Download - ANNUAL REPORT AND FINANCIAL STATEMENTS - · PDF file · 2007-03-16Spyros N. Filaretos ... The Company has prepared its financial statements in accordance with International Financial

ALPHA BANK JERSEY LIMITED

AANNNNUUAALL RREEPPOORRTT AANNDD FFIINNAANNCCIIAALL SSTTAATTEEMMEENNTTSS

3311ss tt DDeecceemmbbeerr 22000066

Alpha Bank Jersey Limited Annual Report and Financial Statements

31 December 2006

TTaabbllee ooff CCoonntteennttss

Page

Officers and Company Particulars 3

Directors’ Report 4

Report of the Independent Auditors to the Members of Alpha Bank Jersey Limited 6

FFiinnaanncciiaall SSttaatteemmeennttss

Income Statement 8

Balance Sheet 9

Statement of Changes in Equity

10

Statement of Cash Flows

11

NNootteess ttoo tthhee FFiinnaanncciiaall SSttaatteemmeennttss

Accounting Principles Applied

12

Income Statement

16

Balance Sheet Assets

19

Balance Sheet Liabilities

21

Equity

22

Off-Balance Sheet Information

23

Additional Information

24

2


31 December 2006

3

AAllpphhaa BBaannkk JJeerrsseeyy LLiimmiitteedd

Martin J. Waghorn Chairman Neil A. Haworth Chief Executive Duncan A. H. Baxter

Linda Cullen Spyros N. Filaretos Alexander Gibb Vassilios J. Karaindros Marinos S. Yannopoulos

Neil A. Haworth

KPMG Channel Islands Limited Chartered Accountants

Ground Floor Sir Walter Raleigh House 48-50 The Esplanade St Helier Jersey JE1 4HH

5 Wests Centre St Helier Jersey JE4 4ST

Tel: 01534 733113 Fax: 01534 733115

Alpha Asset Finance C.I. Limited Business Address: E3/E4 Hirzel Court St Peter Port Guernsey GY1 2NQ

Tel: 01481 706950

Fax: 01481 706951


31 December 2006

4

DDiirreeccttoorrss’’ RReeppoorrtt

The directors submit their report and the audited financial statements of Alpha Bank Jersey Limited (the “Company”) for the year ended 31 December 2006.

The Company was incorporated in Jersey under the Companies (Jersey) Law 1991. The main activities of the Company are the provision of general banking services including deposit taking, money market operations in sterling and foreign currencies, and lending.

The results for the year are shown in the Income Statement on page 8.

The Company has prepared its financial statements in accordance with International Financial Reporting Standards (IFRS).

The Directors do not recommend a dividend in respect of the year ended 31 December 2006 (2005: £nil).

The directors who have served during the year and up to the date of approving the financial statements are as follows:

Duncan A. H. Baxter

Linda Cullen

Spyros N. Filaretos

Alexander Gibb

Neil A. Haworth

Vassilios J. Karaindros

Dimitrios P. Verriopoulos (resigned 01/03/06)

Martin J. Waghorn

Marinos S. Yannopoulos

None of the directors had a material interest at any time during the year in any contract of significance in relation to the Company’s business.


31 December 2006

P.O. Box 453 St Helier Jersey JE4 8WQ Channel Islands

5 St Andrew’s Place Charing Cross, St Helier Jersey JE4 8WQ Channel Islands

Independent auditors’ report to the members of

Alpha Bank Jersey Limited

We have audited the financial statements of Alpha Bank Jersey Limited for the year ended 31 December 2006 which comprise the Income Statement, the Balance Sheet, the Statement of Cash Flows and the Statement of Changes in Equity and the related notes. These financial statements have been prepared under the accounting policies set out therein.

This report is made solely to the Company’s members, as a body, in accordance with Article 110 of the Companies (Jersey) Law 1991. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of directors and auditors

As described in the Statement of Directors’ Responsibilities on page 5, the Company’s directors are responsible for preparation of the financial statements in accordance with applicable law and International Financial Reporting Standards.

