Annual report of Nordea Bank Polska S.A. 2005

Transcription

1 Annual report of Nordea Bank Polska S.A. 2005

2 Contents: Opinion of the Independent Auditor... 3 Report of the Independent Auditor... 6 Letter from the President of the Management Board Separate Annual Financial Statements Report of the Management Board on the Activities... 72

3 Opinion of the Independent Auditor Financial Year ended 31 December 2005

4 To the Shareholders Meeting of Nordea Bank Polska S.A. We have audited the accompanying unconsolidated financial statements of Nordea Bank Polska S.A. seated in Gdynia, Kielecka 2 St., consisting of the balance sheet as at 31 December 2005, with total assets of and total liabilities and equity of PLN 5,919,316 thousand, the profit and loss account for the year then ended with a net profit of PLN 30,727 thousand, the statement of changes in equity for the year then ended with an increase in equity of PLN 11,807 thousand, the cash flow statement for the year then ended with an increase in cash amounting to PLN 522,053 thousand, and supplementary notes, comprising of significant accounting policies and other explanatory notes. The Management of the Bank is responsible for the accuracy of the accounting records and the preparation and true and fair presentation of the unconsolidated financial statements in accordance with International Financial Reporting Standards as adopted by the European Union, and in respect to matters that are not regulated by the above standards, in accordance with the requirements of the Accounting Act dated 29 September 1994 (Official Journal from 2002, No. 76, item 694 with amendments) and respective bylaws and regulations, the requirements for issuers of securities admitted or sought to be admitted to trading on an official stock-exchange listing market. Our responsibility is to express an opinion on these unconsolidated financial statements, and whether the unconsolidated financial statements are derived from properly maintained accounting records and supporting documentation, based on our audit. We conducted our audit in accordance with section 7 of the Accounting Act dated 29 September 1994, the professional standards established by the Polish National Council of Certified Auditors and International Standards on Auditing. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the unconsolidated financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management of the Bank, as well as evaluating the overall financial statements presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the accompanying unconsolidated financial statements of Nordea Bank Polska S.A. present fairly, in all material respects, the financial position of the Bank as at 31 December 2005, the results of its operations and its cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union, and in respect to matters that are not regulated by the above standards, in accordance with the requirements of the Accounting Act dated 29 September 1994 and respective bylaws and regulations, the requirements for issuers of securities admitted or sought to be admitted to trading on an official stock-exchange listing market and the provisions of the Bank s Statute that apply to the Bank s unconsolidated financial statements and have been prepared from accounting records, that in all material respects have been properly maintained, together with supporting documentation. Nordea Annual report 2005 Opinion of the Independent Auditor

5 As required under the Polish Accounting Act dated 29 September 1994 we also report that the Report on the Bank s activities includes, in all material respects, the information required by Art. 49 of the Accounting Act and by the Decree of the Ministry of Finance dated 19 October 2005 on current and periodic information provided by issuers of securities (Official Journal from 2005, No 209, item 1744) and the information is consistent with the unconsolidated financial statements. Signed on the Polish original... Certified Auditor No. 9941/7390 Bożena Graczyk Signed on the Polish original... For KPMG Audyt Sp. z o.o. Chłodna 51 St.; Warsaw Certified Auditor No. 9941/7390 Bożena Graczyk Member of the Management Board Warsaw, 23 March 2006 Signed on the Polish original... For KPMG Audyt Sp. z o.o. Chłodna 51 St.; Warsaw Richard Cysarz Member of the Management Board Nordea Annual report 2005 Opinion of the Independent Auditor 5

6 Report of the Independent Auditor Financial Year ended 31 December 2005 Contents: 1 General 1.1 General information about the Bank 1.2 Auditor information 1.3 Legal status 1.4 Prior period financial statements 1.5 Audit scope and responsibilities 2 Financial analysis of the Bank 2.1 Summary of the financial statements 2.2 Selected financial ratios 2.3 Interpretation of selected financial ratios 3 Detailed report 3.1 Accounting records and data protection 3.2 Verification of assets and liabilities 3.3 Compliance with banking regulations 3.4 Audit materiality 3.5 Supplementary notes, comprising of significant accounting policies and other explanatory notes 3.6 Report on the Bank s activities 3.7 Information on the opinion of the independent auditor

