Letno poročilo 2009.pdf - UniCredit Banka Slovenija dd

Financial StatementsSummary of Accounting Policies• Average monthly salary in the Republic of Slovenia;• If, on the valuation date, the calculated retirement age has alreadybeen reached or exceeded, the retirement has been assumed totake place 6 months after the valuation date.These obligations are measured at present value of future cashoutflows. The gains and losses are recognized in the incomestatement. Actuarial gains and losses, arising from experienceadjustments and from changes in actuarial assumptions, in excess ofthe greater of ten percent of the value of plan assets or ten percent ofthe defined benefit obligation, are charged or credited to income overthe expected average remaining working life-time of the relatedemployees.The Bank additionally provides short-term benefits to its employeessuch as contributions to retirement pension insurance and recognizesthe costs of these contributions as incurred.UniCredit Group established a medium/long-term share optionsand performace shares program, granting equity instruments byUniCredit Italiano S.p.A. to selected managers and employees ifthe various Group Subsidiaries. Share-based payment transactionsare equity-settled. In compliance with the IFRS, the subsidiaries,whose employees have been granted equity instruments by theparent company, must pay the latter for the allocation granted to theiremployees.Fair value calculation criteria for equity-settled Stock Options: Thefair value has been measured by applying the Hull and the Whitemodel. The model is based on trinominal tree price distribution usingthe Boyl’s algorithm and estimates the early exercise probability onthe basis of a deterministic model connected to reaching a MarketShare Value equals to an exercise price-multiple and probabilitybeneficiary’s early exit after the end of the vesting period. Fair valuecalculation criteria for Stocks: Fair value was determined based onthe market price of the share, adjusted for the present value of thedividends, entitled from the grant, to the settlement date.Vesting conditions for the Stocks are 1 year, westing conditions forthe Stock Options are 4 years. Granted Stock's are exercisable in4 years, whereas Stock Options are exercisable in 10 - 13 years.Shareholders’ equityShareholders’ equity is composed of paid-in share capital, sharepremium, fair value reserves (fair value reserves from financial assetsavailable-for-sale and fair value reserves from cash flow hedge),reserves from profit, retained earnings and net profit for the year.Earnings per shareThe Bank presents earnings per share data for its ordinary (par value)shares. Earning per share is calculated by dividing the Bank’s profitor loss by the average number of shares outstanding during theperiod.The Bank has no preference shares or convertible bonds. Therefore,no diluted earning per share is calculated.Financial commitments and contingenciesOff-balance-sheet commitments from guarantees, both financial andservice, represent irrevocable obligations that the Bank will makepayments in the event a customer cannot fulfil its obligations vis-àvisthird parties.A documentary letter of credit is an irrevocable undertaking of the issuingbank acting at the request of a customer (buyer) to make payment tothe beneficiary (seller) or to pay or accept bills of exchange drawn bythe beneficiary against stipulated documents, provided all terms andconditions of the letter of credit are complied with. The documentaryletters of credit are collateralized depending on the creditworthiness ofthe customer and on the same basis as guarantees or loans.The primary purpose of unused credit facilities (loan commitments)is to ensure that funds are available to a customer as required.Commitments to grant loans issued by the Bank represent issuedloan commitments and the unused part of approved overdraft loans.The risk associated with off-balance-sheet financial commitmentsand contingent liabilities is assessed similarly as for loans tocustomers taking into account the financial position and activitiesof the entity to which the Bank issued the guarantee and taking intoaccount the collateral obtained.Interest Income and ExpenseInterest income and expense are recognized in the income statementusing the effective interest method.Impairment losses on loans and receivablesThe Bank assesses at each reporting date whether there is anyindication that loan or receivable may be impaired. If such indicationexists, the amount of the loss is measured as the difference betweenthe asset’s carrying amount and the present value of estimated futurecash flows discounted at the asset’s original effective interest rate.The amount of the loss is recognized in profit or loss.Fee and Commission Income and ExpenseFees and commissions are in principle recognized upon completionof the underlying transaction. Fees and commissions charged forlonger periods are being accrued.TaxationTaxes are calculated in accordance with the Corporate Income Taxregulations. Generally, the taxable profit is based on the profit or lossrecognized in the income statement prepared pursuant to the IFRS. Itis adjusted for tax purposes as follows from the tax regulations.Tax expense (tax income) comprises current tax expense (current taxincome) and deferred tax expense (deferred tax income).178 2009 Annual Report · UniCredit Bank