Pēd. atjaunots: 29.05.2024 10:23 (GMT+3)
EESTI ÜHISPANK
ANNOUNCEMENT
15.03.99
Statement of Changes in Shareholders' Funds
(Millions of EEK)
1998 1997
Subscribed Share Capital
At beginning of year 302.7 235.0
Bonus issue .0 11.8
GDR issue 111.6 .0
Bank mergers 97.3 50.0
Share issues 150.0 5.9
End of year 661.5 302.7
Share Premium Account
At beginning of year 73.0 28.1
Premium arising on shares issued 1,267.7 56.6
Bonus share issue .0 -11.8
End of year 1,340.6 73.0
Retained Earnings
At beginning of year .0 .0
Net profit/loss -383.4 211.2
Transferred to general banking reserve .0 -211.2
End of year -383.4 .0
Reserves and translation differences
At beginning of year 298.5 87.3
Transferred to general banking reserve .0 211.2
Translation differences -8.5 .0
End of year 290.0 298.5
Total Shareholders' Funds 1,908.8 674.1
Statements of Cash Flows
(Millions of EEK)
Group: Bank:
1998 1997 1998 1997
I Cash Flows from Operating Activities
Interest receipts 1,377.1 645.9 1,108.8 582.8
Interest payments -727.5 -290.3 -637.6 -268.6
Dividend receipts 5.1 1.0 5.1 1.0
Other income received 47.4 299.6 8.4 274.0
Administrative expenses paid -450.3 -282.9 -354.8 -267.5
Other operating expenses -61.4 -11.6 -36.4 -10.4
Profit / loss arising
from minority interest 12.7 -.6 - -
Income taxes paid -2.0 -7.3 .0 .0
Written off loans and
bonds less recoveries -251.0 -21.3 -164.1 -19.1
Exchange rate adjustments -8.5 .0 -8.5 .0
Other non-cash movements 6.3 .0 .0 .0
Net cash flows from
operating activities changes
in operating assets and liabilities -52.1 332.6 -79.1 292.2
Net (increase)/decrease in operating assets:
Time deposits in credit institutions 77.0 70.5 9.2 70.4
Loans and advances to customers -1,717.6 -4,239.0 -1,083.7 -2,665.3
Investment securities portfolio 166.6 -341.1 -309.4 -1,239.7
Other assets 112.4 -239.3 79.9 -184.0
Net increase/(decrease) in operating liabilities:
Amounts owed to credit institutions 254.6 203.5 -123.8 259.3
Amounts owed to customers 327.5 1,913.8 704.6 1,686.2
Issued bonds -429.8 2,487.8 -368.2 2,039.4
Other liabilities 125.2 -38.4 43.4 -22.9
Net Cash Flows from
Operating Activities -1,136.3 150.3 -1,127.2 235.7
II Cash Flows from Investing Activities
Merger of banks,
net of cash acquired 35) 419.5 218.8 -146.9 217.9
Investments in associates -34.0 -7.1 -30.0 -6.7
Disposal of associates net of cash 8.8 21.2 8.8 21.2
Investments in subsidiaries - - -143.4 -50.3
Tangible fixed assets -555.9 -119.5 -188.3 -153.6
Disposal of tangible fixed assets 67.7 48.5 28.1 48.5
Net Cash Flows from
Investing Activities -94.0 161.9 -471.6 77.0
III Cash Flows from Financing Activities
Minority interest -16.7 .8 - -
Issue of subordinated debt 42.5 305.0 42.5 305.0
Share issues 358.9 55.9 358.9 55.9
Share premium arising 1,267.7 56.6 1,267.7 56.6
Net Cash Flows from
Financing Activities 1,652.3 418.3 1,669.0 417.5
Net Change in Cash and Cash
Equivalents (I+II+III) 422.0 730.5 70.3 730.2
Cash and Cash Equivalents at
the Beginning of the Year 34) 1,708.4 977.9 1,708.1 977.9
Cash and Cash Equivalents at
the End of the Year 2,130.4 1,708.4 1,778.3 1,708.1
ACCOUNTING PRINCIPLES
The financial statements of Eesti Ühispank conform with International
Accounting Standards and generally accepted accounting principles.
Compared to 1997 financial statements the fixed assets depreciation
rates have been unified for the merged bank.