7 1 General 1.1 General information about the Bank Bank name Nordea Bank Polska S.A Registered office Kielecka 2 St Gdynia Registration in the National Court Register Seat of the court: Regional Court in Gdańsk, XVI Commercial Department Date: 26 June 2001 Registration number: KRS Tax Office and Provincial Statistical Office registration NIP: REGON: Auditor information KPMG Audyt Sp. z o. o. Chłodna 51 St Warsaw KPMG Audyt Sp. z o.o. is registered as a company authorised to audit financial statements (number 458). 1.3 Legal status Share capital The Bank was established for an indefinite period under the terms of its Statute dated 9 November The share capital of the Bank amounted to PLN 168,089,165 as at 31 December 2005 divided into 33,617,833 ordinary shares with a nominal value of PLN 5 each. As at 31 December 2005, the shareholder structure was as follows: NAME OF THE SHAREHOLDER Nomber of shares Nomber of voting rights (w %) Nominal value of shares Percentage of share capital Nordea Bank AB 33,183, % 166, % Others 434, % 1, % Related parties The Bank is a member of the Nordea Bank Polska S.A. group. Management of the Bank The Management Board is responsible for management of the Bank. 33,617, % 168, % Nordea Annual report 2005 Report of the Independent Auditor

8 At 31 December 2005, the Management Board of the Bank was comprised of the following members: Włodzimierz Kiciński President of the Board Asbjörn Høyheim Member of the Board Jacek Kalisz Member of the Board Kari Ojala Member of the Board Anna Rudnicka Member of the Board Sławomir Żygowski Member of the Board Mr Kazimierz Głowacki was a Member of the Management Board up to 20 October Scope of activities The business activities listed in the Bank s Statute include the following: receiving and maintaining current and term deposits, including accepting and placing cash deposits in domestic and foreign banks, maintaining other bank accounts, granting loans, granting and confirming guarantees and letters of credit, issuing banking securities, performing cash settlements, performing FX operations, agency services for cash transfers by residents abroad and settlements with non residents in Poland, performing particular bank activities on behalf of other banks in the area determinated by the Bank s Statue, performing cheque and bill of exchange operations, issuing payment cards and processing card operations, performing term financial operations, trading in receivables, safekeeping of goods and securities as well as providing access to safe deposit-boxes, performing operations related to the issue of securities. 1.4 Prior period financial statements The unconsolidated financial statements for the period ended 31 December 2004 were audited by KPMG Audyt Sp. z o.o. and received an unqualified opinion. The unconsolidated financial statements were approved at the General Meeting on 12 May 2005 where it was resolved to allocate the profit for the prior financial year of PLN 3,967 thousand to Reserve Capital. The closing balances as at 31 December 2004 have been properly recorded prior to IFRS adjustments as the opening balances of the audited year. Due to the changes in the applied accounting policies, resulting from the adoption of the accounting policies that are in compliance with International Financial Reporting Standards as adopted by the European Union, the related corresponding figures for 31 December 2004 have been restated by the Bank together with the opening balances of the audited year. Furthermore, in accordance with IFRS 1, the Bank has elected not to restate the corresponding figures in order to comply with IAS 32, IAS 39 and IFRS 4. The adjustments resulting from changes in accounting policies, in order to comply with IAS 32, IAS 39 and IFRS 4, have been made to the opening balance of equity as at 1 January The unconsolidated financial statements were submitted to the Registry Court on 17 May 2005 and were published in Monitor Polski B No.1714 on 2 November Audit scope and responsibilities This report of the independent auditor was prepared for the General Meeting of Nordea Bank Polska S.A. seated in Gdańsk, Kielecka 2 St., and relates to the unconsolidated financial statements comprising: the balance sheet as at 31 December 2005 with total assets of and total liabilities and equity of PLN 5,919,316 thousand, the profit and loss account for the year then ended with a net profit of PLN 30,727 thousand, the statement of changes in equity for the year then ended with an increase in equity of PLN 11,807 thousand, the cash flow statement for the year then ended with an increase in cash amounting to PLN 522,053 thousand and supplementary notes, comprising of significant accounting policies and other explanatory notes. Nordea Annual report 2005 Report of the Independent Auditor

