ANNUAL FINANCIAL REPORT 2013
TABLE OF CONTENTS 2 1. MANAGEMENT REPORT BY THE BOARD OF DIRECTORS...4 2. AUDIT REPORT BY INDEPENDENT CERTIFIED AUDITOR... 10 3. ANNUAL FINANCIAL STATEMENTS... 13 SEPARATE AND CONSOLIDATED BALANCE SHEET... 14 SEPARATE AND CONSOLIDATED COMPREHENSIVE INCOME STATEMENT... 15 SEPARATE AND CONSOLIDATED CHANGES IN EQUITY STATEMENT... 16 SEPARATE AND CONSOLIDATED CASH FLOW STATEMENT... 18 1. GENERAL INFORMATION... 19 2. MAIN ACCOUNTING PRINCIPLES... 21 3. LEGISLATIVE FRAMEWORK... 41 4. INSURANCE AND FINANCIAL RISK MANAGEMENT... 41 5. NET WRITTEN PREMIUMS AND RELATED INCOME... 57 6. COMMISSIONS PAID... 58 7. CLAIMS PAID TO POLICYHOLDERS (RETENTION... 58 8. CHANGES IN INSURANCE PROVISIONS... 59 9. NET INTEREST INCOME... 59 10. NET FEE AND COMMISSION INCOME... 59 11. PROFIT FROM INVESTMENT SALES... 60 12. PROFIT / (LOSSES) FROM VALUATION OF INVESTMENTS... 60 13. (LOSS) FROM PROPERTY VALUATION... 60 14. DIVIDEND INCOME... 60 15. OTHER OPERATING INCOME... 61 16. OPERATING EXPENSES... 61 17. INCOME TAX... 62 18. PROFIT PER SHARE... 63 19. TANGIBLE FIXED ASSETS... 63 20. AND INVESTMENT PROPERTY... 67 21. INTANGIBLE ASSETS... 69 22. HOLDING IN ASSOCIATED COMPANIES... 69 23. INVESTMENT SECURITIES HELD TO MATURITY... 70 24. INVESTMENT SECURITIES AVAILABLE FOR SALE... 70 25. FINANCIAL ASSETS AT FAIR VALUE THROUGH RESULTS... 70 26. INVESTMENTS ON BEHALF OF POLICY HOLDERS (UNIT LINKED)... 71 AGROTIKI INSURANCE S.A.
TABLE OF CONTENTS 27. RECEIVABLES FROM LOANS... 71 28. RECEIVABLES FROM PREMIUMS... 71 29. RECEIVABLES FROM REINSURERS... 72 30. COMMISIONS AND OTHER DEFERRED PRODUCTION COSTS... 72 31. OTHER ASSETS... 72 32. DEFERRED TAX... 73 33. CASH AND CASH EQUIVALENTS... 74 34. LIABILITIES FROM INVESTMENT INSURANCE CONTRACTS... 74 35. INSURANCE PROVISIONS... 75 36. RETIREMENT BENEFIT LIABILITIES... 77 37. LIABILITIES TO REINSURERS... 78 38. OTHER LIABILITIES... 78 39. OTHER PROVISIONS... 78 40. SHARE CAPITAL... 79 41. RESERVES... 79 42. SEGMENT REPORTING... 80 43. TRANSACTIONS WITH ASSOCIATED COMPANIES... 82 44. AUDITOR REMUNERATIONS (N.3756/2009... 83 45. MINIMUL CAPITAL REQUIREMENT AND SOLVENCY LEVEL... 83 46. GUARANTEE FUNDS... 84 47. ADJUSTEMENTS... 85 48. CONTIGENT LIABILITIES AND RELATED EVENTS... 85 49. EVENTS AFTER THE END OF THE REPORTING PERIOD... 85 4. DATA AND INFORMATION FOR THE PERIOD FROM 01/01 TO 31/12/2013... 86 AGROTIKI INSURANCE S.A. 3
1. MANAGEMENT REPORT BY THE BOARD OF DIRECTORS MANAGEMENT REPORT BY THE BOARD OF DIRECTORS OF AGROTIKI INSURANCE SA FOR THE FISCAL YEAR ENDED ON DECEMBER 31, 2013 4 Α. Financial Information Agrotiki Insurance SA (hereinafter the Company ) consolidates with the method of full consolidation the Company ATE Insurance Romania SA, registered in Bucharest, Romania. The consolidated pre-tax results for the fiscal year 2013 amounted to profit 31,5 million, compared to profit 31,9 million for the same period last year. Income tax for the 2013 fiscal year amounted to 5,9 million and deferred tax (asset) to 13,7 million, forming the final results after taxes, to profits 39,3 million compared to profits 26,5 million for the same period last year. During 2013 a valuation of Company's property (owner occupied and investment) was conducted by an independent property appraisal firm and resulted in an impairment of 7,5 million, with a corresponding charge of the results. On December 31, 2013, the Company s equity amounted to 69,9 million, compared to -150,6 million on December 31, 2012, and the Group s equity amounted to 68 million, compared to -152,2 million respectively. Specifically, following analysis, the key economic figures for the Company s results (separated) are as follows: The Company s Gross Written Premiums amounted to 170,1 million, compared to 179,7 million for the same period last year, thus decreasing by 5,3%. This is mainly due to the decrease in nonlife insurance policies. Specifically, from the Company s Total Gross Written Premiums the amount of 36,2 million correspond to life insurance policies (2012: 38,3 million) and 133,9 million correspond to non-life insurance policies (2012: 141,4 million). Claims paid for the 2013 fiscal year amounted to 95,4 million, compared to 100 million for the same period last year. Insurance operating result, amounted to 70,7 million, compared to 53,6 million for the same period last year. Company s investment revenue amounted to 5,8 million, compared to 7 million for the same period last year. Net Interest revenue for the 2013 fiscal year amounted to 9,2 million compared to 10,7 million for the same period last year. Company s operating expenses during the fiscal year 2013 amounted to 47,4 million, compared to 32,5 million for the same period last year, presenting an increase of 45,8% while for the Group operating expenses amounted to 48 million, compared to 33,1 million for the same period last year, presenting an increase of 45%, due to the cost of employees voluntary exit scheme following Piraeus Bank s scheme, amounting to 12,1 million. Staff cost amounted to 11,3 million compared to 11 million for the same period last year, presenting a minor increase of 2,6%. AGROTIKI INSURANCE S.A.
