Annual report CALYON BANK S.A., pobočka zahraničnej banky - PDF

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Annual report 2007 CALYON BANK S.A., pobočka zahraničnej banky CONTENTS Statement of the Senior country officer... 1 Organization Chart... 2 Auditor s Report on Financial Statements... 3 Financial Statements

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Annual report 2007 CALYON BANK S.A., pobočka zahraničnej banky CONTENTS Statement of the Senior country officer... 1 Organization Chart... 2 Auditor s Report on Financial Statements... 3 Financial Statements as of 31 December Business Contacts... 46 Statement of the Senior country officer In line with the reassessment of the strategy of CALYON Group in 2005, an important work has been made in Slovak Republic to increase the capacity of our unit by transforming the subsidiary into a branch. This transformation, completed on the 1 June 2006, gave access to our Slovak unit to the rating and the balance sheet of CALYON SA has been a year of major evolution in our strategy with a development of our activities toward new business lines like the Real Estate Financing, and the Capital Market activities with the reinforcement of the support of our London teams having created a hub for Eastern and Central European currencies has been as well the year when we have decided to enlarge our clients portfolio among local Slovak corporates and Financial Institutions taking into consideration the positive evolution of the Slovak economical and regulatory environment. On the basis of this successfully completed reengineering of our activities and strategy, we are confident that Calyon Slovak Republic, with the full support of Group Crédit Agricole, being one of the major international banking institutions, and thanks to the professionalism of its staff, will continue to strengthen its activities and market share alongside an improved profitability of our operations in the Slovak Republic. There were no events, which have occurred subsequent to the year-end until the date of preparation of this annual report, which would have a material impact on the financial statements and the annual report of Calyon Slovak Republic as at 31 December 2007 and would require additional disclosure. On behalf of the Management committee, I wish to extend our thanks to all the clients of Calyon Slovak Republic for their support and loyalty as well as to all the employees of Calyon Slovak Republic for their valuable contribution. Thierry Hebraud Senior country officer 1 Organization Chart / Organizačná schéma GENERAL MANAGEMENT VEDENIE SECRETARY LEGAL & COMPLIANCE CAPITAL MARKETS SALES CORPORATE BANKING CUSTOMER SERVICE DEPT. KAPITÁLOVÉ TRHY KORPORÁTNE BANKOVNÍCTVO KLIENTSKÉ SLUŽBY CREDIT ANALYST KREDITNÉ ANALÝZY EDP & EB ZPRACOVANIE DÁT FINANCIAL ÚČTÁREŇ GENERAL AFFAIRS PROVOZ 2 Auditor s Report on Financial Statements ENGLISH TRANSLATION PricewaterhouseCoopers Slovensko, s.r.o. Námestie 1. mája Bratislava Slovak Republic Telephone +421 (0) Facsimile +421 (0) INDEPENDENT AUDITOR S REPORT TO THE MANAGEMENT OF CALYON S.A., POBOČKA ZAHRANIČNEJ BANKY We have audited the accompanying financial statements of Calyon S.A., pobočka zahraničnej banky ( the Branch ), which comprise the balance sheet as at 31 December 2007, and the 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 The management is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards as 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 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. The company's ID (IČO) No Tax Identification No. of PricewaterhouseCoopers Slovensko, s.r.o. (DIČ) VAT Reg. No. of PricewaterhouseCoopers Slovensko, s.r.o. (IČ DPH) SK Spoločnosť je zapísaná v Obchodnom registri Okresného súdu Bratislava 1, pod vložkou č /B, oddiel: Sro. The company is registered in the Commercial Register of Bratislava 1 District Court, ref. No /B, Section: Sro. 3 Management of CALYON S.A., pobočka zahraničnej banky Independent auditor s report Auditor s Responsibility (continued) 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 financial statements present fairly, in all material respects the financial position of Calyon S.A., pobočka zahraničnej banky as of 31 December 2007, its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union. PricewaterhouseCoopers Slovensko, s.r.o. SKAU licence No.: 161 represented by partner Ing. Mária Frühwaldová Auditor, SKAU licence No.: April 2008 Translation note: This version of our report is a translation from the original, which was prepared in Slovak language. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation of information, views or opinions, the original language version of our report takes precedence over this translation. 4 Financial Statements as at 31 December 2007 CONTENTS FINANCIAL STATEMENTS Balance Sheet 6 Income Statement 7 Statement of Changes in Equity 8 Cash Flow Statement 9 NOTES TO THE FINANCIAL STATEMENTS 1 Introduction 10 2 Impacts of changes in the banking environment on the Branch 11 3 Basis of preparation and significant accounting policies 11 4 Critical accounting estimates and judgments in applying accounting policies 20 5 Cash and balances with central banks 21 6 Derivative financial instruments 21 7 Loans and advances to banks 22 8 Loans and advances to customers 22 9 Property, plant and equipment and intangible assets Other assets Deposits from banks Due to customers Other liabilities Share capital Other reserves Interest income and expense Fee and commission income and expense Net trading income and foreign exchange gains less losses Administrative and other operating expenses Income taxes Dividends Financial risk management Contingencies and commitments Derivative financial instruments Cash and cash equivalents Fair values of financial assets and liabilities not carried at fair value Related party transactions Income statement cumulatively for the comparative period of the Branch and the five months and one day period of the Bank Subsequent events 45 5 Balance Sheet as at 31 December 2007 in thousands of SKK Note 31 December December 2006 ASSETS Cash and balances with central banks 5 14,121,815 6,014,653 Derivative financial instruments with positive fair value 6 68, ,806 Loans and advances to banks 7-601,276 Loans and advances to customers 8 7,514,628 5,661,203 Current income tax receivables 8,665 5,190 Intangible fixed assets 9 3,406 4,155 Property, plant and equipment 9 5,497 6,260 Other assets 10 5,884 22,973 TOTAL ASSETS 21,728,016 12,442,516 LIABILITIES Deposits from banks 11 13,071,833 5,975,295 Due to customers 12 8,127,772 5,943,848 Derivative financial instruments with negative fair value 6 87, ,221 Current income tax liability 20 22,684 5,776 Other liabilities 13 45,927 40,641 Net assets attributable to CALYON GLOBAL BANKING S.A , ,735 TOTAL LIABILITIES 21,728,016 12,442,516 The notes on pages 10 to 45 are an integral part of these financial statements. 6 Income Statement for the year ended 31 December 2007 in thousands of SKK Note Interest income , ,515 Interest expense 16 (697,792) (389,901) Net interest income 114, ,614 Fee and commission income 17 79,597 39,439 Fee and commission expense 17 (5,164) (19,428) Net fee and commission 74,433 20,011 Gains less losses from sale of securities available for sale Net trading income and foreign exchange gains less losses 18 48,726 49,269 Other operating income 650 1,968 Provisions for loan impairment ,142 Operating income 238, ,349 Administrative and other operating expenses 19 (123,035) (144,027) Operating profit before tax 115,941 58,322 Income tax expense 20 (22,684) (14,452) Profit for the year attributable to CALYON GLOBAL BANKING S.A ,257 43,870 The notes on pages 10 to 45 are an integral part of these financial statements. 7 Statement of Changes in Equity for the year ended 31 December 2007 in thousands of SKK Share capital Statutory reserve fund Retained earnings Revaluation of securities available for sale Total Balance as at 1 January ,000 93,699 8,611 (51) 602,259 Net change in available for sale investment, net of tax Net profit for the period ,870-43,870 Total recognised income for , ,921 Transfers to statutory reserve - 1,580 (1,580) - - Dividends paid (Note 21) - - (14,107) - (14,107) Paid back to shareholder in process of conversion (Note 1) (500,000) (95,279) (32,059) - (627,338) Retained profit of Branch attributable to CALYON GLOBAL BANKING S.A. as a part of net assets - - (4,735) - (4,735) Balance as at 1 January Total recognised income for ,257-93,257 Retained profit of Branch payable to CALYON GLOBAL BANKING S.A. as a part of net assets - - (93,257) - (93,257) Balance as at 31 December The notes on pages 10 to 45 are an integral part of these financial statements. 