9 The audited Bank prepares its unconsolidated financial statements in accordance with International Financial Reporting Standards as adopted by the European Union on the basis of the decision of General Meeting of Shareholders dated 12 May The unconsolidated financial statements have been audited on the basis of the decision of the Supervisory Board dated 20 October 2005 on the appointment of the auditor. The unconsolidated financial statements have been audited in accordance with the contract dated 23 November We conducted the audit in accordance with section 7 of the Accounting Act dated 29 September 1994 (Official Journal from 2002, no 76, item 694 with amendments), the professional standards established by the Polish National Council of Certified Auditors and International Standards on Auditing. We have conducted the interim audit in the Bank s head office and branches during the period from 10 October 2005 to 13 January We have conducted the final audit of the unconsolidated financial statements in the Bank s head office during the period from 16 January 2006 to 10 February The Management of the Bank is responsible for the accuracy of the accounting records and the preparation and true and fair presentation of the unconsolidated financial statements in accordance with International Financial Reporting Standards as adopted by the European Union, and in respect to matters that are not regulated by the above standards, in accordance with the requirements of the Accounting Act dated 29 September 1994 and respective bylaws and regulations, the requirements for issuers of securities admitted or sought to be admitted to trading on an official stock-exchange listing market. Our responsibility is to express an opinion, with a supplementing report, on these unconsolidated financial statements, and whether the unconsolidated financial statements are derived from properly maintained accounting records and supporting documentation, based on our audit. On 23 March 2006 the Management Board of the Bank submitted a statement as to the true and fair presentation of the unconsolidated financial statements presented for audit which confirmed that there were no undisclosed matters which could significantly influence the information presented in the unconsolidated financial statements for the audited year. All our requests for additional documents and information necessary for expressing our opinion and preparing the report have been fulfilled. KPMG Audyt Sp. z o.o., the members of its Management Board and Supervisory Board and other persons involved in the audit of unconsolidated financial statements of the Bank fulfil independence requirements. The scope of the work planned and performed has not been limited in any way. The method and scope of our audit is detailed in working papers prepared by us and retained in the offices of KPMG Audyt Sp. z o.o. 2 Financial analysis of the Bank 2.1 Summary of the financial statements Nordea Annual report 2005 Report of the Independent Auditor

10 2.1.1 Balance sheet ASSETS PLN 000 % of balance amount PLN 000 % of balance amount Cash and balances with the central bank % % Treasury bills and other bills eligible of rediscounting with the central bank % % Loans and advances to banks % % Loans and advances to customers % % Debt securities % 0.00% Skares % % Derivatives % % Investments in associates % % Intangible assets % % (therein goodwill) % % Property and equipment % % Deferred taxassets % % Accruals % % Other assets % % Total assets % % EQUITY AND LIABILITIES Liabilities PLN 000 % of balance amount PLN 000 % of balance amount Deposits from other Banks % % Deposits from Customers % % Liabilities from issue of debt securities % % Derivatives % % Other liabilities % % Accruals % % Deferred tax liabilities % % Provisions % % Total liabilities % % Equity Shareholders equity % % Issued capital % % Share premium % % Reserves % % Retained earnings % 0.00% Net result current year % % Total equity % % Total liabilities and equity % % Capital adequacy ratio 11.9% 11.6% Nordea Annual report 2005 Report of the Independent Auditor 10

11 2.1.2 Profit and loss account Operating income PLN PLN 000 Interest and similar income Interest expense and similar charges Net interest income Fee and commission income Fee and commission expense Net fee and commission income Result on fair value evaluation Change of shares value in related parties evaluated according to capital valuation method Dividend income Other operating income Operating income Operating expenses General administrative expenses personal expenses other administrative expenses Other operating expenses Operating expenses Impairement of loans and advances Gains on disposal of fixed assets Profit/(loss) before tax Income tax expense (current year) Profit/(loss) for the oeriod Number of shares Basic earnins per share (PLN) Selected financial ratios PLN PLN 000 Total assets Gross profit Net profit Shareholders equity* Return on equity 6.3% 1.2% Capital adequacy ratio 11.9% 11.6% Receivables to total assets 84.0% 82.6% Income generating assats to total assets 95.0% 92,0% Interest braring liabilities to total liabilities 89.8% 86.6% *excluding current year net profit Nordea Annual report 2005 Report of the Independent Auditor 11