Consolidation
The consolidated financial statements of Eesti Ühispank group include
the audited financial statements of the subsidiaries as of 31st
December, 1998. These financial statements have been prepared, in
material aspects, in accordance with the accounting principles of the
parent company. For consolidation purposes, internationally approved
principles have been applied, which require a line-by-line
combination of a parent company's and subsidiaries' balance sheets
and income statements, while intra-group balances and transactions
have been eliminated. Minority interests in the subsidiaries' equity
are presented separately from the liabilities and shareholders'
equity of the group. In the consolidated balance sheet, the equity
capital of a parent company is equal to the equity capital of the
group. The income statement items of subsidiaries incorporated in
foreign countries have been restated using 1998 average exchange
rates and the balance sheet items have been translated at the
year-end exchange rates. Only the statements of the enterprises
where Eesti Ühispank exercises significant control have been
consolidated. The control is treated as significant when the bank
owns at least 50% of the voting right in the company. The statements
of the group of Eesti Ühispank include the financial statements of AS
Saules Banka (participation 79.49%), Ühisliisingu AS (participation
96.67%), Tallinna Panga Liisingu AS (participation 100%), ZAO Russian
Union Leasing (participation 75%), AS Ühispanga Fondijuht
(participation 100%), AS Ühisinvesteeringud (participation 100%),
Tallinna Pank Asset Management (participation 100%), AS Tallinna Pank
Securities Latvia (participation 100%), AS FMI Baltijos Vertybiniai
Popieriai (participation 98.77%), Baltic Invest (participation 100%),
PT Investeeringute AS (participation 100%), AS Bangalo
(participation 100%), AS Navarra (participation 100%), AS TPF Orior
(participation 100%), AS PF Koda (participation 100%), AS LF Finants
(participation 100%), OÜ Efficio (participation 100%), AS Ühispanga
Elukindlustus (100%). The subsidiaries of AS Saules Banka,
Ühisliisingu AS, Tallinna Pank Liisingu AS, Tallinna Pank Asset
Management and AS PF Koda have been prior consolidated into the
parent company's statements. Long-term participations in associates
(participation 20% - 50%) are recognised under the equity method
where the initial investments are increased to recognise the group's
share of profits and reduced by losses of or distributions of
profits received from the associate attributable to the group. The
financial statements of the group include investments in AS
Sularahakeskus (participation 25%), Pankade Kaardikeskuse AS
(participation 39,6%), Leks Insurance (participation 42%). Long-term
participations in Leks Insurance is in the financial statements
carried at a realisation cost.
Securities
Securities comprise all securities possessed by the bank.
Investments into securities are classified either as dealing or
investment portfolio securities, depending on the aim of holding.
Investment equity securities include shares acquired for a strategic
or long-term holding. In the group's statements investment
portfolio equity securities are carried at a lower, either at a
realisation or historical cost, their disposal is based on the FIFO
formula.
Dealing portfolio securities include shares acquired for trading
purposes. Such shares are recognised at market values, based on the
stock exchange closing price on a respective day. The shares not
quoted on the stock exchange are recognised at OTC market values.
In the bank's balance sheet those investments will be re-valued upon
decrease of the company's bookkeeping value (according to the
financial information of the company).
Bonds include fixed interest bonds and other securities. Investment
portolio bonds are recognised in the balance sheet at cost. For
valuation purposes, interest arising as the difference between cost
and nominal value is allocated over the period up to maturity of
the bond. The result is recognised in the income statement as
interest income. In case the bonds are disposed, the FIFO formula is
applied to specify the yield.
Dealing portfolio bonds are recognised in the balance sheet at a
market value, i.e., at the stock exchange closing price on the
balance sheet date. In the financial statement, the result is
recognised as financial income.
Loans
Loans are stated in the balance sheet until their maturity, despite
that part of them may be stated under costs as bad and doubtful
debts. Bad and doubtful debts are recognised in the assets side under
the same name with the minus.
Loans have been recognised in the balance sheet at their actual
amount due from customers that does nor include accrued interest
and penalties. In case of overdraft, the actual utilisation of the
overdraft limit by the borrower is stated. Credit limits not used are
disclosed as off-balance sheet liabilities.