1. MANAGEMENT REPORT BY THE BOARD OF DIRECTORS Profits before taxes for the Company amounted to 31,7 million, compared to profits of 31,9 million for the same period last year. Profits after taxes amounted for the Company 39,5 million, compared to 26,5 million for the same period last year. Total taxes, amounting to 7,8 million, arose from income tax of 5,9 million and from benefit amount of 13,7 from deferred tax due to the change of the tax rate from 20% last year to 26% this year. Company's commitments in guarantee funds and solvency margin are mentioned in notes 45 and 46 of the Financial Statements. There are no other commitments or guarantees. MAIN INDICATORS 2013 2012 2013 2012 1 Operating expenses / Operating income 57,4% 50,5% 57,4% 50,5% 2 Receivables collection rate (including premiums on investment contracts) 30% 109 days 26% 95 days 30% 109 days 26% 95 days 3 Claims Paid/ Net written premiums 68,1% 66,7% 68,1% 66,7% Β. Significant events during the 2013 fiscal year and their impact on the annual financial statements The significant events that took place during the period January 1 to December 31, 2013, and up to the preparation of this report, and which had a positive or negative impact on the annual financial statements, are as follows: a) On March 8, 2013, the sole shareholder of the Company, Piraeus Bank, according to the decision of the Ordinary General Meeting of the Shareholders, in their meeting dated on 27.9.2012 for the increase of Capital Share, made a payment of 172,1 million. As a result, the Company s share capital amounted to 41.681.209,50 divided into 27.787.473 shares of nominal value of 1,50 each. b) On 19.7.2013 Piraeus Group announced Employees voluntary Exit Program. 124 employees of the Company participated in the program, 83 employees terminated by 31.12.2013 while the rest will gradually leave during 2014 until the completion of Company s sale. The total cost of the program amounted to 12,1 million and was accounted for in the 2013 fiscal year. c) The unaudited fiscal years for the Company are 2008, 2009 and 2010. The tax authorities have commenced auditing the fiscal years 2008 and 2009, but the audits have not been completed yet. The Management estimates that no further charges will arise for the Company, apart from the already formed provisions. As regards the tax audit for the 2011, 2012 and 2013 fiscal years, in accordance with Law 3842/2010 and the Ministerial Circular 1159/2011 in force for balance sheets ended after June 30, 2011, the tax audits for companies that must be audited by Certified Auditors will be conducted from now on by them. The tax audit for 2013 fiscal year will be concluded upon issuing the relevant Tax Compliance Report, while the corresponding report for the year 2012 has already been granted in 2013 and will AGROTIKI INSURANCE S.A. 5
ANNUAL FINANCIAL REPORT 2013 6 become permanently accepted by the tax authorities after 18 months from issue date. The corresponding report for the fiscal year 2011 has been finally accepted by the tax authorities as 18 months of the date of issue have elapsed. d) To Required Solvency Margin (R.S.M.) on December 31, 2013 amounts to 32,9 million. The Company meets adequately the Required Solvency Margin with the Available Solvency Margin (A.S.M.), amounted to 74,7 million as it has been calculated and sent to the Supervisory Authority, on the December 31, 2013. e) The Company during the year 2013 had its properties valued by a recognized valuation Company. This resulted in their impairment by 7,5 million consequently affecting results. C. Prospects Business developments for the 2014 After the of Share Capital increase that was carried out during 2013, the Company is considered as one of the most dynamic players in the market, with capital adequacy and ready to take the lead again in the coming period. The continuous improvement of financial performance, the promotion of the new dynamic identity in the insurance market and the emphasis on quality services to our customers and partners, will constitute the pillars of the Company s strategy for the current year based on the valuable experience of the past and emphasizing on the points of excellence such as: the position in the Greek insurance market, as one of the most important and leading companies, the expertise in all insurance sectors, the human-centric business philosophy, the continuous and fundamental values of the Company, the transparency, trustworthiness and reliability in our relations with customers and partners, the development and the continuous training of staff and partners, the devoted partners and customers. The strategy and philosophy of the Company s Management dictate prudent business management as well as steady and careful progress, while focusing in keeping only profitable portfolios. The goals for 2014 are as follows: To take measures in order to curb the decline of the portfolio with interventions in the commercial policy and pricing of the Non-Life business focusing on the Motor and Fire branches. Take steps to improve the functionality of the Company in relation to the Supervisory Authority s requirements as well as to the improvement of information - technology systems. In Life sector, after the discontinuance of health guaranteed renewable programs in 1.1.2014 and the replacement of them with new annually renewable programs, the Company is planning to launch two additional Health programs in order to meet the customer needs. Further control in the cost of claims and the introduction of incentives for the reduction of lapses and surrenders of the Life and Health insurance contracts. AGROTIKI INSURANCE S.A.
