Loans to | | | - | 159,010 |
| individuals | | | | |
+-----------------------------+---+--------+--------------+--------------+
| Credit cards | | | - | 37,232 |
+-----------------------------+---+--------+--------------+--------------+
| Total loans and receivables | | | - | 244,584 |
| to individuals | | | | |
+-----------------------------+---+--------+--------------+--------------+
| Corporate customers | | | - | |
+-----------------------------+---+--------+--------------+--------------+
| Agriculture | | | - | 57,847 |
+-----------------------------+---+--------+--------------+--------------+
| Mining | | | - | 1,309 |
+-----------------------------+---+--------+--------------+--------------+
| Heavy industry | | | - | 113,773 |
+-----------------------------+---+--------+--------------+--------------+
| Small Industry | | | - | 12,946 |
+-----------------------------+---+--------+--------------+--------------+
| Building / construction | | | - | 139,832 |
+-----------------------------+---+--------+--------------+--------------+
| Energy | | | - | 310 |
+-----------------------------+---+--------+--------------+--------------+
| Commercial / Insurance | | | - | 259,391 |
+-----------------------------+---+--------+--------------+--------------+
| Transportation | | | - | 205,918 |
+-----------------------------+---+--------+--------------+--------------+
| Financial institutions | | | - | 45,906 |
+-----------------------------+---+--------+--------------+--------------+
| Services | | | - | 29,752 |
+-----------------------------+---+--------+--------------+--------------+
| Other companies | | | - | 222,280 |
+-----------------------------+---+--------+--------------+--------------+
| Total loans and receivables | | | - | 1,089,263 |
| to companies | | | | |
+-----------------------------+---+--------+--------------+--------------+
| Finance lease receivables | | | - | 69,858 |
+-----------------------------+---+--------+--------------+--------------+
| Total loans and receivables | | | - | 1,403,705 |
+-----------------------------+---+--------+--------------+--------------+
| Less: Allowances for losses | | | - | (35,680) |
| (impairment) on loans and | | | | |
| advances to customers | | | | |
+-----------------------------+---+--------+--------------+--------------+
| Total | | | - | 1,368,025 |
+-----------------------------+---+--------+--------------+--------------+
Loans and advances to customers include finance lease receivables. Group's
finance lease receivables refer to buildings, machineries and vehicles which are
leased under a finance lease agreement to corporations.
+----------------------------------------+--------------+------------+
| |
+----------------------------------------+
| Amounts presented in EUR '000 | 31/12/2008 |31/12/2007 |
+----------------------------------------+--------------+------------+
| Amounts presented in EUR '000 | 31/12/2008 |31/12/2007 |
+----------------------------------------+--------------+------------+
| Net investment in finance leases | | |
+----------------------------------------+--------------+------------+
| Gross Investment in leased equipment | | |
+----------------------------------------+--------------+------------+
| Less than 1 year | - | 15,947 |
+----------------------------------------+--------------+------------+
| Between 1 to 5 years | - | 61,795 |
+----------------------------------------+--------------+------------+
| More than 5 years | - | 20,968 |
+----------------------------------------+--------------+------------+
| Less: unearned finance income | - | (28,852) |
+----------------------------------------+--------------+------------+
| Net investments in leased equipment | - | 69,858 |
+----------------------------------------+--------------+------------+
| The net finance leases receivables | - | |
| comprises: | | |
+----------------------------------------+--------------+------------+
| Less than 1 year | - | 11,286 |
+----------------------------------------+--------------+------------+
| Between 1 to 5 years | - | 43,733 |
+----------------------------------------+--------------+------------+
| More than 5 years | - | 14,839 |
+----------------------------------------+--------------+------------+
| Total | - | 69,858 |
+----------------------------------------+--------------+------------+
+-----------------------------------------+--------------+------------+
| Movement in allowances for credit | 31/12/2008 |31/12/2007 |
| losses | | |
+-----------------------------------------+--------------+------------+
| Amounts presented in EUR '000 | | |
+-----------------------------------------+--------------+------------+
| Balance at the beginning of the year | - | 39,298 |
+-----------------------------------------+--------------+------------+
| Allowances from acquisitions (Proton | - | 0 |
| Bank) | | |
+-----------------------------------------+--------------+------------+
| Allowances from acquisitions (Omega | - | 0 |
| Bank) | | |
+-----------------------------------------+--------------+------------+
| Impairment | - | 6,892 |
+-----------------------------------------+--------------+------------+
| Writte-offs | - | (10,509) |
+-----------------------------------------+--------------+------------+
| Balance at the end of the year | - | 35,681 |
+-----------------------------------------+--------------+------------+
22. INVESTMENT PORTFOLIO
The Group's investment portfolio comprises financial instruments available for
sale and held to maturity.
+----------------------------------------+--------------+------------+
| |
+----------------------------------------+
| Amounts presented in EUR '000 | 31/12/2008 | 31/12/2007 |
+----------------------------------------+--------------+------------+
| Amounts presented in EUR '000 | 31/12/2008 | 31/12/2007 |
+----------------------------------------+--------------+------------+
| Investments held to maturity | - | |
+----------------------------------------+--------------+------------+
| Government bonds | - | 6,659 |
+----------------------------------------+--------------+------------+
| Corporate bonds | - | 3,058 |
+----------------------------------------+--------------+------------+
| Total investment held to maturity | - | 9,717 |
+----------------------------------------+--------------+------------+
| Available for sale portfolio (at fair | | |
| value) | | |
+----------------------------------------+--------------+------------+
| Corporate bonds | - | 112,339 |
+----------------------------------------+--------------+------------+
| Equity securities | 433,654 | 5,991 |
+----------------------------------------+--------------+------------+
| Other investments | - | 2,092 |
+----------------------------------------+--------------+------------+
| Government bonds | - | 129,805 |
+----------------------------------------+--------------+------------+
| Less: Provision for losses | (185,146) | - |
| (impairment) | | |
+----------------------------------------+--------------+------------+
| Total available for sale securities | 248,508 | 250,227 |
+----------------------------------------+--------------+------------+
| | | |
+----------------------------------------+--------------+------------+
| Total Investment Portfolio | 248,508 | 259,944 |
+----------------------------------------+--------------+------------+
The movement in the investment portfolio for the year ended 31 December 2008 may
be summarized as follows:
+----------------------------------+------------------+----------------+------------------+
| Amounts presented in EUR '000 | Investments | Financial | Total 2008 |
| |held-to-maturity | assets | |
| | 2008 | available for | |
| | | sale 2008 | |
+----------------------------------+------------------+----------------+------------------+
| Balance as at 1 January 2008 | 9,717 | 250,227 | 259,944 |
+----------------------------------+------------------+----------------+------------------+
| Decrease from the disposal of | (9,717) | (250,227) | (259,944) |
| Proton Bank | | | |
+----------------------------------+------------------+----------------+------------------+
| Additions / disposals | | 433,653 | 433,653 |
+----------------------------------+------------------+----------------+------------------+
| Redemptions | - | - | - |
+----------------------------------+------------------+----------------+------------------+
| Accruals | - | - | - |
+----------------------------------+------------------+----------------+------------------+
| Impairment losses | - | (185,146) | (185,146) |
+----------------------------------+------------------+----------------+------------------+
| Amortization of premium/ | - | - | - |
| discount | | | |
+----------------------------------+------------------+----------------+------------------+
| Balance as at 31 December 2008 | - | 248,508 | 248,508 |
+----------------------------------+------------------+----------------+------------------+
Investment in Marfin Investment Group (MIG), constitues the major investment in
IRF's portfolio as at 31 December 2008.