8 Cash Flow Statement for the year ended 31 December 2007 in thousands of SKK Note Profit before tax 115,941 58,322 Interest income 16 (812,139) (495,515) Interest expense , ,901 Fee and commission income 17 (79,597) (39,439) Fee and commission expense 17 5,164 19,428 Depreciation of tangible and intangible assets 19 2,620 2,951 Interest income received 803, ,848 Interest expense paid (704,972) (353,180) Fee and commission income received 83,649 19,714 Fee and commission expense paid (5,164) (19,070) Loss from the sale of the business Profit from the sale of securities available for sale - (345) Other non cash items (revaluation of financial derivatives) 6 (47,030) (26,977) Profit after adjustments for non cash operations 59,270 4,812 Change in due from banks 7 (17,777) 836,096 Change in due from customers 8 (1,853,425) 1,270,823 Change in due to banks 11 7,096,538 (5,950,946) Change in due to customers 12 2,183,923 1,991,983 Change in other assets 10 13,614 5,487 Change in other liabilities 13 21,076 (26,011) Income tax paid (5,776) (10,860) Net cash flow from operating activities 7,438,173 (1,883,428) Purchase of fixed assets 9 (3,462) (1,122) Income from the sale of fixed assets Purchase of securities available for sale - (297,915) Income from the sale of securities available for sale - 700,000 Net cash flow from investing activities (3,167) 401,104 Dividends paid and profit distribution to founder (6,167) (14,107) Equity paid back to shareholder in process of conversion - (627,338) Net cash flow from financing activities (6,167) (641,445) Change in valuation of cash equivalents - 51 Net change in cash and cash equivalents 7,488,109 (2,118,906) Cash and cash equivalents at 1 January 25 6,609,635 8,728,541 Cash and cash equivalents at 31 December 25 14,097,744 6,609,635 The notes on pages 10 to 45 are an integral part of these financial statements. 9 1 Introduction These financial statements were prepared in accordance with International Financial Reporting Standards as adopted by the European Union ( IFRS ) for the year ended 31 December 2007 for CALYON S.A., pobočka zahraničnej banky (the Branch ). These financial statements are prepared on a going concern basis. Branch of the French bank CALYON GLOBAL BANKING S.A. was registered in the commercial register on 23 May 2006 under the name CALYON S.A., pobočka zahraničnej banky and it operates under the single European passport. On 1 June 2006, CALYON BANK SLOVAKIA, a.s. (the Bank ), which had been active in Slovakia since 1993, sold all of its assets and liabilities to the newly established branch. As a result, the bank's banking licence became invalid on that same day. On the next day, i.e. 2 June 2006, the Bank entered to liquidation. The Bank s immediate parent was CALYON GLOBAL BANKING S.A. The sale of Bank s assets and liabilities to the newly established branch was a business combination involving entities under common control. The Branch s financial statements are therefore prepared applying the predecessor values method and the financial statetements for the year ended 31 December 2007 include: - the balance sheet as at the end of the current accounting period (31 December 2007) of the Branch and a comparative balance sheet as of the end of the immediatey preceding accounting period (31 December 2006); - the income statement, the statement of changes in equity and the cash flow statement for the current accounting period of the Branch and comparative income statement, statement of changes in equity and cash flow statement for the immediately preceding accounting period of the Branch and five month and one day period of the Bank (Note 28). The Branch is domiciled in the Slovak Republic. Principal activity. The Branch s principal business activity is commercial banking operations within the Slovak Republic. Domicile and registered office. The Branch s registered address is: Namestie 1. maja Bratislava Slovak Republic Identification number (IČO): Date of incorporation: 23 May 2006 Head of the Branch: Charles-Henri de Vanssay Presentation currency. These financial statements are presented in thousands of Slovak Crowns ( thousands of SKK ). Head Office Address Ultimate Parent Share CALYON GLOBAL BANKING S.A. 9, Quai Pr0sident Paul Doumer, PARIS LA DEFENSE CEDEX Calyon Corporate and Investment Bank 100% The Company is included in the consolidated financial statements of CALYON GLOBAL BANKING S.A., which are the part of the consolidated financial statements of Calyon Corporate and Investment Bank, 9, Quai President Paul Doumer, PARIS LA DEFENSE CEDEX, France. These consolidated financial statements are available directly at the registered address of the companies stated above. 