1. MANAGEMENT REPORT BY THE BOARD OF DIRECTORS The redesign of pension and investment programs with primary concern, the profitability of each new program. Moreover, following Piraeus Bank decision, the Company is undergoing a selling process. The final outcome would affect Company s plans. D. Comments on Equity The Equity of the Company as at 31.12.2013 meets the requirements set by Law 2190/1920 while at the same time the Company, fully covers the solvency rules (A.S.M.) and guarantee funds set by the supervisory authority. E. Main risks and uncertainties The Company has been active in the insurance market for over 30 years, offering services in all private insurance sectors. During the year 2014, it is expected to continue the difficult and demanding course for the insurance companies, since most of them are affected by the ongoing economic recession and the increased regulatory adjustments in their business and organizational operations, under the supervision and guidance of the regulatory authority. The Company s aim for the 2014 fiscal year is to sustain the reduction in income from insurance operations while maintaining operational profitability. The Company, though, by nature, is exposed to financial risks from fluctuations in the prices of investment products. Investment revenues are to a great extend affected by factors that cannot be influenced, as they are connected with the progress of the country s financial and the international capital market developments. The progress of the money markets during the 2014 fiscal year will have a significant impact on the Company s investment revenue, as well as its Equity, as a large part of the portfolio has been invested in new government bonds that came from the Greek government bond swap. The overall composition of the portfolio is presented in detail in the notes on the Financial Statements. The Company is also significantly exposed to other risks, such as liquidity, guarantees and insurance risk, which, however, are confronted effectively in the manner described in the explanatory notes of the annual financial statements for December 31, 2013. Consequently, the management of the aforementioned risks is not expected to have a significant impact on the 2014 fiscal year. AGROTIKI INSURANCE S.A. 7
ANNUAL FINANCIAL REPORT 2013 F. Transactions with associated companies The Company s transactions with associated companies during the current fiscal year are as follows: INTER TRANSACTIONS WITH ASSOCIATED COMPANIES (amounts in 000) DESCRIPTION RECEIVABLES LIABILITIES INCOME EXPENSES Α Piraeus Bank 269.058-16.882 (1.060) Β C Other companies of Piraeus Bank ATE Insurance Consolidated Companies 94 (4.761) 1.221 (6.465) ATE Insurance Consolidated Companies ΑΤΕ Insurance Romania S.A. 2.190-41 (10) TOTAL 271.342 (4.761) 18.144 (7.535) The Company s receivables from Piraeus Bank mainly refer to balances from bank Accounts and time term deposits, since the receivables from the other companies refer to uncollected receivables from insurance policies. The receivables from ATE Insurance Romania refer to the amount of share capital decrease as of December 2013 which was deposited in January 2014. The Company s Income mentioned in the table above derives from the sale of insurance policies to other intra-group companies, while the Expenses and Liabilities derive from support and promotional services offered by the intra-group companies. An exception to this is the income earned by ATE Insurance Romania SA, which derives from reinsurance premiums. All transactions between related parties and Piraeus Bank or other companies are conducted within the context of usual business activities and follow the conditions and terms of the market. Transactions with BoD members and management executives from the beginning of the accounting period are outlined below: (amounts in 000) DESCRIPTION Remuneration for executives and members of Management Receivables from executives and members of Management 01/01-31/12/2013 01/01-31/12/2012 01/01-31/12/2013 01/01-31/12/2012 889 947 757 793 130 156 130 156 The aforementioned remuneration for executives and members of the management pertains to salaries paid to Board members and high-ranking Company executives. The nature of the transactions with related parties does not differ compared to the previous fiscal year. 8 AGROTIKI INSURANCE S.A.
1. MANAGEMENT REPORT BY THE BOARD OF DIRECTORS G. Events after the end of the reporting period There are no events subsequent to the Company s current Financial Statements which could have a significant impact on the annual financial statements of the Company and the consolidated companies. NEA SMYRNI, 15.04.2014 FOR THE BOARD OF DIRECTORS THE MANAGING DIRECTOR IORDANIS CHADJIOSSIF AGROTIKI INSURANCE S.A. 9
AUDIT REPORT BY INDEPENDENT 2. CERTIFIED AUDITOR To the Shareholders of ATE Insurance Report on the Separate and Consolidated Financial Statements We have audited the accompanying separate and consolidated financial statements of ATE Insurance and its subsidiaries which comprise the separate and consolidated statement of financial position as of 31 December 2013 and the separate and consolidated statement of comprehensive income, statement of changes in equity and cash flow statement for the year then ended and a summary of significant accounting policies and other explanatory information. Management s Responsibility for the Separate and Consolidated Financial Statements Management is responsible for the preparation and fair presentation of these separate and consolidated financial statements in accordance with International Financial Reporting Standards, as adopted by the European Union, and for such internal control as management determines is necessary to enable the preparation of separate and consolidated financial statements that are free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express an opinion on these separate and consolidated 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 about whether the separate and consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the separate and consolidated financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the separate and consolidated 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 separate and consolidated 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 separate and consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. 10 AGROTIKI INSURANCE S.A.