23. INVESTMENTS IN ASSOCIATES
All investments in associates refer to a 29.20% holding of Proton Bank to the
closed-end fund Omega AEEX, a company listed on ASE. After the disposal of
Proton Bank, as of 31 December 2008, IRF does not hold any investment in
associates.
The fair value of the investment as of 31 December 2007 is approximately EUR
3,426,000.
Some brief financial information as 31 December 2007 on the associates is given
below:
+----------------------------+----------+--------+-------------+-----------+---------------+
| Amounts presented in EUR | Domicile | Assets | Liabilities | Profits | Participation |
| '000 | | | | /(losses) | % |
+----------------------------+----------+--------+-------------+-----------+---------------+
| Omega Portfolio Investment | Greece | 15,823 | 91 | 1,034 | 6,01% |
| SA | | | | | |
+----------------------------+----------+--------+-------------+-----------+---------------+
Investments in associates are accounted under the equity method.
24. PROPERTY, PLANT AND EQUIPMENT AND INVESTMENT PROPERTY
+-----------------------+---------+-----------+-----------+----------+-----------+----------+
| Amounts presented in | Land | Buildings | Machinery | Vehicles | Furniture | Total |
| EUR '000 | | | | | | |
+-----------------------+---------+-----------+-----------+----------+-----------+----------+
| Balance at 1 January | | | | | | |
| 2008 | | | | | | |
+-----------------------+---------+-----------+-----------+----------+-----------+----------+
| Cost | 7,233 | 14,900 | 72 | 185 | 10,266 | 32,656 |
+-----------------------+---------+-----------+-----------+----------+-----------+----------+
| Accumulated | - | (1,824) | (34) | (116) | (2.803) | (4.777) |
| depreciation | | | | | | |
+-----------------------+---------+-----------+-----------+----------+-----------+----------+
| Net carrying amount | 7,233 | 13,076 | 38 | 69 | 7,463 | 27,880 |
+-----------------------+---------+-----------+-----------+----------+-----------+----------+
| Year ended 31 | | | | | | |
| December 2008 | | | | | | |
+-----------------------+---------+-----------+-----------+----------+-----------+----------+
| Opening currying | 7,233 | 13,076 | 38 | 69 | 7,463 | 27,880 |
| amount | | | | | | |
+-----------------------+---------+-----------+-----------+----------+-----------+----------+
| Exchange differences | - | 3 | - | - | - | 3 |
| | | | | | | |
+-----------------------+---------+-----------+-----------+----------+-----------+----------+
| Cost | | | | | | |
+-----------------------+---------+-----------+-----------+----------+-----------+----------+
| Accumulated | | | | | | |
| depreciation | | | | | | |
+-----------------------+---------+-----------+-----------+----------+-----------+----------+
| Additions | - | 498 | 6 | - | 1,010 | 1,514 |
+-----------------------+---------+-----------+-----------+----------+-----------+----------+
| Disposals - cost of | - | - | - | - | (158) | (158) |
| acquisition | | | | | | |
+-----------------------+---------+-----------+-----------+----------+-----------+----------+
| Disposals - | - | - | - | - | 32 | 32 |
| accumulated | | | | | | |
| depreciation | | | | | | |
+-----------------------+---------+-----------+-----------+----------+-----------+----------+
| Depreciation charge | - | (778) | (8) | (26) | (1,133) | (1,945) |
+-----------------------+---------+-----------+-----------+----------+-----------+----------+
| Transfer to disposal | (7,233) | (12,799) | (36) | (43) | (7,214) | (27,325) |
| of Proton Bank | | | | | | |
+-----------------------+---------+-----------+-----------+----------+-----------+----------+
| Closing net carrying | - | - | - | - | - | - |
| amount | | | | | | |
+-----------------------+---------+-----------+-----------+----------+-----------+----------+
| | | | | | | |
+-----------------------+---------+-----------+-----------+----------+-----------+----------+
| Balance at 31 | | | | | | |
| December 2008 | | | | | | |
+-----------------------+---------+-----------+-----------+----------+-----------+----------+
| Net carrying amount | - | - | - | - | - | - |
+-----------------------+---------+-----------+-----------+----------+-----------+----------+
25. NON CURRENT ASSETS HELD FOR SALE
+-------------------------------------+-------------+------------+
| Amounts presented in EUR '000 | 31.12.2008 |31.12.2007 |
+-------------------------------------+-------------+------------+
| Asset of "Proton Insurance' (Note | - | 53,509 |
| 39 ) | | |
+-------------------------------------+-------------+------------+
| Land | - | 148 |
+-------------------------------------+-------------+------------+
| Buildings | - | 70 |
+-------------------------------------+-------------+------------+
| Total | - | 53,727 |
+-------------------------------------+-------------+------------+
The account includes land and building acquired by means of foreclosure and
auctions.
26. GOODWILL AND OTHER INTANGIBLE ASSETS
+----------------------+----+--------------+---------------+-------------+------------+
| |
+----------------------+
| Amounts presented in EUR | Goodwill | Customer | Software | Total |
| '000 | | relations & | | |
| | | other | | |
| | | intangible | | |
| | | assets | | |
+---------------------------+--------------+---------------+-------------+------------+
| Amounts presented in EUR | Goodwill | Customer | Software | Total |
| '000 | | relations & | | |
| | | other | | |
| | | intangible | | |
| | | assets | | |
+---------------------------+--------------+---------------+-------------+------------+
| Balance at 1 January 2008 | | | | |
+---------------------------+--------------+---------------+-------------+------------+
| Cost | 157,184 | 19,538 | 4,747 | 181,469 |
+---------------------------+--------------+---------------+-------------+------------+
| Accumulated amortisation | (7,465) | (5,216) | (2,003) | (14,684) |
+---------------------------+--------------+---------------+-------------+------------+
| Net carrying amount | 149,719 | 14,322 | 2,744 | 166,785 |
+---------------------------+--------------+---------------+-------------+------------+
| | | | |
+------------------------------------------+---------------+-------------+------------+
| Year ended 31 December 2008 | | | |
+------------------------------------------+---------------+-------------+------------+
| Opening net carrying | 149,719 | 14,322 | 2,744 | 166,785 |
| amount | | | | |
+---------------------------+--------------+---------------+-------------+------------+
| Transfer in assets held | | | | - |
| for sale: | | | | |
+---------------------------+--------------+---------------+-------------+------------+
| -Cost | | | | - |
+---------------------------+--------------+---------------+-------------+------------+
| -Accumulated | | | | - |
| amortisation | | | | |
+---------------------------+--------------+---------------+-------------+------------+
| Additions | | | 293 | 293 |
+---------------------------+--------------+---------------+-------------+------------+
| Write-off, disposals | | | | - |
+---------------------------+--------------+---------------+-------------+------------+
| -Cost | | | | - |
+---------------------------+--------------+---------------+-------------+------------+
| -Accumulated | (7,720) | | | (7,720) |
| amortisation | | | | |
+----------------------+-------------------+---------------+-------------+------------+
| Amortisation charge | | (3,129) | (573) | (3,702) |
+---------------------------+--------------+---------------+-------------+------------+
| Transfer in disposal of | (141,999) | (11,193) | (2,464) | (155,656) |
| Proton Bank | | | | |
+---------------------------+--------------+---------------+-------------+------------+
| Closing net carrying | - | - | - | - |
| amount | | | | |
+---------------------------+--------------+---------------+-------------+------------+
| | | | |
+------------------------------------------+---------------+-------------+------------+
| Balance at 31 December 2008 | | | |
+------------------------------------------+---------------+-------------+------------+
| Cost | - | - | - | - |
+---------------------------+--------------+---------------+-------------+------------+
| Accumulated amortisation, | - | - | - | - |
| impairment | | | | |
+---------------------------+--------------+---------------+-------------+------------+
| Net carrying amount | - | - | - | - |
+----------------------+----+--------------+---------------+-------------+------------+
+-----------------------------+---------------+---------------+------------+------------+
| Amounts presented in EUR '000 | | | | |
+-----------------------------+---------------+---------------+------------+------------+
| Year ended 31 December 2007 | | | | |
+-----------------------------+---------------+---------------+------------+------------+
| Opening net carrying amount | 168,353 | 18,495 | 3,252 | 190,100 |
+-----------------------------+---------------+---------------+------------+------------+