Valuation of loans is made having prudently regarded several risks,
including increased interest rates, that might have a future
influence on the companies' financial position. Expected collection
of the principal or interest payments and their size in the
subsequent periods have been considered. To cover possible loan
losses, loan provision has been set up reflecting bad and doubtful
debts, which are carried under costs and recognised in the income
statement line as "loan provisions". Valuation of collection of
loans is based on the borrower's financial position, value of loan
security and its realisation options, on meeting the deadlines as
stated in the loan agreement, the borrower's trustworthiness and
other factors. Accruing of interest on loans not received over two
months is terminated.
Presentation of balances in foreign currencies
In the balance sheet, assets and liabilities denominated in foreign
currencies are regonised in the Estonian kroons according to the rate
of the Bank of Estonia as of 30 September, 1998. Foreign currency
which is not quoted by the Bank of Estonia, is translated under the
balance sheet date DEM quotation of the central bank of the
respective country. Results of foreign currency purchases and sales
are recognised at net in the income statement.
Goodwill
Goodwill represents the difference between the cost of an acquisition
and the fair value of the net assets of the acquired entity. Goodwill
is amortised on a straight-line-basis, considering its expected
useful life not exceeding 10 years.
Tangible fixed assets
Land, buildings and other long-term assets are recognised in the
balance sheet as fixed assets. Fixed assets are stated at net book
value whereas accumulated depreciation is deducted from historical
cost. Annual depreciation charge and write-down of fixed assets is
recognised in the income statement under "value adjustments of
tangible and intangible fixed assets and depreciation". Depreciation
is based on fixed assets' useful lives, which serve as the basis for
depreciation rates. Buildings are depreciated over 20 - 50 years,
other fixed assets over 2.5 - 10 years (exceptionally over 20 years).
Land is not depreciated. Reconstruction expenditures are capitalised
and carried at cost proportionally over five years. Assets with a
purchase cost up to EEK 7,000 are expensed upon their purchase.
Reserves and general banking reserve
According to the effective law, to cover losses, credit institutions
may form tax exempt banking reserve up to 5% of the loan portfolio.
Allocations to this reserve are deductible from the taxed income. In
the event of decrease in the loan portfolio, excess portion of the
reserve is added to the taxable income. Eesti Ühispank's profit of
the years 1994, 1995, 1996 and 1997 has been allocated to the general
banking reserve (except EEK 6.2 million from the 1995 year profit)
and the reserve amounts to EEK 298.5 million.
Taxation
The tax charge on the profit/loss for the year includes current and
deferred taxes. Current taxes are computed on the basis of the
taxation-on-account scheme using the pre-tax profit/loss for the year
adjusted for non-taxable income and expenditure. Deferred taxes are
provided for at 26% in Estonian companies and 25% in Latvian
companies on all timing differences between the result reported in
the annual accounts and the result reported in the tax return.
Derivatives
Forward, swap and option transactions are stated as off-balance
sheet assets and liabilities. Forward, swap and option transactions
are re-valued according to the effective rate of the Bank of Estonia.
Equity options are stated at market values. Unrealised profit from
the revaluation of off-balance sheet assets and liabilities are
recognised in the income statement under "net dealing profits".
Interest income from swap transactions is stated in the income
statement under "interest income" and "interest expenses". Option
premiums and unrealised profit on revaluation of off-balance sheet
assets and liabilities are recognised in the income statement under
dealing profits.
Changes in financial statements
The part of leasing portfolio classified in the prior financial
statements as operating leases is hereby reclassified as financial
leases in accordance with IAS. As a result, the opening accounts of
the group and Eesti Ühispank for 1998 have been re-adjusted. This
has brought about a change in the balance of loans and tangible fixed
assets for the bank and the group.
In comparison with the income statement of Eesti Ühispank and the
group in the previous year, the value of some income and expense
items in the income statement of 1997 has been changed. Its purpose
is to ensure that income and expense are properly recorded according
to the income statement structure of 1998. According to these
changes, profit earned from associate companies has been excluded
from the income from securities in 1997. Also, the operating expense
no longer reflects a loss from the investment equity portfolio. In
the group income statement for 1997, interest expense and interest
income now exclude the turnover of goods purchased and sold by
Ühisliising and its net income is shown under other income.
These adjustments have not affected the final result of Eesti
Ühispank and the group for 1997.