2. AUDIT REPORT BY INDEPENDENT CERTIFIED AUDITOR Opinion In our opinion, the separate and consolidated financial statements present fairly, in all material respects, the financial position of the ATE Insurance and its subsidiaries as at December 31, 2013, and their financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards, as adopted by the European Union. Reference on Other Legal and Regulatory Matters We verified the conformity and consistency of the information given in the Board of Directors report with the accompanying separate and consolidated financial statements in accordance with the requirements of articles 43a, 108 and 37 of Codified Law 2190/1920. PricewaterhouseCoopers S.A. Athens, 16 April 2014 THE CERTIFIED AUDITOR - ACCOUNTANT 268 Kifissias Avenue 152 32 Halandri Dimitrios Sourmbis SOEL Reg. No SOEL Reg No. 16891 AGROTIKI INSURANCE S.A. 11
AGROTIKI INSURANCE S.A. SEPARATE AND CONSOLIDATED FINANCIAL STATEMENTS ON DECEMBER 31, 2013 In accordance with the International Financial Reporting Standards (IFRS) The attached Separate and Consolidated Financial Statements were approved by the Board of Directors of Agrotiki Insurance S.A. on April 15, 2014 and are available on the website http://www.ateinsurance.gr 173 SYGGROU AVENUE 171 21, NEA SMYRNI - GREECE Tel.: +30 210 9379100 REGISTRATION NUMBER OF INCORPORATED COMPANIES.:12821/05/Β/86/1
3. ANNUAL FINANCIAL STATEMENTS SEPARATE AND CONSOLIDATED BALANCE SHEET (amounts in 000) ASSETS NOTES 31/12/13 31/12/12* 31/12/13 31/12/12* Tangible fixed assets 19 27.777 35.324 27.745 35.286 Investement property 20 20.172 21.264 20.172 21.264 Intangible assets 21 936 889 892 866 Investments in associated companies 22 - - 6.084 8.272 Investment securities held to maturity 23 20.373 30.550 20.373 30.550 Investment securities available for sale 24 90.813 110.471 90.813 110.472 Financial assets in fair value through results 25 9.569 5.058 9.569 5.058 Investments on behalf of policyholders (Unit Linked) 26 14.515 15.454 14.515 15.454 Receivables from loans 27 5.738 6.478 5.738 6.478 Receivables from premiums 28 44.350 42.097 44.286 41.989 Receivables from reinsurers 29 38.371 41.071 38.369 41.069 Commissions and other deferred production costs 30 11.956 13.939 11.910 13.899 Other assets 31 7.876 9.877 10.013 9.838 Deferred tax receivables 32 64.538 50.828 64.555 50.843 Cash and cash equivalents 33 277.874 74.478 271.464 67.795 Total Assets 634.859 457.778 636.498 459.132 LIABILITIES Mathematical life insurance provisions 175.088 208.694 175.088 208.694 Insurance provisions for outstanding claims 239.663 257.409 239.553 257.323 Provisions on unearned premiums 56.199 60.482 56.199 60.482 Liabilities from investment insurance policies 34 28.557 28.980 28.557 28.980 Other insurance provisions 2.528 2.706 2.528 2.706 Total Insurance Provisions 35 502.035 558.271 501.925 558.185 Retirement benefit liabilities 36 7.376 4.090 7.376 4.090 Liabilities to reinsurers 37 13.982 13.162 13.965 13.071 Other liabilities 38 32.912 23.312 32.836 23.280 Other provisions 39 4.050 2.281 4.050 2.250 Current tax liabilities 6.436 8.871 6.411 8.837 Total Liabilities 64.755 51.716 64.637 51.528 EQUITY Share capital 40 41.681 40.978 41.681 40.978 Share premiums 40 171.967 614 171.967 614 Other reserves 41 12.261 3.398 13.864 4.987 Results carried forward (157.862) (197.232) (157.575) (197.160) Total 68.047 (152.242) 69.936 (150.581) Minority interest 22 35 - - Total Equity 68.069 (152.207) 69.936 (150.581) Total Liabilities and Equity 634.859 457.778 636.498 459.132 THE CHAIRMAN THE MANAGING DIRECTOR THE CHIEF FINANCIAL OFFICER THE CHIEF ACCOUNTANT THE ACTUARY SPYRIDON PAPASPYROU IORDANIS CHADJIOSSIF EVANGELOS ARCHONTOULIS ANTONIOS GOGONIS GEORGIOS KRAVVARITIS 14 *Adjusted amounts due to the amended IAS 19 "Employee Benefits" (see note 47) AGROTIKI INSURANCE S.A.
3. ANNUAL FINANCIAL STATEMENTS SEPARATE AND CONSOLIDATED COMPREHENSIVE INCOME STATEMENT (amounts in 000) NOTES 01/01/13 31/12/13 01/01/12 31/12/12* 01/01/13 31/12/13 01/01/12 31/12/12* Gross written premiums and related income 170.392 180.051 170.087 179.679 Less: Ceded premiums (30.255) (29.878) (30.045) (29.682) Net written premiums and related income 5 140.137 150.173 140.042 149.997 Commissions paid 6 (22.634) (20.370) (22.674) (20.423) Claims paid to policyholders (Retention) 7 (95.517) (100.265) (95.372) (100.037) Change of insurance provisions 8 48.750 24.255 48.677 24.075 Insurance Operation Result 70.737 53.793 70.674 53.612 Net interest income 9 9.475 11.224 9.169 10.725 Net fee and commission income 10 206 187 206 187 Profit from investment sales 11 2.531 2.822 2.531 2.822 Profit from investment valuation 12 1.325 732 1.325 732 (Loss) from property valuation 13 (7.461) (7.565) (7.461) (7.565) Dividend income 14 64 115 64 115 Total Investment Income 6.141 7.515 5.835 7.016 Other operating income 15 2.677 3.774 2.639 3.769 Administrative expenses 16 (48.033) (33.149) (47.415) (32.530) Profit before taxes 31.522 31.933 31.732 31.867 Income tax 17 7.809 (5.397) 7.811 (5.394) Profit after taxes 39.331 26.536 39.543 26.473 Parent company shareholders 39.332 26.535 39.543 26.473 Minority interest (1) 1 - - Other