| Transfer in assets held for | 0 | | | 0 |
| sale: | | | | |
+-----------------------------+---------------+---------------+------------+------------+
| -Cost | (12,393) | | (126) | (12,519) |
+-----------------------------+---------------+---------------+------------+------------+
| -Accumulated amortisation | 0 | | 46 | 46 |
+-----------------------------+---------------+---------------+------------+------------+
| Additions | 1,224 | | 309 | 1,533 |
+-----------------------------+---------------+---------------+------------+------------+
| Write-off, disposals | | | | |
+-----------------------------+---------------+---------------+------------+------------+
| -Cost | | | (8) | (8) |
+-----------------------------+---------------+---------------+------------+------------+
| -Accumulated amortisation | | 1 | 1 |
+---------------------------------------------+---------------+------------+------------+
| Amortisation charge | | (4,173) | (730) | (4,903) |
+-----------------------------+---------------+---------------+------------+------------+
| Impairment charge | (7,465) | | | (7,465) |
+-----------------------------+---------------+---------------+------------+------------+
| Closing net carrying amount | 149,719 | 14,322 | 2,744 | 166,785 |
+-----------------------------+---------------+---------------+------------+------------+
Additions to goodwill during the year 2007 are attributable to acquisition of
additional stake in Proton and other subsidiaries. The Group on 30 June 2008 has
reported an impairment loss of approximately EUR 7,720,000 being the excess of
Proton's carrying amount.
The recoverable amount of Proton Group has been determined based on value in use
calculations. This impairment loss, due to the sale of PROTON BANK, has been
transferred to loss from discontinued operations (note 15).
27. DEFERRED TAX
Deferred tax has been calculated based on the nominal tax rate applicable for
the financial years in which a temporary taxable and deductible difference
reversal is expected.
Deferred income tax assets and liabilities are attributable to the following
items:
+----------------------------+----------+------------+------------+------------+
| |
+----------------------------+
| Amounts presented in EUR | 31/12/2008 | 31/12/2007 |
| '000 | | |
+----------------------------+-----------------------+-------------------------+
| | Deferred Tax | Deferred Tax |
+----------------------------+-----------------------+-------------------------+
| | Asset | Liability | Asset | Liability |
+----------------------------+----------+------------+------------+------------+
| Amounts presented in EUR | 31/12/2008 | 31/12/2007 |
| '000 | | |
+----------------------------+-----------------------+-------------------------+
| | Deferred Tax | Deferred Tax |
+----------------------------+-----------------------+-------------------------+
| | Asset | Liability | Asset | Liability |
+----------------------------+----------+------------+------------+------------+
| Retirement benefit | | | 296 | - |
| obligations | | | | |
+----------------------------+----------+------------+------------+------------+
| Financial liabilities | - | - | 192 | - |
+----------------------------+----------+------------+------------+------------+
| Property, plant & | - | - | - | 548 |
| equipment | | | | |
+----------------------------+----------+------------+------------+------------+
| Intangible assets | - | - | | 3,581 |
+----------------------------+----------+------------+------------+------------+
| Staff bonuses and | - | - | - | - |
| allowances | | | | |
+----------------------------+----------+------------+------------+------------+
| Tax Deductible losses | - | - | - | - |
+----------------------------+----------+------------+------------+------------+
| Commission from loan | - | - | 168 | - |
| advances | | | | |
+----------------------------+----------+------------+------------+------------+
| Finance Leases | - | -- | 567 | - |
+----------------------------+----------+------------+------------+------------+
| Provision for bad depts | - | | 1,063 | - |
+----------------------------+----------+------------+------------+------------+
| Financial assets at fair | - | - | 1,430 | - |
| value through profit or | | | | |
| loss | | | | |
+----------------------------+----------+------------+------------+------------+
| Available for sale | - | - | 3,359 | 2,800 |
| financial assets | | | | |
+----------------------------+----------+------------+------------+------------+
| Other financial assets | - | - | 9 | |
+----------------------------+----------+------------+------------+------------+
| Other assets | - | - | 16 | |
+----------------------------+----------+------------+------------+------------+
| Total | - | - | 7,099 | 6,928 |
+----------------------------+----------+------------+------------+------------+
| Amount set-off | - | - | (548) | - |
+----------------------------+----------+------------+------------+------------+
| Balance at 31 December | - | - | 6,551 | 6,928 |
+----------------------------+----------+------------+------------+------------+
28. OTHER ASSETS
The Group's other assets and the company's other assets account are analysed as
follows:
+-------------------------------------------+--------------+--------------+
| |
+-------------------------------------------+
| Amounts presented in EUR '000 | 31/12/2008 | 31/12/2007 |
+-------------------------------------------+--------------+--------------+
| Other Assets | | |
+-------------------------------------------+--------------+--------------+
| Amounts presented in EUR '000 | 31/12/2008 | 31/12/2007 |
+-------------------------------------------+--------------+--------------+
| Other Assets | | |
+-------------------------------------------+--------------+--------------+
| Advances to employees | - | 28 |
+-------------------------------------------+--------------+--------------+
| Advances to third parties | - | 52 |
+-------------------------------------------+--------------+--------------+
| Contributions to Co-Guarantee Fund and | - | 12,640 |
| Supplementary Fund | | |
+-------------------------------------------+--------------+--------------+
| Guarantee fees | - | 621 |
+-------------------------------------------+--------------+--------------+
| Prepayments to third parties | 63 | 139 |
+-------------------------------------------+--------------+--------------+
| Brokerage fees receivables | 381 | 15,539 |
+-------------------------------------------+--------------+--------------+
| Credit card receivables | - | 1,751 |
+-------------------------------------------+--------------+--------------+
| Prepaid Taxes and other tax advances | - | 8,963 |
+-------------------------------------------+--------------+--------------+
| Sundry debtors and other receivables | 163 | 17,436 |
+-------------------------------------------+--------------+--------------+
| Bad debts (other than loans and | - | 4,206 |
| receivables) | | |
+-------------------------------------------+--------------+--------------+
| Receivables from related parties | - | 2 |
+-------------------------------------------+--------------+--------------+
| Receivables from foreign stock exchange | - | 4,608 |
+-------------------------------------------+--------------+--------------+
| Bond subscriptions | - | 30,411 |
+-------------------------------------------+--------------+--------------+
| | 607 | 96,396 |
+-------------------------------------------+--------------+--------------+
| Less:Provisions for losses (impairment) | - | (4,921) |
| of receivables besides loans | | |
+-------------------------------------------+--------------+--------------+
| Total | 607 | 91,474 |
+-------------------------------------------+--------------+--------------+
29. DUE TO FINANCIAL INSTITUTIONS
+-------------------------------------------+--------------+-------------+
| Amounts presented in EUR '000 | 31/12/2008 | 31/12/2007 |
+-------------------------------------------+--------------+-------------+
| Interbank deposits | - | 392,371 |
+-------------------------------------------+--------------+-------------+
| Sight deposits | - | 201 |
+-------------------------------------------+--------------+-------------+
| Long-Term Loans | 198,393 | - |
+-------------------------------------------+--------------+-------------+
| Time deposits | - | 28,864 |
+-------------------------------------------+--------------+-------------+
| Sale and repurchase agreement (REPOS) | - | 12,505 |
+-------------------------------------------+--------------+-------------+
| Total | 198,393 | 433,941 |
+-------------------------------------------+--------------+-------------+
During 2008, IRF has utilized the total of the EUR 270m loan facility that has
been provided by a Bank. In September 2008, IRF repaid EUR 70m. The loan bears
interest of 3 month Euribor plus 2.25% spread and 0.6% Law contribution. From
the implementation of IAS 39, the effective rate has been calculated to 6.37%.
