KB prezent. angl - Komerční banka

070 ➔071
Unconsolidated Financial Statements
under CAS
The presentation of financial statements requires management of the Bank to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the balance sheet 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.
These financial statements reflect only the results of operations of the Bank and do not reflect the performance of the
Bank’s subsidiary and associated undertakings, a listing of which can be found at Note 16 to these financial statements. The Bank has
also prepared consolidated financial statements under International Financial Reporting Standards which show the consolidated
results of the Group.
The reporting currency used in the financial statements is the Czech Crown (“CZK”) with accuracy to CZK million, unless indicated
otherwise.
(b) Equity investments in subsidiaries and associates
Subsidiary undertakings are those companies in which the Bank, directly or indirectly, has an interest of more than one half of the
share capital or otherwise has power to exercise control over the operations of the entity. Associated undertakings are those
companies in which the Bank, directly or indirectly, holds 20 – 50 percent of the entity’s issued share capital.
The Bank’s investments in subsidiary and associated undertakings are recognised at cost less any provisions. Investments, in which
the Bank, directly or indirectly, has an equity interest less than 20 percent, are reported as Shares, participation certificates and other
holdings and are carried on the same basis as securities available for sale.
Dividends are recorded as declared and included as a receivable in the balance sheet line Prepayments and accrued income and in
Income from shares and equity investments in the profit and loss statement. Upon payment of the dividend, the receivable is offset
against the collected cash.
Provisions against equity investments are established as equal to the excess of cost over the Bank’s share of the entity’s equity
balance.
Gains and losses arising from the re-translation of equity investments denominated in foreign currencies are reported on the face of
the balance sheet as a component of equity within Gains or losses from revaluation and are recognised through the profit and loss
statement only after the relevant investments are sold.
(c) Foreign currency translation
Assets and liabilities denominated in foreign currencies are translated into Czech Crowns and reported in the financial statements at
the exchange rate declared by the Czech National Bank (“CNB”) prevailing as of the balance sheet date. Income and expenses
denominated in foreign currencies are recorded in Czech Crowns in the underlying accounting system of the Bank and are therefore
reported in the financial statements as re-translated at the official exchange rate prevailing as of the date of the transaction. All gains
and losses arising from movements in exchange rates are recognised in Net profit or loss on financial operations.
Gains or losses on the revaluation of equity investments denominated in foreign currencies are recorded on the balance sheet as
a component of Gains or losses from revaluation.
(d) Amounts due from banks and customers
Loans originated by the Bank by providing money directly to a borrower are categorised as loans originated by the Bank and are
carried at amortised cost. All loans and advances are recognised when cash is advanced to borrowers.
Loans and advances to customers and financial institutions are stated net of provisions for loan losses. Further details about
provisioning are set out in Note 27 to these financial statements.
The Bank charges penalty interest to borrowers when a portion of the loan falls overdue. Pursuant to the Bank’s policies, penalty
interest is not covered by the collateral set aside against the loan of the borrower. Penalty interest is accounted for on a cash basis in
Interest income.
The Bank writes off loss loans when clients are unable to fulfil their obligations to the Bank in respect of these loans. The loan is
written off against the related provision for loan impairment. Subsequent recoveries are credited to the profit and loss statement in
Release of provisions and reserves for receivables and guarantees, recoveries of receivables previously written off if previously
written off.