Výročná správa 2009 - Komunálna Poisťovňa

(All amount are in thousands of Euros, unless stated otherwise)(iii)Impairment of equity financial assets available for saleThe Company determines that equity financial assets available for sale are impaired whenthere has been a significant or prolonged decline in the fair value below its cost. This determinationof what is significant or prolonged requires judgment. In making this judgment, the Companyevaluates, among other factors, the normal volatility in share price, the financial health of theinvestee, industry and sector performance, changes in technology, and operational and financingcash flow. Impairment may be appropriate when there is evidence of deterioration in the financialhealth of the investee, industry and sector performance, changes in technology, and financing andoperational cash flows.(iv)Current volatility on global financial marketsThe ongoing global liquidity crisis which started in the middle of 2007 has produced manyresults, including lower funding of capital markets, reduced liquidity in the Slovak banking sectorand sometimes higher inter-banking interest rates, and very high volatility in local and internationalstock markets. Uncertainties in global financial markets also led to the collapse of banks andsubsequent interventions aimed at remedying banks in the United States and Western Europe. Topredict the total impact of the ongoing financial crisis and to protect companies against it appearsimpossible.These circumstances may affect the Company’s ability to acquire new financial assets underconditions applied in similar transactions in the past. Issuers of financial assets held by the Companymay also be affected by a lower liquidity level that may subsequently influence their abilityto settle the outstanding debt. Deteriorating operational conditions of issuers may also have animpact on the management’s assumptions concerning cash flows and on evaluating impairmentof financial and non-financial assets. When assessing impairment, management has reviewed theexpected future cash flows based on the information available.The Company’s management is not able to reliably evaluate either the impact of further liquiditydeterioration on financial markets or the impact of a higher volatility on currency and stockmarkets. Management believes that all steps are being undertaken to support the Company’ssustainable growth under current conditions.(v)Reserve for deficit in Motor Third Party Liability InsuranceIn 2009, the Company set up a provision for the MTPL deficit in line with the Insurance IndustryAct. The amount of this provision was based on the latest amount of the deficit (EUR 94.02million) that SKP reported in its audited IFRS financial statements at 31 December 2008, adjustedby payments for 2009, and on the Company’s market share 7.04% for 2008 (7.04% for 2007).(vi)Impairment provision to CE WOOD bondAfter the failure of CE WOOD, a.s. to meet its obligations with regards to its issued bonds (i.e.failure to pay up a portion of a bond’s face value and related interest), CE WOOD, a.s. entered intoan agreement with the Company (an owner of CE WOOD’s securities) which outlined a paymentschedule. According to this schedule, CE WOOD agreed to pay up its debt of EUR 487 thousandto the Company until 20 March 2010.As of 31 December 2009, CE WOOD had paid up its first instalment of EUR 125 thousandaccording to the schedule. At the beginning of 2010, two more instalments totalling EUR 194thousand were paid up.After these payments, CE WOOD intended to obtain additional funds from the auction of thesawmill Javořice, a.s. The auction was not successful, as the auctioneer withdrawn from the action.He justified the withdrawal due to the start of the insolvency process involving Javořice, a.s.Ročná účtovná závierka a komentár I Company AccountsCE WOOD is currently attempting to sell its stake in PLOMA, a.s. as an alternative measure.This sale will take the form of a public auction with a reservation price equal to the face value ofall of CE WOOD’s outstanding bonds.137