total income Amounts tranferred to results Profit from valuation of securities available for sale and securities held to maturity 8.877 6.531 8.877 6.531 Foreign exchange differences (14) (217) - - 8.863 6.314 8.877 6.531 Amounts not trasferred to results Actuarial Net Profit net from taxes 40 275 40 275 40 275 40 275 Other comprehensive income after taxes 8.903 6.589 8.917 6.806 Total comprehensive income after taxes 48.234 33.125 48.460 33.279 Parent company shareholders 48.235 33.124 48.460 33.279 Minority interest (1) 1 Profit after taxes per share Basic (in ) 18 1,4154 0,9714 1,4231 0,9691 The Notes mentioned on pages 19 through to 85 form an integral of the Financial Statements. * Adjusted amounts due to the amended IAS 19 "Employee Benefits" (see note 47) AGROTIKI INSURANCE S.A. 15
ANNUAL FINANCIAL REPORT 2013 SEPARATE AND CONSOLIDATED CHANGES IN EQUITY STATEMENT (amounts in 000) SHARE CAPITAL SHARE PREMIUMS RESERVES ACCUMULATED PROFIT/ (LOSS) MINORITY INTEREST TOTAL EQUITY Balance as of January 1, 2012 40.978 614 8.141 (234.961) 36 (185.192) Effect of amended IAS 19 - - - (140) - (140) Balance as of January 1, 2012 (Restated) 40.978 614 8.141 (235.101) 36 (185.332) Profit for period 1/1/2012-31/12/2012 - - - 26.536-26.536 Profit from the valuation / sale of available for sale - - 6.531 - - 6.531 securities Actuarial Profits 275 275 Other transfers to reserves - - (11.057) 11.057 - - Changes in minority interest - - - - (1) (1) Foreign exchange differences - - (217) - - (217) Balance as of December 31, 2012 40.978 614 3.398 (197.232) 35 (152.207) Balance as of January 1, 2013 40.978 614 3.397 (197.232) 35 (152.207) Profit for period 1/1/2013-31/12/2013 - - - 39.330-39.330 Profit from the valuation / sale of available for sale - - 8.877 - - 8.877 securities Share Capital Increase 703 171.353 - - - 172.056 Changes in minority interest - - - - (13) (13) Actuarial Profits - - 40-40 Foreign exchange differences - - (14) - - (14) Balance as of December 31, 2013 41.681 171.967 12.261 (157.862) 22 68.069 The Notes mentioned on pages 19 through to 85 form an integral of the Financial Statements. 16 AGROTIKI INSURANCE S.A.
3. ANNUAL FINANCIAL STATEMENTS SHARE CAPITAL SHARE PREMIUMS RESERVES ACCUMULATED PROFIT (LOSS) TOTAL EQUITY Balance as of January 1, 2012 40.978 614 9.514 (234.824) (183.720) Effect of amended IAS 19 - - - (140) (140) Balance as of January 2012 (Restated) 40.978 614 9.514 (234.964) (183.860) Profit for period 1/1/2012 31/12/2012 - - - 26.473 26.473 Profit from the valuation / sale of available for sale - - 6.531-6.531 securities Actuarial Profits 275 275 Other transfers to reserves - - (11.057) 11.057 - Balance as of December 31, 2012 40.978 614 4.987 (197.159) (150.581) Balance as of January 1, 2013 40.978 614 4.987 (197.159) (150.581) Profit for period 1/1/2013 31/12/2013 - - - 39.543 39.543 Profit from the valuation / sale of available for sale and - - 8.877-8.877 held to maturity securities Share Capital Increase 703 171.353 - - 172.056 Actuarial Profits - - 40 40 Balance as of December 31, 2013 41.681 171.967 13.864 (157.576) 69.936 The Notes mentioned on pages 19 through to 85 form an integral of the Financial Statements. AGROTIKI INSURANCE S.A. 17
ANNUAL FINANCIAL REPORT 2013 SEPARATE AND CONSOLIDATED CASH FLOW STATEMENT (amounts in 000) NOTES 2013 2012 2013 2012 Profit before taxes 31.522 31.933 31.732 31.867 Plus / minus adjustments for: Depreciations 1.313 1.500 1.561 1.462 Results from investment activity 3.717 660 3.717 660 Interest and related income 9 (9.568) (8.672) (9.836) (7.659) Interest and related expenses 9 243 799 243 285 27.227 26.220 27.417 26.615 Plus / minus adjustments for changes in operating capital accounts or accounts concerning operating activities: (Increase) / Decrease of receivables 5.759 (8.456) 5.759 (8.456) Increase / (Decrease) of liabilities (minus liabilities to banks) 15.422 (452) 15.422 165 Increase / (Decrease) of insurance provisions (55.381) (43.110) (55.321) (43.134) (Decrease) / Increase of Unit Linked - (1.619) - (1.619) Sales / (Purchase) of investment securities (shares, securities) 37.779 5.452 37.779 5.452 Interest revenue 9.836 8.672 9.836 7.659 Dividends received 14 64 115 64 115 Minus: Interest and related expenses paid (8.927) (3.832) (8.927) (3.829) Total cash inflow / outflow from operating activities 31.778 (17.010) 32.029 (17.032) Investment Activities Purchase of tangible fixed assets (442) 532 (415) 490 Total cash inflow / outflow from investment activities (442) 532 (415) 490 Financial Activities Collection of loans and advances 132 132 Collection of share capital increase 172.057-172.057 - Net cash inflow / outflow from financial activities 172.057 132 172.057 132 Net increase / (decrease) in cash and cash equivalents for the period 203.410 (16.347) 203.670 (16.411) Foreign exchange differences on cash and cash equivalents (14) (217) - - Cash and cash equivalents at the beginning of period 74.478 91.042 67.795 84.206 Cash and cash equivalents at the end of period 277.874 74.478 271.464 67.795 The Notes mentioned on pages 19 through to 85 form an integral of the Financial Statements. 18 AGROTIKI INSURANCE S.A.