10 1 Introduction (continued) Number of staff and members of the Board of Directors, the Management and the Supervisory Board Average number of staff Number of members of the - Board of Directors (until 1 June 2006) - Management - Supervisory Board (until 1 June 2006) - Head of the Branch (from 23 May 2006) Impacts of changes in the banking environment on the Branch Volatility on the financial markets. During the last few months, the global financial markets have been adversely affected by a significant increase in default rates in the US subprime mortgage market. As a result, global investors have been forced to re-evaluate the risk positions they have been taking which have resulted in increased volatility and lower liquidity in the fixed income, equity, and derivative markets. The tighter credit markets may affect the ability of the Branch to refinance its borrowings, deposits from customers or other liabilities and may affect the value of its loan portfolio. A decline in the fair value of a financial asset below its amortised cost that results from an increase in the base interest rate is generally not evidence of impairment. Management is unable to estimate the effect on the Branch's financial position of any further possible deterioration in liquidity of the financial markets or the increased volatility. 3 Basis of preparation and significant accounting policies Basis of Preparation. The financial statements were prepared in accordance with International Financial Reporting Standards as adopted by the European Union ( IFRS ) under the historical cost convention, with the exception of the revaluation of available-for-sale financial assets and financial instruments categorised as at fair value through profit or loss. The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the periods presented. Standards, interpretations and amendments to published standards that are effective in 2007 and were applied by the Branch. Certain new standards and interpretations have been published that are mandatory for the Branch s accounting periods beginning on or after 1 January IFRS 7, Financial Instruments: Disclosures and complementary amendments to IAS 1, Presentation of Financial Statements, Capital Disclosures (effective from 1 January 2007; adopted by the Branch as from 1 January 2007). IFRS 7 requires new disclosures in order to improve information about financial instruments. It requires qualitative and quantitative disclosure about the extent to which the entity is exposed to risk relating to financial instruments; minimum disclosure of credit risk, liquidity risk and market risk (including the market sensitivity analysis). IFRS 7 supersedes IAS 30, Disclosures in Financial Statements of Banks and Similar Financial Institutions, and the disclosure requirements of IAS 32, Financial Instruments: Presentation. The standard applies to all entities which prepare its financial statements in accordance with International Financial Reporting Standards (IFRS). The amendment to IAS 1 requires disclosure of quantitative data about what the entity regards as capital and the entity's objectives, policies and processes for managing capital. Other new standards, amendments or interpretations which do not have significant impact on the Branch s financial statements: IFRIC 7, Applying the Restatement Approach under IAS 29 - Financial reporting in hyperinflationary economies, IFRIC 8, Scope of IFRS 2 Transactions involving the issuance of equity instruments, 11 3 Basis of preparation and significant accounting policies (continued) Other new standards, amendments or interpretations which do not have significant impact on the Branch s financial statements: IFRIC 9, Reassessment of embedded derivatives, IFRIC 10, Interim financial reporting and impairment, IFRS 4 Implementation Guidance Insurance contracts. Standards and interpretations that have been published on or after 1 January 2008 and which the Branch has not adopted The Branch has not early adopted the following other new standards, interpretations or amendments when preparing these financial statements: IAS 1, Presentation of Financial Statements (effective for annual periods beginning on or after 1 January 2009). The main change in IAS 1 is the replacement of the income statement by a statement of comprehensive income which will also include all non-owner changes in equity, such as the revaluation of available-for-sale financial assets. Alternatively, entities will be allowed to present two statements: a separate income statement and a statement of comprehensive income. Th
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