12 2.3 Interpretation of selected financial ratios The total assets as at 31 December 2005 were higher by 15.7% in comparison to the total assets as at 31 December 2004 and amounted to PLN 5,919,316 thousand. The largest increase in assets included loans and advances to customers which increased by PLN 356,575 thousand (an increase of 9.7%). In liabilities and equity, the largest increase included deposits from customers of PLN 734,369 thousand (an increase of 24.5%). The net profit for the period from 1 January 2005 to 31 December 2005 amounted to PLN 30,727 thousand representing an increase on the corresponding year of PLN 24,979 thousand (434.6%). Total equity as at 31 December 2005 excluding current year net profit amounted to PLN 486,364 thousand which is 2.6% lower than the equity as at 31 December The change in equity was a result of the adjustments resulting from changes in accounting policies, due to the adoption of IFRS. 3 Detailed report 3.1 Accounting records and data protection The Bank maintains current documentation describing the applied accounting principles, adopted by the Management Board and described in the supplementary notes and other explanatory notes to the unconsolidated financial statements, to the extent required by International Financial Reporting Standards, as adopted by the European Union. The unconsolidated financial statements were prepared from accounting records that, in all material respects, have been maintained in accordance with the requirements of section 2 Maintenance of the accounting records and section 8 Data protection of the Accounting Act dated 29 September 1994, together with supporting documentation. 3.2 Verification of assets and liabilities The Bank performed a verification of assets and liabilities in accordance with the requirements and time frame specified in Art. 26 of the Accounting Act and in compliance with the Decree of the Ministry of Finance dated 10 December 2001 regarding special accounting principles for banks (Official Journal No. 149 from 2001, item 1673 with amendments). Differences have been recorded in the period covered by the unconsolidated financial statements. 3.3 Compliance with banking regulations Based on our audit we have not identified any significant deviations in the bank s compliance with the banking regulatory norms pertaining among others to loan concentration, obligatory reserve and capital adequacy ratio. 3.4 Audit materiality We have planned and applied an appropriate level of precision in conducting our audit procedures in order to obtain reasonable assurance about whether the unconsolidated financial statements taken as a whole are free of material misstatements. 3.5 Supplementary notes, comprising of significant accounting policies and other explanatory notes All information included in the supplementary notes, comprising of significant accounting policies and other explanatory notes is presented accurately and completely. The significant accounting policies and other explanatory notes should be read in conjunction with the unconsolidated financial statements taken as a whole. Nordea Annual report 2005 Report of the Independent Auditor 12

13 3.6 Report on the Bank s activities The Report on the Bank s activities includes, in all material respects, information required by Article 49 of the Accounting Act dated 29 September 1994 and by the Decree of the Ministry of Finance dated 19 October 2005 on current and periodic information provided by issuers of securities (Official Journal from 2005, No 209, item 1744) and the information is consistent with the unconsolidated financial statements. 3.7 Information on the opinion of the independent auditor Based on our audit of the unconsolidated financial statements as at and for the year ended 31 December 2005, we have issued an unqualified opinion. Signed on the Polish original... Certified Auditor No. 9941/7390 Bożena Graczyk Signed on the Polish original... For KPMG Audyt Sp. z o.o. Chłodna 51 St.; Warsaw Certified Auditor No. 9941/7390 Bożena Graczyk Member of the Management Board Warsaw, 23 March 2006 Signed on the Polish original... For KPMG Audyt Sp. z o.o. Chłodna 51 St.; Warsaw Richard Cysarz Member of the Management Board Nordea Annual report 2005 Report of the Independent Auditor 13

14 Letter from the President of the Management Board of Nordea Bank Polska S.A.

15 Dear Sir/Madam, In 2005 we became fully convinced of the benefits resulting from the merger between our Bank and LG Petro Bank S.A. carried out in By implementing the adopted development strategy Nordea Bank Polska increased its net profit over five times compared with the figures for The financial stability achieved in 2004 gave a stimulus to a faster growth in Undoubtedly the biggest success in 2005, apart from the net profit, was a considerable (as much as 16%) growth in the balance sheet total, which increased to more than PLN 5.9bn since The good financial result obtained in 2005 was also due to good cost control. With such control the rapid development of the Bank did not entail an increase in operating expenses, which were even 0.4% below the level in We also managed to reduce the staff costs by 3.4% and depreciation of fixed assets by 6%. In spite of the quick growth in the lending business, administrative expenses increased only insignificantly. Launching new financial products contributed to the growth in the balance sheet total. While in 2004 we became known on the market with modern bank assurance products, developed and sold in cooperation with Nordea Polska TUnŻ, in 2005 we launched entirely new products on the Polish market, which made our offer considerably more attractive. First of all, we have been one of the first banks in Poland to initiate the sale of participation units in foreign investment funds managed by the Nordea Group. The offer of three out of 32 Nordea 1, SICAV investment funds registered in Luxembourg launched in the spring of 2005 met with keen interest of the market and was welcomed by customers. The next stage in the enhancement of our savings products offer was the launch of a new product combining a traditional deposit with investment funds, called Nordea Hit. The creative solution and attractive investment conditions were quickly recognised by our customers. The new products have been an excellent supplement to the Nordea Investor policy launched in 2004 and modified in 2005, which has given investors access to 24 domestic and 3 foreign investment funds as well as individual pension insurance, on beneficial terms. The launch of new banking products in 2005 enabled us to achieve a great improvement in the quality of the credit portfolio. A considerable increase in the amount of extended mortgage loans is noteworthy. In spite of the pressure from the competitors we tripled our sales of mortgage loans compared to 2004 with our constantly improved products such as Nordea Habitat. In the first half of 2005 we conducted an intensive promotional campaign of Visa Classic and Visa Gold cards, while in the second half we launched MasterCard Aspirations Standard and Gold credit cards. In consequence of their good prices the products quickly gained recognition both among independent experts and customers of the Bank. By the end of 2005 we had issued over 4,000 credit cards. Moreover, Nordea Bank Polska became involved in the structural transformations accompanying Poland s accession to the European Union. We entered into a EUR 120m agreement with the European Investment Bank, which enables us to provide support by funding infrastructure developments and investment projects implemented by local governments as well as SMEs. We have joined the elite of banks involved in financing the transformation of Polish agriculture and the SME sector. We have targeted new customers through a network of 42 Bank branches located in major business centres of 11 voivodships. The branch network was optimised in previous years. The modern and safe data processing platform provides us with the expansion of our range of banking products and services, addressed to private, corporate and institutional customers. Nordea Annual report 2005 Letter from the President of the Management Board 15