Our responsibility is to audit the financial statements in accordance with the relevant legal and regulatory requirements and International Standards on Auditing (UK and Ireland).

We report to you our opinion as to whether the financial statements give a true and fair view and are properly prepared in accordance with the Companies (Jersey) Law 1991, the Banking Business (Jersey) Law 1991 and the Financial Services (Investment Business (Accounts, Audits and Reports)) (Jersey) Order 2001. We also report to you if, in our opinion, the Company has not kept proper accounting records or if we have not received all the information and explanations we require for our audit.

We read the Directors’ Report accompanying the financial statements and consider the implications for our report if we become aware of any apparent misstatements within it.

Basis of audit opinion

We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by the directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the Company’s circumstances, consistently applied and adequately disclosed.

6


31 December 2006

8

IInnccoommee SSttaatteemmeenntt For the year ended 31 December 2006

Note Interest and similar income 2 5,613 4,135

Interest expense and similar charges 2 4,705 3,219

Net interest income 908 916 Fee and commission income 3 131 52

131 52 Other income 4 26 116

26 116

Staff costs 5 255 220 General administrative expenses 7 298 288 Depreciation 13 37 17

Income tax expense 8 97 114

The notes on pages 12 to 31 form part of these financial statements.


31 December 2006

SSttaatteemmeenntt ooff CChhaannggeess iinn EEqquuiittyy For the year ended 31 December 2006

Share capital £000’s

Retained earnings

£000’s

Fair value reserve £000’s

Total equity £000’s

Change in fair value of available-for-sale securities - - 6 6

Profit for the year - 378 - 378

For the year ended 31 December 2005

Share capital £000’s

Retained earnings

£000’s

Fair value reserve £000’s

Total equity £000’s

Change in fair value of available-for-sale securities - - 5 5

Profit for the year - 445 - 445


10


31December 2006

11

SSttaatteemmeenntt ooff CCaasshh FFlloowwss For the year ended 31 December 2006

Note

Profit before tax 475 559

Adjustments for: Depreciation of plant and equipment 13 37 17 Amortisation of discount/premium on purchase of debt securities - (5)

Operating profit before changes in working capital and provisions 512 571

Net (increase) decrease in assets relating to operating activities: Loans and advances to customers 1,469 (11,926) Other assets (8) 166 Net increase (decrease) in liabilities relating to operating activities Due to banks 2,975 7,552 Due to customers (1,019) 15,888 Other liabilities 254 38 Cash generated from operations 4,183 12,289

Income taxes paid (60) (38)

Acquisition of shares in subsidiary (30) (50) Purchase of fixed assets 13 (4) (107) Purchase of available-for-sale securities (6,753) (2,220) Redemption of available-for-sale securities 7,622 10,566

9



31December 2006

12

NNootteess ttoo tthhee FFiinnaanncciiaall SSttaatteemmeennttss

1.1 Basis of presentation

These financial statements of Alpha Bank Jersey Limited (the “Company”) have been prepared in accordance with International Financial Reporting Standards (“IFRS”) and its interpretations adopted by the International Accounting Standards Board. The financial statements have been prepared on the historical cost basis except for the available-for sale securities, which are measured at fair value. In preparing these financial statements the Company has adopted IFRS 7 “Financial instruments: Disclosures” prior to its required implementation date of 1 January 2007. The adoption of IFRS 7 impacts on the type and amount of disclosures made in these financial statements, but has no impact on the profits or financial position of the Company. In accordance with the transitional requirements and standards, the Company has provided full comparative information. In 2005, the IASB issued a revision to IAS 1 – “Presentation of Financial Statements – Capital Disclosures” which becomes effective for periods starting on or after 1 January 2007. The standard requires disclosures to enable users of the financial statements to evaluate the Company’s objectives, policies and processes for managing capital. The Company will apply the above requirements for its accounting year commencing 1 January 2007.

As a wholly owned subsidiary of Alpha Bank London Limited, the Company has taken advantage of the exemption in IAS 27 (paragraphs: 9 - 10) “Consolidated and Separate Financial Statements” and has not prepared consolidated financial statements. The principal accounting policies adopted are set out below.