All investment portfolio and cash accounts of IRF, are assigned as collateral to
the loan which is repayable in full by September 2011.
30. DUE TO CUSTOMERS
+------------------------------------------+--------------+--------------+
| |
+------------------------------------------+
| Amounts presented in EUR '000 | 31/12/2008 | 31/12/2007 |
+------------------------------------------+--------------+--------------+
| Amounts presented in EUR '000 | 31/12/2008 | 31/12/2007 |
+------------------------------------------+--------------+--------------+
| Due to Customers | | |
+------------------------------------------+--------------+--------------+
| Retail Customers | | |
+------------------------------------------+--------------+--------------+
| Savings account | - | 57,700 |
+------------------------------------------+--------------+--------------+
| Sight deposits | - | 18,175 |
+------------------------------------------+--------------+--------------+
| Time deposits | - | 794,343 |
+------------------------------------------+--------------+--------------+
| Deposits under notice | - | 1,738 |
+------------------------------------------+--------------+--------------+
| | - | 871,956 |
+------------------------------------------+--------------+--------------+
| | | |
+------------------------------------------+--------------+--------------+
| Corporate Customers | | |
+------------------------------------------+--------------+--------------+
| Sight deposits | - | 67,898 |
+------------------------------------------+--------------+--------------+
| | | |
+------------------------------------------+--------------+--------------+
| Time deposits: | | |
+------------------------------------------+--------------+--------------+
| Companies | - | 319,249 |
+------------------------------------------+--------------+--------------+
| Public organizations | - | - |
+------------------------------------------+--------------+--------------+
| Public companies | - | 5,838 |
+------------------------------------------+--------------+--------------+
| Other time deposits | - | 55,694 |
+------------------------------------------+--------------+--------------+
| Sale and repurchase agreement (REPOS) | - | 986 |
+------------------------------------------+--------------+--------------+
| | - | 449,665 |
+------------------------------------------+--------------+--------------+
| Blocked deposits | - | 184 |
+------------------------------------------+--------------+--------------+
| Pledged deposits | - | 59,534 |
+------------------------------------------+--------------+--------------+
| Margin accounts | - | 40,800 |
+------------------------------------------+--------------+--------------+
| Total | - | 1,422,139 |
+------------------------------------------+--------------+--------------+
31. ISSUED DEBT SECURITIES
+------------------------------------------+------------+----------+------------+
| | 31.12.2008 | | 31.12.2007 |
+------------------------------------------+------------+----------+------------+
| Eurobond with maturity 2017 | - | | 25,283 |
+------------------------------------------+------------+----------+------------+
| Total | - | | 25,283 |
+------------------------------------------+------------+----------+------------+
Issued debt securities refer to a bond issued by PROTON BANK. Some brief
financial information as of 31 December 2007 is given below:
Eurobond with maturity 2017
Standard loan Eurobond with a duration of 10 years, till 13 July 2017, closely
related with DBFRB USD Index. The main elements of the debt securities in issue
are as follows:
Issue date: 13 July 2007
Principal amount: 25.000.000 euros
Bond coupons: quarterly
Interest rate:
2008-2008 5.15 per cent.
2008-2009 5.15 per cent.
2009-2010 8.75 per cent less the cumulative return of the DBFRB USD Index
(max 8,75%, min 0,00%)
2010-2011 9.00 per cent less the cumulative return of the DBFRB USD Index (max
9,00%, min 0,00%)
2011-2012 9.50 per cent less the cumulative return of the DBFRB USD Index (max
9,50%, min 0,00%)
2012-2013 9.50 per cent less the cumulative return of the DBFRB USD Index (max
9,50%, min 0,00%)
2013-2014 10.00 per cent less the cumulative return of the DBFRB USD Index (max
10,00%, min 0,00%)
2014-2015 10.00 per cent less the cumulative return of the DBFRB USD Index (max
10,00%, min 0,00%)
2015-2016 10.00 per cent less the cumulative return of the DBFRB USD Index (max
10,00%, min 0,00%)
2016-2017 10.00 per cent less the cumulative return of the DBFRB USD Index (max
10,00%, min 0,00%)
Form and denomination: The Bond Loan is constituted by five hundred (500) Bonds
and the nominal amount of each Bond is EUR 50,000.
The aggregate nominal amount of the Bonds shall be EUR 25,000,000. The Bonds
will be issued in Bond Certificates each one of which comprises one or more
Bonds.
Duration: 10 years
Scheduled redemption: Unless previously redeemed, or purchased and cancelled,
the Bonds will be redeemed at their principal amount on the Final Maturity Date.
Purpose of the issuance : To strengthen solvency.