16 The dynamic growth of the Bank in 2005 would not have been possible without improving the quality of our customer service. Independent experts are of the opinion that Nordea Bank Polska is the leader in the area of on-line transactions security, functionality and usability of IT solutions as well as the quality of the Call Centre operation. This high opinion has resulted in the interest of private and corporate customers in our e-banking services. It has been further supported by the launch of our own shopping mall at www. nordea.pl, which enables our customers to do their shopping on-line with secure payment solutions and obtain added value with discounts. In 2005, following the extension of the Call Centre, we increased our sales capacity through telemarketing. The quality of services offered by Nordea Bank was also appreciated by the US-based bank JP Morgan Chase, which honoured us with its Elite Quality Recognition Award in consideration of the level of errorfree transactions. As a result of the improvement in e-banking services we expanded our base of e-banking customers, both in retail and corporate sectors. In 2005 we worked hard on the development of our customer base. We also managed to reinforce our position in the Nordic Corporate segment. Compared with 2004 Nordea Bank Polska s share of banking business done with Nordic companies grew from 30 percent to 40 percent. The results of 2004 and the dynamic development of the Bank in 2005 were recognised by the independent consulting firm A.T. Kearney, which ranked our Bank among 100 most valuable companies in Poland in a ranking published by the Polish edition of Forbes magazine. As in previous years we will continue our efforts to improve the quality of assets and increase our share in the target market segments. Positive changes in Poland s economy and the growth rate expected in the coming years provide grounds for strengthening Nordea Bank Polska s position in the financial market. This will be facilitated by the wide range of modern financial products offered by our Bank and the ability to build partnership-based relations between the Bank and its long-standing and new customers. We intend to spend the year of 2006 reinforcing the Bank s market position, especially in e-banking and corporate banking. We are certain that we will manage to achieve this goal by developing our branch network, tailored to suit the needs and expectations of the current and prospective customers, which we plan to do in 2006, as well as with the constantly improved quality of service, modern financial services and innovative solutions, such as a secure electronic signature to be included in our offer in Q Our goals are consistent with the Bank s mission: Making it possible. I am convinced that we will succeed with the ambition of Nordea Bank Polska employees and the cooperation with our customers and shareholders. Yours faithfully Włodzimierz Kiciński President of Nordea Bank Polska SA Nordea Annual report 2005 Letter from the President of the Management Board 16

17 Separate Annual Financial Statements of Nordea Bank Polska S.A. Contents: Separate Financial Statements of Nordea Bank Polska S.A. Table of contents: 1. Profit and loss account 2. Balance sheet 3. Statement of changes in equity 4. Cash flow statement 5. Explanatory notes on the financial statements 6. General information about the issuer 7. Significant accounting policies 8. Segment reporting Profit and loss account 9. Interest income and expenses 10. Net fee and commission income 11. Gains on items at fair value through profit and loss 12. Other income 13. Administrative expenses 14. Depreciation and amortisation 15. Impairment of loans and advances 16. Income tax expense 17. Earnings per share Balance sheet 18. Cash in hand and balances with central bank 19. Loans and advances to banks 20. Loans and advances to customers 21. Securities 22. Derivative financial instruments 23. Investments in subsidiaries Intangible assets Property, plant and equipment Deferred tax assets and reserves Prepayments Other assets Liabilities to banks Liabilities to customers Liabilities due to debt securities in issue Other liabilities Accruals Provisions Equity Hedge accounting Fair value Contingent liabilities Assets pledged as collateral Operating lease Separate cash flow statement supplementary information Related entities Events after the balance-sheet date Important accounting estimates and judgements Capital adequacy ratio Risk management First time preparation of the financial statements according to the international financial reporting standards (IFRS)... 65