1.2 Foreign currency transactions

The financial statements are presented in Sterling, which is the currency of the country of incorporation of the Company (functional currency). Transactions in foreign currencies are translated to Sterling at the closing exchange rates at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated to Sterling at the closing exchange rate at that date. Foreign exchange differences arising on translation are recognised in the Income Statement. Non-monetary assets and liabilities are recognised at the exchange rate ruling at initial recognition, except for those non-monetary items denominated in foreign currencies that are stated at fair value. The exchange differences relating to these items are part of the change in fair value and are recognised in the Income Statement or recorded directly in shareholders' equity depending on the classification of the non-monetary item.

1.3 Cash and cash equivalents

For the purposes of the statement of cash flows, cash and cash equivalents consists of: a. Cash on hand. b. Non-restricted placements with central banks. c. Short-term balances due from banks. Short-term balances due from banks are amounts that mature within three months after the date of the financial statements. Cash and cash equivalents are carried at amortised cost in the balance sheet.


31December 2006

13

s

) f

1.4 Classification and measurement of financial assets

The Company classifies its financial assets in the following categories: • Loans and receivables. • Available-for-sale financial assets. • Held-to-maturity investments. • Financial assets at fair value through profit or loss.

For each of the above classifications the following is applicable: a) Loans and receivables

Included in this category are: i. Direct loans to customers ii. Amounts paid for a portion or total acquisition of bonds issued by customers iii. All receivables from customers, banks etc. Loans and receivables are recognised when cash is advanced to the borrowers and are derecognised when either the borrowers repay their obligations, or the loans are sold or written off. They are initially recorded at fair value and are subsequently measured at amortised cost using the effective interest method, less impairment losses.

b) Available-for-sale financial a sets Available-for-sale financial assets are non-derivative financial assets measured at fair value, being the

quoted bid price, through the statement of changes in equity. When these are de-recognised, the cumulative gain or loss previously recognised directly in equity is recognised in the Income Statement. The fair value reserve shows the cumulative net change in the fair value of available-for-sale securities until the investment is de-recognised. Available-for-sale securities are recognised/de-recognised on the date the company commits to purchase/sell the investments.

The Company has included in this category: i. Variable interest rate bonds

ii. Fixed rate interest bonds

c) Held–to-maturity investments The Company has not included any financial assets in this category.

d Financial assets at fair value through pro it or loss

The Company has not included any financial assets in this category.

1.5 Plant and equipment Furniture, fittings and equipment are stated at cost less accumulated depreciation and impairment losses.

Subsequent expenditure is capitalised or recognised as a separate asset only when it increases the future economic benefits. Expenditure on repairs and maintenance is recognised in the Income Statement as an expense incurred. Depreciation is charged on a straight-line basis over the estimated useful lives of plant and equipment taking into account residual values. The estimated useful lives are as follows: - Furniture and fittings: 3 to 10 years. - Computers, plant and other equipment: 3 to 10 years.


31December 2006

14

Depreciation method; residual value and useful lives are annually re-assessed and adjusted if necessary at each reporting date.

1.6 Impairment losses on financial and non-financial assets and liabilities

The Company has assessed, as at each balance sheet date, whether there is evidence of impairment in accordance with the general principles and methodology set out in IAS 39 and the relevant implementation guidance. Financial and non-financial assets and liabilities are impaired when objective evidence demonstrates that a loss event has occurred after the initial recognition and the loss event has an impact on the future cash flows that can be estimated reliably. The Company has concluded there were no impairment losses at the year-end (2005: nil).

1.7 Employee benefits

The Company contributes to a company executive pension plan, which is a defined contribution scheme, the expense being charged to the Income Statement as incurred.

1.8 Interest income and expense

Interest income and expense are recognised in the Income Statement for all instruments measured at amortised cost. The recognition of interest income and expense is performed on the accrual basis using the effective interest rate method. The interest income from available-for-sale financial assets is also recognised in the income statement using the effective interest rate method. The effective interest rate method is a method of calculating the amortised cost of a financial asset or a financial liability and of allocating the interest income or interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts over the expected life of the financial instrument, in order that the present value of the future cash flows, including fees or transaction costs, is equal to the carrying amount of the financial instrument. Interest on financial assets and liabilities that are impaired is determined taking into account the estimated impairment using the effective interest rate method.