3. ANNUAL FINANCIAL STATEMENTS 1. GENERAL INFORMATION AGROTIKI INSURANCE S.A. (the Company ) was established in 1980 as AGROTIKI GREEK GENERAL INSURANCE S.A., trading as AGROTIKI INSURANCE. The change in corporate name from AGROTIKI GREEK GENERAL INSURANCE S.A. TO AGROTIKI INSURANCE S.A. was decided on December 20, 2002, by the Extraordinary General Shareholder Meeting, which approved the merger by absorption of the company AGROTIKI LIFE & HEALTH INSURANCE S.A. by AGROTIKI GREEK GENERAL INSURANCE S.A. The company resulting from the merger by absorption of AGROTIKI LIFE & HEALTH INSURANCE S.A. by AGROTIKI GENERAL INSURANCE S.A. has its registered offices in Nea Smyrni, at 173 Syggrou Avenue, Tel. 210-9379100, and is registered in the Companies Register with the number 12821/05/B/86/1. The Company s initial operating period has been set at 100 years. Since August 5, 2005, the Company has been using the name ATE Insurance as a logo. On December 31, 2013, the composition of the Board of Directors was as follows: Chairman: S. Papaspyrou Vice Chairman Α : T. Lyssimachou Vice Chairman Β : K. Filippou CEO: I. Chadjiossif Members: P. Alexakis, I. Rokas, S. Koliatsas On March 24, 2014, the BoD was convened, and in replacement of the resigned member and B Vice- Chairman Mr. Konstantinos Filippou, elected Mr. Stefanos Psarrakis as a new member. (Minutes: Board 558/24.03.2014). The term of the BoD ends in principle on September 27, 2015. The aim of the Company, pursuant to Article 4 of its articles of association, is: a) To engage, on its behalf or on behalf of third parties, in life and non-life insurance activities (insurance and reinsurance) in Greece and abroad, in all risks cited and identified in Article 13 of Law 400/1970. b) To represent any Greek or foreign insurance or reinsurance company. c) To establish other insurance or reinsurance companies in Greece or abroad, regardless of legal form. d) To establish an Insurance Studies & Training Institution. e) To engage in activities related to the above, in Greece or abroad. f) To establish companies in Greece or abroad dealing with financial services or other companies, regardless of activity or legal form, and participate in similar companies even if their scope is not insurance activities, where this is permitted by current or future legislation. g) To engage in any other related activity or not, provided it is not prohibited by the legislation in force. All the aforementioned activities may be carried out in partnership with third parties in Greece or abroad. The Company is active in all contemporary insurance branches, providing innovative and specialized policies, which provide comprehensive insurance coverage both at individual and corporate level. AGROTIKI INSURANCE S.A. 19
ANNUAL FINANCIAL REPORT 2013 The Separate and Consolidated Financial Statement for the period ended on December 31, 2013 is composed of the company s and subsidiaries separate financial statements, as mentioned in Note 2.1. The Company s Financial Statements are available on the internet, at www.ateinsurance.gr This Financial Statement was approved by the Board of Directors for publication on April 15, 2014. SHAREHOLDERS The main Company shareholders on December 31, 2013 and December 31 2012 are listed below: 2013 SHAREHOLDERS NO OF SHARES HOLDING % PIRAEUS BANK S.A. 27.787.473 100,00% Total 27.787.473 100,00% 2012 SHAREHOLDERS NO OF SHARES HOLDING % PIRAEUS BANK S.A. 27.318.347 100,00% Total 27.318.347 100,00% According to the BoD s decision No 547/28.03.2014 concerning the increase of Share Capital, were issued 469.126 new shares with a nominal value of 1,5 each. Regular Auditors The auditing of the Company s Separate and Consolidated Financial Statements for the 2013 fiscal year was conducted by: PricewaterhouseCoopers Auditing Company S.A. 268 Kifisias Avenue, 15232 Chalandri. Tax Audits The Company has been audited by the tax authorities up to the 2007 fiscal year. Consequently, the open (unaudited) fiscal years pertain to the years 2008, 2009 and 2010. The regular tax audits for the 2008 and 2009 fiscal years are underway, but have not been completed yet. The Company will be audited by the auditing company PwC for the 2013 fiscal year and a relevant mention is made in Note 17. Open Tax Audits for subsidiaries The open tax audits for subsidiary ATE INSURANCE ROMANIA S.A. pertain to the fiscal years 2007 to 2013. 20 AGROTIKI INSURANCE S.A.