32. RETIREMENT BENEFIT OBLIGATION
The retirement benefit obligations refer to PROTON GROUP's personnel and it is
described as follows:
+----------------------------------------+--------------+--------------+
| Amounts presented in EUR '000 | 31/12/2008 | 31/12/2007 |
+----------------------------------------+--------------+--------------+
| Amount recognized in Balance Sheet | - | |
+----------------------------------------+--------------+--------------+
| Present value of unfunded benefit | - | 1,317 |
| obligations | | |
+----------------------------------------+--------------+--------------+
| Unrecognised actuarial profits / ( | - | (178) |
| losses) | | |
+----------------------------------------+--------------+--------------+
| Total Liabilities at the end of period | - | 1,140 |
+----------------------------------------+--------------+--------------+
+----------------------------------------+--------------+--------------+
| Amounts recognized in Income Statement | 31/12/2008 | 31/12/2007 |
+----------------------------------------+--------------+--------------+
| Current service cost | | 277 |
+----------------------------------------+--------------+--------------+
| Interest cost | - | 44 |
+----------------------------------------+--------------+--------------+
| Net actuarial losses recognized | - | 1 |
+----------------------------------------+--------------+--------------+
| Settlements | - | 302 |
+----------------------------------------+--------------+--------------+
| Total | - | 624 |
+----------------------------------------+--------------+--------------+
The change in liabilities is described below:
+----------------------------------------+--------------+--------------+
| |
+----------------------------------------+
| Amounts presented in EUR '000 | |
+----------------------------------------+-----------------------------+
| Change in liabilities: | 31/12/2008 | 31/12/2007 |
+----------------------------------------+--------------+--------------+
| Amounts presented in EUR '000 | |
+----------------------------------------+-----------------------------+
| Change in liabilities: | 31/12/2008 | 31/12/2007 |
+----------------------------------------+--------------+--------------+
| Opening balance | - | 1,228 |
+----------------------------------------+--------------+--------------+
| Less: transfer in discontinued | - | (275) |
| operations | | |
+----------------------------------------+--------------+--------------+
| | - | 953 |
+----------------------------------------+--------------+--------------+
| Increase due to acquisition of Proton | | |
| Bank | | |
+----------------------------------------+--------------+--------------+
| Increase due to business combination | | |
| with Omega | | |
+----------------------------------------+--------------+--------------+
| Expense for the period | - | 625 |
+----------------------------------------+--------------+--------------+
| Compensation paid | - | (438) |
+----------------------------------------+--------------+--------------+
| Total liability recognized in Balance | - | 1,140 |
| Sheet | | |
+----------------------------------------+--------------+--------------+
The main actuarial assumptions used are provided below:
+----------------------------+------------+------------+
| | 31/12/2008 | 31/12/2007 |
+----------------------------+------------+------------+
| Discount Rate | - | 4.90% |
+----------------------------+------------+------------+
| Future salary increases | - | 4.70% |
+----------------------------+------------+------------+
| Personnel turnover rate | - | 0.50% |
+----------------------------+------------+------------+
| | EVK | EVK |
+----------------------------+------------+------------+
| Mortality rates | - | 2,000 |
+----------------------------+------------+------------+
33. CURRENT INCOME TAX LIABILITIES
+--------------------------------------------+------------+------------+
| |
+--------------------------------------------+
| Amounts presented in EUR '000 |31/12/2008 |31/12/2007 |
+--------------------------------------------+------------+------------+
| Amounts presented in EUR '000 |31/12/2008 |31/12/2007 |
+--------------------------------------------+------------+------------+
| Income Tax on Taxable Profits | - | 9,671 |
+--------------------------------------------+------------+------------+
| Provision of tax liabilities | - | 828 |
+--------------------------------------------+------------+------------+
| Total | - | 10,498 |
+--------------------------------------------+------------+------------+
Profits recorded in the jurisdictions of Bermuda and Marshall Islands are tax
free.
34. OTHER LIABILITIES
+--------------------------------------------+------------+------------+
| Amounts presented in EUR '000 | 31/12/2008 | 31/12/2007 |
+--------------------------------------------+------------+------------+
| Withholding taxes arising from salaries | - | 542 |
+--------------------------------------------+------------+------------+
| Taxes and duties payable from customers' | - | 439 |
| deposits | | |
+--------------------------------------------+------------+------------+
| Other withholding taxes and duties | - | 188 |
+--------------------------------------------+------------+------------+
| Prior year income taxes (from tax audit) | - | 541 |
+--------------------------------------------+------------+------------+
| Social security contributions | - | 878 |
+--------------------------------------------+------------+------------+
| Dividends payable | - | 95 |
+--------------------------------------------+------------+------------+
| Salaries payable | 17 | 239 |
+--------------------------------------------+------------+------------+
| Brokerage services securities and | - | 266 |
| derivatives | | |
+--------------------------------------------+------------+------------+
| Suppliers and other third party | 1,739 | 10,983 |
| liabilities | | |
+--------------------------------------------+------------+------------+
| Total | 1,755 | 14,170 |
+--------------------------------------------+------------+------------+
35. SHARE CAPITAL & SHARE PREMIUM
+------------------------------+----------------+---------+---------+---------+-----------+------------+
| Amounts in EUR' 000 | Number of |Nominal | Share | Share | Share | Total |
| | shares |value $ |capital |capital | premium | |
| | | | in $ | | | |
+------------------------------+----------------+---------+---------+---------+-----------+------------+
| Opening balance at 31 | 124,832,394 | - | 187 | 147 | 400,443 | 400,590 |
| December 2007 | | | | | | |
+------------------------------+----------------+---------+---------+---------+-----------+------------+
| Closing balance at 31 | 124,832,394 | - | 187 | 147 | 400,443 | 400,590 |
| December 2008 | | | | | | |
+------------------------------+----------------+---------+---------+---------+-----------+------------+
Authorised share capital
+----------------------------+-----------+---------+---------+-------------+----------+----------+
| | Preference Shares of | Common Shares of $0.0015 each |
| | $0.0001 each | |
+----------------------------+-------------------------------+-----------------------------------+
| | Number | Amount | Amount | Number | Amount | Amount |
| | | in $ | in EUR | | in $ | in EUR |
+----------------------------+-----------+---------+---------+-------------+----------+----------+
| Authorized at 31 December | 2,500,000 | 250 | 208 | 200,000,000 | 300,000 | 249,314 |
| 2008 | | | | | | |
+----------------------------+-----------+---------+---------+-------------+----------+----------+
Movements in share capital and share premium
The Company issued and publicly offered 45,833,340 Units on 14 November 2005
("Offering"). Each Unit consisted of one Common Share and two Warrants. Each
Warrant entitles the holder to purchase from the Company one Common Share at an
exercise price of $5.00 per share.
The terms of the Offering provided that each Warrant would become exercisable on
the earlier of (i) completion of a business combination which, when combined
with all previous business combinations, has an aggregate transaction value of
at least 50 per cent of the initial amount placed in trust together with such
funds as are deposited in the trust fund following the stabilization period (a
"Qualified Business Combination") and (ii) where a business combination has
occurred but a Qualified Business Combination is not completed within 18 months
after admission, or within 24 months after admission if a letter of intent,
agreement in principle or definitive agreement has been signed by the Company
during the initial 18 month period but such acquisition has not been
consummated, or unless extended by majority shareholder approval (the date by
which such Qualified Business Combination has to occur in any of these
circumstances being the "Extended Date"),the relevant date shall be the extended
date and will expire on the earlier of redemption or the date that is four years
after the admission date.
Following the approval of the acquisition of Proton Bank at a special general
meeting, the 91,666,680 Warrants became exercisable and may be exercised by 14
November 2009.
Year 2007
During March and April 2007, the Company modified the terms of its Warrants to
encourage the early exercise of these Warrants. Under two Warrant programs, a
private program offered to certain qualified investors (the "Private Program")
and a subsequent public program offered to all warrant holders (the "Public
Program"), IRF temporarily (1) increased the number of Common Shares received
upon exercise of a Warrant from one Common Share to 1.20 Common Shares on
payment of $5.00, and (2) permitted the exercise of a Warrant such that the
holder received one Common Share in exchange for every 8.75 Warrants
surrendered. Warrant holders were able to use one or both methods to convert
their Warrants into Common Shares.
* The Private Program expired on 23 March 2007. Under this program, 48,214,674
Warrants participated. As a result, 57,133,822 new Common Shares were issued and
$237,740,145 of gross cash proceeds was raised. More particularly:
* 666,645 Warrants were exchanged for 76,188 Common Shares with nominal value of
$0.0015. As a result, the amount of $114 (EUR 86) was transferred from the share
premium account to the share capital account.