1.9 Fee and commission income Fee and commission income are recognised on an accruals basis when the relevant service has been provided. Transaction revenues relating to the recognition of a financial instrument, which are measured at amortised cost, such as loans and advances, are capitalised and recognised in the Income Statement using the effective interest rate method.

1.10 Subsidiary

The investment in the subsidiary, Alpha Asset Finance C.I. Limited, is recognised in the balance sheet at cost, adjusted for impairment.

1.11 Income tax policy Income tax expense is recognised in the income statement except to the extent it relates to items recognised directly in equity, in which case it is recognised directly in equity. Current tax is the expected tax payable on the income for the year, and any adjustments to tax payable in respect of previous years. There is no deferred tax. The Company is obliged to deduct 15% withholding tax from its EU customers, which is reflected in the balance of £385,000 at the year end (2005: £153,000).


31December 2006

15

1.12 Use of estimates and judgments The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected.

1.13 Lease payments made

Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives received are recognised as an integral part of the total lease expense, over the term of the lease.


31December 2006

16

IInnccoommee SSttaatteemmeenntt

Banks 11 63 Investment securities – Available-for-sale 394 418 Loans and advances to customers 1,362 1,097 Term deposits with parent 3,846 2,557

Banks 500 223 Customers 4,205 2,996

Loans 5 13 Alpha Asset Finance C.I. Limited management fee 17 - Fund transfers 12 9 Security charges 97 30

Release of unused provisions - 95 Foreign exchange gain 24 21

Premises service charge refund 2 -

Wages and salaries 201 181 Social security contributions 9 8 Defined contribution scheme - contributions 20 19 Other 25 12

The number of persons employed by the Company at the year-end was 6 (2005 - 4).


31December 2006

17

The remuneration of the directors is as follows: Directors’ emoluments 92 86 Company contributions to defined contribution schemes 15 16

The above amounts for remuneration include the following in respect of the highest paid director:

Directors’ emoluments 82 76 Company contributions to defined contribution schemes 15 16

The number of directors who were members of the Company’s pension scheme is as follows:

Defined contribution schemes 1 1

Premises 45 42 Marketing and advertising 3 1 Banking fees 89 87 Communication and travel 9 6 Professional fees 22 30 Auditors’ remuneration: - Statutory audit 28 17 - Half -year review 6 - - Taxation services 5 5 Information systems 81 93 Other general administrative expenses 10 7

Banking fees include £80,000 (2005: £75,000) paid to Alpha Bank London Limited in respect of a management charge.

The Company has a rental agreement in place for the premises. This is over a 5 year period at £33,000 per annum ending on 12 January 2011.


31December 2006

18

Income tax at 20% (2005: 20%) 98 113 Adjustments in respect of prior periods (1) 1

Reconciliation of effective tax rate:

Current tax on the above at 20% (2005: 20%) 95 112 Disallowable expenses - 1 Capital allowances for the year less than depreciation 3 - Adjustments in respect of prior years (1) 1

The effective rate of tax for the year is 20.4% (2005: 20.4%)


31December 2006

19

Balance Sheet Assets

Loans with parent company 86,659 81,740

Placements with other banks 355 316

Overdrafts 1,231 761

Term loans 27,300 29,239

Debt securities: - Listed 9,492 10,355

Subsidiary at cost 80 50

The Company has one subsidiary, which is wholly owned and has issued 80,000 ordinary shares of £1 each (2005:

50,000 ordinary shares of £1 each). It was incorporated on 14 September 2005 and began trading on 3 October 2005. The subsidiary’s administrative office is based in Guernsey.

