KB prezent. angl - Komerční banka

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Consolidated Financial Statements
under IFRS
During the course of the assignment of the loans and settlement of the payment, insignificant departures from the original scope of
the transaction were made pursuant to the provisions of the agreement.
The Bank reflected the impact of the sale of the portfolio of non-performing loans in its financial statements for the year ended
31 December 2002 according to the economic substance of the transaction. The sold loans were retained within the Bank’s assets
and were remeasured on the basis of the selling prices negotiated with GE. In the first half of 2003, the sold loans were removed
from the Bank’s balance sheet on the date of their assignment to GE. The aggregate impact of the assignment of loans to GE on the
profit and loss statement during 2003 was immaterial.
State guarantee covering losses on the Bank’s risk assets
On 29 December 2000, pursuant to the Public Support No. Act 59/2000 Coll., the Bank entered into an agreement with Konsolidační
banka Praha, s.p.ú. under which Konsolidační banka guaranteed a defined portfolio of classified on and off balance sheet exposures.
The guarantee has applied to the net book values as of 31 December 2000. The period for determining the level of the pay-out under
the guarantee matured as of 31 December 2003 and payments of realised losses will be settled in 2004.
Under the agreement, the Bank provided regular quarterly reports to Česká konsolidační agentura (formerly Konsolidační banka) on
the administration of the assets and the expected losses on the guaranteed pool of exposures.
The aggregate declared losses incurred on the guaranteed portfolio amounted to CZK 5,370 million at the end of 2003, of which 5 percent
represents the Bank’s participation and is provisioned, and Česká konsolidační agentura is to be required to pay CZK 5,102 million.
In accordance with the agreement, Česká konsolidační agentura provided the Bank with an up-front payment of CZK 5,862 million at
the end of 2003 to be used to settle the amount arising from the state guarantee in 2004.
The European Commission has assessed the state guarantee pursuant to EU rules on state aid. The European Commission has
issued a decision that the state guarantee provided to the Bank was compliant with EU rules on state aid. This decision is effective
even if the settlement of the state guarantee is made subsequent to the date of EU accession.
3. Principal accounting policies
The principal accounting policies adopted in the preparation of these consolidated financial statements are set out below:
(a) Basis of accounting
The consolidated financial statements are prepared in accordance with and comply with International Financial Reporting Standards
(“IFRS”) applicable for consolidated financial statements effective for the year ended 31 December 2003. The consolidated financial
statements are prepared on the accrual basis of accounting whereby the effects of transactions and other events are recognised
when they occur and are reported in the financial statements of the periods to which they relate, and on the going concern
assumption. The financial statements include a balance sheet, a profit and loss statement, a statement of changes in shareholders’
equity, a cash flow statement and notes to the financial statements.
The consolidated financial statements are prepared under the historical cost convention, as modified by the revaluation of availablefor-sale
securities, financial assets and financial liabilities held for trading and all derivative contracts. Assets that are not remeasured
to fair value and suffered an impairment are stated at net recoverable amount.
The Group entities maintain their books of account and prepare statements for regulatory purposes in accordance with Czech
accounting principles and those of other jurisdictions in which the Group operates. The accompanying financial statements are based
on the accounting records, together with appropriate adjustments and reclassifications necessary for fair presentation in accordance
with IFRS. In certain instances, the reported amounts relating to the previous accounting period have been reclassified to conform to
the current year’s presentation.
The presentation of consolidated financial statements in conformity with IFRS requires management of the Group to make estimates
and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the
date of the financial statements and their reported amounts of revenues and expenses during the reporting period. These estimates
are based on the information available as of the date of the financial statements and actual results could differ from those estimates.
The reporting currency used in the unconsolidated financial statements is the Czech Crown “CZK”) with accuracy to CZK million.