* 47,548,029 Warrants were exercised by payment of the $5.00 exercise price and
57,057,634 new Common Shares with $0.0015 nominal value were issued. Total gross
cash of $237,740,145 (EUR 178,846,118) was raised. As a result, share capital was
increased by $85,587 (EUR 64,385) and share premium was increased by $ 237,654,559
(EUR178,781,734).
* The Public Program expired on 26 April 2007. Under this program, 29,855,465
Warrants participated. As a result, 15,360,707 new Common Shares were issued and
$55,026,700 of gross cash proceeds was raised. More particularly:
* 18,850,125 Warrants were exchanged for 2,154,300 Common Shares with nominal
value of $0.0015. As a result, the amount of $3,231 (EUR2,368) was transferred
from the share premium account to the share capital account.
* 11,005,340 Warrants were exercised by payment of the $5.00 exercise price and
13,206,407 new Common Shares with $0.0015 nominal value were issued. Total gross
cash of $55,026,700 (EUR 40,315,555) was raised. As a result, share capital was
increased by $23,041 (EUR 16,881) and share premium was increased by $ 55,003,659
(EUR40,298,673).
* Fees and expenses incurred in connection with the private and public program are
amounted to $ 5,591,257 (EUR4,287,287). The relevant amount has been recognized
directly in equity as a deduction in the share premium account.
The Board of Directors of IRF, at a board meeting held on 24 July 2007 meeting,
resolved to purchase up to 11 million treasury common shares for cancellation,
having a par value of $ 0.0015. IRF acquired 3.5 million shares on 26 July 2007
and 1,023,810 shares on 24 December 2007 for a total of $20.34 million (Euro
14,529,000). All of these shares were subsequently cancelled.
All transactions with Common Shares and Warrants are denominated into US
dollars. Amounts have been translated into Euro, the functional currency of the
Group, by using the exchange rate applicable at each transaction date.
After the above movements, IRF had 124,832,394 Common Shares and 13,596,541
Warrants outstanding on 31 December 2008.
Year 2006
On 27 June 2006, at a Special General Meeting of IRF, it's Shareholders approved
the acquisition of Proton Investment Bank. The respective acquisition qualified
as a business combination according to IRF's initial offering circular with the
following consequences:
* Funds held under the Trust Account were released and were available to the
Company for the acquisition of Proton Investment Bank and for any other use.
* The Company was relieved from the obligation to repay the offering proceeds to
the shareholders, except to those shareholders who elected at the Special
General Meeting to redeem their shares. Holders of 430,000 shares elected to
have their shares repurchased by the Company.
Based on the decision of the Specia General Meeting:
* 430,000 shares were cancelled and therefore the number of common and fully paid
shares was reduced to 56,861,675.
* The amount of EUR 1,914,672 ($ 2,425,392) was repaid to these shareholders
* The balance of EUR 189,940,006 ($ 241,449,403) was transferred from the
liabilities (compound financial instrument) to equity (share premium account).
* Warrants issued during the offering became exercisable.
On 20 December 2006, at the Annual General Meeting of IRF, its Shareholders
approved the increase of the authorized share capital of the Company from $
223,687.53 to $ 300,250 by the creation of an additional 51,041,645 common
shares of par value $ 0.0015 each and the relevant amendment of the bye-law 3 of
the Company's bye-laws in order to reflect the increase.
The holders of Common Shares are entitled to receive dividends as declared from
time to time and are entitled to one vote per share on a poll at meetings of the
Company.
The Company is authorized to issue 2,500,000 shares of preferred stock with such
designations, voting and other rights and preferences as may be determined from
time to time by the Board of Directors.
36. OTHER RESERVES
As of 31 December 2008 IRF has not formed any kind of reseve. The comparative
figures refer to the consolidated reserves of Proton Bank Group.
+-----------------------------------------------+--------------+-------------+
| Amounts presented in EUR '000 | 31/12/2008 | 31/12/2007 |
+-----------------------------------------------+--------------+-------------+
| Revaluation reserves | | |
+-----------------------------------------------+--------------+-------------+
| Translation reserve | - | (5) |
+-----------------------------------------------+--------------+-------------+
| Reserve from the revaluation of Available for | - | (2,564) |
| sale financial assets | | |
+-----------------------------------------------+--------------+-------------+
| Total | - | (2,570) |
+-----------------------------------------------+--------------+-------------+
| Other reserves | | |
+-----------------------------------------------+--------------+-------------+
| Statutory reserves | - | 275 |
+-----------------------------------------------+--------------+-------------+
| Reserve of subsidiary's stock option program | - | 200 |
+-----------------------------------------------+--------------+-------------+
| Other reserves | - | 16,112 |
+-----------------------------------------------+--------------+-------------+
| Total | - | 16,587 |
+-----------------------------------------------+--------------+-------------+
37. CASH AND CASH EQUIVALENTS - CASH FLOW STATEMENT
For the purposes of preparing the Cash Flow Statement of the Group, the
short-term placements in other financial institutions, which are either
immediately available or available within 90 days, were included in the cash
account.
+-----------------------------------------------+-------------+-------------+
| Amounts presented in EUR '000 | 31/12/2008 | 31/12/2007 |
+-----------------------------------------------+-------------+-------------+
| Cash and balances with Central Bank | - | 46,728 |
+-----------------------------------------------+-------------+-------------+
| Petty cash | 1 | 1 |
+-----------------------------------------------+-------------+-------------+
| Deposits placed in other financial | 3,569 | 322,354 |
| institutions | | |
+-----------------------------------------------+-------------+-------------+
| Time deposits | 145,039 | - |
+-----------------------------------------------+-------------+-------------+
| Loans and advances to financial institutions | - | 189,974 |
+-----------------------------------------------+-------------+-------------+
| Asset held for sale | - | 316 |
+-----------------------------------------------+-------------+-------------+
| Total - Included in cash and cash equivalents | 148,610 | 559,371 |
+-----------------------------------------------+-------------+-------------+
38. EARNINGS PER SHARE
Basic earnings per share are calculated by dividing the net profit attributable
to shareholders by the weighted average number of shares in issue during the
year. Diluted earnings per share are calculated by adjusting the weighted
average number of common shares outstanding to assume exercise of the warrants.
Basic and diluted earnings per share are analysed below:
+--------------------------------------------------------+------------+------------+
| Amounts presented in EUR | |
+--------------------------------------------------------+-------------------------+
| Basic Earnings per share | 1/1 - | 1/1 - |
| | 31/12/08 | 31/12/07 |
+--------------------------------------------------------+------------+------------+
| | | |
+--------------------------------------------------------+------------+------------+
| Net Profit attributable to the Parent Company's | (264,129) | 61,635 |
| Shareholders | | |
+--------------------------------------------------------+------------+------------+
| Weighted average number of shares in issue | 124,832 | 110,751 |
+--------------------------------------------------------+------------+------------+
| Basic earnings per Share ( EUR/Share ) | (2.12) | 0.56 |
+--------------------------------------------------------+------------+------------+
| | | |
+--------------------------------------------------------+------------+------------+
| Net profit from continuing operations attributable to | (218,795) | 63,513 |
| the Parent Company's Shareholders | | |
+--------------------------------------------------------+------------+------------+
| Weighted average number of shares in issue | 124,832 | 110,751 |
+--------------------------------------------------------+------------+------------+
| Basic earnings per Share ( EUR/Share ) | (1.75) | 0.57 |
+--------------------------------------------------------+------------+------------+
The effect of IRF's "Offering" of warrants on diluted earnings per share has not
been taken into consideration since it is anti-dilutive. Also, the effect of
Proton's stock option plan on diluted earnings per share has not been taken into
consideration since, for the year 2007 since it is anti-dilutive.