Alpha Asset Finance C.I. Limited Jersey Credit instalment finance


31December 2006

20

Additions 2 2 4

Charge for the year 1 36 37

6 68 74

Prepayments 59 50 Amounts due from subsidiary 20 21


31December 2006

21

Balance Sheet Liabilities

Term deposits with parent 2,697 13,209

Term deposits with Alpha Bank A.E. 13,487 -

Instant access accounts 4,481 4,207 Fixed deposits 96,324 97,617

Current year income tax 98 114 Prior year income tax 114 62

Witholding tax 385 153

Accrued expenses 57 34


31December 2006

22

Equity

5,000,000 ordinary shares of £1 each

5,000,000 ordinary shares of £1 each

(7) (12) Net change in fair value of available-for-sale securities 6 5

2,250 1,805 Profit for the year 378 445


31December 2006

23

OOffff––BBaallaannccee SShheeeett IInnffoorrmmaattiioonn

There are no pending legal cases or issues in progress which may have a material impact on the financial statements of the Company.

The Company’s minimum future lease payments are as follows:

Less than one year 33 33 Between one and five years 102 132 More than five years - 3

Undrawn loan commitments - 1,371 Letters of guarantee 5,629 2,988


31December 2006

24

AAddddiittiioonnaall IInnffoorrmmaattiioonn

The Company’s financial instruments principally comprise loans and deposits that arise from its operations as a lending and deposit-taking institution. It also has a portfolio of debt securities that are held as available-for-sale financial assets. The main risks arising from the Company’s financial instruments are credit risk, market risk and liquidity risk. Market risk includes interest rate and foreign currency risk. The Company’s objectives, policies and processes for measuring and managing the risks are described below. These objectives, policies and processes are the same as those in place last year.

Credit risk is the risk that financial loss arises from the failure of a customer or counterparty to meet its obligations under a contract. For the company, credit risk arises principally from lending and investment activities. Internal controls are in place within the Company’s credit function which are designed to ensure that loans are made in accordance with credit policy and that once made such facilities are monitored on a regular basis by the appropriate level of management. Consideration is given to making specific provisions where necessary.

Moreover, significant changes in the economy, or state of a particular industry could result in risks that are different from those provided for at the balance sheet date. To manage these risks management has established limits in relation to individual borrowers or groups of borrowers.

The limits established are constantly monitored and are subject to a regular review by the responsible (based on the amount of the limit) approval body. Limits relating to specific sectors and countries are examined and approved by the Board of Directors. The exposure to credit risk is managed by an analysis of the ability of the borrowers to meet their obligations using internal credit rating systems and methodologies. In the instances of borrowers who have obtained facilities from other group companies, the total exposure on a group basis is taken into account in determining the credit risk. As a result the credit limits are adjusted if considered necessary. In addition the above analysis takes into account the interest rate spread and collaterals held. The Company’s exposure to credit risk is determined by the counterparties with whom the Company conducts business, as well as the markets and countries in which those counterparties conduct their business. Counterparty and country limits are in place and the Company performs credit appraisal procedures prior to the advancing of any facilities. The Company also has policies on the levels of collateral that are required to secure facilities. During the year the company had no impaired loans (2005: nil). The Company holds collateral against loans and advances to customers in the form of property, guarantees and cash deposits.


31December 2006

25

The tables below show the Company’s exposure to credit risk based on the sectors and countries in which the Company’s customers conduct their business. As at 31 December, these exposures were as follows:

Banks - 9,174 9,174

Individuals 1,053 - 1,053 Financial intermediaries 16,957 - 16,957 Real estate companies 9,097 - 9,097 Other 1,424 318 1,742

United Kingdom 5,127 2,537 7,664 Greece 1,636 672 2,308 Cyprus 16,127 - 16,127 North America - 4,059 4,059 Other 5,641 2,224 7,865

Banks - 8,704 8,704 Individuals 2,389 - 2,389 Financial intermediaries 12,338 - 12,338 Real estate companies 12,076 - 12,076 Other 3,197 1.651 4,848

UK 8,306 5,229 13,535 Greece 3,158 - 3,158 Cyprus 12,338 - 12,338 North America - 2,396 2,396 Other 6,198 2,730 8,928


31December 2006

26

Market risk is the risk that changes in market prices, such as interest rate, equity prices, foreign exchange rates and credit spreads (not relating to changes in the obligor’s / issuer’s credit standing) will affect the Company’s income or value of its holdings of financial instruments. The objective of market risk management is to maintain risk exposures within acceptable parameters, whilst optimising the return on risk. The Company has a portfolio of debt securities held for investment purposes. It is policy to hold all such securities as available-for-sale. Management monitors market price movements on the financial instruments held, and these details are circulated for review by the Board of Directors.

Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company principally borrows and lends at floating rates of interest. In any instance where it has borrowed or lent at a fixed rate the resulting interest rate risk is eliminated by matching with loans or deposits at a fixed rate with the parent company. For this reason a separate sensitivity analysis will not be provided further to the gap analysis shown below.

The table below summarises the re-pricing mismatches on the Company’s non-trading book as at 31 December. Items are allocated to time bands by reference to the earlier of the next contractual interest rate re-pricing date and the maturity date.

Due from banks 4.5% 83,121 3,317 576 - - - 87,014Loans and advances 4.8% 27,024 1,507 - - - - 28,531Debt securities 4.2% 9,492 - - - - - 9,492Other assets - - - - - - 233 233

Total assets 119,637 4,824 576 - - 233 125,270

Due to banks 3.1% 16,184 - - - - - 16,184Due to customers 4.2% 96,922 3,308 575 - - - 100,805Other liabilities - - - - - - 654 654Shareholders’ funds - - - - - - 7,627 7,627

Total liabilities 113,106 3,308 575 - - 8,281 125,270

Interest rate sensitivity gap

6,531 1,516 1 - - (8,048) -

Cumulative gap 6,531 8,047 8,048 8,048 8,048 - -


31December 2006

27

Due from banks 3.5% 81,594 462 - - - - 82,056Loans and advances 4.6% 28,414 1,511 75 - - - 30,000Debt securities 3.1% 9,666 689 - - - - 10,355Other assets - - - - - - 228 228

Total assets 119,674 2,662 75 - - 228 122,639

Due to banks 2.2% 13,209 - - - - - 13,209Due to customers 3.1% 100,645 892 287 - - - 101,824Other liabilities - - - - - - 363 363Shareholders’ funds - - - - - - 7,243 7,243

Total liabilities 113,854 892 287 - - 7,606 122,639

Interest rate sensitivity gap

5,820 1,770 (212) - - (7,378) -

Cumulative gap 5,820 7,590 7,378 7,378 7,378 - -

A negative interest rate sensitivity gap exists when more liabilities than assets re-price during a given period. Although a negative gap position tends to benefit net interest income in a declining interest rate environment, the actual effect will depend on a number of factors, including the extent to which repayments are made earlier or later than the contracted date and variations in interest rate sensitivity within re-pricing periods and among currencies.


31December 2006

28

The Company does not have any subsidiaries other than in Jersey and consequently has no structural currency exposure. Its foreign currency exposure arises through certain monetary assets and liabilities that are denominated in foreign currencies. Currency limits, agreed with the Board of Directors, are in place to manage these exposures and are closely monitored.

The table below shows the Company’s currency exposures (expressed in sterling equivalents). Such exposures comprise the monetary assets and monetary liabilities of the Company that are not denominated in Sterling. As at 31 December, these exposures were as follows:

£000’s £000’s £000’s £000’s £000’s

Due from banks 38,262 33,844 14,062 846 87,014 Loans and advances to customers 10,163 - 17,740 628 28,531 Investment securities -Available-for-sale - 4,763 4,729 - 9,492 Investment in subsidiary undertaking 80 - - - 80 Plant and equipment 74 - - - 74 Other assets 79 - - - 79

Due to banks 16,184 16,184 Due to customers 40,614 38,435 20,291 1,465 100,805 Liabilities for current tax and other taxes 374 167 53 3 597 Other liabilities 57 57

Total Assets 44,479 43,319 33,164 1,677 122,639 Total Liabilities 37,251 43,317 33,152 1,676 115,396


31December 2006

29

Liquidity risk is the risk that the Company will not have sufficient funds to meet obligations or commitments associated with its financial instruments. The Company’s exposure to liquidity risk is managed based on policies agreed by the Board of Directors. These include the holding of sufficient immediately available cash or marketable assets, ensuring asset and liability cash flows are appropriately matched, and having the ability to arrange further borrowing if required.