NOTES TO THE FINANCIAL STATEMENTS
(Millions of EEK)
1.Interest income Group: Bank:
1998 1997 1998 1997
Loans 1,109.7 548.8 763.6 471.6
Deposits 45.1 18.8 31.9 18.8
Fixed income securities 96.4 45.3 188.1 65.8
Future contracts 115.0 4.7 115.0 4.7
Purchased securities
with resell commitment 10.3 18.5 9.5 18.5
Other .6 9.8 .6 3.3
1,377.1 645.9 1,108.8 582.8
2.Interest expenses Group: Bank:
1998 1997 1998 1997
Interest to other banks 86.8 50.0 60.8 50.0
Demand deposits 87.4 82.0 82.8 82.0
Time and other deposits 283.4 84.4 276.6 80.3
Issued bonds 197.9 62.7 145.3 45.1
Subordinated debts 26.4 9.2 26.4 9.2
Future contracts 45.6 2.0 45.7 2.0
727.5 290.3 637.6 268.6
3.Fees & commissions received Group: Bank:
1998 1997 1998 1997
Settlement fees 52.9 30.7 42.3 30.8
Securities market services 48.7 45.2 43.1 45.2
Credit instrument
contracts organising* 90.8 61.1 75.4 45.7
Credit and payment cards 47.4 23.8 38.7 23.8
Other 31.3 26.8 30.5 25.8
271.2 187.6 229.9 171.3
*Credit instrument contracts include loan contracts,
letters of credit, and guarantee contracts signed with customers.
4.Fees & commissions paid Group: Bank:
1998 1997 1998 1997
Settlement fees 11.5 12.0 10.1 12.0
Securities market 9.1 2.6 7.7 2.6
Credit and payment cards 28.3 25.3 26.8 25.3
Contract organising fees 52.4 36.7 48.3 36.7
Other 15.3 6.5 12.2 7.0
116.7 83.1 105.1 83.7
5.Personnel expenses Group: Bank:
1998 1997 1998 1997
Salaries 175.8 108.3 136.9 102.2
Pension costs(only in Saules Bank) .2 .0 .0 .0
Payroll taxes 56.1 35.8 45.2 33.7
232.1 144.1 182.1 135.9
Avg number of employees
during the year 1588 1025 1297 969
Number of employees (period end) 1947 1228 1466 1127
6.Other administrative expenses Group: Bank:
1998 1997 1998 1997
Staff training and travelling 11.2 14.8 9.1 11.0
Rent and utilities 33.9 21.0 29.9 21.1
Security 10.7 6.7 9.7 6.7
Transport 16.3 9.7 15.6 11.9
Office, postal, communication expe 55.7 33.3 43.3 33.2
Advertising & marketing 28.9 18.3 25.0 18.1
Other 61.5 34.9 40.2 29.5
218.2 138.7 172.8 131.6
7.Value adjustments of advances
and off-balance sheet items Group: Bank:
1998 1997 1998 1997
Loans & advances to customers 14) -344.7 -95.3 -230.2 -74.5
specific provision -169.5 -77.8 -46.7 -56.9
general provision -185.6 -23.6 -185.6 -23.6
recoveries from loans
previously written off 10.3 6.0 2.0 6.0
Provisions of securities -105.5 .0 -97.3 .0
Loans and advances to banks -6.3 .0
Off-balance sheet instruments -5.9 .0
Other -12.1 .0 -4.9 .0
-474.5 -95.3 -332.5 -74.5
8.Income tax Group:
1998 1997
Direct income tax .9 .0
Deferred tax 1.1 7.3
2.0 7.3
The tax on the operating profit differs from the theoretical
amount that would arise using the basic tax rate of the home
home country of the parent as follows:
Bank:
1997
Profit before tax 211.2
Profit not assesssable for tax* -211.2
The income tax rate effective in Estonia is 26%,
25% in Latvia, 29% in Lithuania.
*Estonian Law on Income Tax allows credit institutions to
transfer from net profit tax exeptional amounts up to 5% of
of total loan portfolio to the general banking reserve.
9.Earnings per Share
1998 1997
Profit/loss attributable to shareholders -383.4 211.2
Average number of shares in issue during the year 44290700 27684500
Earnings per share (basic) -8.7 7.6
EEK EEK
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