39. ASSETS HELD FOR SALE AND LIABILITIES ASSOCIATED WITH ASSETS CLASSIFIED AS
HELD FOR SALE.
On 28 December 2007 the Proton Group committed to sell its insurance activities.
In particular, Proton Bank entered into a contractual agreement with the
«Commercial Value Societe Anonyme Insurance» (Proton Insurance) to transfer
91,29% of the outstanding common shares of the «Proton Societe Anonyme Provision
Insurance». Assets and liabilities of Proton Insurance have been classified as
"Non current assets held for sale" and "Liabilities associated with assets
classified as held for sale" respectively, for the year ended 31 December 2007.
Assets of Proton Insurance, after eliminating all balances with the other group
companies, are as follows:
Amounts presented in EUR '000
+---------------------------------------+------------+
| ASSET | 31.12.2007 |
+---------------------------------------+------------+
| Cash | 10 |
+---------------------------------------+------------+
| Loans and advances to banks | 306 |
+---------------------------------------+------------+
| Financial assets at fair value | 12,980 |
| through profit or loss | |
+---------------------------------------+------------+
| Investments in associates | 625 |
+---------------------------------------+------------+
| Intangible assets | 12,473 |
+---------------------------------------+------------+
| Property, plant and equipment | 2,256 |
+---------------------------------------+------------+
| Investment property | 50 |
+---------------------------------------+------------+
| Insurance receivables | 19,610 |
+---------------------------------------+------------+
| Reinsurance contracts | 1,632 |
+---------------------------------------+------------+
| Deferred tax assets | 69 |
+---------------------------------------+------------+
| Other assets | 3,497 |
+---------------------------------------+------------+
| Total assets | 53,509 |
+---------------------------------------+------------+
+---------------------------------------+------------+
| LIABILITIES | 31.12.2007 |
+---------------------------------------+------------+
| Debt securities in issue (note 31) | 1,539 |
+---------------------------------------+------------+
| Retirement benefit obligations | 275 |
+---------------------------------------+------------+
| Provisions for insurance contracts | 36,093 |
+---------------------------------------+------------+
| Deferred tax liabilities | 93 |
+---------------------------------------+------------+
| Other liabilities | 6,339 |
+---------------------------------------+------------+
| Total liabilities | 44,339 |
+---------------------------------------+------------+
Intangible assets include goodwill of EUR 12,393 thousand which was originally
allocated to Proton Insurance. The total net assets (including goodwill) were
measured at their carrying amount which does not exceed the fair value of Proton
Insurance less cost to sale. Fair value of Proton Insurance was determined on
the basis of the binding agreement between the Group and "Commercial Value
Societe Anonyme Insurance".
40. RELATED PARTIES TRANSACTIONS
40.1 Transactions between companies included in Consolidation
+------------------------------+-------------+-------------+-------------+------------+
| |
+------------------------------+
| Transactions of the parent | | |
| company with Subsidiaries | | |
+------------------------------+---------------------------+--------------------------+
| | 31/12/2008 |31/12/2007 |
+--------------------------------------------+---------------------------+------------+
| Transactions of the parent | | |
| company with Subsidiaries | | |
+------------------------------+---------------------------+--------------------------+
| | 31/12/2008 |31/12/2007 |
+--------------------------------------------+---------------------------+------------+
| Asset Accounts | | |
+--------------------------------------------+---------------------------+------------+
| Time deposit | - | 28,864 |
+--------------------------------------------+---------------------------+------------+
| Total | - | 28,864 |
+--------------------------------------------+---------------------------+------------+
| | | |
+--------------------------------------------+---------------------------+------------+
| Income | | |
+--------------------------------------------+---------------------------+------------+
| Dividend Income | 2,582 | - |
+--------------------------------------------+---------------------------+------------+
| Interest Income | 656 | - |
+--------------------------------------------+---------------------------+------------+
| Total | 3,238 | - |
+--------------------------------------------+---------------------------+------------+
| | | |
+--------------------------------------------+---------------------------+------------+
| Liability Accounts | | |
+--------------------------------------------+---------------------------+------------+
| Other liabilities | 70,881 | 70,199 |
+--------------------------------------------+---------------------------+------------+
| Total | 70,881 | 70,199 |
+------------------------------+-------------+-------------+-------------+------------+
The aforementioned balances of the Company have been eliminated from the
consolidated financial statements.
40.2 Transactions with Associates
+----------------------------+------------+------------+
| Amounts presented in EUR |31/12/2008 |31/12/2007 |
| '000 | | |
+----------------------------+------------+------------+
| Asset Accounts | | |
+----------------------------+------------+------------+
| Other amounts due | - | 28 |
+----------------------------+------------+------------+
| Total | - | 28 |
+----------------------------+------------+------------+
| | | |
+----------------------------+------------+------------+
| Liability Accounts | | |
+----------------------------+------------+------------+
| Deposits | - | 5,188 |
+----------------------------+------------+------------+
| Other liabilities | - | 18 |
+----------------------------+------------+------------+
| Total | - | 5,206 |
+----------------------------+------------+------------+
| | | |
+----------------------------+------------+------------+
| Income /Expenses | | |
+----------------------------+------------+------------+
| Interest and similar | (143) | 193 |
| expenses | | |
+----------------------------+------------+------------+
| Other income | 88 | 205 |
+----------------------------+------------+------------+
| Total | (55) | 398 |
+----------------------------+------------+------------+
The aforementioned balances of the Company with its subsidiaries have been
eliminated from the consolidated financial statements
40.3 Transactions with Management and Members of the Board of Directors
No salaries or loans were paid to the Directors of the Company for the period,
apart from salaries paid to CEO of the Company.
+----------------------------+-------------+-------------+
| |
+----------------------------+
| Transactions with Management and Members of the Board |
| of Directors |
+--------------------------------------------------------+
| Amounts presented in EUR | 31/12/2008 | 31/12/2007 |
| '000 | | |
+----------------------------+-------------+-------------+
| Transactions with Management and Members of the Board |
| of Directors |
+--------------------------------------------------------+
| Amounts presented in EUR | 31/12/2008 | 31/12/2007 |
| '000 | | |
+----------------------------+-------------+-------------+
| Asset accounts | | |
+----------------------------+-------------+-------------+
| Loans | - | 22,467 |
+----------------------------+-------------+-------------+
| Other assets | - | 195 |
+----------------------------+-------------+-------------+
| Total | - | 22,662 |
+----------------------------+-------------+-------------+
| | | |
+----------------------------+-------------+-------------+
| Liability accounts | | |
+----------------------------+-------------+-------------+
| Deposits | - | 67,775 |
+----------------------------+-------------+-------------+
| Depts securities in issue | - | 1,539 |
+----------------------------+-------------+-------------+
| Other Liabilities | 1,009 | 177 |
+----------------------------+-------------+-------------+
| Total | 1,009 | 69,491 |
+----------------------------+-------------+-------------+
| Letters of Guarantee | - | 18,195 |
+----------------------------+-------------+-------------+
| | | |
+----------------------------+-------------+-------------+
| Income | | |
+----------------------------+-------------+-------------+
| Interest and similar | 1,178 | 1,419 |
| income | | |
+----------------------------+-------------+-------------+
| Other income | 1,186 | 394 |
+----------------------------+-------------+-------------+
| Total | 2,364 | 1,813 |
+----------------------------+-------------+-------------+
| Expenses | | |
+----------------------------+-------------+-------------+
| Remuneration | 3,719 | 5,224 |
+----------------------------+-------------+-------------+
| Interest and similar | 2,094 | 3,120 |
| expenses | | |
+----------------------------+-------------+-------------+
| Other fees & expenses | 1,136 | 4,378 |
+----------------------------+-------------+-------------+
| Total | 6,949 | 12,722 |
+----------------------------+-------------+-------------+
41. STOCK OPTION PLAN
The Company has approved a stock option plan for its directors and employees in
respect of up to 10 per cent of Shares in issue from time to time. Pursuant to
the plan, holders receive options which vest over a period to be determined by
the Board at the date of the granting of each such option. No share options has
been granted to the directors or the employees of the company as of 31 December
2008.