Liquidity risk relates to the Company’s ability to maintain sufficient funds to cover its obligations. To that end, a liquidity gap analysis is performed.

Cash flows arising from all assets and liabilities are estimated and classified into relevant time periods, depending on when they occur. The liquidity gap analysis is set out in the table below:

Due from banks 55,540 27,581 3,317 576 87,014 Loans and advances to customers 1,736 950 1,556 6,908 17,381 28,531 Investment securities -Available-for-sale 2,993 6,499 - - - 9,492 Investment in subsidiary undertaking - - - - 80 80 Plant and equipment - - - - 74 74 Other assets 79 79

Due to banks - 16,184 - - - 16,184 Due to customers 74,321 22,602 3,308 574 - 100,805 Liabilities for current income tax and other taxes - - - - 597 597 Other liabilities - - - - 57 57


31December 2006

30

Due from banks 48,352 33,051 516 137 - 82,056 Loans and advances to customers 765 12,428 - - 16,807 30,000 Investment securities -Available-for-sale 176 3,184 2,022 2,835 2,138 10,355 Investment in subsidiary undertaking - - - - 50 50

Property, plant and equipment - - - - 107 107 Other assets - - - - 71 71

Due to banks 845 12,364 - - - 13,209 Due to customers 4,207 96,438 893 286 - 101,824 Liabilities for current income tax and other taxes - - - 329 329 Other liabilities - - - - 34 34

The financial assets and liabilities in the above tables, with the exception of available-for-sale securities, are not carried at fair value. The directors are of the opinion that the fair value of the financial assets and liabilities are not materially different from their carrying values.


31December 2006

31

The outstanding balances with parent company, ultimate parent company and subsidiary are set out below. All transactions were made in the ordinary course of business and on substantially the same terms, including interest rates and security, as for comparable transactions with persons of similar standing. The related results of these transactions are as follows:

Due from banks – Alpha Bank London Limited 86,659 81,740 Other asset – Alpha Asset Finance C.I. Limited 831 21

Due to banks - Alpha Bank London Limited 2,697 13,209 Due to banks - Alpha Bank A.E. 13,487 - Due to banks - Alpha Asset Finance C.I. Limited 16 -

Letters of guarantee issued - Alpha Bank London Limited 5,629 2,988

Interest income – Alpha Bank London Limited 3,853 2,557 Interest income – Alpha Asset Finance C.I. Limited 29 6 Management fee income – Alpha Asset Finance C.I. Limited 17 -

Banking fees - Alpha Bank London Limited 80 75

An Advisory and Service Agreement is in place between Alpha Bank Jersey Limited and its parent, Alpha Bank London Limited, whereby administrative services provided by Alpha Bank London Limited are charged to Alpha Bank Jersey Limited. These services include the provision of directors, accounting services, information systems, human resources and administrative support. The costs are reviewed annually and any revision is approved by the Board of Directors. For 2006 the management charge was £80,000 (2005: £75,000). There is also a service agreement with Alpha Asset Finance C.I. Limited whereby the Company receives a management fee based on the level of customer receivables.

The Company is a wholly owned subsidiary of Alpha Bank London Limited, a company incorporated in England. The smallest and largest group in which the results of Alpha Bank Jersey Limited are consolidated is that headed by Alpha Bank A.E., a company incorporated in Greece, whose principal place of business is 40 Stadiou Street, 102 52 Athens, Greece.

The consolidated financial statements of the Alpha Bank A.E. group are available to the public and may be obtained from the above address.

There have been no significant events after the balance sheet date.

Download - ANNUAL REPORT AND FINANCIAL STATEMENTS - · PDF file · 2007-03-16Spyros N. Filaretos ... The Company has prepared its financial statements in accordance with International Financial

Top Related