3. ANNUAL FINANCIAL STATEMENTS Other At the end of the current period, the number of employees was 191 for the Company (2012: 260) and 207 for the Group (2012: 276). The Company s financial statements are included in the consolidated financial statements of the PIRAEUS BANK S.A. Group, which is registered in Greece and has a direct holding of 100,00% in AGROTIKI INSURANCE S.A. 2. MAIN ACCOUNTING PRINCIPLES 2.1 Presentation of Financial Statements The Company s financial statements have been prepared in accordance with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) as well as the Interpretations issued by the IFRS Interpretations Committee (IFRIC), as adopted by the European Union and in force on December 31, 2013. The preparation of financial statements in accordance with the IFRS requires calculating estimates and adopting concessions, which may affect the accounting balances of assets and liabilities, the required disclosures for contingent assets and liabilities on the date of preparation of the financial statements, as well as the amounts of income and expenses identified during the fiscal year. The use of available disclosure and the application of subjective judgment form an integral part of the estimates procedure. The actual future results may vary from the aforementioned estimates, while the deviations may have a significant impact on the financial statements. These estimates and concessions are mentioned in Note 2.28. The Consolidated Annual Financial Statements include the financial statements of the Company (AGROTIKI INSURANCE S.A.) and the company ATE INSURANCE ROMANIA S.A. (full consolidation method). The consolidation of the aforementioned companies is represented with the indication "Group", while the indication "Company" refers to the Parent Company "AGROTIKI INSURANCE S.A.". The Financial Statements have been compiled based on the historical cost principle, with the exception of securities available for sale, financial assets at fair value through results, investments on behalf of policyholders, investments in property and owner-occupied properties valued at fair value. The amounts in the Financial Statements are provided in thousands of Euros, unless stated otherwise. 2.2 Transactions in foreign currency ΤThe Group and Parent Company use the Euro ( ) as their transaction currency. Subsidiary ATE INSURANCE ROMANIA S.A. uses the Romanian leu (RON). All transactions in foreign currency are converted into the transaction currency, according to the exchange rates in effect on the date of each transaction. Foreign exchange earnings and losses resulting from the settlement of such transactions and from AGROTIKI INSURANCE S.A. 21
ANNUAL FINANCIAL REPORT 2013 22 the conversion of monetary assets and liabilities denominated in foreign currencies are identified in the Comprehensive Income Statement. Exchange rate differences arising from the conversion of debt securities and other monetary financial assets revaluated at fair value are included in the Comprehensive Income Statement. Exchange rate differences from the conversion of non-monetary financial assets are a component of the change on their fair value. Depending on the classification of a non-monetary financial asset, exchange rate differences are either identified in the Comprehensive Income Statement or in Shareholders Equity, in the event that the non monetary financial assets have been classified as available for sale securities. When preparing the financial statements, the assets and liabilities of foreign entities are converted into euros at the exchange rates in effect at the balance sheet date, while income and expenses are converted at average rates for the period. Differences arising from the use of exchange rates on the closing date of the Financial Position and average exchange rates of the period and from revaluating a foreign entity s opening equity at closing rate are recorded directly in the Foreign currency exchange rate differences reserve in Shareholders Equity. 2.3 Consolidated accounts Subsidiaries Subsidiaries are the companies in which the Parent Company directly or indirectly has an interest of more than one half of the voting rights or otherwise has power to exercise control over their financial and operating policies. The subsidiary ATE INSURANCE ROMANIA S.A. has been consolidated with the full consolidation method. All intercompany transactions, balances and unrealized earnings and losses on transactions between Group companies are eliminated on consolidation. Wherever necessary, accounting policies for subsidiaries have been modified, in order to ensure consistency with the policies adopted by the Parent Company. 2.4 Investments in Financial Assets The Group classifies its investments in financial assets as Investments at Fair Value through Results, Held to Maturity or Available for sale. Investments on behalf of policyholders are essentially handled in the same manner as the Investments at market value through results. The decision for the classification of the investments is made upon acquisition. Initially, all investments are classified according to the transaction date and are valued at acquisition cost, which is the fair value of the amount paid, including investment-related sales expenses, provided that the investments are available for sale or held to maturity. The investment expenses at fair value through results are not capitalized, but are recorded directly in the income statement. Investments at Fair Value through Results: these investments are acquired aiming at short-term profit and include securities such as shares, bonds and mutual funds. After their initial recognition, the investments AGROTIKI INSURANCE S.A.
3. ANNUAL FINANCIAL STATEMENTS classified in this category are valued at fair value. The earnings or losses arising from this valuation are recorded in the Income Statement. Investments Held to Maturity: these are investments with a fixed maturity date and fixed or determinable payments, which the Group has the positive intention and ability to hold to maturity. Investments held to maturity are measured at amortized cost. Investments Available for sale: these are investments which might be held to maturity or be sold in order to cover liquidation needs or achieve earnings from any foreign currency or interest rate fluctuations. After initial recognition, the investments classified as available for sale are recorded at fair value. The earnings or losses arising from the valuation of the investments available for sale are recorded in a separate equity account until any sale, receivables or provision of impairment, and then are transferred to the income statement. Derivative Financial Products: Derivative products are used for hedging and are valued at market value. The Company uses derivative products listed in the Athens Derivatives Exchange and in foreign financial markets. The only derivative that the Company owns, dated on December 31, 2013 resulted from the exchange of Greek bonds (PSI) and is not used for hedging (See note 25). The Group does not follow hedge accounting (Ηedging Αccounting). Investments on behalf of Policyholders: they belong in the Investments at fair value through results category and pertain to investments both in share or bond assets or even cash available, valued at market value, just like the corresponding liabilities to policyholders. The income and expenses arising from the valuation of these assets are reconciled with those of the liabilities, so as to charge the results in the net result concerning the Group s commission. Fair Value Calculation Investments traded in organized financial markets are valued at fair value, which is determined according to the current market capitalization value on the closing date of the financial statements. Investments in unlisted securities are valued according to acquisition cost minus any amortization. All regular purchase and sale transactions of investments in financial assets are recorded on the trade date, which corresponds to the date on which the Group has agreed to acquire or sell the financial asset. The term regular purchase and sale transactions of financial assets requires that the financial asset is handed over within a fixed period, instituted by legislature or established by the usual market practices. 2.5 Tangible assets Tangible assets are used by the Group itself, either for operating activities or administrative purposes. Tangible assets include land, buildings, lease hold improvements, furniture and other equipment, as well as transportation vehicles. As of December 31, 2008, the Group changed its accounting practice and records all tangible assets at fair value minus subsequent depreciation. Under the new established policy, the Group will re-evaluate its land and buildings at fair value every three years, unless there is serious indication of impairment in the meantime. Every increase in market value arising from the valuation of tangible assets is transferred to the Group s equity, crediting the valuation reserve. Every decrease in market value, which AGROTIKI INSURANCE S.A. 23