42. COMMITMENTS, CONTINGENT ASSETS AND LIABILITIES
42.1 Contingent legal liabilities
As at 31 December 2008 there was no litigation pending against the Group in
connection with its activities.
42.2 Assets given as collateral
All investment portfolio and cash accounts of IRF, is assigned as collateral to
IRF's long term loan.
43. FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES
The fair value represents the amount for which an asset could be exchanged, or a
liability settled, between knowledgeable, willing parties in an arm's length
transaction. Differences might arise between the carrying amount and the fair
value of financial assets and liabilities. The securities available of IRF GROUP
are presented in the financial statements at their fair value.
44. CLASSIFICATION OF FINANCIAL ASSETS AND LIABILITIES
Assets
+----------------------------+-------------+-----------+----------+-----------+-----------+
| Balance at 1 January 2008 | | | | | |
+----------------------------+-------------+-----------+----------+-----------+-----------+
| Assets | Fair value |Avaliable | Held to | Loans & | Total |
| | through | for sale |maturity | advances | |
| | profit or | | | | |
| | loss | | | | |
+----------------------------+-------------+-----------+----------+-----------+-----------+
| Trading portfolio and | 5,965 | - | - | - | 5,965 |
| other financial assets at | | | | | |
| fair value through Profit | | | | | |
| & Loss | | | | | |
+----------------------------+-------------+-----------+----------+-----------+-----------+
| Other assets | - | 248,508 | - | - | 248,508 |
+----------------------------+-------------+-----------+----------+-----------+-----------+
| Total | 5,965 | 248,508 | - | - | 254,473 |
+----------------------------+-------------+-----------+----------+-----------+-----------+
| | | | | | |
+----------------------------+-------------+-----------+----------+-----------+-----------+
| | | | | | |
+----------------------------+-------------+-----------+----------+-----------+-----------+
| | | | | | |
+----------------------------+-------------+-----------+----------+-----------+-----------+
| Balance at 1 January 2007 | | | | | |
+----------------------------+-------------+-----------+----------+-----------+-----------+
| Assets | Fair value |Avaliable | Held to | Loans & | Total |
| | through | for sale |maturity | advances | |
| | profit or | | | | |
| | loss | | | | |
+----------------------------+-------------+-----------+----------+-----------+-----------+
| Loans & advances to | - | - | - | 527,410 | 527,410 |
| financial institutions | | | | | |
+----------------------------+-------------+-----------+----------+-----------+-----------+
| Trading portfolio and | 179,802 | - | - | - | 179,802 |
| other financial assets at | | | | | |
| fair value through Profit | | | | | |
| & Loss | | | | | |
+----------------------------+-------------+-----------+----------+-----------+-----------+
| Derivative financial | 11,529 | - | - | | 11,529 |
| instruments | | | | | |
+----------------------------+-------------+-----------+----------+-----------+-----------+
| Loans and advances to | - | - | - | 1,368,025 | 1,368,025 |
| customers | | | | | |
+----------------------------+-------------+-----------+----------+-----------+-----------+
| Investment portfolio | - | 250,227 | 9,717 | | 259,944 |
+----------------------------+-------------+-----------+----------+-----------+-----------+
| Other assets | - | - | - | 91,474 | 91,474 |
+----------------------------+-------------+-----------+----------+-----------+-----------+
| Total | 191,331 | 250,227 | 9,717 | 1,986,909 | 2,438,184 |
+----------------------------+-------------+-----------+----------+-----------+-----------+
Liabilities
+---------------------+------------+----------------+-----------+
| Balance at 1 January 2008 | | |
+----------------------------------+----------------+-----------+
| LIABILITIES | At | At fair value | Total |
| | amortized |through profit | |
| | cost | or loss | |
+---------------------+------------+----------------+-----------+
| Due to financial | 198,393 | | 198,393 |
| institutions | | | |
+---------------------+------------+----------------+-----------+
| Total liabilities | 198,393 | | 198,393 |
+---------------------+------------+----------------+-----------+
| Balance at 1 January 2007 | | |
+----------------------------------+----------------+-----------+
| LIABILITIES | At | At fair value | Total |
| | amortized |through profit | |
| | cost | or loss | |
+---------------------+------------+----------------+-----------+
| Due to financial | 433,941 | | 433,941 |
| institutions | | | |
+---------------------+------------+----------------+-----------+
| Due to customers | 1,422,139 | | 1,422,139 |
+---------------------+------------+----------------+-----------+
| Derivative | | 14,570 | 14,570 |
| financial | | | |
| instruments | | | |
+---------------------+------------+----------------+-----------+
| Issued debt | 25,283 | | 25,283 |
| securities | | | |
+---------------------+------------+----------------+-----------+
| Total liabilities | 1,881,363 | 14,570 | 1,895,933 |
+---------------------+------------+----------------+-----------+
45. POST-BALANCE SHEET EVENTS
Subsequent events, which regard the Group which, according to the International
Financial Reporting Standards, need to be mentioned are the following:
On 19 January 2009 IRF announced the successful admission of its entire issued
Common Shares and all issued Warrants to trading on the Specialist Fund Market
of the London Stock Exchange plc.
Admission had become effective and dealings in the Company's Common's Shares and
Warrants commenced on the same date and trading of the Company's Common's Shares
and Warrants on AIM was simultaneously cancelled.
As at the date of admission on the SFM, there were 124,832,394 Common Shares and
13,596,541 Warrants in issue.
46. APPROVAL OF FINANCIAL STATEMENTS
The financial statements of "IRF European Finance Investments Limited" ("the
Company") as well as the consolidated financial statements of the Company and
its subsidiaries ("the Group"), for the year ended 31 December 2008 were
approved by the Company's Board of Directors on 24 April 2009 and are subject to
the final approval of the General Meeting of the Shareholders according the
Company's Bye-laws,
Independent Auditors Report on pages 6 to7.
Athens, 24 April 2009
+------------------------------------------+------------------------------------------+
| Angeliki Frangou | Loukas Valetopoulos |
| _________________________________ | _________________________________ |
| Chairman, Non - Executive Director | Chief Executive Officer, Director |
+------------------------------------------+------------------------------------------+
This information is provided by RNS
The company news service from the London Stock Exchange
END
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