ANNUAL FINANCIAL REPORT 2013 offsets the previous increases for the same asset, is transferred to the Group s equity, debiting the valuation reserve. Any other decrease in market value is recorded directly as a loss in the Income Statement. The Company has assessed the current value on December 31, 2013, as mentioned in note 19. Depreciations: Land is not depreciated. The rest of the tangible assets are depreciated on a straight line basis over their useful life, which is re-examined annually. The useful life of tangible assets per category is as follows: Buildings Other assets: Furniture and other equipment Transportation vehicles 35 50 years 5 8 years 7 9 years Improvements to third party property are exempted and are depreciated within the minimum time period between the useful life improvement and the lease duration of the leased asset. All other assets are recorded at historical acquisition cost less any depreciation or impairment. Subsequent costs enhance the value of the fixed asset or recognize it as a separate asset, only when it is likely to result in future economic benefits and their cost may be measured reliably. Repair and maintenance costs are charged to the income statement on the date they were incurred. 2.6 Investments in property Investments in property include land and buildings owned by the Company for leasing or for acquiring capital gains and are classified as investment property. Investment property is initially recorded at acquisition value, which also includes acquisition costs. Starting from the year that ended on December 31, 2008, and following the change of the relevant policy, investment property is valued annually at fair value. After the initial registration of investment property, it is valued annually at fair value, as determined by independent valuers. The changes are recorded in the results. The assets are recognized until their sale or earlier, on the date the Company ceases to have future financial benefits from the asset. Any change of use, such as private use of the asset, causes the transfer of said asset to the category of tangible assets. The earnings or losses arising are recorded in the income statement. 2.7 Intangible assets Intangible assets mainly include software programs. The software acquired separately is capitalized at acquisition value. Subsequently it is measured at acquisition value less accumulated depreciation and impairment. Computer software is depreciated over 5 years. The Company s management examines the value of intangible assets annually to determine any impairment or whether their estimated useful life has changed. When the book value of an intangible asset exceeds its recoverable amount, an appropriate provision for impairment is made with an equal charge on the results. 24 AGROTIKI INSURANCE S.A.
3. ANNUAL FINANCIAL STATEMENTS 2.8 Cash and cash equivalents Cash and cash equivalents consist of the Company s monetary assets with less than 3 months maturity from the acquisition date. 2.9 Receivables Receivables are recorded in the Balance Sheet, net of provisions for doubtful debts. The collectability of receivables is assessed when the company considers it important. The assessment is based on the economic situation, the debtor s repayment history, the probability of support by reputable credit-worthy guarantors and the realizable value of collateral. The receivables which are not considered important as well as those which are, but without any impairment indications are classified into groups with similar credit risk characteristics. The Company examines the possible impairment provision for every category. In assessing each category, the amount of monitored debts or doubtful debts, the time period the receivables are in arrears, their collectability once considered doubtful, the prevailing market conditions and past experience with regard to the amount of expected losses are considered. When a receivable is described as doubtful, its book value is reduced to its estimated recoverable value, which is defined as the market value of expected future cash inflows, including estimated amounts recoverable from guarantees and tangible collateral, discounted at the real market interest rate. Subsequent changes to the recoverable amounts and the time period within which they are expected to be collected are compared with previous estimates and, in the event of a difference in the established provision, an equivalent charge is recorded in the income statement. Receivables and other loans, when they can no longer be recovered, are deleted by debiting the account of established provisions for doubtful debts. The Company accepts postdated checks from customers and associates for processing receivables from premiums. Nevertheless, the Company s standing policy is to reduce receivables from premiums and pay commissions only after the amount on said checks has been collected. 2.10 Leases The Company as a lessee: Operating leases The Company only participates in operating leases, where the lessor retains a significant portion of the risks and benefits deriving from the leased assets. The costs of operating leases are recorded in the income statement, using the standard method throughout the lease term. AGROTIKI INSURANCE S.A. 25
ANNUAL FINANCIAL REPORT 2013 The Company as a lessor: Operating leases The Company participates in operating leases only when the leased assets are recorded in the Company s financial statements and are depreciated based on their useful life. Revenues from leases are recorded in the income statement using the accrual method. 2.11 Offsetting Receivables Liabilities Offsetting financial assets with liabilities and recording the net amount in the Financial Statements is permitted only when there is a legal right to offset the registered amounts and there is intention of either settling the net amount arising from offsetting or simultaneously settling the total amount of both the financial asset and the liability. 2.12 Interest income and expenses For all financial instruments, Interest income and expenses are recorded in the income statement using the effective interest rate method. The effective interest rate method calculates the non-depreciated value of the asset or liability and distributes the interest income or expenses throughout the reporting period. Effective interest rate is the rate which accurately discounts the estimated future payments or receivables throughout the expected duration of the financial instrument. Once a financial asset or group of similar financial assets are undervalued as a result of impairment, interest income is recognized by applying the interest rate used to discount future cash flows for the purpose of measuring the impairment loss. 2.13 Commissions and related income Commissions and related income are recorded in the income statement in the fiscal year during which the relevant services where provided. Commissions and related income deriving from third party transactions are recognized in the results at completion of the transaction. Fees for portfolio management and consulting services are recorded in the results according to the services provision contract, using the accrual method. 26 2.14 Income tax Income tax is calculated over the fiscal year profit, pursuant to the tax legislation in force and is recognized as an expense in the income statement. Tax losses carried forward to future fiscal years for offsetting are recognized as assets when it seems possible that there will be a realization of future taxable profits, which will be sufficient to offset the accumulated tax losses. Deferred income tax is calculated using the Balance Sheet method, based on temporary differences arising between the book value of assets and liabilities in the Financial Statements and tax value attributed to them in accordance with the tax legislation in force. AGROTIKI INSURANCE S.A.